Jyoti CNCAutomation Limited

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Nov 5, 2013 (4 years and 7 days ago)

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DRAFT RED HERRING PROSPECTUS
Dated March 05, 2013
Please read Section 60B of the Companies Act, 1956
100 % Book Building Issue
(Our Companywas incorporatedas “AMBEngineeringCompanyPrivate Limited” onJanuary17,1991as a private limitedcompanyunder the CompaniesAct,1956.The name of our Companywas changed
to “Jyoti CNCAutomations Private Limited” and received fresh certificate of incorporation dated May 08,2002.Subsequently,the name of our Company was changed to “Jyoti CNCAutomation Private
Limited” and received fresh certificate of incorporation datedApril 28,2008.Further,pursuant to a special resolution of the shareholders of our Company at an annual general meeting held on September 17,
2012,our Companybecame a public limitedcompanyand the word “private” was deletedfromits name.The fresh certificate of incorporationto reflect the newname was issued by the RoCon November 30,
2012.For details of changes inthe name andregisteredoffice of our Company,see sectiontitled“ ” onpage 155.)
G - 506, Lodhika GIDC,Village Metoda, Rajkot – 360 021, Gujarat, India
+91 (02827) 306 100;+91 (02827) 306 161
Maulik Gandhi, Company Secretary and Compliance Officer
investors@jyoti.co.in;www.jyoti.co.in
History andCertainCorporate Matters
Registered and Corporate Office:
Tel:Fax:
Contact Person:
Email:Website:
PUBLICISSUEOF13,384,826 EQUITYSHARESOFFACEVALUEOF 10 EACH(“EQUITYSHARES”) OFJYOTI CNCAUTOMATIONLIMITED(THE“COMPANY”
ORTHE“ISSUER”) FORCASHATAPRICEOF PEREQUITYSHARE(INCLUDINGASHAREPREMIUMOF PEREQUITYSHARE) AGGREGATINGTO
MILLION(THE“ISSUE”).THEISSUEWILLCONSTITUTE31.82%OFTHEPOSTISSUEPAIDUPCAPITALOFTHECOMPANY.
`
`[•]`[•]`
[•]
`Our Company is considering a Pre-IPO Placement of upto 2,790,000 Equity Shares and/or aggregating upto 600 million with certain investors ("Pre-IPO Placement").The Pre-IPO
Placement will be at the discretion of our Company.Our Company will complete the issuance and allotment of Equity Shares pursuant to the Pre-IPOPlacement,if any,prior to filing of the
RedHerringProspectus withthe Registrar of Companies (the"RoC").If the Pre-IPOPlacement is completed,the Issue size will be reducedtothe extent of suchPre-IPOPlacement,subject to
the Issue size constitutingat least 25%of the post-Issue paid-upequity share capital of our Company.
Jyoti CNCAutomation Limited
PROMOTERS OF OUR COMPANY: PARAKRAMSINH JADEJA,VIKRAMSINH RANA, SAHDEVSINH JADEJAAND JYOTI INTERNATIONALPRIVATE LIMITEDPROMOTERS OF OUR COMPANY: PARAKRAMSINH JADEJA,VIKRAMSINH RANA, SAHDEVSINH JADEJAAND JYOTI INTERNATIONALPRIVATE LIMITED
THE FACE VALUE OF EQUITYSHARES IS 10 EACH.
THE PRICE BAND AND THE MINIMUM BID LOT WILL BE DECIDED BY THE COMPANY IN CONSULTATION WITH THE BOOK RUNNING LEAD MANAGERS AND
ADVERTISED IN EDITION OF (A WIDELY CIRCULATED ENGLISH NATIONAL NEWSPAPER),EDITION OF (A WIDELY CIRCULATED HINDI NATIONAL
NEWSPAPER) AND EDITION OF (AWIDELYCIRCULATED GUJARATI NEWSPAPER) AT LEAST FIVE WORKINGDAYS PRIORTOTHE BID/ISSUE OPENINGDATE
ANDSHALLBEMADEAVAILABLETOTHESTOCKEXCHANGES(ASDEFINEDBELOW) FORTHEPURPOSEOFUPLOADONTHEIRWEBSITE.
`
[•] [•] [•] [•]
[•] [•]
Incase of anyrevisioninthe Price Band,the Bid/Issue Periodwill be extendedbythree additional WorkingDays after revisionof the Price Band,subject tothe Bid/Issue Periodnot exceeding
10WorkingDays.Anyrevisioninthe Price Bandandthe revisedBid/Issue Period,if applicable,will be widelydisseminatedbynotificationtothe BombayStockExchange Limited(“ ”)
and The National Stock Exchange of India Limited (“ ”),by issuing a press release,and also by indicating the change on the websites of the Book Running Lead Managers (“ ”)
andat the terminals of the other members of the Syndicate andbyintimationtoSelf CertifiedSyndicate Banks (“ ”).
BSE
NSE BRLMs
SCSBs
Pursuant to Rule 19(2)(b)(i) of the Securities Contracts (Regulation) Rules,1957,as amended (the “ ”),the Issue is being made for at least 25%of the post-Issue paid-up Equity Share
capital of our Company.The Issue is beingmade throughthe BookBuildingProcess where at least 75%of the Issue will be allocatedona proportionate basis toQualifiedInstitutional Buyers
(“ ”) (the “ ”),provided that our Company may allocate up to 30%of the QIB Portion to Anchor Investors,on a discretionary basis (the “ ”),of
which one-third shall be reserved for domestic Mutual Funds,subject to valid Bids being received fromdomestic Mutual Funds at or above the Anchor Investor Issue Price.For details,see
“ ” on page 323.Further,5%of the QIBPortion (excluding theAnchor Investor Portion) shall be available for allocation on a proportionate basis to Mutual Funds only.The
remainder shall be available for allocation on a proportionate basis to all QIBs including Mutual Funds,subject to valid Bids being received fromthemat or above the Issue Price.If at least
75%of the Issue cannot be allocated to QIBs,then the entire application money will be refunded forthwith.Further,not more than 15%of the Issue will be available for allocation on a
proportionate basis to Non-Institutional Bidders and not more than 10%of the Issue will be available for allocation to Retail Individual Bidders,subject to valid Bids being received at or
above the Issue Price.Retail Individual BiddersmayparticipateintheIssuethroughtheASBAprocessbyprovidingthedetailsof theASBAAccountsinwhichthecorrespondingBidAmountswill
be blocked by the SCSBs.QIB Bidders (except Anchor Investors) and Non-Institutional Bidders shall compulsorily participate in the Issue through the ASBAprocess.Anchor Investors are not
permittedtoparticipateintheIssuethroughtheASBAprocess.Fordetailsinthisregard,specificattentionisinvitedto“ ”onpage323.
SCRR
QIBs QIB Portion Anchor Investor Portion
Issue Procedure
IssueProcedure
RISK IN RELATIONTOTHE FIRST ISSUE
This beingthe first public issue of the EquityShares of our Company,there has beennoformal market for the EquityShares.The face value of the EquityShares is 10each.The Floor Price is
times of the face value and the Cap Price is times of the face value.The Issue Price (as has been determined and justified by our Company and the BRLMs as stated in the section titled
“ ” on page 100) should not be taken to be indicative of the market price of the Equity Shares after the Equity Shares are listed.No assurance can be given regarding an
active and/or sustainedtradinginthe EquityShares or regardingthe price at whichthe EquityShares will be tradedafter listing.
`
[•] [•]
Basis for Issue Price
IPO GRADING
This Issue has been graded by [•] as IPOGrade [•],indicating[•] fundamentals.The IPOgrade is assigned on a five -point scale from1 to 5,with IPOgrade 5/5 indicating strong fundamentals
andIPOgrade 1/5indicatingpoor fundamentals.For details,see sectiontitled“ ” onpage 56.General Information
GENERALRISKS
Investments in equity and equity-related securities involve a degree of risk and investors should not invest any funds in this Issue unless they can afford to take the risk of losing their
investment.Investors are advised to read the Risk Factors carefully before taking an investment decision in this Issue.For taking an investment decision,investors must rely on their own
examination of our Company and the Issue,including the risks involved.The Equity Shares offered in the Issue have not been recommended or approved by the Securities and Exchange
Board of India (“ ”),nor does SEBI guarantee the accuracy or adequacy of the contents of this Draft Red Herring Prospectus.Specific attention of the investors is invited to the section
titled“ ” onpage 13.
SEBI
RiskFactors
ISSUER'S ABSOLUTE RESPONSIBILITY
The Company,having made all reasonable inquiries,accepts responsibility for and confirms that this Draft Red Herring Prospectus contains all information with regard to the Company and
the Issue,whichis material inthe context of the Issue,that the informationcontainedinthis Draft RedHerringProspectus is true andcorrect inall material aspects andis not misleadinginany
material respect,that the opinions and intentions expressed hereinare honestly held and that there are no other facts,the omission of which make this Draft Red Herring Prospectus as a whole
or anyof suchinformationor the expressionof anysuchopinions or intentions misleadinginanymaterial respect.
LISTINGARRANGEMENT
The Equity Shares offered through the Red Herring Prospectus are proposed to be listed on BSEand NSE.We have received an'in-principle'approval fromBSEand NSEfor the listing of the
EquityShares pursuant toletters dated and,respectively.For the purposes of the Issue,the DesignatedStockExchange shall be [•].[•] [•]
REGISTRARTOTHE ISSUE
AVENDUS CAPITALPRIVATE LIMITED
5th Floor, B Quadrant
IL&FS Financial Centre
Bandra Kurla Complex
Bandra (East)
Mumbai 400 051
Tel: +91 22 6648 0050
Fax: +91 22 6648 0040
Email: jyoticnc.ipo@avendus.com
Investor grievance E-mail: investorgrievance@avendus.com
Website: www.avendus.com
Contact Person: Rashi Malik
SEBI Registration No.: INM000011021
*Our Company may consider participationbyAnchor Investors.TheAnchor Investor BiddingDate shall be one WorkingDay prior tothe Bid/Issue OpeningDate.
**Our Company may close the Bid/Issue Periodfor QIBs one WorkingDay prior tothe Bid/Issue ClosingDate inaccordance withthe SEBI Regulations
BID/ISSUE OPENS ON
BID/ISSUE PROGRAMME*
BID/ISSUE CLOSES ON**
[•] FOR QIB BIDDERS: [•] FOR OTHER BIDDERS: [•]
SBI CAPITALMARKETS LIMITED
202, Maker Tower 'E'
Cuffe Parade
Mumbai 400 005
India
Tel: +91 22 2217 8300
Fax: +91 22 2218 8332
E-mail: jyoticnc.ipo@sbicaps.com
Investor Grievance E-mail: investor.relations@sbicaps.com
Website: www.sbicaps.com
Contact Person: Sylvia Mendonca /
Arvind Ganeshan
SEBI Registration No.: INM000003531
LINK INTIME INDIAPRIVATE LIMITED
C-13, Pannalal Silk Mills Compound
L.B.S. Marg, Bhandup (West)
Mumbai 400 078
Tel: (91 22) 2596 0320
Fax: (91 22) 2596 0329
Email: jcal.ipo@linkintime.co.in
Website: www.linkintime.co.in
Investor Grievance E-mail: jcal.ipo@linkintime.co.in
Contact Person: Sanjog Sud
SEBI Registration No. : INR000004058
BOOK RUNNING LEAD MANAGERS

