Project Akash

406 Pages·2017·3.92 MB·English

RED HERRING PROSPECTUS
Dated March 5, 2018
Please read Section 32 of the Companies Act, 2013
100% Book Built Offer

BHARAT DYNAMICS LIMITED

Our Company was incorporated as a private limited company on July 16, 1970 as “Bharat Dynamics Private Limited” with the Registrar of Companies, Hyderabad under the Companies Act,
1956. The Board of Directors in their meeting held on October 07, 1970 passed a resolution for deleting the word ‘private’ from the name of our Company and the name of our Company was
changed to “Bharat Dynamics Limited” pursuant to an amendment to the certificate of incorporation issued by the Registrar of Companies, Hyderabad. Our Company became a deemed public
limited company under Section 43A of the Companies Act, 1956 with effect from July 01, 1975. Subsequent to the abolition of Section 43A of the Companies Act, 1956, with effect from
December 13, 2000, our Company again became a private limited company. Further, our Company was converted to a public limited company and a fresh certificate of incorporation pursuant
to conversion from private to public was issued by the RoC on October 27, 2017. For further details in connection with change in name and registered office of our Company, please see
“History and Certain Corporate Matters” on page 139.
Registered Office: Kanchanbagh, Hyderabad – 500 058, Telangana, India
Corporate Office: Plot no.38-39, TSFC Building, Near ICICI Towers, Financial District, Gachibowli, Hyderabad-500032
Contact Person: N. Nagaraja, Company Secretary and Compliance Officer;
Telephone: [phone] | Fax: [phone] | E-mail: [email protected] | Website: www.bdl-india.com
Corporate Identification Number: U24292TG1970GOI001353
OUR PROMOTER: THE PRESIDENT OF INDIA, ACTING THROUGH THE MINISTRY OF DEFENCE, GOVERNMENT OF INDIA
INITIAL PUBLIC OFFERING OF 22,451,953 EQUITY SHARES OF FACE VALUE OF ₹10 EACH (“EQUITY SHARES”) OF BHARAT DYNAMICS LIMITED (OUR “COMPANY” OR THE
“ISSUER”) THROUGH AN OFFER FOR SALE BY OUR PROMOTER, THE PRESIDENT OF INDIA, ACTING THROUGH THE MINISTRY OF DEFENCE, GOVERNMENT OF INDIA (THE
“SELLING SHAREHOLDER”), FOR CASH AT A PRICE* OF ₹[●] PER EQUITY SHARE (THE “OFFER PRICE”), AGGREGATING TO ₹[●] MILLION (THE “OFFER”). THE COMPANY
HAS RESERVED A PORTION OF 458,203 EQUITY SHARES FOR ALLOCATION AND ALLOTMENT TO ELIGIBLE EMPLOYEES (AS DEFINED HEREIN), (“EMPLOYEE
RESERVATION PORTION”). THE OFFER LESS EMPLOYEE RESERVATION PORTION IS REFERRED TO AS THE NET OFFER. THE OFFER AND THE NET OFFER WILL

CONSTITUTE 12.25% AND 12.00% RESPECTIVELY, OF THE PRE AND POST OFFER PAID-UP EQUITY SHARE CAPITAL OF OUR COMPANY.

THE FACE VALUE OF THE EQUITY SHARES IS ₹ 10 EACH. THE PRICE BAND, THE RETAIL DISCOUNT, EMPLOYEE DISCOUNT, AS APPLICABLE AND THE MINIMUM BID LOT
SIZE WILL BE DECIDED BY THE SELLING SHAREHOLDER AND THE COMPANY IN CONSULTATION WITH THE BOOK RUNNING LEAD MANAGERS (“BRLMS”) AND WILL BE
ADVERTISED IN ALL EDITIONS OF THE ENGLISH DAILY NEWSPAPER FINANCIAL EXPRESS, ALL EDITIONS OF THE HINDI NATIONAL NEWSPAPER JANSATTA AND THE
HYDERABAD EDITION OF THE TELUGU DAILY NEWSPAPER SURYAA (TELUGU BEING THE REGIONAL LANGUAGE OF TELANGANA WHEREIN THE REGISTERED AND
CORPORATE OFFICE OF OUR COMPANY IS LOCATED), EACH WITH WIDE CIRCULATION, AT LEAST FIVE WORKING DAYS PRIOR TO THE BID/ OFFER OPENING DATE AND
SHALL BE MADE AVAILABLE TO BSE LIMITED (“BSE”) AND NATIONAL STOCK EXCHANGE OF INDIA LIMITED (“NSE”, AND TOGETHER WITH BSE, THE “STOCK
EXCHANGES”) FOR THE PURPOSE OF UPLOADING ON THEIR RESPECTIVE WEBSITES.

