PB GLOBAL LIMITED (Formerly Pesticides & Brewers Limited)

Transcription

1 Draft Letter of Offer Dated: November 23, 2016 For Equity Shareholders of our Company PB GLOBAL LIMITED (Formerly Pesticides & Brewers Limited) Our Company was originally incorporated as Pesticides Limited on October 28, 1960 in the State of Maharashtra as a public lim ited company under the Companies Act, Our Company received the Certificate for Commencement of Business on March 28, Subsequently, the name of our Company was changed to Pesticides and Brewers Limited vide special resolution passed by the shareholders of our Company in their meeting held on October 16, 1970 and fresh Certificate consequent upon change of name issued by the RoC, Maharashtra on December 22, The name of our Company changed to PB Global Limited vide special resolution passed by the shareholders of our Company in their meeting held on August 1, 2016 and Certificate of Incorporation pursuant to change of name issued by Roc, Mumbai on August 10, 2016 Our Corporate Identification Number is L99999MH1960PLC For details of incorporation, please refer to chapter titled Histo ry and Corporate Structure beginning on page no. 89 of this Draft Letter of Offer. Registered Office: Chitalsar, Manpada Swami Vivekananda Road, Thane , Maharashtra, India Tel. No.: / , Fax No.: info@pbltd.in, Website: Contact Person: Bijal Shah-, Company Secretary and Compliance Officer. Corporate Identity Number: L99999MH1960PLC THE ISSUE FOR PRIVATE CIRCULATION TO THE ELIGIBLE SHAREHOLDERS OF THE COMPANY OR THE ISSUER ONLY ISSUE OF [ ] EQUITY SHARES WITH A FACE VALUE OF RS. 10/- EACH FOR CASH AT A PRICE OF RS. [ ] EACH INCLUDING A SHARE PREMIUM OF RS. [ ] PER EQUITY SHARE AGGREGATING TO AN AMOUNT NOT EXCEEDING RS LAKHS TO THE EXISTING EQUITY SHAREHOLDERS ON RIGHTS BASIS IN THE RATIO OF [ ] FULLY PAID UP EQUITY SHARES FOR EVERY [ ] FULLY PAID UP EQUITY SHARES HELD ON RECORD DATE, I.E. [ ]. THE ISSUE PRICE IS [ ] TIMES OF THE FACE VALUE OF THE FULLY PAID UP EQUITY SHARE.FOR FURTHER DETAILS PLEASE SEE THE CHAPTER TITLED TERMS OF THE ISSUE ON PAGE 148 OF THIS DRAFT LETTER OF OFFER. GENERALRISKS Investment in equity and equity related securities involve a degree of risk and investors should not invest any funds in this Issue unless they can afford to take the risk of losing their investment. Investors are advised to read the risk factors carefully before taking an investment decision in this offering. For taking an investment decision, investors must rely on their own examination of the Issuer and the offer including the risks involved. The securities being offered in the Issue have not been recommended or approved by the Securities and Exchange Board of India (SEBI) nor does SEBI guarantee the accuracy or the adequacy of this document. Investors are advised to refer to the section entitled Risk Factors beginning on page 11 of this Draft Letter of Offer before making an investment in this Issue. ISSUER SABSOLUTE RESPONSIBILITY The Issuer, having made all reasonable inquiries, accepts responsibility for, and confirms that this Draft Letter of Offer contains all information with regard to the Issuer and the Issue, which is material in context of the Issue, that the information contained in this Draft Letter of Offer is true and correct in all material respects 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 document as a whole or any of such information or the expression of any such opinions or intentions misleading in any material respect. LISTING The existing Equity Shares of the Company are listed on BSE Limited (BSE). The Company has received in-principle approvals from BSE vide their letter nos. [ ] dated [ ] for listing of the Equity Shares being issued in terms of this Draft Letter of Offer. For the purposes of the Issue, the Designated Stock Exchange shall be BSE. LEAD MANAGER REGISTRAR TOTHE ISSUE GRETEX CORPORATE SERVICES PRIVATE LIMITED Office No. 13, 1st Floor, Raja Bahadur Mansion, New Bansilal Building, 9-15, HomiModi Street, Fort, Near BSE Ltd, Mumbai Tel No.: / / Fax No.: info@gretexgroup.com Website: Investor Grievance info@gretexgroup.com Contact Person: Mr. Tanmoy Banerjee SEBI Registration No. INM ISSUE OPENS ON PURVA SHAREGISTERY (INDIA) PRIVATE LIMITED 9, Shiv Shakti Industrial Estate, J. R. BorichaMarg, Opposite Kasturba Hospital Lane, Lower Parel (East), Mumbai , Maharashtra, India Telephone: Fax: busicomp@vsnl.com Website: Investor Grievance busicomp@vsnl.com Contact Person: Mr. V.B. Shah SEBI Registration Number: INR ISSUE SCHEDULE LAST DATE FOR RECEIVING REQUEST FOR SPLIT APPLICATION FORMS ISSUE CLOSES ON [ ] [ ] [ ]

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3 TABLE OF CONTENTS TITLE PAGE SECTION I GENERAL 2 DEFINITIONS AND ABBREVIATIONS 2 NOTICE TO OVERSEAS SHAREHOLDERS 7 PRESENTATION OF FINANCIAL INFORMATION AND USE OF MARKET 8 DATA FORWARD LOOKING STATEMENTS 9 SECTION II RISK FACTORS 11 INTERNAL RISK FACTORS 11 EXTERNAL RISK FACTORS 20 SECTION III INTRODUCTION 27 THE ISSUE 27 SUMMARY OF FINANCIAL INFORMATION 28 GENERAL INFORMATION 31 CAPITAL STRUCTURE 35 SECTION IV PARTICULARS OF THE ISSUE 40 OBJECTS OF THE ISSUE 40 BASIS OF ISSUE PRICE 47 KEY INDUSTRY REGULATIONS AND POLICIES 49 STATEMENT OF POSSIBLE SPECIAL TAX BENEFITS 54 SECTION V ABOUT THE COMPANY 57 INDUSTRY OVERVIEW 57 BUSINESS OVERVIEW 80 HISTORY & CORPORATE STRUCTURE 89 OUR MANAGEMENT 93 OUR GROUP ENTITIES 102 DIVIDEND POLICY 104 SECTION VI FINANCIAL INFORMATION 105 FINANCIAL STATEMENTS 105 MANAGEMENT S DISCUSSION AND ANALYSIS OF FINANCIAL 129 CONDITIONS AND RESULTS OFOPERATIONS SECTION VII LEGAL AND OTHER INFORMATION 135 OUTSTANDING LITIGATIONS AND OTHER DEFAULTS 135 MATERIAL DEVELOPMENTS 137 GOVERNMENT AND OTHER STATUTORY APPROVALS 138 OTHER REGULATORY AND STATUTORY DISCLOSURES 140 SECTION VIII ISSUE RELATED INFORMATION 148 TERMS OF THE ISSUE 148 SECTION IX MAIN PROVISIONS OF THE ARTICLES OF ASSOCIATION OF 176 OUR COMPANY SECTION X STATUTORY AND OTHER INFORMATION 220 MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION 220 SECTION XI -DECLARATION 221 Page 1 of 221

4 SECTION I - GENERAL DEFINITIONS AND ABBREVIATIONS In this Draft Letter of Offer, unless the context otherwise requires, the terms defined and abbreviations expanded below shall have the same meaning as stated in this section. References to statutes, rules, regulations, guidelines and policies will be deemed to include all amendments and modifications notified thereto. In this Draft Letter of Offer, unless otherwise indicated or the context otherwise requires, all references to P B GLOBAL Limited the/our Company, PBGL, Issuer, we, our and us are to P B Global Limited and references to you are to the Equity Shareholders and or/ prospective investors in the Issue. Company Related Terms Terms Description PBGL, Our Company, the Company the Issuer the Issuer Company We us our Articles/ Articles of Association/ AoA Auditor/ Statutory Auditor Board/Board of Directors CFO Company Secretary & Compliance Officer Director(s) Equity Shareholder(s)/ Shareholder(s) Equity Share(s) Group Companies/ Group Entities Eligible Equity Shareholder(s) Memorandum /Memorandum of Association/MoA Promoters Promoter Group/Promoter Group Entities P B Global Limited Articles of Association of our Company, as amended from time to time Our statutory auditors namely, P. V. Page & Co., Chartered Accountants Board of Directors of our Company including a committee thereof Parimal Vibhash Mehta Bijal Shah Any or all director(s) of our Company, unless otherwise specified and as the context may require A holder of the Equity Shares of our Company Equity Shares of our Company of face value of Rs each The companies, firms, ventures, etc. covered under the applicable accounting standards (i.e. Accounting Standard 18 issued by the Institute of Chartered accountants of India) on a consolidated basis, or other Companies as considered material by our Board. Equity Shareholders whose names appear on the register of members of our Company or on the list of register of beneficial owners of our Company maintained by the Depositories as at the end of business hours on the Record Date i.e. [ ] Memorandum of Association of our Company, as amended from time to time. As on date, there is no promoter/ promoter group. As on date, there is no promoter/ promoter group. Registered Office Chitalsar, Manpada Swami Vivekananda Road Thane Mumbai City MH India Page 2 of 221

5 Term Abridged Letter of Offer Allottee(s) Allotment Date Applicant(s) Application Application Amount Application Form Application Supported by Blocked Amount/ ASBA ASBA Account ASBA Investor(s)/ASBA Applicant Bankers to the Company Bankers to the Issue Category III Foreign Portfolio Investor(s) Composite Application Form/CAF Description The abridged letter of offer to be sent to the Eligible Equity Shareholders of our Company with respect to the Issue in accordance with the SEBI ICDR Regulations Persons to whom Equity Shares of our Company will be issued pursuant to the Issue The date on which the Allotment is made The Eligible Equity Shareholders and/or the Renouncees who are entitled to apply or have applied for the Rights Issue Equity Shares under the Issue, as the case may be Application made by the Applicant whether submitted by way of the CAF or the SAF or in the form of a plain-paper Application, to subscribe to the Rights Issue Equity Shares issued pursuant to the Issue at the Issue Price The aggregate value of the Application indicated in the Application Form or the SAF or in the plain paper application, payable at the time of the Application The form in terms of which an Applicant shall make an Application to subscribe to the Rights Issue Equity Shares pursuant to the Issue, including plain-paper Applications The application (whether physical or electronic) used by an ASBA Investors to make an application authorizing the SCSB to block the Application Amount in his/her/its specified bank account maintained with the SCSB An account maintained with an SCSB and specified in the CAF or plain paper Application, as the case may be, for blocking the amount mentioned in the CAF or plain paper Application, as the case may be. Eligible Equity Shareholders proposing to subscribe to the Issue through ASBA process and who: (a) are holding the Equity Shares of our Company in dematerialized form as on the Record Date and have applied for their Rights Entitlements and/or additional Equity Shares in dematerialized form; (b) have not renounced their Rights Entitlements in full or in part; (c ) are not Renouncees; and (d) are applying through blocking of funds in a bank account maintained with the SCSBs. Please note that, in terms of SEBI circular CIR/CFD/DIL /1/2011 dated April 29, 2011, QIB applicants, Non-Institutional Investors (including all companies and bodies corporate) and other applicants whose application amount exceeds Rs.200,000 can participate in the Issue only through the ASBA process, subject to them complying with the requirements of SEBI circular dated December 30, Further, all QIB applicants and Non-Institutional Investors are mandatorily required to use the ASBA facility, even if application amount does not exceed Rs.2,00,000/-. [ ] [ ] Includes all other investors who are not eligible under category I and category II foreign portfolio investors (as defined under the SEBI (FPI) Regulations) such as endowments, charitable societies, charitable trusts, foundations, corporate bodies, trusts, individuals and family offices The form used by an Investor to make an application for the Allotment of Right Issue Equity Shares in the Issue, or renounce his Rights Entitlement or request for the SAFs, and used by sole Renouncee to make an Application for Allotment of the Equity Shares in the Issue to the extent of renunciation of Rights Entitlement in their favour. Page 3 of 221

6 Consolidated Certificate Controlling Branches of the SCSBs Draft Letter of Offer/ DLOO Designated Stock Exchange Equity Shareholders/ Eligible Equity Shareholders Foreign Portfolio Investor(s)/FPI(s) HNI Issue / Rights Issue Issue Closing Date Issue Opening Date Issue Price Issue Proceeds Issue Size Lead Manager Letter of Offer/ LoF Net Proceeds In case of holding of Equity Shares in physical form, the certificate that our Company would issue for the Equity Shares Allotted to one folio. Such branches of the SCSBs which coordinate with the Lead Manager, the Registrar to the Issue and the Stock Exchanges, a list of which is available at The draft letter of offer dated November 23, 2016 issued by our Company in accordance with the SEBI Regulations and filed with SEBI for its observations does not contain complete particulars of the Issue BSE Limited A holder/beneficial owner of our Equity Shares as on the Record Date. A person who satisfies the eligibility criteria prescribed under Regulation 4 of the SEBI (FPI) Regulations and has been considered under chapter III of the SEBI (FPI) Regulations, which shall be deemed to be an intermediary in terms of the provisions of the SEBI Act. Provided that any foreign institutional investor or qualified foreign investor 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 Securities and Exchange Board of India (Foreign Institutional Investors) Regulations, 1995, as amended from time to time. High Networth Individual Issue of [ ] Equity Shares of face value of Rs. 10/- ( right issue equity shares ) for cash at Issue Price of Rs. [ ] per Equity Share including share premium of Rs. [ ] per Equity Share for an amount aggregating upto Rs. 4,000 Lacs to our existing equity shareholders on a rights basis in the ratio of [ ] Equity Share for every [ ] fully paid-up Equity Share held by the Equity Shareholders on the Record Date. [ ] [ ] [ ] The proceeds of the Issue that are available to our Company Not exceeding Rs. 4,000 Lacs Gretex Corporate Services Private Ltd This final letter of offer dated [ ] filed with the stock exchanges after incorporating the observations received from the SEBI on the Draft Letter of Offer The Issue Proceeds less the Issue related expenses. For further details, see the section Object of the Issue on page no. 40 All Investors, including FPIs which are foreign corporate or foreign individuals, that are not QIBs or Retail Individual Investors and who have applied for Equity Shares for an cumulative amount more than Rs. 2,00,000/- Non Institutional Investors/ Non Institutional Investors Qualified Foreign QFI shall mean a person who has opened a dematerialized account with a Investors / qualified depositary participant as a qualified foreign investor under the SEBI QFIs (FPI) Regulations Qualified Institutional Qualified institutional buyers as defined under Regulation 2(1)(zd) of the SEBI Buyers or QIBs (ICDR) Regulations Record Date [ ] Refund Bank [ ] Registrar to the Issue / Purva Sharegistery (India) Private Limited Registrar Renouncee(s) [ ] Retail Individual Individual Investors who have applied for Equity Shares for an amount not more Page 4 of 221

7 Investors Rights Entitlement SAF(s) SCSB(s) Securities Act SEBI LODR Regulations Stock Exchanges than Rs. 2 Lacs (including HUFs applying through their Karta) The number of Equity Shares that an Eligible Equity Shareholder is entitled to in proportion to the number of Equity Shares held by the Eligible Equity Shareholder on the Record Date Split Application Form(s) A Self Certified Syndicate Bank, registered with SEBI, which acts as a banker to the Issue and which offers the facility of ASBA. A list of all SCSBs is available at The Securities and Exchange Board of India, 1992 as amended from time to time The Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations 2015, as amended BSE Limited and National Stock Exchange Limited where our Equity Shares are presently listed. Conventional and General Terms or Abbreviations Term /Abbreviation Rs. /Rupees or INR AGM AS BSE CDSL Central Government / Government of India CIN CEO Companies Act, 1956 Companies Act, 2013 Companies Act Depositories Act Depository DIN DIPP DP ID DP/Depository Participant EBITDA EGM EPS FY FCNR Account FDI FEMA FII Financial Year/fiscal year/ Fiscal/ FY GAAP GDP Description Full Form Indian Rupee Annual General Meeting Accounting Standards issued by the ICAI BSE Limited Central Depository Services (India) Limited The Central Government of India Corporate Identification Number Chief Executive Officer Companies Act, 1956, to the extent applicable Companies Act, 2013, to the extent notified as amended from time to time Companies Act, 1956 and / or Companies Act, 2013, to the extent applicable Depositories Act, 1996, as amended from time to time A depository registered with the SEBI under the Securities and Exchange Board of India (Depositories and Participants) Regulations, 1996 Director Identification Number The Department of Industrial Policy and Promotion, Ministry of Commerce and Industry, Government of India. Depository Participant Identity Depository Participant as defined under the Depositories Act,1996 Earnings Before Interest, Tax, Depreciation and Amortization Extra-Ordinary General Meeting Earnings Per Share Financial Year Foreign Currency Non - Repatriable Account Foreign Direct Investment Foreign Exchange Management Act, 1999, as amended from time to time Foreign Institutional Investor (as defined under the SEBI (Foreign Portfolio Investors) Regulations, 2014), registered with the SEBI under applicable laws in India Period of 12 months ending March 31 of that particular year. Generally Accepted Accounting Principles Gross Domestic Product Page 5 of 221

8 Government The Central Government and/or the State Government, as applicable HUF/HUFs Hindu Undivided Family / Hindu Undivided Families ICAI The Institute of Chartered Accountants of India IFSC Indian Financial System Code IFRS International Financial Reporting Standards India Republic of India Indian GAAP Generally accepted accounting principles followed in India IT Act Income Tax Act, 1961 KMP Key Managerial Personnel KYC Know Your Customer MCX Multi Commodity Exchange MICR Magnetic Ink Character Recognition NECS National Electronic Clearing Service NOF Net Owned Fund NRE Account Non-Resident External Account NRO Account Non-Resident Ordinary Account NSDL National Securities Depository Limited NSE National Stock Exchange of India Limited OCB(s) Overseas Corporate Body(ies) PAN Permanent Account Number PAT Profit After Tax PBT Profit Before Tax P/E Ratio Price / Earnings Ratio RBI Reserve Bank of India ROE Return on Equity RONW Return on Net Worth Rs. Rupees, the official currency of the Republic of India RTGS Real Time Gross Settlement SCRA Securities Contract (Regulation) Act, 1956, as amended from time to time SCRR Securities Contracts (Regulation) Rules, 1957, as amended from time to time. Sec. Section SEZ Special Economic Zone SOP Standard Operating Procedure SSI Small Scale Industry STT Securities Transaction Tax US/ United States United States of America USD/ US$/ $ United States Dollar, the official currency of the Unites States of America Foreign Venture Capital Funds (as defined under the Securities and Exchange VCF / Venture Capital Fund Board of India (Venture Capital Funds) Regulations, 1996) registered with SEBI under applicable laws in India. VAT Value Added Tax WDV Written Down Value Working Days All days except Saturday, Sunday and any public holiday Notwithstanding the foregoing, terms in sections titled Statement of Tax Benefits, Financial Information and Outstanding Litigation and Other Defaults on pages 54, 105 and 135 respectively of the DLOO, have the meanings given to such terms in these respective sections. The words and expressions used but not defined herein shall have the same meaning as is assigned to such terms under the Companies Act, as amended, the Securities Contracts (Regulation) Act, 1956, the Depositories Act, 1996 and the rules and regulations made there under Page 6 of 221

9 NOTICE TO OVERSEAS SHAREHOLDERS The distribution of this Draft Letter of Offer and the issue of the Equity Shares on a rights basis to persons in certain jurisdictions outside India may be restricted by legal requirements prevailing in those jurisdictions. Persons into whose possession the Draft Letter of Offer/Letter of Offer/Abridged Letter of Offer and CAF may come are required to inform them about and observe such restrictions. Our Company is making this Issue on a rights basis to the Eligible Equity Shareholders of our Company as on the Record Date and will dispatch the Draft Letter of Offer/Letter of Offer/Abridged Letter of Offer and CAF to Eligible Equity Shareholders who have provided an Indian address. Overseas shareholders, who have not updated our records with their Indian address or the address of their duly authorized representative in India, prior to the date on which we propose to dispatch the Letter of Offer / Abridged Letter of Offer and CAFs, shall not be sent the Letter of Offer / Abridged Letter of Offer and CAFs No action has been or will be taken to permit the Issue in any jurisdiction where action would be required for that purpose, except that the Draft Letter of Offer has been filed with the SEBI for its observations. Accordingly, the Equity Shares may not be offered or sold, directly or indirectly, and the Draft Letter of Offer may not be distributed, in any jurisdiction outside India. Receipt of the Draft Letter of Offer will not constitute an offer in those jurisdictions in which it would be illegal to make such an offer and, in those circumstances, the Draft Letter of Offer must be treated as sent for information only and should not be copied or redistributed. Accordingly, persons receiving a copy of the Draft Letter of Offer should not, in connection with the issue of the Equity Shares or the Rights Entitlements, distribute or send the Draft Letter of Offer in or into the United States of America or any other jurisdiction where to do so would or might contravene local securities laws or regulations. If the Draft Letter of Offer is received by any person in any such territory, or by their agent or nominee, they must not seek to subscribe to the Equity Shares or the Rights Entitlements referred to in the Draft Letter of Offer. Envelopes containing a CAF should not be dispatched from any jurisdiction where it would be illegal to make an offer, and all persons subscribing for the Equity Shares in this Issue must provide an Indian address. Any person who makes an application to acquire rights and the Equity Shares offered in this Issue will be deemed to have declared, represented, warranted and agreed that such person is authorized to acquire the rights and the Equity Shares in compliance with all applicable laws and regulations prevailing in his jurisdiction. We, the Registrar, the Lead Managers or any other person acting on behalf of us reserve the right to treat any CAF as invalid where we believe that CAF is incomplete or acceptance of such CAF may infringe applicable legal or regulatory requirements and we shall not be bound to allot or issue any Equity Shares or Rights Entitlement in respect of any such CAF. Neither the delivery of the Draft Letter of Offer nor any sale hereunder, shall under any circumstances create any implication that there has been no change in our Company's affairs from the date hereof or that the information contained herein is correct as at any time subsequent to the date of the Draft Letter of Offer. The contents of the Draft Letter of Offer should not be construed as legal, tax or investment advice. Prospective Investors may be subject to adverse foreign, state or local tax or legal consequences as a result of the offer of Equity Shares. As a result, each Investor should consult its own counsel, business advisor and tax advisor as to the legal, business, tax and related matters concerning the offer of Equity Shares. In addition, neither our Company nor the Lead Manager is making any representation to any offeree or purchaser of the Equity Shares regarding the legality of an investment in the Equity Shares by such offeree or purchaser under any applicable laws or regulations. Page 7 of 221

