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Cox & Kings

Cox & Kings

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Published by: adhavvikas on Mar 08, 2011
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11/13/2011

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DRAFT RED HERRING PROSPECTUSDated January 25, 2008Please read Section 60B of the Companies Act, 1956(This Draft Red Herring Prospectus will be updated upon filing with the RoC)100% Book Built Issue
 
COX AND KINGS (INDIA) LIMITED
(The Company was incorporated as “Eastern Carrying Company Ltd” on June 7, 1939 under the India Companies Act, VII of 1913. The name of the Company was changed to “Cox & Kings (India) Limited” on February 23, 1950 after the introduction of the Companies Act 1956, as amended (“
Companies Act
”). The fresh certificate of incorporation consequent upon the changeof name was granted on 23
rd
February 1950 by the Registrar of Companies, Maharashtra, located at Mumbai (the “
RoC
”). For details of changes in the registered office, see the section “History and Certain Corporate Matters” beginning on page 120 of this Draft Red Herring Prospectus).
Registered Office
: Turner Morrison Building, 1st Floor, 16 Bank Street, Fort, Mumbai- 400 001Maharashtra, India
Telephone No
: +91-22-22709100
Fax No
: +91-22-22704600.
Contact Person
: Ms. Rashmi Jain, Company Secretary & Compliance Officer;
Email
: ipo@coxandkings.com
Website
: www.coxandkings.com
PUBLIC ISSUE OF 8,700,000 EQUITY SHARES OF RS. 10 EACH FOR CASH AT A PRICE OF RS
[●]
PEREQUITY SHARE INCLUDING A SHARE PREMIUM OF RS.
[●]
PER EQUITY SHARE, AGGREGATING RS.
[●]
MILLION (THE "ISSUE") BY COX AND KINGS (INDIA) LIMITED (THE "COMPANY OR "THEISSUER"). THE ISSUE COMPRISES A NET ISSUE TO THE PUBLIC OF 8,600,000 SHARES OF RS. 10 EACH(THE "NET ISSUE") AND A RESERVATION OF UP TO 100,000 SHARES OF RS. 10 EACH FOR THEPERMANENT ELIGIBLE EMPLOYEES OF THE COMPANY (THE "EMPLOYEE RESERVATION PORTION").THE ISSUE WOULD CONSTITUTE 23.75% OF THE FULLY DILUTED POST ISSUE PAID-UP CAPITAL OF THECOMPANY. THE NET ISSUE WILL CONSTITUE 23.48% OF THE FULLY DILUTED POST ISSUE PAID-UPCAPITAL OF THE COMPANY.PRICE
 
BAND:
 
RS.
 
[●]
 
TO
 
RS.
 
[●]
 
PER
 
EQUITY
 
SHARE
 
OF
 
FACE
 
VALUE
 
RS.
 
10
 
EACH.THE
 
ISSUE
 
PRICE
 
IS
 
[●]
 
TIMES
 
THE
 
FACE
 
VALUE
 
AT
 
THE
 
LOWER
 
END
 
OF
 
THE
 
PRICE
 
BAND
 
AND
 
[●]
 
