Wintac Limited

274 Pages·2017·3.87 MB·English

by  Satish Kumar P.

DRAFT LETTER OF OFFER Date : September 28,2017
For our Equity Shareholders only

(Originally incorporated as ―Recon Pharma Private Limited‖ on August 23, 1990 under the Companies Act, 1956 with the
Registrar of Companies, Karnataka at Bangalore, and the name of our company was changed to ―Recon Private Limited‖ on
March 1, 1993 , which was then changed to ―Recon Limited‖ on March 5, 1993 and further changed to ―Wintac Limited‖ with
effect from July 10, 2000). CIN : L85110KA1990PLC011166. For details of the changes in our Name, Registered Office and
other details, please see Section titled ―History and Other Corporate Matters‖ on page 119 of this Draft Letter of Offer
Regd Office: No. 54/1, NH – 4, Near 39th Mile Stone, Boodihal, Nelamangala, Bangalore – 562 123
Tel: No. 080 67086500 Fax No: 080 27733369, Website : www.wintaclimited.com; E-mail: [email protected]
Contact Person: B P Thyagaraj Asst. Vice President (Finance) & Secretary & Compliance Officer
Promoter: Veego Pharma LLC, USA (formerly known as Gavis Pharma LLC)
LETTER OF OFFER
ISSUE OF 66,82,828 EQUITY SHARES OF FACE VALUE OF Rs. 10/- EACH FOR CASH AT A PREMIUM OF Rs. 90/-
PER EQUITY SHARE AGGREGATING TO RS. 6,682.83 LAKHS TO THE EXISTING EQUITY SHAREHOLDERS OF
OUR COMPANY ON RIGHTS BASIS IN THE RATIO OF 2 EQUITY SHARES FOR EVERY 3 FULLY PAID EQUITY
SHARES HELD BY THE EXISTING SHAREHOLDERS ON THE RECORD DATE, I.E. ON [●]. THE ISSUE PRICE OF
EACH EQUITY SHARE IS 10 TIMES TO THE FACE VALUE OF THE EQUITY SHARE. FOR FURTHER DETAILS,
PLEASE REFER THE SECTION TITLED “TERMS OF THE ISSUE” BEGINNING ON PAGE NO. 213 OF THIS DRAFT
LETTER OF OFFER
GENERAL RISKS
Investment 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 investment. Investors are advised to read the risk factors
carefully before taking an investment decision in this offering. For taking an investment decision, investors must rely on
their own examination of the issuer and the offer including the risks involved. The securities being offered in the issue
have not been recommended or approved by Securities and Exchange Board of India (SEBI) nor does SEBI guarantee the
accuracy or adequacy of this document. Specific attention of investors is invited to the statement of ‘Risk Factors‘
beginning on page no. 9.
ISSUER‟S ABSOLUTE RESPONSIBILITY
The Issuer, having made all reasonable inquiries, accepts responsibility for and confirms that this Letter of Offer contains
all information with regard to the Issuer and the Issue, which is material in the context of the Issue, that the information
contained in this Letter of Offer 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
make this Letter of Offer as a whole or any of such information or the expression of any such opinions or intentions
misleading in any material respect.
LISTING
The existing Equity Shares of our Company are listed on BSE Limited. Our Company has received in-principle approval
from BSE Limited for listing the securities arising from this Issue by its letter dated ________________.
LEAD MANAGER TO THE ISSUE REGISTRAR TO THE ISSUE