10 PRESENTATION OF FINANCIAL INFORMATION AND USE OF MARKET DATA Certain Conventions References in this Draft Letter of Offer to India are to the Republic of India. Financial Data Unless stated otherwise, the financial data in this Draft Letter of Offer is derived from our Company's audited financial statements. Our Company's fiscal year commences on April 1 and ends on March 31 of the following calendar year. Our Company prepares its financial statements in accordance with the generally accepted accounting principles in India, which differ in certain respects from generally accepted accounting principles in other countries. Indian GAAP differs in certain significant respects from the IFRS. Our Company publishes its financial statements in Indian Rupees. Any reliance by persons not familiar with Indian accounting practices on the financial disclosures presented in this Draft Letter of Offer should accordingly be limited. We have not attempted to explain those differences or quantify their impact on the financial data included herein, and we urge you to consult your own advisors regarding such differences and their impact on our financial data. In this Draft Letter of Offer, any discrepancies in any table between the total and the sums of the amounts listed are due to rounding off, and unless otherwise specified, all financial numbers in parenthesis represent negative figures. For definitions, see the section Definitions and Abbreviations on page no. 2 of the DLOO. Currency of Presentation All references to Rupees, INR or Rs. are to Indian Rupees, the official currency of the Republic of India. In this Draft Letter of Offer, reference to the singular also refers to the plural and one gender also refers to any other gender. Unless stated otherwise, throughout this Draft Letter of Offer, all figures have been expressed in Lacs, where the 1 Lac means 100 thousand. In this Draft Letter of Offer, any discrepancies in any table between the total and the sums of the amounts listed are due to rounding-off, and unless otherwise specified, all financial numbers in parenthesis represent negative. Page 8 of 221

11 FORWARD LOOKING STATEMENTS Certain statements contained in this Draft Letter of Offer are not historical facts but are forward-looking in nature. Forward-looking statements include statements concerning our Company's plans, objectives, goals, strategies, future events, future revenues or financial performance, capital expenditures, financing needs, plans or intentions relating to acquisitions, our Company's competitive strengths and weaknesses, our Company's business strategy and the trends our Company anticipates in the industries and the political and legal environment, and geographical locations, in which our Company operates, and other information that is not historical information. Words such as believe, anticipate, estimate, seek, expect, continue, intend, predict, project, should, goal, future, could, may, will, would, targets, aims, is likely to, plan and similar expressions, or variations of such expressions, are intended to identify forward-looking statements but are not the exclusive means of identifying such statements. By their nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, and risks exist that the predictions, forecasts, projections and other forward-looking statements will not be achieved. These risks, uncertainties and other factors include, among other things, those listed under Risk Factors, as well as those included elsewhere in this Draft Letter of Offer. Investors should be aware that a number of important factors could cause actual results to differ materially from the plans, objectives, expectations, estimates and intentions expressed in such forward-looking statements. These factors include, but are not limited, to: General economic and business conditions in India and other countries. Regulatory changes relating to the finance and capital market sectors in India and our ability to respond to them. Changes in laws and regulations that apply to the Company. Our ability to successfully implement our strategy, our growth and expansion, technological changes, our exposure to market risks that have an impact on our business activities or investments. Our ability to keep pace with rapid changes in finance and stock broking sector. The monetary and fiscal policies of India, inflation, deflation, unanticipated turbulence in interest rates, foreign exchange rates, equity prices or other rates or prices, the performance of the financial markets in India and globally, changes in domestic and foreign laws, regulations and taxes and changes in competition in our industry. Changes in the value of the Rupee and other currencies. The occurrence of natural disasters or calamities. Change in political and social condition in India. For a further discussion of factors that could cause our Company's actual results to differ, see the sections Risk Factors on page no.11 of the DLOO. 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 future gains or losses could materially differ from those that have been estimated. The forward-looking statements contained in this Draft Letter of Offer are based on the beliefs of management, as well as the assumptions made by, and information currently available to, management of our Company. Whilst our Company believes that the expectations reflected in such forward-looking statements are reasonable at this time, it cannot assure investors that such expectations will prove to be correct. Given these uncertainties, Investors are cautioned not to place undue reliance on such forward-looking statements. Neither our Company nor the Lead Manager or any of their respective affiliates make any representation, warranty or prediction that the results anticipated by such forward-looking statements will be achieved, and Page 9 of 221

12 such forward-looking statements represent, in each case, only one of many possible scenarios and should not be viewed as the most likely or standard scenario. Neither our Company nor the Lead Manager nor any of their respective affiliates or advisors 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. In accordance with SEBI/Stock Exchanges requirements, our Company and Lead Manager will ensure that investors in India are informed of material developments until the time of the grant of listing and trading permissions by the Stock Exchanges for the Equity Shares allotted pursuant to this Issue. Page 10 of 221

13 SECTION II - RISK FACTORS An investment in the Equity Shares involves a high degree of risk. You should carefully consider all information in this Draft Letter of Offer, 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 Business Overview, Management s Discussion and Analysis of Financial Condition and Results of Operations and Financial Statements on pages 80, 129 and 105, respectively. This Draft Letter of Offer 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 9. 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. We are dependent on our management team for success whose loss could seriously impair the ability to continue to manage and expand business efficiently. Our success largely depends on the continued services and performance of our management and other key personnel. The loss of service of the senior management could seriously impair the ability to continue to manage and expand the business efficiently. Further, the loss of any of the senior management or other key personnel may adversely affect the operations, finances and profitability of our Company. Any failure or inability of our Company to efficiently retain and manage its human resources would adversely affect our ability to implement new projects and expand our business. 2. Our management team play key role in our functioning and we heavily rely on their knowledge and experience in operating our business and therefore, it is critical for our business that our management team remain associated with us. Our success also depends upon the services of our key managerial personnel and our ability to attract and retain key managerial personnel and our inability to attract them may affect our operations. We benefit from our relationship with our management and our success depends upon the continuing services of our management who have been responsible for the growth of our business and are closely involved in the overall strategy, direction and management of our business. Our managements have been actively involved in the day to day operations and management since the incorporation of the Company. Accordingly, our performance is heavily dependent upon the services of our managements. If our management are unable or unwilling to continue in their present position, we may not be able to replace them easily or at all. Further, we rely on the continued services and performance of our key executives and senior management for continued success and smooth functioning of the operations of the Company. If we lose the services of any of our key managerial personnel, we may be unable to locate suitable or qualified replacements, and may incur Page 11 of 221

14 additional expenses to recruit and train new personnel, which could adversely affect our business operations and affect our ability to continue to manage and expand our business. 3. Our management team and Directors may have interests in us other than reimbursement of expenses incurred or normal remuneration or benefits. Our management is interested in us to the extent of any transactions entered into or their shareholding and dividend entitlement. Our Directors are also interested in us to the extent of their shareholding and dividend entitlement, remuneration paid to them for services rendered as our Directors and reimbursement of expenses payable to them. For further information, see Management chapter of the Draft Letter of Offer. 4. We rely on our systems including information technology systems to manage our business processes and reporting and their failure could adversely affect our business operations. We rely on our information technology systems to manage our business processes and reporting. Any failure or malfunction in these information technology systems could result in business interruptions, including disruption in tracking, recording and analyzing work in progress, processing financial information, managing creditors/debtors or engaging in normal business activities. This could adversely affect our reputation, competitive position and operational efficiencies. 5. Our success depends on our ability to retain and attract technical personnel and various other professionals including consultants. If we are not able to retain them or recruit additional qualified personnel, we may not be able to successfully develop our business. We are assisted by various technical personnel and experienced professionals including consultants globally to provide us with critical market and regulatory information applicable to the jurisdictions where they operate. We benefit from their experience and the loss of their association with us may significantly delay or prevent the development of our business. Competition among agrochemical companies for qualified professionals is intense and the ability to retain or associate with qualified individuals is critical to our success. There can be no assurance that we will be able to retain and attract such professionals in the future on acceptable terms, or at all, and the failure to do so may have an adverse effect on our business and results of operations. 6. Our Company had negative cash flow from investing activities and financing activities respectively, details of which are given below. Sustained negative cash flow could adversely impact our business, financial condition and results of operations. Cash Flow from March 31, 2016(Rs in Lacs) March 31, 2015(Rs in Lacs) Investing Activities (527.94) 0.13 Financing Activity ( ) ( ) 7. Our Company has not complied certain statutory provisions like Companies Act 2013, SEBI Listing Regulations, and Listing Agreement etc. Such non compliances may attract penalties. Currently, the shares of the Company are suspended at BSE Ltd due to non-compliances Listing Agreement and SEBI Listing Regulation. Such non-compliance may in the future render us liable to statutory penalties and disallowing the resolutions, which may have consequence of violation of SEBI Listing regulations. Our Company has not regularized the appointment of additional directors in terms of the provisions of the Companies Act, Page 12 of 221

15 8. We may be subject to fine or compounding pursuant to delay in appointment of a whole-time Company secretary and Chief Financial Officer. We were required to have a whole-time company secretary and Chief Financial Officer. However, we have appointed a whole-time company secretary and Chief Financial Officer in September 2016 resulting in delay in the appointment of the whole-time secretary and Chief Financial Officer. We cannot assure you that the Tribunal (erstwhile Company Law Board) or the Appellate Tribunal will not impose any penalty or take any action against us which may impact our reputation, results of operations and cash flows. Such non-compliance in the future may render us liable to statutory penalties. 9. Some of our historical, legal and secretarial records are not traceable. Non-availability of certain historical, legal and secretarial records exposes us to the risk of penalties that may be imposed by the competent regulatory authority in future. We have not been able to locate many of our important corporate records. We have been unable to locate the copies of certain of our corporate records including but not limited to Board, AGM, EGM Minutes, forms filed by us with the RoC and share transfer forms. Our Company believes that these records were duly filed with the RoC on a timely basis. Prior to 2006, all the documents are not available with the RoC. Our Company cannot assure you that these forms filed with Roc will be available in the future. If RoC initiates proceedings for any actual or perceived irregularity in our compliance with reporting requirements in any future or historic periods, there may be an adverse effect on our business, results of operation and financial condition. 10. 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 our agro chemical products and the procedural and regulatory requirements to obtain such registrations differ in each jurisdiction. 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 agro chemical products and we may lose the identified business opportunity. Moreover, if we fail to comply with various conditions attached to 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. 11. 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, Page 13 of 221

16 in a timely manner or at all, our business, operations and financial conditions may be adversely affected. For further details, see Government and Other Statutory Approvals on page Certain approvals, registrations, licenses are available in old name. Certain approvals, registrations, licenses are available in old name, Pesticides & Brewers Limited. The Company has not applied for change of name for the following approvals/licenses: Sl. No. 1 Particulars Authority Registration No Date of Registratio n Central Excise Registration Certificate 2 Service Tax Registration under Section 69 of the Finance Act, 1994 (32 of 1994) 3 Certificate of Importer- Exporter Code Central Board of Excise And Customs Ministry of Finance Department of Revenue Central Board of Excise And Customs Ministry of Finance Department of Revenue AAACP2251PXD002 AAACP2251PEI AAACP2251PST Ministry of Commerce & Industry 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 realized by us, thereby benefiting or adversely affecting us, depending on the depreciation or appreciation of Rupee. 14. If we are unable to effectively implement our business and growth strategies, our results of operations may be adversely affected. Our success will depend, in large part, on our ability to effectively implement our business and growth strategies. We cannot assure you that we will be able to execute our strategies in a timely manner or within budget estimates or that we will meet the expectations of targeted customers. We believe that our business and growth strategies will place significant demands on our management and other resources and will require us to develop and improve operational, financial and other internal controls. Any inability to manage our business and growth strategies could adversely affect our business, financial condition and results of operations. 15. Our business is dependent on our key customers and the loss of any significant customer could adversely affect our financial results. The loss of a significant customer or customers would have a material adverse effect on our financial results. We cannot assure you that we can maintain the historical levels of business from current customers or that we will be able to replace these customers in case we lose any of them. Further the business with customers is based on regular requirements and orders, rather than yearly contracts. Page 14 of 221

17 16. A substantial portion of our agrochemical and non-agrochemical sales are undertaken against future payment on an unsecured basis which may subject us to significant credit risk. We deliver a significant portion agro chemical and non-agrochemical products against future payment. Our credit terms vary according to local market practice and typically, the credit period ranges between 30 days to 180 days. If any of our customers fail to make payments to us or become insolvent, we would suffer losses and our business, financial condition and results of operations could be adversely affected. Whilst we believe that we have not experienced material losses in this respect, but in severe abnormal conditions there can be a significant impact on our customers ability to pay their debts, which could result in a material adverse effect on our business, results of operations and financial condition. Moreover, majority of our agrochemical and non-agrochemical sales are not supported by letters of credit or bank guarantee. In case of any disputes or differences or default with regard to our payments, we would have to initiate appropriate recovery proceedings and in many instances in the jurisdiction of the customer which may pose additional challenges due to unawareness of the civil laws and procedures of such jurisdiction. Further, we may be subject to working capital shortages due to delays or defaults in payments by customers. If buyers default in their payments on an assignment for which we have devoted significant resources or if an order or assignment in which we have invested significant resources is delayed, cancelled or curtailed, it could have a material adverse effect on our business, financial condition, results of operations and cash flows. 17. Our business is subject to risks related to weather, disease and pests that could adversely affect the results of our operations and our financial condition. Agri-products and Agri-inputs industry is subject to substantially all of the risks faced by the agriculture in India. The agri-products and agri-inputs industry is substantially subject to weather factors, which make its operational results relatively unpredictable. Weather among other factors also affects the presence of disease and pests in the short term on a regional basis. Extreme weather conditions, disease and pests can potentially affect quality and quantity of a substantial portion of our products in any year and have a material adverse effect on our business, results of operations and financial condition. 18. If we are unable to accurately forecast and manage inventory levels we may be exposed to risk of unexpected shortfall and / or surplus of products. We monitor our inventory levels based on our own projections of future demand. Because of the length of time necessary to produce commercial quantities of our products, we make production decisions well in advance of sales. An inaccurate forecast of demand for any product can result in the unavailability / surplus of products. This unavailability of products in high demand may depress sales volumes and adversely affect customer relationships. Conversely, an inaccurate forecast can also result in an over-supply of products, which may increase costs, negatively impact cash flow, reduce the quality of inventory, erode margins substantially and ultimately create write-offs of inventory. Any of the aforesaid circumstances could have a material adverse effect on our business, results of operations and financial condition. 19. The agri-products and agri-inputs business is highly seasonal in our country and such seasonality may affect our operating results. The agri-products and agri-inputs business is highly seasonal in our country. Our raw material supplies are seasonal and our sales are also seasonal in nature. Further, majority of the farmers depend on rain for cultivation. Generally rainfall occurs during Kharif season and hence, the timing and seasonality of rainfall also impacts the business of our Company. Thus, we are subject to seasonal factors, which make our operating results relatively unpredictable. We recognize revenues upon the sale of our agri-input products. Page 15 of 221

18 20. Decline in prices of our products may reduce our profit margins. Prices of our products are influenced by several factors, including the inherent strength and productivity of the product, supply of competing product(s) in the market, demand from farmers and dealers, among others. Any adverse changes in terms of sale price, including not being able to revise prices in accordance with cost increases and other relevant factors including those not being in our control, may lead to a material adverse effect on our sales margins, profitability which would have a material adverse effect on our business, results of operations and financial condition. 21. Product defects could adversely affect our business. Although seeds undergo extensive quality checks before they are processed, they may still contain defective or undesired characteristics that may be difficult to detect, with the available technology and tools at our dominion, prior to their sale and use. Since our seeds are used by farmers, any quality defects therein would directly affect the earnings of the farmer. Losses claimed by farmers may include the value of lost crops, which could greatly exceed the value of the seeds we sell. We cannot assure that use of our products will not expose us to costly and time-consuming litigations/claims and lead to negative publicity about the quality of our products, further affecting our sales and performance. Any of the aforesaid factors would have a material adverse effect on business, financial condition and results of operations. 22. We have entered into certain related party transactions and may continue to do so. We have entered into related party transactions with our Management and Directors. For details of these transactions, please refer to section titled "Related Party Transactions" at page 105 of the Draft Letter of Offer. 23. The loss of key suppliers or their failure to deliver material on a timely basis could negatively impact our business prospects and results of operations. We must have an adequate supply of materials to execute our order positions at all times. We purchase all the required materials from our suppliers on a purchase order basis and have no long-term contracts with any suppliers. If the suppliers, most of whom are local/domestic, are unable to supply us with these materials products in a timely manner or the costs of these products increase due to unforeseen circumstances, this could negatively impact our operating results. 24. The industry segments in which we operate being fragmented, we face competition from other players, which may affect our business operations and financial conditions. The market for our products is competitive on account of both the organized and unorganized players. Players in this industry generally compete with each other on key attributes such as technical competence, quality of products, distribution network, pricing and timely delivery. Some of our competitors may have longer industry experience and greater financial, technical and other resources, which may enable them to react faster in changing market scenario and remain competitive. Moreover, the unorganized sector offers their products at highly competitive prices which may not be matched by us and consequently affect our volume of sales and growth prospects. Growing competition may result in a decline in our market share and may affect our margins which may adversely affect our business operations and our financial condition. 25. Fluctuations in the availability and quality of raw materials could cause delay and increase costs. As on date we do not have any long term tie-up or agreements for supply of raw materials. Any decrease in the availability of raw materials for whatever reason, including climatic change, could adversely affect our sales and profitability. Further, any price volatility of raw materials and our inability to adjust to the same could adversely affect our results of operations and profitability. Page 16 of 221

19 26. If any third party laboratory on which we rely for tests does not perform its obligations as contractually required or in accordance with Good Laboratory Practices ( GLP ), we may not be able to obtain regulatory approval or commercialize formulations. We approach independent certified laboratories and other third party service providers for conducting tests of new agro chemical products and expect to continue to do so. We do not control many aspects of their activities and third party laboratories may not complete activities on schedule or may not conduct studies in accordance with applicable plans and protocols. Nonetheless, in certain jurisdictions we are responsible for confirming that each of our laboratory tests is conducted in accordance with its protocol and GLP standards. If third parties fail to carry out their obligations, their registration and commercialization could be delayed or prevented or an enforcement action could be brought against us which may adversely affect our business, financial condition and results of operations. 27. We face substantial competition in the industry; our revenues could get affected in case we are not able to obtain customers and orders. Our Company is operating in agriculture sector. We will face significant competition from existing players and potential entrants in the industry. Further, we will face significant competition mainly from large vertically integrated and diversified companies in the industry. Our revenues could get affected adversely in case we are not able to secure new customers and orders. 28. Any changes in regulations or applicable government incentives would materially adversely affect our Company s operations and growth prospects. Our Company is enjoying benefit of subsidies in relation to the sale of certain fertilizers and as such is subjected to various regulations in India. Our Company s business and prospects could be adversely affected by changes in any of these regulations and policies, or if any or all of the incentives currently available cease. 29. Our operations are subject to high working capital requirements. Our inability to obtain and / or maintain sufficient cash flow, credit facilities and other sources of funding, in a timely manner, or at all, to meet our requirement of working capital or pay our debts, could adversely affect our operations. Our business requires significant amount of working capital. In many cases, significant amount of our working capital is required for purchasing and maintaining of stock of goods. Though, presently we have sanctioned working capital limits from the existing bankers, we may need to incur additional indebtedness in the future to satisfy our working capital needs. Our inability to obtain and / or maintain working capital or pay our debts, could adversely affect our financial condition and results of operations. 30. The objects of the Issue for which funds are being raised have not been appraised by any bank or financial institution. The deployment of funds in the project is entirely at the discretion of our management and as per the details mentioned in the section titled Objects of the Issue. Any revision in the estimates may require us to reschedule our project expenditure and may have a bearing on our expected revenues and earnings. Our funding requirements and the deployment of the Proceeds of the Issue are based on quotations from machinery suppliers and civil contractors and our man8agement s estimates. Our Company may have to revise such estimates from time to time and consequently our funding requirements may also change. Our estimates for the project may exceed the value that would have been determined by third party appraisals and may require us to reschedule our project expenditure which may have a bearing on our expected revenues and earnings. Further, the deployment of the funds towards the objects of the Issue is entirely at the discretion of our management and is not subject to monitoring by any external independent agency. However, the deployment of funds is subject to monitoring by our Audit Committee. Page 17 of 221

