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C M Y K

Draft Red Herring Prospectus


Dated September 03, 2007
will be updated upon RoC filing
Please read Section 60B of the Companies Act, 1956
100% Book Building Issue

KHADIM INDIA LIMITED


(Our Company was incorporated as S.N. Footwear Industries Private Limited on December 03, 1981 under the Companies Act, 1956. The name of our Company was changed to Khadim
Chain Stores Private Limited pursuant to a fresh certificate of incorporation dated April 17, 1998 which was subsequently changed to Khadim Chain Stores Limited on our becoming a public
limited company pursuant to a fresh certificate of incorporation dated June 24, 2005. Our name was further changed to Khadim India Limited with effect from August 26, 2005. For details
of changes in our registered office please refer to History and Certain Corporate Matters on page 124 of this Draft Red Herring Prospectus).
Registered Office/ Corporate Office: Kankaria Estate, 5th Floor, 6, Little Russell Street, Kolkata - 700 071, India Tel: +91 33 40090501 Fax: +91 33 40090500
Contact Person: Mr. Joydev Sengupta (Company Secretary, Head - Legal & Compliance Officer); Website: www.khadims.com E-mail:ipo@khadims.com
PUBLIC ISSUE OF 5,500,000 EQUITY SHARES OF RS. 10/- EACH FOR CASH AT A PREMIUM OF RS. [ ] PER EQUITY SHARE AGGREGATING RS. [ ] MILLION. THE ISSUE COMPRISES A
RESERVATION OF UP TO 200,000 EQUITY SHARES FOR SUBSCRIPTION BY ELIGIBLE EMPLOYEES (AS DEFINED HEREIN) (THE EMPLOYEE RESERVATION PORTION) AND A NET ISSUE TO
THE PUBLIC OF 5,300,000 EQUITY SHARES (THE NET ISSUE) BY KHADIM INDIA LIMITED (COMPANY/ ISSUER). THE NET ISSUE WILL CONSTITUTE 30.05% OF THE FULLY DILUTED POST
ISSUE CAPITAL OF THE COMPANY.Our Company is considering a Pre-IPO placement of up to [  ] Equity Shares aggregating Rs. [  ] million with certain investors, (Pre-IPO Placement).
If the Pre-IPO placement is completed before the filing of the RHP with RoC, the Issue Size offered to the public would be reduced to the extent of such Pre-IPO placement, subject to a
minimum of 25% of the post-issue paid up Equity Share Capital being offered to the public.
PRICE BAND: Rs. [ ] TO Rs. [ ] PER EQUITY SHARE OF FACE VALUE OF RS. 10
THE ISSUE PRICE IS [ ] TIMES THE FACE VALUE AT THE LOWER END OF THE PRICE BAND AND [ ] TIMES THE FACE VALUE AT THE HIGHER END OF THE PRICE BAND
In case of revision in the Price Band, the Bidding Period/Issue Period will be extended for three additional days after revision of the Price Band subject to the Bidding Period/Issue Period
not exceeding 10 working days. Any revision in the Price Band and the revised Bidding Period/Issue Period, if applicable, will be widely disseminated by notification to Bombay Stock
Exchange Limited (BSE) and the National Stock Exchange of India Limited (NSE), by issuing a press release, and also by indicating the change on the website of the Book Running
Lead Manager and at the terminals of the Syndicate.
The Issue is being made through 100% Book Building Process wherein up to 50% of the Net Issue shall be available for allocation on a proportionate basis to QIBs. However, up to 5% of
the QIB Portion shall be available for allocation proportionately to mutual funds. Further not less than 35% of the Net Issue shall be available for allocation on a proportionate basis to the
Retail Individual Bidders and not less than 15% of the Net Issue shall be available for allocation on a proportionate basis to Non-Institutional Bidders, subject to valid Bids being received
at or above the Issue Price. Further, up to 200,000 Equity Shares shall be available for allocation on a proportionate basis to the Employees, subject to valid Bids being received at or
above the Issue Price.

RISK IN RELATION TO THE FIRST ISSUE


This being the first issue of Equity Shares of our Company, there has been no formal market for the Equity Shares of our Company. The face value of the shares is Rs. 10 and the Floor Price is []
times of the face value and the Cap Price is [] times of the face value. The Price Band (as determined by the Company in consultation with the Book Running Lead Manager (BRLM) on the basis
of assessment of market demand for the Equity Shares by way of book building) 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.
IPO GRADING
Our Company has appointed [] as the IPO Grading Agency. [] has assigned a Grade of [] to the Issue. For details see the section titled General Information on page no.38 of this Draft Red
Herring Prospectus.
GENERAL RISKS
Investments in equity and equity-related securities involve a degree of risk and investors should not invest any funds in this issue unless they can afford to take the risk of losing their investment.
Investors are advised to read the risk factors carefully before taking an investment decision in this offering. For taking an investment decision, investors must rely on their own examination of the
issuer and the offer including the risks involved. The equity shares have not been recommended or approved by Securities and Exchange Board of India (SEBI) nor does SEBI guarantee the
accuracy or adequacy of this document. Specific attention of the investors is invited to the Statement of Risk Factors beginning on page no 10 of this Draft Red Herring Prospectus.
ISSUERS ABSOLUTE RESPONSIBILITY
The Issuer, having made all reasonable inquiries, accepts responsibility for and confirms that this Draft Red Herring Prospectus contains all information with regard to the issuer and the issue, which
is material in the context of the issue, that the information contained in the offer document 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 document as a whole or any of such information or the expression of any such
opinions or intentions misleading in any material respect.
LISTING
The Equity Shares offered through this Draft Red Herring Prospectus are proposed to be listed on Bombay Stock Exchange Limited (BSE) (Designated Stock Exchange) and the National Stock
Exchange of India Limited (NSE). We have received in principle approval from the BSE and NSE for the listing of Equity Shares pursuant to letters dated [] and [] respectively.

BOOK RUNNING LEAD MANAGER

MICROSEC CAPITAL LIMITED


74A, Mittal Tower, 7th Floor
210, Nariman Point, Mumbai - 400 021
Tel: +91-22-2285 5544 (4 Lines), Fax: +91-22-2285 5548
E-mail: khadims@microsec.in; Website: www.microsec.in
Contact Person: Mr. Pankaj Harlalka

BID/ISSUE OPENS ON

[]

REGISTRAR TO THE ISSUE


INTIME SPECTRUM REGISTRY LIMITED
C-13, Pannalal Silk Mills Compound
L B S Marg, Bhandup (West), Mumbai 400 078
Tel: +91-22-2596 0320
Fax: +91-22-2596 0328
Website: www.intimespectrum.com
E-Mail:khadims@intimespectrum.com
Contact Person: Mr. Sachin Achar

ISSUE PROGRAMME
BID/ISSUE CLOSES ON :

[]
C M Y K

KHADIM INDIA LIMITED

TABLE OF CONTENTS
SERIAL

TITLE

PAGE NO.

NO.
1.

DEFINITIONS AND ABBREVIATIONS

2.

3.

CERTAIN CONVENTIONS, PRESENTATION OF FINANCIAL, INDUSTRY


AND MARKET DATA
FORWARD-LOOKING STATEMENTS

4.

RISK FACTORS

10

5.

SUMMARY OF THE INDUSTRY

30

6.

SUMMARY OF OUR BUSINESS, STRENGTHS AND STRATEGIES

31

7.

THE OFFER

35

8.

SUMMARY FINANCIAL INFORMATION

36

9.

GENERAL INFORMATION

38

10.

CAPITAL STRUCTURE

44

11.

OBJECTS OF THE ISSUE

52

12.

BASIS FOR ISSUE PRICE

60

13.

STATEMENT OF TAX BENEFITS

63

14.

INDUSTRY OVERVIEW

71

15.

OUR BUSINESS

80

16.

FINANCIAL INDEBTEDNESS

113

17.

REGULATIONS AND POLICIES IN INDIA

119

18.

HISTORY AND CERTAIN CORPORATE MATTERS

124

19.

OUR MANAGEMENT

132

20.

OUR PROMOTERS AND PROMOTER GROUP

143

21.

CURRENCY OF PRESENTATION

153

22.

DIVIDEND POLICY

153

23.

FINANCIAL STATEMENTS

154

24.

MANAGEMENTS

DISCUSSION

AND

ANALYSIS

OF

FINANCIAL

191

CONDITION AND RESULTS OF OPERATIONS


25.

OUTSTANDING LITIGATION AND MATERIAL DEVELOPMENTS

200

26.

GOVERNMENT AND OTHER APPROVALS

229

27.

OTHER REGULATORY AND STATUTORY DISCLOSURES

241

28.

TERMS OF THE ISSUE

250

29.

ISSUE STRUCTURE

253

30.

ISSUE PROCEDURE

257

31.

MAIN PROVISIONS OF THE ARTICLES OF ASSOCIATION

286

32.

MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTIONS

305

33.