Merchant Banking Division
Bigshare Services Private Limited
SEBI REGN NO.: INM 000011070
SEBI Registration No: INR000001383
1011, Building No. 10
E/2, Ansa Industrial Estate,
Solitaire Corporate Park, Guru Hargovindji Marg, Saki Vihar Road,
Chakala, Andheri (East), Mumbai – 400 093 Andheri (E), Mumbai-400072
Tel : [phone]; Fax : [phone] Tel: [phone]; Fax: [phone]
Email: [email protected] Website: www.bigshareonline.com
Website: www.arihantcapital.com E-Mail: [email protected]
Contact Persons: Mr. Amol Kshirsagar / Contact Person : Mr. Ashok Shetty
Mr. Satish Kumar P.
ISSUE PROGRAMME
ISSUE OPENS ON LAST DATE FOR REQUEST FOR SPLIT APPLICATION FORMS ISSUE CLOSES ON
[●] [●] [●]
TABLE OF CONTENTS
CONTENTS PAGE
Section I – Definitions and Abbreviations
Conventional/General Terms 2
Company / Issue Related Terms 3
Industry Related Terms 4
Abbreviations 4
Presentation of Financial Information and Use of Market Data 7
Forward Looking Statements 8
Section II – Risk Factors 9
Section III – Introduction
Summary of Industry 27
Summary of Business 35
Summary of Financial Information 42
The Issue 45
General Information 46
Capital Structure 51
Section IV – Objects of the Issue
Objects of the Issue 60
Basis for Issue Price 73
Statement of Tax Benefits 75
Section V – About Us
Industry Overview 83
Business Overview 92
Key Industry Regulations and Policies 111
History and Other Corporate Matters 119
Our Management 128
Our Promoter and Promoter Group Entities 139
Dividend Policy 150
Section VI – Financial Information
Auditors‘ Report and Financial Information of Our Company 151
Management‘s Discussion and Analysis of Financial Condition and Results of 189
Operations
Financial Indebtedness 197
Section VII – Legal and other Regulatory Information
Outstanding Litigations, Material Developments and Other Disclosures 198
Government and Other Statutory Approvals 202
Other Regulatory and Statutory Disclosures 203
Section VIII –Issue Related Information
Terms of the Issue 213
Issue Procedure 218
Section IX – Description of Equity Shares and Terms of the Articles of Association
Main Provisions of Articles of Association 255
Section X –Other Information
Material Contracts and Documents for Inspection 270
Section XI – Declaration 273
SECTION – I

GENERAL

DEFINITIONS AND ABBREVIATIONS

In this Letter of Offer, the terms ―we‖, ―us‖, ―our‖, ―our Company‖, ―the Company‖ or ―WINTAC‖,
unless the context otherwise implies, refer to WINTAC LIMITED. All references to ―Rs.‖ or ―INR‖ refer
to Rupees, the lawful currency of the Republic of India; ―USD‖ or ―US$‖ refer to the United States
Dollar, the lawful currency of the United States of America, references to the singular also refers to the
plural and one gender also refers to any other gender, wherever applicable, and the words ―Lakh‖ or
―Lac‖ means ―100 thousand‖ and the word ―million‖ or ―mn‖ means ―10 lakh‖ and the word ―crore‖
means ―10 million‖ or ―100 lakhs‖ and the word ―billion‖ means ―1,000 million‖ or ―100 crores‖. Any
discrepancies in any table between the total and the sums of the amounts listed are due to rounding off.

Conventional / General Terms
Term Description
Act or Companies The Companies Act, 2013 and the rules made there under, as amended from
Act time to time.
Depository A depository registered with SEBI under the Securities and Exchange Board of
India (Depositories and Participants) Regulations, 1996, as amended from time
to time.
Depositories NSDL and CDSL.
Depositories Act The Depositories Act, 1996 and subsequent amendments thereto.
Depository A depository participant as defined under the Depositories Act, 1996 and
Participant / DP registered with SEBI under the Securities and Exchange Board of India
(Depositories and Participants) Regulations, 1996, as amended from time to time.
DP ID Depository Participant‘s identity.
FII(s) Foreign Institutional Investors registered with SEBI under applicable laws.
GoI Government of India.
Indian GAAP Generally Accepted Accounting Principles in India.
I.T. Act The Income Tax Act, 1961 and subsequent amendments thereto.
Person or Persons Any individual, sole proprietorship, unincorporated association, unincorporated
organization, body corporate, corporation, company, partnership, limited
liability company, limited liability partnership, 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.
Non Residents A person resident outside India, as defined under FEMA.
NRE Account Non Resident External Account as defined under Foreign Exchange
Management (Deposit) Regulations, 2000, as amended from time to time.
NRO Account Non Resident Ordinary Account as defined under Foreign Exchange
Management (Deposit) Regulations, 2000, as amended from time to time.
Promoter Veego Pharma LLC. Prior to its change of name on June 12, 2017, Veego Pharma
LLC was known under the name of ―Gavis Pharma LLC‖.
Securities Act United States Securities Act, 1933, and subsequent amendments thereto.
SEBI Act, 1992 Securities and Exchange Board of India Act, 1992 and amendments thereto.
SEBI (ICDR) Securities And Exchange Board Of India (Issue Of Capital And Disclosure
Regulations Requirements) Regulations, 2009, as amended.
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SEBI LODR SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, as
Regulations amended
Takeover Code/ The Securities and Exchange Board Of India (Substantial Acquisition of Shares
SEBI SAST and Takeovers) Regulations, 2011 as amended to date.
Regulations
Veego Veego Pharma LLC, USA (formerly known as Gavis Pharma LLC), our
promoter. The name of Gavis Pharma LLC was changed to Veego Pharma LLC
on June 12, 2017.
Wealth tax Act The Wealth Tax Act, 1957 and subsequent amendments thereto.

