arch pharmalabs limited

498 Pages·2011·5.48 MB·English

C M Y K
DRAFT RED HERRING PROSPECTUS
Dated March 23, 2011
Book Built Issue
Please read Section 60B of the Companies Act, 1956
(The Draft Red Herring Prospectus will be updated
ARCH PHARMALABS LIMITED upon filing with the RoC)
Our Company was incorporated on April 2, 1993 as Merven Drug Products Private Limited with the Registrar of Companies, Andhra Pradesh, Hyderabad. The status of
our Company was changed to a public limited company on April 24, 1993 and the name of our Company was changed to Merven Drug Products Limited pursuant to a
Fresh Certificate of Incorporation dated September 13, 1993 issued by the Registrar of Companies, Andhra Pradesh, Hyderabad. Subsequently, with changes in control
of our Company, the name of our Company was changed to Vitara Merven Limited on January 9, 1998 and thereafter to Merven Drug Products Limited on
September 10, 1999. Pursuant to the Reverse Merger of Arch Commerz Private Limited with our Company the name of our Company was changed to Arch Commerz Limited
on January 2, 2004. The name of our Company was then changed to ‘Arch Pharmalabs Limited’ pursuant to grant of Fresh Certificate of Incorporation dated
March 11, 2004 by the Registrar of Companies, Andhra Pradesh, Hyderabad. The CIN of our Company is U24231MH1993PLC150891. For details of changes in our name
and our registered office, please refer to the chapter titled “History and Certain Corporate Matters” beginning on page 129.
Registered Office and Corporate Office: ‘H’ Wing, 4th Floor, Tex Center, off Saki Vihar Road, Chandivali, Andheri (East), Mumbai 400 072
Tel No: + 91 22 3308 9200; Fax No: + 91 22 2847 1234; Website: www.archpharmalabs.com; E-mail: [email protected]
Contact Person: Vikas Kedia, Company Secretary and Compliance Officer, Tel No: + 91 22 2847 0588; Fax No: + 91 22 2847 1234; E-mail: [email protected]
PROMOTERS OF OUR COMPANY
Ajit Kamath, Manoj Jain, Rajendra Kaimal, Vidya Kamath, Bindu Jain, Ajit Annu Kamath (HUF), Manoj Jain (HUF), Arch Phytochemicals Private Limited,
Avant Capital Services Private Limited, Arch Impex Private Limited, AMR Investments Private Limited and Arch Pharmachem Limited
PUBLIC ISSUE OF [(cid:2)] EQUITY SHARES OF FACE VALUE `10 EACH (“EQUITY SHARES”) OF ARCH PHARMALABS LIMITED (“COMPANY” OR “ISSUER”)
FOR CASH AT A PRICE OF `[(cid:2)] PER EQUITY SHARE (INCLUDING A SHARE PREMIUM OF `[(cid:2)] PER EQUITY SHARE) (“ISSUE PRICE”) AGGREGATING
TO `[(cid:2)] MILLION, CONSISTING OF A FRESH ISSUE OF [(cid:2)] EQUITY SHARES BY OUR COMPANY AGGREGATING UPTO ` 1,350 MILLION (“FRESH
ISSUE”) AND AN OFFER FOR SALE OF 6,172,607 EQUITY SHARES BY INDIA ADVANTAGE FUND II, INDIA ADVANTAGE FUND V, RAINBOW FUND,
DYNAMIC INDIA FUND I, LEVERAGE INDIA FUND AND SWISS TECHNOLOGY VENTURE CAPITAL FUND PRIVATE LIMITED (“THE SELLING
SHAREHOLDERS”) AGGREGATING TO `[(cid:2)] MILLION (“OFFER FOR SALE”). THE FRESH ISSUE AND THE OFFER FOR SALE ARE TOGETHER REFERRED
TO AS THE “ISSUE”. THE ISSUE COMPRISES OF A NET ISSUE TO THE PUBLIC OF [(cid:2)] EQUITY SHARES (“NET ISSUE”) AND A RESERVATION OF UPTO
200,000 EQUITY SHARES FOR SUBSCRIPTION BY ELIGIBLE EMPLOYEES (AS DEFINED HERE-IN) ON A COMPETITIVE BASIS (“EMPLOYEE
RESERVATION PORTION”). THE ISSUE AND THE NET ISSUE WILL CONSTITUTE [(cid:2)]% AND [(cid:2)]%, RESPECTIVELY, OF THE POST-ISSUE PAID-UP EQUITY
SHARE CAPITAL OF OUR COMPANY.
Our Company in consultation with the Book Running Lead Managers (“BRLMs”) may decide to offer a discount of `[(cid:2)] to the Issue Price to the Eligible Employees
at the time of Allotment (“Employee Discount”) and which shall be advertised at least two (2) working days prior to the Bid/Issue Opening Date. The excess amount
paid at the time of Bidding shall be refunded to the Eligible Employees prior to the twelfth Working Day from the date of Bid/ Issue Closing Date or the eighth day
from the date on which our Company and Selling Shareholders become liable to repay, whichever is earlier.
THE FACE VALUE OF THE EQUITY SHARES IS `10 EACH.
THE PRICE BAND AND THE MINIMUM BID LOT SIZE FOR THE ISSUE WILL BE DECIDED BY OUR COMPANY IN CONSULTATION WITH THE SELLING
SHAREHOLDERS AND THE BRLMs AND SHALL BE ADVERTISED AT LEAST TWO (2) WORKING DAYS PRIOR TO THE BID/ISSUE OPENING DATE.
In case of revision in the Price Band, the Bid/Issue Period shall be extended for at least three (3) additional Working Days after such revision of the Price Band, subject to
the Bid/Issue Period not exceeding ten (10) Working Days. Any revision in the Price Band, and the revised Bid/Issue Period, if applicable, shall be widely disseminated by
notification to the Bombay Stock Exchange Limited (“BSE”) and the National Stock Exchange of India Limited (“NSE”) and by issuing a press release and also by indicating
the change on the websites of the BRLMs and at the terminals of the Syndicate Members.
This is an Issue of atleast 25.00% of the post-Issue capital in accordance with Rule 19(2)(b)(i) of the Securities Contracts Regulations Rules, 1957, as amended (“SCRR”). This
Issue is being undertaken as per Sub-Regulation (1) of Regulation 26 of the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009, as amended
(“SEBI ICDR Regulations”) and through a Book Building Process wherein not more than 50% of the Net Issue will be available for allocation on a proportionate basis to
Qualified Institutional Buyers (“QIB” and such portion being referred to as “QIB Portion”). Our Company in consultation with the Selling Shareholders and the BRLMs may
consider participation by Anchor Investors in the Net Issue for upto 30% of the QIB Portion, in accordance with the SEBI ICDR Regulations at or above the Anchor Investor
Price, out of which atleast one-third will be available for allocation to the domestic Mutual Funds only. In the event of under-subscription or non-allocation, if any, in the
Anchor Investor Portion, the balance Equity Shares shall be added to the remaining QIB Portion. 5% of the QIB Portion (excluding Anchor Investor Portion, if any) shall
be available for allocation on a proportionate basis to Mutual Funds only and the remaining QIB Portion shall be available for allocation on a proportionate basis to all QIBs,
including Mutual Funds, subject to valid Bids being received at or above the Issue Price. If the aggregate demand by Mutual Funds is less than 5% of the QIB Portion
(excluding the Anchor Investor Portion, if any), the balance Equity Shares available for allocation in the Mutual Fund Portion will be added to the QIB Portion (excluding