TABLE OF CONTENTS

SECTION I: GENERAL ................................................................................................................... 2
 
DEFINITIONS

AND

ABBREVIATIONS ...................................................................................... 2
 
PRESENTATION

OF

FINANCIAL,

INDUSTRY

AND

MARKET

DATA ................................ 10
 
FORWARD

LOOKING

STATEMENTS ..................................................................................... 12
 
SECTION II: RISK FACTORS ..................................................................................................... 13
 
SECTION III: INTRODUCTION .................................................................................................. 32
 
SUMMARY

OF

INDUSTRY ....................................................................................................... 32
 
SUMMARY

OF

BUSINESS ........................................................................................................ 37
 
SUMMARY

FINANCIAL

INFORMATION ............................................................................... 43
 
THE

ISSUE ................................................................................................................................... 55
 
GENERAL

INFORMATION ....................................................................................................... 56
 
CAPITAL

STRUCTURE .............................................................................................................. 65
 
OBJECTS

OF

THE

ISSUE ........................................................................................................... 80
 
BASIS

FOR

ISSUE

PRICE ......................................................................................................... 100
 
STATEMENT

OF

TAX

BENEFITS ........................................................................................... 103
 
SECTION IV: ABOUT THE COMPANY .................................................................................. 115
 
INDUSTRY

OVERVIEW .......................................................................................................... 115
 
BUSINESS .................................................................................................................................. 130
 
REGULATIONS

AND

POLICIES ............................................................................................. 151
 
HISTORY

AND

CERTAIN

CORPORATE

MATTERS ............................................................ 155
 
MANAGEMENT ........................................................................................................................ 162
 
PROMOTERS

AND

PROMOTER

GROUP ............................................................................... 174
 
OUR

GROUP

COMPANIES ...................................................................................................... 179
 
RELATED

PARTY

TRANSACTIONS...................................................................................... 181
 
DIVIDEND

POLICY .................................................................................................................. 182
 
SECTION V: FINANCIAL INFORMATION ............................................................................ 183
 
RESTATED

CONSOLIDATED

FINANCIAL

STATEMENTS ................................................ 183
 
RESTATED

UNCONSOLIDATED

FINANCIAL

STATEMENTS .......................................... 220
 
MANAGEMENT’S

DISCUSSION

AND

ANALYSIS

OF

FINANCIAL

CONDITION

AND

RESULTS

OF

OPERATIONS .................................................................................................... 259
 
FINANCIAL

INDEBTEDNESS ................................................................................................. 284
 
SECTION VI: LEGAL AND OTHER INFORMATION .......................................................... 292
 
OUTSTANDING

LITIGATION

AND

MATERIAL

DEVELOPMENTS ................................. 292
 
GOVERNMENT

APPROVALS ................................................................................................. 296
 
OTHER

REGULATORY

AND

STATUTORY

DISCLOSURES .............................................. 303
 
SECTION VII: ISSUE INFORMATION .................................................................................... 315
 
TERMS

OF

THE

ISSUE ............................................................................................................. 315
 
ISSUE

STRUCTURE ................................................................................................................. 318
 
ISSUE

PROCEDURE ................................................................................................................. 323
 
RESTRICTIONS

ON

FOREIGN

OWNERSHIP

OF

INDIAN

SECURITIES ............................ 363
 
SECTION VIII: MAIN PROVISIONS OF THE ARTICLES OF ASSOCIATION ............... 365
 
SECTION IX: OTHER INFORMATION ................................................................................... 382
 
MATERIAL

CONTRACTS

AND

DOCUMENTS

FOR

INSPECTION .................................... 382
 
DECLARATION ........................................................................................................................ 384
 
2

SECTION I: GENERAL

DEFINITIONS AND ABBREVIATIONS


Unless the context otherwise indicates, the following terms have the meanings given below.
References to statutes, rules, regulations, guidelines and policies will be deemed to include all
amendments and modifications notified thereto.

Term
Description
“The Issuer”, “the
Company”, “our
Company”
Unless the context otherwise requires, refers to Jyoti CNC Automation
Limited, a public limited company incorporated under the Companies
Act with its registered office at G - 506, Lodhika GIDC, Village
Metoda, Rajkot – 360 021, Gujarat, India
“We”, “us”, “Our” Unless the context otherwise requires, refers to Jyoti CNC Automation
Limited and its Subsidiaries on a consolidated basis, as described herein

Company Related Terms

Term
Description
Articles / Articles of
Association/ AoA
The articles of association of our Company, as amended
Auditors The statutory auditors of our Company, namely, Kalaria & Sampat,
Chartered Accountants
Board/ Board of
Directors
The board of directors of our Company or a duly constituted committee
thereof
Director(s) The director(s) on the Board of Directors of our Company
Group Companies The companies, firms, ventures disclosed in section titled “Our Group
Companies” on page 179, promoted by our Promoters, irrespective of
whether such entities are covered under Section 370(1B) of the
Companies Act
Memorandum/
Memorandum of
Association /MoA
The memorandum of association of our Company, as amended
Promoters Parakramsinh Jadeja, Vikramsinh Rana, Sahdevsinh Jadeja and Jyoti
International Private Limited.
Promoter Group The persons and entities constituting our promoter group pursuant to
regulation 2(1)(zb) of the SEBI Regulations, a list of which is provided
in the section titled “Promoters and Promoter Group” on page 174
Registered Office The registered office of our Company located at G - 506, Lodhika
GIDC, Village Metoda, Rajkot – 360 021, Gujarat, India
Subsidiaries The subsidiaries of our Company, namely, Jyoti S. A. S., Huron
Graffenstaden S. A. S., Huron Fräsmaschinen GmbH and Huron Canada
Inc


Issue Related Terms

Term
Description
Allotment/Allot/Allotted The issue and allotment of Equity Shares to successful Bidders
pursuant to the Issue
Allottee A successful Bidder to whom the Equity Shares are Allotted
Allotment Advice The note or advice or intimation of Allotment, sent to each successful
Bidder who has been or is to be Allotted the Equity Shares after
approval of the Basis of Allotment by the Designated Stock Exchange
Alternative Investment
Funds or AIFs
Alternative Investment Funds (as defined under the SEBI AIF
Regulations) registered with SEBI
Anchor Investor A Qualified Institutional Buyer, who applies under the Anchor
Investor Portion with a minimum Bid of ` 100 million
Anchor Investor Bidding
Date
The date, one Working Day prior to the Bid/Issue Opening Date, on
which Bids by Anchor Investors shall open and allocation to Anchor
Investors shall be completed. Anchor Investors are not permitted to
withdraw their bids after the Anchor Investor Bidding Date
Anchor Investor Issue
Price
The final price at which the Equity Shares will be issued and Allotted
to Anchor Investors in terms of the Red Herring Prospectus and the
3