TIMES
 
THE
 
FACE
 
VALUE
 
AT
 
THE
 
HIGHER
 
END
 
OF
 
THE
 
PRICE
 
BAND.
Our Company is considering a Pre-IPO Placement of certain Equity Shares with some investors (“Pre-IPO Placement”). Our Company will complete the issuance of such Equity Shares prior to the filing of the RHP with the RoC. The number of EquityShares in the Net Issue will be reduced to the extent of the Equity Shares proposed to be allotted in the Pre-IPO Placement, if any, subject to the Net Issue to the public being atleast 10% of the fully diluted post-Issue paid up capital of our Company.Further, the reservation for Eligible Employees shall be subject to a maximum of 10% of such revised Issue size.
In case of revision in the Price Band, the Bidding Period shall be extended for three additional working days after such revision,subject to the Bidding Period not exceeding 10 working days. Any revision in the Price Band, and the revised Bidding Period,if applicable, shall be widely disseminated by notification to the Bombay Stock Exchange Limited (the “
BSE
”) and theNational Stock Exchange of India Limited (the “
NSE
”), by issuing a press release and also by indicating the change on thewebsite of the Book Running Lead Manager (the “
BRLM
”) and the terminals of the other members of the Syndicate.Pursuant to Rule 19(2)(b) of the SCRR (as defined below), this Issue is for less than 25% of the post-Issue share capital of theCompany and is therefore being made through a 100% Book Building Process (as defined below) wherein at least 60% of the NetIssue shall be allocated on a proportionate basis to Qualified Institutional Buyers (“QIBs”), out of which 5% shall be available for allocation on a proportionate basis to Mutual Funds only and the remainder shall be available for allocation on a proportionatebasis to all QIBs, including Mutual Funds, subject to valid Bids being received at or above the Issue Price. If at least 60% of theNet Issue cannot be allotted to QIBs, then the entire application money will be refunded forthwith. Further, not less than 10% of the Net Issue shall be available for allocation on a proportionate basis to Non-Institutional Bidders and not less than 30% of the
 
Net Issue shall be available for allocation on a proportionate basis to Retail Individual Bidders, subject to valid Bids being receivedat or above the Issue Price. Further, 100,000 Equity Shares shall be available for allocation on a proportionate basis to the EligibleEmployees, subject to valid Bids being received at or above the Issue Price.
IPO GRADING
The Company has appointed and will obtain a grading of this Issue from Credit Analysis and Research Limited, a credit ratingagency registered with the Securities and Exchange Board of India (“SEBI”) at the time of filing of the Red Herring Prospectuswith RoC. For details regarding the grading of the Issue, see the section “General Information” beginning on page 44 of thisDraft Red Herring Prospectus.
 RISKS IN RELATION TO FIRST ISSUE
This being the first issue of Equity Shares of the Company, there has been no formal market for the Equity Shares of theCompany. The face value of the Equity Shares is Rs. 10 per Equity Share and the Issue Price is
[●]
times the face value. TheIssue Price (as determined by the Company, in consultation with the BRLM, on the basis of the assessment of market demandfor the Equity Shares by way of the Book Building Process) should not be taken to be indicative of the market price of theEquity Shares after the Equity Shares are listed. No assurance can be given regarding an active and/or sustained trading in theEquity Shares of the Company or regarding the price at which the Equity Shares will be traded after listing.
GENERAL RISKS
Investments in equity and equity-related securities involve a degree of risk and investors should not invest any funds in thisIssue unless they can afford to take the risk of losing their investment. Investors are advised to read the risk factors carefullybefore taking an investment decision in this Issue. For taking an investment decision, investors must rely on their ownexamination of the Company and the Issue, including the risks involved. The Equity Shares offered in the Issue have not beenrecommended or approved by SEBI, nor does SEBI guarantee the accuracy or adequacy of the contents of this Draft RedHerring Prospectus. Specific attention of the investors is invited to the statements in the section “Risk Factors” beginning onpage x of this Draft Red Herring Prospectus.
COMPANY’S ABSOLUTE RESPONSIBILITY
The Company, having made all reasonable inquiries, accepts responsibility for and confirms that this Draft Red HerringProspectus contains all information with regard to the Company and the Issue that is material in the context of the Issue, thatthe information contained in this Draft Red Herring Prospectus is true and correct in all material aspects and is not misleadingin any material respect, that the opinions and intentions expressed herein are honestly held and that there are no other facts, theomission of which makes this Draft Red Herring Prospectus as a whole or any of such information or the expression of anysuch opinions or intentions misleading in any material respect.
LISTING
The Equity Shares offered through the Red Herring Prospectus are proposed to be listed on the BSE and the NSE. TheCompany has received in-principle approvals from the BSE and the NSE for the listing of the Equity Shares pursuant to lettersdated
[●]
and
[●],
respectively. For the purposes of the Issue,
[●]
shall be the Designated Stock Exchange.
BOOK RUNNING LEAD MANAGER REGISTRAR TO THE ISSUEENAM SECURITIES PRIVATE LIMITED
801/ 802, Dalamal TowersNariman PointMumbai 400 021,Maharashtra, IndiaTel: + 91 22-66381800Fax: + 91 22-22846824E-mail: cnk.ipo@enam.comInvestor Grievance E-Mail: complaints@enam.comContact Person: Ms. Kinjal PalanWebsite: www.enam.comSEBI Registration Number- INM000006856
 KARVY COMPUTERSHARE PRIVATE LIMITED
Plot No. 17 to 24, Vithalrao Nagar Madhapur Hydrabad 500081Andhra Pradesh, IndiaTel: + 91 40 234220815Fax: + 91 40 23420814E-mail: cnk.ipo@karvy.comContact Person: Mr. M. Murali KrishnaWebsite: www.karvy.comSEBI Registration Number: INR 000000221
 