the Anchor Investor Portion, if any) and be available for allocation proportionately to the QIB Bidders. Further not less than 15% of the Net Issue shall be available for
allocation on a proportionate basis to Non-Institutional Bidders and not less than 35% of the Net Issue shall be available for allocation on a proportionate basis to Retail
Individual Bidders subject to valid Bids being received from them at or above the Issue Price. Further, up to 200,000 Equity Shares shall be available for allocation on a
proportionate basis to Eligible Employees, subject to valid Bids being received at or above the Issue Price, provided that the value of allotment to a single Eligible Employee
does not exceed ` 200,000 and such reservation does not exceed 5% of the Post Issue Share Capital of our Company. For further details please refer to the chapter titled “Issue
Procedure” and “Issue Structure” on pages 373 and 362 respectively. Potential Investors may participate in this Issue through an Application Supported by Blocked Amount
(“ASBA”) process providing details of their respective bank accounts in which the corresponding Bid amounts will be blocked by the Self Certified Syndicate Banks (“SCSB”).
IPO GRADING
This Issue has been graded by [(cid:2)] as [(cid:2)] (pronounced [(cid:2)]), indicating [(cid:2)] through its letter dated [(cid:2)] and [(cid:2)] as [(cid:2)] (pronounced [(cid:2)]), indicating [(cid:2)] through its letter
dated [(cid:2)]. For further details, please refer to the chapter titled “General Information” beginning on page 17.
RISKS IN RELATION TO THE FIRST ISSUE
This being the first public issue of Equity Shares of our Company, subsequent to the delisting of Equity Shares of our Company, there has been no formal market for the Equity
Shares of our Company. The face value of the Equity Shares is `10 each and the Issue Price is [(cid:2)] times of the face value at the lower end of the Price Band and [(cid:2)]
times of the face value at the higher end of the Price Band. The Issue Price (as determined and justified by our Company in consultation with the Selling Shareholders
and the BRLMs as stated in the chapter “Basis for Issue Price” on page 61 on the basis of assessment of market demand for the Equity Shares by way of the Book Building
Process) 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 active and/
or sustained trading in the Equity Shares of our Company or regarding the price at which the Equity Shares will be traded after listing.
GENERAL RISKS
Investments in equity and equity related securities involves 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 this Issue including the risks involved. The Equity Shares offered in this Issue have not
been recommended or approved by the Securities and Exchange Board of India (“SEBI”) nor does SEBI guarantee the accuracy or adequacy of this Draft Red Herring
Prospectus. Specific attention of the investors is invited to the section titled “Risk Factors” beginning on page xviii.
ISSUER’S AND SELLING SHAREHOLDERS’ ABSOLUTE RESPONSIBILITY
Our Company having made all reasonable inquiries, accepts responsibility for and confirms that this Draft Red Herring Prospectus contains all information with regard
to our Company and the Issue, which is material in the context of this Issue; that the information contained in this Draft Red Herring Prospectus is true and correct in
all material aspects and is not misleading in any material respect; that the opinions and intentions expressed herein are honestly held and that there are no other facts,
the omission of which makes this Draft Red Herring Prospectus as a whole or any of such information or the expression of any such opinions or intentions misleading
in any material respect. Each Selling Shareholder accepts responsibility that this Draft Red Herring Prospectus contains the requisite information in relation to itself
as a Selling Shareholder and in relation to the Equity Shares held by it to be offered and sold in the Offer for Sale and which is material in the context of this Issue and
that this information is true and correct in all material aspects and is not misleading.
LISTING
The Equity Shares offered through the Red Herring Prospectus are proposed to be listed on BSE and NSE. The in-principle approvals from BSE and NSE for listing the Equity
Shares have been received pursuant to letter no. [(cid:2)] dated [(cid:2)] and letter no. [(cid:2)] dated [(cid:2)] respectively. For the purposes of the Issue, [(cid:2)] shall be the Designated Stock Exchange.
BOOK RUNNING LEAD MANAGERS REGISTRAR TO THE ISSUE
IIFL
INDIA INFOLINE LIMITED ENAM SECURITIES PRIVATE LIMITED LINK INTIME INDIA PRIVATE LIMITED
8th Floor, IIFL Centre, Kamala City, Senapati Bapat Marg, 801, Dalamal Towers, Nariman Point, Mumbai 400 021, C- 13 Pannalal Silk Mills Compound, LBS Marg,
Lower Parel (West), Mumbai 400 013, Maharashtra, India Maharashtra, India Bhandup (West), Mumbai 400 078, Maharashtra,India
Tel: [phone]; Fax: [phone] Tel: + 91 22 6638 1800, Fax: + 91 22 2284 6824 Tel: [phone], Toll free: 1-800-220320, Fax: [phone]
E-mail: [email protected] E-mail: [email protected] Email: [email protected]
Investor Grievance mail: [email protected] Investor Grievance mail:[email protected] Investor Grievance mail: [email protected]
Website: www.iiflcap.com Website: www.enam.com Website: www.linkintime.co.in
Contact Person: Satish Ganega Contact Person: Sonal Sinha Contact Person: Chetan Shinde
SEBI Registration Number: INM 000010940 SEBI Registration Number: INM000006856 SEBI Registration Number: INR000004058
BID/ISSUE PROGRAMME
BID/ISSUE OPENS ON*: [(cid:2)], 2011 BID/ISSUE CLOSES ON : [(cid:2)], 2011 FOR QIB BIDDERS#
FOR ALL BIDDERS BID/ISSUE CLOSES ON : [(cid:2)], 2011 FOR NON-INSTITUTIONAL, RETAIL INDIVIDUAL BIDDERS AND ELIGIBLE EMPLOYEES
*Our Company in consultation with the Selling Shareholders and the BRLMs may consider participation by Anchor Investors. Anchor Investor Bid/Issue Period shall be one (1) Working Day prior to the Bid/Issue Opening
Date. For further details refer to the chapter titled "Issue Procedure" on page 373. #Our Company may consider closing the Bid/ Issue Period for QIB Bidders one (1) Working Day prior to the Bid/ Issue Closing Date.
C M Y K
TABLE OF CONTENTS
SECTION I: GENERAL ......................................................................................................................................... i

