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8/6/2019 Checklist Public Issue - SME Segment
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VC CORPORATE ADVISORS PVT. LTD.For internal circulation only Confidential
INITIAL DUE DILIGENCE CHECK LISTINITIAL DUE DILIGENCE CHECK LIST
FOR THEFOR THE
IPOIPO
VC Corporate Advisors Pvt. Ltd.31, Ganesh Chandra Avenue,2nd Floor Suite no. 2C,
Kolkata - 700 013.
Ph : 033 - 2225 3940 / 3941 / 4116
Fax: 033 - 2225 3941
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VC CORPORATE ADVISORS PVT. LTD.For internal circulation only Confidential
INITIAL REGULATORY DUE DILIGENCE LIST
TABLE OF CONTENTS
A. INITIAL REGULATORY DUE DILIGENCE CHECKLIST .................................. 3Section I General Information .................................................................... 3
Section II Capital Structure ........................................................................ 5Section III History ..................................................................................... 7
Section IV Management ............................................................................. 8Section V Subsidiaries, Group And Associate Companies & Equity Investments 9
Section VI Business ................................................................................. 10Section VII - Promoters ............................................................................. 12
Section VIII- Information on Financial Performance ....................................... 12Section IX - Management Discussion and Analysis ......................................... 14
Section X- General information .................................................................... 14Section XI- Consent Letters ........................................................................ 15
Section XII- SEBI Certificates ...................................................................... 15
Section XIII Other certificates ................................................................... 15B. PRELIMINARY LIST OF INFORMATION REQUIRED ABOUT THE BUSINESS
OF THE COMPANY ....................................................................................... 15Corporate profile/ history of the Company .................................................... 15
Business of the Company ............................................................................ 15
Industry Overview - .................................................................................. 17
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A. INITIAL REGULATORY DUE DILIGENCE CHECKLIST
Document type
SECTION I GENERAL INFORMATION
1. Consent/ Resolution from shareholders for fresh issue of equity. Resolution
2. Power of Attorney from the Directors of the company for signing the RHP/
Prospectus while filing with SEBI/the Registrar of Companies (RoC).
Document(s)
3. Minutes of Board and general body meetings of the company for the last three
years.
Document(s)
4. Review of minutes of all stockholders/shareholders meetings, stock books,
stock ledgers and other records of stock issuances of the Company.
Documents
5. Review of internal audit reports for the last 5 years. Documents
6. Copies of all statutory RBI/ GoI/ FIPB/ various GoI agencies clearances and
approvals received and copies of applications made if approval(s) awaited
e.g. SIA registration, environmental clearance, approvals required for utilities,emission norms, approvals for foreign investment, approvals for export etc.
Document(s)
7. List of approvals that are required to undertake and continue the business e.g. permission for electricity, water and other utilities from the relevant
authorities
Copy of all approvals/consents received from municipal/localauthorities.
Copy of any show cause notice received from municipal/local
authorities.
Copy of tax exemption approval that the company has availed of,
including exemption relating to entertainment tax.
Certificate &Document(s)
8. Labour compliances
List of all labour compliances maintained by the company.
Latest filings for provident fund, gratuity
Labour Registers ESI, Provident Fund, Accidents Register.
Registration under the Contract Labour (Regulation and Abolition) Act,
1970.
Any group insurance policies for gratuity, accident etc.
Any notices from any labour or statutory authority.
List of any collective bargaining agreements.
Number of employee unions, are these recognized or unrecognized
unions, are they registered or unregistered.
Any payouts made to any workmen as compensation for any accidentsetc.
Copy of the fatal accidents register.
9. Confirmation that the company, its directors, any of the companys associatesof group companies, and companies with which the directors of issuer are
associated as directors or promoters, has not been prohibited from accessing
the capital market under any order or directions passed by SEBI. If the
promoter is a body corporate, then confirm and disclose that none of the
directors or the person(s) in control of the body corporate has been prohibited
from accessing the capital market under any order or direction passed by
SEBI.
Certificate
10. Confirmation that neither the company, nor its promoters or their relatives or
promoter group companies have been declared by RBI as willful defaulters. If
declared as a willful defaulter, the reasons thereof with case history.