Company / Issue Related Terms
Term Description
Allotment Unless the context otherwise requires, the issue and the allotment of
Equity Shares, pursuant to the Issue.
Allottee The applicants to whom the Equity Shares are being/have been
allotted.
Articles/Articles of Articles of Association of our Company.
Association/ AOA
Auditors Refers to M/s. B.K. Ramadhyani & Co LLP, Chartered Accountants,
the statutory auditors of our Company, unless otherwise specified.
Bankers to the Issue [●]
Board or Board of Directors Board of Directors of our Company which term shall include a
committee of the Board
Capital or Share Capital Share Capital of our Company comprising of subscribed and paid up
Equity Share Capital.
Designated Stock Exchange BSE Limited
Draft Letter of Offer The Draft Letter of Offer filed with SEBI and BSE Limited
Equity Share(s) or Share(s) Equity Shares of our Company having a face value of Rs. 10/- each
listed on BSE Limited unless otherwise specified in the context thereof.
Equity Shareholders Unless otherwise stated, means a holder of Equity Shares of our
Company as on the Record Date.
Fiscal/FY Period of twelve months ended March 31 of that particular year, unless
otherwise stated.
Investor(s) The holder(s) of Equ ity Shares of our Company as on the Record Date,
i.e. [●] and Renouncees.
Issue Closing Date [●]
Issue Opening Date [●]
Issue Price Rs. 100/- per Equity Share
Lead Manager or Lead Lead Manager to this Issue, in this case being Arihant Capital Markets
Manager to the Issue Limited.
Memorandum / Memorandum of Association of our Company.
Memorandum of
Association/ MoA
Promoter Veego Pharma LLC, USA (formerly known as Gavis Pharma LLC)
Record Date [●]
Registrar to the Issue or Bigshare Services Private Limited
Registrar
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Registrar and Transfer Canbank Computer Services Ltd
Agent to the Company /
R&T
Registered Office The Registered office of our Company situated at No.54/1, Boodihal,
Nelamangala, Bangalore - 562123.
Renouncees Shall mean the persons who have acquired Right Entitlements from the
existing Equity Shareholders of our Company.
Right Entitlement The number of Equity Shares that a shareholder is entitled to in
proportion to his/her shareholding in our Company i.e. 2 Equity Share
for every 3 Equity Share held as on the Record Date.
Rights Issue The issue of Equity Shares being offered on rights basis as per terms of
this Letter of Offer.
The Offer or The Issue Issue of 66,82,828 Equity Shares of Rs. 10/- each for cash at a price of
Rs. 100/- per share (including Share Premium of Rs. 90/- per Equity
Share) aggregating Rs. 6,682.83 Lakhs to the existing shareholders on
rights basis in the Ratio of 2 Equity Shares for every 3 fully paid Equity
Shares held by the existing shareholders on the record date, i.e. on [●]