DEFINITIONS AND ABBREVIATIONS ....................................................................................................... i
CERTAIN CONVENTIONS, PRESENTATION OF FINANCIAL, INDUSTRY AND
MARKET DATA AND CURRENCY OF PRESENTATION ....................................................................... xv
FORWARD LOOKING STATEMENTS ..................................................................................................... xvii

SECTION II: RISK FACTORS ....................................................................................................................... xviii

SECTION III: INTRODUCTION......................................................................................................................... 1

SUMMARY OF INDUSTRY ............................................................................................................................ 1
SUMMARY OF BUSINESS ............................................................................................................................ 3
SUMMARY FINANCIAL INFORMATION .................................................................................................. 8
THE ISSUE ..................................................................................................................................................... 16
GENERAL INFORMATION ......................................................................................................................... 17
CAPITAL STRUCTURE ................................................................................................................................ 28
OBJECTS OF THE ISSUE ........................................................................................................................... 52
BASIS FOR ISSUE PRICE ........................................................................................................................... 61
STATEMENT OF TAX BENEFITS ............................................................................................................. 64

SECTION IV: ABOUT OUR COMPANY ......................................................................................................... 72

INDUSTRY OVERVIEW ............................................................................................................................... 72
OUR BUSINESS ............................................................................................................................................. 86
KEY REGULATIONS AND POLICIES ..................................................................................................... 115
HISTORY AND CERTAIN CORPORATE MATTERS ............................................................................. 129
OUR MANAGEMENT ................................................................................................................................. 148
OUR PROMOTERS, PROMOTER GROUP AND GROUP COMPANIES............................................. 169
RELATED PARTY TRANSACTIONS ........................................................................................................ 187
DIVIDEND POLICY .................................................................................................................................... 191

SECTION V: FINANCIAL INFORMATION ................................................................................................. 192

FINANCIAL STATEMENTS ...................................................................................................................... 192
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS ..................................................................................................................... 270
FINANCIAL INDEBTEDNESS .................................................................................................................. 294

SECTION VI: LEGAL AND OTHER INFORMATION .............................................................................. 302

OUTSTANDING LITIGATIONS AND MATERIAL DEVELOPMENTS .............................................. 302
LICENSES AND APPROVALS .................................................................................................................. 312
OTHER REGULATORY AND STATUTORY DISCLOSURES ............................................................... 348

SECTION VII – ISSUE RELATED INFORMATION .................................................................................. 362

ISSUE STRUCTURE ................................................................................................................................... 362
TERMS OF THE ISSUE .............................................................................................................................. 369
ISSUE PROCEDURE ................................................................................................................................... 373
RESTRICTIONS ON FOREIGN OWNERSHIP OF INDIAN SECURITIES ........................................ 409

SECTION VIII: MAIN PROVISIONS OF THE ARTICLES OF ASSOCIATION .................................. 411

SECTION IX: OTHER INFORMATION ....................................................................................................... 446

MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION ................................................... 446

DECLARATION ................................................................................................................................................. 449
Arch(cid:2)Pharmalabs(cid:2)Limited(cid:2) (cid:2) (cid:2)

SECTION I: GENERAL

DEFINITIONS AND ABBREVIATIONS

Unless the context otherwise requires the following terms shall have the following meanings ascribed thereto in this
Draft Red Herring Prospectus. Reference to any statutes, regulations and policies shall include amendments thereto,
from time to time.

All references to “Arch Pharmalabs Limited”, “Issuer”, “we”, “us”, “our” and “our Company” are to Arch Pharmalabs
Limited and its Subsidiaries, unless the context requires otherwise. In this Draft Red Herring Prospectus, all references
to “Group” are to Arch Pharmalabs Limited and Subsidiaries, as defined hereunder.