Certificate
11. Penalties, if any imposed by SEBI or any other regulatory body in or abroad
to be disclosed. Else a negative confirmation.
Certificate
12. Address of the registered office of the company, registration number of the
company along with the address of RoC where the company is registered.
MoA/AoA and Mgmt
confirmation
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13. Name, address, telephone number, fax number and e-mail address of the
Company Secretary.
Mgmt confirmation
14. Name, address, telephone number, fax number and e-mail address of the
Auditors to the Company.
Mgmt confirmation
15. Name, address, telephone number, fax number, website address, e-mail
address and contact person of the Registrar to the Issue along with copy ofthe SEBI registration certificate.
Document(s)
16. Name, address, telephone number, fax number, website address, e-mail
address and contact person of the Market Makers to the Issue along with copy
of the SEBI registration certificate.
Document(s)
17. Name & address of the Compliance Officer of the Company with phone and
fax numbers and the e-mail address.
Resolution/
Certificate
18. Name, address, phone number, fax number and e-mail address of the of the
legal advisors to the Company.
Mgmt confirmation
19. Name, address, phone number, fax number and e-mail address of the of the
Bankers to the Company.
Mgmt confirmation
20. No default certificate from bankers / lenders.
21. NOC from bankers / lenders as per existing terms of agreements.
22. Name, address, telephone number, fax number, contact person, websiteaddress and e-mail address of the Underwriters and Escrow Collection Banks
(along with copy of the SEBI registration certificate of the Bankers and any
correspondent bank).
Mgmt confirmation
23. Details of all credit ratings received by the Company during the previous
three years (including copies of the letters received from the rating agency(s))giving the name of the rating agency(s), credit rating, borrowing programme
etc.
Document(s)
24. Date and place of original incorporation of the company and any changes
thereafter in the name and registered office.
Copies of Certificate of
Incorporation andchange of name/
registered office (s)
25. If there is a change in the name of the company at any time during the last 3years, state reasons for change and whether and when the Objects clause of
Memorandum of Association was amended to carry on activities as reflected
by the new name.
Document(s)
26. Certificate regarding utilisation of issue proceeds. Certificate
27. Tripartite Agreement between the Issuer, Registrar and Depositories (NSDL
& CDSL) to be executed by the Registrar.
Document(s)
28. Recent analyses of the Company prepared by investment bankers, engineers,
management consultants, accountants, rating agencies or others, including
marketing studies, credit reports and other types of reports, financial or
otherwise.
Document(s)
29. Details of any branch, agency, place of business or any permanent
establishment inside and outside, including address, brief description of
business and details of the personnel involved.30. Review of any report, notice or correspondence relating to any violation or
infringement by the Company of any Indian or other governmental regulation.
31. Review of compliance reports filed and significant correspondence with any
regulatory agency.
32. Review of all governmental permits, consents and regulatory approvals of theCompany.
33. List of and information relating to all material laws affecting operations of theCompany.
34. Review of copies of the approvals from the Secretariat for Industrial
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Assistance/Foreign Investment Promotion Board (SIA/FIPB) and the
Reserve Bank of (RBI) required by the Company or its shareholders for
any direct or indirect foreign investment or technical collaboration in the
Company, or copies of any industrial license obtained under Schedule I of the
Industries Regulation Development Act, 1951, if any.
35. Review of any reports, notices or correspondence to the Company regardingforeign payments or compliance with any countrys governmental regulations
or currency requirements.
36. Review of any other agreements executed by the Company with the Indian
government, or governmental entity, whether at the central, state ormunicipal/local level.
37. Other than those listed above, review of all reports filed with, and significant
correspondence sent to, any government regulatory agency, in or abroad, by
the Company.
38. Review of copies of all valid powers of attorney granted by the Company.
SECTION II CAPITAL STRUCTURE
The information in the capital structure should be as on the date of SEBI filing
1. Authorised, Issued, Subscribed and paid up capital Certificate Number of instruments
Face value
2. Size of the present issue in terms of the number of instruments and face
value
Certificate
Promoters contribution
Firm allotment/ reservation
i) Names of group companies in case reservation made to theshareholders of the group companies.
ii) Net offer to the public
3. Paid up capital
After Issue (based on issue structure)
After conversion of outstanding vested ESOPs/ securities, as applicable
4. Share premium account
Before the issue Document(s)/
Certificate
After the issue
5. Details of any outstanding financial instrument(s) or right entitling anyone to
receive equity shares after the issue.