DECLARATION

307

KHADIM INDIA LIMITED

DEFINITIONS AND ABBREVIATIONS


Conventional / General Terms
Term
Description
Khadim India Limited Khadim India Limited, a public limited company incorporated under the
Companies Act, 1956, having its registered office at Kankaria Estate, 5th
or Khadims or KIL
or the Company or
Floor, 6, Little Russell Street, Kolkata 700 071, India.
Our Company or we
or us or our
Offering-Related Terms
Term
Description
Allotment
Unless the context otherwise requires, the allotment of Equity Shares
pursuant to the Issue.
Allottee
The successful Bidder to whom the Equity Shares are/have been Issued.
Articles/Articles of
Articles of Association of Khadim India Limited.
Association
Auditors
The statutory auditors of our Company, Ray & Ray, Chartered
Accountants.
Banker(s) to the Issue
[]
Bid
An indication to make an offer during the Bidding Period by a prospective
investor to subscribe to our Equity Shares at a price within the Price
Band, including all revisions and modifications thereto.
Bid Amount
The highest value of the optional Bids indicated in the Bid cum
Application Form and payable by the Bidder on submission of the Bid in
the Issue.
Bid/Issue Closing Date
The date after which the Syndicate will not accept any Bids for the Issue,
which shall be notified in an English national newspaper and Hindi
national newspaper, both with wide circulation.
Bid cum Application The form in terms of which the Bidder shall make an indication to make
Form
offer to subscribe to the Equity Shares and which will be considered as
the application for issue and transfer of the Equity Shares pursuant to
the terms of this Prospectus.
Bidder
Any prospective investor who makes a Bid pursuant to the terms of this
Prospectus and the Bid cum Application Form.
Bidding/ Issue Period
The period between the Bid/ Issue Opening Date and the Bid/ Issue
Closing Date inclusive of both days and during which prospective Bidders
can submit their Bids.
Bid/
Issue
Opening The date on which the Syndicate shall start accepting Bids for the Issue,
Date
which shall be the date notified in an English national newspaper and
Hindi national newspaper, both with wide circulation.
Board
of The board of directors of our Company or a committee constituted
Directors/Board
thereof.
Book Building Process
Book building route as provided in Chapter XI of the SEBI Guidelines, in
terms of which Issue is being made.
BRLM/ Book Running Book Running Lead Manager to the Issue, in this case being Microsec
Lead Manager
Capital Limited.
BSE
The Bombay Stock Exchange Limited formerly known as The Stock
Exchange, Mumbai
CAN/ Confirmation of Means the note or advice or intimation of allocation of Equity Shares sent
Allocation Note
to the Bidders who have been allocated Equity Shares after discovery of
the Issue Price in accordance with the Book Building Process.
Cap Price
The higher end of the Price Band, above which the Issue Price will not be
finalized and above which no Bids will be accepted.
Companies Act or the The Companies Act, 1956, and the rules and regulations made
Act
thereunder, as amended from time to time.
Cut-off Price
Any price within the Price Band finalized by us in consultation with the
BRLM. A Bid submitted at Cut-off Price is a valid Bid at all price levels
within the Price Band.
Depository
A depository registered with SEBI under the SEBI (Depositories and
Participant) Regulations, 1996, as amended from time to time.
Depositories Act
The Depositories Act, 1996, as amended from time to time.

KHADIM INDIA LIMITED

Term
Depository Participant
Designated Date

Description
A depository participant as defined under the Depositories Act.
The date on which the Escrow Collection Banks transfer the funds from
the Escrow Account to the Issue Account, which in no event shall be
earlier than the date on which the Prospectus is filed with the RoC.
Stock The Bombay Stock Exchange Limited

Designated
Exchange
Director(s)
Director(s) of Khadim India Limited, unless otherwise specified.
Draft
Red
Herring The Draft Red Herring Prospectus dated [] issued in accordance with
Prospectus / DRHP
Section 60B of the Companies Act, which does not have complete
particulars of the price at which the Equity Shares are offered. Upon
filing with RoC at least three days before the Bid/Issue Opening Date it
will become the Red Herring Prospectus. It will become a Prospectus
upon filing with RoC after the determination of Issue Price.
Eligible Employees
Permanent employees of the Company including the Directors thereof
who are Indian nationals based in India and are present in India on the
date of submission of Bid-cum-Application Form. However, the Directors
who are the Promoters and forming part of the Promoter Group of the
Company shall not be considered to be Eligible Employees.
Employee Reservation
The portion of the Issue being up to 200,000 Equity Shares available for
allocation to Eligible Employees.
Equity Shares
Equity shares of the Company of face value of Rs. 10 each, unless
otherwise specified in the context thereof.
Escrow Account
Account opened with an Escrow Collection Bank(s) and in whose favour
Bidders will issue cheques or drafts in respect of the Bid Amount when
submitting a Bid.
Escrow Agreement
Agreement to be entered into among the Company, the Registrar, the
Escrow Collection Bank(s), and the BRLM for collection of the Bid
Amounts and for remitting refunds, if any, of the amounts collected, to
the Bidders.
Escrow
Collection The banks, which are clearing members and registered with SEBI as
Bank(s)
Banker to the Issue at which the Escrow Account will be opened in this
case being [].
FEMA
The Foreign Exchange Management Act, 1999, and the rules and
regulations made there under, as amended from time to time.
FII
Foreign Institutional Investor (as defined under the Securities and
Exchange Board of India (Foreign Institutional Investors) Regulations,
1995) registered with SEBI under applicable laws in India.
First Bidder
The Bidder whose name appears first in the Bid cum Application Form or
Revision Form.
Floor Price
The lower end of the Price Band, below which the Issue Price will not be
finalized and below which no Bids will be accepted.
Fresh Issue/ Present The issue of 5,500,000 Equity Shares of Rs.10/- each at the Issue Price
Issue
by the Company pursuant to this Prospectus.
Indian GAAP
Generally accepted accounting principles in India.
Issue
The public issue of 5,500,000 Equity Shares of Rs. 10 each for cash at a
price of Rs. [] each aggregating to Rs. [] Million. The Issue comprises
a Net Issue to the public of 5,300,000 Equity Shares and the Employee
Reservation Portion of up to 200,000 Equity Shares.
Issue Price
The final price at which Equity Shares will be allotted in terms of this
Prospectus, as determined by the Company in consultation with the
BRLM, on the Pricing Date.
Issue Account
Account opened with the Banker(s) to the Issue to receive monies from
the Escrow Account for the Issue on the Designated Date.
Margin Amount
The amount paid by the Bidder at the time of submission of his/her Bid,
being 10% to 100% of the Bid Amount.
Memorandum
/ The Memorandum of Association of Khadim India Limited.
Memorandum
of
Association
Microsec
Capital Microsec Capital Limited, a public company incorporated under the
Limited
provisions of the Companies Act with the registered office at Shivam

KHADIM INDIA LIMITED

Term
Mutual Fund(s)
Net Issue/Net Issue to
the public
NSE
Non-Institutional
Bidders
Non-Institutional
Portion
Non Resident
NRI/
Non
Resident
Indian
Pay-in Date
Pay-in-Period

Price Band
Pricing Date
Promoters

Promoter Group
Prospectus

Qualified
Institutional
Buyers or QIBs

QIB Portion

Description
Chambers, 1st Floor, 53, Syed Amir Ali Avenue, Kolkata-700 019.
A mutual fund registered with SEBI under the SEBI (Mutual Funds)
Regulations, 1996.
The Issue less the Employees Reservation Portion, being 53,00,000
Equity Shares of Rs. 10 each
National Stock Exchange of India Limited.
All Bidders that are not Qualified Institutional Buyers or Retail Individual
Bidders and who have bid for an amount more than Rs. 100,000.
The portion of the Issue being at least 795,000 Equity Shares available
for allocation to Non-Institutional Bidders.
A person resident outside India, as defined under FEMA.
A person resident outside India, who is a citizen of India or a person of
Indian origin and shall have the same meaning as ascribed to such term
in the Foreign Exchange Management (Transfer or Issue of Security by a
Person Resident Outside India) Regulations, 2000.
Bid/Issue Closing Date or the last date specified in the CAN sent to the
Bidders, as applicable.
(i) With respect to Bidders whose Margin Amount is 100% of the Bid
Amount, the period commencing on the Bid/Issue Opening Date and
extending until the Bid/Issue Closing Date, and
(ii) With respect to Bidders whose Margin Amount is less than 100% of
the Bid Amount, the period commencing on the Bid/Issue Opening
Date and extending until the closure of the Pay-in Date, as specified
in the CAN.
The price band with a minimum price (Floor Price) of Rs. [] and the
maximum price (Cap Price) of Rs. [].
The date on which the Company in consultation with the BRLM finalises
the Issue Price.
NATURAL PERSONS

Mr. Satya Prasad Roy Burman

Mr. Siddhartha Roy Burman


CORPORATE PROMOTER

Knightsville Private Limited


Please refer to the promoter group described on page no. 143 of this
Draft Red Herring Prospectus under the head Capital Structure.
The prospectus, to be filed with the RoC after pricing containing, inter
alia, the Issue Price and the number of shares that is determined at the
end of the Book Building Process, the Issue and certain other
information.
Public financial institutions as specified in Section 4A of the Companies
Act, scheduled commercial banks, mutual funds registered with SEBI,
venture capital funds registered with SEBI, state industrial development
corporations, insurance companies registered with the Insurance
Regulatory and Development Authority, provident funds with minimum
corpus of Rs. 250 million and pension funds with minimum corpus of Rs.
250 million.
The portion of the Issue being up to 2,650,000 Equity Shares available
for allocation to QIBs.
Kankaria Estate, 5th Floor, 6, Little Russell Street, Kolkata 700 071, India

Registered Office of the


Company
Registrar/ Registrar to Intime Spectrum Registry Limited, a company incorporated under the
the Issue
Companies Act, having its registered office at C-13, Pannalal Silk Mills
Compound, L.B.S. Marg, Bhandup (West), Mumbai- 400 078.
Retail
Individual Bidders who apply or bid for Equity Shares of or for a value of not more
Bidders
than Rs. 100,000.
Retail Portion
The portion of the Issue being at least 1,855,000 Equity Shares available
for allocation to Retail Individual Bidder(s).
Revision Form
The form used by the Bidders to modify the quantity of Equity Shares or
the Bid Price in any of their Bid cum Application Forms or any previous
Revision Form(s).