Company Related Terms

Term Description
ACPL Arch Commerz Private Limited incorporated as a private limited company on
November 15, 1996 till it got reverse merged with our Company with effect from
April 1, 2002
AFSPL Arch Financial Services (Bombay) Private Limited now known as Anhita
Financial Services (Bombay) Limited
Auditors/Joint Statutory The joint statutory auditors of our Company, M/s Chaturvedi & Shah, Chartered
Auditors/Statutory Auditors Accountants and M/s Nayak & Rane, Chartered Accountants
Avon Subsidiary of our Company, Avon Organics Limited.
Avon Medak Unit manufacturing facility located at survey No 18, Yawapur Village, Sadasivpet
Mandal, Medak 502292, Andhra Pradesh owned by Avon, our Subsidiary
Avon Solapur Unit manufacturing facility located at Plot No. E/2 Chincholi Industrial Area, MIDC,
Solapur 413001, Maharashtra, India owned by Avon, our Subsidiary
Board/Board of Directors the board of directors of our Company or a committee constituted thereof, unless
the context otherwise specifies
Badlapur Unit manufacturing facility located at Plot Nos. G-3, G-4 & G-5, Kharvai, MIDC,
Badlapur, District Thane – 421 503 Maharashtra
CCPS/ Cumulative 10% cumulative convertible preference shares of `10 each aggregating to `90
Convertible Preference Million issued Swisstech VCF
Shares
Convertible Debentures Optionally Unsecured Fully Convertible Debentures of `10 each issued to
Swisstech VCF
Corporate Promoters 1. Arch Phytochemicals Private Limited;
2. Avant Capital Services Private Limited;
3. Arch Impex Private Limited;
4. AMR Investments Private Limited; and
5. Arch Pharmachem Limited
Directors directors of our Company, unless otherwise specified
Dataline Dataline Investments Limited, Mauritius
Dynamic India Fund - I Dynamic India Fund-I which is one of the shareholders of our Company and a
Selling Shareholder, having its registered office at IFS Court, Twenty Eight,
Cybercity, Ebene, Mauritius
Dombivli Unit manufacturing facility located at Plot Nos. C-21. C-22, F-40, Phase II, Sagaon,
Dombivli (E), District Thane- 421 204, Maharashtra
Group Companies includes those companies, firms and ventures promoted by our Promoters,
irrespective of whether such entities are covered under section 370(1)(B) of the
Companies Act, namely:
1. AMRA Industries Limited;
2. Arch Investment Private Limited;
3. Arch Herbals Private Limited;
4. Marm Realty Private Limited;
5. Arch Infra Ventures Limited; and
6. AMRA Remedies Limited.
For details please refer to the chapter titled “Our Promoters, Promoter Group and
Group Companies” on page 169
Gurgaon Unit manufacturing facility located at Village Pathreri, Bilaspur Tauru Road District
i
(cid:2) (cid:2) Arch(cid:2)Pharmalabs(cid:2)Limited(cid:2)

Term Description
Gurgaon -122 001, Haryana
IDBI IDBI Bank Limited
India Advantage Fund I India Advantage Fund I, which is one of the shareholders of our Company. The
trustee of India Advantage Fund I is IDBI Trusteeship Services Limited, a
company registered under the Companies Act having its registered office at Asian
Building, 17, R Kamani Marg, Ballard Estate, Mumbai - 400 001 (the surviving
entity after its merger with The Western India Trustee and Executor Company
Limited, the erstwhile trustee of India Advantage Fund I). The Trustee acts
through its investment manager ICICI Venture
India Advantage Fund II India Advantage Fund II, which is one of the shareholders of our Company and a
Selling Shareholder. The trustee of India Advantage Fund II is IDBI Trusteeship
Services Limited, a company registered under the Companies Act having its
registered office at Asian Building, 17, R Kamani Marg, Ballard Estate, Mumbai -
400 001 (the surviving entity after its merger with The Western India Trustee and
Executor Company Limited, the erstwhile trustee of India Advantage Fund II).
The Trustee acts through its investment manager ICICI Venture
India Advantage Fund V India Advantage Fund V, which is one of the shareholders of our Company and a
Selling Shareholder. The trustee of India Advantage Fund V is IDBI Trusteeship
Services Limited, a company registered under the Companies Act having its
registered office at Asian Building, 17, R Kamani Marg, Ballard Estate, Mumbai –
400 001 (the surviving entity after its merger with The Western India Trustee and
Executor Company Limited, the erstwhile trustee of India Advantage Fund V).
The Trustee acts through its investment manager ICICI Venture
India Advantage Fund VI India Advantage Fund VI, which was one of the shareholders of our Company.
The trustee of India Advantage Fund VI is IDBI Trusteeship Services Limited, a
company registered under the Companies Act having its registered office at Asian
Building, 17, R Kamani Marg, Ballard Estate, Mumbai - 400 001 (the surviving
entity after its merger with The Western India Trustee and Executor Company
Limited, the erstwhile trustee of India Advantage Fund VI)
IEWT IVC Employees Welfare Trust, a trust established under the Indian Trust Act,
1882 having its registered office at IL&FS Financial Center, C-22, G Block,
Bandra Kurla Complex, Bandra (East), Mumbai 400 051, which is a SEBI
registered venture capital fund was one of our shareholders, acting through its
investment manager IIML Investors
ICICI Venture ICICI Venture Funds Management Company Limited, having its registered office
at Ground Floor, ICICI Venture House, Appa Saheb Marathe Marg, Prabhadevi,
Mumbai 400 025, who acts as an investment manager for India Advantage Fund I,
India Advantage Fund II, India Advantage Fund V and Rainbow Fund acting
through their Trustee, IDBI Trusteeship Services Limited
IIML Investors IL&FS Investment Managers Limited, a company registered under the Companies
Act, 1956 and having its registered office at IL&FS Financial Center, C-22, G
Block, Bandra Kurla Complex, Bandra (East), Mumbai 400 051, which acts as an
Investment Manager of and is acting for and on behalf of SARA Fund, Leverage
India Fund and IEWT
Individual Promoters 1. Ajit Kamath;
2. Manoj Jain;
3. Rajendra Kaimal;
4. Vidya Kamath; and
5. Bindu Jain
Leverage India Fund Leverage India Fund, a scheme of IL&FS Private Equity Trust, a trust established
under the Indian Trusts Act, which is one of the shareholders of our Company and
a Selling Shareholder and has its offices at IL&FS Financial Centre, Plot No. C-
22, G Block, Bandra-Kurla Complex, Bandra (East), Mumbai 400 051, acting
through its investment manager IIML Investors
Medak Unit 1 manufacturing facility located at Survey No. 323, Gundlamachnoor Village
Hathnoora Mandal, District Medak- 502 296, Andhra Pradesh
Medak Unit 2 manufacturing facility located at Mittapally Village, Siddipet – 502 375, District
Medak, Andhra Pradesh
Medak Unit 3 manufacturing facility located at Survey No. 10, Gaddapotharam, Jinaram
ii
Arch(cid:2)Pharmalabs(cid:2)Limited(cid:2) (cid:2) (cid:2)