Term
Description
Prospectus, which price may be equal to or higher than the Issue Price
but not higher than the Cap Price. The Anchor Investor Issue Price will
be decided by our Company, in consultation with the BRLMs
Anchor Investor Portion Up to 30% of the QIB Portion, consisting of up to [●] Equity Shares,
which may be allocated to Anchor Investors by our Company in
consultation with the BRLMs, on a discretionary basis. One-third of
the Anchor Investor Portion shall be reserved for domestic Mutual
Funds, subject to valid Bids being received from domestic Mutual
Funds at or above the Anchor Investor Issue Price
Application Supported
by Blocked Amount/
ASBA
An application (whether physical or electronic) by an ASBA Bidder to
make a Bid authorising the relevant SCSB to block the Bid Amount in
the ASBA Account
ASBA Account
Account maintained with a SCSBs which will be blocked by such
SCSB to the extent of the appropriate Bid Amount in relation to a Bid
by an ASBA Bidder
ASBA Bidder
Any Bidder (other than Anchor Investors) who intends to bid through
the ASBA process
Avendus
Avendus Capital Private Limited
Bankers to the Issue/
Escrow Collection
Banks
The bank(s) which is/are clearing member(s) and registered with SEBI
as Bankers to the Issue, with whom the Escrow Account(s) in relation
to the Issue will be opened, in this case being [●]
Basis of Allotment
The basis on which the Equity Shares will be Allotted, described in the
section titled “Issue Procedure – Basis of Allotment” on page 356
Bid An indication to make an offer during the Bid/Issue Period by a Bidder
(including an ASBA Bidder), or on the Anchor Investor Bidding Date
by an Anchor Investor, pursuant to submission of a Bid cum
Application Form to subscribe to the Equity Shares at a price within
the Price Band, including all revisions and modifications thereto, to
the extent permitted under the SEBI Regulations
Bid Amount The highest value of the optional Bids as indicated in the Bid cum
Application Form
Bid cum Application
Form
The form in terms of which the Bidder shall make an offer to subscribe
for Equity Shares and which shall be considered as the application for
the issue of Equity Shares pursuant to the terms of the Red Herring
Prospectus and the Prospectus
Bidder Any prospective investor who makes a Bid pursuant to the terms of the
Red Herring Prospectus and the Bid cum Application Form, including
an ASBA Bidder and Anchor Investor
Bid/Issue Closing Date Except in relation to Anchor Investors, [●]. Our Company, in
consultation with the BRLMs, may decide to close the Bid/Issue
Period for QIBs one Working Day prior to the Bid/Issue Closing Date,
subject to the SEBI Regulations
Bid/Issue Opening Date Except in relation to Anchor Investors, [●].
Bid/Issue Period The period between the Bid/Issue Opening Date and the Bid/Issue
Closing Date inclusive of both days during which prospective Bidders
(excluding Anchor Investors) can submit their Bids
Book Building Process The book building process as described in Schedule XI of the SEBI
Regulations, in terms of which the Issue is being made
BRLMs/Book Running
Lead Managers
The book running lead managers to the Issue, in this case being
Avendus and SBICAP
Client ID Client identification number of the Bidder’s beneficiary account
Cap Price The higher end of the Price Band above which the Issue Price and
Anchor Investor Issue Price will not be finalised and above which no
Bids will be accepted, including any revisions thereof
Cut-off Price The Issue Price, finalised by our Company, in consultation with the
BRLMs, which shall be any price within the Price Band. Only Retail
Individual Bidders are entitled to Bid at the Cut-off Price. QIBs
(including Anchor Investors) and Non-Institutional Bidders are not
entitled to Bid at the Cut-off Price
Demographic Details The demographic details of the Bidders such as their address,
occupation and bank account details
Designated Branches Such branches of the SCSBs which shall collect the Bid cum
4

Term
Description
Application Form used by the ASBA Bidders, a list of which is
available at the website of SEBI (www.sebi.gov.in) and updated from
time to time
Designated Date The date on which the Escrow Collection Banks transfer the funds
from the Escrow Account to the Public Issue Account(s) or the Refund
Account(s), as appropriate and the Registrar to the Issue issues
instruction to SCSBs for transfer of funds from the ASBA Accounts to
the Public Issue Account(s) in terms of the Red Herring Prospectus
Designated Stock
Exchange
[●]
DP ID The Depository Participant’s identity
Draft Red Herring
Prospectus
This Draft Red Herring Prospectus dated March 05, 2013, filed with
SEBI and issued in accordance with Section 60B of the Companies
Act and the SEBI Regulations, which does not contain complete
particulars of the price at which the Equity Shares are offered
Eligible NRI A non-resident Indian, resident in a jurisdiction outside India where it
is not unlawful to make an offer or invitation under the Issue and in
relation to whom the Red Herring Prospectus constitutes an invitation
to subscribe for the Equity Shares
Eligible QFI Qualified Foreign Investors from such jurisdictions outside India
where it is not unlawful to make an offer or invitation under the Issue
and in relation to whom the Red Herring Prospectus constitutes an
invitation to purchase the Equity Shares offered thereby and who have
opened demat accounts with SEBI registered qualified depositary
participants
Equity Shares
The Equity Shares of our Company with a face value of ` 10 each
Escrow Account Account(s) opened with the Escrow Collection Bank(s) for the Issue
and in whose favour the Bidders (excluding ASBA Bidders) will issue
cheques or demand drafts in respect of the Bid Amount when
submitting a Bid
Escrow Agreement The agreement to be entered into among our Company, the Registrar
to the Issue, the BRLMs, the Syndicate Members, the Escrow
Collection Bank(s) and Refund Bank(s) for collection of the Bid
Amounts and remitting refunds, if any, to the Bidders (excluding
ASBA Bidders), on the terms and conditions thereof
First Bidder The Bidder whose name appears first in the Bid cum Application Form
or the Revision Form
Floor Price The lower end of the Price Band, and any revisions thereof, below
which the Issue Price will not be finalised and below which no Bids
will be accepted and which shall not be less than the face value of the
Equity Shares
Issue
Public issue of 13,384,826 Equity Shares for cash at a price of ` [●]
per Equity Share aggregating to ` [●] million

Our Company is considering a Pre-IPO Placement of upto 2,790,000
Equity Shares and / or aggregating upto ` 600 million with certain
investors. The Pre-IPO Placement is at the discretion of our Company.
Our Company will complete the issuance and allotment of Equity
Shares pursuant to the Pre-IPO Placement, if any, prior to filing of the
Red Herring Prospectus with the RoC. If the Pre-IPO Placement is
completed, the Issue size will be reduced to the extent of such Pre-IPO
Placement, subject to the Issue size constituting at least 25 % of the
post-Issue paid-up equity share capital of our Company
Issue Agreement The agreement entered into on March 05, 2013 between our Company
and the BRLMs, pursuant to which certain arrangements are agreed to
in relation to the Issue
Issue Price The final price at which Equity Shares will be issued and Allotted to
the Bidders (except Anchor Investors), as determined in accordance
with the Book Building Process on the Pricing Date
Issue Proceeds The proceeds of the Issue that are available to our Company
Listing Agreement The equity listing agreement to be entered into by our Company with
the Stock Exchanges
Mutual Funds A mutual fund registered with SEBI under the SEBI (Mutual Funds)
5

Term
Description
Regulations, 1996
Mutual Funds Portion 5% of the QIB Portion (excluding the Anchor Investor Portion)
available for allocation to Mutual Funds only, on a proportionate basis
Net Proceeds The Issue Proceeds less the Issue expenses. For further information
about use of the Issue Proceeds and the Issue expenses, see section
titled “Objects of the Issue” on page 80
Non-Institutional
Bidders
All Bidders, including sub-accounts which are foreign corporate or
foreign individuals, that are not QIBs (including Anchor Investors) or
Retail Individual Bidders, who have Bid for Equity Shares for an
amount exceeding ` 200,000
Non-Institutional Portion The portion of the Issue, being not more than [●] Equity Shares,
available for allocation on a proportionate basis to Non-Institutional
Bidders subject to valid Bids received at or above the Issue Price
Non-Resident A person resident outside India, as defined under FEMA and includes
a Non Resident Indian
Non Syndicate Broker
Centre
A broker centre of the Stock Exchanges with broker terminals,
wherein a Non Syndicate Stock Broker may accept Bid cum
Application Forms, a list of which is available on the websites of the
Stock Exchanges at www.bseindia.com and www.nseindia.com and at
such other websites as may be prescribed by SEBI from time to time.
Non Syndicate Stock
Broker
A broker registered with SEBI under the Securities and Exchange
Board of India (Stock Brokers and Sub Brokers Regulations), 1992,
having office in any of the Non Syndicate Broker Centres, and eligible
to procure Bids in terms of the circular No. CIR/CFD/14/2012 dated
October 4, 2012 issued by SEBI.
Non Syndicate Stock
Broker Mechanism
Investors applying through Non Syndicate Stock Broker at a Non
Syndicate Broker Centre pursuant to SEBI circular no.
CIR/CFD/14/2012 dated October 04, 2012
Preference Shares
The Preference Shares of our Company with a face value of ` 10 each
Pre-IPO Placement The preferential issue of up to 2,790,000 Equity Shares, aggregating
up to ` 600 million with certain investors, which is being considered
by our Company. Our Company will complete the issuance and
allotment of Equity Shares pursuant to the Pre-IPO Placement, if any,
prior to the filing of the Red Herring Prospectus with the RoC
Price Band
Price Band of a minimum price of ` [●] (Floor Price) and the
maximum price of ` [●] (Cap Price) and include revisions thereof. The
Price Band and the minimum Bid lot size for the Issue will be decided
by our Company, in consultation with the BRLMs, and advertised in
[●] edition of [●] (a widely circulated English national newspaper),
[●] edition of [●] (a widely circulated Hindi national newspaper) and
[●] edition of [●] (a widely circulated Gujarati newspaper), at least
five Working Days prior to the Bid/ Issue Opening Date, with the
relevant financial ratios calculated at the Floor Price and at the Cap
Price and shall be made available to the Stock Exchanges for the
purpose of upload on their website
Pricing Date