Certificate
6. Details of change in face value/ subdivision/ split of shares and the Board and
EGM resolution authorizing such action.
Document(s)
7. Details of any bonus/ rights issue
The Board and EGM resolution authorizing such action Document(s)
RBI/ FIPB approval required if the rights/ bonus issue is made to an
NRI/ OCB/ Foreign collaborator
Document(s)
8. Details of the existing subscribed and allotted equity shares including that ofpromoter and promoter group:
Certificate
Date of allotment
No. of shares
Face value
Price/ consideration
Reason for allotment (e.g. subscribers to the memorandum, bonus,rights, amalgamation/ merger/ swap)
Cumulative Share premium
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9. Disclose the names of the promoters, promoter group, their pre and post issue
holdings, contribution towards promoters contribution and details of lock in
of their shares on a LIFO basis.
Certificate
10. Details of shares issued for consideration other than cash stating the date of
issue, persons to whom issued, price, reasons for the issue and whether any
benefits have accrued to the company out of the issue.
Certificate
11. Names and shareholding of the top ten shareholders of the Company Certificate
Two years prior to SEBI/ RoC filing
10 days prior to SEBI/ RoC filing
SEBI/ RoC filing
12. Current shareholding pattern and the post issue shareholding pattern. Certificate
Promoter Group
Directors of the promoters, if the promoter is a corporate
NRI/ OCB/ FII
Others
Total number of members of the Company
13. If the promoter is a corporate, the names of natural persons who are in control
(holding 10% or more of voting rights) or who are on the Board of anycompany which is a part of the promoter group.
Mgmt confirmation &
Document(s)
14. Promoters contribution and lock-in Certificate
Individual shareholding
Date of allotment/ date of making fully paid/ date of acquisition
Consideration
Nature of issue (bonus, rights etc.)
Face value and issue price of securities
Percentage of promoters contribution to the total issued capital
Date to which securities are locked-in
15. Promoters and other shareholders to give NOC to the Company for lock-in of
their shareholding, as per SEBI guidelines.
Certificate
16. If the locked-in shares have been pledged, then the details including name of
pledgee, facilities availed and terms and conditions of the pledge.
Document(s)
17. Details of additional lock in of shares, if any. Certificate
18. Details of transactions in the shares of the issuer company by the Promoter
Group and the Directors of the promoting companies
Document(s)/
Certificate
Transferor
Transferee
Maximum and minimum price of the transaction
Date of the transaction
19. Details of all buy-back, stand by and similar arrangements for purchase of
securities by the promoters, directors and lead managers, if any.
Document(s)
20. Details of bridge loans, if any. Document(s)
21. Confirmation that the issuer shall not make any further issue of capital
whether by way of issue of bonus shares, preferential allotment, rights issueor public issue or in any other manner, during the period commencing from
SEBI filing till listing.
Certificate
22. Disclose as to the proposal, intention, negotiations, consideration of the issuer
to alter the capital structure by way of split/ consolidation of the
denomination of the shares, or issue of shares on a preferential basis or issue
of bonus or rights or further public issue of shares or any other securities,within a period of 6 months from the date of opening the present issue.
Certificate
23. Details of the ESOP scheme, if any. Document(s)
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24. Review of copies of Register of Members/ Transfer of Shares, Register of
Inter Corporate Loans, Register of Charges, Register of Contracts, Register of
Directors, the Register of Investments and any other Register required to be
maintained by the Company.
SECTION III HISTORY1. History of the Company including
Date of Incorporation Copy of Certificate
Date of Commencement of Business Copy of Certificate
Date of conversion of private limited company to public limited
company, as applicable, dates on which names have been changed, if
applicable, reasons for change of name, changes in registered offices of
the company and reasons therefore
Copy of Certificate,
Document(s),
Certificate
Dates on which the Memorandum of Association of the company have
been amended citing the details of amendment
Document(s)
2. Main objects of the Company Document(s)
3. Trace the major events in the history of the company including Mgmt confirmation/
Document(s)
Corporate profile of the company regarding its history, description of theactivities, services, products, market of each segment, growth of the
company, standing of the company and/ or its products and its
management, the major suppliers and customers of the company,
environmental issues if any.