Industry Related Terms
Term Description
ANDA Abbreviated New Drug Application. ANDA is an application for a U.S. generic
drug approval for an existing licensed medication or approved drug.
API Active Pharmaceutical Ingredient contained in the product
ANSM French National Agency for Medicines and Health Products.
cGMP Current Good Manufacturing Practices.
CRAMS Contract (or Custom) Research and Manufacturing Services
EIR Establishment Inspection Report
GMP Good Manufacturing Practices
Generic Drugs A generic drug (generic drugs, short: generics) is a drug which is produced and
distributed without patent protection.
Injectables Refers to drugs that can be put into the body (injected) with a needle or syringe.
The medicine is put under the skin, into a muscle, or into a vein.
NDA New Drug Application
Oncology A branch of medicine that deals with tumours (cancer).
Ophthalmic Related to Ophthalmology, which is a branch of medicine which deals with the
anatomy, physiology and diseases of the eye.
R & D Research and Development
USFDA United States Food and Drug Administration

Abbreviation
Term Description
AGM Annual General Meeting.
AS Accounting Standards, as issued by the Institute of Chartered Accountants of
India.
ASBA Application Supported by Blocked Amount process provided by SEBI as one of
the modes for applying in a Public Issue / Rights Issue.
BSE BSE Limited
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BV Book Value.
CAF Composite Application Form.
CDSL Central Depository Services (India) Limited.
DP Depository Participant.
EGM Extra-ordinary General Meeting.
EPS Earnings Per Share.
FEMA Foreign Exchange Management Act, 1999 and subsequent amendments thereto.
FII(s) Foreign Institutional Investors registered with SEBI under applicable laws.
FY Financial Year
G o I Government of India.
JV Joint Venture
Ltd. Limited
MoU / MOU Memorandum of Understandi ng.
NSDL National Securities Depository Limited.
NRI(s) Non Resident Indian(s).
OCB(s) Overseas Corporate Body(ies).
P.A. Per Annum
PAN Permanent Account Number.
SAF Split Application Form
SCSB Self Certified Syndicate Banks.
SEBI Securities & Exchange Board of India.

5
NOTICE TO OVERSEAS SHAREHOLDERS

The distribution of this Letter of Offer and the issue of Equity Shares on a rights basis to persons in
certain jurisdictions outside India may be restricted by legal requirements prevailing in those
jurisdictions. Persons into whose possession the Draft Letter of Offer, Letter of Offer, Abridged Letter of
Offer or CAF may come are required to inform themselves about and observe such restrictions. We are
making this Issue of Equity Shares on a rights basis to the Equity Shareholders and will dispatch the
Letter of Offer/ Abridged Letter of Offer and CAFs to such shareholders who have provided an Indian
address. Those overseas shareholders who do not update our records with their Indian address or the
address of their duly authorized representative in India, prior to the date on which we propose to
dispatch the Letter of Offer / Abridged Letter of Offer and CAFs, shall not be sent this Letter of Offer /
Abridged Letter of Offer and CAFs. No action has been or will be taken to permit this Issue in any
jurisdiction where action would be required for that purpose, except that the Draft Letter of Offer has
been filed with SEBI for observations.

Any person who makes an application to acquire rights and the Equity Shares offered in this Issue will be
deemed to have declared, represented, warranted and agreed that he is authorised to acquire the rights
and the Equity Shares in compliance with all applicable laws and regulations prevailing in his
jurisdiction. We, the Registrar, the Lead Manager or any other person acting on behalf of us reserve the
right to treat any CAF as invalid where we believe that CAF is incomplete or acceptance of such CAF
may infringe applicable legal or regulatory requirements and we shall not be bound to allot or issue any
Equity Shares or Rights Entitlement in respect of any such CAF. Neither the delivery of this Letter of
Offer nor any sale hereunder, shall under any circumstances create any implication that there has been no
change in the Company‘s affairs from the date hereof or that the information contained herein is correct
as at any time subsequent to the date of this Letter of Offer.