20 31. The implementation of the proposed Objects of the Issue is in a preliminary stage. Since the funding for the working capital is mainly from the issue proceeds, any delay in access to issue proceeds would eventually delay the process of placing the orders. Our Company is further subject to risks on account of inflation in the price of plant and machinery. There may also be a possibility of delay at the suppliers end in providing timely delivery of these machineries, which in turn may delay the implementation of our project. For further details, please refer to the chapter titled Objects of the Issue beginning on page number 40 of the Draft Letter of Offer. 32. We have not identified any alternate source of financing the Objects of the Issue. If we fail to mobilize resources as per our plans, our growth plans may be affected. We have not identified any alternate source of funding and hence any failure or delay on our part to raise money from the Issue or any shortfall in the Issue Proceeds may delay the implementation schedule of our Project and could affect our growth plans. For further details please refer to the Chapter titled Objects of the Issue beginning on page 40 of this Draft Letter of Offer. 33. We have not disclosed the details of investment in subsidiary under the head of Non-Current Investments in the Audited Financial Statement. Our Company has not disclosed the details of investment made in subsidiary under the head of Non-Current Investments in the Audited Financial Statement for the year ended March 31, However, the investment made in the subsidiary is disclosed in the Directors Report dated September 1, B: Risk related to this Issue and our Equity Shares 34. After this Issue, the Equity Shares may experience price and volume fluctuations or an active trading market for the Equity Shares may not develop. The price of the Equity Shares may fluctuate after this Issue as a result of several factors, including, among other things, volatility in the Indian and global securities markets, the results of our operations and performance, the performance of our competitors, developments in the industry in which we operate and changing perceptions in the market about participation in these sectors, changes in the estimates of our performance or recommendations by financial analysts, significant developments in India s economic liberalization and deregulation policies and significant developments in India s fiscal regulations. There has been no public market for our Equity Shares and an active trading market for the Equity Shares may not develop or be sustained after this Issue. Further, the price at which the Equity Shares are initially traded may not correspond to the Issue Price. The share prices of companies participating in business assets can fluctuate significantly, which subjects an investment in the Equity Shares to substantial volatility. 35. There are restrictions on daily movements in the price of the Equity Shares, which may adversely affect a shareholder s ability to sell, or the price at which it can sell, the Equity Shares at a particular point in time. The price of the Equity Shares will be subject to a daily circuit breaker imposed by Stock Exchanges in India which does not allow transactions beyond a certain level of volatility in the price of the Equity Shares. This circuit breaker operates independently of the index-based market-wide circuit breakers generally imposed by the SEBI on Indian stock exchanges. The percentage limit on our circuit breaker is set by the stock exchanges based on the historical volatility in the price and trading volume of the Equity Shares. The stock exchanges do not inform us of the percentage limit of the circuit breaker from time to time, and may change it without our knowledge. This circuit breaker effectively limits upward and downward movements in the price of the Page 18 of 221

21 Equity Shares. As a result, shareholders ability to sell the Equity Shares, or the price at which they can sell the Equity Shares, may be adversely affected at a particular point in time. 36. Conditions in the Indian securities market may affect the price or liquidity of our Equity Shares. The Indian securities markets are smaller than securities markets in more developed economies and the regulation and monitoring of Indian securities markets and the activities of investors, brokers and other participants differ, in some cases significantly, from those in the more developed economies. Indian stock exchanges have in the past experienced substantial fluctuations in the prices of listed securities. Further, the Indian stock exchanges have experienced volatility in the recent times. The Indian stock exchanges have also experienced problems that have affected the market price and liquidity of the securities of Indian companies, such as temporary exchange closures, broker defaults, settlement delays and strikes by brokers. In addition, the governing bodies of the Indian stock exchanges have from time to time restricted securities from trading and limited price movements. A closure of, or trading stoppage on the Stock Exchanges also could adversely affect the trading price of the Equity Shares. 37. Fluctuations in operating results and other factors may result in decreases in our Equity Share price. Stock markets have experienced extreme volatility that has often been unrelated to the operating performance of particular companies. These broad market fluctuations may adversely affect the trading price of our Equity Shares. There may be significant volatility in the market price of our Equity Shares. If we are unable to operate profitably or as profitably as we have in the past, investors could sell our Equity Shares when it becomes apparent that the expectations of the market may not be realized, resulting in a decrease in the market price of our Equity Shares. In addition to our operating results, the operating results of other competitor companies, changes in financial estimates or recommendations by analysts, governmental investigations and litigation, speculation in the press or investment community, changes in general conditions in the economy or the financial markets, or other developments affecting the industry in which we operate, could cause the market price of our Equity Shares to be issued to fluctuate substantially. 38. Investors may be subject to Indian taxes arising out of capital gains on the sale of the Equity Shares. Under current Indian tax laws and regulations, capital gains arising from the sale of equity shares in an Indian company are generally taxable in India. Any gain realised on the sale of listed equity shares on a stock exchange held for more than 12 months will not be subject to capital gains tax in India if Securities Transaction Tax (STT) has been paid on the transaction. STT will be levied on and collected by a domestic stock exchange on which the equity shares are sold. Any gain realised on the sale of equity shares held for more than 12 months to an Indian resident, which are sold other than on a recognised stock exchange and on which no STT has been paid, will be subject to long term capital gains tax in India. Further, any gain realised on the sale of listed equity shares held for a period of 12 months or less will be subject to short term capital gains tax in India. Capital gains arising from the sale of the Equity Shares will be exempt from taxation in India in cases where the exemption from taxation in India is provided under a treaty between India and the country of which the seller is resident. 39. Our ability to pay dividends will depend upon future earnings, financial condition, cash flows, working capital requirements, capital expenditure and other factors. Our Company has not yet paid any dividends. For further details please refer to chapter titled Dividend Policy on page 104 of the Draft Letter of Offer. The amount of our future dividend payments, if any, will depend upon our future earnings, financial conditions, cash flows, working capital requirements, capital expenditures and other factors. There can be no assurance that we shall have distributable funds or that we Page 19 of 221

22 will declare dividends. We cannot assure you that we will be able to secure adequate financing in the future on acceptable terms, in time, or at all. 40. Any future issue of Equity Shares may dilute your shareholding and sales of our Equity Shares by our major shareholders may adversely affect the trading price of the Equity Shares. Any future equity issues by us, including in a primary offering, may lead to the dilution of investors' shareholdings in us. Any future equity issuances by us or sales of its Equity Shares by our major shareholders may adversely affect the trading price of the Equity Shares. In addition, any perception by investors that such issuances or sales might occur could also affect the trading price of our Equity Shares. 41. We could be harmed by employee misconduct or errors that are difficult to detect and any such incidences could adversely affect our financial condition, results of operations and reputation. Employee misconduct or errors could expose us to business risks or losses, including regulatory sanctions and serious harm to our reputation. There can be no assurance that we will be able to detect or deter such misconduct. Moreover, the precautions we take to prevent and detect such activity may not be effective in all cases. Our employees and agents may also commit errors that could subject us to claims and proceedings for alleged negligence, as well as regulatory actions on account of which our business, financial condition, results of operations and goodwill could be adversely affected. 42. Our ability to pay dividends in the future will depend upon future earnings, financial condition, cash flows, working capital requirements and capital expenditures and there can be no assurance that we will be able to pay dividends in the future. The amount of our future dividend payments, if any, will depend upon our future earnings, financial condition, cash flows, working capital requirements and capital expenditures. Hence, there can be no assurance that we will be able to pay dividends in the future. In accordance with Indian law and practice, permission for listing and trading of the Equity Shares issued pursuant to the Issue will not be granted until after the Equity Shares have been issued and allotted. Approval for listing and trading will require all relevant documents authorizing the issuing of Equity Shares to be submitted and there could therefore be a failure or delay in listing the Equity Shares on the BSE. Any failure or delay in obtaining such approval would restrict your ability to dispose of your Equity Shares. The BSE has in the past experienced problems, including temporary exchange closures, broker defaults, settlements delays and strikes by brokerage firm employees, which, if continuing or recurring, could affect the market price and liquidity of the securities of Indian companies, including our Equity Shares. A closure of, or trading stoppage on the BSE could adversely affect the trading price of the Equity Shares. EXTERNAL RISK FACTORS 43. A slowdown in economic growth in India could cause our business to suffer. We are incorporated in India, and all of our assets and employees are located in India. As a result, we are highly dependent on prevailing economic conditions in India and our results of operations are significantly affected by factors influencing the Indian economy. A slowdown in the Indian economy could adversely affect our business, including our ability to grow our assets, the quality of our assets, and our ability to implement our strategy. Factors that may adversely affect the Indian economy, and hence our results of operations, may include: any increase in Indian interest rates or inflation; any scarcity of credit or other financing in India; prevailing income conditions among Indian consumers and Indian corporations; volatility in, and actual or perceived trends in trading activity on, India s principal stock exchanges; Page 20 of 221

23 variations in exchange rates; changes in India s tax, trade, fiscal or monetary policies; political instability, terrorism or military conflict in India or in countries in the region or globally, including in India s various neighboring countries; Prevailing regional or global economic conditions; and Other significant regulatory or economic developments in or affecting India. Any slowdown in the Indian economy or in the growth of the sectors we participate in or future volatility in global commodity prices could adversely affect our borrowers and contractual counterparties. This in turn could adversely affect our business and financial performance and the price of our Equity Shares. 44. The Companies Act, 2013 has effected significant changes to the existing Indian company law framework, which may subject us to higher compliance requirements and increase our compliance costs. A majority of the provisions and rules under the Companies Act, 2013 have recently been notified and have come into effect from the date of their respective notification, resulting in the corresponding provisions of the Companies Act, 1956 ceasing to have effect. The Companies Act, 2013 has brought into effect significant changes to the Indian company law framework, such as in the provisions related to issue of capital, disclosures in prospectus, corporate governance norms, audit matters, related party transactions, introduction of a provision allowing the initiation of class action suits in India against companies by shareholders or depositors, a restriction on investment by an Indian company through more than two layers of subsidiary investment companies (subject to certain permitted exceptions), prohibitions on loans to directors and insider trading and restrictions on directors and key managerial personnel from engaging in forward dealing. Penalties for instances of non-compliance have been prescribed under the Companies Act, 2013, which may result in inter alia, our Company, Directors and key managerial employees being subject to such penalties and formal actions as prescribed under the Companies Act, 2013, should we not be able to comply with the provisions of the Companies Act, 2013 within the prescribed timelines, and this could also affect our reputation. To ensure compliance with the requirements of the Companies Act, 2013 within the prescribed timelines, we may need to allocate additional resources, which may increase our regulatory compliance costs and divert management attention. While we shall endeavor to comply with the prescribed framework and procedures, we may not be in a position to do so in a timely manner. Further, we cannot currently determine the impact of provisions of the Companies Act, 2013, which are yet to come in force. Any increase in our compliance requirements or in our compliance costs may have an adverse effect on our business and results of operations. 45. Our growth will depend on our ability to develop our brand and failure to do so will have a negative impact on our ability to compete in this industry. We believe that continuing to build our brand, particularly in our industry; will be critical to achieving widespread recognition of our products. Promoting and positioning our brand will depend largely on the success of our marketing efforts and our ability to provide high quality products. Brand promotion activities may not yield increased revenues, and even if they do, any increased revenues may not offset the expenses we incur in building our brand. If we fail to promote and maintain our brand, our business, financial condition and results of operations could be adversely affected. 46. The Company has not independently verified the industry data taken from the Government of India, SEBI and RBI and trade, industry or general publications and other third-party sources in this Draft Letter of Offer. We have not independently verified data from the Government of India, SEBI and RBI and trade, industry or general publications and other third-party sources contained herein and although we believe these sources to be reliable, we cannot assure you that they are complete or reliable. Such data may also be produced on a different basis from comparable information compiled with regard to other countries. Therefore, discussions of matters relating to India and its economy are subject to the caveat that the statistical and other data upon which such discussions are based have not been verified by us. These facts and other statistics include the facts Page 21 of 221

24 and statistics included under the sections titled "Industry Overview" on page 57 of this Draft Letter of Offer. Further, this market and industry data has not been prepared or independently verified by us. Such data involves risks, uncertainties and numerous assumptions and is subject to change based on various factors. 47. Our operations and profitability are dependent upon the availability of transportation and other logistic facilities in a time and cost efficient manner. The prolonged disruption or unavailability of their facilities in a timely manner could result in delays or non-supply or may require us to look for alternative sources which may be cost inefficient, thereby adversely affecting our operations, profitability, reputation and market position. We do not have in-house transportation facility and we heavily rely on efficient transportation and other logistic facilities at every stage of our business activity. For this purpose, we hire services of transportation companies on a transaction to transaction basis. Factors such as increased transportation costs and transportation strikes could adversely impact the supply of our products. There is no assurance that such disruptions will not occur in the future 48. Natural calamities and force majeure events may have an adverse impact on our business. Natural disasters may cause significant interruption to our operations, and damage to the environment that could have a material adverse impact on us. The extent and severity of these natural disasters determines their impact on the Indian economy. Prolonged spells of deficient or abnormal rainfall and other natural calamities could have an adverse impact on the Indian economy, which could adversely affect our business and results of operations. 49. We have not prepared, and currently do not intend to prepare, our financial statements in accordance with the International Financial Reporting Standards ( IFRS ). Our transition to IFRS reporting could have a material adverse effect on our reported results of operations or financial condition. Public companies in India, including us, may be required to prepare annual and interim financial statements under IFRS in accordance with the roadmap for convergence with IFRS announced by the Ministry of Corporate Affairs, Government of India through a press note dated January 22, 2010 (the IFRS Convergence Note ). The Ministry of Corporate Affairs by a press release dated February 25, 2011 has notified that 35 Indian Accounting Standards are to be converged with IFRS. The date of implementation of such converged Indian accounting standards has not yet been determined. Our financial condition, results of operations, cash flows or changes in shareholders equity may appear materially different under IFRS than under Indian GAAP or our adoption of converged Indian Accounting Standards may adversely affect our reported results of operations or financial condition. This may have a material adverse effect on the amount of income recognized during that period and in the corresponding (restated) period in the comparative Fiscal/period. 50. Our business and activities may be regulated by the Competition Act, The Competition Act, 2002, as amended (the Competition Act ) was enacted for the purpose of preventing practices that have or are likely to have an adverse effect on competition in India and has mandated the Competition Commission of India (the CCI ) to separate such practices. Under the Competition Act, any arrangement, understanding or action, whether formal or informal, which causes or is likely to cause an appreciable adverse effect on competition is void and attracts substantial penalties. Any agreement among competitors which directly or indirectly involves determination of purchase or sale prices, limits or controls production, or shares the market by way of geographical area or number of customers in the relevant market is presumed to have an appreciable adverse effect on competition in the relevant market in India and shall be void. Further, the Competition Act prohibits abuse of dominant position by any enterprise. If it is proved that the contravention committed by a company took place with the consent or connivance or is attributable to any neglect on the part of, any director, manager, secretary or other officer of such company, that person shall be guilty of the contravention and liable to be punished. Page 22 of 221

25 51. If the rate of price inflation increases, our business and results of operations may be adversely affected. If the rate of price inflation increases in India or in other economies in which we operate, our costs, such as salaries, or any other of our expenses may increase. If this trend continues, we may be unable to accurately estimate or control our expenses and this could have an adverse effect on our business and results of operations. 52. Political instability or changes in the Government could adversely affect economic conditions in India generally and our business in particular. Our business, and the market price and liquidity of our Equity Shares, may be affected by interest rates, changes in Government policy, taxation, social and civil unrest and other political, economic or other developments in or affecting India. Elimination or substantial change of policies or the introduction of policies that negatively affect the Company s business could cause its results of operations to suffer. Any significant change in India s economic policies could disrupt business and economic conditions in India generally and the Company s business in particular. 53. Financial instability in Indian financial markets could adversely affect our company s results of operations and financial condition. In this globalized world, the Indian economy and financial markets are significantly influenced by worldwide economic, financial and market conditions. Any financial turmoil, say in the United States of America, Europe, China or other emerging economies, may have a negative impact on the Indian economy. Although economic conditions differ in each country, investors reactions to any significant developments in one country can have adverse effects on the financial and market conditions in other countries. A loss in investor confidence in the financial systems, particularly in other emerging markets, may cause increased volatility in Indian financial markets. Indian financial markets have also experienced the contagion effect of the global financial turmoil. Any prolonged financial crisis may have an adverse impact on the Indian economy, thereby resulting in a material and adverse effect on our Company's business, operations, financial condition, profitability and price of its Shares. Stock exchanges in India have in the past experienced substantial fluctuations in the prices of listed securities. 54. Financial instability in other countries could disrupt Indian financial markets and our Company s business and have an adverse effect on the market for the Equity Shares. The Indian financial markets and the Indian economy are influenced by economic and market conditions in our Country and other countries, particularly emerging market countries in Asia. Although economic conditions are different in each country, investors reactions to developments in one country can have adverse effects on the securities of companies in other countries, including India. A loss of investor confidence in the financial systems of other emerging markets due to negative economic development such as rising fiscal or trade deficit or a default on sovereign debt in emerging markets may cause volatility in Indian financial markets and, indirectly, in the Indian economy in general. Any worldwide financial instability could also have a negative impact on the Indian economy. This in turn could negatively impact on the movement of exchange rates and interest rates in India. Any significant financial disruption could have an adverse effect on our Company s business, future financial performance and the market for the Issue Shares. 55. Global economic, political and social conditions may harm our ability to do business, increase our costs and negatively affect our stock price. Global economic and political factors that are beyond our control, influence forecasts and directly affect performance. These factors include interest rates, rates of economic growth, fiscal and monetary policies of Page 23 of 221

26 governments, inflation, deflation, foreign exchange fluctuations, consumer credit availability, fluctuations in commodities markets, consumer debt levels, unemployment trends and other matters that influence consumer confidence, spending and tourism. Increasing volatility in financial markets may cause these factors to change with a greater degree of frequency and magnitude, which may negatively affect our stock prices. 56. Terrorist attacks, civil unrests and other acts of violence or war involving India or other countries could adversely affect the financial markets, our business, financial condition and the price of our Equity Shares. Any major hostilities involving India or other acts of violence, including civil unrest or similar events that are beyond our control, could have a material adverse effect on India s economy and our business. Incidents such as terrorist attacks and other acts of violence may adversely affect the Indian stock markets where our Equity Shares will trade as well the global equity markets generally. Such acts could negatively impact business sentiment as well as trade between countries, which could adversely affect our Company s business and profitability. Additionally, such events could have a material adverse effect on the market for securities of Indian companies, including the Equity Shares. 57. Taxes and other levies imposed by the Government of India or other State Governments, as well as other financial policies and regulations, may have a material adverse effect on our business, financial condition and results of operations. Taxes and other levies imposed by the Central or State Governments in India that affect our industry include sales tax, income tax and other taxes, duties or surcharges introduced on a permanent or temporary basis from time to time. Imposition of any other taxes by the Central and the State Governments may adversely affect our results of operations. 58. Any downgrading of India s sovereign rating by an independent agency may harm our ability to raise financing. Any adverse revisions to India's credit ratings for domestic and international debt by international rating agencies may adversely impact our ability to raise additional financing, and the interest rates and other commercial terms at which such additional financing may be available. This could have an adverse effect on our business and future financial performance, our ability to obtain financing for capital expenditures and the trading price of our Equity Shares. 59. Natural calamities could have a negative impact on the Indian economy and cause Our Company's business to suffer. India has experienced natural calamities such as earthquakes, tsunami, and floods in recent years. The extent and severity of these natural disasters determine their impact on the Indian economy. Prolonged spells of abnormal rainfall or other natural calamities could have a negative impact on the Indian economy, which could adversely affect our business, prospects, financial condition and results of operation as well as the price of the Equity Shares. 60. You may be subject to Indian taxes arising out of capital gains on sale of Equity Shares. Under current Indian tax laws and regulations, capital gains arising from the sale of equity shares in an Indian company are generally taxable in India. Any gain realized on the sale of listed equity shares on a stock exchange held for more than 12 months is not subject to capital gains tax in India if securities transaction tax ( STT ) is paid on the transaction. STT will be levied on and collected by a domestic stock exchange on which the Equity Shares are sold. Any gain realized on the sale of equity shares held for more than 12 months to an Indian resident, which are sold other than on a recognized stock exchange and on which no STT has been paid, will be subject to long term capital gains tax in Page 24 of 221

27 India. Further, any gain realized on the sale of listed equity shares held for a period of 12 months or less will be subject to short term capital gains tax. Any change in tax provisions may significantly impact your return on investments. 61. You may be restricted in your ability to exercise preemptive rights under Indian law and thereby may suffer future dilution of your ownership position. Under the Companies Act, as amended, a public limited company incorporated in India must offer holders of its equity shares preemptive rights to subscribe and pay for a proportionate number of shares to maintain their existing ownership percentages before the issuance of any new equity shares, unless the preemptive rights have been waived by adoption of a special resolution by holders of the equity shares that are present at the relevant meeting. If you are in a jurisdiction that requires registration or qualification of the new securities, you may be unable to exercise your preemptive rights for the Equity Shares unless such registration or qualification is effective with respect to the rights or an exemption from the registration or qualification requirements is available to you. Our Company may elect not to file a registration statement or otherwise qualify the preemptive rights available by Indian law to investors in your jurisdiction. To the extent that you are unable to exercise preemptive rights granted in respect of the Equity Shares, your proportional interests in our Company would be reduced. 62. Third-party statistical and financial data in this Draft Letter of Offer may be incomplete or unreliable. We have not independently verified the data in this Draft Letter of Offer that comes from industry publications and other third party sources and therefore we cannot assure you that they are complete or reliable. Such data may also be produced on different bases from those used in other countries. Therefore, discussions of matters relating to India, its economy and our industry in this Draft Letter of Offer are subject to the caveat that the statistical and other data upon which such discussions are based may be incomplete or unreliable. 63. There are many factors that make predicting the future operating results of our Company very difficult, and Our Company can provide no assurances that it forecasts will materialize. Several factors may affect the future operating results of our Company, many of which are beyond the control of our Company. The operating results of our Company are difficult to predict and past performance of our Company may not be indicative of future performance. Several factors may have an adverse effect on the future performance of the Company, including, but not limited to, changes in growth and demand for our Company s products, a shift in consumer preferences, changes in government policies (both domestically and globally), a decrease in the sales price of our Company s goods, an increase in the cost of raw materials,including fuel and other energy costs, changes in domestic duties on raw materials, changes in tax and excise policies, changes in other incentives applicable to our Company or its products, an increase in the costs associated with our Company s financing, currency fluctuations, an increase in transportation costs or the disruption of transportation due to labor shortages, strikes or other reasons, strikes or work stoppages of our Company s employees or employees of supporting manufacturers, accidents, natural disasters, acts of terrorism, the outbreak of disease or heavy rains. Page 25 of 221