The date on which our Company, in consultation with the BRLMs,
finalises the Issue Price
Prospectus The Prospectus to be filed with the RoC pursuant to Section 60 of the
Companies Act and the SEBI Regulations, containing, inter alia, the
Issue Price that is determined at the end of the Book Building Process
on the Pricing Date, including any addenda or corrigenda thereto
Public Issue Account(s) The account(s) to be opened with the Banker(s) to the Issue to receive
monies from the Escrow Account(s) and the ASBA Accounts, on the
Designated Date
QIB Portion The portion of the Issue, being at least [●] Equity Shares, or at least 75
% of the Issue available for allocation to QIBs on a proportionate
basis, subject to valid Bids being received at or above the Issue Price,
including the Anchor Investor Portion. Allocation to Anchor Investors,
if any, will be made by our Company in consultation with the BRLMs,
on a discretionary basis.
Qualified Foreign
Investors or QFIs
Non-resident investors, other than SEBI registered FIIs or sub-
accounts or SEBI registered FVCIs, who meet ‘know your client’
requirements prescribed by SEBI and are resident in a country which
6

Term
Description
is (i) a member of Financial Action Task Force or a member of a
group which is a member of Financial Action Task Force; and (ii) a
signatory to the International Organisation of Securities Commission’s
Multilateral Memorandum of Understanding or a signatory of a
bilateral memorandum of understanding with SEBI.

Provided that such non-resident investor shall not be resident in
country which is listed in the public statements issued by Financial
Action Task Force from time to time on: (i) jurisdictions having a
strategic anti-money laundering/combating the financing of terrorism
deficiencies to which counter measures apply; (ii) jurisdictions that
have not made sufficient progress in addressing the deficiencies or
have not committed to an action plan developed with the Financial
Action Task Force to address the deficiencies.
Qualified Institutional
Buyers or QIBs
Public financial institutions as specified in Section 4A of the
Companies Act, scheduled commercial banks, mutual fund registered
with SEBI, FII and sub-account registered with SEBI (other than a
sub-account which is a foreign corporate or foreign individual),
scheduled commercial banks, mutual funds and venture capital funds
registered with SEBI, FVCIs, Alternative Investment Funds,
multilateral and bilateral development financial institutions, state
industrial development corporations, insurance companies registered
with the Insurance Regulatory and Development Authority, provident
funds with minimum corpus of ` 250 million, pension funds with
minimum corpus of ` 250 million, the National Investment Fund set
up by resolution no. F. No. 2/3/2005-DDII dated November 23, 2005
of the GoI published in the Gazette of India, insurance funds set up
and managed by the army, navy or air force of the Union of India and
insurance funds set up and managed by Department of Posts, GoI.
Red Herring Prospectus
or RHP
The Red Herring Prospectus to be issued in accordance with Section
60B of the Companies Act and the SEBI Regulations, which will not
have complete particulars of the price at which the Equity Shares shall
be issued and which shall be filed with the RoC at least three days
before the Bid/Issue Opening Date and will become a Prospectus upon
filing with the RoC after the Pricing Date
Refund Account(s) Account(s) opened with the Escrow Collection Bank(s) from which
refunds if any, of the whole or part of the Bid Amount shall be made
to the Bidders (excluding the ASBA Bidders)
Refund Bank(s) One or more Escrow Collection Bank(s) with whom Refund
Account(s) will be opened and from which a refund of the whole or
part of the Bid Amount, if any, shall be made, in this case being, [●]
Registrar /Registrar to
the Issue
Link Intime India Private Limited

Retail Individual Bidders Bidders (including HUFs and Eligible NRIs), whose Bid Amount for
Equity Shares in the Issue is less than or equal to ` 200,000
Retail Portion The portion of the Issue, being not more than [●] Equity Shares
available for allocation to Retail Individual Bidder(s), subject to valid
Bids being received at or above the Issue Price
Revision Form The forms used by the Bidders to modify the quantity of Equity Shares
or the Bid Amount in any of their Bid cum Application Forms or any
previous Revision Form(s)
SBICAP SBI Capital Markets Limited
Self Certified Syndicate
Banks or SCSBs
The banks registered with the SEBI under the Securities and Exchange
Board of India (Bankers to an Issue) Regulations, 1994 offering
services in relation to ASBA, including blocking of an ASBA Account
in accordance with the SEBI Regulations and a list of which is
available at the website of the SEBI (www.sebi.gov.in) and updated
from time to time. A list of the branches of the SCSBs where Bid cum
Application Forms will be forwarded by such members of the
Syndicate is also available at the website of the SEBI
(www.sebi.gov.in) and updated from time to time
Stock Exchanges BSE and the NSE
Syndicate Agreement The agreement to be entered into among the members of the
7

Term
Description
Syndicate, our Company and the Registrar in relation to the collection
of Bids in the Issue (other than Bids directly submitted to the SCSBs
under the ASBA Process)
Syndicate ASBA
Bidding Locations
Bidding centres at Mumbai, Chennai, Kolkata, Delhi, Ahmedabad,
Rajkot, Jaipur, Bengaluru, Hyderabad, Pune, Vadodara and Surat
where the Syndicate shall accept Bid cum Application Forms in terms
of the SEBI Circular No. CIR/CFD/DIL/1/2011 dated April 29, 2011
Syndicate Members Intermediaries registered with the SEBI and permitted to carry out
activities as an underwriter, in this case being [●]
Syndicate or members of
the Syndicate
The BRLMs and the Syndicate Members
Syndicate / Non
Syndicate Stock Broker
SCSB Branches
In relation to ASBA Bids submitted to a member of the Syndicate or to
a Non Syndicate Stock Broker, such branches of the SCSBs at the
Syndicate ASBA Bidding Locations or at the Non Syndicate Broker
Centres named by the SCSBs to receive deposits of Bid cum
Application Forms from the members of the Syndicate or the Non
Syndicate Stock Broker, and a list of which is available at the website
of the SEBI (www.sebi.gov.in) and updated from time to time
TRS or Transaction
Registration Slip
The slip or document issued by a member of the Syndicate or the
SCSBs, as the case may be, to a Bidder generated at each price and
demand option as the proof of registration of the Bid
Underwriters The members of the Syndicate
Underwriting Agreement The agreement among the Underwriters and our Company to be
entered into on or after the Pricing Date
Working Day(s) All days, excluding Sundays and public holidays, on which
commercial banks in India are open for business, except with reference
to announcement of Price Band and Bid/Issue Period, where working
day shall mean all days, excluding Saturdays, Sundays and public
holidays, which are working days for commercial banks in India

Industry Related Terms

Term
Description
AMC Annual Maintenance Contract
APC Auto Pallet Changer
AT Automation with Turning
ATC Auto Tool Changer
ATM Automation with Turning and Milling
CAD Computer Aided Design
CAM Computer Aided Manufacturing
CED Cathode Electro Deposition
CII Confederation of Indian Industry
CMTI Central Manufacturing Technology Institute
CNC Computerised Numerical Control
DSIR Department of Scientific & Industrial Research
EDM Electro-Discharge Machines
EFTA European Free Trade Association
EPCG Scheme Export Promotion Capital Goods Scheme
EU European Union
FSI Floor Space Index
GPMs General Purpose Machines
HMC Horizontal Machining Centers
HSM High Speed Machines
IMTEX Indian Machine Tool Exhibition
IMTMA Indian Machine Tool Manufacturers Association
MTB Machine Tool Builders
NMCC National Manufacturing Competitiveness Council
PPP Public Private Partnership
R&D Research & Development
SME Small and Medium Enterprises
SPMs Special Purpose Machines
TMC Turn Mill Centers
8

VMC Vertical Machining Centers

Conventional and General Terms/ Abbreviations


Term
Description
Act or Companies Act Companies Act, 1956, as amended
AGM Annual General Meeting
AS/Accounting
Standards
Accounting Standards issued by the Institute of Chartered Accountants
of India
BSE BSE Limited
CAGR Compounded Annual Growth Rate
CDSL Central Depository Services (India) Limited
CIN Corporate Identity Number
Civil Code Code of Civil Procedure, 1908, as amended
Depositories NSDL and CDSL
Depositories Act Depositories Act, 1996, as amended
DIN Director Identification Number
DP ID Depository participant identity
DP/ Depository
Participant
A depository participant as defined under the Depositories Act, 1996
EBITDA Earnings Before Interest, Tax, Depreciation and Amortisation
ECS Electronic Clearing Service
EGM Extraordinary General Meeting
EPS Earnings Per Share i.e., profit after tax for a Fiscal Year divided by the
weighted average outstanding number of equity shares at the end of that
Fiscal Year
FCNR Account Foreign Currency Non-Resident Account established in accordance with
the FEMA
FDBN Foreign Document Bill for Negotiation
FDBP Foreign Document Bill Purchase
FDI Foreign Direct Investment
FEMA