*A discount of up to [●]% on the Offer Price may be offered to Retail Individual Bidders (“Retail Discount”) equivalent to ₹[●] per Equity Share and to Eligible Employees Bidding in the Employee Reservation
Portion (“Employee Discount”) equivalent to ₹[●] per Equity Share.
In case of any revision in the Price Band, the Bid/Offer Period shall be extended for at least three additional Working Days after such revision of the Price Band, subject to the total Bid/Offer Period not exceeding
ten Working Days. Any revision in the Price Band, and the revised Bid/ Offer Period, if applicable, shall be widely disseminated by notification to the Stock Exchanges by issuing a press release and also by
indicating the change on the websites of the BRLMs and at the terminals of the Syndicate Member.
The Offer is being made in terms of Rule 19(2)(b)(iii) of the Securities Contracts (Regulation) Rules, 1957, as amended (“SCRR”), wherein at least 10% of the post-Offer Equity Share capital of our Company
will be offered to the public. The Offer is being made through the Book Building Process in accordance with Regulation 26(1) of the Securities and Exchange Board of India (Issue of Capital and Disclosure
Requirements) Regulations, 2009, as amended (“SEBI ICDR Regulations”), wherein not more than 50% of the Net Offer shall be available for allocation on a proportionate basis to Qualified Institutional
Buyers (“QIB Portion”). 5% of the QIB Portion shall be available for allocation on a proportionate basis to Mutual Funds only. The remainder of the QIB Portion shall be available for allocation on a proportionate
basis to all QIBs, including Mutual Funds, subject to valid Bids being received from them at or above the Offer Price. However, if the aggregate demand from Mutual Funds is less than 5% of the QIB Portion,
the balance Equity Shares available for allocation in the Mutual Fund Portion will be added to the remaining QIB Portion for proportionate allocation to QIBs. Further, not less than 15% of the Net Offer shall
be available for allocation on proportionate basis to Non-Institutional Bidders and not less than 35% of the Net Offer shall be available for allocation to Retail Individual Bidders in accordance with the SEBI
ICDR Regulations, subject to valid Bids being received from them at or above the Offer Price. All Bidders shall participate in the Offer mandatorily through the Applications Supported by Blocked Amount
(“ASBA”) process by providing the details of their respective ASBA Accounts in which the corresponding Bid Amount will be blocked by the SCSBs. For details, see “Offer Procedure” on page 338.
RISKS IN RELATION TO THE FIRST OFFER
This being the first public issue 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 Floor Price is [●] times of the
face value and the Cap Price is [●] times of the face value.The Offer Price (as determined and justified by the Selling Shareholder and the Company, in consultation with the BRLMs), as stated in “Basis for
Offer Price” on page 88 should not be taken to be indicative of the market price of the Equity Shares after such Equity Shares are listed. No assurance can be given regarding an active and/or sustained trading
in the Equity Shares or regarding the price at which the Equity Shares will be traded after listing.
GENERAL RISKS
Investments in equity and equity-related securities involve a degree of risk and investors should not invest any funds in this Offer unless they can afford to take the risk of losing their entire investment. Investors
are advised to read the risk factors carefully before taking an investment decision in this Offer. For taking an investment decision, investors must rely on their own examination of our Company and the Offer,
including the risks involved. The Equity Shares offered in the Offer have not been recommended or approved by the Securities and Exchange Board of India (“SEBI”), nor does SEBI guarantee the accuracy or
adequacy of the contents of this Red Herring Prospectus. Specific attention of the investors is invited to “Risk Factors” on page 14.
COMPANY’S AND SELLING SHAREHOLDERS’ ABSOLUTE RESPONSIBILITY
Our Company, having made all reasonable inquiries, accepts responsibility for and confirms that this Red Herring Prospectus contains all information with regard to our Company and this Offer, which is material
in the context of this Offer, that the information contained in this 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 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. Further, the Selling Shareholder confirms all information set out about itself as the Selling Shareholder in context of the Offer for Sale included in this Red Herring
Prospectus and accepts responsibility for statements in relation to itself and the Equity Shares being sold by it in the Offer for Sale are true and correct in all material respects.
LISTING
The Equity Shares offered through this Red Herring Prospectus are proposed to be listed on BSE and NSE. Our Company has received in-principle approvals from BSE and NSE for listing of the Equity Shares
pursuant to their each letters dated February 07, 2018. For the purposes of this Offer, NSE shall be the Designated Stock Exchange. A copy of this Red Herring Prospectus and the Prospectus shall be delivered
for registration to the RoC in accordance with section 26(4) of the Companies Act, 2013. For details of the material contracts and documents available for inspection from the date of this Red Herring Prospectus
up to the Bid/Issue Closing Date, see “Material Contracts and Documents for Inspection” on page 399.
BOOK RUNNING LEAD MANAGERS REGISTRAR TO THE OFFER