The company's performance, standing with reference to the prominentcompetitors with reference to segment [geographical, type of customers,
etc.]
Technology, market, managerial competence and capacity built-up
Capacity/ facility creation, location, marketing competition, details ofpast projects, time and cost overrun etc.
Raising of capital in form of equity or debt, details of default and
reschedulements, if any
Injunction/ restraining order, if any towards the company
Details of any restructuring
Complete details of acquisitions of business/ undertakings/ mergers/
amalgamation/ revaluation of assets. Provide copies of
merger/amalgamation scheme relating to merger of the erstwhile
subsidiaries into the Company, and other relevant documents in that
regard including valuation report and legal opinion.
Changes in the activities in the last 5 years of the issuer which have had a
material impact on the profit/loss of the company
4. Details of litigations and defaults as per certificate. Company to provide with
a list of all litigations, show cause notices or threatened notice or litigation.
Company should ensure that back up documentation and litigation files are
available for the same.
Certificate
5. A description of any and all strikes, lockouts, slowdowns and other labordisruptions at any of the Company's or any subsidiary's facilities and any
claim of unfair labor practices or petitions filed with federal or stategovernmental authorities with respect to workers at the Company's or any
subsidiary's facilities.
Document(s) & Mgmtconfirmation
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SECTION IV MANAGEMENT
1. Board of Directors
Name, age, fathers name, occupation, address (as submitted to the
RoC) of the Directors1Document(s)
Other directorships and the nominee capacity of the directors Certificate from eachDirector
Changes in the directors in the three years preceding the date of filing
the offer document: dates of appointment, resignation and reasons for
resignation- certificate required
Mgmt confirmation
Board resolution/ contract for the appointment and the remuneration of
the managing director and other directors
Document(s) &
Resolution
Interests of Directors, their borrowing powers and qualification shares Mgmt confirmation &
Document(s)
Litigation/ defaults etc as per certificate. Certificate
2. Key managerial personnel:
Profiles of key managerial personnel including name, date of joining,
qualification, details of previous employment, experience in the line of
business, key strengths , remuneration paid in last one year etc.
Mgmt confirmation and
employees
confirmation
Confirmation that the key management personnel are permanent
employees
Certificate
Changes in the key managerial personnel in the past one year: dates of
appointment, resignation and reasons for resignation
Certificate
3. Organisation structure with names, designations, functions and
responsibility
4. Corporate Governance Composition of Board, Audit committee, Investors
grievances committee, etc.
Document(s), Mgmt
confirmation
5. The following information shall be disclosed with respect to the company's
directors and key managerial personnel:
Name, business experience, functions and areas of experience in
the company. The nature of any family relationship between any of the
persons named under this head.
Any arrangement or understanding with major shareholders,
customers, suppliers or others, pursuant to which any person referred to
in this head, was selected as a director or member of senior management.
During the last FY, the amount of compensation paid, and
benefits in kind granted, to persons mentioned under this head, by the
company for services in all capacities to the company. Disclosure of
compensation should be given on an individual basis. The disclosure
should also covers contingent or deferred compensation accrued for the
year, even if the compensation is payable at a later date.
If any portion of the compensation was paid pursuant to a bonus
or profit-sharing plan, provide a brief description of the plan and thebasis upon which such persons participate in the plan.
With respect to the persons listed under this head, disclose as to
their share ownership in the company
The following information shall be disclosed with respect to, the
company's directors.
Date of expiration of the current term of office.
Details of directors' service contracts with the company
Mgmt confirmation,
Document(s) &
Certificate
1Form 29 & 32 which are filed with the RoC
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providing for benefits upon termination of employment, or an appropriate
negative statement.
Details relating to the company's audit committee and
remuneration committee, including the names of committee members and
a summary of the terms of reference under which the committee operates.
6. Documents providing for any bonus, retirement, profit sharing, incentivecompensation, welfare and other employee benefit plans or agreements of the
Company.