Term Description
Mandal, Kazipalli Industrial Area, District Medak – 500 043, Andhra Pradesh
Merged Entity refers to our Company post the Reverse Merger.
Merven Project the project envisaged by our Company which was part financed through the
proceeds of the initial public offering of our Company in the year 1994. The unit
set up under this project is the Medak Unit 1
Turbhe R&D Center research and development unit situated at Plot No. C-424, TTC Turbhe, MIDC
Industrial Area, Navi Mumbai, Maharashtra
Original Lenders State Bank of Hyderabad, IDBI Bank Limited and Bank of Baroda. For further
details, please refer to the chapter titled “History and Certain Corporate Matters”
beginning on page 129
Optionally Unsecured Fully Optionally Unsecured Fully Convertible Debentures of our Company issued to
Convertible Debentures Leverage India Fund against optionally unsecured fully convertible debentures of
Arch Pharmachem Limited held by them pursuant to the shareholder’s resolution
dated March 22, 2005
Promoters includes Individual Promoters, Corporate Promoters and Promoter Entities
Promoter Directors Ajit Kamath, Manoj Jain and Rajendra Kaimal who are Promoters of our
Company and are also directors on the Board of our Company
Promoter Entities entities forming part of the Promoters, as defined above, and refers to Ajit Annu
Kamath (HUF) and Manoj Jain (HUF)
Promoter Group includes such persons and entities constituting our promoter group in terms of
Sub-Regulation (zb) of Regulation 2 of the SEBI ICDR Regulations. For details
please refer to the chapter titled “Our Promoters, Promoter Group and Group
Companies” on page 169
Rainbow Fund Rainbow Fund Trust, a trust registered under the Indian Trusts Act, 1882, which is
one of the shareholders of our Company and a Selling Shareholder and having its
principal office at 10th floor, Prestige Obelisk, Kasturba Road, Bangalore 560 001
represented by its trustees Beena M. Chotai and Anselm Pinto and acting though
its investment manager ICICI Venture
Registered Office and/ or the registered office of our Company situated at ‘H’ Wing, 4th Floor, Tex Center,
Corporate Office Off Saki Vihar Road, Chandivli, Andheri (East) Mumbai 400 072, India
Reverse Merger the reverse merger of ACPL with our Company pursuant to the Scheme of
Rehabilitation. For further details, please refer to the chapter titled “History and
Certain Corporate Matters” beginning on page 129
SARA Fund SARA Fund Trustee Company Private Limited a company incorporated under the
Companies Act, 1956 and having its registered office at USI Complex, Rao Tula
Ram Marg, Opposite Signals Enclave, New Delhi 110 010, as trustees of the,
South Asian Regional Apex Fund a trust established under the Indian Trusts Act,
1882, which is a SEBI registered venture capital fund and is one of our
shareholders, acting through its investment manager IIML Investors
Scheme of Rehabilitation the scheme sanctioned by the Board for Industrial and Financial Reconstruction
vide order dated August 18, 2003, pursuant to which the reverse merger of Arch
Commerz Private Limited with Merven Drug Products Limited was approved. For
further details, please refer to the chapter titled “History and Certain Corporate
Matters” beginning onpage 129
Subsidiary(ies) the subsidiaries of our Company, namely:
1. Avon Organics Limited;
2. Arch Life Sciences Limited;
3. Arch Finechemicals Limited;
4. Arch Pharmalabs (USA) Inc.; and
5. Regal Pharma Pte Limited.
Swisstech VCF Swiss Technology Venture Capital Fund Private Limited, a company incorporated
under the laws of the Republic of Mauritius and having its registered office at C/o
Multiconsult Limited, Rogers House, 5 President John Kennedy Street, Port
Louis, Mauritiusandis one of our shareholders and is a Selling Shareholder
Taloja Unit manufacturing facility located at Plot No. G-6. MIDC Taloja Industrial Area,
Village Navade Taluka Panvel, District Raigad 410208, Maharashtra
Taloja R&D Center/ research and development unit situated at Taloja, Plot No. 21, MIDC Chemical
Corporate R&D Center Zone, Taloja Industrial Area, Village Navade, Taluka Panvel, District Raigad -
410 208 Maharashtra
iii
(cid:2) (cid:2) Arch(cid:2)Pharmalabs(cid:2)Limited(cid:2)
Term Description
Tarapur Unit 1 manufacturing facility located at Plot Nos. T-84, 85 & 86. MIDC, Tarapur, Boisar
- 401 506, Maharashtra
Tarapur Unit 2 manufacturing facility located at E-64/E-8O/E-81 /E-82, Tarapur Industrial Area,
MIDC Salvad, Thane District, Maharashtra
Issue Related Terms
Term Description
Allocation/ Allocation of unless the context otherwise requires, the allocation of Equity Shares pursuant to
Equity Shares this Issue to the successful Bidders.
Allotment/Allot/Allotted/ unless the context otherwise requires, the allotment of Equity Shares pursuant to
Allotment of Equity Shares this Issue to successful Bidders
Allottee the successful Bidder to whom the Equity Shares are Allotted
Allotment Advice in relation to Bidders other than Anchor Investors, 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 discovery of the Issue Price in accordance with the Book
Building Process, including any revisions thereof
Anchor Investor (s) a Qualified Institutional Buyer, applying under the Anchor Investor Portion, with a
minimum Bid of `100 Million
Anchor Investor Allocation notice or intimation of allocation of Equity Shares sent to Anchor Investors who
Notice have been allocated Equity Shares after discovery of the Issue Price if the Issue
Price is higher than the Anchor Investor Issue Price
Anchor Investor Bid/Issue the day, one Working Day prior to the Bid/Issue Opening Date, on which Bids by
Date/ Anchor Investor Anchor Investors shall be submitted and allocation to Anchor Investors shall be
Bidding Date completed
Anchor Investor Margin an amount equivalent to the Margin Amount, payable by Anchor Investors at the
Amount time of submission of their Bid
Anchor Investor Portion up to 30% of the QIB Portion which may be allocated by our Company to Anchor
Investors on a discretionary basis subject to minimum number of two, where the
allocation under the Anchor Investor Portion is less than` 2,500 Million and five
where the allocation is more than ` 2500 Million. 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 price at which allocation is
being done to other Anchor Investors
Anchor Investor Price the price at which Allotment is made to Anchor Investors in terms of this Draft
Red Herring Prospectus, which shall be higher than or equal to the Issue Price, but
not higher than the Cap Price.
Application Supported by an application, whether physical or electronic, used by all Bidders to make a Bid