The contents of this Letter of Offer should not be construed as legal, tax or investment advice.
Prospective investors may be subject to adverse foreign, state or local tax or legal consequences as a
result of the offer of Equity Shares. As a result, each investor should consult its own counsel, business
advisor and tax advisor as to the legal, business, tax and related matters concerning the offer of Equity
Shares. In addition, neither our Company nor the Lead Manager or the Legal Advisors is making any
representation to any offeree or purchaser of the Equity Shares regarding the legality of an investment
in the Equity Shares by such offeree or purchaser under any applicable laws or regulations.

6
PRESENTATION OF FINANCIAL INFORMATION AND USE OF MARKET DATA

Financial Data

Unless stated otherwise, the financial data in this Letter of Offer are derived from our audited restated
consolidated financial statements, prepared in accordance with Indian GAAP, the SEBI ICDR Regulations
and the Companies Act, which are included in this Letter of Offer, and set out in the Chapter ―Financial
Information” beginning on page 151. Our financial year commences on April 1 and ends on March 31.

In this Letter of Offer, any discrepancies in any table between the total and the sums of the amounts listed
are due to rounding off. All decimals have been rounded off to two decimal points.

There are significant differences between Indian GAAP, US GAAP and IFRS. Our consolidated financial
statements and reported earnings could be different in a material manner from those which would be
reported under IFRS or US GAAP. This Letter of Offer does not contain a reconciliation of our
consolidated financial statements to IFRS or US GAAP, nor does it include any information in relation to
the differences between Indian GAAP, IFRS and US GAAP. We urge you to consult your own advisors
regarding such differences and their impact on our financial data. Accordingly, the degree to which the
Indian GAAP financial statements included in this Letter of Offer will provide meaningful information is
entirely dependent on the reader‗s level of familiarity with Indian GAAP. Any reliance by persons not
familiar with Indian accounting practices on the financial disclosures presented in this Letter of Offer
should accordingly be limited.

Currency and Units of Presentation

All references to ―Rupees‖ or ―Rs.‖ or ―Rs.‖ are to Indian Rupees, the official currency of the Republic of
India. All references to ―US$‖ or United States Dollars are to the official currency of the United States of
America. Except where specified in this Letter of Offer, all figures have been expressed in lakhs.

Industry and Market Data

Unless stated otherwise, industry and market data used throughout this Letter of Offer have been
obtained from industry publications. Industry publications generally state that the information contained
in those publications has been obtained from sources believed to be reliable but that their correctness,
accuracy and/or completeness are not guaranteed and their reliability cannot be assured. Although we
believe that industry data used in this Letter of Offer are reliable, they have not been independently
verified. The extent to which the market and industry data used in this Letter of Offer are meaningful
depends on the reader‗s familiarity with and understanding of the methodologies used in compiling such
data.

7
FORWARD-LOOKING STATEMENTS

This Letter of Offer contains certain ―forward-looking statements‖. These forward-looking statements
generally can be identified by words or phrases such as ―aim‖, ―anticipate‖, ―believe‖, ―contemplate‖,
―expect‖, ―estimate‖, ―future‖, ―goal‖, ―intend‖, ―may‖, ―objective‖, ―plan‖, ―project‖, ―will‖, ―will
continue‖, ―will pursue‖, ―will likely result‖, ―will seek to‖, ―seek‖ or other words or phrases of similar
import. Similarly, statements that describe our strategies, objectives, plans or goals are also forward-
looking statements. All forward-looking statements are subject to risks, uncertainties and assumptions
that could cause actual results to differ materially from those contemplated by the relevant statement.

