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DRAFT RED HERRING PROSPECTUSJuly 26, 2018
Please read Section 32 of the Companies Act, 2013(This Draft Red Herring Prospectus will be updated upon filing with the RoC)
100% Book Building Offer
PNB METLIFE INDIA INSURANCE COMPANY LIMITEDOur Company was incorporated on April 11, 2001 at Bengaluru, Karnataka as MetLife India Insurance Company Private Limited, as a private limited company under the Companies Act, 1956. Further, our Company obtained the certificate of registration from the Insurance Regulatory and Development Authority of India (“IRDAI”) to undertake life insurance business on August 6, 2001. Pursuant to the conversion of our Company to a public limited company and as approved by our Shareholders pursuant to a special resolution dated December 4, 2007, the name of our Company was changed to MetLife India Insurance Company Limited and a fresh certificate of incorporation was issued by the Registrar of Companies, Karnataka at Bengaluru (the “RoC”) on January 9, 2008. Subsequently, the name of our Company was changed to its present name as approved by our Shareholders pursuant to a special resolution dated January 16, 2013 and a fresh certificate of incorporation was issued by the RoC on January 22, 2013. For further details on the changes in the name and the registered office of our Company, see “History and Certain Corporate Matters” on page 193.
Corporate Identity Number: U66010KA2001PLC028883IRDAI Registration Number: 117, dated August 6, 2001
Registered Office: Unit No. 701, 702 & 703, Raheja Towers, West Wing, Municipal No. 26/27, M G Road, Bengaluru 560 001Corporate Office: 1st Floor, Techniplex -1, Techniplex Complex, Off Veer Savarkar Flyover, Goregaon (West), Mumbai 400 062
Tel: (+91) 22 4179 0000; Fax: (+91) 22 4179 0203Contact Person: Ms. Yagya Turker, Company Secretary and Compliance Officer; Tel: (+91) 22 4179 0000; Fax: (+91) 22 4179 0203
E-mail: [email protected]; Website: www.pnbmetlife.com OUR PROMOTERS: PUNJAB NATIONAL BANK AND METLIFE INTERNATIONAL HOLDINGS, LLC
INITIAL PUBLIC OFFERING OF UP TO 495,898,076 EQUITY SHARES OF FACE VALUE OF ` 10 EACH (THE “EQUITY SHARES”) OF PNB METLIFE INDIA INSURANCE COMPANY LIMITED (THE “COMPANY”) FOR CASH AT A PRICE OF ` [●] PER EQUITY SHARE (THE “OFFER PRICE”) THROUGH AN OFFER FOR SALE OF UP TO 495,898,076 EQUITY SHARES AGGREGATING TO ` [●] MILLION (THE “OFFER”) BY THE SELLING SHAREHOLDERS, INCLUDING UP TO 80,495,242 EQUITY SHARES AGGREGATING TO ` [●] MILLION BY PUNJAB NATIONAL BANK (“PNB”), UP TO 129,036,281 EQUITY SHARES AGGREGATING TO ` [●] MILLION BY METLIFE INTERNATIONAL HOLDINGS LLC (“MIHL”), UP TO 107,611,370 EQUITY SHARES AGGREGATING TO ` [●] MILLION BY M. PALLONJI & COMPANY PRIVATE LIMITED (“MPCL”), UP TO 76,659,064 EQUITY SHARES AGGREGATING TO ` [●] MILLION BY ELPRO INTERNATIONAL LIMITED (“EIL”), UP TO 19,164,766 EQUITY SHARES AGGREGATING TO ` [●] MILLION BY IGE (INDIA) PRIVATE LIMITED (“IGE”), UP TO 76,641,892 EQUITY SHARES AGGREGATING TO ` [●] MILLION BY THE JAMMU AND KASHMIR BANK LIMITED AND UP TO 6,289,461 EQUITY SHARES AGGREGATING TO ` [●] MILLION BY MANIMAYA HOLDINGS PRIVATE LIMITED (“MANIMAYA”). THE OFFER SHALL CONSTITUTE 24.64% OF THE POST-OFFER PAID UP EQUITY SHARE CAPITAL OF OUR COMPANY.
THE PRICE BAND AND THE MINIMUM BID LOT WILL BE DECIDED BY THE IPO COMMITTEE, IN CONSULTATION WITH THE BOOK RUNNING LEAD MANAGERS AND WILL BE ADVERTISED IN [●] EDITIONS OF [●] (A WIDELY CIRCULATED ENGLISH NATIONAL DAILY NEWSPAPER), [●] EDITIONS OF [●] (A WIDELY CIRCULATED HINDI NATIONAL DAILY NEWSPAPER AND [●] EDITIONS OF [●] (A WIDELY CIRCULATED KANNADA NATIONAL DAILY NEWSPAPER, KANNADA ALSO BEING THE REGIONAL LANGUAGE IN THE PLACE WHERE OUR REGISTERED OFFICE IS LOCATED) AT LEAST FIVE WORKING DAYS PRIOR TO THE BID/OFFER OPENING DATE AND SHALL BE MADE AVAILABLE TO THE BSE LIMITED (THE “BSE”) AND THE NATIONAL STOCK EXCHANGE OF INDIA LIMITED (THE “NSE”, AND TOGETHER WITH THE BSE, THE “STOCK EXCHANGES”) FOR THE PURPOSES OF UPLOADING ON THEIR RESPECTIVE WEBSITES.
THE FACE VALUE OF THE EQUITY SHARES IS ` 10 EACH AND THE OFFER PRICE IS [●] TIMES THE FACE VALUE OF THE EQUITY SHARESIn case of a revision in the Price Band, the Bid/Offer Period will be extended for at least three additional Working Days after revision of the Price Band subject to the Bid/Offer Period not exceeding a total of 10 Working Days. Any revision in the Price Band and the revised Bid/Offer Period, if applicable, will 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 Book Running Lead Managers, and at the terminals of the members of the Syndicate and by an intimation to the Self Certified Syndicate Banks (“SCSBs”), Registered Brokers, Collecting Depository Participants and the Registrar to the Offer.
The Offer is being made in compliance with the requirements of the Insurance Regulatory and Development Authority of India (Issuance of Capital by Indian Insurance Companies transacting Life Insurance Business) Regulations, 2015, as amended (the “IRDAI Issuance of Capital Regulations”).
In terms of Rule 19(2)(b) of the Securities Contracts (Regulation) Rules, 1957, as amended (the “SCRR”), the Offer is being made through the Book Building Process, in compliance with Regulation 26(1) of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009, as amended (the “SEBI ICDR Regulations”), wherein not more than 50% of the Offer shall be allotted on a proportionate basis to Qualified Institutional Buyers (the “QIBs”) (the “QIB Portion”), provided that our IPO Committee in consultation with the Book Running Lead Managers, may allocate up to 60% of the QIB Category to Anchor Investors, on a discretionary basis (the “Anchor Investor Portion”). One-third of the Anchor Investor Portion shall be reserved for domestic Mutual Funds, subject to valid Bids being received from domestic Mutual Funds at or above the price at which allocation is made to Anchor Investors (the “Anchor Investor Allocation Price”). Post allocation to the Anchor Investors, the QIB Portion will be reduced by such number of Equity Shares. 5% of the QIB Portion (excluding the Anchor Investor Portion) shall be available for allocation on a proportionate basis to Mutual Funds only, and the remainder of the QIB Portion shall be available for allocation on a proportionate basis to all QIBs (other than Anchor Investors), including Mutual Funds, subject to valid Bids being received from them at or above the Offer Price. Further, not less than 15% of the Offer shall be available for allocation on a proportionate basis to Non-Institutional Investors and not less than 35% of the Offer will be available for allocation to Retail Individual Investors, in accordance with the SEBI ICDR Regulations, subject to valid Bids being received at or above the Offer Price. All potential Investors, other than the Anchor Investors are mandatorily required to participate in this Offer only through an Application Supported by Blocked Amount (“ASBA”) process, providing details of their respective bank accounts in which the Bid amount will be blocked by the SCSBs. The Anchor Investors are not permitted to participate in the Anchor Investor Portion through the ASBA process. For details, see “Offer Procedure” beginning on page 430.
RISKS IN RELATION TO THE FIRST OFFER
This being the first public issue of the Equity Shares, there has been no formal market for the Equity Shares of our Company. The face value of our Equity Shares is ` 10 each and the Floor Price and Cap Price are [●] times and [●] times of the face value of the Equity Shares, respectively. The Offer Price (as determined and justified by our IPO Committee in consultation with the Book Running Lead Managers), in accordance with the SEBI ICDR Regulations, and as stated in “Basis for Offer Price” on page 95 should not be taken to be indicative of the market price of the Equity Shares after the Equity Shares are listed. No assurance can be given regarding 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 RISKSInvestments in equity and equity-related securities involve a degree of risk and investors should not invest any funds in the 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 the 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 have not been recommended or approved by the Securities and Exchange Board of India (“SEBI”), nor does the SEBI guarantee the accuracy or adequacy of the contents of this Draft Red Herring Prospectus. Specific attention of the investors is invited to “Risk Factors” beginning on page 19.