Blocked Amount/ ASBA authorising a SCSB to block the Bid Amount in their specified bank account
maintained with the SCSB
ASBA Account Account maintained by an ASBA Bidder with a SCSB which shall be blocked by
such SCSB to the extent of the Bid Amount of the ASBA Bidder, as specified in
the ASBA Bid-cum-Application Form.
ASBA Investor/ ASBA a QIB Bidder (not being an Anchor Investor), a Bidder bidding in the Non-
Bidder Institutional Investor category and any other prospective investor in this Issue who
intends to Bid/apply through ASBA.
ASBA Bid-cum-Application the form, whether physical or electronic, used by an ASBA Bidder to submit a Bid
Form through a SCSB by authorising the SCSB to block the Bid Amount in an ASBA
Account, which would be considered as an application for Allotment to ASBA
Bidders in terms of the Red Herring Prospectus and the Prospectus. Syndicate/
sub-syndicate members may also procure ASBA Bid-cum-Application Form
directly from the investors and submit it to the SCSBs.
ASBA Revision Form the form used by the ASBA Bidders to modify the quantity of Equity Shares or the
Bid Amount in any of their ASBA Bid cum Application Form or any previous
ASBA Revision Form(s)
Bankers to the Company Axis Bank Limited, Canara Bank, State Bank of India, IDBI Bank Limited and
ICICI Bank Limited
Basis of Allotment the basis on which Equity Shares will be Allotted to Bidders under this Issue
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Term Description
Bid an indication to make an offer during the Bid/Issue Period by a Bidder, or during
the Anchor Investor Bid/Issue Period by the Anchor Investors, to subscribe to the
Equity Shares of our Company at a price within the Price Band, including all
revisions and modifications thereto for the purpose of ASBA Bidders, it means an
indication to make an offer during the Bidding/ Issue Period by an ASBA Bidder
pursuant to the submission of ASBA Bid-cum-Application Form to subscribe to
the Equity Shares including all revisions and modifications thereto
Bid Amount the highest value of the optional Bids indicated in the Bid-cum-Application
Form/ASBA Bid-cum-Application Form
Bid/Issue Closing Date except in relation to Anchor Investors, the date after which the Syndicate and the
SCSBs will not accept any Bids for the Issue, which shall be notified in an English
and a Hindi national newspaper and in one Marathi newspaper with wide
circulation.
Our Company in consultation with the Selling Shareholders and BRLMs may
decide to close the Bidding Period for QIBs one day prior to the Bid/Issue Closing
Date
Bid/Issue Opening Date the date on which the Syndicate and the SCSBs shall start accepting Bids for the
Issue, which shall be notified in an English and a Hindi national newspaper and in
one Marathi newspaper with wide circulation
Bid-cum-Application Form the form used by a Bidder to make a Bid and which will be considered as the
application for Allotment for the purposes of the Red Herring Prospectus and the
Prospectus including the ASBA Bid-cum-Application Form
Bidder/ Bidders any prospective investor who makes a Bid for Equity Shares pursuant to the terms
of the Red Herring Prospectus and the Bid-cum-Application Form and/ or the
ASBA Bid- cum-Application Form
Bid/Issue Period / Bidding the period between the Bid/Issue Opening Date and the Bid/Issue Closing Date,
Period inclusive of both days, during which prospective Bidders (except Anchor
Investors) and the ASBA Bidders can submit their Bids, including any revisions
thereof
Bidding Centers Centers for acceptance of the Bid-cum-Application Form.
Book Building Process/ the book building route as provided under Schedule XI of the SEBI ICDR
Method Regulations, in terms of which this Issue is being made
BRLMs/ Book Running Lead Book Running Lead Managers to the Issue, in this case being India Infoline
Managers Limited and Enam Securities Private Limited
Brokers to this Issue brokers registered with any recognized Stock Exchange, appointed by the
Members of the Syndicate
CAN/Confirmation of the note or advice or intimation including any revisions thereof, sent to each
Allocation Note successful Anchor Investor indicating the Equity Shares allocated after discovery
of the Anchor Investor Price
Cap Price the higher end of the Price Band, above which the Issue Price will not be finalized
and above which no Bids will be accepted
Controlling Branches such branches of the SCSBs which coordinate Bids under this Issue by ASBA
Investors with the Registrar to the Issue and the Stock Exchanges and a list of
which is available at http://www.sebigov.in/pmd/scsb.pdf or at such other website
as may be prescribed by SEBI from time to time.
Cut-off Price/ Cut-off any price within the Price Band finalised by our Company in consultation with the
Selling Shareholders and the Book Running Lead Managers. A Bid submitted at
Cut-Off Price is a valid price at all levels within the Price Band. Only Retail
Individual Bidders and Eligible Employees are entitled to Bid at the Cut-off Price,
for a Bid Amount not exceeding `200,000. No other category of Bidders are
entitled to Bid at the Cut-off Price
Demographic Details the demographic details of the Bidders such as their address, PAN, occupation and
bank account details.
Depositories NSDL and CDSL
Designated Branch branch offices of the SCSBs which the respective SCSB has identified as a
designated branch at which the physical ASBA Bid-cum-Application Form can be
submitted by an ASBA Bidder and a list of which is available on
http://www.sebi.gov.in, or at such other website as may be prescribed by SEBI
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Term Description
from time to time.
Designated Date the date on which funds are transferred from the Escrow Account to the Issue
Account or the Refund Account, as appropriate, or the amount blocked by the
SCSB is transferred from the bank account of the ASBA Bidder to the Public Issue
Account, as the case may be, after the Prospectus is filed with the RoC, following
which the Board of Directors shall Allot Equity Shares to successful Bidders
Designated Stock Exchange/ [•]
DSE
Draft Red Herring Prospectus this draft red herring prospectus dated March 23, 2011 issued in accordance with
or DRHP Section 60B of the Companies Act and SEBI ICDR Regulations, approved by the
Board of Directors and which does not contain complete particulars of the price at
which the Equity Shares are issued and the size (in terms of value) of this Issue
Eligible Employee(s) Other than Promoter or Immediate relative of the Promoter (any spouse of that
person, any parent or any brother, sister or child of that person of the spouse)