Actual results may differ materially from those suggested by the forward looking statements due to risks
or uncertainties associated with our expectations with respect to, but not limited to, regulatory changes
pertaining to the industries in India in which we have our businesses and our ability to respond to them,
our ability to successfully implement our strategy, our growth and expansion, technological changes, our
exposure to market risks, general economic and political conditions in India, which have an impact on
our business activities or investments, the monetary and fiscal policies of India, inflation, deflation,
unanticipated turbulence in interest rates, foreign exchange rates, equity prices or other rates or prices,
the performance of the financial markets in India and globally, changes in domestic laws, regulations and
taxes and changes in competition in our industry. Important factors that could cause actual results to
differ materially from our expectations include, but are not limited to, the following:

 General economic and business conditions in the markets in which we operate and in the local,
regional, national and international economies;
 Changes in laws and regulations relating to the sectors/areas in which we operate or changes in
price control regime in products that we manufacture for our clients;
 Increased competition in the sectors/areas in which we operate;
 Our ability to successfully implement our growth strategy and expansion plans, and to
successfully launch and implement the project and business plans for which funds are being
raised through this Issue;
 Our ability to meet our capital expenditure requirements;
 Fluctuations in operating costs;
 Our ability to attract and retain qualified personnel;
 Changes in technology;
 Changes in political and social conditions in India or in countries that we may enter, the
monetary and interest rate policies of India and other countries, inflation, deflation,
unanticipated turbulence in interest rates, equity prices or other rates or prices.
 The performance of the financial markets in India and globally; and
 Any adverse outcome in the legal proceedings in which we are involved.

For further discussion of factors that could cause our actual results to differ from our expectations, please
see “Risk Factors”, and “Management„s Discussion and Analysis of Financial Condition and Results of
Operations” beginning on pages 9 and 189 respectively.

By their nature, certain market risk disclosures are only estimates and could be materially different from
what actually occurs in the future. As a result, actual future gains or losses could materially differ from
those that have been estimated. In accordance with SEBI requirements, we will ensure that investors in
India are informed of material developments until the time of the grant of listing and trading permission
by the Stock Exchange.

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SECTION – II

RISK FACTORS

An investment in equity shares involves a high degree of risk. You should carefully consider all the
information in this Letter of Offer, including the risks and uncertainties described below, before
making an investment in our Equity Shares. If any of the following risks actually occur, our
business, results of operations and financial condition could suffer, the price of our Equity Shares
could decline, and you may lose all or part of your investment. The financial and other implications
of material impact of risks concerned, wherever quantifiable, have been disclosed in the risk factors
mentioned below. However there are a few risk factors where the impact is not quantifiable and
hence the same has not been disclosed in such risk factors.

INTERNAL RISK FACTORS

1. In respect of our proposed project and the objects of the present rights issue, we have not
obtained any quotations from external sources for many of the elements of cost of the project.
The figures given are based largely on the estimates made by us. Further, any increase in the
cost of any of the item of project cost would result in cost overrun

The cost of each item of the project as given on page 60 of this LOF is estimated by our
management and no quotations have been received from any external sources for many of the
items of cost, including several items of plant & machinery. Although the project cost has
been estimated by our management based on their experience, there can be no assurance that
there will not be any escalation of costs during actual implementation. Although we have
provided for contingencies @ 5% on the various elements of the cost of project, any increase
beyond this may result in cost overrun of the proposed project. However, in such an
eventuality, the cost overrun is proposed to be met by us through internal sources and/or
through other permissible mode of funding or by way of loans from banks/financial
institutions, subject to obtaining requisite approvals, if any, in this regard.

2. We are dependent on Somerset Therapeutics LLC to a significant extent for our future
business.

After the acquisition of majority equity stake and management control of our Company by
Veego Pharma LLC, we entered into a Master Development Agreement and Manufacture &
Supply Agreement with them which envisaged development of products on their behalf for
overseas markets. Under this Agreement, we were to develop the products, prepare dossiers
and Veego Pharma LLC would file the dossiers in the US and other regulated markets for
regulatory approvals. Subsequent to the receipt of regulatory approval, the products were to
be manufactured by us and supplied to Veego Pharma LLC as per their requirements. Veego
Pharma LLC communicated to us on October 1, 2016 that they had since assigned their rights
and obligations under the said Agreements to Somerset Therapeutics LLC, USA. As we are
now largely engaged in developing products for Somerset Therapeutics LLC, we would be
significantly dependent upon them for our future business. During the FY 2016-17, Somerset
Therapeutics LLC has contributed to about 60% of our Sales and Service.

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