Foreign Exchange Management Act, 1999 read with the rules and
regulations thereunder and amendments thereto
FEMA Regulations FEM (Transfer or Issue of Security by a Person Resident Outside India)
Regulations, 2000 and amendments thereto
FII(s) Foreign Institutional Investors as defined under SEBI (Foreign
Institutional Investor) Regulations, 1995 and registered with SEBI under
applicable laws in India
FIPB Foreign Investment Promotion Board
French GAAP Generally Accepted Accounting Principles in France
Fiscal Year/ FY/ Fiscal Unless stated otherwise, the period of 12 months ending March 31 of that
particular year
FVCI Foreign Venture Capital Investor registered under the SEBI (Foreign
Venture Capital Investors) Regulations, 2000
GDP Gross domestic Product
GoI/Government Government of India
GWP Gross World Product
HUF Hindu Undivided Family
I.T. Act Income Tax Act, 1961, as amended
ICAI Institute of Chartered Accountants of India
IFRS International Financial Reporting Standards
Indian GAAP Generally Accepted Accounting Principles in India
Indian Partnership Act Indian Partnership Act 1932, as amended
IPO Initial Public Offering
IT Information Technology
LIBOR London Inter-Bank Offer Rate
MAT Minimum Alternate Tax
Mn / mn Million
MOU Memorandum of Understanding
NA/ n.a. Not Applicable
NAV Net Asset Value
NEFT National Electronic Fund Transfer
9

Term
Description
NOC No Objection Certificate
NRE Account Non Resident External Account
NRI Non Resident Indian, being a person resident outside India, as defined
under FEMA and the FEMA Regulations.
NRO Account Non Resident Ordinary Account
NSDL National Securities Depository Limited
NSE National Stock Exchange of India Limited
OCB A company, partnership, society or other corporate body owned directly
or indirectly to the extent of at least 60% by NRIs including overseas
trusts, in which not less than 60% of beneficial interest is irrevocably
held by NRIs directly or indirectly and which was in existence on
October 3, 2003 and immediately before such date had taken benefits
under the general permission granted to OCBs under the FEMA. OCBs
are not permitted to invest in the Issue
p.a. Per annum
P/E Ratio Price/Earnings Ratio
PAN Permanent Account Number allotted under the Income Tax Act, 1961
PAT Profit after tax
PBT Profit before tax
PCFC Packing Credit in Foreign Currency
PCL Packing Credit Loan
PIO Person of Indian Origin
PLR Prime Lending Rate
PSCFC Post Shipment Credit in Foreign Currency
`/Rs./INR
Indian Rupees
RACB Rupee Advance against Collection Bills
RBI Reserve Bank of India
RoC Registrar of Companies, Gujarat, Dadra and Nagar Havelli
RONW Return on Net Worth
RTGS Real Time Gross Settlement
SCRA Securities Contracts (Regulation) Act, 1956, as amended
SCRR Securities Contracts (Regulation) Rules, 1957, as amended
SEBI Securities and Exchange Board of India constituted under the SEBI Act
SEBI Act Securities and Exchange Board of India Act 1992, as amended
SEBI AIF Regulations Securities and Exchange Board of India (Alternative Investment Funds)
Regulations, 2012
SEBI FII Regulations Securities Exchange Board of India (Foreign Institutional Investors)
Regulations 1995, as amended
SEBI Regulations Securities and Exchange Board of India (Issue of Capital and Disclosure
Requirements) Regulations, 2009 as amended
SEBI Takeover
Regulations
Securities and Exchange Board of India (Substantial Acquisition o
f

Shares and Takeovers) Regulations, 2011 as amended
SEBI VCF Regulations Securities and Exchange Board of India (Venture Capital Fund)
Regulations, 1996 as amended
SICA Sick Industries Companies (Special Provisions) Act, 1985
State Government The government of a state of the Union of India
UK United Kingdom
UK GAAP Generally Accepted Accounting Principles in United Kingdom
US / USA United States of America
US GAAP Generally Accepted Accounting Principles in United States of America
USD/US$ United States Dollars
VCFs Venture Capital Funds as defined in and registered with SEBI under the
SEBI (Venture Capital Fund) Regulations, 1996
10

PRESENTATION OF FINANCIAL, INDUSTRY AND MARKET DATA

All references to “India” contained in this Draft Red Herring Prospectus are to the Republic of
India and all references to the “US” are to the United States of America and to the “U.K.” are to
the United Kingdom.

Financial Data

Unless stated otherwise, the financial data in this Draft Red Herring Prospectus is derived from the
restated audited standalone financial statements of our Company as of and for the past five Fiscals
and restated audited consolidated financial statements as of and for the past five Fiscals, prepared
in accordance with Indian GAAP, the Companies Act and the SEBI Regulations, and included in
this Draft Red Herring Prospectus. The fiscal year of our Company commences on April 1 and
ends on March 31 of the next year, so all references to particular fiscal year, unless stated
otherwise, are to the 12 months period ended on March 31 of that year.

All numbers in this Draft Red Herring Prospectus have been represented in million or in whole
numbers, where the numbers have been too small to present in million. All numbers have been
rounded off to two decimals. In this Draft Red Herring Prospectus any discrepancies in any table
between the total and the sums of the amounts listed are due to rounding off.

There are significant differences between Indian GAAP, US GAAP, UK GAAP, French GAAP
and IFRS. We do not provide reconciliation of the financial statements of our Company to IFRS or
US GAAP or UK GAAP or French GAAP financial statements. Our Company has 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 the financial
data of our Company. Accordingly, the degree to which the Indian GAAP financial statements
included in this Draft Red Herring Prospectus will provide meaningful information is entirely
dependent on the reader’s level of familiarity with Indian accounting practices. Any reliance by
persons not familiar with Indian accounting practices on the financial disclosures presented in this
Draft Red Herring Prospectus should accordingly be limited.

Any percentage amounts, as set forth in the sections titled “Risk Factors”, “Business”,
“Management’s Discussion and Analysis of Financial Condition and Results of Operations” on
pages 13, 130 and 259 respectively and elsewhere in this Draft Red Herring Prospectus, unless
otherwise indicated, have been calculated on the basis of the restated audited consolidated and
standalone summary financial statements of our Company prepared in accordance with Indian
GAAP.

Currency and Units of Presentation

All references to “Rupees” or “Rs.” or “`” are to Indian Rupees, the official currency of the
Republic of India. All references to “US$”, “USD” or “US Dollars” are to United States Dollars,
the official currency of the United States of America. All references to Canadian “CAD” are to
Canadian Dollars, the official currency of the Canada. All references to

“Euro” or “€” are to the
official currency of the member states of the European Union participating in the Economic and
Monetary Union.

Exchange Rates

This Draft Red Herring Prospectus contains conversions of US Dollar, Euro, CAD and other
currency amounts into Indian Rupees that have been presented solely to comply with the
requirements of the SEBI Regulations. These conversions should not be construed as a
representation that those US Dollar, Euro, CAD or other currency amounts could have been, or can
be converted into Indian Rupees, at any particular rate.

Definitions

For definitions, see section titled “Definitions and Abbreviations” on page 2. In the section titled
“Main Provisions of the Articles of Association” on page 365, defined terms have the meaning
given to such terms in the Articles.

Industry and Market Data

Unless stated otherwise, industry and market data used in this Draft Red Herring Prospectus has
11

been obtained or derived from publicly available information as well as industry publications and
sources. Industry publications generally state that the information contained in those publications
has been obtained from sources believed to be reliable but that their accuracy and completeness are
not guaranteed and their reliability cannot be assured. Accordingly, no investment decision should
be made on the basis of such information. Although industry data used in this Draft Red Herring
Prospectus is reliable, it has not been independently verified by our Company or the BRLMs.
Similarly, internal Company reports, which we believe to be reliable, have not been verified by
any independent sources.

The extent to which the market and industry data used in this Draft Red Herring Prospectus is
meaningful depends on the reader’s familiarity with and understanding of the methodologies used
in compiling such data. There are no standard data gathering methodologies in the industry in
which our Company conducts its business, and methodologies and assumptions may vary widely
among different industry sources.