DISCLAIMER CLAUSE OF THE INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY OF INDIA (THE “IRDAI”)The IRDAI does not undertake any responsibility for the financial soundness of our Company or the correctness of any of the statements made or opinions expressed in this connection, any approval by the IRDAI under the IRDAI Issuance of Capital Regulations (as defined in “Definitions and Abbreviations” on page 2) shall not in any manner be deemed to be or serve as a validation of the representations by our Company in this Draft Red Herring Prospectus.
COMPANY AND SELLING SHAREHOLDERS’ ABSOLUTE RESPONSIBILITYOur Company, having made all reasonable inquiries, accepts responsibility for and confirms that this Draft Red Herring Prospectus contains all information with regard to our Company and the Offer, which is material in the context of the Offer, that the information contained in this Draft Red Herring Prospectus is true and correct in all material aspects and is not misleading in any material respect, that the opinions and intentions expressed herein are honestly held and that there are no other facts, the omission of which makes this Draft Red Herring Prospectus as a whole or any of such information or the expression of any such opinions or intentions, misleading in any material respect. Further, each Selling Shareholder accepts responsibility only for and confirms that the information relating to itself and the Equity Shares being offered by it in the Offer contained in this Draft Red Herring Prospectus are true and correct. Each Selling Shareholder, severally and not jointly, does not assume any responsibility for any other statements, including without limitation, any and all of the statements made by or in relation to our Company or the other Selling Shareholders in this Draft Red Herring Prospectus.
LISTINGThe Equity Shares issued through the Red Herring Prospectus are proposed to be listed on the Stock Exchanges. We have received in-principle approvals from the BSE and the NSE for the listing of the Equity Shares pursuant to letters dated [●] and [●] respectively. For the purposes of this Offer, [•] is the Designated Stock Exchange. A signed copy of the 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 that will be available for inspection from the date of the Red Herring Prospectus up to the Bid/ Offer Closing Date, see “Material Contracts and Documents for Inspection” on page 526.
BOOK RUNNING LEAD MANAGERS REGISTRAR TO THE OFFER
Kotak Mahindra Capital Company Limited1st Floor, 27 BKC, Plot No. 27,“G” Block, Bandra Kurla Complex,Bandra (East),Mumbai 400 051Maharashtra, IndiaTel: (+91) 22 4336 0000Fax : (+91) 22 6713 2445E-mail : [email protected] Investor Grievance E-mail : [email protected] : www.investmentbank.kotak.comContact Person: Ganesh RaneSEBI Registration No.: INM000008704
DSP Merrill Lynch LimitedGround Floor, A Wing, One BKC, G Block, Bandra Kurla Complex,Bandra (East)Mumbai 400 051Maharashtra, IndiaTel: (+91) 22 6632 8000Fax : (+91) 22 6776 2343E-mail :[email protected] Investor Grievance E-mail :[email protected] : www.ml-india.comContact Person: Radha ChakkaSEBI Registration No.: INM000011625
Citigroup Global Markets India Private Limited1202, 12th Floor First International Financial Center, G-Block C54&55Bandra Kurla Complex, Bandra (East)Mumbai, 400 098Tel: (+91) 22 6175 9999Fax: (+91) 22 6175 9898 E-mail: [email protected] Grievance E-mail : [email protected] :www.online.citibank.co.in/rhtm/citigroupglobalscreenContact Person: Ashish GunetaSEBI Registration No.: INM000010718
PNB Investment Services Limited*PNB Pragati Towers, 2nd Floor, C-9, G Block, Bandra Kurla Complex,Bandra EastMumbai 400 051Tel: (+91) 22 2653 2745Fax: (+91) 22 2653 2687E-mail: [email protected] Investor Grievance E-mail :[email protected] : www.pnbisl.comContact Person: Vinay RaneSEBI Registration No.: INM000011617
Link Intime India Private LimitedC-101, 1st Floor, 247 ParkL.B.S. Marg, Vikhroli (West)Mumbai 400 083Maharashtra, IndiaTel: (+91) 22 4918 6200Fax: (+91) 22 4918 6195E-mail: [email protected] Grievance Email: [email protected]: www.linkintime.co.inContact Person: Shanti Gopalkrishnan SEBI Registration No.: INR000004058
BID/OFFER PERIOD*BID/OFFER OPENS ON* [●] BID/OFFER CLOSES ON ** [●]
* In compliance with the proviso to Regulation 21A(1) of the Securities and Exchange Board of India (Merchant Bankers) Regulations, 1992, as amended, read with the proviso to Regulation 5(3) of the SEBI ICDR Regulations, PNB Investment Services Limited which is an ‘associate’ of PNB, in terms of the Securities and Exchange Board of India (Merchant Bankers) Regulations, 1992, as amended, will be involved only in marketing of the Offer.** Our IPO Committee, in consultation with the Book Running Lead Managers, may consider participation by Anchor Investors, in accordance with the SEBI ICDR Regulations. The Anchor Investor Bidding Date shall be one Working Day prior to the Bid/Offer Opening Date.**Our IPO Committee, in consultation with the Book Running Lead Managers, may decide to close the Bid/Offer Period for QIBs one Working Day prior to the Bid/Offer Closing Date, in accordance with the SEBI ICDR Regulations.
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TABLE OF CONTENTS
SECTION I – GENERAL .................................................................................................................................... 2
DEFINITIONS AND ABBREVIATIONS ..................................................................................................... 2 CERTAIN CONVENTIONS, USE OF FINANCIAL INFORMATION AND MARKET DATA AND
CURRENCY OF PRESENTATION ............................................................................................................ 14 FORWARD-LOOKING STATEMENTS ................................................................................................... 17
SECTION II - RISK FACTORS ....................................................................................................................... 19
SECTION III – INTRODUCTION ................................................................................................................... 47
SUMMARY OF INDUSTRY ........................................................................................................................ 47 SUMMARY OF BUSINESS ......................................................................................................................... 55 SUMMARY OF FINANCIAL INFORMATION ....................................................................................... 63 THE OFFER .................................................................................................................................................. 68 GENERAL INFORMATION ....................................................................................................................... 70 CAPITAL STRUCTURE .............................................................................................................................. 81 OBJECTS OF THE OFFER ......................................................................................................................... 93 BASIS FOR OFFER PRICE ........................................................................................................................ 95 STATEMENT OF TAX BENEFITS ............................................................................................................ 98
SECTION IV: ABOUT THE COMPANY ..................................................................................................... 111
INDUSTRY OVERVIEW ........................................................................................................................... 111 BUSINESS .................................................................................................................................................... 140 KEY REGULATIONS AND POLICIES IN INDIA................................................................................. 178 HISTORY AND CERTAIN CORPORATE MATTERS ......................................................................... 193 MANAGEMENT ......................................................................................................................................... 202 PROMOTERS AND PROMOTER GROUP ............................................................................................ 233 GROUP COMPANIES................................................................................................................................ 242 RELATED PARTY TRANSACTIONS ..................................................................................................... 243 DIVIDEND POLICY ................................................................................................................................... 244
SECTION V – FINANCIAL INFORMATION ............................................................................................. 245
FINANCIAL STATEMENTS..................................................................................................................... 245 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS ...................................................................................................................................... 314 SECTION VI – EMBEDDED VALUE REPORT..................................................................................... 342
SECTION VII – LEGAL AND OTHER INFORMATION .......................................................................... 377
OUTSTANDING LITIGATION AND OTHER MATERIAL DEVELOPMENTS .............................. 377 GOVERNMENT AND OTHER APPROVALS ........................................................................................ 399 OTHER REGULATORY AND STATUTORY DISCLOSURES ........................................................... 403
SECTION VIII – OFFER RELATED INFORMATION ............................................................................. 420
OFFER STRUCTURE ................................................................................................................................ 420 RESTRICTIONS ON FOREIGN OWNERSHIP OF INDIAN SECURITIES ...................................... 424 TERMS OF THE OFFER ........................................................................................................................... 426 OFFER PROCEDURE................................................................................................................................ 430
SECTION IX – MAIN PROVISIONS OF ARTICLES OF ASSOCIATION ............................................. 476
SECTION X – OTHER INFORMATION ..................................................................................................... 526
MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION ................................................ 526 DECLARATION ......................................................................................................................................... 529
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SECTION I – GENERAL
DEFINITIONS AND ABBREVIATIONS
Unless the context otherwise indicates or implies, the following terms shall have the meanings provided below in
this Draft Red Herring Prospectus, and references to any statute, legislation, act, rules, regulations, guidelines,
policies, circulars, notifications or clarifications will include any amendments or re-enactments thereto, from time
to time. In case of any inconsistency between the definitions given below and the definitions contained in the
General Information Document (as defined below), the definitions given below shall prevail.
The words and expressions used but not defined in this Draft Red Herring Prospectus will have the same meaning
as assigned to such terms under the Companies Act, 2013, the Securities and Exchange Board of India Act, 1992
(the “SEBI Act”), the SEBI ICDR Regulations, the Securities Contracts Regulation Act, 1992 (“SCRA”), the
Depositories Act, the Insurance Act, 1938, as amended (the “Insurance Act”) and the rules and regulations made
thereunder.