Eligible employees would include:
(a) A permanent and full time employee of our Company or our Subsidiary as on
the date of filing of the Red Herring Prospectus with the RoC and based, working
and present in India as on the date of submission of the Bid-cum-Application Form
and would continue to be in employment of the Company and/ or the Subsidiaries
until the submission of the Bid-cum-application form.
(b) A director of our Company, whether a whole time director, part time director or
otherwise, as on the date of filing of the Red Herring Prospectus with the RoC and
based and present in India as on the date of submission of the Bid-cum-Application
Form and would continue to be in employment of the Company and/ or the
Subsidiaries until the submission of the Bid-cum-application form and would
continue to be a Director of the Company and/ or the Subsidiaries until the
submission of the Bid-cum-application form.

The above don’t include employees of Corporate Promoters and Group Companies
Eligible NRIs NRIs from jurisdictions outside India where it is not unlawful to make an issue or
invitation under this Issue and in relation to whom the Red Herring Prospectus
constitutes an invitation to subscribe to the Equity Shares offered herein
Employee Discount the difference of `[•] between the Issue Price and the differential lower price at
which our Company has decided to allot the Equity Shares to the Eligible
Employee
Employee Reservation the portion of the Issue, upto 200,000 Equity Shares, available for allocation to
Portion Eligible Employees on a proportionate basis, subject to such reservation not
exceeding 5% of the Post Issue Equity Share Capital of our Company
Equity Shares Equity Shares of our Company of face value of `10 each fully paid up unless
otherwise specified in the context thereof
Escrow Account account opened with the Escrow Collection Bank(s) for this Issue and in whose
favour the Bidder (except ASBA Bidder) will issue cheques or drafts in respect of
the Bid Amount when submitting a Bid
Escrow Agreement agreement to be entered into by our Company, the Selling Shareholders, the
Registrar to the Issue, BRLMs, the Syndicate Members and the Escrow Collection
Bank(s) for collection of the Bid Amounts and where applicable, refunds of the
amounts collected to the Bidders on the terms and conditions thereof
Escrow Collection Bank(s)/ the banks which are clearing members and registered with SEBI as banker to an
Banker(s) to the Issue issue under SEBI (Bankers to an Issue) Regulations, 1994 at which the Escrow
Account for this Issue will be opened, in this case being [•].
FII / Foreign Institutional Foreign Institutional Investor (as defined under SEBI (Foreign Institutional
Investors Investors) Regulations, 1995, as amended) registered with SEBI under applicable
laws in India.
First Bidder the Bidder whose name appears first in the Bid-cum-Application Form or Revision
Form or the ASBA Bid-cum-Application Form or ASBA Revision Form
Floor Price the lower end of the Price Band, at or above which the Issue Price will be finalized
and below which no Bids will be accepted
Fresh Issue fresh issue of [•] Equity Shares by our Company to be Allotted pursuant to this
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Term Description
Issue aggregating upto ` 1,350 Million
FVCI Foreign Venture Capital Investors registered with SEBI under the SEBI (Foreign
Venture Capital Investor) Regulations, 2000.
IPO Grading Agencies ICRA and CARE
Issue this public issue of [•] Equity Shares of `10 each at the Issue Price, comprising a
Fresh Issue of [•] Equity Shares of our Company aggregating upto ` 1,350 Million
and an Offer for Sale of 6,172,607 Equity Shares by the Selling Shareholders
aggregating to `[•]. This Issue comprises a Net Issue of [•] Equity Shares and an
Employee Reservation Portion of upto 200,000 Equity Shares for subscription by
Eligible Employees.
Issue Agreement the agreement dated March 22, 2011 entered into among our Company, the Selling
Shareholders and the BRLMs, pursuant to which certain arrangements are agreed
to in relation to the Issue
Issue Price the final price at which the Equity Shares will be Issued and Allotted in terms of
the Red Herring Prospectus. The Issue Price will be decided by our Company in
consultation with the Book Running Lead Managers on the Pricing Date
Our Company in consultation with the Book Running Lead Managers (“BRLMs”)
may decide to offer a discount of `[•] to the issue price to the Eligible Employees
at the time of allotment
Issue Proceeds the gross proceeds of this Issue that would be available to our Company after the
final listing and trading approvals are received
Listing Agreement the Listing Agreement to be entered into with the Stock Exchange(s) by our
Company
Margin Amount an amount of 100% of the Bid Amount paid by Bidders or blocked in the ASBA
Account, as the case may be, at the time of submission of the Bid-cum-Application
Form or the ASBA Bid-cum-Application Form, as applicable.
Mutual Funds a mutual fund registered with SEBI under the SEBI (Mutual Funds) Regulations,
1996
Mutual Fund Portion 5% of the QIB Portion (excluding the Anchor Investor Portion, if any) or [•]
Equity Shares available for allocation to Mutual Funds, out of the QIB Portion
(excluding the Anchor Investor Portion, if any)
Net Issue Issue less the Employee Reservation Portion, consisting of [•] Equity Shares
available for allotment pursuant to this Issue
Net Proceeds of the Fresh proceeds of the Fresh Issue, after deducting the Company’s share of the
Issue underwriting fees, issue management fees, selling commissions and other expenses
associated with the Issue, including the listing fees
Non-Institutional Bidders all Bidders that are not QIBs or Retail Individual Bidders and who have Bid for