SBI CAPITAL MARKETS LIMITED IDBI CAPITAL MARKETS & SECURITIES YES SECURITIES (INDIA) LIMITED ALANKIT ASSIGNMENTS LIMITED
LIMITED
Address: 202, Maker Tower 'E', (Formerly known as IDBI Capital Market Address: IFC, Tower 1 & 2, Unit no. 602 A, Address: 205 – 208, Anarkali Complex,
Cuffe Parade, Mumbai - 400 005, Services Limited) 6th Floor, Senapati Bapat Marg, Jhandewalan Extension, New Delhi, 110 055,
Maharashtra, India. Address: 3rd Floor, Mafatlal Centre, Nariman Elphinstone (W), Mumbai 400 013 India.
Telephone: [phone] Point, Mumbai - 400 021, Maharashtra, India Maharashtra, India Telephone: [phone]
Facsimile: [phone] Telephone: [phone] Telephone: [phone] Facsimile: [phone]
Email: [email protected] Facsimile: [phone] Facsimile: [phone] Email: [email protected]
Website: www.sbicaps.com Email: [email protected] Email: [email protected] Website: www.alankit.com
Investor Grievance ID: Website: www.idbicapital.com Website: www.yesinvest.in Investor Grievance ID: [email protected]
[email protected] Investor Grievance ID: Investor Grievance ID: [email protected] Contact Person: Pankaj Goenka/Bojiman
Contact Person: Sambit Rath / Nikhil [email protected] Contact Person: Mukesh Garg / Chandresh SEBI Registration Number: INR000002532
Bhiwapurkar Contact Person: Sumit Singh / Priyankar Shetty Sharma
SEBI Registration Number: INM000003531 SEBI Registration Number: INM000010866 SEBI Registration Number: INM000012227
BID/OFFER PROGRAMME
BID/OFFER OPENING DATE: MARCH 13, 2018 BID/OFFER CLOSING DATE: MARCH 15, 2018
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TABLE OF CONTENTS

SECTION I – GENERAL .................................................................................................................................... 1
DEFINITIONS AND ABBREVIATIONS ............................................................................................................ 1
PRESENTATION OF FINANCIAL, INDUSTRY AND MARKET DATA ...................................................... 10
FORWARD-LOOKING STATEMENTS ............................................................................................................ 12
SECTION II: RISK FACTORS ........................................................................................................................ 14
SECTION III: INTRODUCTION .................................................................................................................... 44
SUMMARY OF INDUSTRY .............................................................................................................................. 44
SUMMARY OF OUR BUSINESS ...................................................................................................................... 47
SUMMARY FINANCIAL INFORMATION ...................................................................................................... 50
THE OFFER ......................................................................................................................................................... 59
GENERAL INFORMATION .............................................................................................................................. 61
CAPITAL STRUCTURE ..................................................................................................................................... 69
OBJECTS OF THE OFFER ................................................................................................................................. 85
BASIS FOR OFFER PRICE ................................................................................................................................ 88
STATEMENT OF TAX BENEFITS ................................................................................................................... 91
SECTION IV: ABOUT OUR COMPANY....................................................................................................... 93
INDUSTRY OVERVIEW ................................................................................................................................... 93
OUR BUSINESS ................................................................................................................................................ 123
KEY REGULATIONS AND POLICIES ........................................................................................................... 134
HISTORY AND CERTAIN CORPORATE MATTERS ................................................................................... 139
OUR MANAGEMENT ...................................................................................................................................... 145
OUR PROMOTER, PROMOTER GROUP AND GROUP COMPANIES ....................................................... 172
RELATED PARTY TRANSACTIONS ............................................................................................................ 173
DIVIDEND POLICY ......................................................................................................................................... 174
SECTION V: FINANCIAL INFORMATION ............................................................................................... 175
FINANCIAL STATEMENTS............................................................................................................................ 175
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATION ..................................................................................................................................................... 275
FINANCIAL INDEBTEDNESS ........................................................................................................................ 305
SECTION VI: LEGAL AND OTHER INFORMATION ............................................................................. 308
OUTSTANDING LITIGATION AND OTHER MATERIAL DEVELOPMENTS .......................................... 308
GOVERNMENT AND OTHER APPROVALS ................................................................................................ 312
OTHER REGULATORY AND STATUTORY DISCLOSURES ..................................................................... 313
SECTION VII – OFFER RELATED INFORMATION ............................................................................... 329
TERMS OF THE OFFER .................................................................................................................................. 329
OFFER STRUCTURE ....................................................................................................................................... 334
OFFER PROCEDURE ....................................................................................................................................... 338
RESTRICTIONS ON FOREIGN OWNERSHIP OF INDIAN SECURITIES .................................................. 388
SECTION VIII – MAIN PROVISIONS OF THE ARTICLES OF ASSOCIATION ................................ 389
SECTION IX: OTHER INFORMATION ..................................................................................................... 399
MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION .......................................................... 399
DECLARATION ............................................................................................................................................... 402
SECTION I – GENERAL

DEFINITIONS AND ABBREVIATIONS

Unless the context otherwise indicates, requires or implies, the following terms shall have the following meanings
in this Red Herring Prospectus. References to statutes, rules, regulations, guidelines and policies will be deemed
to include all amendments and modifications notified thereto from time to time.