28 Prominent Notes I. This is an Issue of [ ] Equity Shares at a premium of Rs.[ ]/- per Equity Share for an amount aggregating upto Rs.4,000 Lacs on a rights basis to the existing Equity Shareholders of our Company in the ratio of [ ] Equity Share for every [ ] Equity Share(s) held on the Record Date (i.e., [ ]) by the existing Equity Shareholders. II. The net worth of our Company as on March 31, 2016 was Rs Lacs. III. There has been no financing arrangement whereby the Directors of our Company who are our Directors and their relatives have financed the purchase by any other person of securities of our Company other than in the normal course of business of the financing entity during the period of six months immediately preceding the date of filing of the Draft Letter of Offer with SEBI IV. All information shall be made available by the Lead Manager and our Company to the public and investors at large and no selective or additional information would be available only to a section of investors in any manner whatsoever. V. The Lead Manager and our Company shall update this Draft Letter of Offer and keep our shareholders / public informed of any material changes till listing and trading permission in respect of the Equity Shares is received. Investors may contact the Lead Manager for any complaint, clarifications and information pertaining to the Issue. Any clarification or information relating to this Issue shall be made available by the Lead Manager to the public and investors at large and no selective or additional information would be made available only to a section of the investors in any manner. All grievances relating to ASBA process may be addressed to the Registrar to the Issue, with a copy to the relevant SCSBs, giving full details such as name, address of the applicants, application number, number of Equity Shares applied for, application amounts blocked, ASBA Account number and the Designated Branch of the SCSBs where the Application Form has been submitted by the ASBA Investor. For contact details please see General Information on page 31 of DLOO. Page 26 of 221

29 SECTION III INTRODUCTION THE ISSUE The Board of Directors of our Company have, pursuant to a resolution passed at their meeting held on August 16, 2016 authorized this offer of Rights Equity Shares. The following is a summary of the Issue. This summary should be read in conjunction with, and is qualified in its entirety by, more detailed information in the section titled Terms of the Issue on page 148 of this Draft Letter of Offer. Rights Equity Shares being offered by our [ ] Equity Shares Company Rights Entitlement for Rights Equity Shares [ ]Equity Shares for every [ ] Equity Shares held on the Record Date i.e. [ ]. Record Date [ ] Face Value per Rights Equity Shares Rs Issue Price per Rights Equity Share [ ] Issue size Not exceeding Rs. 4, Lacs Paid-up Equity Shares outstanding prior to the 10,50,000 Equity Shares Issue Equity Shares outstanding after the Issue [ ] Equity Shares Terms of the Issue Please refer to the section titled Terms of the Issue on page 148 of this Draft Letter of Offer. Use of Issue Proceeds For further information, see the section titled Objects of the Issue on page 40 ISIN [ ] Scrip Code Term of Payment The entire Issue Price will be paid on Application, along with the CAF. Page 27 of 221

30 SUMMARY OF FINANCIAL INFORMATION The following tables set forth the summary financial information derived from our audited financial statements as on and for Fiscal 2016 prepared in accordance with Companies Act, the Indian GAAP, applicable standards and guidance notes specified by the Institute of Chartered Accountants of India, applicable accounting standards and other applicable statutory and / or regulatory requirements. Unless stated otherwise, the summary of financial information presented below, is in Rs. and should be read in conjunction with the financial information and the notes thereto included in the section titled Financial Information on page 105 of this Draft Letter of Offer. Balance sheet as at March 31, 2016: (Amount in Rs.) Particulars As at 31st March 2016 As at 31st March 2015 EQUITY AND LIABILITIES Shareholders funds (a) Share capital 10,500,000 10,500,000 (b) Reserves and surplus 54,361,663 31,502,802 Non-current liabilities (a) Long-term borrowings 12,553,250 9,015,497 (b) Other long-term liabilities 308,484, ,726,314 Current liabilities (a) Short-term borrowings 369,857,083 - (a) Trade payables 246,752, ,355,692 (b) Other current liabilities 7,915,668 4,798,439 TOTAL 1,010,424, ,898,744 ASSETS Non-current assets (a) Fixed assets (i) Tangible assets 7,244,458 6,864,373 (ii) Intangible assets 184,681 86,165 (b) Non current investments 10,528,494 2,028,494 (c) Deferred tax assets 299, ,620 (d) Long-term loans and advances 10,512,139 10,220,506 (e) Other non-current assets 10,000 10,000 Current assets (a) Inventories 489,563, ,747,164 (b) Trade receivables 421,679, ,090,258 (c) Cash and cash equivalents 10,895,621 44,765,802 (d) Short-term loans and advances 17,641,515 10,683,362 (e) Other Current Assets 41,864,348 - TOTAL 1,010,424, ,898,744 Page 28 of 221

31 Statement of Profit and Loss as at March 31, 2016 Particulars For the Year ended 31st March 2016 (Amount in Rs.) For the Year ended 31st March 2015 Revenue Revenue from operartions 4,993,111,735 2,738,097,852 Other Income 3,844,258 73,496 Total Revenue 4,996,955,993 2,738,171,348 Expenses (a) Purchase of traded goods 4,627,951,511 2,695,450,760 (b) Changes in inventories of traded goods -213,816, ,769,815 (c) Employee benefits expenses 15,261,679 11,190,082 (d) Finance cost 62,122,080 23,250,567 (e) Depreciation 2,196,295 1,919,019 (f) Other expenses 468,485, ,602,614 Total Expenses 4,962,200,899 2,708,643,227 Profit/ (Loss) before tax 34,755,094 29,528,120 Less: Tax Expense (a) Current Tax 11,793,403 9,513,924 (b) Deferred Tax 102,830 49,040 22,858,861 19,965,157 Earnings per share (of 10/- each): (a) Basic (b) Diluted Not Applicable Not Applicable See accompanying notes forming part of the financial statements Page 29 of 221

32 Cash Flow Statement for the year ended March 31, 2016 Particulars For the Year ended March 2016 (Amount in Rs.) For the Year ended March 2015 A Cash Flow from Operating Activities Profit before taxation 34,755,094 29,528,120 1 Adjustments for : Depreciation 2,196,295 1,919,019 Dividend Income -13,217-13,732 Profit on Sale of Fixed Assets -231,932 - Interest Expenditure 62,122,080 23,250,567 B C Operating profit before working capital changes 98,828,319 54,683,975 Changes in Working Capital: Increase / (Decrease) in trade payables 69,396,817-35,347,778 Increase / (Decrease) in other current liabilities 3,117,229-60,399 Increase / (Decrease) in Short term borrowings 369,857,083 - Increase / (Decrease) in other long term liabilities 1,757,851 39,641,332 (Increase) / Decrease in trade receivables -232,589,294 1,196,248 (Increase) / Decrease in inventories -213,816,578-4,893,594 (Increase) / Decrease in Deferred Tax 102,830 - (Increase) / Decrease in loans and advances -7,249,785-3,039,766 Cash Generated from Operations 89,404,473 52,180,018 Income Taxes paid (net of refunds) 11,896,233 2,820,323 Net cash generated from operating activities 77,508,240 49,359,695 Cash flow from Investing Activities Purchase of tangible/intangible assets -2,962,964 - Sale of tangible assets 520,000 - Purchase of Mutual Fund -8,500,000 - Fixed Deposits -41,864,348 - Dividend received 13,217 13,090 Net cash from investing activities -52,794,095 13,090 Cash flow from Financing Activities Interest paid -62,122,080-23,250,567 Loans borrowed/ (repaid) 3,537,753 1,294,975 Net cash used in Financing Activities -58,584,327-21,955,592 D Net increase in cash and cash equivalents -33,870,182 27,417,192 E Cash and Cash Equivalents Cash and Cash equivalents at the beginning of the year 44,765,802 4,529,669 F Cash and Cash equivalents at the end of the year 10,895,621 44,765,802 Cash and cash equivalents comprise of: Cash on Hand 1,061, ,698 Balances with Banks 9,834,519 44,414,104 10,895,621 44,765,802 Page 30 of 221

33 GENERAL INFORMATION Our Company was originally incorporated as Pesticides Limited on October 28, 1960 in the State of Maharashtra as a public limited company under the Companies Act, Our Company received the Certificate for Commencement of Business on March 28, Subsequently, the name of our Company was changed to Pesticides And Brewers Limited vide special resolution passed by the shareholders of our Company in their meeting and fresh Certificate consequent upon change of name issued by the RoC, Maharashtra on December 22, The name of our Company changed to PB Global Limited vide special resolution passed by the shareholders of our Company in their meeting held on August 1, 2016 and Certificate of Incorporation pursuant to change of name issued by Roc, Mumbai on August 10, Our Corporate Identification Number is L99999MH1960PLC For details of incorporation; please refer to chapter titled History and Certain other Corporate Matters beginning on page no. 89 of this Draft Letter of Offer. Right Issue of [ ] Equity Shares of face value of Rs. 10 each for cash at a price of Rs. [ ] per Equity Share (including a premium of Rs. [ ] per Rights Equity Share) not exceeding an amount of Rs Lacs by the Company to the Eligible Equity Shareholders in the ratio of [ ] Rights Equity Shares for every [ ] Equity Shares held on the Record Date, i.e.[ ]. The Issue Price of each Rights Equity Share is [ ] times the face value of the Rights Equity Share. For further details please refer to the chapter entitled Terms of the Issue on page 148 of this Draft Letter of Offer. REGISTERED OFFICE OF OUR COMPANY PB Global Limited Chitalsar, Manpada, Swami Vivekananda Road, Thane Maharashtra, India Tel: / Fax: info@pbltd.in Website: CIN: L99999MH1960PLC ADDRESS OF THE ROC Registrar of Companies, Mumbai Everest, 100 Marine Drive Mumbai , India Phone: / / Fax: roc.mumbai@mca.gov.in DESIGNATED STOCK EXCHANGE BSE Ltd P J Towers, Dalal Street Fort, Mumbai Phone: /34; Fax: Page 31 of 221

34 OUR BOARD OF DIRECTORS Sl. Name Age DIN Address Designation No. 1. Omprakash Gurdayal B-177, Prem Kutir, N.S. Managing Director Berlia Road,Colaba, Mumbai Parimal Vibhash Mehta /608, Azad Nagar - Executive Director II,VeeraDesai Road, Andheri (West), Mumbai Annie Jaquim Fernandes 4. Rajendrakumar Kishanlal Agarwal /7, Rita Mansion, Bora Bazar Street, Fort, Mumbai A Meher Apts, Altamount Road, Mumbai Pratik Didwania , Ballyganj Park Road, 7ABally-High, Kolkata Non Executive and Independent Director Non Executive and Independent Director Non Executive and Independent Director For detailed profile of our Directors under the Companies Act, please refer to the chapter entitled Our Management on page 93 of this Draft Letter of Offer. COMPANY SECRETARY & COMPLIANCE OFFICER Bijal Shah Chitalsar, Manpada, Swami Vivekananda Road, Thane Maharashtra, India Tel: Fax: info@pbltd.in Website: Membership No.: CHIEF FINANCIAL OFFICER Parimal Mehta Chitalsar, Manpada, Swami Vivekananda Road, Thane Maharashtra, India Tel: Fax: info@pbltd.in Website: PAN: AFZPM6880Q Note: Investors may contact the Registrar to the Issue or the compliance officer in case of any pre-issue or post- Issue related matters such as non-receipt of letter of Allotment, credit of shares, SAF or Refund Orders, etc. All grievances relating to the ASBA process may be addressed to the Registrar to the Issue, with a copy to the SCSBs, giving full details such as name, address of the applicant, ASBA Account number and the Designated Branch of the SCSBs where the CAF, or the plain paper Application, as the case may be, was submitted by the ASBA Investor. Page 32 of 221

35 LEAD MANAGER TO THE ISSUE Gretex Corporate Services Private Limited Office No. 13, Raja Bahadur Mansion, (New Bansilal Building), 9-15, Homi Modi Street, Fort, Mumbai , Maharashtra, India Tel: / / Fax: info@gretexgroup.com Website: Investor Grievance info@gretexgroup.com SEBI Registration Number: INM REGISTRAR TO THE ISSUE Purva Sharegistery (India) Private Limited 9, Shiv Shakti Industrial Estate, J. R. Boricha Marg Opposite Kasturba Hospital Lane, Lower Parel (East) Mumbai , Maharashtra, India Tel: Fax: busicomp@vsnl.com Website: Investor Grievance busicomp@vsnl.com Contact Person: Mr. V.B. Shah SEBI Registration Number: INR LEGAL ADVISORS TO THE ISSUE Mr. Amresh Shashidhar Jadhav Ground Floor, Yashodeep Near St. John High School, Opp. New Chandrolok CHSL Tel: advamreshjadhav86@gmail.com Contact Person: Mr. Amresh Shashidhar Jadhav STATUTORY AUDITORS OF OUR COMPANY P.V. Page & Co. 201, Sardar Griha, 198, L. T. Marg, Mumbai Telefax: office_pvp@yahoo.com Contact Person: Mr. Prakash V Page Firm Registration Number: W BANKERS OF OUR COMPANY [ ] BANKERS TO THE ISSUE [ ] SELF CERTIFIED SYNDICATE BANKERS The list of banks that have been notified by SEBI to act as SCSBs for the Applications Supported by Blocked Amount Process is provided at For details on Designated Branches of SCSB collecting the CAF, please refer the above mentioned SEBI link. Page 33 of 221

36 EXPERTS Except for the reports of the Auditor of our Company on the audited financial information and statement of tax benefits, included in the Draft Letter of Offer, our Company has not obtained any expert opinions. TRUSTEES This being an issue of Equity Shares, the appointment of trustees is not required. MONITORING AGENCY Our Company is not required to appoint a monitoring agency pursuant to Regulation 16 of the SEBI (ICDR) Regulations. Our Board will monitor the use of the proceeds of this Issue as per clause 32(2) of the SEBI (Listing Obligation and Disclosure Requirement) Regulations, UNDERWRITING Our Company has not entered into any underwriting / standby agreement. APPRAISING ENTITY None of the purposes for which the Net Proceeds are proposed to be utilized have been financially appraised by any bank or financial institution. CREDIT RATING This being an issue of equity shares and not of convertible debt instruments, no credit rating is required. MINIMUM SUBSCRIPTION If we do not receive the minimum subscription of 90% in this Issue or if our Board fails to dispose off the unsubscribed Equity Shares in the manner as permitted under Section 62(1)(a)(i), subject to receipt of requisite regulatory approvals, if any, after the Issue Closing Date or the subscription level falls below 90% after the Issue Closing Date on the account of cheques being returned unpaid or withdrawal of applications, we shall refund the entire subscription amount received within 15 days from the Issue Closing Date. If the subscription amount is not refunded within 15 days from the Issue Closing date, we shall be liable to pay interest for the period of delay, after such aforesaid 15 days, in accordance with the provisions of the Companies Act, 2013 and SEBI (ICDR) Regulations. ISSUE SCHEDULE Issue Opening Date Last Date for receiving requests for split forms Issue Closing Date [ ] [ ] [ ] The Board of Directors or a duly authorized committee thereof will have the right to extend the Issue period as it may determine from time to time, provided that the Issue will not be kept open in excess of 30 days from the Issue Opening Date. Page 34 of 221

37 CAPITAL STRUCTURE The Equity Share Capital of the Company as on the date of this Draft Letter of Offer, before and after the Issue, is set forth (Rs. in Lacs, except share data) Sl. No. Particulars Aggregate Aggregate Value at Value at Nominal Value Issue Price A Authorised Share Capital 1,00,00,000 Equity Shares having face value of Rs.10/- each B Issued, Subscribed and Paid-Up Share Capital before the Issue 10,50,000 Equity Shares of face value of Rs.10/- each C Present Issue being offered to the existing equity shareholders through this Draft Letter of Offer* [ ] Equity Shares of face value of Rs. 10/- each for cash at a price of [ ]per share [ ] [ ] D Issued, Subscribed and Paid-Up Share Capital after the Issue [ ] Equity Shares of face value of Rs.10/- each [ ] [ ] * The Board of our Company has, pursuant to resolutions passed at its meeting held on August 16, 2016 authorized the Issue. 1. History of Equity Share Capital of our Company: As on date, issued, subscribed and paid up capital of the company is Rs.1,05,00,000/- i.e.10,50,000 Equity Shares of face value of Rs.10/- each. There is no information available for capital build-up of the Company since incorporation. We have searched in ROC by payment of challan dated August 17, 2016 but no evidence was available with RoC. Currently, the Company is listed at BSE Ltd, however trading of securities are suspended due to penal reason. Source: BSE Letter dated September 1, 2016 reference No: DCS/Certlisting/PB/344/ Notes: a. As on date, the above shares are not pledged. b. The Issue is exempted from the requirements of minimum promoter s contribution in accordance with Regulation 34 of the ICDR Regulations. c. The major shareholders may subscribe to the Equity Shares pursuant to their Rights Entitlement and / or renunciation, as applicable. d. Such subscriptions of Equity Shares over and above their Rights Entitlement, if allotted, may result in an increase in their percentage shareholding above their current percentage shareholding. Any acquisition of additional Equity Shares shall not result in change of control of the management of the Company in accordance with provisions of the SEBI Takeover Code and shall be exempt subject to fulfillment of the conditions of Regulation 10 of the SEBI Takeover Code. e. In case the rights issue remains unsubscribed and/ or minimum subscription is not achieved, the Board of Directors may dispose of such unsubscribed portion in the best interest of the Company and in compliance with the applicable laws. Page 35 of 221

38 Category (I) Category of shareholder (II) Nos. of shareholders (III) No. of fully paid up equity shares held (IV) No. of Partly paid-up equity shares held (V) No. of shares underlying Depository Receipts (VI) Total nos. shares held (VII) = (IV)+ (V)+ (VI) Shareholding as a % of total no. of shares (calculated as per SCRR, 1957) (VIII) As a % of (A+B+C2) Total as a % of (A+B+C) No. of Shares Underlying Outstanding convertiable securities (including warrant (X) Shareholding, as a % assuming full conversion of convertible securities ( as a percentage of diluted share capital) (XI)= (VII)+(X) As a % of (A+B+C2) No (a) As a % of total Shares held (b) Number of equity shares held in dematerialized form (XIV) 2. Shareholding Pattern of our Company The table below presents the shareholding pattern as on the date of filling of Draft Letter of Offer: Number of Voting Rights held in each class of securities (IX) No of Voting Rights Numbe r of Locked in shares (XII) Number of Shares pledged or otherwise encumber ed (XIII) Class Equity Cla ss eg. Y Total No. (a) As a % of total Sha res held (b) (A) Promoter & Promoter Group (B) Public ,50, ,50, ,50, ,50, (C ) Non Promoter- Non Public (C1) Shares underlying DRs (C2) Shares held by Employee Trusts Total ,50, ,50, ,50, ,50, Page 36 of 221

39 3. Notes to the Capital Structure a) Particulars of the top ten shareholders as on the date of filing this Draft Letter of Offer: Sl. Name of Shareholders Number of Equity % of Total Paid up No Shares Capital 1 Mr. Amitabh V W Mittal 1,00, Preet Mittal 1,00, Sujata Electronics Ltd 1,00, Infotech Era (India) Ltd 1,00, New Era Fabrics Ltd 1,00, Berlia Chemicals & Traders Pvt Ltd 70, Satvijay Traders Pvt Ltd 54, The Barium Chemicals Ltd 54, Mr. Santosh Kumar Jalan 24, Mr. Sanwar Parsad Jalan 14, b) Particulars of top ten shareholders ten days prior to the date of filing this Draft Letter of Offer: Sl. Name of Shareholders Number of Equity % of Total Paid up No Shares Capital 1 Mr. Amitabh V W Mittal 1,00, Preet Mittal 1,00, Sujata Electronics Ltd 1,00, Infotech Era (India) Ltd 1,00, New Era Fabrics Ltd 1,00, Berlia Chemicals & Traders Pvt Ltd 70, Satvijay Traders Pvt Ltd 54, The Barium Chemicals Ltd 54, Mr. Santosh Kumar Jalan 24, Mr. Sanwar Parsad Jalan 14, c) Particulars of the top ten shareholders two years prior to the date of filing of this Draft Letter of Offer: Sl. Name of Shareholders Number of Equity % of Total Paid up No Shares Capital 1 Mr. Amitabh V W Mittal 1,00, Preet Mittal 1,00, Sujata Electronics Ltd 1,00, Infotech Era (India) Ltd 1,00, New Era Fabrics Ltd 1,00, Berlia Chemicals & Traders Pvt Ltd 70, Satvijay Traders Pvt Ltd 54, The Barium Chemicals Ltd 54, Mr. Santosh Kumar Jalan 24, Mr. Sanwar Parsad Jalan 14, d) Our Company, our Directors and the Lead Manager have not entered into any buy-back arrangement and / or safety net facility for purchase of Equity Shares from any person. e) Our Company has not issued Equity Shares during a period of one year preceding the date of this Draft Letter of Offer. Page 37 of 221