Equity Shares for an amount more than `200,000 (but not including NRIs other
than eligible NRIs)
Non-Institutional Portion the portion of the Net Issue being not less than [•] Equity Shares available for
allocation to Non-Institutional Bidders
Non-Resident a person resident outside India, as defined under FEMA and includes a Non
Resident Indian
NRI(s) / Non-Resident Indian a “person resident outside India”, as defined under FEMA and who is a citizen of
India or is a person of Indian origin (as defined under the Foreign Exchange
Management (Deposit) Regulations, 2000, as amended).
Offer for Sale transfer of 6,172,607 Equity Shares by the Selling Shareholders pursuant to this
Issue
Pay-in-Date with respect to Anchor Investors, it shall be the Anchor Investor Bid/ Issue Date
and extending until two (2) Working Days after the Bid/ Issue Closing Date in the
event the Anchor Investor is required to pay any additional amount due to the Issue
Price being higher than the Anchor Investor Issue Price
Person/Persons any individual, sole proprietorship, unincorporated association, unincorporated
organization, body corporate, corporation, company, partnership, limited liability
company, joint venture, or trust or any other entity or organization validly
constituted and/or incorporated in the jurisdiction in which it exists and operates,
as the context requires.
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Term Description
Price Band price band of a minimum price (Floor Price) of `[•] and the maximum price (Cap
Price) of `[•] and includes revisions thereof. The Price Band and the minimum Bid
lot size for this Issue will be decided by our Company in consultation with the
Selling Shareholders and the BRLMs and advertised at least two (2) Working Days
prior to the Bid/ Issue Opening Date, in an English and a Hindi national newspaper
and in one Marathi newspaper with wide circulation
Pricing Date the date on which our Company in consultation with the Selling Shareholders and
BRLMs, finalises the Issue Price
Prospectus the prospectus to be filed with the RoC in accordance with Section 60 of the
Companies Act, containing, inter alia, the Issue Price that is determined at the end
of the Book Building process, the size of this Issue and certain other information
Public Issue Account account opened with the Bankers to the Issue to receive monies from the Escrow
Account and the SCSBs from the bank accounts of the ASBA Bidders on the
Designated Date
QIB Bid/ Issue Closing Date Our Company in consultation with the Selling Shareholders and BRLMs may
decide to close the Bidding Period for QIBs (except Anchor Investors) one day
prior to the Bid/Issue Closing Date and our Company and Selling Shareholders
shall notify the same in an English and a Hindi national newspaper and in one
Marathi newspaper with wide circulation.
QIB Portion the portion of the Net Issue being not more than [•] Equity Shares required to be
allocated to QIBs. In case of Allotment to Anchor Investors, QIB Portion shall be
net of Anchor Investor Portion.
Qualified Institutional Buyers public financial institutions as specified in Section 4A of the Companies Act,
or QIBs scheduled commercial banks, mutual fund registered with SEBI, FII and sub-
account registered with SEBI, other than sub-account which is a foreign corporate
or foreign individual, multilateral and bilateral development financial institution,
venture capital fund registered with SEBI, foreign venture capital investor
registered with SEBI, state industrial development corporation, insurance company
registered with Insurance Regulatory and Development Authority, provident fund
with minimum corpus of `250 Million, pension fund with minimum corpus of
`250 Million, National Investment Fund set up by Government of India and
insurance funds set up and managed by army, navy or air force of the Union of
India, Insurance funds set up and managed by the Department of Posts, India
Red Herring Prospectus/ RHP the red herring prospectus issued in accordance with Section 60B of the
Companies Act, which does not have complete particulars of the price at which the
Equity Shares are offered and the size of the Issue. The Red Herring Prospectus
will be filed with the RoC at least three (3) days before the Bid/Issue Opening Date
and will become a Prospectus upon filing with the RoC after the Pricing Date
Refund Account the account opened with Escrow Collection Bank(s), from which refunds
(excluding to the ASBA Bidders), if any, of the whole or part of the Bid Amount
shall be made
Refund Banks/ Refund the bank(s) which have been appointed / designated for the purpose of refunding
Bankers the amount to investors either through the electronic mode as prescribed by SEBI
and / or physical mode
Refunds through electronic refunds through electronic transfer of funds means refunds through NECS, Direct
transfer of funds Credit, NEFT, RTGS or the ASBA process, as applicable
Registrar/ Registrar to the registrar to this Issue, in this case being Link Intime India Private Limited
Issue
Resident Retail Individual a Retail Individual Bidder who is a “person resident in India” (as defined in
Investor /Resident Retail Foreign Exchange Management Act, 1999)
Individual Bidder
Retail Individual Bidder(s) Individual Bidders who have Bid for Equity Shares for an amount not more than
`200,000 in any of the bidding options in this Issue (including HUFs applying
through their Karta and eligible NRIs and does not include NRIs other than
Eligible NRIs)
Retail Portion the portion of the Net Issue being not less than [•] Equity Shares available for
allocation to Retail Individual Bidder(s)
Revision Form the form used by the Bidders (excluding ASBA Bidders) to modify the quantity of
Equity Shares or the Bid Price in any of their Bid cum Application Form or any
viii