General Terms

Term Description
“our Company”, the Bharat Dynamics Limited, a company incorporated under the Companies
“Company”, the “Issuer”, we, Act, 1956, having its registered office at Kanchanbagh, Hyderabad – 500 058,
us or our Telangana, India.

Company Related Terms

Term Description
Articles of Association/AoA/ The articles of association of our Company, as amended and in force from
Articles time to time.
Audit Committee The audit committee of our Board of Directors.
The board of directors of our Company or a duly constituted committee
Board/Board of Directors
thereof.
The corporate social responsibility and sustainability development
CSR Committee
committee of our Board of Directors.
Plot no.38-39, TSFC Building, Near ICICI Towers, Financial District,
Corporate Office
Gachibowli, Hyderabad-500 032, Telangana, India.
Director(s) The director(s) of our Company.
Equity Shares The equity shares of our Company of face value of ₹10 each.
F&S Frost & Sullivan India Private Limited.
Report titled “Report on Defence & Guided Missile Systems in India”
F&S Report
published on December 19, 2017 by F&S.
IPO Committee The committee of our Board of Directors.
Key management personnel of our Company in terms of section 2(51) of the
Key Management Personnel
Companies Act or regulation 2(1)(s) of the SEBI ICDR Regulations.
Our Company, in its Board meeting held on December 26, 2017, adopted a
Materiality Policy
policy on identification of material creditors and material litigations.
Memorandum of Association/ The memorandum of association of our Company, as amended and in force
MoA from time to time.
The Memorandum of Understanding that our Company enters into with the
MoU
Department of Defence Production, MoD every financial year.
Nomination and Remuneration
The nomination and remuneration committee of our Board of Directors.
Committee
The Promoter of our Company is the President of India acting through the
Promoter
Ministry of Defence, GoI.
Registered office of our Company located at Kanchanbagh, Hyderabad – 500
Registered Office
058, Telangana, India.
The restated audited financial statements of our Company which comprises,
in each case:

 the audited balance sheet, the audited statement of profit and loss and
the audited cash flow statements as at and for the six months period
ended September 30, 2017 and as at and for the financial years ended
Restated Financial Statements
March 31, 2017, March 31, 2016 and March 31, 2015 and notes thereto
prepared in accordance with the Ind AS and the Companies Act and the
rules made thereunder; and

 the audited balance sheet, the audited statement of profit and loss and
the audited cash flow statements as at and for the financial years ended
1
Term Description
March 31, 2014 and March 31, 2013 and notes thereto, prepared in
accordance with Indian GAAP and the Companies Act; and

restated in accordance with the SEBI ICDR Regulations and the Guidance
Note on Reports in Company Prospectuses (Revised) issued by the ICAI,
together with the schedules, notes and annexures thereto.
Registrar of Companies, Andhra Pradesh and Telangana, situated at
RoC
Hyderabad, India.
The exemption letters issued by SEBI:

 Letter bearing reference No. SEBI/HO/CFD/DIL1/OW/P/2017/
18400/1 dated August 03, 2017; and
SEBI Exemption Letters  Letter bearing reference No. SEBI/HO/CFD/DIL1/OW/P/2018/
1679/1 dated January 17, 2018.

granting certain exemptions under the SEBI ICDR Regulations and the SEBI
Listing Regulations.
Shareholders Shareholders of our Company.
Statutory Auditor/ Auditor The statutory auditor of our Company, namely, S.R. Mohan & Co.