12

FORWARD LOOKING STATEMENTS

All statements contained in this Draft Red Herring Prospectus that are not statements of historical
fact constitute “forward-looking statements.” All statements regarding our expected financial
condition and results of operations, business, plans and prospects are forward-looking statements.
These forward-looking statements include statements as to our business strategy, our expected
revenue and profitability, planned projects and other matters discussed in this Draft Red Herring
Prospectus regarding matters that are not historical facts. These forward-looking statements and
any other projections contained in this Draft Red Herring Prospectus (whether made by us or any
third party) are predictions and involve known and unknown risks, uncertainties and other factors
that may cause our actual results, performance or achievements to be materially different from any
future results, performance or achievements expressed or implied by such forward-looking
statements or other projections. Investors can generally identify forward-looking statements by
terminology such as “aim”, “anticipate”, “believe”, “expect”, “estimate”, “intend”, “objective”,
“plan”, “project”, “will”, “will continue”, “will pursue” or other words or phrases of similar
import. All forward looking statements are subject to risks, uncertainties and assumptions about us
that could cause actual results to differ materially from those contemplated by the relevant
forward-looking statement. Important factors that could cause actual results to differ materially
from our expectations include, among others:

• growth of the manufacturing sector and the user industry including but not limited to auto,
auto ancillary, aerospace, general engineering, consumer goods and dies and moulds
sectors;
• market fluctuations and industry dynamics beyond our control;
• our ability to successfully procure critical components for our products;
• potential mergers, acquisitions or restructuring;
• our ability to successfully launch new products;
• our ability to retain our current employees;
• changes in monetary and/ or fiscal policies of the Government of India, inflations,
deflation, foreign exchange rates, unanticipated turbulence in interest rates;
• occurrence of natural disasters or calamities affecting the areas in which we have
operations;
• changes in political and social conditions in India;
• the performance of the financial markets in India and globally; and
• competition in the industry.

For further discussion of factors that could cause the actual results to differ from the expectations,
see sections titled “Risk Factors”, “Business” and “Management’s Discussion and Analysis of
Financial Condition and Results of Operations” on pages 13, 130 and 259, respectively.


By their nature, certain market risk disclosures are only estimates and could be materially different
from what actually occurs in the future. As a result, actual gains or losses could materially differ
from those that have been estimated. Our Company, our Directors, the Syndicate and their
respective affiliates or associates do not have any obligation to, and do not intend to, update or
otherwise revise any statements reflecting circumstances arising after the date hereof or to reflect
the occurrence of underlying events, even if the underlying assumptions do not come to fruition. In
accordance with the SEBI requirements, our Company and the BRLMs will ensure that investors
in India are informed of material developments until such time as the grant of listing and trading
permissions by the Stock Exchanges.
13

SECTION II: RISK FACTORS

RISK FACTORS

An investment in our Equity Shares involves a high degree of risk. You should carefully consider
all the information in this Draft Red Herring Prospectus, including the risks and uncertainties
described below, before making an investment in our Equity Shares. To obtain a complete
understanding of our Company, you should read this section in conjunction with the sections
“Business” and “Management’s Discussion and Analysis of Financial Condition and Results of
Operations” as well as the other financial and statistical information contained in this Draft Red
Herring Prospectus. The risks and uncertainties described in this section are not the only risks and
uncertainties we currently face. Additional risks and uncertainties not known to us or that we
currently deem immaterial may also have an adverse effect on our business, financial condition
and results of operations. If any of the following risks, or other risks that are not currently known
or are now deemed immaterial, actually occur, our business, financial condition and results of
operations could suffer, the price of our Equity Shares could decline, and you may lose all or part
of your investment.

Unless otherwise stated, the financial information used in this section is derived from our restated
audited financial statements prepared under Indian GAAP. See “Restated Consolidated Financial
Statements” and “Restated Unconsolidated Financial Statements”on page 183 and 220.

Internal Risk Factors

1. There are outstanding legal proceedings involving our Company, our Subsidiaries and
our Directors

There are outstanding legal proceedings involving our Company, Subsidiaries and
Directors. These proceedings are pending at different levels of adjudication before
various courts, tribunals, enquiry officers and appellate tribunals. The brief details of such
outstanding litigations are as follows:

Litigation against our Company

Sr.
No
Nature of the cases/ claims
No. of cases
outstanding
Amount involved
(` in million)
1 Civil 1 3.14
2 Service tax 2 0.48*
3 Excise 3 4.69
4 FEMA 1 Not-quantifiable
5 Stamp duty 1 1.68
Total 8 9.99
* Amount is not quantifiable in one case.

Litigation by our Company

Sr.
No
Nature of the cases/ claims
No. of cases
outstanding
Amount involved
(` in million)
1 Income tax 3 10.41*
Total 3 10.41
* In one case there is no tax demand in view of carry forward business losses / unabsorbed depreciation of our
Company.

Litigation involving our Subsidiaries

Sr.
No
Nature of the cases/ claims
No. of cases
outstanding
Amount involved
(` in million)
1 Civil 1 Not quantifiable
2 Labour 1 Not quantifiable
Total 2 Not-quantifiable

Litigation involving our Directors

Sr.
No
Nature of the cases/claim
No. of cases
outstanding
Amount involved
(` in million)
14

1 Objection against registration of
trade mark
1 Not quantifiable

An adverse outcome in any of these proceedings may affect our reputation and standing
and could have an adverse effect on our business, financial condition and results of
operations. For further details of outstanding litigation, see section titled “Outstanding
Litigation and Material Developments” on page 292.

2. We had renegotiated the terms of repayment of instalments to our term loan lenders in
the past and had overdue payments to two of our lenders. We cannot assure that we
shall not renegotiate or restructure debts due to our lenders or default on timely
repayments to our lenders in the future which could have an adverse effect on our
business, reputation, result of operations or financial condition.

We had renegotiated the terms of repayment of quarterly instalment falling due from
March 28, 2009 by deferring the payment by 12 months i.e. moratorium of 12 months on
the repayment of principal loan amount from March 28, 2009 to March 28, 2010. Also,
we had overdue payments of ` 43.50 million (principal amount) to two of our lenders,
which was paid on March 04, 2013.

We cannot assure that we shall not renegotiate or restructure the debt due to our lenders
or default on timely repayment as per the financing agreement with our lenders in the
future. In the event of default under such financing agreement, our lenders can elect to
accelerate all amounts outstanding and declare such amounts immediately due and
payable together with accrued, unpaid and penal interest which may require us to dedicate
a substantial portion of our cash flow from operations to make payments under the
financing documents, thereby reducing the availability of cash flow to meet working
capital requirements and use for other general corporate purposes which could have an
adverse effect on our business and financial condition and results of operation. Further,
any action initiated by a lender may result in the price of the Equity Shares being
adversely impacted along with our ability to obtain further funding from other banks and
financial institutions.

3. Demand for our products depends on demand and capital spending by customers in the
auto and auto ancillary, aerospace, general engineering, dies and moulds and
Government entities. Any downturn affecting these sectors may result in a decrease in
demand for our products and services and adversely affect our business, financial
condition and results of operations.

Demand for many of our products and services depends on capital spending by auto and
auto ancillary, aerospace, general engineering, dies and moulds and Government entities,
which is directly affected by trends in these sectors and the current economic scenario. In
FY12, 30.84%, 18.08%, 17.41%, 7.18% and 11.70% of our revenues came from auto and
auto ancillaries, aerospace, general engineering, dies and moulds and government entities
respectively. The corresponding figures for the nine months ended December 31, 2012
were 21.13%, 15.37%, 21.16%, 8.23% and 14.10% respectively. Our customers may
defer major expenditures given the long term nature of many large scale projects due to
perception of lower demand for their products or other reasons. Further, any financial
crisis may lead to tightening of credit and consequently our customers, who may not have
the ability to fund capital expenditures, may have difficulty in obtaining financing, which
may result in cancellations of projects or deferral of projects to a later date. Such
cancellations or deferrals may result in decreased demand for our products and could
adversely affect our results of operations, cash flows and liquidity.

4. Increased costs for raw materials and components, interruptions in their availability
and poor quality of these raw materials may adversely affect our results of operations.

Our business is significantly affected by the availability, cost and quality of the raw
materials and components which we need to develop our products. Our principal raw
materials include controllers, isolation transformers, switch gears, drives, MCPs, Rotary
table packages, LM Guide ways & runner blocks, lubrication systems chucks, cylinders,
draw bars, pig iron, CRC/SS sheets. We are dependent on external suppliers for certain of
the materials /components. The prices and supply of these and other raw materials and
components depend on factors beyond our control, including general economic
conditions, competition, production levels, transportation costs and duties. If, for any
15

reason, our suppliers of raw materials and components should curtail or discontinue their
delivery of such materials to us in the quantities we need or at prices that are competitive
or expected by us, our ability to meet the requirements of our customers could be
impaired and our earnings and business could suffer. Further, we may not be able to pass
on any increase in the cost of manufacturing our products to our customers, which may
adversely affect our results of operations. Additionally, we do not have control over the
quality of raw materials and components they supply, which may adversely affect the
quality and workmanship of our products.

5. Dependence on a few suppliers for key components may require us to procure them
from other suppliers at higher cost and cause operational interruptions and affect our
delivery capacity leading to loss of production and underutilisation of our capacity.

We source controllers largely from key suppliers like Siemens and FANUC. Similarly,
other key components like isolation transformers, switch gears, drives, MCPs, rotary table
package etc. are also supplied by a few suppliers. The relationship with these key
suppliers plays an important role in helping us provide complete integrated solutions to
our customers in the agreed timeframe. If we are unable to maintain a beneficial
relationship with our key suppliers for our products, then we may have to purchase key
inputs from other suppliers at higher costs or we may not be able to source key inputs
from other suppliers, which may result in operational interruptions or prolonged loss of
production and can significantly affect our delivery capacity and lead to under-utilization
of our production capacity. Any delay in delivery or increase in price may result in order
cancellations by our customers or even claims for damages, and may harm our
relationships with those customers and our business and results of operations could be
adversely affected.

