IPO Readiness and Listing of shares Private and confidential April 2018

IPO considerations

IPO considerations Considering an IPO? Why IPO? Advantages/ disadvantages Ongoing reporting Are you ready? IPO readiness/process Which market are you eligible for Business and Tax considerations

Issues facing your business Thinking about an IPO? Issues facing your business Scalability Why IPO? Financial reporting procedures Forecasting Which market? Local vs. overseas Future reporting requirements - Eligibility Transparency of ownership structure Resources/timing/ project management Investment story? — Suitability Corporate governance Choosing advisors Management team Incentivisation/ remuneration Investor relations Historical financial track record Tax efficient group structure Dividend policy Going public is a long, involved process that represents a significant milestone for any company.

Steps to consider when you go public There are a number of key fundamentals that you should consider Why IPO? Which market? Are you eligible? Are you ready? 1 2 3 To raise capital for growth To raise profile and status in the market To realise the value of the Company To obtain a broad investor base To provide an exit strategy for existing shareholders To be able to use listed shares as an acquisition currency or to reward staff Regulatory requirement for Indian companies to be listed or in the process of listing in India Companies can also consider alternative structures for an international listing Business considerations India, London, New York, Amsterdam, Singapore etc. If London: Main Market or AIM The key eligibility criteria differ according to which market you want to list in Is there growth potential for your products/operations Has your Company demonstrated that it can be profitable Is there a robust business plan Is the promoter group able to contribute additional capital to the Company, if required Are you prepared to give up Management ‘control’ and invite independent Non-Executive Directors onto the Board Are you prepared for outside investor/regulator scrutiny and loss of privacy

Advantages v/s disadvantages of going public The advantages The disadvantages Companies typically make use of a variety of financing options before they even consider going public. Going public potentially provides both tangible and intangible benefits, including the following: Increased capital Improved financial position Less dilution than through PE route Enhanced ability to raise equity Liquidity and valuation Improved credibility with business partners Better employee morale and productivity Listing improves liquidity for investors There are also some very significant disadvantages of going public that should be weighed against the many advantages: Disclosure of information Demands on management Pressure to maintain growth pattern Possible loss of control Listing regulations Enhanced corporate governance. Extensive ongoing reporting requirements Incurrence of additional cost

Business and Tax considerations Business considerations Tax considerations Equity v/s debt Valuations and dilution of current holding Impact on operations Cost of funds Use of IPO proceeds Foreign exchange requirements Enhancement in brand value Continuing regulatory compliance Analysing the tax implication of preferring an IPO under the existing structure. Tax restructuring Analysing suitable jurisdictions Deciding on the listing vehicle Tax treaties between India and other countries Tax impact on future distributions Option of seeking advance ruling Regulatory compliances Tax implications for shareholders

Stakeholders involved Regulators – SEBI/ ROC/ Others Investors/ Analyst Company – Going for listing Auditors (Previous and current) Bankers/ Underwrites Lawyers (India/ International)

SEBI Regulations- An Overview

ICDR- Listing Requirements Net tangible assets (excluding intangibles) of at least Rs.3 Crores in each of the preceding 3 years of which not more than 50 % is held in monetary assets; Average pre-tax operating profits ≥ Rs. 15 Crores during 3 most profitable years out of past 5 years; Net worth of at least Rs.1 Crore in each of the 3 preceding FY; The aggregate of the proposed issue does not exceed 5 times the pre-issue net worth of the immediately preceding financial year; and If name has changed in the last one year, at least 50% of the revenue for the preceding full one year has been earned from the activity indicated by the new name Issue is made through book-building process with at least 75% of net offer to public being allotted to QIBs if above conditions are not met

ICDR-Listing Requirements Promoters' Shareholding Public Shareholding Minimum 20% of post issue shareholding; Lock-in of minimum promoter’s contribution for 3 years; Promoter’s holding in excess of 20% shall be locked in for 1 year Atleast 25% of post issue capital (at offer price) is ≤ INR 1600 Crore; Atleast INR 400 Crore, if post issue capital (at offer price) is ≥ INR 1600 Crore and ≤ INR 4,000 Crore; Atleast 10%, if the post issue capital is ≥ INR 4,000 Crore IPO Key Considerations Alteration in AoA Pricing of shares Common form or transfer Fully paid shares to be free from all lien Advance call money may carry interest but shall not entitle declaration of dividend No forfeiture of unclaimed dividends before claims barred by law option or right to call of shares can be be given only wit with the sanction of the company in general meeting Price to be determined in consultation with Merchant Banker Differential pricing for different type of investor allowed subject to certain conditions If issue size is ≥ INR 500 Crore, Face value may be less than INR 10 but not lower than INR 1 If issue size is < INR 500 Crore, Face value shall be INR 10