Document(s)
7. Review of copies of all agreements or arrangements restricting the transfer of
shares, or relating to the management, ownership or control of the Company,
and any other agreements which define or limit the rights of the shareholdersof the Company, including any restrictions upon voting rights or upon the
declaration or payment of any dividends or relating to the issuance of
additional share capital
8. Review of full particulars of any pension plan, pension arrangement, or
proposed pension scheme, covenant or life assurance schemes of the
Company. Details on compliance of the Provident Fund and Miscellaneous
Provisions Act, maintaining of the registers prescribed thereunder and details
of contributions and employees covered thereunder. Details of any otherProvident Fund scheme or Trust. Details of availing any infancy benefits
under Provident Fund and Bonus laws.
9. Details of bonus payments and registers required to be maintained pursuant to
the Payment of Bonus Act. Details of compliance with Payment of Gratuity
Act or other Gratuity Fund Scheme and any other Employee Welfare
Schemes in existence.
SECTION V SUBSIDIARIES, GROUP AND ASSOCIATE COMPANIES & EQUITY
INVESTMENTS
1. Define promoter group Legal Certificate
2. Group and associate companies Document(s)
Date of incorporation
Shareholding pattern Board of Directors
Audited accounts for the last 3 years, along with any significant notes to
accounts
Details of litigations and defaults as per certificate. Certificate
Information regarding companies which have become BIFR companies
or are under winding up or have negative net worth
Mgmt confirmation/
Document(s)
If listed, Document(s)/ Mgmt
confirmation
i. Highest and lowest market price during the preceding 6
months, current market price and current market capitalization
ii. In case the company has made a rights or a public issue, the
following details regarding the last issue: year of issue, type of issue,issue amount, date of closure of issue, date of completion of dispatch
of delivery of security certificates, issue price of the security, object
of the issue, rate of dividend paid, date of completion of the project,
where the object was financing of a project and particulars of changes
in the capital structure
iii. Promise v/s performance of all the group companies who have
made an issue during the last 3 years, or the last issue made by such
group companies, including cost and progress of implementation of
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the project in comparison with the cost and progress of
implementation given in the Prospectus/ Letter of Offer.
iv. Details of investor complaints which have been received,
resolved and which are pending resolution
v. Investor grievance redressal system including the normal time
taken to redress various types of investor complaints3. List of ALL VENTURES OF THE PROMOTERS (sole proprietorship, Firm,
private company, limited company, listed company), giving activities
undertaken, in brief. If any of these entities had faced/is facing any litigations/
defaults/ overdues OR labour problems/ closure etc., these may be mentioned
under this para. The list to include all private/ listed companies of the issuer
irrespective of whether they are under the same management as per Section
370(1B) of the Companies Act
Certificate
4. In case of common pursuits among the group companies and the issuer
Company, details of any conflict of interest to be given, along with related
party transactions and their financial implication on the issuer Company. Ifthe promoters/ directors are involved one or more ventures in the same line of
business as the issuer Company, potential conflict of interest to be given
Mgmt confirmation &
Certificate from
Auditors reg. Relatedparty transactions
5. Details of promoter company/ group companies etc. in securities relatedbusiness Certificate
6. Details of any investment in any other company, partnership, association or
any other person, including copies or details of any agreements/ arrangementswith other investors
7. A schedule with the names of all companies that the Company controls solelythrough its right to appoint an additional seat on the board of directors.
SECTION VI BUSINESS
1. Facilities
Location of the facilities Document(s)
Technology, process, etc. Mgmt confirmation/
Document(s)
Confirmation that land acquired by the company is free from allencumbrances and has a clear title
Certificate & Mgmtconfirmation/Document(s)
Details of municipal tax and local tax compliance Document(s)
All significant leases of real property and all leases of any substantial
amount of personal property to which the Company is a party, either aslessor or lessee
Document(s) & Mgmt
confirmation
2. Nature of products, consumers and end users, including dependence on
customers, suppliers, dealers etc (in or abroad)
Mgmt confirmation
3. RM supply agreements / arrangements
4. Seasonality of the business Mgmt confirmation
5. Details of the market including details of competition, past trends and
future prospects
Mgmt confirmation &
Document(s)
6. Manpower: Details of the recruitment strategy, training programs andretention strategy
Mgmt confirmation
7. Marketing strategy Mgmt confirmation
Approach to marketing and marketing set up
Brand names/ service marks owned by the Company (and whether they
are registered in the name of the Company)
Document(s)
8. Collaborations/ alliances: Document(s)
Details of collaboration, performance guarantee or assistance in
marketing by collaborators.