Unless the context otherwise indicates, all references to “we”, “us”, “our”, “the Company” or “our Company”
or “the Offer” are references to PNB MetLife India Insurance Company Limited, a company incorporated in
India under the Companies Act, 1956 with its registered office situated at Unit No. 701, 702 & 703, Raheja
Towers, West Wing, Municipal No. 26/27, M G Road, Bengaluru 560 001, Karnataka, India.
In the “Main Provisions of Articles of Association” on page 476, defined terms have the meanings given to such
terms in the Articles of Association. In the “Statement of Tax Benefits” on page 98, defined terms have the
meanings given to such terms in the Financial Statements. In the “Embedded Value Report” on page 342, defined
terms have the meanings given to such terms in the Embedded Value Report.
Company and Selling Shareholder Related Terms
Term Description
AoA/Articles of
Association/Articles
The articles of association of our Company, as amended
Appointed Actuary The appointed actuary of our Company, Mr. P. K. Dinakar
Audit Committee The audit committee of our Board comprising our Directors, Dr. Archana Niranjan Hingorani,
Ms. Anisha Motwani, Mr. Neeraj Swaroop, Mr. Lyndon Emanuel Oliver and Mr. Lingam
Venkata Prabhakar
Auditors/ Joint Statutory
Auditors
The joint statutory auditors of our Company, being K. S. Aiyar & Co., Chartered Accountants
and Thakur, Vaidyanath Aiyar & Co., Chartered Accountants
Board/ Board of Directors The board of directors of our Company, or a duly constituted committee thereof
Chairman The chairman of our Board, Mr. Lyndon Emanuel Oliver
Corporate Office The corporate office of our Company, situated at 1st Floor, Techniplex – 1, Techniplex
Complex, Off Veer Savarkar Flyover, Goregaon (West), Mumbai 400 062, Maharashtra, India
CRISIL CRISIL Research, a division of CRISIL Limited
CRISIL Report Industry Report titled ‘CRISIL Research – Analysis of Life Insurance Industry in India’ dated
July 10, 2018 prepared by CRISIL Research, a division of CRISIL Limited
CSR Committee The corporate social responsibility committee of our Board comprising our Directors, Mr.
Sunil Gulati, Mr. Surbhit Dabriwala and Mr. Erach Kotwal
Director(s) The director(s) on our Board
EIL Elpro International Limited
Equity Shares The equity shares of our Company of face value of ₹ 10 each
Equity Shareholders /
Shareholders
The holders of the Equity Shares
ESOP Scheme 2017 PNB MetLife India Insurance Company Limited – Employee Stock Option Plan 2017
IGE IGE (India) Private Limited
Group Companies The group companies of our Company, as covered under the applicable accounting standards
and other companies as considered material by our Board, if any, in accordance with the
Materiality Policy. For details, see “Group Companies” on page 242.
IPO Committee The IPO committee of our Board comprising a nominee of PNB, a nominee of MIHL, a
nominee of MPCL and MPEL together, and a nominee of EIL and IGE together.
JKB The Jammu and Kashmir Bank Limited
KMP/ Key Managerial
Personnel
Key management personnel of our Company in terms of Regulation 2(1)(s) of the SEBI ICDR
Regulations and Section 2(51) of the Companies Act, 2013 and as identified in “Management”
on page 202
Manimaya Manimaya Holdings Private Limited
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Term Description
Materiality Policy The policy adopted by our Board on November 15, 2017, which was further modified
pursuant to a resolution by our Board on May 18, 2018, for identification of group companies
of our Company, outstanding litigation and outstanding dues to creditors in respect of our
Company, pursuant to the disclosure requirements under the SEBI ICDR Regulations for
the purposes of disclosure in the offer documents. For further details, see “Group
Companies” and “Outstanding Litigation and Other Material Developments” on pages
242 and 377, respectively.
MetLife MetLife, Inc., the publicly traded parent company of the MetLife group.
MPCL M. Pallonji & Company Private Limited
MPEL M. Pallonji Enterprises Private Limited
MIHL MetLife International Holdings, LLC
MoA/Memorandum
of Association
The memorandum of association of our Company, as amended
Nomination and
Remuneration Committee
The nomination and remuneration committee of our Board comprising our Directors, Mr.
Neeraj Swaroop, Mr. Abhaya Prasad Hota, Mr. Sunil Gulati, Dr. Archana Niranjan Hingorani,
Mr. Lyndon Emanuel Oliver, Mr. Sunil Mehta, Mr. Surbhit Dabriwala and Mr. Pheroze
Kersasp Mistry
Non Promoter Selling
Shareholders
MPCL, EIL, IGE, JKB and Manimaya
Promoter Selling
Shareholders
PNB and MIHL
PNB Punjab National Bank
PNB Trademark Agreement Name and trademark license agreement dated December 4, 2012 between PNB and our
Company
Promoters The promoters of our Company, namely PNB and MIHL
Promoter Group Persons and entities constituting the promoter group of our Company, pursuant to Regulation
2(1)(zb) of the SEBI ICDR Regulations. For details, see “Promoters and Promoter Group”
on page 233
Registered Office The registered office of our Company, situated at Unit No. 701, 702 & 703, Raheja Towers,
West Wing, Municipal No. 26/27, M G Road, Bengaluru 560 001, Karnataka, India
Restated Financial
Statements
Restated statement of financial information as at March 31, 2014, 2015, 2016, 2017 and
2018 of our Company read along with all the schedules and notes thereto which have been
prepared in accordance with the requirements of the Companies Act, 2013 and Indian
GAAP and the IRDAI Preparation of Financial Statements Regulations, the Insurance Act,
the IRDAI Act, the IRDAI Issuance of Capital Regulations and restated in accordance with
the SEBI ICDR Regulations, and included in “Financial Statements” on page 245
Selling Shareholders Together, the Promoter Selling Shareholders and the Non Promoter Selling Shareholders
Stakeholders’ Relationship
Committee
The stakeholders’ relationship committee of our Board comprising our Directors, Ms. Sonu
Bhasin, Ms. Anisha Motwani and Mr. Ashish Kumar Srivastava
With Profits Committee The With Profits committee of our Board comprising our Directors, Mr. Nitin Chopra, Mr.
Joginder Pal Dua and Mr. Ashish Kumar Srivastava, and Mr. P. K. Dinakar, Appointed
Actuary and Ms. Padmaja R., an independent actuary appointed in accordance with the IRDAI
Corporate Governance Guidelines.