LODR- Board Governance and Listing Compliances Board Composition Constitution of Committees Various Policies Independent Directors One Women Director; 1/2 of the members of the Board be non-executive directors; 1/3rd ID's, if Chairman is non- executive and if Chairman is executive director 1/2 shall be ID's. A person shall not serve more than 7 companies as ID; If, a person is serving as WTD in any listed company, he shall not serve as ID of more than 3 companies Audit Committee; Nomination and Remuneration Committee; CSR Committee Stakeholder Relationship Committee; Risk Management Committee (Applicable on top 100 listed companies as per market capitalization) IPO Committee (optional) Policy on Materiality of Related Party Transactions and dealing with Related Party Transactions; Policy on preservation of documents; Policy for determining material subsidiaries; Vigil Mechanism; Nomination and Remuneration Policy; Policy on diversity of Board; Risk Management Policy; Code of Conduct for Board and Senior Management; Familiarization Programme; Policy for determining material events. Dividend Distribution Policy(Applicable on top 100 listed companies as per market capitalization) Code of Conduct for Insider Trading Regulations Code of Fair Disclosures ID’s to hold one separate meeting in a year without the presence of non-IDs and members of the management of the Company; IDs in their separate meeting to review:- Performance of non-IDs and Board; Performance of the chairperson the quality, quantity and timeliness of flow of information between the management and the board The company to familiarize the IDs through various programmes about the Company

Disclosures- LODR, Insider Trading and SAST

LODR-Public Disclosures Quarterly results within 45 days Capital and Debt Restructuring Issuance, split, consolidation, forfeiture of securities etc. Disclosure to Stock Exchanges Revision in Ratings Agreements/ family settlements impacting change in management Fraud/defaults by promoters/ KMP and their arrest Change in Directors, KMP, Auditor & Compliance Officer Notice, call letters etc. issued to shareholders. General Meeting proceedings. Amendment of MoA/AoA

LODR- Disclosure of outcome of Board Meeting Dividends and/or cash bonuses recommended or declared or the decision to pass any dividend and the date on which dividend shall be paid/dispatched; Cancellation of dividend with reasons thereof; Buyback of securities; Fund raising proposed to be undertaken; Increase in capital by issue of bonus shares; Reissue of forfeited shares or securities, or the issue of shares or securities held in reserve for future issue or the creation in any form or manner of new shares or securities or any other rights, privileges or benefits to subscribe to; Short particulars of alterations of capital, including calls; Financial results; Voluntary delisting Within 30 minutes to Stock Exchange Disclosures

SAST- Disclosures under Takeover Code 1 2 3 Event Based Acquisition of ≥5%; Change of ≥2% after the 5% Disclosure to be made to Stock Exchange within 2 days Continual Persons holding ≥25%; Every Promoter Disclosure to be made to Stock Exchange within 7 days of closure of financial year Encumbered Shares Encumbrance considered akin to acquisition/ disposal of shares Include a pledge, lien or any such transaction, by whatever name called. Convertible security shall also be regarded as shares and disclosures of such acquisitions and holdings shall be made accordingly. No obligation on the Target Company to give the disclosure to Stock Exchange.

Disclosures under Insider Trading Regulations Initial Disclosures Disclosure of their holding in the Company by Promoters, Directors and KMPs within 30 days of Listing. Every KMP, Director or person becoming a promoter shall disclose his holding of securities in Company as on date of appointment/becoming promoter to the Company within 7 days of such appointment. Continual Disclosures Every promoter, employee and director shall disclose to the Company the number of securities acquired or disposed of within 2 trading days, if the value of the securities traded, whether in one transaction or a series of transactions over any calendar quarter, aggregate to a traded value in excess of Rs. 10 Lacs; Company shall notify the particulars of such trading to stock exchange within 2 trading days of receipt of aforementioned disclosures. Disclosures by other connected persons The Company may at its discretion require any other connected person or class of connected persons to make disclosure of their holding and trading of securities

Roadmap for IPO

Roadmap for an Indian IPO Readiness Diagnostics and preparation Appointment of Merchant Bankers and other advisors Due diligence Compilation of information for and review of offer document Preparation of restated financial statements including auditors’ report and other certifications Information for Road shows Launch of IPO Receiving bids/applications Closure of IPO Review of offer document before and after printing of offer document with price information Stage 1 Preparation Stage 3 Marketing and distribution Unlisted Company Stage 2 Filings Listed Company Filing of draft offer document with SEBI Responses to SEBI Comments Filing of offer document with Registrar of Companies in India Stage 4 Listing and quotation Allocation and allotment Obtain Listing Approvals Listing on stock exchanges

Illustrative IPO timeline Publication of Research Report Roadshows Obtain listing and trading approvals File RHP with ROC Kick off Due Diligence & Drafting Incorporate SEBI comments in RHP Anchor Investor Listing T - 60 T T + 10 T + 40 T + 50 T + 54 T + 55 T + 76 T + 130 T + 137 T + 140 T + 152 T + 153 T + 158 T + 162 T + 163 T + 165 T + 177 T + 178 T + 179 In-house preparation Auditors report and other certifications In-principle approval from SEs File RHP with SEBI Allotment Issue Opens Research Presentation Receive SEBI comments on DRHP Receive SEBI go-ahead to RHP Issue closes File DRHP with SEBI Note: Timelines may alter depending on preparedness of the Company, Market sentiments (secondary and primary) and SEBI and Stock Exchange clearances

Discussion Atul Mittal Director Deloitte Haskin & Sells LLP 9810065744 Past – Chairman and Central Council member- NIRC-ICSI

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