KHADIM INDIA LIMITED

Term
Description
RHP or Red Herring The Red Herring Prospectus dated [] issued in accordance with Section
Prospectus
60B of the Companies Act, which does not have complete particulars of
the price at which the Equity Shares are offered and the size of the
Issue. The Red Herring Prospectus will be filed with the RoC at least
three days before the Bid/Issue Opening Date and will become a
Prospectus after filing with the RoC after pricing and allocation.
RoC
Registrar of Companies, West Bengal situated at NIZAM PALACE, 2nd
MSO Building, 234/4, AJC Bose Road, Kolkata 700 020.
SCRR
The Securities Contracts (Regulation) Rules, 1957, as amended from
time to time.
SEBI
The Securities and Exchange Board of India constituted under the SEBI
Act.
SEBI Act
The Securities and Exchange Board of India Act, 1992, as amended from
time to time.
SEBI Guidelines
The SEBI (Disclosure and Investor Protection) Guidelines, 2000 issued by
SEBI, as amended, including instructions and clarifications issued by
SEBI from time to time.
Stock Exchanges
BSE & NSE.
TRS/
Transaction The slip or document issued by any of the members of the Syndicate to a
Registration Slip
Bidder as proof of registration of the Bid.
U.S. GAAP
Generally accepted accounting principles in the United States of America.
Underwriters
The BRLM & members of the Syndicate.
Underwriting
The agreement among the BRLM, members of the Syndicate and the
Agreement
Company to be entered into on or after the Pricing Date.
Abbreviations
Term
AS

Description

AY

Accounting Standards as issued by the Institute of Chartered Accountants


of India
Assessment Year

BCCL

Bennett Coleman & Co. Limited

B/W

Black and white

CAD

Computer Aided Design

CAGR

Compound Annual Growth Rate

CAM

Computer Aided Manufacturing

CDSL

Central Depository Services (India) Limited

CENVAT

Central Value Added Tax

CIN

Corporate Identity Number

CLRI

Central Leather Research Institute

DIN

Directors Identification Number

DIP Guidelines

SEBI (Disclosure & Investor Protection) Guidelines, 2000, as amended

DTAA

Double Tax Avoidance Agreement

EC

Education Cess

EMI

Equated Monthly Installment

ERP

Enterprise Resource Planning

ESI

Employee's State Insurance

EVA

Ethylene-Vinyl Acetate

FCNR Account

Foreign Currency Non Resident Account

FDI

Foreign Direct Investment, as understood under applicable Indian


regulation
Foreign Exchange Management Act, 1999, as amended from time to time,
and the Regulations framed there under
Foreign Institutional Investor (as defined under SEBI (Foreign Institutional
Investors) Regulations, 1995), registered with SEBI under applicable laws
in India

FEMA
FII

KHADIM INDIA LIMITED

FIPB

Foreign Investment Promotion Board

FMCG

Fast Moving Consumer Goods

FY/Fiscal

Financial year/Fiscal year

GDP

Gross Domestic Product

GNP

Gross Net Profit

GoI

The Government of India

HNI

High Net-worth Individual

I.T. Act

The Income Tax Act, 1961, as amended

INR

Indian National Rupee

LFRs

Large Format Retail

LOI

Letter of Intent

LTCG

Long term Capital Gain

MAT

Minimum Alternative Tax

Mn

Million

MOU

Memorandum of Understanding

MRP

Maximum Retail Price

N.A.

Not Applicable

NCAER

National Council of Applied Economic Research

NIFT

National Institute of Fashion Technology

Nos.

Numbers

NRE Account

Non-Resident External Account.

NRI

NRO Account

Non-Resident Indian, as defined under Foreign Exchange Management


(Transfer or Issue of Security by a Person Resident Outside India)
Regulations, 2000, as amended
Non Resident Ordinary Account

NSDL

National Securities Depository Limited

OCBs

Overseas Corporate Bodies, as defined by the relevant FEMA Regulations

PAN

Permanent Account Number

P.A

Per Annum

PFY

Present Financial Year

PVC

Polyvinyl Chloride

QIB

Qualified Institutional Buyer

Qty

Quantity

P/E Ratio

Price/Earnings Ratio

R&D

Research and Development

RoNW

Return on Networth

Rs.

Indian National Rupee

SBI

State Bank of India

SC

Surcharge

SCRA

Securities Contracts (Regulation) Act, 1956 as amended

SCRR

Securities Contracts (Regulation) Rules, 1957, as amended

SEBI

Securities and Exchange Board of India.

SEBI Act
SEBI
Regulations
SKU

Securities and Exchange Board of India Act, 1992 as amended


Takeover Securities and Exchange Board of India (Substantial Acquisition of Shares
and Takeover) Regulations, 1997, as amended
Stock Keeping Units

sq. ft

Square Feet

SSI

Small Scale Industries

STT

Securities Transaction Tax

KHADIM INDIA LIMITED

CERTAIN CONVENTIONS, PRESENTATION OF FINANCIAL, INDUSTRY AND MARKET DATA


FINANCIAL DATA
Unless stated otherwise, the financial data in this Draft Red Herring Prospectus is derived from the
financial statements of the Company and translated and restated to be in accordance with Indian
GAAP and the applicable SEBI Guidelines included in this Draft Red Herring Prospectus. An index of
this financial information is presented in the section titled Financial Statements beginning on
page 154 of this Draft Red Herring Prospectus.
The degree to which the financial information, prepared in accordance with Indian GAAP, included
in this Draft Red Herring Prospectus will provide meaningful information is entirely dependent on
the reader's level of familiarity with Indian accounting practices, Indian GAAP, the Companies Act
and the SEBI Guidelines. Any reliance by persons not familiar with Indian accounting practices,
Indian GAAP, the Companies Act and the SEBI Guidelines on the financial disclosures presented in
this Draft Red Herring Prospectus should accordingly be limited. Our fiscal year commences on
April 1 and ends on March 31, so all references to a particular fiscal year are, unless otherwise
stated, to the twelve-month period ended March 31 of that year.
In this Draft Red Herring Prospectus, any discrepancies in any table between the total and the
sums of the amounts listed are due to rounding off to two decimal places.
Unless otherwise specified or the context otherwise requires, all references to India contained in
this Draft Red Herring Prospectus are to the Republic of India, together with its territories and
possessions.
CURRENCY OF PRESENTATION
All references to Rupees or Rs. or INR are to Indian Rupees, the official currency of the
Republic of India.
INDUSTRY AND MARKET DATA
Unless stated otherwise, industry data used throughout this Draft Red Herring Prospectus has been
obtained from industry publications. Industry publications generally state that the information
contained in those publications has been obtained from sources believed to be reliable but that
their accuracy and completeness are not guaranteed and their reliability cannot be assured.
Although the Company believes that the industry data used in this Draft Red Herring Prospectus is
reliable, it has not been verified by any independent source.
Further, the extent to which the market data presented in this Draft Red Herring Prospectus is
meaningful depends on the readers familiarity with and understanding of the methodologies used
in compiling such data. There are no standard data gathering methodologies in the industry in
which we conduct our business, and methodologies and assumptions may vary widely among
different industry sources.

KHADIM INDIA LIMITED

FORWARD-LOOKING STATEMENTS
This Draft Red Herring Prospectus includes certain forward-looking statements with respect to our
financial condition, results of operations and business. These forward-looking statements can be
identified by the fact that they do not relate to any historical or current facts. Forward-looking
statements often use words such as "anticipate", "expect", "estimate", "intend", "plan", "believe",
"will", "may", "should", "would", "could" or other words with similar meaning. By their nature,
forward-looking statements involve risk and uncertainty and there are a number of factors that
could cause actual results and developments to differ materially from those expressed in or implied
by, such forward-looking statements.
Actual results may differ materially from those suggested by the forward-looking statements due
to risks or uncertainties associated with our expectations with respect to, but not limited to,
regulatory changes pertaining to the industries in India in which we have businesses and our
ability to respond to them, our ability to successfully implement strategy, growth and expansion of
our business, technological changes, exposure to market risks, general economic and political
conditions in India which have an impact on our business activities or investments, the monetary
and fiscal policies of India, inflation, deflation, unanticipated turbulence in interest rates, foreign
exchange rates, equity prices or other rates or prices, the performance of the financial markets in
India and globally, changes in domestic laws, regulations and taxes and changes in competition in
the industry.
For further discussions of factors that could cause our actual results to differ, please see the
sections titled Risk Factors and Management's Discussion and Analysis of Financial Condition
and Results of Operations beginning on pages 10 and 191 of this Draft Red Herring Prospectus.
By their nature, certain market risk disclosures are only estimates and could be materially different
from what actually occurs in the future. As a result, actual future gains or losses could materially
differ from those that have been estimated. Neither we, nor the BRLM, nor the other Underwriters,
nor any of their respective affiliates have any obligation to update or otherwise revise any
statements reflecting circumstances arising after the date hereof or to reflect the occurrence of
underlying events, even if the underlying assumptions do not come to fruition. In accordance with
the SEBI requirements, the Company, the BRLM will ensure that investors in India are informed of
material developments until such time as the grant of listing and trading permission by the Stock
Exchanges are received in relation to the Equity Shares

KHADIM INDIA LIMITED

RISK FACTORS
An investment in Equity Shares involves a high degree of risk. You should carefully consider all the
information in this Draft Red Herring Prospectus, including the risks and uncertainties described
below, before making an investment in our Equity Shares. If any of the following risks actually
occur, our business, prospects, financial condition, results of operations and the value of our
properties could suffer, the trading price of our Equity Shares could decline and you may lose all or
part of your investment.
A. INTERNAL RISK FACTORS
I.