6. The operations of our Company are subject to manufacturing risk and may be
disrupted by failure in the facilities causing fatal injury to personnel including death
and destruction of property and consequent imposition of civil and criminal penalties.

Our manufacturing facilities are subject to operating risks, such as the breakdown or
failure of equipment, power supply or processes, performance below expected levels of
output or efficiency, obsolescence, earthquakes, other natural disasters and industrial
accidents. Our manufacturing facilities are also subject to operating risk resulting in fatal
personal injury and property damage and consequent imposition of civil and criminal
penalties. In last 10 years, there have been 2 (two) fatal incidents at our manufacturing
facilities leading to the death of an employee and a contract labourer. The occurrence of
any of these events could have a material adverse effect on our business, financial
condition and results of operations.

7. A portion of the Net Proceeds of the Issue is proposed to be utilized towards
procurement of various milling and turning machines for the machine shop which will
be manufactured in-house and by our subsidiary, Huron Graffenstadden S. A. S.

One of the objects of the Issue includes the utilization of the Net Proceeds towards
expansion of capacities at our manufacturing facility. For this purpose we intend to
procure various CNC machines for the machine shop manufactured by us and by our
subsidiary, Huron Graffenstadden S. A. S. We intend to procure 20 machines which will
be manufactured in-house and 4 machines will be procured from our subsidiary, Huron
Graffenstadden S. A. S. aggregating to ` 552.53 million. While we believe that our
decision to manufacture the machines in-house and procure the machines from our
subsidiary is cost effective, there can be no assurance that we could not have achieved
more favourable terms had such machines been purchased from unrelated parties. For
details of procurement of various CNC machines for the machine shop, see “Objects of
the Issue” on page 80.

8. We have not placed orders for 100% of the machinery, equipments and toolings that is
required for expansion of the facility and as a result, we may face time and cost
overruns.

One of the objects of the Issue includes expansion of capacities at the manufacturing
facility which, inter-alia, includes purchase of machinery, equipments and toolings for the
machine and foundry shop and sheet metal division. For details, see the section titled
“Objects of the Issue” on page 80. We are yet to enter into definitive agreements or are
16

yet to place orders for all the machinery, equipments and toolings required for expansion
at the manufacturing facility. The total cost of machinery, equipments and toolings
proposed to be procured is estimated to be ` 579.77 million. We are subject to risks on
account of inflation in the price of machinery, equipments and toolings and fluctuations
in foreign currency rates. Further we have not received any quotations for some of the
measuring equipments required for the machine shop which has been estimated at ` 2.60
million based on management estimates. These factors may increase the overall cost of
our expansion, and we may have to raise additional funds by way of additional debt or
equity placement to complete our expansion of manufacturing facility, which may have
an adverse effect on our business and results of operations.

9. A portion of the Net Proceeds of the Issue is proposed to be utilized towards
prepayment of certain loans.

Our Company intends to utilize up to ` 285.30 million from the Net Proceeds towards
prepayment of certain term loans of our Company that would be outstanding as of June
30, 2013. Certain of our loan facilities contain prepayment penalty clauses that we may
be required to comply with and as a result, we may be required to pay an additional
prepayment premium to our lenders. For details, see “Objects of the Issue” on page 80.

10. We have incurred losses on a consolidated basis in 4 (four) years out of the last 5 (five)
years and we have had negative cash flow from operating activities.

We incurred losses on a consolidated basis for the FY 2011, 2010, 2009 and 2008 of `
41.82 million, ` 413.20 million, ` 14.88 million and ` 31.50 million, respectively. For
the nine months ended December 31, 2012 and FY 2009, we had negative cash flows
from operating activities of ` 37.89 million and ` 181.87 million respectively on a
consolidated basis. We cannot assure you that we will not incur losses, have negative
cash flows from operating activities in the future, which may adversely affect our ability
to carry out our business.

11. The trademark ‘Jyoti’ with associated logo we currently use is not owned by us but is
owned by our Promoter, Parakramsinh Jadeja which is not registered in his name. In
case we are unable to use this trademark, our business and result of operation may be
adversely impacted.

We have entered into a licence agreement with Parakramsinh Jadeja, one of our
Promoters, inter-alia, for use of the ‘Jyoti’ brand with associated logo. Parakramsinh
Jadeja has made an application for registration of ‘Jyoti’ brand with associated logo
before the Trade Mark Registry to have this trademark registered in his name. However,
‘Jyoti’ brand with associated logo has not been registered in his name till date.
Parakramsinh Jadeja has received an objection against the registration and an affidavit in
support of the application has been filed by Parakramsinh Jadeja before the Trade Mark
Registry on October 27, 2011. We cannot assure you that ‘Jyoti’ brand with associated
logo will be registered in his name and we will continue to have the uninterrupted use and
enjoyment of ‘Jyoti’ brand with associated logo. Loss of right to use these trademarks
may adversely affect our business, financial condition and results of operations.

12. Failure by the customers to make payment and take delivery of our products could
affect our cash flows and working capital, which may have an adverse effect on our
results of operations.

Many of our customers purchase our machines through funding from bank. In such
cases, banks directly make us the payment and we deliver the machines to our customers.
Before commencing any work order, we receive earnest money as advance from our
customers. If there is any delay by the customers in procuring the funds or the loan
arrangement from the bank then we may be left with a complete machine ready for
delivery without any buyers. In such case, our working capital would be blocked and our
cash flow would be affected and thereby adversely affecting our results of operations.

13. Our success depends largely on our senior management and our ability to attract and
retain our key personnel. Any inability to attract, recruit and retain skilled personnel
could adversely affect our business and results of operations.

17

We believe that our current management team contributes significant experience and
expertise to the management and growth of the business. The continued success of the
business and the ability to execute the business strategies in the future will depend largely
on our ability to attract, retain and motivate our key management and operational
personnel. Our management team has been involved in the machine tool industry in India
for a significant period. During this time, our management team has developed sector-
specific and operational management expertise and an understanding of the key
opportunities and risks associated with the business. Any failure to retain key managers,
or to replace our key management and operational personnel with equally qualified
persons in the event of the departure, could have a material adverse effect on our
business, prospects, results of operations and financial condition. Further, as our business
continues to grow we will need to recruit and train additional qualified personnel. If we
fail to attract and retain qualified personnel, our business prospects, results of operations,
cash flows and financial condition may also be adversely affected. We do not maintain
key-man life insurance in relation to our key managerial personnel. The loss of the
services of our key management and operational personnel due to death or disability or a
failure to recruit suitable or comparable replacements in a timely manner could have a
material adverse effect on our business, prospects, results of operations, cash flows and
financial condition.

14. We provide after sales service to our customers. Any failure or deterioration of after
sale service could have an adverse effect on our business, reputation, results of
operations or financial condition.

We believe that our ability to provide effective after sales service has played a huge part
in our success. Effective after sales service ensures repeat customers and also adds to our
brand value. Presently, our service network caters to 19 cities across India where a team
of qualified engineers is present to provide support to our customers. However, we
cannot guarantee that we will be able to maintain the standard and quality of our after sale
services considering the volumes and the increasing number of customers across
geographical territories coupled with the complexity of the requirements of diverse
segment of customers. The performance and quality of our after sales service to our
customers is critical to the success of our business. The effectiveness and quality of our
after sales service depends significantly on the engineers’ skill and experience which in
turn is dependent on the quality of training program. We cannot give any assurance that
training given to the field service engineers is adequate or that they will continue to
provide services after completion of their training. Any failure or deterioration of after
sale service could have an adverse effect on our business, reputation, results of operations
or financial condition.

15. We face significant competition in our business from Indian and international
companies which could adversely affect our operations and our profitability.

We operate in a competitive market. Many Indian and foreign players are operating in the
machine tools market. There are several strategies adopted by our competitors to increase
their market share through pricing, service, new product introductions and distribution
reach among others. This increased competition by both traditional and new players may
affect our margins. In order to protect our existing market share or capture market share,
we may be required to increase expenditure for increasing our reach and to introduce and
establish new products. Due to inherent risks in the marketplace associated with new
product introductions, including uncertainties about user industry’s response, increased
expenditure may not prove successful in maintaining or enhancing our market share and
could result in lower profitability. For further details, see the section titled “Business –
Competition” on page 144.

16. Any inability to manage our growth may disrupt our business and affect our
profitability.

We have experienced year-on-year growth in our income from operations on consolidated
basis of 37.62% and 57.05% in FY 2012 and FY 2011, respectively. Further, our strategy
is to continue to grow by expanding the size and scope of existing business. This growth
strategy will place significant demands on us and require us to continuously evolve and
improve our operational, financial and internal controls across our organisation. In
particular, continued expansion increases the challenges involved in:

18

• maintaining high levels of customer satisfaction;
• recruiting, training and retaining sufficient skilled management, technical and
marketing personnel;
• adhering to health, safety and environment and quality and process execution
standards that meet customer expectations;
• preserving a uniform culture, values and work environment in operations at our
manufacturing facilities; and
• developing and improving our internal administrative infrastructure, particularly our
financial, operational, communications and other internal systems.