Offer related terms

Term Description
The slip or document issued by the Designated Intermediary to a Bidder as
Acknowledgement Slip
proof of registration of the ASBA Form.
Transfer of Equity Shares to successful Bidders pursuant to the Offer to the
Allot/Allotment/Allotted
successful Bidders.
Note, advice or intimation of status of Allotment sent to the Bidders who have
Allotment Advice cum Refund
applied for the Equity Shares after the Basis of Allotment has been approved
Intimation
by the Designated Stock Exchange.
Allottee A successful Bidder to whom the Equity Shares is Allotted.
An application, whether physical or electronic, used by an ASBA Bidder, to
Application Supported by
make a Bid and authorize a SCSB to block the Bid Amount in the ASBA
Blocked Amount or ASBA
Account.
A bank account maintained with a SCSB and specified in the ASBA Form
ASBA Account submitted by Bidders for blocking the Bid Amount mentioned in the ASBA
Form.
A Bid made by an ASBA Bidder including all revisions and modifications
ASBA Bid
thereto as permitted under the SEBI ICDR Regulations.
ASBA Bidder Any Bidder in the Offer who intends to submit a Bid.
An application form, whether physical or electronic, used by an ASBA Bidder
ASBA Form and which will be considered as an application for Allotment in terms of this
Red Herring Prospectus and the Prospectus.
Banker to the Offer/ Escrow Bank which is a clearing member and registered with SEBI as a banker to the
Collection Bank Offer and with whom the Public Offer Account will be opened.
The basis on which the Equity Shares will be Allotted to successful Bidders
Basis of Allotment
under the Offer and which is described in “Offer Procedure” on page 338.
An indication to make an offer during the Bid/Offer Period by an ASBA
Bidder pursuant to submission of the ASBA Form, to subscribe to or purchase
the Equity Shares of our Company at a price within the Price Band, including
Bid all revisions and modifications thereto as permitted under the SEBI ICDR
Regulations.

The term Bidding shall be construed accordingly.
The highest value of optional Bids indicated in the ASBA Form and as
Bid Amount blocked in the ASBA Account of the Bidder, less the Retail Discount and
Employee Discount as applicable, upon submission of the Bid.
Bid Lot [●] Equity Shares.
2
Term Description
The date after which the Designated Intermediaries will not accept any Bids
which shall be published in all editions of the English daily newspaper
Financial Express, all editions of the Hindi national newspaper Jansatta and
Bid/Offer Closing Date
the Hyderabad edition of the Telugu daily newspaper Suryaa (Telugu being
the regional language of Telangana, where the Registered Office is located)
each with wide circulation.
The date on which the Designated Intermediaries shall start accepting Bids
which shall be published in all editions of the English daily newspaper
Financial Express, all editions of the Hindi national newspaper Jansatta and
Bid/Offer Opening Date
the Hyderabad edition of the Telugu daily newspaper Suryaa (Telugu being
the regional language of Telangana, where the Registered Office is located)
each with wide circulation.
The period between the Bid/Offer Opening Date and the Bid/Offer Closing
Bid/Offer Period Date inclusive of both days, during which prospective Bidders can submit
their Bids, including any revisions thereof.
Any prospective investor who makes a Bid pursuant to the terms of this Red
Bidder Herring Prospectus and the ASBA Form and unless otherwise stated or
implied.
Centres at which the Designated Intermediaries shall accept the Bid cum
Application Forms, i.e., Designated SCSB Branch for SCSBs, Specified
Bidding Centres
Locations for Syndicate, Broker Centres for Registered Brokers, Designated
RTA Locations for RTAs and Designated CDP Locations for CDPs.
Book building process, as provided in Schedule XI of the SEBI ICDR
Book Building method
Regulations, in terms of which the Offer is being made.
BRLMs/ Book Running Lead
SBICAP, IDBI Capital and YES Securities.
Managers
Broker centres notified by the Stock Exchanges where Bidders can submit the
ASBA Forms to a Registered Broker. The details of such Broker Centres,
Broker Centres along with the names and contact details of the Registered Brokers are
available on the respective websites of the Stock Exchanges
(www.bseindia.com and www.nseindia.com), as updated from time to time.
The higher end of the Price Band, above which the Offer Price will not be
Cap Price
finalised and above which no Bids will be accepted.
Client identification number maintained with one of the Depositories in
Client ID
relation to the demat account.
A depository participant as defined under the Depositories Act, 1996,
Collecting Depository registered with SEBI and who is eligible to procure Bids at the Designated
Participant or CDP CDP Locations in terms of circular no. CIR/CFD/POLICYCELL/11/2015
dated November 10, 2015 issued by SEBI.
Offer Price, finalised by the Selling Shareholder and the Company, in
consultation with the BRLMs, which shall be any price within the Price Band.

Cut-off Price Only Retail Individual Bidders and the Eligible Employees Bidding in the
Employee Reservation Portion, respectively are entitled to Bid at the Cut-off
Price. QIBs and Non-Institutional Bidders are not entitled to Bid at the Cut-
off Price.
Details of the Bidders including the Bidder’s address, name of the Bidder’s
Demographic Details
father/husband, investor status, occupation and bank account details.
Such locations of the CDPs where Bidders can submit the ASBA Forms to
Collecting Depository Participants.