40 f) Except as stated in the chapter entitled Our Management at page 93 of this Draft Letter of Offer, none of our Directors and their immediate relatives or key management personnel Group holds any Equity Shares. g) Our Company has not issued any Equity Shares out of revaluation reserves or reserves without accrual of cash resources. h) As on the date of filling of Draft letter of Offer, the total number of members of our Company was i) Our Company has not issued any Equity Shares pursuant to any scheme approved under the Sections of the Companies Act, j) Neither the Lead Manager nor any associates of the Lead Manager hold any Equity Shares in our Company. k) If our Company does not receive the minimum subscription of 90% of the Issue of the Equity Shares being offered under the Issue, on an aggregate basis, our Company shall refund the entire subscription amount received within 15 days from the Issue Closing Date. If there is any delay in the refund of the subscription amount of more than 8 days after our Company becomes liable to pay the subscription amount (i.e. 15 days after the Issue Closing Date), our Company shall pay interest for the delayed period, at such rates as prescribed under the Companies Act. l) All Equity Shares will be fully paid up at the time of Allotment. m) There are no outstanding warrants, options or rights to convert debentures, loans or other instruments convertible into the Equity Shares. n) There have been no financial or buyback arrangements whereby our Directors and their relatives have financed the purchase by any other person of securities of our Company, other than in the normal course of the business of the financing entity during a period of six months preceding the date of filing of this Draft Letter of Offer. o) Our Company presently does not intend or propose to alter the capital structure for a period of six months from the Issue Opening Date, by way of split or consolidation of the denomination of Equity Shares or further issue of Equity Shares (including issue of securities convertible into or exchangeable, directly or indirectly for Equity Shares) whether on a preferential basis or issue of bonus or rights or further public issue of specified securities or otherwise. However, if business needs of the Company so require, the Company may alter the capital structure by way of split / consolidation of the denomination of the Equity Shares / issue of Equity Shares on a preferential basis or issue of bonus or rights or public or preferential issue of Equity Shares or any other securities during the period of six (6) months from the date of opening of the Issue or from the date the application moneys are refunded on account of failure of the Issue, after seeking and obtaining all the approvals which may be required. However, if our Company enters into acquisitions, joint ventures or other arrangements, our Company may, subject to necessary approvals, consider raising additional capital to fund such activity or use Equity Shares as currency for acquisitions or participation in such joint ventures. p) Our Company does not have any employee stock option scheme or employee stock purchase scheme as on the date of filling of Draft Letter of Offer. q) At any given time, there shall be only one denomination of the Equity Shares. Our Company shall comply with such disclosure and accounting norms as may be specified by SEBI from time to time. Page 38 of 221

41 r) Our Company, Directors shall not make any payments direct or indirect, discounts, commissions, allowances or otherwise under this Issue except as disclosed in this Draft Letter of Offer. s) The Equity Shares are fully paid up and there are no partly paid up Equity Shares as on the date of filing this Draft Letter of Offer. t) Our Company has not raised any bridge loan from any Bank against the proceeds of this Issue. However, depending on its business requirements, the Company may consider raising bridge financing facilities, pending receipt of the Net Proceeds of the Issue. u) The Issue will remain open for a minimum of 15 days. The Board of Directors or duly authorized committee thereof shall have the right to extend the Issue period as it may determine from time to time, provided that the issue will not be kept open in excess of 30 days from the Issue Opening Date. Page 39 of 221

42 SECTION IV PARTICULARS OF THE ISSUE OBJECTS OF THE ISSUE The Objects of the Issue are to finance working capital requirement of our Company and in connection with our Company s current business activities and matters related thereto. We intend to utilize the proceeds of the Issue to meet the following objects: 1. To meet additional Working Capital Requirements 2. To Meet the Issue Expenses (Collectively referred as the objects ) The main objects of our Memorandum of Association and the objects incidental or ancillary to the main objects enable our Company to undertake its existing activities. The purpose for which the funds are being raised through the Issue fall within the main objects of our Memorandum of Association. The fund requirements and deployment described herein are based on internal management estimates and have not been appraised by any bank, financial institution or any other external agency. These are based on current circumstances of our business. Issue Proceeds Details of the proceeds of the Issue are summarized in the table below: Sl. No. Particulars Amount(Rs in Lacs) 1 Gross Proceeds of the Issue Issue Expenses [ ] 3 Net Proceeds of the Issue [ ] Means of Finance Sl. No Particulars Amount (Rs in Lacs) a. Proceeds of the Issue 4, The entire requirement of funds is proposed to be funded through the proceeds of the Issue. Since the entire fund requirement are to be funded from the proceeds of the Issue, there is no requirement to make firm arrangements of finance under Regulation 4(2) (g) of the SEBI ICDR Regulations through verifiable means towards at least 75% of the stated means of finance, excluding the amounts to be raised through the proposed Issue. Our management, in response to the competitive and dynamic nature of the industry, will have the discretion to revise its business plan from time to time and consequently our funding requirement and deployment of funds may also change. This may, subject to compliance with applicable laws and regulations, also include rescheduling the proposed utilization of Issue Proceeds and increasing or decreasing expenditure for a particular object vis-à-vis the utilization of Issue Proceeds. In case of variations in the actual utilization of funds earmarked for the purposes set forth above, increased fund requirements for a particular purpose may be financed by surplus funds, if any, available in respect of the other purposes for which funds are being raised in this Issue. In case of any delay in raising the funds proposed through this Issue, the company shall utilize its Internal Accruals to pay for the Issue related expenses till then. Page 40 of 221

43 The fund requirement and deployment is based on internal management estimates and have not been appraised by any bank or financial institution. These are based on current conditions and are subject to change in the light of changes in external circumstances or costs or other financial conditions and other external factors. As we operate in competitive environment, our Company may have to revise its business plan from time to time and consequently our fund requirements may also change. Our Company s historical expenditure may not be reflective of our future expenditure plans. Our Company may have to revise its estimated costs, fund allocation and fund requirements owing to various factors such as economic and business conditions, increased competition and other external factors which may not be within the control of our management. This may entail rescheduling or revising the planned expenditure and funding requirements, including the expenditure for a particular purpose at the discretion of the Company s management. For further details on the risks involved in our business plans and executing our business strategies, please see the section titled Risk Factors beginning on page 11 of the Draft Letter of Offer. Details of Use of Issue Proceeds 1. DETAILS OF UTILIZATION OF NET PROCEEDS OF THE FRESH ISSUE Additional Working capital Requirement Our business is working capital intensive. We finance our working capital requirement from various banks / financial institutions and from our internal accruals. As on March 31, 2015 and March 31, 2016 our Company s net working capital consisted of Rs. 3, Lacs and 3, Lacs respectively based on the audited financial statements. The total working capital requirement for the year is expected to be Rs. 8, Lacs. The incremental working capital requirement for the year ending March 31, 2017 will be Rs. 4, Lacs, which will be met through the Proceeds of the Issue to the extent of Rs. 4, Lacs, and the balance portion will be met through internal accruals. Page 41 of 221

44 Basis of estimation of working capital requirement The details of our Company s working capital requirement and funding of the same are based on the audited financial statements as at March 31, 2015 and March 31, 2016 are as set out in the table below: (Rs. In Lacs) Particulars As on March 31 Current Assets Inventories Finished Goods 2, , Trade Receivables 1, , Cash & Bank Balances Short term loans & advances Other current assets Total (A) 5, , Current Liabilities& Bank Borrowing for Working Capital Bank Borrowing , Sundry Creditors 1, , Other Current Liabilities & short term provisions Total (B) 1, , Net Working Capital (A)-(B) 3, , Incremental Working Capital Sources of Incremental Working Capital Internal accruals Total Source Page 42 of 221

45 The details of our Company s expected working capital requirement as at March 31, 2017 is set out in the table below: (Rs. In Lacs) Particulars (Estimated) Current Assets Inventories Finished Goods 5, Trade Receivables 6, Advance to Supplier 1, Cash & Bank Balances Short term loans & advances Other current assets Total (A) 14, Current Liabilities Bank Borrowing 3, Sundry Creditors 2, Other Current Liabilities & short term provisions Total (B) 6, Net Working Capital (A)-(B) 8, Incremental Working Capital * 4, Sources of Incremental Working Capital Fresh Issue Proceeds 4, Internal accruals Total Source 4, *Incremental Working capital is calculated by subtracting the Current year working capital from previous year net working capital. Page 43 of 221

46 Assumption for working capital requirements Assumptions for Holding Levels Particulars Holding Level as of March 31, 2015 Holding Level as of March 31, 2016 (In months) Holding Level as of March 31, 2017 (Estimated) Current Assets Inventories Finished Goods Trade Receivables Current Liabilities Trade Payables Our Company proposes to utilize Rs. [ ] Lacs of Net Proceeds towards working capital requirements for meeting our business requirements. The incremental working capital requirements are based on historical Company data and estimation of the future requirements in Financial Year considering the growth in activities of our Company. Our Company has assumed finished goods inventory of 1.07 months for the Financial Year Our Debtors cycle was of about 1.01 months in Financial Year Further, we expect our debtors circle to be 1.32 months in FY Similarly we have estimated current assets, current liabilities and short term provisions in line with working capital employed in past years and expected to be employed in Financial Year Justification for Holding Period levels The justifications for the holding levels mentioned in the table above are provided below: Assets Current Assets Inventories Trade receivables In FY we have assumed finished goods inventory of around 1.07 months as turnover is increasing. In FY the debtors collection period is estimated to increase from 1.01 months in FY to 1.32 months. Liabilities Current Liabilities Trade Payables In FY the creditors holding period is reduced to 0.52 months from 0.64 months in FY as we strive to make on time payments to our suppliers so as to get the best price for the products. Page 44 of 221

47 Issue Expenses Particulars Amount* As a percentage of total expenses As a percentage of Issue size Fees of the Lead Manager, Registrar to the Issue, [ ] [ ] [ ] Legal Advisor, Auditor s fees etc. Statutory Advertising, Marketing, Printing & [ ] [ ] [ ] Distribution and ASBA processing fees Regulatory fees, Filing fees, Stamp Duty, Listing [ ] [ ] [ ] Fees, Depository Fees and other miscellaneous expenses Total estimated Issue expenses [ ] [ ] [ ] *Will be incorporated at the time of filing of the Letter of Offer with Stock Exchange. Deployment of Funds An amount of Rs. 9 Lacs has been deployed towards Issue Expenses as on November 10, The same has been certified by our statutory auditor, Prakash V Page, partner of P. V. Page & Co., Chartered Accountant vide certificate dated 10th November, Appraisal None of the Objects have been appraised by any bank or financial institution or any other independent third party organization. The funding requirements of our Company and the deployment of the proceeds of the Issue are currently based on management estimates. The funding requirements of our Company are dependent on a number of factors which may not be in the control of our management, including variations in interest rate structures, changes in our financial condition and current commercial conditions and are subject to change in light of changes in external circumstances or in our financial condition, business or strategy. Monitoring of utilization of funds The Audit committee & the Board of Directors of our Company will monitor the utilization of funds raised through this public issue. Pursuant to Regulation 32 of SEBI Listing Regulation 2015, our Company shall on half-yearly basis disclose to the Audit Committee the Applications of the proceeds of the Issue. On an annual basis, our Company shall prepare a statement of funds utilized for purposes other than stated in this Draft letter of Offer and place it before the Audit Committee. Such disclosures shall be made only until such time that all the proceeds of the Issue have been utilized in full. The statement of funds utilized will be certified by the Statutory Auditors of our Company. Bridge Financing Facilities As on the date of this Draft Letter of Offer, we have not raised any bridge loans which are proposed to be repaid from the Net Proceeds. Interim Use of Proceeds Pending utilization of the Issue proceeds of the Issue for the purposes described above, our Company will deposit the Net Proceeds with scheduled commercial banks included in schedule II of the RBI Act. Our Company confirms that it shall not use the Net Proceeds for buying, trading or otherwise dealing in shares of any listed company or for any investment in the equity markets or investing in any real estate product or real estate linked products. Variation in Objects In accordance with Section 27 of the Companies Act, 2013, our Company shall not vary the objects of the Issue without our Company being authorized to do so by the Shareholders by way of a special resolution. In addition, the notice issued to the Shareholders in relation to the passing of such special resolution shall specify the prescribed details as required under the Companies Act and shall be published in accordance with the Page 45 of 221

48 Companies Act and the rules there under. As per the current provisions of the Companies Act, our controlling Shareholders would be required to provide an exit opportunity to such shareholders who do not agree to the proposal to vary the objects, at such price, and in such manner, as may be prescribed by SEBI, in this regard. Other confirmations There is no material existing or anticipated transactions with our Directors, our Company s key Managerial personnel and Group Entities, in relation to the utilization of the Net Proceeds. No part of the Net Proceeds will be paid by us as consideration to our Directors or key managerial personnel or our Group Entities, except in the normal course of business and in compliance with the applicable laws. Page 46 of 221

49 BASIS OF ISSUE PRICE The Issue Price has been determined by our Company, in consultation with the Lead Manager, on the basis of market conditions and on the basis of the following quantitative and qualitative factors. The information presented in this section is for year ended Fiscal 2016, 2015 and 2014 is derived from our Company s audited financial information, prepared in accordance with Indian GAAP and the Companies Act and in accordance with the SEBI Regulations. You should read the following summary with the sections titled Risk Factors, Business Overview and Financial Information on pages 11,80 and 105, respectively, of this Draft Letter of Offer, to get a more informed view before making an investment decision. The trading price of the Equity Shares could decline and you may lose all or part of your investments The Issue Price is determined by our Company in consultation with the Lead Manager. The financial data presented in this section are based on our Companies financial statements. The face value of the Equity Shares is Rs.10/- each and the Issue Price is Rs. [ ]/-. QUANTITATIVE FACTORS Information presented in this section is derived from our Financial Statements prepared in accordance with Indian GAAP. Some of the quantitative factors, which form the basis for computing the price, are as follows: 1. Basic Earnings Per Share (EPS)#: Period Basic EPS (Rs.) Weights Fiscal Fiscal Fiscal Weighted Average #Notes: a. Basic earnings per share (Rs.) = Net profit after tax attributable to shareholders divided by Weighted average number of equity shares outstanding during the year. b. Earnings per share calculations are in accordance with Accounting Standard 20 Earnings per Share prescribed by the Companies (Accounting Standard) Rules, 2006 c. The face value of each Equity Share is Rs.10/-. 2. Price to Earnings (P/E) ratio in relation to Issue Price of Rs.[ ]/- per Equity Shares of Rs.10/- each: The P/R ratio based on the basic EPS for the Fiscal Year 2016 at the Issue Price is Rs. [ ]/- Peer Group P/E* Sl. No. Particulars P/E 1 Highest (UPL Limited) Lowest (Bharat Rasayan Limited)& ( Meghmani Organics 21.3 Limited) 3 Average P/E of the Industry 37.2 *Source: Capital Market Vol. XXXI/19 dated Nov 07 20, 2016, Pesticides / Agrochemicals - India Page 47 of 221

50 3. Return on Net Worth(RoNW)# Period Return on Net Worth (%) Weights Fiscal Fiscal Fiscal Weighted Average 0.39 Note: # Return on net worth (%) = Net Profit after tax / Net worth at the end of the year 4. Minimum Return on increased Net Worth required maintaining pre-issue EPS. The minimum return on increased net worth required maintaining pre-issue EPS for the year ended on 31st March, 2016 at the Issue Price on the Basic EPS [ ] %. 5. Net Asset Value per Equity Share Particulars NAV (Rs. Equity Shares) NAV per Equity Share as of March 31, NAV per Equity Share after the Issue [ ] Issue Price per Equity Share [ ] Note: Net asset value per share (Rs.) = Net Worth at the end of the Year /Total number of equity shares outstanding at the end of the year 6. Comparison of Accounting Ratios with peer group There are no listed entities similar to our line of business and comparable to our scale of operations. 7. The Issue Price of Rs.[ ]/- per share is[ ] times the face value of Rs.10/- per share. The volume weighted average market price of the shares of our Company during a period of sixty trading days ending on the day prior to the date of determination of the rights issue price i.e., [ ] (Date of Board Meeting) works out to Rs. [ ] per Equity Share. Currently, there is no trading in the Company. Thus, the Company in consultation with the Lead Manager is justified based on the above parameters. Page 48 of 221

51 KEY INDUSTRY REGULATIONS AND POLICIES The following description is a summary of certain sector specific laws and regulations in India, which are applicable to the Company. The information detailed in this chapter has been obtained from publications available in the public domain. The regulations set out below may not be exhaustive, and are only intended to provide general information to the investors and are neither designed nor intended to substitute for professional legal advice. The statements below are based on the current provisions of Indian law, and the judicial and administrative interpretations thereof, which are subject to change or modification by subsequent legislative, regulatory, administrative or judicial decisions. The Pesticides Management Bill, 2008 (the Pesticide Management Bill ) The Pesticides Management Bill proposes to regulate the import, manufacture, export, sale, transport, distribution, quality and use of pesticides with a view to control pests; ensure availability of quality pesticides; allowing its use only after assessment of its efficacy and safety; minimizing the contamination of agricultural commodities by pesticide residues; create awareness among users regarding safe and judicious use of pesticides and to take necessary measures to continue, restrict or prohibit the use of pesticides on reassessment with a view to prevent its risk on human beings, animals or environment, and for matters connected therewith or incidental thereto. The Pesticide Management Bill has been introduced in the Rajya Sabha. Foreign Trade (Development and Regulation) Act, 1992 (the Foreign Trade Act ) In India, exports and imports are regulated by the Foreign Trade Act. The Foreign Trade Act empowers the Government of India to inter alia, (a) make provisions for development and regulation of foreign trade by facilitating imports into, and increasing exports from India, (b) prohibit, restrict or otherwise regulate exports and imports, in all or specified cases as well as subject them to exemptions, (c) formulate and announce an export and import policy and also amend the same by notification in the Official Gazette, and (d) appoint a Director General of Foreign Trade for the purpose of administering foreign trade and advising the Central Government in formulating export and import policy and implementing the policy. Under the Foreign Trade Act, every importer and exporter must obtain an Importer Exporter Code from the Director General of Foreign Trade or from any other duly authorized officer. The Director General of Foreign Trade or an authorised officer can suspend or cancel a license issued for export or import of goods in accordance with the Foreign Trade Act, after giving the license holder a reasonable opportunity of being heard. Public Liability Insurance Act, 1991 ( Public Liability Act ) The Public Liability Act provides for public liability insurance for the purpose of providing immediate relief to the persons affected by accidents occurring while handling any hazardous substance, as defined under the Public Liability Act and for matters connected therewith or incidental thereto. Every owner, prior to handling any hazardous substance, is required to maintain, one or more insurance policies against the liability to give relief under the Public Liability Act. In addition every owner is also required to pay, together with the premium, such amount not exceeding the amount of the premium, to be credited to the Environment Relief Fund. Foreign Exchange Management (Export of Goods and Services) Regulations, 2000 (the FEM Export of Goods and Services Regulations ) The FEM Export of Goods and Services Regulations require that every exporter of goods or software in physical form or through any other form, either directly or indirectly, to any place outside India, other than Nepal and Bhutan, furnish to the Commissioner of Customs, a declaration in one of the forms set out in the Schedule and supported by such evidence as may be specified, containing true and correct material particulars including the amount representing the full export value of the goods or software; or if the full export value is not ascertainable at the time of export, the value which the exporter, having regard to the prevailing market conditions expects to receive on the sale of the goods in overseas market, and affirms in the said declaration that the full export value of goods (whether ascertainable at the time of export or not) or the software has been or will within the specified period be, paid in the specified manner. The amount representing the full export Page 49 of 221

52 value of goods or software exported shall be realised and repatriated to India within six months from the date of export. However, where the goods are exported to a warehouse established outside India with the permission of the RBI, the amount representing the full export value of goods exported shall be paid to the authorised dealer as soon as it is realised and in any case within 15 months from the date of shipment of goods. The Export (Quality Control and Inspection) Act, 1963 (the Export Act ) The Export Act empowers the Government of India to establish, a council called the Export Inspection Council, which would advise the Central Government regarding measures for the enforcement of quality control and inspection in relation to commodities intended for export and to formulate programmes in connection therewith, to make, with the concurrence of the Central Government, grants-in-aid to various agencies involved in foreign trade. Duty Drawback Scheme In terms of Customs Act, 1962, customs duty paid at the time of import of goods, with certain cuts, can be claimed as duty drawback at the time of export of such goods under the Duty Drawback Scheme. The Duty Drawback is of two types: (i) all industry rate and (ii) brand rate. All industry rates are notified by the Government in the form of drawback schedule every year. Where the export product has not been notified in all industry rate of duty drawback or where the exporter considers the all industry rate of duty drawback insufficient to fully neutralise the duties of his export product, the exporter may opt for the brand rate of duty drawback. Prevention of Black Marketing and Maintenance of Supplies Act, 1980: To make matters worse, in 1980 came the "Prevention of Black Marketing and Maintenance of Supplies Act." It is an "Act for detention in certain cases or the purpose of prevention of black marketing and maintenance of supplies of commodities essential to the community and for matters concerned therewith". Agricultural Produce (Grading and Marketing) Act, 1937 (Agmark): The Directorate of Marketing and Inspection enforces the Agricultural Produce (Grading and Marketing) Act, Under this Act Grade standards are prescribed for agricultural and allied commodities. These are known as Agmark' standards. Grading under the provisions of this Act is voluntary. The DMI enforces the Agricultural Products (Grading and Marketing) Act, Under this Act, Grade Standards are prescribed for agricultural and allied commodities. These are known as "Agmark" Standards. Grading under the provisions of this Act is voluntary. Manufacturers who comply with standard laid down by DMI are allowed to use "Agmark" labels on their products. Prevention of Food Adulteration Act, 1954: This Act is the basic statute that is intended to protect the common consumer against the supply of adulterated food. This specifies different standards for various food articles. The standards are in terms of minimum quality levels intended for ensuring safety in the consumption of these food items and for safeguarding against harmful impurities and adulteration. The Central Committee for Food Standards, under the Directorate General of Health Services, Ministry of Health and Family Welfare, is responsible for the operation of this Act. The provisions of the Act are mandatory and contravention of the rules can lead to both fines and imprisonment. Prevention of Food Adulteration Act applies to domestic and imported food commodities, encompassing food color and preservatives, pesticide residues, packaging, labeling and regulation of sales. Foreign Trade Policy ( ) The Ministry of Commerce and Industry, Government of India, issued the New Foreign Trade Policy on August 27, 2009 for the period (the Foreign Trade Policy ). The Foreign Trade Policy is updated every year on the 31st of March and the modifications, improvements and new schemes become effective from April of each year. The principal objectives of the Foreign Trade Policy are (a) to facilitate sustained growth in exports of the country so as to achieve larger percentage share in the global merchandise trade, (b) to provide Page 50 of 221