Risks Related to the Objects of the Issue:

1. Our funding requirements and the deployment of the proceeds of the Issue are based
on management estimates and have not been independently appraised.
Our funding requirements and the deployment of the proceeds of the Issue are based on
management estimates and have not been appraised by any bank, financial institution or other
independent organization. The estimated costs towards rents and deposits for the lease/license
arrangements for our stores and the cost towards holding the inventory may vary based on
location, size and several other factors. In view of the highly competitive nature of the industry
in which we operate, we may have to revise our management estimates from time to time and
consequently our funding requirements may also change. This may result in the rescheduling
of our project expenditure programmes or relocations of some of the future Stores and an
increase or decrease in our proposed expenditure for a particular project and our results of
operations may be impacted.
2. We have not entered into any definitive arrangements for establishment of some of
our Project Stores.
We intend to use the proceeds of the Issue for expenditure on establishment of new footwear
and lifestyle retail stores described in the section Objects of the Issue beginning on page 52.
We have not entered into any lease, license or other similar arrangements for establishment of
29 of 39 proposed footwear retail stores and 1 lifestyle retail store. In the event we are unable
to enter into arrangements at favourable terms and conditions, as expected and assumed by
us, or in a timely manner or at all, we may not be reap the expected benefits from the net
proceeds of the Issue and our financial results may suffer.
3. The financial tie-up of the project is not complete
We have not yet tied-up the entire debt requirement for the project. Out of the total debt
requirement of Rs. 319 million, we have not received sanctions for Rs. 40 million. In case we
are unable to tie-up the entire debt, the implementation of the project may be delayed.
We have already tied-up around 87.50% of the total debt requirement. The application for the
remaining amount has already been submitted and the sanctions shall be received very soon.
In case of any delay in getting the sanctions the defict shall be funded through our internal
accruals.
II. CORPORATE AND OTHER INTERNAL RISK
1. We are involved in litigation proceedings and we cannot assure you that we will
prevail in these actions.
There are outstanding litigations filed by and against us. We are defendants in legal proceedings
incidental to our business and operations. These legal proceedings are pending at different levels of
adjudication before various courts and tribunals. Should any new developments arise, such as a
change in Indian law or rulings against us by appellate courts or tribunals, we may need to make
provisions in our financial statements, which could adversely impact our business results.
Furthermore, if significant claims are determined against us and we are required to pay all or a
portion of the disputed amounts, it could have a material adverse effect on our business and
profitability and the networth of the Company could be eroded.

10

KHADIM INDIA LIMITED

A summary of litigation pending against us is as follows:


Sl No.

Type of Cases

Criminal Cases

Show cause by
Registrar
of
Companies,
West Bengal

Description (in short)

Number
Cases

of

Amount (Rs.) (this


is
an
approximation
since
there
are
several
matters
where
the
amounts are not
ascertainable)

Not Ascertainable

A notice has been


issued by the Registrar
of Companies, West
Bengal (ROC) dated
March 14, 2007 as
detailed in the Chapter
on
Outstanding
Litigation and Material
Developments

Not Ascertainable

Sales Tax

Disputed Claims

Rs. 28,878,699

Excise

Disputed Claims

Rs. 9,943,595

Income Tax

Rs. 16,864,868

Civil Claims

Not Ascertainable

Labour Cases

Nil

Nil

By Shareholders

Nil

Nil

Employees
Provident Fund

Not Ascertainable

This includes matters


relating to infringement
of intellectual property,
complaints
filed
by
consumers
before
Consumer
Redressal
Forums
and
miscellenous
matters
etc.

Proceedings initiated by
the
Provident
Fund
authorities
under
Section
7A
of
the
Employees
Provident
Fund & Miscellaneous
Provisions Act, 1952.

2. Our Promoter Group entities are involved in certain legal proceedings.


There are certain ongoing legal proceedings against our Promoter Group Companies pending at
different levels of adjudication before various courts and tribunals. No assurance can be given as
to whether these matters will be settled in favour of or against them. We have attempted to
ascertain the number of cases and the financial implication thereof as far as practically possible.

11

KHADIM INDIA LIMITED

A summary of the litigation against our Promoter Group entities is as follows:

Name
of
Promoter Group
entity
St. Marys Clinic &
Drug Stores

Khadim
Enterprise

Particulars

Number
Pending

of

cases

Amout involved
Rs. Lacs (approx)

Civil
case
being
an
Eviction Suit wherein St.
Marys Clinic & Drug
Stores is Defendant no. 2
Criminal
Cases
filed
against the then partners
of the firm at the instance
of
Provident
Fund
authority for violation /
non
compliance
of
relevant provisions of the
Employees
Provident
Fund
&
Miscellaneous
Provisions Act, 1952.
Income
Tax
dispute
pending
before
the
Commissioner of Income
Tax (Appeals)

Not Ascertainable

10

Not Ascertainable

Rs. 5,667/-

in

Apart from the above there are no litigation against any of our other Promoter Group entities.
3. Our Directors are involved in certain legal proceedings
There are certain ongoing legal proceedings against our Directors pending at different levels of
adjudication before various courts and tribunals. No assurance can be given as to whether
these matters will be settled in favour of or against them.
There are certain cases filed against our directors, in relation to other companies where they
are or were directors or otherwise.
A summary of the litigation against our past and present Directors is as follows:
Sl
No

Name
of
Director

Mr.
Satya
Prasad Roy
Burman

Number
of
Cases
1

Nature
Case

of

Short Description of Case

Amount
Involved

Show Cause by
Registrar
of
Companies
(ROC)

A notice has been issued by


the Registrar of Companies,
West Bengal (ROC) dated
March 14, 2007 as detailed in
the Chapter on Outstanding
Litigation
and
Material
Developments

Not
Ascertainable

Criminal

Not
Ascertainable

Employees
Provident Fund
matter

Matters
pertaining
to
Copyrights Act and West
Bengal
Shops
and
Establishments Act, 1953.
Proceedings initiated by the
Provident
Fund
authorities
under Section 7A of the
Employees Provident Fund &
Miscellaneous Provisions Act,
1952.

12

Not
Ascertainable

KHADIM INDIA LIMITED

Mr.
Siddhartha
Roy Burman

Show Cause by
ROC

A notice has been issued by


the Registrar of Companies,
West Bengal (ROC) dated
March 14, 2007 as detailed in
the Chapter on Outstanding
Litigation
and
Material
Developments

Not
Ascertainable

Criminal

Not
Ascertainable

Employee
Provident Fund
matter

Matters
pertaining
to
Copyrights Act and West
Bengal
Shops
and
Establishments Act, 1953.
Proceedings initiated by the
Provident
Fund
authorities
under Section 7A of the
Employees Provident Fund &
Miscellaneous Provisions Act,
1952.
A notice has been issued by
the Registrar of Companies,
West Bengal (ROC) dated
March 14, 2007 as detailed in
the Chapter on Outstanding
Litigation
and
Material
Developments
A notice has been issued by
the Registrar of Companies,
West Bengal (ROC) dated
March 14, 2007 as detailed in
the Chapter on Outstanding
Litigation
and
Material
Developments

Not
Ascertainable

Not
Ascertainable

Mrs. Namita
Roy Burman
(past
Director)

Show Cause by
ROC

Mr.
Indra
Nath
Chatterjee

Show Cause by
ROC

Prof. Ashoke
Kumar Dutta

Show Cause by
ROC

A notice has been issued by


the Registrar of Companies,
West Bengal (ROC) dated
March 14, 2007 as detailed in
the Chapter on Outstanding
Litigation
and
Material
Developments

Not
Ascertainable

Prof.
Amar
Nath Sadhu

Show Cause by
ROC

Not
Ascertainable

Criminal

A notice has been issued by


the Registrar of Companies,
West Bengal (ROC) dated
March 14, 2007 as detailed in
the Chapter on Outstanding
Litigation
and
Material
Developments
Certain criminal cases were
initiated against him as an ex
Director of Prudential AMC
Limited for non holding of
Annual General Meeting and
non-filing of Balance Sheet &
Profit & Loss Account
and
non-filing
of
the
Annual
Returns by Company
He appeared before the Ld.
Chief
Judicial
Magistrate,
Alipore and was granted bail.

13

Not
Ascertainable

KHADIM INDIA LIMITED

For more details of these litigations, please refer to the section titled Outstanding Litigation,
Material Developments beginning on page no. 200 of this Draft Red Herring Prospectus.
4. Mr. Partha Roy Burman, our past director and one of the individuals in the promoter
group, may be in conflict with our business interest.
Mr. Partha Roy Burman, one of the individuals in the promoter group, was a Whole-time
Director in the Company. The office of Mr. Roy Burman was automatically vacated pursuant to
the provisions of Section 283(1)(g) of the Companies Act, 1956, from the close of business
hours of 26 March 2007.
At present he has set up his own venture of Food & Hospitality of which we have no material
information, neither do we have any interest or control in any manner whatsoever over it or in
any of his future ventures.
5. The tenancy rights in respect of few of the footwear outlets and godowns from
where the operations of the Company are being done stand in the name of Mr. Partha
Roy Burman, our past director, or in the name of partnership firms in which he or his
wife or both them is / are partners.
The tenancy rights in respect of few of the footwear outlets and godown from where the
operations of the Company are being carried out, stand in the name of Mr. Partha Roy
Burman, our past director, or in the name of partnership firms in which he or his wife or both
them is / are partners. These stores and godown may not be in the control of the Company in
future and as a result of which the performance of the Company may be affected to that
effect.
6. There are certain cases / litigation in which Mr. Partha Roy Burman, our past
director, is involved either in the capacity of an erstwhile director or in his individual
capacity and we do not have any control on any of his independent action.
There are certain cases / litigation where Mr. Partha Roy Burman, our past director, is involved
either in the capacity of an erstwhile director or in his individual capacity. As we do not have
any control on his independent action, there may be circumstances where his action may have
an impact on the outcome of the case / litigation. For details in this regard please refer to page
no. 200 under the head Outstanding Litigations and Material Development.
7. There are restrictive covenants in the agreements we have entered into with certain
banks for working capital credit facilities and other borrowings
We have entered into agreements with certain banks for working capital credit facilities and
term loans for which our current assets and future income receivables and fixed assets have
been charged. Some of these agreements contain restrictive covenants that require our
Company to obtain prior permission from the concerned banks prior to undertaking activities
such as new ventures, diversification, modernization, issue of Equity Shares, change in capital
structure, change in management, etc.
If the consent of the concerned banks is not forthcoming our ability to undertake the above
mentioned activities will be restricted. For more details of these restrictive covenants, please
refer to the section titled Financial Indebtedness beginning on page no. 113 of this Draft Red
Herring Prospectus.
8. BCCL holds 5,00,000 Equity Shares representing 4.12% of the total paid up pre-Issue
capital of our Company and we also have an agreement with BCCL for the purpose of
advertisement of our product or services, in BCCL print publications and non-print
media, which may lead to conflict of interest.
BCCL holds 5,00,000 Equity Shares representing 4.12% of the total paid up pre-Issue capital
of our Company and we have also entered into an agreement with BCCL for the purpose of
advertisement of our products or services, in BCCL print publications and non-print media for
three years starting from August 10, 2007 and ending on August 9, 2010. We have agreed to
release advertisements for a total value of Rs. 50 million during this time period.