Designated CDP Locations The details of such Designated CDP Locations, along with names and contact
details of the Collecting Depository Participants eligible to accept ASBA
Forms are available on the respective websites of the Stock Exchanges
(www.bseindia.com and www.nseindia.com), as updated from time to time.
The date on which the amounts blocked by the SCSBs are transferred from
Designated Date
the ASBA Accounts, to the Public Offer Account after filing of the Prospectus
3
Term Description
with the RoC, following which the Board of Directors shall Allot Equity
Shares to successful Bidders in the Offer.
Syndicate, sub-Syndicate/agents, SCSBs, Registered Brokers, Brokers, the
Designated Intermediaries CDPs and RTAs, who are authorized to collect Bid cum Application Forms
from the Bidders, in relation to the Offer.
Such locations of the RTAs where Bidders can submit the ASBA Forms to
RTAs. The details of such Designated RTA Locations, along with names and
Designated RTA Locations contact details of the RTAs eligible to accept ASBA Forms are available on
the respective websites of the Stock Exchanges (www.bseindia.com and
www.nseindia.com), as updated from time to time.
Designated Stock Exchange NSE
The draft red herring prospectus dated January 22, 2018 issued in accordance
Draft Red Herring Prospectus with the SEBI ICDR Regulations, which does not contain complete
or DRHP particulars of the price at which the Equity Shares will be Allotted and the
size of the Offer, including any addendum or corrigendum thereto.
A permanent and full-time employee of our Company (excluding such
employee not eligible to invest in the Offer under applicable laws, rules,
regulations and guidelines), as on the date of registration of the Red Herring
Prospectus with the RoC, who are Indian nationals and are based, working
and present in India and continue to be on the rolls of our Company as on the
date of submission of their ASBA Form and Bidding in the Employee
Reservation Portion. Directors, Key Management Personnel and other
Eligible Employee employees of our Company involved in the Offer Price fixation process
cannot participate in the Offer (as per Model Conduct, Discipline and Appeal
Rules of CPSEs and Office memorandum of DPE dated June 16, 2009 and
July 28, 2009).

An employee of our Company who is recruited against a regular vacancy but
is on probation as on the date of submission of the ASBA Form will also be
deemed a permanent employee of our Company.
NRI(s) from jurisdictions outside India where it is not unlawful to make an
offer or invitation under the Offer and in relation to whom the ASBA Form
Eligible NRI(s)
and this Red Herring Prospectus will constitute an invitation to subscribe or
to purchase the Equity Shares.
Discount of ₹[●] per Equity Share to the Offer Price given to Eligible
Employee Discount
Employees Bidding in the Employee Reservation Portion.
The portion of the Offer, being 458,203Equity Shares that is reserved for
Employee Reservation Portion
allocation and Allotment to Eligible Employees.
Equity Shares Equity Shares of face value of ₹10 each.
Bidder whose name shall be mentioned in the ASBA Form or the Revision
First Bidder Form and in case of joint Bids, whose name shall also appear as the first
holder of the beneficiary account held in joint names.
The lower end of the Price Band, subject to any revision thereto, at or above
Floor Price which the Offer Price will be finalised and below which no Bids will be
accepted.
The General Information Document prepared and issued in accordance with
the circular (CIR/CFD/DIL/12/2013) dated October 23, 2013 notified by
General Information SEBI and updated pursuant to the circulars
Document/GID (CIR/CFD/POLICYCELL/III/2015) dated November 10, 2015 and
(SEBI/HO/CFD/DIL/CIR/P/2016/26) dated January 21, 2016, suitably
modified and included in “Offer Procedure” on page 338.
IDBI Capital Markets & Securities Limited (Formerly known as IDBI Capital
IDBI Capital
Market Services Limited)
The maximum number of Retail Individual Bidders who can be allotted the
Maximum RIB Allottees minimum Bid Lot. This is computed by dividing the total number of Equity
Shares available for Allotment to Retail Individual Bidders by the Bid Lot.
5% of the QIB Portion, or 549,844 Equity Shares which shall be available for
Mutual Fund Portion
allocation to Mutual Funds only.
4
Term Description
Mutual funds registered with SEBI under the Securities and Exchange Board
Mutual Funds
of India (Mutual Funds) Regulations, 1996.
The Offer less the Employee Reservation Portion being 21,993,750 Equity
Net Offer
Shares aggregating to ₹[●] million.
All Bidders that are not QIBs or Retail Individual Bidders or Eligible
Employees Bidding in the QIB portion or Retail Portion or Employee
Non-Institutional Bidders Reservation Portion, respectively and who have Bid for the Equity Shares for
an amount more than ₹200,000 (but not including NRIs other than Eligible
NRIs).
The portion of the Offer being not less than 15% of the Net Offer comprising
of 3,299,063 Equity Shares which shall be available for allocation on a
Non-Institutional Portion
proportionate basis to Non-Institutional Bidders, subject to valid Bids being
received at or above the Offer Price.
A person resident outside India as defined under FEMA and includes a Non-
Non-Resident
Resident Indians, FVCIs and FPIs.
The initial public offer of 22,451,953 Equity Shares of face value of ₹10 each
Offer/ Offer for Sale for cash at a price of ₹[●] each, aggregating ₹[] million through an offer for
sale by the Selling Shareholder.
The agreement dated January 22, 2018 between our Company, the Selling
Offer Agreement Shareholder, the BRLMs, pursuant to which certain arrangements are agreed
to in relation to the Offer.
Price band of a minimum price of ₹[] per Equity Share (Floor Price) and the
maximum price of ₹[] per Equity Share (Cap Price) including revisions
thereof, if any.