53 domestic consumers with good quality goods and services at internationally competitive prices as well as creating a level playing field for the domestic producers, (c) to stimulate sustained economic growth by providing access to essential raw materials, intermediates, components, consumables and capital goods required for augmenting production and providing services, (d) to enhance the technological strength and efficiency of Indian agriculture, industry and services, thereby improving their competitiveness to meet the requirements of the global markets, and (e) to generate new employment opportunities and to encourage the attainment of 136 internationally accepted standards of quality. Payment of Bonus Act, 1965 Pursuant to the Payment of Bonus Act, 1965, as amended (the Bonus Act ), an employee in a factory or in any establishment where twenty or more persons are employed on any day during an accounting year, who has worked for at least 30 working days in a year is eligible to be paid a bonus. Contravention of the provisions of the Bonus Act by a company is punishable by imprisonment for up to six months or a fine of up to Rs.1,000 or both, against persons in charge of, and responsible to the company for, the conduct of the business of the company at the time of contravention. The Employees State Insurance Act, 1948 The Employees State Insurance Act, 1948 (the ESI Act ), provides for certain benefits to employees in case of sickness, maternity and employment injury. All employees in establishments covered by the ESI Act are required to be insured, with an obligation imposed on the employer to make certain contributions in relation hereto. In addition, the employer is also required to register itself under the ESI Act and maintain prescribed records and registers. The Employees Provident Fund and Miscellaneous Provisions Act, 1952 The Employees Provident Fund and Miscellaneous Provisions Act, 1952 (the EPF Act ), provides for the institution of compulsory provident fund, pension fund and deposit linked insurance funds for the benefit of employees in factories and other establishments. A liability is placed both on the employer and the employee to make certain contributions to the funds mentioned above. Payment of Gratuity Act, 1972 Under the Payment of Gratuity Act, 1972, as amended (the Gratuity Act ), an employee who has been in continuous service for a period of five years will be eligible for gratuity upon his retirement or resignation, superannuation or death or disablement due to accident or disease. However, the entitlement to gratuity in the event of death or disablement will not be contingent on an employee having completed five years of continuous service. An employee in a factory is said to be in continuous service for a certain period notwithstanding that his service has been interrupted during that period by sickness, accident, leave, absence without leave, lay-off, strike, lock-out or cessation of work not due to the fault of the employee. The employee is also deemed to be in continuous service if the employee has worked (in an establishment that works for at least six days in a week) for at least 240 days in a period of 12 months or 120 days in a period of six months immediately preceding the date of reckoning. Intellectual Property: The Trademarks Act, 1999, The Patents Act 1970 and the Copyright Act, 1957 inter alia govern the law in relation to intellectual property, including patents, copyrights, trademarks, service marks, brand names, trade names and research works. Income-tax Act, 1961 The Income-tax Act, 1961 ( IT Act ) is applicable to every Company, whether domestic or foreign whose income is taxable under the provisions of this Act or Rules made there under depending upon its Residential Status and Type of Income involved. Every Company assessable to income tax under the IT Act is required to comply with the provisions thereof, including those relating to Tax Deduction at Source, Advance Tax, and Page 51 of 221

54 Minimum Alternative Tax. Every such Company is also required to file its returns by 30th September of each assessment year. Service Tax Chapter V of the Finance Act 1994 (as amended), and Chapter V-A of the Finance Act 2003 requires that where provision of certain listed services, whole taxable services exceeds Rs. 10,00,000, a service tax with respect to the same must be paid. Every person who is liable to pay service tax must register himself for the same. The Indian Contract Act, 1872 The Indian Contract Act codifies the way in which a contract may be entered into, executed, implementation of the provisions of a contract and effects of breach of a contract. A person is free to contract on any terms he chooses. The Contract Act consists of limiting factors subject to which contract may be entered into, executed and breach enforced. It provides a framework of rules and regulations that govern formation and performance of contract. Registrations under the applicable Shops & Commercial Establishments Acts of the respective States in which Our Company has an established place of business/ office ( Shops Act ) The Shops Act provides for the regulation of conditions of work in shops, commercial establishments, restaurants, theatres and other establishments. The Act is enforced by the Chief Inspector of Shops (CIS) and various inspectors under the supervision and control of Deputy/Assistant Labour Commissioners of the concerned District, who in turn functions under the supervision of Labour Commissioner. The Companies Act, 1956 & 2013 The Act deals with laws relating to companies and certain other associations. The Companies Act primarily regulates the formation, financing, functioning and winding up of companies. The Act prescribes regulatory mechanism regarding all relevant aspects including organizational, financial and managerial aspects of companies. Regulation of the financial and management aspects constitutes the main focus of the Act. In the functioning of the corporate sector, although freedom of companies is important, protection of the investors and shareholders, on whose funds they flourish, is equally important. The Companies Act plays the balancing role between these two competing factors, namely, management autonomy and investor protection. Transfer of Property Act, 1882 The Transfer of Property Act, 1882 (the TP Act ) establishes the general principles relating to transfer of property in India. It forms a basis for identifying the categories of property that are capable of being transferred, the persons competent to transfer property, the validity of restrictions and conditions imposed on the transfer and the creation of contingent and vested interest in the property. The TP Act also provides for the rights and liabilities of the vendor and purchaser in a transaction of sale of land. Registration Act, 1908 The Registration Act, 1908 (the Registration Act ) has been enacted with the objective of providing public notice of the execution of documents affecting, inter alia, the transfer of interest in immovable property. The purpose of the Registration Act is the conservation of evidence, assurances, title and publication of documents and prevention of fraud. It details the formalities for registering an instrument. Section 17 of the Registration Act identifies documents for which registration is compulsory and includes, among other things, any nontestamentary instrument which purports or operates to create, declare, assign, limit or extinguish, whether in present or in future, any right, title or interest, whether vested or contingent, 110 in any immovable property of the value of one hundred rupees or more, and a lease of immovable property for any term exceeding one year or reserving a yearly rent. A document will not affect the property comprised in it, nor be treated as evidence of any transaction affecting such property (except as evidence of a contract in a suit for specific performance or as evidence of part performance under the T.P. Act or as collateral), unless it has been registered. Evidence of registration is normally available through an inspection of the relevant land records, which usually contains details of the registered property. Further, registration of a document does not guarantee title of land. Page 52 of 221

55 The Indian Stamp Act, 1899 Under the Indian Stamp Act, 1899 (the Stamp Act ) stamp duty is payable on instruments evidencing a transfer or creation or extinguishment of any right, title or interest in immovable property. Stamp duty must be paid on all instruments specified under the Stamp Act at the rates specified in the schedules to the Stamp Act. The applicable rates for stamp duty on instruments chargeable with duty vary from state to state. Instruments chargeable to duty under the Stamp Act, which are not duly stamped are incapable of being admitted in court as evidence of the transaction contained therein and it also provides for impounding of instruments that are not sufficiently stamped or not stamped at all. Excise Regulations The Central Excise Act, 1944 seeks to impose an excise duty on specified excisable goods, which are produced or manufactured in India. However, the Government has the power to exempt certain specified goods from excise duty, by notification. The rate, at which the said duty is sought to be imposed, is contained in the Central Excise Tariff Act, Customs Regulations All imports to the country and exports from the country are subject to duties under the Customs Act, 1962 at the rate specified under the Custom Tariff Act Page 53 of 221

56 STATEMENT OF POSSIBLE SPECIAL TAX BENEFITS To The Board of Directors PB Global Limited Chitalsar Manpada, Swami Vivekananda Road, Thane Maharashtra Dear Sirs, Sub: Statement of Possible Special Tax Benefit ( the Statement ) available to PB Global Limited and its Shareholder s prepared in accordance with the requirements under Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009 as amended ( the Regulations ) We refer to the proposed Rights Issue of the shares of PB Global Limited ( the Company ) enclosed statement states the possible special tax benefits available to the Company and to the shareholders of the Company under the Income-tax Act, 1961 ( the Act ) as amended by the Finance Act, 2015(i.e. applicable to Financial Year relevant to Assessment Year ), presently in force in India. Several of these benefits are dependent on the Company or its shareholders fulfilling the conditions prescribed under the relevant provisions of the statute. Hence, the ability of the Company or its shareholders to derive the special tax benefits is dependent upon fulfillment of such conditions, which based on business imperatives the Company faces in the future, and accordingly, the Company may or may not choose to fulfill. The benefits discussed in the enclosed statement cover only special tax benefits available to the Company and its Shareholders and do not cover any general tax benefits available to the Company or its Shareholders. Further, the preparation of the enclosed statement and its contents is the responsibility of the Management of the Company. We were informed that, this statement is only intended to provide general information to the investors and is neither designed nor intended to be a substitute for professional tax advice. In view of the individual nature of the tax consequences and the changing tax laws, each investor is advised to consult his or her own tax consultant with respect to the specific tax implications arising out of their participation in the issue. We do not express any opinion or provide any assurance as to whether: the Company or its shareholders will continue to obtain these benefits in future; or the conditions prescribed for availing the benefits have been/would be met with. The contents of the enclosed statement are based on information, explanations and representations obtained from the Company and on the basis of our understanding of the business activities and operations of the Company and the provisions of the tax laws. Our views expressed herein are based on the facts and assumptions indicated to us. No assurance is given that the revenue authorities/courts will concur with the views expressed herein. Our views are based on the existing provisions of law and its interpretation, which are subject to change from time to time. We do not assume responsibility to update the views consequent to such changes. We shall not be liable to the Company for any claims, liabilities or expenses relating to this assignment except to the extent of fees relating to this assignment, as finally judicially determined to have resulted primarily from bad faith or intentional misconduct. We will not be liable to any other person in respect of this statement. Page 54 of 221

57 The enclosed statement is intended solely for your information and for inclusion in the Draft Letter of Offer/Letter of Offer or any other issue related material in connection with the proposed issue of equity shares and is not to be used, referred to or distributed for any other purpose without our prior written consent. For P. V. Page & Co. Chartered Accountants Firm Registration No W Prakash V Page Partner Membership No Place: Mumbai Date: 16 th October,2016 Page 55 of 221

58 ANNEXURE TO THE STATEMENT OF POSSIBLE SPECIAL TAX BENEFITS AVAILABLE TO THECOMPANY AND ITS SHAREHOLDERS UNDER THE APPLICABLE TAX LAWS IN INDIA Outlined below are the possible Special tax benefits available to the Company and its shareholders under the current direct tax laws in force in India for the Financial Year relevant to Assessment Year These benefits are dependent on the Company or its shareholders fulfilling the conditions prescribed under the relevant tax laws. Hence, the ability of the Company or its shareholders to derive the special tax benefits is dependent upon fulfilling such conditions, which based on business imperatives it faces in the future, it may not choose to fulfill. a) SPECIAL TAX BENEFITS AVAILABLE TO THE COMPANY UNDER THE INCOME TAX ACT, 1961 ( THE ACT ) There are no Special tax benefits available to the Company. b) SPECIAL TAX BENEFITS AVAILABLE TO THE SHAREHOLDERS OF THE COMPANY UNDER THE INCOME TAX ACT, 1961 ( THE ACT ) There are no Special tax benefits available to the shareholders of the Company arising out of proposed rights issue. Notes: All the above benefits are as per the current tax laws and any change or amendment in the laws/regulation, which when implemented would impact the same. We have not commented upon the taxation aspect under any law for the time being in force, as applicable, of any country other than India. Each investor is advised to consult its own tax consultant for taxation in any country other than India. Page 56 of 221

59 SECTION V ABOUT THE COMPANY INDUSTRY OVERVIEW Introduction Unless stated otherwise, the information in this section is derived from the report titled Assessment of Housing and Building Material Industry in India, September 2016 dated September 26, 2016 ( CRISIL Report ), and also as well as includes extracts from publicly available information, data and statistics. The information has not been independently verified by us, the BRLMs, or any of our or their respective affiliates or advisors. The information may not be consistent with other information compiled by third parties within or outside India. The data may have been re-classified by us for the purposes of presentation. Industry sources and publications generally state that the information contained therein has been obtained from sources generally believed to be reliable, but that their accuracy, completeness and underlying assumptions are not guaranteed and their reliability cannot be assured. Industry sources and publications are also prepared based on information as of specific dates and may no longer be current or reflect current trends. Industry sources and publications may also base their information on estimates, projections, forecasts and assumptions that may prove to be incorrect. Accordingly, investors should not place undue reliance on, or base their investment decision, on this information. CRISIL Report has been prepared by Crisil Research a division of CRISIL Limited, at the specific request of our Company. The market research process for the report has been undertaken thorough secondary/desktop research as well as primary research, which involves discussing the status of the market with leading participants and experts. CRISIL Research, a division of CRISIL Limited has taken due care and caution in preparing the CRISIL Report based on the information obtained by CRISIL from sources which it considers reliable (the Data ). However, CRISIL does not guarantee the accuracy, adequacy or completeness of the Data/CRISIL Report and is not responsible for any errors or omissions or for the results obtained from the use of Data/Report. The CRISIL Report is not a recommendation to invest/disinvest in any company covered in the CRISIL Report. CRISIL especially states that it has no liability whatsoever to the subscribers/users/transmitters/distributors of the CRISIL Report. CRISIL Research operates independently of, and does not have access to information obtained by CRISIL s Ratings Division/ CRISIL Risk and Infrastructure Solutions Ltd (CRIS), which may, in their regular operations, obtain information of a confidential nature. The views expressed in the CRISIL Report are that of CRISIL Research and not of CRISIL s Ratings Division/CRIS. No part of the Report may be published/ reproduced in any form without CRISIL s prior written approval. Indian Economy: Macroeconomic Outlook Economic reforms during early 1990s catapulted Indian economy on a high growth path. The country registered a real GDP growth of about 9.5% in the period and averaged 8% from The Indian economy has a significant presence on the global economic stage. During FY 2010 to FY 2016, India s Real GDP grew at a CAGR of 7.3% and at 7.5% during making it the fastest growing major economy in the world. India s GDP was 2.5% of world GDP in 2013 and it is expected to rise to 3.1% and 3.8% of world GDP in 2016 and 2021 respectively. IMF has pegged India s real GDP growth between 7.5% -7.7% for FY IMF and other agencies have predicted India to be in the top three global economies by Page 57 of 221

60 Historical GDP Growth (%) Sustained high Real GDP growth of over 6% since 1991, has led to a fundamental transformation of the Indian economy. The country was close to the USD 1tn GDP mark at USD 967 bn in 2010 and doubled it to USD 1872bn by FY2015. At a projected nominal GDP growth rate of 13% in the period , India is expected to become a USD 3.5tn economy by India is a consumption-led economy with private consumption forming around 60% of the GDP. Several factors will continue to drive the consumption and contribute to the economy including: Favorable demographics, dropping dependency ratio, rapidly rising education levels and steady growth of urbanization. Growing young & working population Increasing penetration of mobile technology and internet infrastructure Increasing aspirations and affordability Government s focus on skill development, job creation, infrastructure, manufacturing and investments Financial inclusion initiatives such as UDI led bank accounts and direct transfer of subsidies Consumption Growth Page 58 of 221

61 Globally India is seen as one of the key consumer markets from where future growth is likely to emerge. It is estimated that India s consumption expenditure will increase to USD 2,000bn by 2020 and will surpass the consumption expenditure of developed economies like Italy, France and United Kingdom. By 2030, India is expected to rank among the top 5 economies in terms of consumption. India s PFCE (Private Final Consumption Expenditure) as a Share of GDP India has emerged as the fastest growing major economy in the world as per the Central Statistics Organization(CSO) and International Monetary Fund (IMF). According to IMF World Economic Outlook Update (January2016), the Indian economy is expected to grow at % during FY , despite the uncertainties in the global market. India's foreign exchange reserves stood at USD billion by end of March 2016, as compared to USD billion last year, according to data from the Reserve Bank of India (RBI).The services sector of India contributes 65% to the Indian GDP while the manufacturing & industrial sector contributes 18% and the agriculture sector contributes 17%. The Gross Fixed Capital Formation (GFCF) at current prices stood at Rs 0.89 trillion (USD billion) in the first quarter of 2016 while India's exports stood at USD21.68 billion in July India s principal export partners are US, Germany, UAE, China, Japan, Thailand, Indonesia and European Union. The cumulative FDI inflows from April 2000 to March 2016 are USD billion wherein Mauritius (33.24%), Singapore (15.90%), UK (8.01%), Japan (7.27%), USA (6.22%) and Netherlands (6.00%) were the principal investing nations channeling the investment into sectors such as Services(17.60%), Construction Development (8.38%), Computer Software and Hardware (7.28%), Telecommunications(6.37%), Automobile (5.22%), Drugs and Pharmaceuticals (4.80%), Chemical (4.12%) and Trading (4.12%). Source: India Brand Equity Foundation - Indian Economy Overview & India - A Snapshot - September 2016: ( Asian Economy Overview Growth in the Emerging Asia region (Southeast Asia, China and India) shows mild moderation but will remain robust at an average rate of 6.5% real gross domestic product (GDP) growth in In the medium term, growth in the region is projected to average 6.2% per year over , according to the most recent Medium-Term Projection Framework for this edition of the Outlook (MPF-2016) as per below figure. This is noticeably below the 7% rate of growth over , due mainly to China s slowing growth. The growth Page 59 of 221

62 slowdown in China will also place downward pressure on growth in the rest of the region. The ten ASEAN countries together are projected to grow at 4.6% in 2015 with an annual average rate of 5.2% over In general, the Southeast Asia region will maintain a favorable growth performance in the medium term. INDIAN CAPITAL MARKET Trends in Primary Market The primary securities market continues to show an upward trend in capital mobilisation. During July 2016, the primary market saw four issues that mobilised Rs 2,497 crore compared to Rs 2,518 crore mobilised through eleven issues in June 2016 (revised figures). All the four issues were public- there were no rights issues during the month. Among the public issues, there were three IPOs that garnered Rs 1,659 crore in all. In July 2016, there was one QIP issue which raised Rs 56 crore, compared to one issue in the previous month which raised Rs 61 crore. There were 27 preferential allotments (amounting to Rs 1,470 crore) listed at BSE and NSE during July 2016, compared to 32 preferential allotments (Rs 2,009 crore) listed during June In July 2016, Rs 36,774 crore was raised through private placement route in the corporate bond market and Rs 838 crore amount was raised through public issue route. In July 2016, there were net inflows to mutual funds amounting to Rs 1,02,719 crore. While net inflows to private sector mutual funds were Rs 77,091 crore, public sector mutual funds witnessed net inflows of Rs 25,628 crore. In July 2016, income/debt oriented schemes witnessed net inflows of Rs 97,953 crore, while growth/equity funds and balanced schemes received net inflows of Rs 2,506 crore and Rs 2,078 crore respectively. Further, the FoF (Fund of fund) schemes investing overseas and GETFs (Gold Exchange Traded Funds) registered net outflows during July The cumulative net assets under management by all mutual funds increased by 9.95 per cent to Rs 15,18,097 crore as on July 31, 2016 from Rs 13,80,747 crore as on June 30, Trends in the Secondary Market The Indian stock market continued to rally in July The benchmark indices saw a rise- S&P BSE Sensex by 3.9 percent to close at 28,051.9 and Nifty 50 by 4.2 percent to close at 8,638.5respectively on July 31, Sensex and Nifty touched their intraday highs of 28,240.2 and 8,674.7 respectively on July 28, Both Sensex and Nifty touched their intraday lows of 27,034.1 and 8,287.6 respectively on July 08, Movement of Sensex and Nifty Global Chemical Industry Overview The chemical industry includes basic and specialty chemicals, consumer care products, agrochemicals and pharmaceuticals and is also a major economic force which employs millions of people around the world, and generates billions of dollars in shareholder value and tax revenues for governments. It accounts for about 7% Page 60 of 221

63 of global income and 9% of international trade. A variety of global economic and regulatory forces influence changes in chemical production, transport, import, export, use and disposal over time. In response to the growing demand for chemical-based products and processes, the international chemical industry has grown dramatically since the 1970s.Global chemical output was valued at USD billion in 1970; by 2010, it had grown to USD 4.12 trillion. Global Scenario The global chemicals industry has grown steadily over the past several decades. In the decade 2000 to 2010, the Global Chemical Production Regional Index calculated by the American Chemistry Council shows that total production increased 54%. Certain countries like China experienced rapid growth in their production which nearly tripled over that time period. In 2010, China was the largest chemical producing country, with sales of USD 754billion.The OECD countries as a group still account for the bulk of world chemical production, but developing countries and countries with economies in transition are increasingly significant. An analysis by OECD notes that while annual global chemical sales doubled over the period 2000 to 2009, OECD s share decreased from 77 % to 63 %and the share of the BRIICS countries (Brazil, Russia, India, Indonesia, China and South Africa) increased from 13% to 28 %. Source: United Nations Environment Programme - Global Chemicals Outlook: ( Overview of the Global Pharmaceutical Market: The global pharmaceutical industry is in a state of flux, working towards win-win transformations across all value chains from manufacturers, providers, payers, and patients. The global pharmaceutical market was estimated to be around US$ billion in 2015 and is expected to grow at a CAGR ( ) of 9.8% annually to reach US$ billion by North America accounted for the largest market share of around 40% by value, followed by Europe with around 32% of the market share. This is mainly due to the leading role of the US and European pharmaceutical industry. In 2015, the generic drugs market comprised a major segment of the pharmaceutical industry valued at US$ Billion, covering a significant 37% share of the global pharmaceutical market. The generic market is poised for significant growth in the next few years and is expected to reach US$ billion in 2020, growing at a CAGR of 11% from 2015 to The US is the world s largest generic pharmaceuticals market with a share of 25.4%, valued at US$ billion in 2015 and growing at a CAGR ( ) of 7.4%. China ranks second, occupying around 18.6% market share of the global generics market and is valued at US$ 61.4 billion, growing at a CAGR ( ) of 12.3%. India has emerged as a major market for consumption as well as manufacturing of generics, targeting exports of 40% and above to the US each year. Growth prospects in Emerging Asia The Philippines and Viet Nam are projected to show robust growth at an annual average rate of around 6% over Viet Nam s growth has been led by a rapid acceleration of fixed investment, strong foreign direct investment (FDI) inflows and robust consumption. Together, these components account for most of overall real growth, as net exports have restrained overall growth due to strong imports. In general, the private sector s performance has improved, with strong retail sales growth, although structural adjustments in the state-owned enterprise and banking sectors will weigh on growth somewhat. The Philippines has benefitted from strong momentum in domestic demand, buoyed by growing remittances. The Philippines is also benefitting from a significant improvement in its attractiveness as an FDI destination. Growth prospects reflect the countries improved macroeconomic fundamentals and their plans to develop infrastructure. However, risks remain as job creation and the business environment need to be improved. Indonesia, Southeast Asia s largest economy, has experienced mild moderation in its real growth with both domestic and external demand slowing to 5.5% in the medium term. Private consumption has expanded moderately. The government has attempted toboost investment by doubling the infrastructure budget for 2015, but execution has been delayed. While the Indonesian currency has depreciated considerably, partly due to falling commodity prices, export Page 61 of 221