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21. Review of all significant documents relating to major acquisitions or
dispositions, or, proposed acquisitions or dispositions, by the Company.
22. Details of any investigation by, or correspondence with, any monopoly
and/ or restrictive trade practices commission of office, including the office of
The Monopolies and Restrictive Trade Practices Commission under or in
connection with the Monopolies and Restrictive Trade Practices Act, 1969, asamended.
23. Details of any agreement or arrangement (or any judgment or ruling)
which restricts the Companys ability to compete anywhere in the world and
of any notification or registration or notification under the relevant domesticlegislation.
24. Details of and copies of documents relating to any patent, trade or service
mark or registered design, or any copyright, know-how or other intellectual
property of which the Company is the owner, licensee or user.
25. Details of any infringement or alleged infringement by third parties of
any intellectual property rights of the Company.
26. Details of any intellectual property rights owned by third parties the use
or exploitation of which is necessary or desirable for the business of the
Company27. Details of any circumstances where the benefit, or the right of use, of any
of the above intellectual property rights, licences or agreements may be lost
or affected adversely (including on a change of control).
28. Schedule of major suppliers and customers, giving annual amounts
purchased or sold.
29. Backlog and order records
30. Details of all insurance policies of the company. List to be provided with
details of amounts of the same and the coverage of the policy. Cover notes/
policy details should be kept available for review.
SECTION VII - PROMOTERS
1. Back ground of the promoters, their qualifications and experience Certificate &
Document(s)
Details of litigations and defaults as per certificate Certificate 26
Any other interest of the promoter in the company
2. In case the present promoters have acquired the controlling interest, state
details such as date of acquisition, terms of acquisition, consideration and
compliance with the provisions of the SEBI (Substantial Acquisition ofShares and Takeovers) Regulations, 1997 as applicable
3. If the Promoters/Directors have any other interest in the Issuer Company, thesame should be brought out briefly under this head also in addition to details
appearing elsewhere in the prospectus.
4. If the promoters have disassociated with any firm in the last 3 years then the
reasons for the disassociation together with the terms of such disassociation
Certificate
5. Details of outstanding litigations and defaults in case of companies with
which the promoters were associated in the past as per certificate
Certificate
6. Companies belonging to Promoter whose name has been struck off from theRegistrar of Companies
SECTION VIII- INFORMATIONON FINANCIAL PERFORMANCE
1. Documents to carry audited accounts for the last 5 years and the stub period
2. Auditors certificates considering ICAI accounting standards Auditors Certificate
Comfort letter(s) at the time of SEBI filing and RoC filings of
the RHP and Prospectus
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Certificate of Tax Benefits
Auditors Report (as per Schedule II requirement)
Adjusted P&L Account for the last 5 years and the stub period
Adjusted Statement of Assets and Liabilities, with Net worthshown separately, Revaluation reserves should be deducted for the last 5
years and the stub period Adjusted cash flow statement for the last 5 years and the stub
period
Significant Accounting Policies
Changes in Accounting Policies in the last five years
Notes to Accounts & qualifications to a/cs
Statement of adjusted accounting ratios
Statement of aggregated related party transaction as per
Accounting Standard 18
Statement of adjusted segmental information as per AccountingStandard 17
Statement of dividend paid for the last five years.