14

KHADIM INDIA LIMITED

Although the editorial functions of the publications of BCCL may be considered to be


independent, due to the above arrangements with BCCL, there is a possibility of conflict of
their interests in so far as any advertisement, publicity, editorial, news item or article
appearing in their publications is concerned. For further details regarding the shareholders
agreement and the advertising agreement, please see the section titled History and Certain
Corporate Matters beginning on page 124.
9. We have entered into two separate agreements with BCCL. One of them is a
shareholders agreement, which contains certain restrictive covenants
Our Company has entered into a shareholders agreement with BCCL and the Promoters.
Under the terms of the said shareholders agreement, as long as BCCL holds 2% of the Equity
Share capital in the Company, prior consent of BCCL is required to be obtained by us for any
matter having a bearing on the rights of BCCL as set out in the shareholders agreement.
10. Our promoters have entered into certain agreements with preferential allottees
which may, up on non-fulfilment of conditions, lead to buy back of shares allotted to
them.
Our individual promoters have entered into certain agreements with certain Investors who
have invested in the company through preferential allotment of equity shares in accordance
with the Unlisted Companies (Preferential Allotment) Rules, 2003, which contains a guarantee
of a predermined price and in case the stock price is below the predetermined price at the end
of the compulsory lock in period or that the Company fails to go for IPO then the two individual
promoters would be liable to buy back the shares from such investors. This may result in an
increase in the promoters holding in the Company.
11. We are yet to receive consents/renewals of certain statutory approvals required in
the ordinary course of our businesses, and if we are unable to obtain these
approvals, our business could be adversely affected.
We are required to obtain certain statutory and regulatory permits and approvals to operate
our business. While we believe that we will be able to obtain or renew permits and approvals
as and when required, there can be no assurance that the relevant authorities will issue any
such permits or approvals in the time anticipated by us or at all. For example, we have applied
for certain approvals for which approvals are in process. If we are unable to renew, maintain
or obtain required permits or approvals, this may result in interruptions in the implementation
of our projects. For further details regarding approvals, please refer to the section entitled
Government and Other Approvals beginning on page 229 of this Draft Red Herring
Prospectus.
12. If we are unable to obtain protection for some of our brands, our business could be
adversely affected.
In India we own 77 trademarks including Khadims, and have presently 231 applications
pending for registration of several trademarks including the ones for Khadims Egaro and
British Walker. Our Mark Khadims is registered in 4 foreign countries and also in all the
countries covered under the Community Application of Trade Marks and the registration for the
same is pending in 2 other countries. We also have around 45 registered copyrights and 50
designs registered in our name. We have a dedicated team which monitors and protects any
infringement or unauthorized use of our intellectual property. However, our efforts to protect
our intellectual property may not be adequate and any third party claim on any of our
unprotected brands may lead to erosion of our business value and our operations could be
adversely affected.
13. Loss making Promoter Group Companies/Entities
Some of our Promoter Group Companies/firms have incurred losses in the three fiscal years as
follows:

15

KHADIM INDIA LIMITED

Name
Knightsville Private Limited
(incorporated on 29 June 2005)
Khadim Financial Services Private
Limited
Moviewallah Communications Private
Limited
St. Mary's Clinic and Drugs Stores

Fiscal 2005

Fiscal 2006

Rs. in Million
Fiscal 2007

(0.08)

(0.09)

0.50

(2.60)

0.27

(3.29)

(0.05)

(3.31)

(0.17)

(0.07)

(0.13)

Some of our Promoter Group Companies have accumulated losses and negative Net worth as
under:
Rs. in Million
Name
Fiscal 2005
Fiscal 2006
Fiscal 2007
Companies with accumulated losses
Knightsville Private Limited
(0.08)
(0.17)
Khadim Financial Services (P) Ltd
Moviewallah Communications Private
Limited

1.60

(1.00)

(0.69)

(12.24)

(12.29)

(15.63)

(11.86)

(11.89)

(15.23)

Company with negative Net worth


Moviewallah Communications Private
Limited

14. Contingent Liabilities could adversely affect our financial condition


The Contingent liabilities of our Company not provided for, as certified by our statutory
auditors are as under:
Rs. in Million
Sl. No.
Particulars
2006-2007
1.
Sales tax Demand (Under Appeal)
19.00
2.
Income Tax Demand (under appeal)
25.60
3.
Excise Duty Demand (Under appeal)
0.09
4.
Others
4.28
5.
Bank Guarantees
10.12
Total
59.09
Crystallization of any of the above liabilities may require the company to honour the demands,
if any, which may adversely affect the liquidity of the company and may have adverse affect
on the financial resources and net worth of the company. We are backed by a team of
professionals who have successfully handled such kind of litigations in past. We are confident
that it will put strong arguments to bring the decision in our favour so that the liabilities
aforesaid are not invoked.
15. Post this Issue, our Promoters and Promoter group would control substantial voting
power, investors may not be able to affect the outcome of any shareholder vote
Following the Issue, our Promoters and Promoter group entities will own 61.94 % of our issued
and paid-up Equity Share capital. So long as our Promoters own a majority of our Equity
Shares, they would be able to elect our entire Board of Directors and control most of the
matters affecting us, including appointment and removal of our officers, our business strategy
and policies, any decision with respect to mergers, amalgamations, acquisitions or disposal of
assets, the incurrence of indebtedness, the issuance of any additional shares or other equity
securities, our dividend policy and our capital structure and financing. Further, this control
could delay, defer or prevent a change in control of the Company, impede a merger,
consolidation, takeover or other business combination involving the Company, or discourage a
potential acquirer from making a tender offer or otherwise attempting to obtain control of the
Company even if it is in the Companys best interest. In addition, for so long as the Promoter
and the Promoter Group continues to exercise significant control over the Company, they may

16

KHADIM INDIA LIMITED

influence the material policies of the Company in a manner that could conflict with the
interests of our other shareholders.
Our promoters and promoters group are holding almost 90% of the pre-issue capital and the
company has witnessed a noteworthy growth under their leadership. Our promoters come with
idea of diversification and modernization from time to time, keeping in view the beneficial
interest of the shareholders.
16. Any future issuance of Equity Shares by the Company or sales of the Equity Shares
by any of its significant shareholders may adversely affect the trading price of the
Equity Shares
If we do not have sufficient internal resources to fund our working capital or capital
expenditure needs in the future, we may need to raise funds through further equity offerings.
Any future issuance of our Equity Shares by the Company could dilute your shareholding. Any
such future issuance of our Equity Shares or sales of our Equity Shares by any of our
significant shareholders may also adversely affect the trading price of our Equity Shares, and
could impact our ability to raise capital through an offering of our securities. In addition, any
perception by investors that such issuances or sales might occur could also affect the trading
price of our Equity Shares. Upon completion of the Issue, 20% of our post-Offer paid-up
capital held by certain of our Promoters will be locked up for a period of three years from the
date of allotment of Equity Shares in the Issue. For further information relating to such Equity
Shares that will be locked up, please refer to the section entitled Capital Structure beginning
on page no. 44 of this Draft Red Herring Prospectus. All other remaining Equity Shares that are
outstanding prior to the Offer will be locked up for a period of one year from the date of
allotment of Equity Shares in the Issue.
We operate in a professional manner and decisions relating to the capital issue are being taken
by the experienced managerial group keeping in mind the interest of general shareholders.
Our Board comprises of professional independent Directors and important corporate decisions
are taken on joint, consultative basis.
17. We do not have a track record for payment of dividend on equity shares
We do not have the track record of dividend distribution on the Equity Shares. The future
payment of dividends, if any would be based on the then available distributable profits and the
recommendations of our Board of Directors. The amount of our future dividend payments, if
any, will depend upon our future earnings, financial condition, cash flows, working capital
requirements, capital expenditures and other factors.
We have not declared dividend in the past with the object to conserve the resources and utilize
the same for future growth and expansions.
III. Business Specific Risks
1. Both of our business formats, namely footwear and LFR are seasonal in nature where
the festival season plays a vital role. A substantial decrease in our sales during this
season may have material adverse impact on our financial performance
Our business is dependent on our performance during festivals like Durga Puja, Diwali,
Christmas and thus shows a seasonality. Various fixed costs like lease rentals, employee costs,
store operating costs, distribution and logistics costs form a substantial portion of overhead
and thus any material decrease in sales during these festivals may have a material adverse
effect on our financial condition and results of operations.
2. We may have Exclusive Dealers viability risk
In the footwear business, one of our key contributors to the business growth is our chain of
Exclusive Dealers. This enables us to focus our strategies and efforts towards quality
maintenance and customer satisfaction without the interference of any external agency.
However, they are subject to competition from other established brand as well as the
unorganized sectors. A decline in Exclusive Dealer profitability could lead to Exclusive Dealer