BID/ISSUE PROGRAMBID/ISSUE OPENS ON:
[●],
2008 BID/ISSUE CLOSES ON:
[●],
2008
 
 TABLE OF CONTENTSSECTION I: GENERAL.........................................................................................................................i
DEFINITIONS AND ABBREVIATIONS................................................................................................iPRESENTATION OF FINANCIAL, INDUSTRY AND MARKET DATA............................................viiFORWARD-LOOKING STATEMENTS.................................................................................................ix
SECTION II: RISK FACTORS.............................................................................................................x
RISK FACTORS.......................................................................................................................................x
SECTION III: INTRODUCTION..........................................................................................................24
SUMMARY...............................................................................................................................................24THE ISSUE ...............................................................................................................................................29SUMMARY FINANCIAL INFORMATION ...........................................................................................30GENERAL INFORMATION....................................................................................................................44CAPITAL STRUCTURE..........................................................................................................................53OBJECTS OF THE ISSUE........................................................................................................................65BASIS FOR THE ISSUE PRICE..............................................................................................................71STATEMENT OF TAX BENEFITS.........................................................................................................75
 SECTION IV: ABOUT THE COMPANY ............................................................................................82
INDUSTRY OVERVIEW.........................................................................................................................82BUSINESS ................................................................................................................................................99REGULATIONS AND POLICIES...........................................................................................................113HISTORY AND CERTAIN CORPORATE MATTERS..........................................................................120OUR MANAGEMENT.............................................................................................................................139OUR PROMOTERS AND PROMOTER GROUP COMPANIES...........................................................152RELATED PARTY TRANSACTIONS....................................................................................................170DIVIDEND POLICY ................................................................................................................................171
 SECTION V: FINANCIAL INFORMATION......................................................................................172
FINANCIAL STATEMENTS...................................................................................................................172MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATION...................................................................................................................................................................235FINANCIAL INDEBTEDNESS...............................................................................................................258
 SECTION VI: LEGAL AND REGULATORY INFORMATION......................................................262
OUTSTANDING LITIGATIONS AND OTHER MATERIAL DEVELOPMENTS...............................262GOVERNMENT AND OTHER APPROVALS .......................................................................................315OTHER REGULATORY AND STATUTORY DISCLOSURES............................................................323
 SECTION VII: ISSUE INFORMATION..............................................................................................333
TERMS OF THE ISSUE...........................................................................................................................333ISSUE STRUCTURE................................................................................................................................336ISSUE PROCEDURE ...............................................................................................................................340
 SECTION VIII: MAIN PROVISIONS OF THE ARTICLES OF ASSOCIATION.........................368SECTION IX: OTHER INFORMATION.............................................................................................402
MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION..................................................402DECLARATION.......................................................................................................................................404

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