Offer Related Terms
Term Description
Acknowledgment Slip The slip or document issued by the Designated Intermediary(ies) to an Investor as proof of
registration of the Bid cum Application Form
Allotted/Allotment/Allot Unless the context otherwise requires, the transfer of the Equity Shares to successful Investors
pursuant to the Offer
Allottee A successful Investor to whom the Equity Shares are Allotted
Allotment Advice The note or advice or intimation of Allotment, sent to each successful Investor who has been
or is to be Allotted the Equity Shares after approval of the Basis of Allotment by the Designated
Stock Exchange
Anchor Escrow Account Account opened with Escrow Collection Bank for the Offer and in whose favour the Anchor
Investors will transfer money through direct credit or NEFT or RTGS in respect of the Bid
Amount when submitting a Bid
Anchor Investor A QIB, which applies under the Anchor Investor Portion in accordance with the requirements
specified in the SEBI ICDR Regulations and the Red Herring Prospectus
Anchor Investor Allocation
Price
The price at which the Equity Shares will be allocated to Anchor Investors in terms of the
Red Herring Prospectus and the Prospectus. The Anchor Investor Allocation Price will be
decided by our IPO Committee, in consultation with the Book Running Lead Managers
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Term Description
Anchor Investor Application
Form
An application form, whether physical or electronic, used by Anchor Investors, which will
be considered as the application for Allotment in terms of the Red Herring Prospectus and
the Prospectus
Anchor Investor Bidding
Date
The date one Working Day prior to the Bid/Offer Opening Date on which Bids by Anchor
Investors shall be submitted and allocation to the Anchor Investors shall be completed
Anchor Investor Offer Price The final price at which the Equity Shares will be Allotted to Anchor Investors in terms of
the Red Herring Prospectus and the Prospectus, which will be a price equal to or higher than
the Offer Price but not higher than the Cap Price. The Anchor Investor Offer Price will be
decided by our IPO Committee, in consultation with the Book Running Lead Managers
Anchor Investor Pay-in Date With respect to Anchor Investor(s), it shall be the Anchor Investor Bidding Date, and in the
event the Anchor Investor Allocation Price is lower than the Offer Price, not later than two
Working Days after the Bid/ Offer Closing Date
Anchor Investor Portion Up to 60% of the QIB Category, which may be allocated by our IPO Committee, in
consultation with the Book Running Lead Managers, to Anchor Investors, on a discretionary
basis, in accordance with SEBI ICDR Regulations. One-third of the Anchor Investor Portion
shall be reserved for domestic Mutual Funds, subject to valid Bids being received from
domestic Mutual Funds at or above the price at which allocation is made to Anchor Investors
Application Supported by
Blocked Amount/ ASBA
The application (whether physical or electronic) by an ASBA Investor to make a Bid
authorizing the relevant SCSB to block the Bid Amount in the relevant ASBA Account
ASBA Account A bank account maintained with an SCSB and specified in the Bid cum Application Form
which will be blocked by such SCSB to the extent of the appropriate Bid Amount in relation
to a Bid by an ASBA Investor
ASBA Investor All Investors other than Anchor Investors
ASBA Form An application form, whether physical or electronic, used by Investors bidding through the
ASBA process, which will be considered as the application for Allotment in terms of the Red
Herring Prospectus and the Prospectus
BAML DSP Merrill Lynch Limited
Basis of Allotment The basis on which the Equity Shares will be Allotted to successful Investors under the Offer,
as described in “Offer Procedure” on page 430
Bankers to our Company Punjab National Bank, Citibank N.A. and HDFC Bank Limited
Bid An indication to make an offer during the Bid/Offer Period by a Investor (other than an Anchor
Investor), or on the Anchor Investor Bidding Date by an Anchor Investor, pursuant to
submission of a Bid cum Application Form, to purchase our Equity Shares at a price within the
Price Band, including all revisions and modifications thereto, to the extent permissible under
the SEBI ICDR Regulations, in terms of the Red Herring Prospectus and the Bid cum
Application Form
Bid Amount The highest value of the optional Bids as indicated in the ASBA Form and payable by the
Investor or as blocked in the ASBA Account of the Investor, as the case may be, upon
submission of the Bid in the Offer
Bid cum Application Form The form in terms of which the Investor shall make a Bid, including ASBA Form, and which
shall be considered as the application for the Allotment pursuant to the terms of the Red Herring
Prospectus and the Prospectus
Bid Lot [●] Equity Shares
Investor Any prospective investor who makes a Bid pursuant to the terms of the Red Herring Prospectus
and the Bid cum Application Form and unless otherwise stated or implied, includes an Anchor
Investor
Bid/Offer Closing Date Except in relation to Anchor Investors, the date after which the Designated Intermediaries shall
not accept any Bids for the Offer, which shall be published in [●] editions of [●] (a widely
circulated English national daily newspaper), [●] editions of [●] (a widely circulated Hindi
national daily newspaper) and [●] editions of [●] (a widely circulated Kannada regional daily
newspaper, Kannada being the regional language in the place where our Registered Office is
located). Our IPO Committee, in consultation with the Book Running Lead Managers, may
decide to close the Bid/ Offer Period for QIBs one Working Day prior to the Bid/Offer Closing
Date, subject to the SEBI ICDR Regulations
Bid/Offer Opening Date Except in relation to Anchor Investors, the date on which the Designated Intermediaries shall
start accepting Bids for the Offer, which shall be published in [●] editions of [●] (a widely
circulated English national daily newspaper), [●] editions of [●] (a widely circulated Hindi
national daily newspaper) and [●] editions of [●] (a widely circulated Kannada regional daily
newspaper, Kannada being the regional language in the place where our Registered Office is
located)
Bid/Offer Period Except in relation to Anchor Investors, the period between the Bid/Offer Opening Date and the
Bid/Offer Closing Date, inclusive of both days during which prospective Investors (excluding
Anchor Investors) can submit their Bids, including any revisions thereof in accordance with the
SEBI ICDR Regulations and the terms of the Red Herring Prospectus
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Term Description
Bidding Centres Centres at which the Designated Intermediaries shall accept the Bid cum Application Forms,
being the Designated SCSB Branch for SCSBs, Specified Locations for the Syndicate, Broker
Centres for Registered Brokers, Designated RTA Locations for CRTAs and Designated CDP
Locations for CDPs.
Book Building Process The book building process as described in Part A of Schedule XI of the SEBI ICDR
Regulations, in terms of which the Offer is being made
BRLMs/Book Running Lead
Managers
The Book Running Lead Managers to the Offer, being Kotak Mahindra Capital Company
Limited, DSP Merrill Lynch Limited, Citigroup Global Markets India Private Limited and PNB
Investment Services Limited. PNB Investment Services Limited will only be involved in
marketing of the Offer.
Broker Centres Broker centres of the Registered Brokers, where Investors (other than Anchor Investors) can
submit the Bid cum Application Forms. The details of such 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
CAN / Confirmation of
Allocation Note
Notice or intimation of allocation of the Equity Shares sent to Anchor Investors, who have been
allocated the Equity Shares, after the Anchor Investor Bidding Date
Cap Price The higher end of the Price Band above which the Offer Price and Anchor Investor Offer Price
will not be finalized and above which no Bids will be accepted, including any revisions thereof
Client ID Client identification number of the Investor’s beneficiary account
Citi Citigroup Global Markets India Private Limited
Collecting Depository
Participants/CDPs
A depository participant, as defined under the Depositories Act, 1996 and registered under
Section 12 (1A) of the SEBI Act and who is eligible to procure Bids at the Designated CDP
Locations in terms of circular no. CIR/CFD/POLICYCELL/11/2015 dated November 10, 2015
issued by SEBI
Collecting Registrar and
Share Transfer Agents or
CRTAs
Registrar and share transfer agents registered with SEBI and eligible to procure Bids at the
Designated RTA Locations in terms of circular no. CIR/CFD/POLICYCELL/11/2015 dated
November 10, 2015 issued by SEBI
Cut-off Price The Offer Price, finalized by our IPO Committee, in consultation with the Book Running Lead
Managers, which shall be any price within the Price Band. Only Retail Individual Investors are
entitled to Bid at the Cut-off Price. QIBs (including Anchor Investors) and Non-Institutional
Investors are not entitled to Bid at the Cut-off Price
Demographic Details The details of the Investors including the Investors’ address, names of the Investors’
father/husband, investor status, occupation, PAN and bank account details
Designated Branches Such branches of the SCSBs which shall collect the ASBA Forms, a list of which is available
on the website of SEBI at
http://www.sebi.gov.in/sebiweb/other/OtherAction.do?doRecognised=yes or at such other
website as may be prescribed by SEBI from time to time.
Designated CDP Locations Such centres of the Collecting Depository Participants where Investors (except Anchor
Investors) can submit the Bid cum Application Forms. The details of such Designated CDP
Locations, along with the names and contact details of the CDPs are available on the respective
websites of the Stock Exchanges and updated from time to time (www.bseindia.com and
www.nseindia.com)
Designated Date The date on which the funds from the Anchor Escrow Account are transferred to the Public
Offer Account or the Refund Account(s), as appropriate, and the amounts blocked by the
SCSBs are transferred from the ASBA Accounts, to the Public Offer Account or Refund