17

KHADIM INDIA LIMITED

attrition, distribution shrinkage and staggered business growth. However, the company has
not faced any such adversity in the past and owing to its experience and brand loyalty in the
masses such risks may not arise in future.
3. We face significant competition in the large format retail sector
The Indian retail industry is highly competitive. Competition is characterized by many factors,
including assortment, advertising, price, quality, service, location, reputation and credit
availability, availability of retail space. We also face competition from other forms of retail
other than through stores including sale of goods on-line over the internet, door-to door sales
and sale of household products from homes. Certain large domestic industrial and business
groups have evinced interest in this sector and seem to be in the process of establishing retail
chains in India. Such prospective competitors are larger and better placed to take advantage
of efficiencies created by size, and have better financial resources or greater access to capital
at lower costs, and may be better known nationally.
Additionally, we may face competition from international players if foreign participation in the
retail sector is further liberalized. Moreover, as the industry is highly fragmented and we also
face competition from local stores, who may, for a variety of reasons such as easier access for
and personal relationships with the customers, be able to cater to local demands better than
us. Our inability to compete successfully in our industry would materially affect our business
prospects and financial condition.
We firmly believe that the retail sector is just taking shape and thus has room for new entrants
as well. Our Footwear brand Khadims enjoys a confidence and trust in the market we
operate and we are confident that we can convert this trust factor into patronage in our new
line of business. We are also creating a segment for our products to cater to a larger customer
base who associate themselves with the brand Khadims for over two decades now.
4. We deal in a wide range of lifestyle merchandise and aspirational products and thus
our ability to correctly ascertain fashion trends and customer preference is critical to
our operations.
Our success depends partly upon our ability to anticipate and respond to the changing
consumer preferences and fashion trends in a timely manner. If we are not able to respond to
the changing trends in fashion we may not be able to match up to our competitors. The
experience that we have gained over the years enables us to forecast the customer
preferences and demands, which is coupled with a very strong operational and in-house
product development and merchandising team.
5. The products we deal in face the risk of design mortality.
Both our footwear products and our own branded products in the LFR business face threat of
obsolescence in terms of design and fashion trends, making investments in moulds and brand
building redundant. Technological changes may also lead to design mortality.
We always try to assess as to what (in terms of colour, texture and style) will sell in which
region derived out of a rich four-decade intellectual repository. The strong outsourcing
infrastructure that we have built over the period helps us to adapt to the newer trends and
design seamlessly at the same time also risk fence us from loss of investment in equipment
and machines due to obsolescence.
6. A substantial portion of our product is procured from outside and are subject to risks
relating to quality control, timely delivery, obsolescence and poaching of the vendors
by competitors.
Around 85% of our turnover in footwear business comes from products outsourced from
outside. In LFR almost all our own brands are outsourced. We may face the risk relating to
quality control, timely delivery of logistics, obsolescence and poaching of vendors. Any or all of
these may prevent us from encashing opportunities in the marketplace and also at times
maintain our market share. A poor quality control or a poor logistics movement in the
outsourcing chain, could damage the reputation of the Company.

18

KHADIM INDIA LIMITED

We have a well tested outsourcing model with over four decades of existence. We have a
dedicated team to ensure timely delivery of the right product mix in right quantity. This team
monitors the movement of all the outsourced products that ensures quality products with right
demand. We treat our vendors as business partners leading to corresponding win-win situation
that in turn inculcates a sense of belonging thus reducing the risk of poaching.

7.

Supply Chain Management plays a very vital role in both kinds of our businesses.
A strong supply chain system is essential to ensure availability of merchandise at the stores.
Ensuring shelf availability for our products warrants quick turnaround time and high level of
coordination with suppliers. We rely on our supply chain and adopt operational processes to
optimize our inventory position and reduce cost. We strive to keep optimum inventory at our
stores and distribution centers to control our working capital requirements. Inefficient supply
chain management could adversely affect the results from operations.
However, we operate in a hub and spoke system for effective sourcing and distribution. We
have set up regional distribution centers for efficient storage and timely delivery of material to
our retail outlets and channel partners. This helps us to minimize lead time and better
utilization of working capital.

8. We are vulnerable to volatility in prices of our raw materials


We rely on third-party suppliers for the raw materials used in our manufacturing process. The
price and availability of such raw materials may fluctuate significantly on many factors,
including weather patterns and socio-economic environment of the country. Adverse
fluctuations in the price, availability and quality of the raw materials used by us could have a
material adverse effect on our cost of goods sold or our ability to meet our customers
demands. Further, non-availability of required raw materials or any other item of production in
the desired quantity and quality at the right time may adversely affect our sales commitment,
profitability and price competitiveness.
A major portion of our raw material for footwear is petroleum derivatives, which are prone to
price fluctuations due to volatility in international crude oil prices.
9. Our profits have not increased in the proportion to the increase in our turnover
Our turnover has increased from Rs.1315.37 million in fiscal 2006 to Rs.1493.47 million in
fiscal 2007 at a growth of 13.54%. During the same period, our profit after tax has increased
from Rs.27.28 million to Rs.29 million at the growth of 6.30%.
This moderate growth in the profit after tax despite the reasonable growth in turnover is
attributable to the fact that the Company has incurred huge costs on developing its
infrastructure in the area of manpower, information technology and immovable properties.
All these expenses are in effect an investment for future as we expect to get benefits from the
amount spend.
10. Any adverse impact on the title or ownership rights or development rights of our
landlords from whose premises we operate may impede the effective operations of
our stores, offices or distribution centers in the future
Some of the premises from which we operate our stores / offices / distribution centers are
taken by us on long term lease or sub-lease or leave and license or on conducting basis and/or
on the basis of other contractual agreements with third parties. We may continue to enter into
such transactions with third parties. Any adverse impact on the title / ownership rights /
development rights of our landlords from whose premises we operate our stores may impede
our business, our operations and our profitability. In the event, these leases or other
agreements are not renewed, our operations and in turn profitability will be impacted.
The financial impact of such aforesaid risk cannot be quantified. Additionally, some of our lease
deeds prescribe a lock-in period. These lock in periods prevent us from moving our stores even

19

KHADIM INDIA LIMITED

in circumstances that impede our profitability. Any such event and such restrictive covenants
in our lease deeds affects our ability to move the location of our stores and may adversely
affect our business, financial condition and results of operations.
11. Past store sales may not be comparable to and indicative of future store sales.
Various factors affect the sales at our stores including competition, our capabilities in sourcing
and buying and merchandising, our supply chain, store location and floor plate, fashion trend
changes, our systems and processes etc. These factors will have an influence on existing and
future stores and thus past figures of sales may not be true indication of future sales.
12. Our business depends on our ability to obtain and retain quality retail spaces.
Our success in our business depends on our ability to identify and acquire quality retail space
at appropriate terms and conditions. We compete with other large retailers for acquiring
quality real estate resources. If we fail to acquire targeted properties, we would face delays in
execution of our strategies, which may result in cost overruns or otherwise adversely affect
our business, operations and profitability.
In addition, some of our retail stores are owned by us. We take property on lease or licence,
which may or may not be renewed. The termination of our leases or licences, or disputes that
may arise with store owners may result in closure of our stores, thus affecting our business
and profitability.
13. Our business depends on our ability to maintain consistency in customer service and
other operations.
Competition for personnel, particularly for employees with retail expertise, is intense.
Additionally, our ability to maintain consistency in the quality of customer service in our stores
is critical to our success. This will depend on our ability to hire the right personnel and also
train the new personnel in the implementation of our processes effectively. In addition, the
attrition rate of employees is high in the retail industry and in the event we lose employees at
a high rate or we cannot recruit fresh talent, it may adversely affect our operations.
14. Our growth requires additional capital, which may not be available on terms
acceptable to us.
The retail industry is capital intensive and requires significant expenditures for store
establishment, sourcing of products and raw materials. We intend to pursue a strategy of
continued investment in additional retail stores. We anticipate that we will need to obtain
additional financing as we expand our operations. We may not be successful in obtaining
additional funds in a timely manner, on favourable terms. In addition, restrictions on the
foreign direct investment in the retail sector in India are likely to impact our funding options.
Moreover, certain of our loan documentations contain provisions that may reduce our ability to
incur future debt. In addition, the availability of borrowed funds for our business may be
reduced, and the lenders may require us to invest increased amounts of equity in a project in
connection with both new loans and the extension of facilities under existing loans. If we do
not have access to additional capital, we may be required to delay, scale down some of our
plans or growth strategies or reduce capital expenditures and the size of our operations.
15. We rely on our manufacturing facilities. The loss of or shutdown of operations at any
of our manufacturing facilities may have a material adverse effect on our business,
financial condition and results of operations.
We have a number of sub-brand for footwear manufactured by us such as British walkers,
Lazard, waves, pedro etc. In fiscal 2007, the sale of footwear manufactured by us was Rs.
209.17 million which accounted for 14.01% of our total sales. Our footwear manufacturing
plant is located at Kasba Industrial Estate, Kolkata, West Bengal.

20

KHADIM INDIA LIMITED

Our facilities are subject to operating risks, such as the breakdown or failure of equipment,
power supply or processes, performance below expected levels of output or efficiency,
obsolescence, labour disputes, natural disasters, industrial accidents and the need to comply
with the directives of relevant government authorities. The occurrence of any of these risks
could significantly affect our operating results. In addition, smooth and efficient functioning of
our manufacturing process is dependent on sub-contractors and job workers. In the event our
sub-contractors or job workers fail to deliver on time or as per the quality prescribed, our
manufacturing process may be impacted. Although we take precautions to minimize the risk of
any significant operational problems at our facilities, our business, financial condition and
results of operations may be adversely affected by any disruption of operations at our
facilities, including due to any of the factors mentioned above.
16. We are dependent on our management and professional team for success
Our performance and success depends largely on our management team (in particularly, our
Chairman cum Whole-Time Director Mr. Satya Prasad Roy Burman and Managing Director, Mr.
Siddhartha Roy Burman) and team of professionals to oversee the operations and growth of
our business. If we lose the services of our Chairman / Managing Director or any of our key
managerial personnel, it would be very difficult to find and integrate a suitable replacement in
a timely manner which could significantly impair our ability to develop and implement our
business strategies. This would have a material adverse effect on our financial condition and
results of operations.
Our success depends in part on our ability to recruit and retain talented professionals such as
designers, merchandisers, procurement personnel, logistics personnel, business development
personnel at reasonable cost. In addition, owing to high attrition rate of employees in our
sector of operation i.e. the retail sector. We may face an intense competition from other
footwear and retail sector companies in recruiting and retaining employees. Attracting and
retaining scarce top quality managerial talent has become a serious challenge for the
companies in India. The inability to recruit and retain such high quality human resources at
reasonable cost may harm our growth and our future earnings may be affected adversely.
There can be no assurance that we will be able to successfully attract, assimilate or retain
qualified personnel.
17. The Company may not be able to mobilize low cost funds
We may face problem to procure low cost funds. We are working in a multi-banking
arrangement to net off the cost factor.
18. Our future plans may need substantial capital and additional financing in the form of
debt and/or equity to meet our requirements.
Our proposed business plans are being funded partly through this IPO, debts and internal
accruals. However the actual amount and timing of future capital requirements may differ from
estimates for various unforeseen events like delays or cost over runs, unanticipated expenses,
act of God, market developments or new opportunities in the industry. Internal accruals also
may not be as per estimation and thus we may have to resort to alternate sources of funds in
the form of debt or equity.
Any additional funding through the equity route may eventually dilute your shareholding in the
Company.
We would try to take benefit from debt funding and internal accruals to the extent possible.
19. We have entered into related party transactions with our promoters and/or Directors
We have entered into transactions with our related/group companies. Whilst we believe that all
such transactions have been conducted on an arms length basis, there can be no assurance
that we could not have achieved more favourable terms had such transactions not been
entered into with related parties. Furthermore, it is likely that we may enter into related party
transactions in the future. There can be no assurance that such transactions individually or in
the aggregate, will not have an adverse effect on our business and results of operations. For