64 growth has been very weak on the back of stagnant external demand. Economic growth in Malaysia weakened during the first half of The weakness was caused by deteriorating external demand as a result of the economic slowdown in China, its major trading partner, and by the persistence of low international oil prices in the first half of the year. However, the ringgit s depreciation may support non-commodity exports in the future. While political turmoil had a large negative impact on growth in Thailand in 2014, the country experienced modest GDP growth of 2.7% in While exports remain weak, the recovery in tourist arrivals that began in the summer of 2014 and continued into 2015 is a promising sign. However, the transition process to democracy must be monitored carefully to ensure that it does not lead to macroeconomic instability. Thailand s growth performance in the medium term should improve gradually from that of recent years. Growth performance in Brunei Darussalam and Singapore is projected to improve considerably over the medium term despite the recent international oil price shock and weaker than expected global growth compared to the past few years. Rising oil prices will allow Brunei Darussalam to record positive growth. Labour shortages and slowing productivity growth will keep Singapore s real growth noticeably below the pace of Singapore s weak performance is largely attributable to slowing domestic demand. While service-sector growth has declined compared to 2014, it continues to prop up overall growth, particularly due to strong contributions from finance, insurance and business services. Growth in the CLM countries (Cambodia, Lao PDR and Myanmar) is projected to lead that of the ASEAN region, with real GDP growth rates of more than 7% over Recovery of the agricultural sector and development of the tourism sector and industry will underpin real growth in Cambodia and Lao PDR. Growth in Myanmar, which is now the fastest in the region, should continue to accelerate as FDI continues to rise and as economic reforms spur the private sector s rapid development. Prospects in these countries, however, will depend on maintaining adequate control of rapidly rising credit and, especially in Myanmar, on sustaining the momentum of economic reforms. Top 10 global generic pharmaceutical companies The following chart sets forth the top 10 generic pharmaceutical companies globally. Three out of the 10 top generic companies are Indian. Sl. No Company Revenues (2015) (USD Bn) 1 Teva Pharmaceutical Industries Sandoz Limited Mylan Pharmaceuticals Private Limited Fresenius Kabi India Private Limited Hospira (Now a part of Pfizer) Sun Pharmaceutical Industries Limited Aspen Pharmacare Holdings Limited Sanofi India Limited Lupin Limited Cipla Limited 1.8 The global population currently stands at 7.2 billion, and is expected to rise to 9.3 billion by This will lead to an increased demand for food. The dietary needs in emerging countries will change as economy grows. To meet the food & nutrition needs of a growing population requires a sustainable approach that puts thrust on increasing productivity against the background of lower yields & decreasing farm sizes. It requires a push from all stakeholders the farmer, the government and the agrochemical/agro industry collectively so that the changing needs of the society are met. Around 25%of the global crop output is lost due to attacks by pests, weeds and diseases which doesn't augur well for farming given the critical challenges ahead and thus agrochemicals have an increasing role to play. Page 62 of 221

65 The scenario in India, even considering that we have different climatic conditions and cropping patterns is also underscored with similar macro trends. With the boom in population, it is estimated that by 2022, India will surpass China as the world's most populous country. Demand supply imbalances which have arisen on account of various challenges discussed briefly in the executive summary and which shall be covered in great detail further in the report need to be addressed expediently. The first green revolution was fairly successful in putting the country on a path to self-sufficiency of food grains. However it had certain limitations in that it could not help achieve absolute sustainability in agriculture. The Second Green Revolution would strive to correct in full or partial measure the shortcomings of the First Green Revolution. This would require a holistic approach to farming in India which would include opting measures on various fronts. These would namely include: 1. Reducing dependency on monsoons with better irrigation/water harvesting methods 2. Developing high yields variants of other crops besides food grains 3. Educating the farmer education on right agricultural practices 4. Integrated pest management techniques 5. Bringing in technology & mechanization to consolidate fragmented farmlands; 6. Developing measures such as crop insurance and generating alternate sources of livelihood to mitigate risk to protect farmers. Crop protection chemicals will also play a major role in the new phase of Second Green Revolution. The role of crop protection chemicals is not limited to protection; they help in yield enhancement as well. Use of crop protection chemicals can increase crop productivity by 25-50%, by mitigating crop loss due to pest attacks. It is estimated that almost 25% of world's agricultural production is lost due to postharvest pest attacks. Thus, crop protection chemicals are also very essential to ensure food and nutritional security. Traditionally, agrochemicals have been manufactured through chemical synthesis but lately biochemically processes are also gaining popularity. Usually, agrochemicals involve an active ingredient in a definite concentration along with adjuvant which enhance their performance, safety and usability. The agrochemicals are diluted in recommended doses and applied on seeds, soil, irrigation water and crops to prevent the damages from pests, weeds and diseases. The crop protection chemicals can be broadly classified into five types: 1.1 Insecticides: Insecticides provide protection to the crops from the insects by either killing them or by preventing their attack. They help in controlling the pest population below a desired threshold level 1.2 Fungicides: Fungicides protect the crops from the attack of fungi and can be of two types Protestants and eradicates. Protestants prevent or inhibit fungal growth and eradicates kill the pests on application 1.3 Herbicides: Herbicides also called as weedicides are used to kill undesirable plants. They can be of two types - selective and non-selective 1.4 Bio-pesticides: Bio-pesticides are new age crop protection products manufactured from natural substances like plants, animals, bacteria and certain minerals. They are eco friendly,easy to use; require lower dosage amounts for same performance as compared to chemical based pesticides 1.5 Others (Fumigants, Rodenticides, Plant growth regulators etc.):fumigants and rodenticides are the chemicals which protect the crops from pest attacks during crop storage. Plant growth regulators help in controlling or modifying the plant growth process and are usually used in cotton, rice and fruits Page 63 of 221

66 Overcoming the Limitations of First Green Revolution-Role of Agrochemicals Inter-crop Imbalances: During the First Green Revolution, though crops like wheat, rice, bajra and maize realized benefits, the focus was largely confined to wheat and rice. The two crops wrested area from coarse cereals, pulses and oilseed. The HYV (high yield variety) seeds for some of the crops have either not been developed so far or the results have not been guaranteed. The lack of guarantee on realizable benefits creates a hindrance to adoption by farmers who have to bear the risk of crop failure. What the 1st Green Revolution achieved was an increase in yield and surplus produce of crops that could address the per calorie requirement of the nation- which led to imbalances in the crop portfolio reflecting our need for food security. An example of this is pulses which is the main source of protein for the largely vegetarian population of India. At 641 kg/ha (FY12), the yield of pulses in India is extremely low as compared to other countries such as China (1431 kg/ha),myanmar (1323 kg/ha), Canada (1892 kg/ha) and Brazil (1027 kg/ha) which are the major producers of pulses in the world. The 2nd Green Revolution should strive to secure the nutritional requirements of the country by building on a balanced crop portfolio. Growing Regional disparities: The First Green Revolution led to economic disparities at inter and intraregional levels. Not all of India transitioned to the new agricultural technologies at the same time; as it only focused on the areas which were better from the cultivation and are ability point of view such as northern regions including Punjab, Haryana, and Western Uttar Pradesh in the north and Andhra Pradesh and Tamil Nadu in the south. Whereas, the eastern region including Assam, Bihar, West Bengal and Orissa and arid and semi-arid areas of southern and western India were largely neglected Yield in Punjab v/s Yield in West Bengal Wheat Indian agrochemicals market to reach US$ 6.3 billion by FY2020: Report Indian agrochemical industry, which is estimated at $ 4.4 billion in FY15, is expected to grow at 7.5 percent annually to reach $ 6.3 billion by FY20, with domestic demand growing at 6.5 percent per annum and export demand at 9 percent per annum, according to a report jointly presented by Tata Strategic Management Group (TSMG) and FICCI at the latter s sixth National Conference on Agrochemicals 2016 in New Delhi. Rice Page 64 of 221

67 The report - titled as Next generation Indian agriculture: Role of crop protection solutions - was released by Hukumdev Narayan Yadav, chairman, Standing Committee of Parliament on Agriculture and Farmers Welfare. Agrochemicals play a critical role in ensuring food and nutrition security of the nation. With estimated 355 MMTPA (million metric tonne per annum) food grain requirement by 2030 from current 253 MMTPA, efficient usage of crop protection products and solutions for Indian agriculture are the need of the hour. In order to realise the true potential, industry, government and regulatory bodies need to work in tandem and embrace digital technologies to further improve farmer connect, commented Manish Panchal, senior practice head - chemicals & energy at Tata Strategic Management Group. As per the report, the industry is dominated by insecticides accounting for 60 percent of the overall demand, followed by fungicides and herbicides contributing 18 percent and 16 percent, respectively. The report highlights the changing food consumption patterns in India, demand patterns and future growth potential of crop protection industry in India. As per the report, there is a need of crop protection and crop enhancement solutions to overcome the challenges faced by Indian agriculture in ensuring food and nutritional security of the nation. To ensure sustainable agriculture in the country, it has also suggested adoption of the best global practices and the latest technologies which include agronomy, fertigation, seed treatment and biotechnology development. The Indian agriculture sector is currently facing critical challenges like reduction in arable land, decreasing farm size, increasing pest attacks, low per hectare yield and a shift towards animal products consumption, all of which are leading to demand outpacing supply in the country s food chain. Agrochemicals could play a significant role in overcoming this imbalance. Indian crop protection market is supported by strong growth drivers. Current consumption of crop protection products in India at 0.6 kg per hectares (ha), is much lower than the world average of 3 kg per ha. This offers immense opportunities for future growth. With several products going off-patent globally, the sector is opening opportunities for generics, contract manufacturing & research for Indian players who can leverage their large scientific talent pool. Despite the strong growth drivers, Indian agrochemicals industry faces challenges in terms of low awareness among farmers and rising sales of non-genuine products (approximately 25 percent by volume). With large number of end users spread across the vast geography, managing availability through a distribution network is a challenge for all the major players. A collaborative approach by the industry, government & regulatory bodies is the need of the hour to realise full potential of the agrochemicals industry. Charu Kapoor, principal - chemicals practice, TSMG, added, The Indian crop protection industry has seen a significant slowdown in the past two years due to two consecutive years of drought and weak global demand. The monsoon this year looks promising and the industry could see improved conditions. To reduce business volatility from such macro factors and build a more resilient business model, it is imperative for companies to explore adjacencies. Indian Agrochemical market Overview The Indian crop protection industry is estimated to be USD 4.25 billion in FY14 and is expected to grow at a CAGR of 12% to reach USD 7.5 billion by FY19. Exports currently constitute almost 50% of Indian crop protection industry and are expected to grow at a CAGR of 16% to reach USD 4.2 billion by FY19, resulting in 60% share in Indian crop protection industry. Domestic market on the other hand would grow at 8% CAGR, as it is predominantly monsoon dependent, to reach USD 3.3 billion by FY19. Globally, India is fourth largest producer of crop protection chemicals, after United States, Japan and China. The crop protection companies in India can be categorized into three types Multi-National, Indian including public sector companies and small sector units. Page 65 of 221

68 Indian Crop Protection Market (USD Billion) 12% USD 4.5 billion USD 7.5 billion 16% % 3.3 FY 14 FY 19 Source: Industry Analysis by Tata Strategic Industry structure and Competitive landscape The Indian crop protection industry is dominated by generic products with more than 80% of molecules being non-patented. This results in very low entry barriers for the industry. Hence, strong distribution network, appropriate pricing, brand recall and dealer margins are some of the critical factors for companies to succeed. Crop protection chemicals are manufactured as technical grades and converted into formulations for agricultural use. The Indian Agrochemical value chain comprises of technical grade manufacturers, formulators producing the end products, distributors and end use customers. According to the Pesticide Monitoring Unit, GOI, there are about 125 technical grade manufacturers, including about 10 multinationals, more than 800 formulators and over 145,000 distributors in India. More than 60 technical grade pesticides are being manufactured indigenously. Agrochemical Value Chain Technical grade manufacturers (~125) Formulators (~800) Distributors (~145,000) End use Customers Page 66 of 221

69 Source: Industry Analysis by Tata Strategic In India top ten companies control almost 75-80% of the market share (Refer Annexure-I for list of top agrochemical companies in India). The market share of large players depends primarily on product portfolio and introduction of new molecules. The market has seen a number of mergers and acquisitions with large players buying out small manufacturers. Companies are also looking for strategic alliances and partnerships in order to expand their market reach. Key Industry Players in India Presence of key industry participants across product segments Company Insecticides Herbicides Fungicides Others BASF India - Seed treatment Bayer Crop science Ltd Seed treatment, plant growth regulators Dhanuka Agritech Limited PGRs, Surfactants Dow Agro Sciences India Pvt. Ltd. Plant Growth Regulator DuPont Growth Enhancer Excel Crop Care Limited Seed treatment, Home & Garden Gharda Chemicals Ltd. Plant growth Regulator Meghmani Organics Limited Pesticide Intermediates Monsanto India Ltd. - - Maize seeds Nagarjuna Agrichem Limited Fertilizers, Micro Nutrients, Liquid Fertilizers, PI Industries Ltd Speciality Products Rallis India Rodenticides, Seed treatment Syngenta India Seed treatment United Phosphorous Limited Fumigants, Rodenticides Source: Industry Analysis by Tata Strategic Indian market scenario Distribution of domestic crop protection market by Product category The Indian crop protection market is dominated by Insecticides, which form almost 60% of domestic crop protection chemicals market. The major applications are found in rice and cotton crops. Fungicides and Herbicides are the largest growing segments accounting for 18% and 16% respectively of total crop protection chemicals market respectively. As the weeds grow in damp and warm weather and die in cold seasons, the sale of herbicides is seasonal. Rice and wheat crops are the major application areas for herbicides. Increasing labor costs and labor shortage are key growth drivers for herbicides. The fungicides find application in fruits, vegetables and rice. The key growth drivers for fungicides include a shift in agriculture from cash crops to fruits and vegetables and government support for exports of fruits and vegetables. Bio-pesticides include all biological materials organisms, which can be used to control pests. Currently bio- pesticides constitute only 3% of Indian crop protection market; however there are significant growth opportunities for this product segment due to increasing concerns of safety and toxicity of pesticides, stringent regulations and government support. Source: Industry Analysis by Tata Strategic Page 67 of 221

70 Indian Crop Protection Market Split 3% 3% 18% 16% 60% Insecticides Fungicides Herbicides Biopesticides Others Major crop protection products Segment Major Products Main Applications Insecticides Ace hate, Monocrotophos, Permethrin Cotton, Rice Fungicides Mancozeb, Copper Oxychloride, Ziram Fruits, Vegetables, Rice Herbicides Glyphosate, Isoproturan, 2,4-D, Pendimethalin Rice, Wheat Bio-pesticides Spinosyns, neem based Rice, Maize, Tobacco Others Zinc Phosphide, Aluminum Phosphide Stored produce Source: Industry Analysis by Tata Strategic Erstwhile Andhra Pradesh (Seemandhra and Telangana), Maharashtra and Punjab are top three states contributing to 45% of pesticide consumption in India. Erstwhile Andhra Pradesh is the leading consumer with 21% share. The top seven states together account for more than 70% of crop protection chemicals usage in India. Page 68 of 221

71 State wise agrochemical consumption 5% 15% 24% AP Maharashtra Punjab MP & Chattisgarh 5% Karnataka 5% 7% 7% 8% 11% 13% Gujarat Tamil Nadu Haryana West Bengal Others Source: Industry reports, Analysis by Tata Strategic Challenges faced by the Indian Crop Protection Chemical Industry Non-genuine products: There is a significant share of non-genuine pesticides which include counterfeit, spurious, adulterated or sub-standard products. According to industry estimates the non-genuine pesticides could account for more than 40% of the pesticides sold in India in FY14.These products are inferior formulations which are unable to kill the pests or kill them efficiently. They also leave by-products which may significantly harm the soil and environment. The damage through such products is multifold. Apart from crop loss and damage to soil fertility, use of non-genuine products leads to loss of revenue to farmers, agrochemical companies and government. Some of the key reasons for use of non-genuine products are lack of awareness amongst the farmers, difficulty in differentiating between genuine and non-genuine products, supply chain in efficiencies, law enforcement challenges and influencing power of distributors/retailers. In association with FICCI, TATA Strategic has taken up a study focusing on this subject: Stringent regulations: Stringent environmental regulations across the world are increasing the cost of developing new products and simultaneously delaying the introduction of new products in the market. For instance, in the European Union any agrochemical product if found to be mutagenic, carcinogenic or classified as an endocrine disruptor would not achieve registration or re-registration irrespective of the level of exposure generated. It takes almost nine to ten years to bring a new product. Low focus on R&D by domestic manufacturers due to high costs: The industry is facing a serious challenge owing to the rising R&D costs. R&D associated with new product development amounts to ~ USD 250 million in costs. This prevents the companies from investing in R&D activities and they tend to focus more on the generic products which require low investments in research and development. In order to sustain in the long run, the industry needs to be committed to making long term investments and withstand longer gestation periods in order to bring to the market more innovative products. Lack of education and awareness among farmers: It is important to educate the farmers about the appropriate kind of pesticide, its dosage and quantity and application frequency. Only 25-30% of farmers are aware of agrochemicals products and the usage, therefore; large numbers of farmers are unaware of the cost benefit that Page 69 of 221

72 could be gained by using agrochemicals. However it is not easy to reach the farmers owing to infrastructure issues, regional languages and dialects and a general inertia towards adoption of newer products on account of possible risks of crop failure. The main point of contact between the farmers and the manufacturers are the retailers who don't have adequate technical expertise and are thus unable to impart proper product understanding to the farmers. It is also very difficult for the farmers to convey their needs effectively to the manufacturers. Need for efficient distribution systems: The large number of end users and the predominantly generic nature of the market make a strong and efficient distribution network essential for the crop protection market. However, the industry has been plagued by problems arising out of supply chain inefficiencies and inadequate infrastructure which result in post-harvest losses estimated at INR 45,000 crore every year. The lack of an efficient distribution system also makes it difficult for the agrochemical companies to reach the farmers to promote their products and educate them about their usage and benefits. Long gestation period for new products: It takes almost 10 years to bring a new molecule into the market. Even for the generic products, it can take up to 5 years to get the product registered. The regulatory bodies do not have adequate resources and infrastructure to execute timely registration of products. Sometimes the rules are not clearly defined creating interpretation challenges for the regulatory bodies, leading to confusion there by adding to the complexities for the crop protection chemical companies. Opportunities and Key Growth Drivers for Indian Crop Protection Market Export Opportunities: The export of pesticides from India has seen a strong growth over the last few years. Globally, India is the thirteenth largest exporter of pesticides. Most of the exports are off-patent products. The major exports from India happen to Brazil, USA, France and Netherlands. The key growth drivers are India's capability in low cost manufacturing, availability of technically trained manpower, seasonal domestic demand, overcapacity, better price realization globally and strong presence in generic pesticide manufacturing (India has process technologies for more than 60 generic molecules). Post tsunami Japanese companies are trying to build manufacturing capacities outside Japan to de-risk themselves. The Japanese companies are highly particular about confidentiality and intellectual property protection and some of them have seen opportunity in India and are now creating a base here. However, complex registration procedures pose a major challenge for the Indian crop protection chemicals export. CAGR 17.5% Indian Agrochemical Exports, FY 10-FY FY 10 FY 11 FY 12 FY 13 FY 14 Page 70 of 221

73 Source: Trademap Statistics, Tata Strategic Analysis Agrochemicals worth USD 6.3 billion are expected to be taken off-patent list by This provides significant export opportunities for Indian companies which have expertise in generic segment. Top 6 importing nations constitute only 44% of India's agrochemical exports. This also indicates export potential for Indian companies. In order to build a strong export base, companies should set up marketing offices in association with domestic players in export geographies. Companies can look for strategic alliances with local companies to expand their marketing and distribution reach. Companies can also explore merger and acquisition opportunities to increase their global presence. Opportunities in generic products Agrochemicals going off-patent, (USD Billion) Source: Industry reports, Analysis by Tata Strategic Growth in herbicides and fungicides: Labor shortage, rising labor costs and growth in GM crops has led to growth in the use of herbicides. The herbicide consumption in India stands at 0.35 USD billion in FY14 and is expected to grow at a CAGR of 15% over the next five years to reach ~0.8 USD billion by FY19. On the other hand the fungicide industry in India has grown due to the growth in Indian horticulture industry, which has grown at a CAGR of 7.5% over the last five years. Low consumption of pesticides in India: The per hectare consumption of pesticides in India is amongst the lowest in the world and currently stands at 0.6 kg/ha against 5-7 kg/ha in the UK and at almost times ~ 13 kg/ha in China. In order to increase yield and ensure food security for its enormous population agrochemicals penetration in India is bound to go up. Electronic Industry In India The IT & electronics industry is one of the fastest-growing industries in India, both in terms of production and exports. In fact, software development and IT-enabled services (ITeS) have made India s brand equity a force to reckon with. Today, India is a vast market for IT, with a major production base. In , direct Page 71 of 221