Account, as applicable, in terms of the Red Herring Prospectus, after the Prospectus is filed
with the RoC
Designated Intermediaries Collectively, the members of the Syndicate, sub-syndicate/agents, SCSBs, Registered
Brokers, CDPs and CRTAs, who are authorized to collect Bid cum Application Forms from
the Investors (other than Anchor Investors), in relation to the Offer
Designated RTA Locations Such centres of the CRTAs where Investors (except Anchor Investors) can submit the Bid cum
Application Forms. The details of such Designated CRTA Locations, along with the names and
contact details of the CRTAs are available on the respective websites of the Stock Exchanges
(www.bseindia.com and www.nseindia.com) and updated from time to time
Designated Stock Exchange [●]
Draft Red Herring
Prospectus/DRHP
This draft red herring prospectus dated [●], issued in accordance with the SEBI ICDR
Regulations, which does not contain complete particulars of the price at which our Equity
Shares will be Allotted and the size of the Offer, including any addenda or corrigenda thereto
Eligible FPI FPIs from such jurisdictions outside India where it is not unlawful to make an offer or invitation
under the Offer and in relation to whom the Bid cum Application Form and the Red Herring
Prospectus will constitute an invitation to subscribe to or purchase the Equity Shares
Eligible NRI A non-resident Indian, resident in a jurisdiction outside India where it is not unlawful to make
an offer or invitation under the Offer and in relation to whom the Red Herring Prospectus
constitutes an invitation to subscribe for the Equity Shares
http://www.nseindia.com/http://www.nseindia.com/
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Term Description
Escrow Agreement Agreement dated [●], entered into by and among our Company, the Selling Shareholders, the
Registrar to the Offer, the Book Running Lead Managers, the Escrow Collection Bank, Public
Offer Account Bank(s) and Refund Bank for collection of the Bid Amounts from Anchor
Investors and where applicable remitting refunds, if any, on the terms and conditions thereof
Escrow Collection Bank(s) The bank(s) which is/are clearing members and are registered with the SEBI as a banker to
an offer under the SEBI BTI Regulations, with whom the Anchor Escrow Accounts in
relation to the Offer for Bids by Anchor Investors will be opened, in this case being [●]
First Investor The Investor whose name appears first in the Bid cum Application Form or the Revision
Form and in case of joint Investors, whose name appears as the first holder of the beneficiary
account held in joint names
Floor Price The lower end of the Price Band, and any revisions thereof, at or above which the Offer Price
and the Anchor Investor Offer Price will be finalized and below which no Bids will be accepted
and which shall not be less than the face value of the Equity Shares
General Information
Document/GID
The General Information Document for investing in public issues prepared and issued in
accordance with the circular (CIR/CFD/DIL/12/2013) dated October 23, 2013, notified by
SEBI and updated pursuant to the circular (CIR/CFD/POLICYCELL/11/2015) dated
November 10, 2015 and (SEBI/HO/CFD/DIL/CIR/P/2016/26) dated January 21, 2016 and
(SEBI/HO/CFD/DIL2/CIR/P/2018/22) dated February 15, 2018 notified by SEBI and
included in “Offer Procedure” on page 430
Kotak Kotak Mahindra Capital Company Limited
Maximum RII Allottees The maximum number of RIIs who can be allotted the minimum Bid Lot. This is computed
by dividing the total number of Equity Shares available for Allotment to RIIs by the
minimum Bid Lot
Mutual Fund Portion 5% of the QIB Category (excluding the Anchor Investor Portion) or 4,958,981 Equity Shares
which shall be available for allocation to Mutual Funds only, on a proportionate basis, subject
to valid Bids being received at or above the Offer Price
Non-Institutional Category The portion of the Offer, being not less than 15% of the Offer or 74,384,712 Equity Shares,
available for allocation on a proportionate basis to Non-Institutional Investors subject to valid
Bids being received at or above the Offer Price
Non-Institutional
Investors/NIIs
All Investors, including Category III FPIs that are not QIBs (including Anchor Investors) or
Retail Individual Investors, who have Bid for Equity Shares for an amount of more than ₹
200,000 (but not including NRIs other than Eligible NRIs)
Offer Initial public offering of up to 495,898,076 Equity Shares of face value ₹ 10 each of the
Company for cash at a price of ₹ [●] each, through an offer for sale by the Selling Shareholders
Offer Agreement The agreement dated July 26, 2018 entered into by and among our Company, the Selling
Shareholders and the Book Running Lead Managers, pursuant to which certain arrangements
are agreed to in relation to the Offer
Offer for Sale Offer of up to 495,898,076 Equity Shares aggregating to ₹ [●] million to be offered for
sale/transfer by the Selling Shareholders pursuant to the Offer in terms of the Red Herring
Prospectus and the Prospectus
Offer Price The final price at which Equity Shares will be Allotted to the successful ASBA Bidders, as
determined in accordance with the Book Building Process and determined by our IPO
Committee, in consultation with the Book Running Lead Managers in terms of the Red Herring
Prospectus on the Pricing Date
Offered Shares Collectively, the Equity Shares offered by each Selling Shareholder
PNB Investment PNB Investment Services Limited
Price Band Price band of the Floor Price of ₹ [●] and a Cap Price of ₹ [●], including any revisions thereof.
The Price Band and the minimum Bid Lot size for the Offer will be decided by our IPO
Committee, in consultation with the Book Running Lead Managers, and advertised in [●]
editions of [●] (a widely circulated English national daily newspaper), [●] editions of [●] (a
widely circulated Hindi national daily newspaper) and [●] editions of [●] (a widely circulated
Kannada regional daily newspaper, Kannada being the regional language in the place where
our Registered Office is located) at least five Working Days prior to the Bid/Offer Opening
Date
Pricing Date The date on which our IPO Committee, in consultation with the Book Running Lead Managers,
shall finalize the Offer Price
Prospectus The Prospectus to be filed with the RoC for this Offer on or after the Pricing Date in accordance
with the provisions of Section 26 of the Companies Act, 2013 and the SEBI ICDR Regulations,
containing the Offer Price, the size of the Offer and certain other information, including any
addenda or corrigenda thereto
Public Offer Account The account(s) to be opened with the Escrow Collection Bank(s) under Section 40(3) of the
Companies Act, 2013 to receive monies from the Escrow Account(s) and the ASBA Accounts
on the Designated Date
QIB Category The portion of the Offer, being not more than 50% of the Offer or 247,949,037 Equity Shares
to be Allotted to QIBs on a proportionate basis, including the Anchor Investor Portion (in which
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7
Term Description
allocation shall be on a discretionary basis, as determined by our IPO Committee, in
consultation with the Book Running Lead Managers), subject to valid Bids being received at
or above the Offer Price
Qualified Institutional Buyers
or QIBs
A qualified institutional buyer as defined under Regulation 2(1)(zd) of the SEBI ICDR
Regulations
Red Herring Prospectus or
RHP
The red herring prospectus to be issued in accordance with Section 32 of the Companies Act,
2013 and the SEBI ICDR Regulations, which will not have complete particulars of the price
at which the Equity Shares shall be Allotted and which shall be registered with the RoC at
least three Working Days before the Bid/Offer Opening Date and will become the Prospectus
after filing with the RoC after the Pricing Date, including any addenda or corrigenda thereto
Refund Account(s) Account(s) opened with the Refund Bank from which refunds, if any, of the whole or part of
the Bid Amount shall be made to Anchor Investors
Refund Bank(s) The banks which are clearing members and registered with SEBI under the SEBI BTI
Regulations and with whom the Refund Account(s) have will be opened, in this case being
[●]
Registered Brokers Stock brokers registered with the stock exchanges having nationwide terminals, other than the
members of the Syndicate and eligible to procure Bids in terms of circular number
CIR/CFD/14/2012 dated October 14, 2012, issued by SEBI
Registrar Agreement The agreement dated July 26, 2018, entered into by and among our Company, the Selling
Shareholders and the Registrar to the Offer in relation to the responsibilities and obligations of
the Registrar to the Offer pertaining to the Offer
RoC or Registrar of
Companies
The Registrar of Companies, Karnataka at Bengaluru
Registrar to the Offer Link Intime India Private Limited
Resident Indian A person resident in India, as defined under FEMA
Retail Category The portion of the Offer, being not less than 35% of the Offer or 173,564,327 Equity Shares,
available for allocation to Retail Individual Investors, which shall not be less than the minimum
Bid lot, subject to availability in the Retail Category
Retail Individual Investors/
RIIs
Investors (including HUFs and Eligible NRIs) whose Bid Amount for Equity Shares in the
Offer is not more than ₹ 200,000 in any of the bidding options in the Offer (including HUFs
applying through their karta and Eligible NRIs and does not include NRIs other than Eligible
NRIs)
Revision Form The form used by the Investors to modify the quantity of Equity Shares or the Bid Amount in
any of their Bid cum Application Forms or any previous Revision Form(s), as applicable. QIBs
bidding in the QIB category and Non-Institutional Investors bidding in the Non-Institutional
category are not permitted to withdraw their Bid(s) or lower the size of their Bid(s) (in terms of
quantity of Equity Shares or the Bid Amount) at any stage
Self-Certified Syndicate
Banks or SCSBs
The banks registered with the SEBI which offer the facility of ASBA and the list of which is
available on the website of the SEBI and updated from time to time and at such other websites
as may be prescribed by SEBI from time to time
Share Escrow Agent The escrow agent appointed pursuant to the Share Escrow Agreement, namely [●].