Any inability to manage our growth may have an adverse effect on our business, results
of operations and financial condition. If we fail to manage growth effectively it could
have an adverse effect on our results of operations.

17. Our Company is subject to restrictive covenants under credit facilities provided to us by
our lenders. These restrictions could restrict our ability to conduct our business and
operations

There are restrictive covenants in the agreements which our Company has entered into
with our lenders. The agreements governing our debt obligations include terms that
require us to, among other things, take prior approval of our lenders for undertaking any
change in capital structure, formulate any scheme of amalgamation or re-construction,
implement any scheme of expansion / diversification / modernisation, make any corporate
investment and undertake any guarantee obligations. Such restrictive covenants our
ability to conduct our business and operations. For details, see section titled “Financial
Indebtedness” on page 284.

18. We have substantial working capital requirements and if we are unable to obtain
working capital loans to help finance these requirements it would a have significant
adverse effect on our business, results of operations and financial condition.

Our business requires a substantial amount of working capital, primarily to maintain a
high level of inventory on account of a long manufacturing cycle.
As we increase our
production and undertake expansion our business may require a large amount of working
capital to finance the purchase of raw materials. Our working capital requirements may also
increase owing to a growing number of orders to be delivered within a similar timeframe or if
for certain orders the payment terms do not include advance payments. All of these factors
may result in an increase in our working capital requirements.
We avail the majority of our
working capital by way of loan from various banks. Such financing arrangement could
cause our debt to equity ratio to increase. Our Company’s working capital (i.e. current
assets less the current liabilities and provisions) as of March 31, 2012 was ` 1,334.82
million.

We cannot assure you that we will be able to secure adequate financing in the future on
acceptable terms, in time, or at all. Failure to obtain
financing on terms favourable to us
could have a material adverse effect on our business, results of operations and financial
condition.
For details of the working capital facilities currently availed by us, see the
section titled “Financial Indebtedness” on page 284.

19. We cannot assure you that we will be able to secure adequate financing in the future
on acceptable terms, in time, or at all. Our failure to obtain sufficient financing could
result in the delay or abandonment of implementation of our business development
plans or any acquisition plans and this may affect our business and future results of
operations.

We may require additional funds in connection with other future business expansion and
development initiatives. In addition to the net proceeds from the Issue and our internally
generated cash flow, we may need additional sources of funding to meet our future capital
requirements, which may include entering into new debt facilities with lending
institutions or raising additional equity in the capital markets. If we decide to raise
additional funds through the incurrence of debt, our interest obligations will increase, and
we may be subject to additional covenants. Such financings could cause our debt to
equity ratio to increase or require us to create charges or liens on our assets in favour of
lenders. If we decide to raise additional funds through the issuance of equity (other than
through a rights issue to the existing shareholders), the ownership interest of our existing
19

shareholders will be diluted. We cannot assure you that we will be able to secure
adequate financing in the future on acceptable terms, in time, or at all. Our failure to
obtain sufficient financing could result in the delay in implementation of our business
development plans or abandonment of any acquisition plans and this may affect our
business and future results of operations.

20. Our Company has availed unsecured loans, which can be recalled anytime by their
respective lenders.

Unsecured loans amounting to ` 117.37 million (including interest) is outstanding as on
January 31, 2013. Such unsecured loans availed by our Company can be recalled anytime
by the lenders by giving notice to our Company. In the event such loans are recalled, our
Company may be required to arrange alternative sources of financing. For details of our
indebtedness, please refer to the chapter titled “Financial Indebtedness” on page 284 of
the Draft Red Herring Prospectus.

21. Our Promoters have significant control over us, and have the ability to direct our
business and affairs; their interests may conflict with your interests as a shareholder.

Our Promoters, together with the members of the Promoter Group, beneficially own
96.91% of our issued and outstanding Equity Shares. Our Promoters, together with the
members of the Promoter Group, will hold 66.07% of our post-Issue paid up capital. Our
Promoters have the ability to control our business, including matters relating to sale of all
or substantially all of our assets, timing and distribution of dividends, election of directors
and change of control transactions. Our Promoters may influence the material policies of
our Company in a manner that could conflict with the interests of our other shareholders.
The Promoters’ control could delay, defer or prevent a change in control of our Company,
impede a merger, consolidation, takeover or other business combination involving our
Company, or discourage a potential acquirer from making a tender offer or otherwise
attempting to obtain control of our Company, even if it is in the best interest of our other
shareholders.

22. We have entered into certain related party transactions and we expect that we will
continue to do so in the future which may involve conflicts of interest.

We have entered into certain transactions with related parties, such as our Promoters
including entities affiliated with our Promoters, Directors and their relatives, key
management personnel and enterprises in which key management personnel/Directors
have significant influence. For detailed information on our related party transactions, see
the section titled “Related Party Transactions” on page 181. While we believe that all
our related party transactions have been conducted on an arm’s length basis, there can be
no assurance that we could not have achieved more favourable terms had such
transactions been entered into with unrelated parties. Furthermore, it is likely that we will
enter into related party transactions in the future. There can be no assurance that such
transactions, individually or in the aggregate, will not have an adverse effect on our
business, financial condition and results of operations.

23. The objects of the Issue for which funds are being raised have not been appraised by
any bank or financial institution and we have not entered into any definitive
agreements to utilise the Issue proceeds. In addition, we have not appointed any third
party to monitor the deployment of the Issue proceeds.

The objects for which the funds are being raised have not been appraised by any bank or
financial institution. We have not entered into any definitive agreements to utilise the
Issue proceeds. There has been no independent appraisal of our expansion plans. Whilst
the quotations obtained by us for machines, equipments and toolings and civil works in
relation to expansion plans, such costs are subject to change in the light of various factors
beyond our control, including delays or increase in quoted prices by identified vendors. In
the event, for whatsoever reason, we are unable to execute our expansion plans, we could
have a significant amount of unallocated net proceeds. Due to the number and variability
of factors that we will analyze before we determine how to use these unutilised net
proceeds, we presently cannot determine how we would reallocate such proceeds.
Accordingly, investors will not have the opportunity to evaluate the economic, financial
and other relevant information that will be considered by us in the determination on the
application of any such net proceeds in these circumstances. In addition, the deployment
20

of funds is not subject to monitoring by any independent agency. For details, see the
section titled “Objects of the Issue” on page 80.


24. We generate income and incur expenses in multiple currencies and exchange rate
movement may cause us to incur losses
.


Changes in currency exchange rates influence our results of operations. We report
consolidated financial results in Indian Rupees, while portions of each of our total income
and expenses are denominated, generated or incurred in currencies other than the Indian
Rupee such as the U.S. Dollar, Euro, Japanese Yen, British Pound and other currencies.
In accordance with “Accounting Standard 21 ― Consolidated Financial Statements”
issued by ICAI, at the time of conversion of the financial statements during the
consolidation process, line items of the profit and loss account are converted using an
average exchange rate for the period or year under consideration except for opening and
closing stock which are converted at the opening and closing exchange rate respectively
and depreciation which is converted using the exchange rate at the date of purchase of the
assets, where as items of the balance sheet are converted using the closing exchange rate
for the period or calendar year under consideration. Any expansion into new geographies
such as the international acquisitions exposes us to additional foreign currency risks
associated with such diversification.

To the extent that income and expenditures are not denominated in Indian Rupees, despite
our entering into foreign exchange hedging contracts from time to time, exchange rate
fluctuations could affect the amount of income and expenditure we recognize. Further,
our future capital expenditures, including any imported equipment and machinery, may be
denominated in currencies other than the Indian Rupee. Our Company also has currency
exposures related to its financing in currencies other than the local currency in which our
Company operates. Any depreciation in the value of the Indian Rupee against such other
currencies could increase the Indian Rupee cost for our Company for servicing our debt
or making such capital expenditures.

Although we follow foreign currency exposure closely, including on a contract-by-
contract basis, and selectively enter into hedging transactions in an attempt to reduce the
risks of currency fluctuations, these activities are not always sufficient to protect against
incurring large losses if currencies fluctuate significantly. Fluctuations in foreign
exchange rates adverse to us that are not sufficiently hedged could adversely affect our
results of operations.

24. Our Company had entered into a cross currency derivative transaction in March 2008
with its closing date being March 11, 2013 which was prematurely settled by our
Company on February 11, 2013 at a loss of ` 14.93 million. We cannot guarantee that
our Company will not enter into any similar transaction in derivatives in the future that
may have an adverse effect on our business, financial condition and results of
operations.

Our Company had entered into a cross currency derivative transaction in March 2008
with the closing date being March 11, 2013 which was prematurely settled by our
Company on February 11, 2013 at a loss of ` 14.93 million. Our company does not have
a formal policy or strategy for hedging of currency risk and we cannot guarantee that our
Company will not enter into any similar transaction in derivatives in the future. Our
Company’s use of derivative transaction involves the risk that such transactions may not