21

KHADIM INDIA LIMITED

details on related party transactions refer to Financial Statements Related Party


Transactions on page 186 of this Draft Red Herring Prospectus.
20. Any failure in our information technology systems could adversely impact our
business performance
We rely extensively on our information technology systems to provide us connectivity across
our business functions through our software, hardware and connectivity systems. Any
disruptions in the functioning could affect operations. We have adequate back up facilities. We
also have reasonably adequate firewall to protect our systems. We are considering the
implementation of numerous applications including a state of the art ERP.
21. Our growth strategy to expand into new geographic areas exposes us to certain risks
Increasing penetration in new geographical areas is one of our growth strategies. We propose
to continue with this strategy of entering new geographic areas. Pursuance of such a growth
strategy may expose us to risks which may arise due to lack of familiarity with the
development, ownership and management of retail business and the customer preferences
including:

adjusting our retail methods to different geographies;

obtaining necessary governmental approvals and permits under unfamiliar regulatory


regimes;

attracting potential customers in a market in which we do not have significant experience;

obtaining the necessary products in sufficient amounts and on acceptable terms;

the cost of hiring new employees and increased infrastructure costs

Significant development in Indias fiscal and environmental regulations.


In the event we are unable to successfully manage the risks of such an expansion, it could
have a material adverse effect on our revenues, earnings and financial condition.
22. All our new stores have gestation period and thus takes time to break even.
From our past experience we have seen that our new footwear stores generally have a
gestation period that varies from store to store. Similarly, from the industry data it is seen that
any large format retail takes time to break even. This may actually, have an impact on our
future earnings. This is evident from our performance for the financial year 2005-2006 and
2006-2007, in which case the bottom line has not seen substantial growth which can be
attributed to that fact of our opening of a number of stores mainly in those areas where we did
not have significant presence earlier.
23. Business is highly dependent on our ability to attract customers to our stores, past
sale may not be indicative of future store sale
Various factors affect the sales at our stores including competition, our capabilities in sourcing
and buying and merchandising, our supply chain, store location and floor plate, fashion trend
changes, our systems and processes etc. Other factors such as the regional economy, weather
conditions, natural disasters, social unrest as well as government regulations specific to the
states in which we operate may affect the customers coming to our stores. These factors will
have an influence on existing and future stores and thus past figures of sales may not be true
indication of future sales
The disposable income available to the customers also affects their spending power on
consumer products that we sell in our stores. A change in economic conditions in the country
may affect the disposable income available to customers, which may in turn affect the result
from our operations, our financial position and our profitability. In addition, our ability to
maintain close and satisfactory relationships with our customers and to consistently procure
products that meet the requirements of our customers is therefore important to our business.
There is no assurance that these customers will continue to purchase our products from us or
that they will not scale down their orders, in the event that they are able to obtain similar
products from our competitors at more favorable terms or for any other reason. Any significant
loss from losing such customers or reduction in business from them will adversely impact our
revenue and profitability.

22

KHADIM INDIA LIMITED

Our company is covering all consuming centres and towns of Eastern India with a population in
excess of 3,00,000 through owned-exclusive dealers and distributors. We have extended our
successful Eastern India model to South India and aggressively rolling outlets planned in
Western and Northern India.
24. Uninsured losses or losses in excess of our insurance coverage could result in a loss
of our Investment
Although we attempt to limit and mitigate our liability adequately for damages arising from fire
and other perils, burglary, etc. through contractual provisions and/or comprehensive insurance
coverage for our existing outlets and manufacturing facilities, there could still be possible
losses, which we have not insured or the insurance cover in relation to which may not be
adequate. We may face loss of investments in the absence of insurance and even in cases in
which any such loss may be insured, we may not be able to recover the entire claim from
insurance companies. Further, there are many events that could significantly impact our
operations, or expose us to third-party liabilities, for which we may not be adequately insured.
Any damage suffered by us in excess of such limited coverage amounts, or in respect of
uninsured events, would not be covered by such insurance policies and we would bear the
impact of such losses. We furthermore cannot assure that any claim under the insurance
policies maintained by us will be honored fully or on time.
Although, the above risk factors are generic in nature, the company is aware and attempts to
minimize the frequency and severity of the same through appropriate risk management
strategies by taking reasonably adequate insurance coverage.
25. In future we may face potential liabilities from lawsuits or claims by consumers
We may face the risk of legal proceedings and claims being brought against us by our
customers/consumers for any defective product sold or any deficiency in our services to them.
Also, since we have a large number of customers/consumers visiting our stores daily, we could
face liabilities should our customers/consumers face any loss or damage to their property or
self due to any unforeseen incident such as fire, accident etc. in our stores. This may result in
liabilities and/or financial claims for our Company as well as loss of business and reputation.
Our Company is carrying its business over 25 years and is successful in winning the confidence
of the customers. As on date the company has not experienced any legal proceedings
instituted by its customers having significant influence on our business or brand image. We
have adequately covered ourselves under Public Liability Insurance Act, 1996
26. Our Expansion plan for the retail stores may not be successful
Our growth will continue to be dependent upon, the opening of new stores and capitalizing on
our existing marketing and distribution network, increased sales volume and profitability from
our existing and new stores, franchises and other distribution and selling arrangements. The
ability to operate our existing and new stores profitably is subject to various contingencies,
many of which are beyond our control. These contingencies include our ability to secure
suitable locations for our outlets on a timely basis and on satisfactory terms,. In addition,
many of our retail stores are not owned by us. We take property on lease or license, some of
which may or may not be renewed. The termination of our leases or licenses, or disputes that
may arise with store owners may result in closure of our stores, thus affecting our business
and profitability. Moreover, the costs associated with acquiring, assimilating and opening new
stores may adversely affect our profitability. In addition, an inability to continue our existing
arrangements for stores in shopping malls and department stores where we currently have
outlets could adversely affect our retail operations and our business. Furthermore, a number of
our lease / license arrangements are medium term leases and there can be no assurance that
such leases will continue to be renewed, or, if renewed, will be on existing or comparable
terms.
27. Most of our projects require the services of third parties, which entails certain risks,
and as we expand geographically, we will be using contractors with whom we are
not familiar
Most of our projects require the services of third parties. These third parties include designers,
contractors and suppliers of materials. The timing and quality of projects we develop depends

23

KHADIM INDIA LIMITED

on the availability and skill of those third parties, as well as contingencies affecting them,
including raw material shortages and industrial action such as strikes and lockouts. It should
not be assumed that skilled third parties will continue to be available at reasonable rates and
in the areas in which we conduct our projects. Additionally, we rely on manufacturers and
other suppliers and do not have direct control over the products they supply, which may
adversely affect our developments. As we expand geographically, we will have to use
contractors with whom we are not familiar, which will increase the risk of cost overruns,
manufacturing defects and failures to meet scheduled completion dates.
Till now we have not faced any substantial problem in opening new stores so far as the third
parties are concerned.

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KHADIM INDIA LIMITED

B. EXTERNAL RISKS
1. Indian Footwear industry may face severe competition from International Players
With the entry of internationally renowned brands in the India Market the Indian Footwear
industry may face severe competition in general and the Company in particular.
Most of the international brands are targeting at the high end as they focus on the upper
income segments. Our segment Khadims addresses the middle-class.
2. The Indian footwear industry is highly competitive
The organized footwear industry in India consists of approximately 25% of the entire market.
The major market is controlled by unorganized players. These Unorganized competitors enjoy
tax and other fiscal advantages resulting in an ability to undercut organized players.
This is a risk applicable to the entire footwear industry. The Company is constantly
endeavoring to keep pace with the latest developments in the industry and is gradually
strengthening its position to enhance its market share by introducing new products, appointing
new distributors, extensive geographical coverage etc.
Moreover, we offer a value lifestyle proposition that is able to meet the aspirational aspect of
the customer. Further, the Number of SKUs offered by us is quite significant to cater a larger
number of people from one outlet.
3. We are subject to risks arising from exchange rate fluctuations which may adversely
affect our financial performance
The company is also trying to spread its wings in the foreign markets and has started export
activities since year 2005-06. In addition, we also place orders with overseas merchants /
manufacturers for our imports of plant and machinery and raw material for footwear and
accessories. Thus the receipt and payment for the said imports and exports are in the
respective currency of the country. Moreover, our gold business is also subject to exchange
fluctuations. In the future, we expect an increase in our dealings in foreign exchange thus
increasing our exposure to foreign exchange markets. The exchange rate between the Rupee
vis--vis other currencies is variable and may continue to fluctuate in the future and affect us
to the extent of increasing the cost of import of goods and services or decreasing the price of
the exported products. Our inability to hedge this foreign exchange exposure may result in an
adverse impact on our financial condition.
4. We are dependent on the political, economic, regulatory,
regulatory approvals and Government approvals of the country.