The Price Band for the Offer will be decided by the Selling Shareholder and
Price Band the Company in consultation with the BRLMs and will be advertised, at least
five Working Days prior to the Bid/ Offer Opening Date, in all editions of the
English daily newspaper Financial Express, all editions of the Hindi national
newspaper Jansatta and the Hyderabad edition of the Telugu daily newspaper
Suryaa (Telugu being the regional language of Telangana, where our
Registered Office is located), each with wide circulation.
The date on which the Selling Shareholder and the Company, in consultation
Pricing Date
with the BRLMs, will finalise the Offer Price.
The Prospectus to be filed with the RoC after the Pricing Date in accordance
with section 26 of the Companies Act, and the provisions of the SEBI ICDR
Prospectus Regulations containing, inter alia, the Offer Price that is determined at the
end of the Book Building Process, the size of the Offer and certain other
information including any addenda or corrigenda thereto.
The bank account opened with the Banker to the Offer by our Company under
Public Offer Account section 40(3) of the Companies Act to receive monies from the ASBA
Accounts on the Designated Date.
The agreement dated March 1, 2018 entered into between our Company, the
Selling Shareholder, the Registrar to the Offer, the BRLMs, the Syndicate
Public Offer Account
Member, the Escrow Collection Bank(s) and the Refund Bank(s) for transfer
Agreement
of funds from Public Offer Account and where applicable, refunds of the
amounts collected, on the terms and conditions thereof.
The portion of the Net Offer being 50% of the Net Offer comprising of
QIB Category/QIB Portion
10,996,874 Equity Shares which shall be Allotted to QIBs.
Qualified Institutional Buyers Qualified institutional buyers as defined under Regulation 2(1)(zd) of the
or QIBs or QIB Bidders SEBI ICDR Regulations.
This red herring prospectus dated March 5, 2018 issued in accordance with
Section 32 of the Companies Act and the provisions of the SEBI ICDR
Red Herring Prospectus or Regulations which will not have complete particulars of the price at which
RHP the Equity Shares will be offered and the size of the Offer, including any
addenda or corrigenda thereto.

5
Term Description
This Red Herring Prospectus will be registered with the ROC at least three
Working Days before Bid/Offer Opening Date and will become the
Prospectus upon filing with the RoC after the Pricing Date.
The account opened with the Refund Bank to which refunds, if any, of the
Refund Account whole or part of the Bid Amount, shall be transferred from the Public Offer
Account(s).
The Banker to the Offer with whom the Refund Account has been opened, in
Refund Bank
this case being, ICICI Bank Limited.
Stock brokers registered with the SEBI and the stock exchanges having
nationwide terminals other than the Members of the Syndicate, eligible to
Registered Brokers
procure Bids in terms of circular no. CIR/CFD/14/2012 dated October 4, 2012
issued by SEBI.
The agreement dated January 22, 2018 entered into amongst our Company,
the Selling Shareholder and the Registrar to the Offer in relation to the
Registrar Agreement
responsibilities and obligations of the Registrar to the Offer pertaining to the
Offer.
Registrar and share transfer agents registered with SEBI and eligible to
Registrar and Share Transfer
procure Bids at the Designated RTA Locations in terms of circular no.
Agents or RTAs
CIR/CFD/POLICYCELL/11/2015 dated November 10, 2015 issued by SEBI.
Registrar to the Offer or
Alankit Assignments Limited.
Registrar
Discount of ₹[●] per Equity Share to the Offer Price given to Retail Individual
Retail Discount
Bidders in the Retail Portion.
Individual Bidders, other than Eligible Employees Bidding in the Employee
Retail Individual Reservation Portion who have Bid for the Equity Shares for an amount not
Bidder(s)/RIB(s) more than ₹2,00,000 in any of the bidding options in the Retail Portion
(including HUFs applying through their Karta and Eligible NRIs).
The portion of the Net Offer being not less than 35% of the Net Offer
consisting of 7,697,813 Equity Shares which shall be available for allocation
Retail Portion
to Retail Individual Bidder(s) in accordance with the SEBI ICDR Regulations
subject to valid Bids being received at or above the Offer Price.
Form used by the Bidders to modify the quantity of the Equity Shares or the
Bid Amount in any of their ASBA Forms or any previous Revision form(s).