Share Escrow Agreement The agreement dated [●] to be entered into between our Company, the Selling Shareholders
and a share escrow agent in connection with the transfer of the respective portion of Offered
Shares by each Selling Shareholders and credit of such Equity Shares to the demat account
of the Allottees
Specified Locations Bidding centres where the Syndicate shall accept Bid cum Application Forms, a list of which
is included in the Bid cum Application Form
Stock Exchanges Together, BSE Limited and National Stock Exchange of India Limited
Syndicate Agreement The agreement dated [●] to be entered into amongst the members of the Syndicate, our
Company, the Selling Shareholders and the Registrar to the Offer in relation to the collection
of Bid cum Application Forms by the Syndicate
Syndicate Members Intermediaries registered with the SEBI and permitted to carry out activities as an underwriter,
in this case being [●]
Syndicate or members of the
Syndicate
Collectively, the Book Running Lead Managers and the Syndicate Members
Underwriters [●]
Underwriting Agreement The agreement to be entered into by and among our Company, the Selling Shareholders and
the Underwriters, to be entered into on or after the Pricing Date
Wilful Defaulter A company or person categorised as a wilful defaulter by any bank or financial institution or
consortium thereof, in accordance with the guidelines on wilful defaulters issued by the
Reserve Bank of India and includes an issuer whose director or promoter is categorized as
such
Working Day(s) Any day, other than the second and fourth Saturdays of each calendar month, Sundays and
public holidays, on which commercial banks in Mumbai, India are open for business,
provided however, with reference to (a) announcement of Price Band; and (b) Bid/Offer
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Term Description
Period, “Working Day” shall mean any day, excluding all Saturdays, Sundays and public
holidays, on which commercial 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 the Stock Exchanges,
excluding Sundays and bank holidays, as per the SEBI Circular
SEBI/HO/CFD/DIL/CIR/P/2016/26 dated January 21, 2016
Conventional and General Terms and Abbreviations
Term Description
AGM Annual general meeting of the Company
AIF(s) Alternative Investment Funds
AIF Regulations SEBI (Alternative Investment Funds) Regulations, 2012, as amended
AS Accounting Standards issued by the Institute of Chartered Accountants of India
AS 18 Accounting Standard 18 issued by the Institute of Chartered Accountants of India
AY/Assessment Year Assessment Year
BSE BSE Limited
CAGR Compounded Annual Growth Rate, being the annualised average year-over-year growth rate
over a specified period of time calculated as per the following formula -
(End Value/Beginning Value)^(1/number of years) – 1
Category I FPIs FPIs registered as category I FPIs under the SEBI FPI Regulations, which shall include
Government and Government related investors such as central banks, Governmental agencies,
sovereign wealth funds and international or multilateral organizations or agencies
Category II FPIs FPIs registered as category II FPIs under the SEBI FPI Regulations, which shall include
appropriately regulated broad based funds such as mutual funds, investment trusts,
insurance/reinsurance companies, appropriately regulated persons such as banks, asset
management companies, investment managers/ advisors, portfolio managers, broad based
funds that are not appropriately regulated but whose investment manager is appropriately
regulated: Provided that the investment manager of such broad based fund is itself registered as
Category II foreign portfolio investor, university funds and pension funds and university related
endowments already registered
Category III FPIs FPIs registered as category III FPIs under the SEBI FPI Regulations, which shall include all
other FPIs not eligible under category I and II foreign portfolio investors, such as endowments,
charitable societies, charitable trusts, foundations, corporate bodies, trusts, individuals and
family offices
CDSL Central Depository Services (India) Limited
CFO Chief Financial Officer
CIN Corporate Identity Number
CLRA The Contract Labour (Regulation and Abolition) Act, 1970
Companies Act Companies Act, 1956, to the extent not repealed, and/or the Companies Act, 2013
Companies Act, 2013 The Companies Act, 2013, to the extent in force pursuant to the notification of the Notified
Sections, read with the rules, regulations, clarifications and modifications thereunder
Consolidated FDI Policy The consolidated FDI Policy, effective from August 28, 2017, issued by the Department of
Industrial Policy and Promotion, Ministry of Commerce and Industry, Government of India,
and any modifications thereto or substitutions thereof, issued from time to time
Depository A depository registered with the SEBI under the Securities and Exchange Board of India
(Depositories and Participants) Regulations, 1996
Depositories Act The Depositories Act, 1996
DIN Director Identification Number
DIPP Department of Industrial Policy and Promotion, Ministry of Commerce and Industry, GoI
DP ID Depository Participant’s identity number
EBITDA Earnings Before Interest, Tax, Depreciation and Amortization
EGM Extra-ordinary General Meeting
EPF Act The Employees’ Provident Fund and Miscellaneous Provisions Act, 1952
EPS Earnings per share
ESI Act The Employees’ State Insurance Act, 1948
Euro Euro, the official single currency of the participating member states of the European
Economic and Monetary Union of the Treaty establishing the European Community
FCNR Account Foreign Currency Non Resident (Bank) account established in accordance with the FEMA
FDI Foreign direct investment
FEMA The Foreign Exchange Management Act, 1999 read with rules and regulations thereunder
FII(s) Foreign Institutional Investors as defined under Securities and Exchange Board of India
(Foreign Institutional Investors) Regulations, 2000, registered with the SEBI under
applicable laws in India and deemed as FPIs under the SEBI FPI Regulations
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9
Term Description
Financial Year/Fiscal/FY The period of 12 months commencing on April 1 of the immediately preceding calendar year
and ending on March 31 of that particular calendar year
FPI(s) Foreign portfolio investors as defined under the SEBI FPI Regulations and includes a person
who has been registered under the SEBI FPI Regulations
FVCI Foreign Venture Capital Investors (as defined under the Securities and Exchange Board of
India (Foreign Venture Capital Investors) Regulations, 2000) registered with SEBI
GAAR General Anti-Avoidance Rules
GDP Gross Domestic Product
GoI The Government of India
GST Goods and services tax
HUF(s) Hindu Undivided Family(ies)
IAS Rules The Companies (Indian Accounting Standards) Rules, 2015
ICAI Institute of Chartered Accountants of India
IFRS International Financial Reporting Standards
IFSC Indian Financial System Code
Income Tax Act / IT Act The Income Tax Act, 1961
IND (AS) / IND AS / Ind AS The Indian Accounting Standards referred to in the Companies (Indian Accounting Standard)
Rules, 2015, as amended
Indian GAAP Generally Accepted Accounting Principles in India
INR or Rupee or ₹ or Rs. Indian Rupee, the official currency of the Republic of India
IRDAI Insurance Regulatory and Development Authority of India
IRDAI Act The Insurance Regulatory and Development Authority of India Act, 1999
IRDAI Investment
Regulations
The Insurance Regulatory and Development Authority (Investment) Regulations, 2016
IRDAI Issuance of Capital
Regulations
The Insurance Regulatory and Development Authority of India (Issuance of Capital by
Indian Insurance Companies transacting Life Insurance Business) Regulations, 2015
IRDAI CG Guidelines The Guidelines on Corporate Governance for insurance companies issued by the IRDAI by
way of circular no. IRDA/F&A/GDL/CG/100/05/2016 dated May 18, 2016
IRDAI Preparation of
Financial Statements
Regulations
The Insurance Regulatory and Development Authority (Preparation of Financial Statements
and Auditor’s Report of Insurance Companies) Regulations, 2000
IRDAI Registration of
Corporate Agents Regulations
The Insurance Regulatory and Development Authority of India (Registration of Corporate
Agents) Regulations, 2015
IRDAI Transfer of Equity
Shares Regulation
The Insurance Regulatory and Development Authority of India (Transfer of Equity Shares
of Insurance Companies) Regulations, 2015
IT Information Technology
MCA The Ministry of Corporate Affairs, GoI
Mn Million
Mutual Funds Mutual funds registered with the SEBI under the Securities and Exchange Board of India
(Mutual Funds) Regulations, 1996
Notified Sections The sections of the Companies Act, 2013 that have been notified by the MCA and are currently
in effect
NR/ Non-resident A person resident outside India, as defined under the FEMA and includes an NRI
NRI Non-Resident Indian
NSDL National Securities Depository Limited
NSE National Stock Exchange of India Limited
P/E Ratio Price/Earnings Ratio
PAN Permanent account number
PAT Profit after tax
Payment of Bonus Act The Payment of Bonus Act, 1965
Payment of Gratuity Act The Payment of Gratuity Act, 1972
RBI The Reserve Bank of India
Regulation S Regulation S under the U.S. Securities Act
Resident A person resident in India, as defined under the FEMA
Rule 144A Rule 144A under the U.S. Securities Act
SCRA The Securities Contract (Regulation) Act, 1956
SCRR The Securities Contracts (Regulation) Rules, 1957
SEBI The Securities and Exchange Board of India constituted under the SEBI Act
SEBI Act The Securities and Exchange Board of India Act, 1992
SEBI BTI Regulations The Securities and Exchange Board of India (Bankers to an Issue) Regulations, 1994
SEBI ICDR Regulations The Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements)
Regulations, 2009
SEBI FPI Regulations The Securities and Exchange Board of India (Foreign Portfolio Investors) Regulations, 2014
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10
Term Description
SEBI FVCI Regulations The Securities and Exchange Board of India (Foreign Venture Capital Investors)
Regulations, 2000
SEBI Listing Regulations The Securities and Exchange Board of India (Listing Obligations and Disclosure
Requirements) Regulations, 2015
STT Securities Transaction Tax
SEBI Takeover Regulations The Securities and Exchange Board of India (Substantial Acquisition of Shares and
Takeovers) Regulations, 2011
Trademarks Act Trademarks Act, 1999
UNCITRAL United Nations Commission on International Trade Law
US$/ USD/ US Dollar United States Dollar, the official currency of the United States of America
USA/ U.S./ US United States of America, its territories and possessions, any state of the United States of
America
U.S. GAAP Generally Accepted Accounting Principles in the United States of America
U.S. Securities Act U.S. Securities Act of 1933, as amended
VAT Value Added Tax
VCFs Venture capital funds as defined in and registered with the SEBI under the Securities and
Exchange Board of India (Venture Capital Fund) Regulations, 1996 or the Securities and
Exchange Board of India (Alternative Investment Funds) Regulations, 2012, as the case may
be
Industry Specific Terms
Term Description
Acquisition cost Costs that are primarily related to the acquisition of insurance contracts
Annuity and immediate
annuity
Annuities provide for a series of payments to be made at regular intervals in return for a
certain sum paid up front. An immediate annuity is a contract to pay out regular amounts of
benefit wherein the contract commences payments, immediately after the contract is
concluded
Assets Under Management /
AUM
AUM refers to the carrying value of investments managed by the Company and includes net
current assets pertaining to unit linked investments
Bancassurance An arrangement entered into by a bank (corporate agent registered by IRDAI) and an
insurance company, through which the bank sells or markets the insurance companies
products to its customer base.