74 employment in the IT & ITeS sector was estimated at 3.5 million. The demand for electronic products and systems in the country is estimated to reach US$ 400 billion by India s communication and broadcasting sector with a 966 million strong subscriber base as of March 2015 is one of the world s largest in gross telephone subscribers. Advantage India The availability of cost-effective manpower allows multinationals to save up to 25 per cent in operational costs. India has favorable government policy and regulatory support for the electronics & IT industry. The industry offers a range of services, from low-end application development to high-end integrated IT solutions across multiple verticals, with a well-developed vendor base. The Indian IT & software industry adheres to quality processes and standards, with most companies aligning operations with international standards. Software technology parks and special economic zones in India provide an affordable real estate space for IT companies. Among the top five global service locations, India maintains a substantive lead on the financial attractiveness index. The BPM industry, besides providing cost-efficiency, focuses on specialization, process re-engineering and latest technology-enabled platforms; moreover, it is anticipated to become a US$ 50 billion industry by ELECTRONICS AND COMPUTER SOFTWARE EXPORT PROMOTION COUNCIL The Electronics and Computer Software Promotion Council (ESC) was formed to provide a platform for India s IT & electronics industry. With exports to more than 200 countries, ESC has successfully steered the direction of India s electronics and software exports. ESC offers a comprehensive database of industry companies, and products and capabilities of all major players. The council facilitates import/export collaborations, joint ventures, sub-contracting tie-ups, and technology transfers for industry players. It provides access to published reports on markets, products and trade statistics, business opportunities, and government policies. Source: Indian Electronics Industry Analysis The electronics market of India is one of the largest in the world and is anticipated to reach US$ 400 billion in 2022 from US$ 69.6 billion in The market is projected to grow at a compound annual growth rate (CAGR) of 24.4 per cent during Total production of electronics hardware goods in India is estimated to reach US$ 104 billion by The communication and broadcasting equipment segment constituted 31 per cent, which is the highest share of total production of electronic goods in India in FY13, followed by consumer electronics at 23 per cent. Page 72 of 221

75 Electronic exports from India was expected to reach US$ 8.3 billion in FY13, a CAGR of 27.9 per cent during FY Technological improvements and competitively cost effectiveness are main drivers for demand of Indian electronics products abroad. The Government of India has set up Electronic Hardware Technology Parks (EHTPs), Special Economic Zones (SEZs) and a brought about a favourable climate for foreign direct investment (FDI). It has also increased liberalization and relaxed tariffs to promote growth in the sector. In addition, the government gave its green signal to the Modified Special Incentive Package Scheme (MSIPS) under which the central government will be offering up to US$ 1.7 billion in benefits to the electronics sector in next five years. The growing customer base and the increased penetration in consumer durables segment has provided enough scope for the growth of the Indian electronics sector. Also, digitisation of cable could lead to increased broadband penetration in the country and open up new avenues for companies in the electronics industry. Electronics exports have outpaced total production Electronic exports from India reached USD6.1 billion in FY15, over FY07 15, exports from the sector (CAGR: 10.2 per cent) Consumer Electronics have shown a positive growth over the years with the growth in the production of LCD/LED TVs rising to almost 40 per cent in as compared to a mere 11 per cent in Technological improvements and competitively cost effectiveness are main drivers for demand of Indian electronics products abroad. Page 73 of 221

76 Introduction India is currently the world s second-largest telecommunications market and has registered strong growth in the past decade and half. The Indian mobile economy is growing rapidly and is expected to contribute substantially to India s Gross Domestic Product (GDP). The liberal and reformist policies of the Government of India have been instrumental along with strong consumer demand in the rapid growth in the Indian telecom sector. The government has enabled easy market access to telecom equipment and a fair and proactive regulatory framework that has ensured availability of telecom services to consumer at affordable prices. The deregulation of Foreign Direct Investment (FDI) norms has made the sector one of the fastest growing and a top five employment opportunity generator in the country. Market Size The Indian telecommunication services market will likely grow by 10.3 per cent year-on-year to reach US$ billion by 2020#. Driven by strong adoption of data consumption on handheld devices, the total mobile services market revenue in India is expected to touch US$ 37 billion in 2017^. Smartphone subscription in India is expected to increase four-fold to 810 million users by 2021, while the total smartphone traffic is expected to grow 15-fold to 4.5 Exabyte s (EB) per month by 2021###. India' has the second largest mobile subscriber base in the world. According to Telecom Regulatory Authority of India (TRAI), the total telecom subscriber base in December 2015 stood at 1.04 billion, out of which 1.01 billion were mobile subscribers and million were wire line subscribers.$ According to a study by GSMA, smart phones are expected to account for two out of every three mobile connections globally by 2020 making India the fourth largest smartphone market. Total number of Fourth- Generation (4G) enabled Smartphone shipments in India stood at 13.9 million units in the quarter ending December 2015, which was more than 50 per cent of total shipments, thereby surpassing number of Third- Generation (3G) enabled Smartphone shipments for the first time. ^^ The broadband services user-base in India is expected to grow to 250 million connections by 2017, according to GSMA. India added the highest number of net mobile phone subscriptions of 21 million during the fourth quarter of 2015@. International Data Corporation (IDC) predicts India to overtake US as the second-largest Smartphone market globally by 2017 and to maintain high growth rate over the next few years as people switch to smart phones and gradually upgrade to 4G. In spite of only 5 per cent increase in mobile connections in 2015, overall expenditure on mobile services in India is expected to increase to US$ 21.4 billion in 2015, led by 15 per cent growth in data services expenditure@@. The Indian telecom sector is expected to generate four million direct and indirect jobs over the next five years according to estimates by Randstad India. The employment opportunities are expected to be created due to combination of government s efforts to increase penetration in rural areas and the rapid increase in smartphone sales and rising internet usage. Page 74 of 221

77 Investment With daily increasing subscriber base, there have been a lot of investments and developments in the sector. The industry has attracted FDI worth US$ billion during the period April 2000 to March 2016, according to the data released by Department of Industrial Policy and Promotion (DIPP). Some of the major developments in the recent past are: Xiaomi, world s third largest Smartphone maker, has approached state governments in India to set up handset plants in collaboration with Chinese contract manufacturer Foxconn, in order to boost their production to keep pace with the rising demand. Axiata Digital, a subsidiary of Malaysia s largest telecom firm Axiata Group Berhad, has made its entry into Indian e-commerce market by investing Rs 100 crores (US$ million) in Bengalurubased StoreKing. Sterlite Technologies, one of India s leading optic fibre and telecommunication cable manufacturers, plans to collaborate with telecommunication carriers to deploy smart communication networks in India, which are expected to have a lifespan of up to 25 years as against the normal lifespan of seven to eight years. India s largest telecom operator Bharti Airtel Limited plans to buy entire spectrum of Videocon Telecommunications Limited for Rs 4,428 crore (US$ million) which will give the telecom operator additional spectrum in the 1,800 MHz band in six licence areas namely Bihar, Haryana, Madhya Pradesh, Eastern Uttar Pradesh, Western Uttar Pradesh, and Gujarat. Chinese Smartphone manufacturer One Plus has partnered with Foxconn to start manufacturing its products in India as part of its plan to have 90 per cent of the devices sold in India to be locally manufactured by the end of Government of India to make a windfall gain from sale of spectrum in and achieve its fiscal deficit target of 3.5 per cent of Gross Domestic Product (GDP) for the year. Mr Paolo Colella, Managing Director, Ericsson India has identified India to be one of the fastest growth regions for Ericsson globally and has announced setting up of its second manufacturing plant in Pune, Maharashtra. Walmart India Private Limited's president has shown interest in opening its chain of stores in Haryana, while Micromax has also offered to set up a mobile handset manufacturing unit in the National Capital Region (NCR). Vodacom SA, a subsidiary of Vodafone Plc, has entered into an agreement with Tata Communications Ltd to buy the fixed-line assets of TataComm's South African telecom subsidiary Neotel Pty Ltd. Bharti Airtel has planned to invest Rs 60,000 crore (US$ 8.89 billion) over a period of three years with a view to boost its telecom network capacity thereby improving the quality of voice and data services to its customers. Reliance Communications Ltd, India s fourth largest mobile services provider, has agreed to acquire Sistema Shyam TeleServices Ltd (SSTL), the local unit of Russian company Sistema JSFC, in a deal Page 75 of 221

78 valued at Rs 4,500 crore (US$ million), which includes payments to the government for spectrum allotted to Sistema. Videocon Industries Ltd plans to set up a mobile handset assembly plant along with manufacturing set top boxes in Punjab for an investment of Rs 500 crore (US$ 74 million) over three years. American Tower Corporation, a New York Stock Exchange-listed mobile infrastructure firm, has acquired 51 per cent stake in telecom tower company Viom Networks in a deal worth Rs 7,635 crore (US$ 1.13 billion). Chinese Smartphone maker OnePlus has announced its partnership with Foxconn, a Taiwanese company, for assembling its phones in Foxconn's factory in Andhra Pradesh. Swedish telecom equipment maker Ericsson has announced the introduction of a new radio system in the Indian market, which will provide the necessary infrastructure required by mobile companies in order to provide Fifth-Generation (5G) services in future. Global telecom equipment makers like Ericsson, Nokia Networks and Huawei are looking forward to over US$ 1 billion revenue opportunity as mobile phone operators in India roll out high-speed broadband services on the 4G LTE technology across the country. Lenovo Group of China has commenced manufacturing its smart phones in India, through its contract manufacturer Flex s facility near Chennai, thus becoming the largest Chinese company to follow Make in India strategy. Foxconn, the world s largest contract-manufacturing firm for consumer electronics and manufacturer for Apple products, has signed a Memorandum of Understanding (MoU) with Maharashtra state government to invest US$ 5 billion over the next three years for setting up a manufacturing unit between Mumbai and Pune. Government Initiatives The government has fast-tracked reforms in the telecom sector and continues to be proactive in providing room for growth for telecom companies. Some of the other major initiatives taken by the government are as follows: The Government of India has cleared India's biggest spectrum auction across seven bands, which is expected to generate revenue of Rs 5.66 trillion (US$ 83.9 billion), expand the bandwidth and the ability of telecom companies to service consumers and address the problem of call drops. The Telecom Regulatory Authority of India (TRAI) has released a consultation paper which aims to offer consumers free Internet services within the net neutrality framework and has proposed three models for free data delivery to customers without violating the regulations. The Government of India has liberalized the payment terms for spectrum auctions by allowing two options of payments to telecom companies for acquiring the right to use spectrum, which include upfront payment and payment in installments. The Department of Telecommunications (DoT) has amended the Unified Licence for telecom operations which will allow sharing of active telecom infrastructure like antenna, feeder cable and transmission systems between operators, thereby lowering the costs of operations and leading to faster rollout of networks. Page 76 of 221

79 The Telecom Regulatory Authority of India (TRAI) has recommended amendments in the Unified Licence in order to facilitate interconnection at Internet Protocol (IP) level among licenced operators. The Telecom Regulatory Authority of India (TRAI) has recommended a Public-Private Partnership (PPP) model for BharatNet, the central government s ambitious project to set up a broadband network in rural India, and has also envisaged central and state governments to become the main clients in this project. The Ministry of Skill Development and Entrepreneurship (MSDE) signed a Memorandum of Understanding (MoU) with Department of Telecommunication (DoT) to develop and implement National Action Plan for Skill Development in Telecom Sector, with an objective of fulfilling skilled manpower requirement and providing employment and entrepreneurship opportunities in the sector. The Telecom Regulatory Authority of India (TRAI) has directed the telecom companies or mobile operators to compensate the consumers in the event of dropped calls with a view to reduce the increasing number of dropped calls. With a view to encourage consolidation in the telecom sector, the Government of India has approved the rules for spectrum trading that will allow telecom companies to buy and sell rights to unused spectrum among themselves. The Union Cabinet chaired by the Prime Minister, Mr Narendra Modi, gave its approval to the guidelines on spectrum sharing, aimed to improve spectral efficiency and quality of service, based on the recommendations of the Telecom Regulatory Authority of India (TRAI). The Central Government s several initiatives to promote manufacturing in the country, such as Make in India campaign appears to have had a positive impact on mobile handsets manufacturing in the country. Companies like Samsung, Micromax and Spice had been assembling handsets in the country already. Xiaomi and Motorola, along with Lenovo have also started assembly of smart phones in India. Firms like HTC, Asus and Gionee too have shown interest in setting up a manufacturing base in the country. The Government of India plans to roll out free high-speed wi-fi in 2,500 cities and towns across the country over the next three years. The program entails an investment of up to Rs 7,000 crore (US$ 1.04 billion) and will be implemented by state-owned Bharat Sanchar Nigam Ltd (BSNL). Road Ahead India will emerge as a leading player in the virtual world by having 700 million internet users of the 4.7 billion global users by 2025, as per a Microsoft report. With the government s favourable regulation policies and 4G services hitting the market, the Indian telecommunication sector is expected to witness fast growth in the next few years. Exchange Rate Used: INR 1 = US$ as on July 11, 2016 References: Media Reports and Press Releases, Cellular Operators Authority of India (COAI), Telecom Regulatory Authority of India (TRAI), Department of Telecommunication (DoT), Department of Industrial Policy and Promotion (DIPP) Notes: ^ - According to research firm IDC,! - GSMA report 'The Mobile Economy: India - Ericsson Mobility Report February 2016, # - According to a report by leading research firm Market Research Store, ## - According to a study by the Associated Chambers of Commerce and Industry of India (Assocham), ### - According to the Ericsson Mobility Report - as per research firm Gartner, $ -TRAI Telecom Subscription Report December 2015, ^^ - According to a report by International Data Corporation (IDC). Page 77 of 221

80 Telecom subscriber base expands substantially India is currently the second-largest telecommunication market and has the third highest number of internet users in the world Between FY 07-16* India s telephone subscriber base expanded at a Compound Annual Growth Rate (CAGR) of 19.5 per cent to 1, million and teledensity to In September 2015, total telephone subscription stood at 1, million, while teledensity was at percent. Warehousing Industry Analysis Global Warehousing Storage and Warehousing Market Will Grow at 8.52% CAGR to 2019, Forecasts a Global Report The Global Warehousing and Storage Market Research Analysis report says warehousing provides a wide range of value-added services such as assortment and grading, packaging and labeling, and shipping services. According to this research, the storage and warehousing market growth is driven by increased demand for the outsourcing of warehouse services. Vendors in the market provide differentiated value-added services to customers, including packaging and kitting, which is difficult to maintain during in-house warehouse operations. The following companies are the key players in the Global Warehousing and Storage Market: APL, DHL, Genco, Kuehne+Nagel and UPS. Commenting on the Global Warehousing and Storage Market report, an analyst said: "An increase in adoption of WMS services in warehouses enables the optimization of warehouse operations with efficient inventory management services. Another key trend is the increase in M&A, which will propel demand for warehouse services during the forecast period." Further, the Global Warehousing and Storage Market report states that the capital-intensive nature of the business is a major hindrance in the growth of the market. Warehouse operations and management require a lot of investment in the business, which also requires a huge workforce. Segmentation of global warehousing and storage market by type of warehouses: Farm product warehousing and storage General warehousing and storage Refrigerated warehousing and storage Source: cagr-to-2019-forecasts-a-global-report html Warehousing space expected to grow significantly over next three years The warehousing space requirement for e-retail players is projected to accelerate up to mirroring growth of the e-retail industry. To cater to the rising demand and maintain customer service quality, large players have announced plans to strengthen supply chain network. The roll-out of GST is not expected to have a substantial impact on the supply chain of e-retailers. Page 78 of 221

81 Source: India s Warehousing Industry: an Overview Apart from conventional storing services, warehouses in India now provide value-added services like consolidation and breaking up of cargo, packaging, labelling, bar coding, reverse logistics, etc. The growth in warehousing in India is primarily being driven by the following factors: Growing manufacturing activity Rising domestic consumption, Increasing international trade Emergence of organized retail in the country Increasing private and foreign investments in infrastructure Easing of government regulations Introduction The existing provider landscape is largely compromised and hence unable to create the desired integrated scaled proposition due to several factors, as listed: Lack of alignment of capacity with cargo flows Lack/Absence of the appropriate scale and quality of warehousing infrastructure and services required to enable value-based pricing Low capital and operating efficiencies (i.e., lower utilization and poor throughput/unit space) Limited capacity (and ability) for handling multi-modal interfaces Limited value addition specific to the user industry, which stems from a weak understanding of the user s supply chain Inappropriate level of automation Inappropriate measurement of total logistics costs by end users, creating an illusion that value can only be driven by cutting piecemeal logistics (warehousing, transport, handling) costs India s warehousing industry The size of the Indian warehousing industry (across commodities and modes) is pegged at about INR560 billion (excluding inventory carrying costs, which amount to another ~INR4,340 billion). The industry is growing at over 10% annually. Warehousing forms a crucial link in the overall logistics value chain. It accounts for ~5% of the Indian logistics market (excluding inventory carrying costs, which amount to another ~30%). Multiple business models exist within the warehousing industry. The key segments can be represented as: Industrial/Retail warehousing: accounts for ~55% of the total market CFS/ICD: ~14% share Agri warehousing: 15% share Cold stores: ~16% share Source: Page 79 of 221

82 BUSINESS OVERVIEW The following information is qualified in its entirety by, and should be read together with, the more detailed financial and other information included in this Draft Letter of Offer, including the information contained in the section titled 'Risk Factors', beginning on page no.11 of this Draft Letter of Offer. This section should be read in conjunction with, and is qualified in its entirety by, the more detailed information about our Company and its financial statements, including the notes thereto, in the section titled 'Risk Factors' and the chapters titled Financial Information' and Management Discussion and Analysis of Financial Conditions and Results of Operations' beginning on page no.11, 105 and 129 respectively, of this Draft Letter of Offer. Unless the context otherwise requires, in relation to business operations, in this section of this Draft Letter of offer, all references to "we", "us", "our" and "our Company" are to PB Global Limited and Group Entities as the case may be. OVERVIEW Our Company is a fast-growing diversified organization with a presence across sectors such as pesticides & agrochemicals, chemicals distribution, electronics & telecom distribution and warehousing. After having built a strong presence in chemicals distribution across India the company diversified into electronics and telecommunications. While headquartered in Mumbai the Company s sourcing network spans the globe to serve the growing appetite of the Indian and MENA (Middle East & North Africa) markets. Initially sourcing materials from Soviet Era CIS countries, the company has now expanded its supplier network and has successfully entered into supply agreements with manufacturers from China, Taiwan, Japan, Turkey, Romania, Belgium and Chile. To serve its customers across India the Company has created a pan-india network of offices and warehouses. Our company is present in all major Indian cities and industrial regions to provide ground-level assistance to its customers. The company maintains stocks of all its products across its warehouses to provide just-in-time deliveries to industrial consumers. Seeing the growth in volumes the Company has created an in-house logistics team to provide the fastest and most economical service to customers. The dedicated logistics team also enables our company to closely coordinate and economize its deliveries from its global suppliers. The company has diversified into electronics and telecom distribution for leading Indian and global manufacturers. The emergence of dynamic sectors such as E-commerce has seen the Company enter into supply chain partnerships with leading portals. OUR OPERATIONS AND PRODUCTS PESTICIDES & AGROCHEMICALS Our Company commissioned its first manufacturing unit in 1963 and the unit became operational in The facility is located in 25 acres at Manpada, Thane, 40 km from Mumbai. The unit has constantly been upgraded through technology collaborations with leading North American firms and is equipped with start-of-the-art facilities for the production and storage of pesticides and insecticides. Currently, Annual Production Capacity: 4,250 MT (1965) expanded to 10,500 MT (1978). Page 80 of 221

83 OUR PRODUCTS: Barium Carbonate. Copper Oxychloride. Malathion. Zinc Phosphide. CHEMICALS DISTRIBUTION & TRADING Initially the source of chemicals was CIS countries, the company has now expanded its gobal supplier network and has successfully entered into supply agreements with manufacturers from China, Taiwan, Japan, Turkey, Romania, Belgium and Chile. OUR PRODUCTS: Soda Ash Light Soda Ash Dense Sodium Bicarbonate Caustic Soda Caustic Potash Ammonium Chloride Ammonium Bicarbonate Pvc Resin Cpvc Resin Melamine Polyethylene Resin Sodium Nitrate Sodium Nitrite Sodium Tri Polyphosphate - Stpp Acetic Acid Sodium Sulfate Hydrogen Peroxide 50% Citric Acid Calcium Carbide Gum Rosin Page 81 of 221

84 ELECTRONICS & TELECOM DISTRIBUTION P.B. International (A Division of PB Global Limited) was established in 2010 as the electronics and telecom distribution arm of the company. It leverages the company s pan-india presence to provide distribution services across India. The company s reputation in international markets as well as at home has enabled it to enter into successful partnerships with leading multinational manufacturers of consumer electronics. P.B. International is an authorized distributor for several mobile and cameras brands. P.B. International identified the importance of emerging channels such as e-commerce to the expanding Indian economy. The Company has leveraged its supply management experience and vendor relationships to become a leader supplier of consumer electronics to e-commerce portals under the brand name of TechFone. WAREHOUSING PB Global Limited is a leading provider of warehousing and storage solution across Maharashtra. The company owns and manages 200,000 sqft of specialized storage space in Thane, Bhiwandi and Mumbai. We provide storage solutions for a wide range of materials and are equipped with specialized handling equipment. Areas of Focus: Bulk chemicals (hazardous and non-hazardous) Specialty chemicals Metals Automobile storage Food grains Other specialized products Page 82 of 221