Revision Form QIB Bidders and Non-Institutional Bidders are not allowed to withdraw or
lower their Bids (in terms of quantity and of Equity Shares or the Bid Amount)
at any stage. Retail Individual Bidders cannot revise their Bids after the Bid/
Offer Closing Date.
SBICAP SBI Capital Markets Limited
Share Escrow Agent Alankit Assignments Limited
Agreement dated March 1, 2018 entered into by the Selling Shareholder, our
Company and the Share Escrow Agent in connection with the transfer of
Share Escrow Agreement
Equity Shares under the Offer for Sale by the Selling Shareholder and credit
of such Equity Shares to the demat account of the Allottees
Banks registered with SEBI, offering services in relation to ASBA, a list of
Self Certified Syndicate Banks which is available on the website
or SCSBs http://www.sebi.gov.in/sebiweb/other/OtherAction.do?doRecognised=yes
and updated from time to time
Selling Shareholder The President of India, acting through the Ministry of Defence, GoI.
Bidding centers where the Syndicate shall accept ASBA Forms, a list of
which is available on
Specified Locations
http://www.sebi.gov.in/sebiweb/other/OtherAction.do?doRecognised=yes
and updated from time to time.
Stock Exchanges BSE Limited and National Stock Exchange of India Limited.
The agreement dated March 1, 2018, entered into amongst the BRLMs, the
Syndicate Agreement Syndicate Member, our Company and the Selling Shareholder in relation to
the collection of ASBA Forms by Syndicate Member.
6
Term Description
Intermediaries registered with SEBI who are permitted to carry out activities
Syndicate Member
as an underwriter, in this case, SBICAP Securities Limited.
Syndicate or Member of the
The BRLMs and the Syndicate Member.
Syndicate
A non-banking financial company registered with the Reserve Bank of India
Systemically Important Non-
and having a net-worth of more than ₹5,000 million as per the last audited
Banking Financial Company
financial statements.
Underwriters The Book Running Lead Manager(s) and the Syndicate Member(s).
The agreement dated [●] to be entered into amongst the Underwriters, our
Underwriting Agreement Company and the Selling Shareholder on or after the Pricing Date, but prior
to the registration of the Prospectus with the RoC.
Any person categorised as a wilful defaulter by any bank or financial
institution or consortium thereof, in accordance with the guidelines on wilful
Wilful Defaulter
defaulters issued by the Reserve Bank of India and includes any company
whose director or promoter is categorised as such.
“Working Day” means all days, other than second and fourth Saturday of the
month, Sunday or a public holiday, on which commercial banks in Mumbai
are open for business; provided however, with reference to (a) announcement
of Price Band; and (b) Bid/ Offer Period, “Working Day” shall mean all days’
excluding all Saturdays, Sundays or a public holiday, on which commercial
Working Day banks in Mumbai are open for business; and with reference to the time period
between the Bid/Offer Closing Date and the listing of the Equity Shares on
the Stock Exchanges, “Working Day” shall mean all trading days of Stock
Exchanges, excluding Sundays and bank holidays, as per the SEBI Circular
no. SEBI/HO/CFD/DIL/CIR/P/2016/26 dated January 21, 2016 as amended
from time to time.
YES Securities YES Securities (India) Limited

Technical/Industry Related Terms/Abbreviations

Term Description
ATGM Anti Tank Guided Missile
CMDS Countermeasure Dispensing System
DRDO Defence Research and Development Organisation, Government of India
LR SAM Long Range Surface to Air Missile
MR SAM Medium Range Surface to Air Missile
OEM Original Equipment Manufacturer
R&D Research and Development
SAM Surface to Air Missile
SFD Submarine Fired Decoy
VSHORADM Very Short Range Air Defence Missile

Conventional and General Terms or Abbreviations

Term Description
₹/Rs./ Rupees Indian Rupees
A/c Account
AGM Annual General Meeting
Alternative Investment Funds registered with SEBI under the SEBI AIF
AIF
Regulations
Air Act The Air (Prevention and Control of Pollution) Act, 1981, as amended
Accounting Standards as notified under Companies (Accounting Standards)
AS or Accounting Standards
Rules, 2006
AY Assessment Year
BSE BSE Limited
FPIs who are registered with SEBI as “Category I foreign portfolio investors”
Category I FPIs
under the SEBI FPI Regulations
7