Bonus The non-guaranteed benefits which are expected to be added to the participating life
insurance policies and are the way in which policyholders receive their share of the profits
of the policies. Bonus includes terminal and reversionary bonus
Certified Insurance
Facilitators /
CIFs
Employees of bancassurance partners providing insurance advice and distributing insurance
products to banks customers, referred as ‘Specified Persons’ by IRDAI
CIBT93 Critical Illness Basic Table 1993 issued by the Actuarial Society of India (now known as
Institute of Actuaries of India) with respect to incidence rates and morbidity assumptions.
CIBT93 shall constitute ‘Published Tables’ within the meaning of Regulation 4 of IRDAI
(Asset, Liabilities and Solvency Margin of Life Insurance Business) Regulations, 2016
Common service centres Front-end delivery points for government, private and social sector services to citizens of
India, an initiative of the Government of India
Death Claims Settlement
Ratio
Ratio of death claims settled to death claims reported to the Company and outstanding at the
beginning of the year
Death claims or mortality
claims
Amount of benefit which is payable on death as specified in the policy document. This is
stated at the inception of the contract
Embedded Value The measure of the consolidated value of shareholders’ interest in the covered life insurance
business, which is all life insurance business written by the Company since inception and in-
force as on the valuation date (including lapsed business which has the potential of getting
revived). The Embedded Value of the Company has been determined on the basis of the
Indian Embedded Value Methodology
Embedded Value Operating
Profit (EVOP) and Operating
Return on Embedded Value
Embedded value operating profit is a measure of the increase in the Embedded Value during
a specified period due to matters that can be influenced by management. It excludes changes
in the Embedded Value due to external factors like changes in economic variables and
shareholder-related actions like capital injection or dividend pay-outs. Operating Return on
embedded value is the ratio of EVOP for a specified period to the Embedded Value at the
beginning of that period
Embedded Value Report The embedded value report dated July 4, 2018 prepared by the Independent Actuary in
accordance with Actuarial Practice Standard 10 issued by the Institute of Actuaries of India
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Term Description
Facultative An arrangement under which the insurer is free to place the reinsurance with any reinsurer or
reject the reinsurance offered. Similarly, the reinsurer may accept or reject the reinsurance
offered
Fair Value Change Unrealised gains/ losses arising due to changes in the fair value of investment assets including
listed equity shares, mutual funds, debt securities and derivative instruments
First year Premium Insurance premium that is due in the first policy year of a life insurance contract from the
policyholder
Grievance Disposal Rate Average number of days taken to resolve the grievances for a period
Grievance Ratio Number of grievances reported to the Company divided by number of policies issued by the
Company in the same period (per 10,000)
Gross Written Premium The total premium written by the Company before deductions for reinsurance ceded
Independent Actuary Mr. Vivek Jalan, Managing Partner, Willis Towers Watson Actuarial Advisory LLP, in
accordance with the IRDAI Issuance of Capital Regulations.
Indian Assured Lives
Mortality 2006 – 2008 table
Mortality Table as published by the Institute of Actuaries of India, effective from April 1, 2013,
within the meaning of Regulation 4 of IRDAI (Asset, Liabilities and Solvency Margin of Life
Insurance Business) Regulations, 2016
Individual living benefit
claims
Amount of benefit which is payable on survival as specified in the policy document for
individual policies. This is stated at the inception of the contract
Individual New Business
Premium
Insurance premium that is due in the first policy year and/or single premium payment from
the policyholders of an individual life insurance Contract
Insurance density Premium per capita
Insurance underwriting The process by which an insurance company determines whether or not and on what basis it
will accept an application for insurance
Insurance Marketing Firm Entity registered by IRDAI to solicit or procure insurance products as specified under
applicable regulations to undertake insurance service activities, and to distribute other
financial products by employing individuals licensed to market, distribute and service such
other financial products
Life insurance penetration Insurance premium as % of gross domestic product or GDP
Investment yield A measure of the income earned from an investment compared to the price paid for the
investment. Normally expressed as a percentage
LIC(a) 1996-98 table for
annuities
Mortality Table for annuitants as published by the Institute of Actuaries of India, within the
meaning of Regulation 4 of IRDAI (Asset, Liabilities and Solvency Margin of Life Insurance
Business) Regulations, 2016
Mathematical reserves The provision made by an insurer to cover liabilities arising under or in connection with
policies or contracts for life insurance business. Mathematical reserves also include specific
provision for adverse deviations of the bases, such as mortality and morbidity rates, interest
rates, and expense rates, and any explicit provisions made, in the valuation of liabilities, in
accordance with the regulations made by IRDAI for this purpose
Micro-agents Entities or individuals appointed as micro insurance agents as per the applicable regulations
for distribution of micro-insurance products
Mis-selling Ratio Number of grievances with respect to unfair business practice that are reported to the
Company divided by policies issued by the Company in the same period represented as a
percentage
Morbidity rate The frequency at which a disease appears in a population. Morbidity rates help insurers
predict the likelihood that an insured will contract or develop any number of specified
diseases
Mortality rate A measure of the number of deaths, varying by such parameters as age, gender and health,
used in pricing and computing liabilities for future policyholders of life and annuity products,
which contain mortality risks
Net Asset value / NAV NAV in the context of equity shares is computed as the closing net worth of a company,
divided by the closing outstanding number of fully paid up equity share. In the context of the
unit-linked business of our Company and the investments made in mutual funds by our
Company, it represents the value of one unit held by the policyholder/ us and is computed as
total assets of the fund/ scheme divided by number of units outstanding
Net New Cash Net Premium minus net benefits
Net Premium The total premium written by the Company after deductions for reinsurance ceded
Net worth Net worth represents the shareholders’ funds and is computed as sum of share capital including
share application money pending allotment, reserves and surplus including share premium,
and credit/(debit) fair value change account in shareholders’ account net of debit balance in
profit and loss account
New Business Annualized
Premium Equivalent
Annualised premium equivalent (APE) is 100% of annualised regular premium for new
business plus 10.00% of single premiums, written by the Company during the period under
consideration
New Business Premium /
NBP
Insurance premium that is due in the first policy year of a life insurance contract or a single
lump sum payment from the policyholder
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12
Term Description
Non-Participating or Non-Par
Product
Policies without participation in profits, means policies which are not entitled to any share
in surplus (profits) during the term of the policy. Examples include pure risk policies such as
fixed annuities, term insurance, critical illness, etc.
Operating Expense Ratio Operating expenses related to insurance business (excluding commission) divided by Gross
Written Premium (total premium)
Participating or Par Product A life insurance policy where the policyholder is entitled to at least a 90.00% share of the
surplus emerging in the participating fund
Persistency Ratio The ratio of life insurance policies remaining in force to all policies issued in a fixed period.
Persistency can be measured in terms of number of policies or in terms of premium
Policy lapse A life insurance contract lapses if the policyholder does not pay premium within the grace
period as prescribed under the IRDAI (Non-Linked Insurance Products and Linked Insurance
Product) Regulations, 2013, as applicable
Premium The consideration which the policyholder has to pay in order to avail the benefits offered
by an insurance policy
Private life insurers All Indian life insurance companies other than the Life Insurance Corporation of India
Protection gap Protection gap is the difference between the insurance that is economically beneficial and
amount of insurance actually purchased
Reinsurance An insurance contract between one insurance company (cedant) and another insurance
company (reinsurer) to indemnify against losses on one or more contracts issued by the cedant
in exchange for a consideration (the premium). The intent of reinsurance is for an insurance
company to reduce the risks associated with underwritten policies by spreading risks across
alternative institutions
Renewal Premium Life insurance premiums falling due in the years subsequent to the first year of the
Policy
Reversionary bonus Reversionary bonuses are regular bonuses declared annually and accrue at the policy
anniversary during the ensuing financial year. Once declared, these accrued bonuses are
guaranteed. The bonuses can be:
Compound Reversionary Bonuses – These are regular bonuses declared as a percentage of base Sum Assured plus already declared past bonus amounts;
Simple Reversionary Bonuses - These are regular bonuses declared as a percentage of base Sum Assured only.