Tax Shelter Statement (SEBI format) Capitalization Statement (SEBI format)
Statement of Earning per share
Break up of Sundry Debtors (separately showing break up of
receivables from promoters/ promoter group/ group companies)
Aging Schedule of Sundry Debtors
Break up of Loans and Advances (separately showing loans/
advances to promoters/ promoter group/ group companies/companies in
which directors are interested)
Statement of adjusted Other Income
Statement of adjusted secured loan showing details of terms
and conditions Statement of adjusted unsecured loan (separately showing
loans/ advances taken from promoters/ promoter group/ group
companies/companies in which directors are interested)
Details of Investments (both quoted investments with current
market value and unquoted investments)
Relevant details of all the contingent liabilities
3. Outstanding due to small scale undertakings for more than 30 days
4. Cost per share to the promoters and book value per share. Certificate
5. Details of customer concentration (if the main customer(s) are foreign then
details of the impacts on the financials due to currency fluctuations need to
provided)
Mgmt confirmation/
Document(s)
6. Key Accounting ratios to be given as of the date of filing (to include anyalteration in the capital structure after the date of audit), including EPS, NAV
and RoNW and to be provided also in the post-diluted basis
Auditors Certificate
7. In case of change in standard denomination of shares, financial data,
comparison of financial ratios should be presented pre-split and post split, and
stock market data and capital structure should have adequate disclosures.
Auditors certificate
8. Brief terms and conditions of the term loans including re-schedulement,
prepayment, penalty, default, etc. be incorporated along with suitable risk
factor(s) for the negative developments. Company to provide a list of
Document(s)
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o What is current market size of each of the segments in which the Company is operating.
The data on each segment should be backed by relevant industry publications.
o The details of the major domestic and overseas players in each of the segment in which
the Company is operating.
o Key factor which determine the bargaining capability of the Company vis--vis other
players in the industry.
o What is the cost advantage the Company enjoys vis-a-vis other players in the segment. Cost Analysis
o Major elements of variable and fixed costs
o Strategies to compress cost structure
Investment planso Is the Company operating at optimum capacity? Can the company increase volumes
without incurring too much incremental expenditure?o Capex required for supporting expansion. Financing plan to support this capex.
o New business initiatives planned by the Company
o Plans to expand in overseas geographies
Inorganic Growth Plans
o Profile of the likely acquisitions / joint ventures if any.
Business Advantage
o Technology and business practices
o Major competitive advantages derived by the company
o Productivity achievements targets and plans to achieve them
o Quality policy and systems for ensuring quality
Competitive advantage
o Major competitive advantages derived by the company
o Achievements targets and plans to achieve them
o Quality policy and systems for ensuring quality
Marketing Advantage:
o Marketing structure and sales set up
o Segment wise positioning
o Pricing strategy
o Advertising and marketing strategy including Promotions, if anyo Policy of the company in attracting/drawing customers.
Organisation structureo What is the current organization structure?
o What are the HR; Training and recruitment policies?
o Who are the key people? What are their educational qualifications and work experience?
Please highlight who amongst these are secondees? What is plan to move to anindependent management structure?
o What is the total employee strength? What is the number of employees in each segment/
business area? What are the planned additions?
o What is the average cost per employee?
R&D
o Importance of R&D in the industry
o R&D setup and budgets
o Initiatives and key achievements
SWOT analysis as perceived by management
Other
o (Potential) competition to the Companys business
o Any stated dividend policy details of the same
o Highlight a few decisions that emphasize the independent nature of the Board?
o What is the current contracting strategy for equipment / manpower etc.?
16CHECKLIST FOR THE INITIAL PUBLIC OFFERING
8/6/2019 Checklist Public Issue - SME Segment
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VC CORPORATE ADVISORS PVT. LTD.For internal circulation only Confidential
o Details of the ESOP structures?
o What are the commercial arrangements with the software
developers/corporates/publication houses
o Details of debt contracted so far (loan agreements) and changes to terms, if any
o What is the billing, receivables and payables cycle?
o Detailed financial model with assumptions etc.
o Details of break-up of revenue by customer and product segment in the past 2 years:volumes, price and usage. Historical (2 years) cost break-up by variable and fixed costs.
o Shareholders agreement
INDUSTRY OVERVIEW -
The industry section of the Red Herring Prospectus should be prepared to inform the investors of the major
industry parameters affecting profitability of the companies in the industry, prominently highlighting the
aspects that are positive for the company and making investors aware of possible risks to the company.
This should cover industry evolution and future outlook, including key demand drivers
[All industry data is required to be supported by copies of industry reports which can be quoted as sources
in the Red Herring Prospectus.]
17CHECKLIST FOR THE INITIAL PUBLIC OFFERING