Rider The add-on benefits which are in addition to the benefits under a basic policy
Single Premium Single lump sum premium received from the policyholder
Solvency Ratio, Required
Solvency Margin and
Available Solvency
Margin
Every insurer is required to maintain an excess of the value of admissible assets over the
amount of liabilities of not less than an amount prescribed by the IRDAI, which is referred
to as a Required Solvency Margin. The actual excess of admissible assets over liabilities
maintained by the insurer is termed as Available Solvency Margin. The ratio of Available
Solvency Margin to the Required Solvency Margin is called as Solvency Ratio
Sum assured The amount that an insurer agrees to pay on the occurrence of a stated contingency
Surplus The excess of the value placed on a life insurance company’s assets over the value placed on
its liabilities
Surrender The termination of a life insurance policy at the request of the policyholder after which the
policyholder receives the cash surrender value, if any, of the contract
Surrender Ratio Total surrender payout during a period divided by the average AUM of policyholders during
that period. Average AUM = (Opening AUM + Closing AUM)/2
Terminal bonus Bonus declared under the policy in the year when the policy results into a claim either by death,
surrender or maturity
Top-up premium Premium paid by the policyholder in the form of a single payment separately from and in
addition to the required regular premium
Total Cost Ratio Operating expenses including commission, provision for doubtful debts and bad debts
written off divided by Gross Written Premium
Underwriting The process by which an insurance company determines whether or not and on what basis it
will accept an application for insurance
Unit-linked fund A unit-linked fund pools together the premiums paid by policyholders and invests in a
portfolio of assets to achieve the fund(s) objective. The price of each unit in a fund depends
on how the investments in that fund perform
Unit-linked products A life insurance contract or health insurance contract under which benefits are wholly or
partly to be determined by reference to the value of underlying assets or any approved index
Value of New Business /
VNB / VONB
VONB is the present value of expected future earnings from new policies written
during a specified period and it reflects the additional value to shareholders expected to be
generated through the activity of writing new policies during a specified period
Value of New Business
Margin / VNB Margin /
Margin as a percentage of
VNB Margin is the ratio of VNB to New Business Annualized Premium Equivalent for a
specified period and is a measure of the expected profitability of new business
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13
Term Description
New Business Annualized
Premium Equivalent
Variable insurance product Products where the benefits are partially or wholly dependent on the performance of an
approved external index/ benchmark which is linked to the product
Vested bonus Bonus already accrued, which is declared and attached to a policy. Once vested it becomes
guaranteed.
Weighted received premium 100% of insurance premium that is due in the first policy year of a life insurance contract
plus 10% of single lump sum payment from the policyholder
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14
CERTAIN CONVENTIONS, USE OF FINANCIAL INFORMATION AND MARKET DATA AND
CURRENCY OF PRESENTATION
Certain Conventions
In this Draft Red Herring Prospectus, all references to “India” are to the Republic of India, all references “U.K.”
or “United Kingdom” are to the United Kingdom of Great Britain and Northern Ireland and all references to the
“U.S.”, “U.S.A.” or “United States” are to the United States of America.
Unless stated otherwise, all references to page numbers in this Draft Red Herring Prospectus are to the page
numbers of this Draft Red Herring Prospectus.
Financial Data
Unless indicated otherwise, the financial data in this Draft Red Herring Prospectus is derived from our Restated
Financial Statements as of and for the Fiscals ended March 31, 2014, 2015, 2016, 2017 and 2018. These financial
statements have been prepared in accordance with Indian GAAP, the Companies Act, 2013 and relevant rules
framed thereunder, the Insurance Act, the IRDAI Preparation of Financial Statements Regulations, the IRDAI
Issuance of Capital Regulations, IRDAI Act, regulations framed and circulars issued thereunder and restated under
the SEBI ICDR Regulations. The information pertaining to our Assets under Management in “Business” are based
on our Restated Financial Statements.
In this Draft Red Herring Prospectus, any discrepancies in any table between the total and the sum of the amounts
listed are due to rounding off. All figures, in decimals have been rounded off to the second decimal for all amounts
in ₹ million and all percentage figures have been rounded off to two decimal place except certain figures cited
from the Embedded Value Report from Mr. Vivek Jalan, Managing Partner, Willis Towers Watson Actuarial
Advisory LLP and the CRISIL Report and accordingly there may be consequential changes in this Draft Red
Herring Prospectus.
Our Company’s financial year commences on April 1 and ends on March 31 of the next year; accordingly, all
references to a particular financial year, unless stated otherwise, are to the 12 month period ended on March 31 of
that year. Reference in this Draft Red Herring Prospectus to the terms Fiscal or Fiscal Year or Financial Year is
to the 12 months ended on March 31 of such year, unless otherwise specified. Indian GAAP differs from
accounting principles and auditing standards with which prospective investors may be familiar in other countries,
including IFRS and U.S. GAAP and the reconciliation of the financial information to other accounting principles
and auditing standards has not been provided. Our Company has not attempted to explain those differences or
quantify their impact on the financial data included in this Draft Red Herring Prospectus and investors should
consult their own advisors regarding such differences and their impact on our Company’s financial data. For risks
involving differences between Indian GAAP and other accounting principles and auditing standards and risks in
relation to Ind AS, see “Risk Factors” beginning on page 19. The degree to which the financial information
included in this Draft Red Herring Prospectus will provide meaningful information is entirely dependent on the
reader’s level of familiarity with Indian accounting policies and practices, Indian GAAP, the Insurance Act, the
IRDAI Act, regulations framed and circulars issued thereunder, the Companies Act, 2013 and the SEBI ICDR
Regulations. Any reliance by persons not familiar with Indian accounting policies and practices, Indian GAAP,
the Insurance Act, the IRDAI Act, regulations framed and circulars issued thereunder, the Companies Act, 2013,
the IRDAI Issuance of Capital Regulations, IRDAI Preparation of Financial Statements Regulations and the SEBI
ICDR Regulations and practices on the financial disclosures presented in this Draft Red Herring Prospectus should
accordingly be limited. Our Company has obtained the Embedded Value Report from Mr. Vivek Jalan, Managing
Partner, Willis Towers Watson Actuarial Advisory LLP, in accordance with the IRDAI Issuance of Capital
Regulations. For further details, see “Embedded Value Report” beginning on page 342.
Our Company has obtained a certificate dated May 22, 2018, from the Appointed Actuary in relation to actuarial
report and abstract as at March 31, 2018, under the Insurance Act and the Insurance Regulatory and Development
Authority of India (Actuarial Report and Abstract for Life Insurance Business) Regulations, 2016, as amended.
Unless the context otherwise indicates, any percentage amounts, as set forth in “Risk Factors”, “Business” and
“Management’s Discussion and Analysis of Financial Condition and Results of Operations” beginning on
pages 19, 140 and 314, respectively and elsewhere in this Draft Red Herring Prospectus have been calculated on
the basis of the Restated Financial Statements of our Company.
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15
Industry and Market Data
Unless stated otherwise, industry and market data used in this Draft Red Herring Prospectus has been obtained or
derived from publicly available information as well as various industry publications and sources and the CRISIL
Report.
We have commissioned a report titled ‘CRISIL Research - Analysis of life insurance industry in India’ dated July
10, 2018 prepared by CRISIL, for the purpose of confirming our understanding of the industry in connection with
the Offer. In this regard, CRISIL has issued the following disclaimer:
“CRISIL Research, a division of CRISIL Limited (CRISIL) has taken due care and caution in preparing this report
(Report) based on the Information obtained by CRISIL from sources which it considers reliable (Data). However,
CRISIL does not guarantee the accuracy, adequacy or completeness of the Data / Report and is not responsible
for any errors or omissions or for the results obtained from the use of Data / Report. This Report is not a
recommendation to invest / disinvest in any entity covered in the Report and no part of this Report should be
construed as an expert advice or investment advice or any form of investment banking within the meaning of any
law or regulation. CRISIL especially states that it has no liability whatsoever to the subscribers / users /
transmitters / distributors of this Report. Without limiting the generality of the foregoing, nothing in the Report is
to be construed as CRISIL providing or intending to provide any services in jurisdictions where CRISIL does not
have the necessary permission and/or registration to carry out its business activities in this regard. PNB MetLife
India Insurance Company Limited will be responsible for ensuring compliances and consequences of non-
compliances for use of the Report or part thereof outside India. CRISIL Research operates independently of, and
does not have access to information obtained by CRISIL's Ratings Division / CRISIL Risk and Infrastructure
Solutions Ltd (CRIS), which may, in their regular operations, obtain information of a confidential nature. The
views expressed in this Report are that of CRISIL Research and not of CRISIL's Ratings Division / CRIS. No part
of this Report may be published/reproduced in any form without CRISIL's prior written approval.”
Apart from the above, Industry publications generally state that the information contained in such publications
has been obtained from publicly available documents from various sources believed to be reliable but their
accuracy and completeness are not guaranteed and their reliability cannot be assured. Accordingly, no investment
decisions should be made based on such information. Although we believe the industry and market data used in
this Draft Red Herring Prospectus is reliable, it has not been independently verified by us, our Directors, our
Promoters, the Selling Shareholders or the Book Running Lead Managers or any of their respective affiliates or
advisors. The data used in these sources may have been re-classified by us for the purposes of presentation. Data
from these sources may also not be comparable.
The extent to which the market and industry data used in this Draft Red Herring Prospectus is meaningful depends
on the reader’s familiarity with and understanding of the methodologies used in compiling such data.
Such data involves risks, uncertainties and numerous assumptions and is subject to change based on various
factors. Accordingly, investment decisions should not be based solely on such information. For details of risks in
relation to the CRISIL Report, see “Risk Factors – This Draft Red Herring Prospectus contains information
from an industry report which we have commissioned from CRISIL” on page 32.
Currency and Units of Presentation
All references to “Rupees” or “₹” or “Rs.” or “INR” are to