social

conditions,

Global economic and political factors that are beyond our control, influence forecasts and
directly affect performance. These factors include interest rates and its impact on availability of
retail space, rates of economic growth, fiscal and monetary policies of governments, inflation,
deflation, consumer credit availability, consumer debt levels, tax rates and policy,
unemployment trends, terrorist threats and activities, worldwide military and domestic
disturbances and conflicts, and other matters that influence consumer confidence, spending
and tourism. Increasing volatility in financial markets may cause these factors to change with
a greater degree of frequency and magnitude. Multi-point octroi and tax evasion by smaller
stores are some of the concerns faced by organized retailers. Changes in local taxes and levies
can impact the performance of retailers adversely. The Governments stand on foreign direct
investment (FDI) in the retail trading sector is still unclear. The absence of FDI may impact
growth and exposure to some best practices.
Since 1991, the Government of India has pursued policies of economic liberalization, including
significantly relaxing restrictions on the private sector. The current government has announced
policies and taken initiatives that support the economic liberalisation policies that have been
pursued by previous governments, the rate of economic liberalisation has been affected by the
coalition nature of the current government. If there were to be any slowdown in the economic
liberalisation, or a reversal of steps already taken, it could have an adverse effect on our
business and results of operations. There is no assurance that the liberalization policies of the
government will continue in the future. The pace of economic liberalization could change and

25

KHADIM INDIA LIMITED

specific laws and policies affecting the industry and other policies affecting investment in our
Companys business could change as well. A significant change in Indias economic
liberalization and deregulation policies could disrupt business and economic conditions in India
and thereby affect our Companys business.
5. A slowdown in economic growth in India could cause our business to suffer.
The Indian economy has shown sustained growth over the last few years with GDP growing at
7.2% in fiscal 2003, 8.0% in fiscal 2004 and 8.5% in fiscal 2005 and 8.8% in fiscal in 2006 as
per World Economic Outlook, IMF. However, growth in industrial and agricultural production in
India has been varying. Industrial growth was 6.2% in fiscal 2003, 6.6% in fiscal 2004 and
8.3% during fiscal 2005. Agricultural production declined by 5.2% in fiscal 2003, grew by
9.6% in fiscal 2004 and by 1.1% in fiscal 2005. GDP growth in the first half of fiscal 2006 was
reported at around 8.1% and RBI has raised its GDP growth forecast for fiscal 2006 to 7.5% to
8.0% from its previous estimate of 7.0% to 7.5%.
We currently operate primarily in the domestic Indian market, and our performance is
intertwined with the overall economy, the GDP growth rate and the economic cycle in India.
The Indian economy could be adversely affected by a number of factors. In particular, India
depends on imported oil for its energy needs, importing approximately 41.9% of its
requirements of crude oil during fiscal 2005, which represented approximately 27.9% of total
imports during such fiscal year. A significant increase in the price of crude oil could adversely
affect the Indian economy. India's economy could also be adversely affected by a general rise
in interest rates and unfavourable weather conditions adversely affecting agriculture. Any
slowdown in the Indian economy or volatility in global commodity prices, could adversely affect
our business and impact our performance.
6. Our performance is linked to the stability of policies and the political situation in
India.
The role of the Indian central and state governments in the Indian economy has remained
significant over the years. Since 1991, the Government has pursued policies of economic
liberalisation, including significantly relaxing restrictions on the private sector. There can be no
assurance that these liberalisation policies will continue in the future. The rate of economic
liberalisation could change, and specific laws and policies affecting financial services
companies, foreign investment, currency exchange rates and other matters affecting
investments in Indian companies could change as well. A significant change in Indias
economic liberalisation and deregulation policies could disrupt business and economic
conditions in India, thus affecting our business.
The current Government is a coalition of several parties. The withdrawal of one or more of
these parties could result in political instability. Any political instability could delay the reform
of the Indian economy, which could materially adversely impact our business.
7. Terrorist attacks and other acts of violence or war could adversely affect the
financial markets and adversely affect our business, prospects, financial condition
and results of operations
Terrorist attacks may cause damage or disruption to our company, our employees, our
facilities and our customers, which could impact our sales and results from operations. The
terrorist attack or attack or wars may also negatively affect the global capital market. These
acts may result in loss of business confidence make travel and other services more difficult and
ultimately affect the companys business. As a result of such events countries may enter into
armed conflict with other countries. The consequences of any potential armed conflict are
unpredictable, and the company may not be able to foresee events that could have material
adverse effect on its business, financial condition or results of operation.
8. Natural calamities could adversely affect the Indian economy, our business and the
price of our equity shares
India has experienced natural calamities like earthquakes, a tsunami, floods and drought in the
past few years. The extent and severity of these natural disasters determine their impact on

26

KHADIM INDIA LIMITED

the Indian economy. For example, in fiscal 2003, many parts of India received significantly
less than normal rainfall. As a result of the drought conditions in the economy during fiscal
2003, the agricultural sector recorded a negative growth of 5.2%. Also, the erratic progress of
the monsoon in fiscal 2005 adversely affected sowing operations for certain crops and resulted
in a decline in the growth rate of the agricultural sector from 10.0% in fiscal 2004 to negligible
growth in fiscal 2005. The agricultural sector grew by 6.0% in fiscal 2006 and by 2.2% in the
first nine months of fiscal 2007. Further prolonged spells of below or above normal rainfall or
other natural calamities could adversely affect the Indian economy and our business,
especially in view of our strategy of increasing our exposure to rural India.
9. The price of our Equity Shares may be highly volatile
The Equity Shares offered pursuant to the Issue will be listed on the National Stock Exchange
of India Limited and the Bombay Stock Exchange Limited. Prior to the issue there has been no
public market for the equity shares of our Company and an active market may not develop
after the issue. The issue price of the share may bear no relationship with the market price of
shares after issue. The prices of our Equity Shares on the Indian Stock Exchanges may
fluctuate significantly after the Issue as a result of several factors including:

Volatility in Indian and global securities market;


Our results of operations and performance;
Performance of our competitors and perception in the Indian market about investment in
the retail sector;
Changes in the estimates of our performance or recommendations by financial analysts;
Significant development in Indias economics liberalization and de-regulation policies; and
Significant development in Indias fiscal and environmental regulations.

There can be no assurance that the price at which our Equity Shares are initially traded will
correspond to the prices at which our Equity Shares will trade in the market subsequent to this
Issue. Also, sale by the Promoters or major shareholders of their shareholding (subject to lockin compliances) may affect the trading price of our Equity Shares
Securities market is the volatile market and responds quickly to any change in factors like
economic or financial condition of the company, results, competitors perspective etc., but in
addition to it the ever-increasing restriction and compliance measures by regulatory bodies
have discouraged the unwanted fluctuations in the share price.
10. Conditions in the Indian securities market may affect the price or liquidity of the
Equity Shares
The Indian securities markets are smaller than securities markets in more developed
economies. Indian stock exchanges have in the past experienced substantial fluctuations in the
prices of listed securities. Further, the Indian stock exchanges have experienced recent
volatility, with the BSE index declining by almost 25% in the summer of 2006 before
recovering; significant volatility was also seen in the first few months of 2007. The Indian
stock exchanges have also experienced problems that have affected the market price and
liquidity of the securities of Indian companies, such as temporary exchange closures, broker
defaults, settlement delays and strikes by brokers. In addition, the governing bodies of the
Indian stock exchanges have from time to time restricted securities from trading, limited price
movements and restricted margin requirements. Further, disputes have occurred on occasion
between listed companies and the Indian stock exchanges and other regulatory bodies that, in
some cases, have had a negative effect on market sentiment. If similar problems occur in the
future, the market price and liquidity of the Equity Shares could be adversely affected
11. Regulatory, environmental and health and safety matters
A number of government permits and approvals are required for the Companys operations.
These permits and approvals include licenses for operation of the factories, registration under
the Central and State Sales Tax Acts, environment clearances under the Water and Air
(Prevention and Control of Pollution) Acts. The cost, liabilities and requirements associated
with complying with these laws and regulations may be substantial and time consuming and
may delay the commencement or continuation of production activities. Failure to comply with

27

KHADIM INDIA LIMITED

these laws and regulations or to obtain or renew the necessary permits and approvals may
result in the loss of the right to operate the business.
These permits and approval are required to be obtained by the entire footwear/retail industry
and is not applicable specifically to our company. These approvals are of routine nature and
the management believes that we will be able to renew or obtain such permits and approvals
as and when required, in the time-frame anticipated by us.
NOTES:
i.

Net worth of our Company as on 31st March 2007 is Rs. 487.55 million.

ii.

The present Issue is of 55,00,000 Equity Shares of Rs. 10/- each for Cash at a Premium
of Rs. [] per Equity Share aggregating Rs. [] Million. 2,00,000 equity Shares will
reserved in the issue for subscription by Eligible Employees. Net offer to the public is of
53,00,000 aggregating Rs. [] Million.

iii.

Book Value of the Equity Shares of our Company as on 31st March 2007 is Rs. 44.63 per
Equity Share.

iv.

Investors are advised to refer to the paragraph on Basis for Issue Price beginning on
page no.60 before making an investment in this Issue.

v.

Investors may note that in case of over subscription, the allotment shall be on
proportionate basis and for details reference may be made to Para on Basis of Allotment
given on page no. 278 of this Draft Red Herring Prospectus.

vi.

The investors are advised to refer the Paragraph on promoters background on page no.
143 and past financial performance of the company on page no. 154 before making an
investment in the proposed issue.

vii.

There are no relationships with statutory auditors to the company other than auditing and
certification of financial statements.

viii.

Investors may note that allotment and trading in the Equity Shares of our Company shall
be done only in dematerialized form.

ix.

The average cost of acquisition of Equity Shares of face value of Rs. 10 each by the
companys Promoters is as follows:
Sr. No.
1
2
3

Name of Shareholder
Mr. Satya Prasad Roy Burman
Mr. Siddhartha Roy Burman
Knightsville Private Limited

Avg. Cost of
Acquisition (Rs.)
10.00
10.00
3.52

No of Shares
1,240,749
324,885
8,737,829

Average cost of acquisition to our Promoters is Rs. 4.50 per share


x.

Except as disclosed in the sections Our Management and Our Promoter and Promoter
Group on pages 132 and 143 of this Draft Red Herring Prospectus, none of our Promoters,
our Directors and our key managerial employees have any interest in our Company except
to the extent of remuneration and reimbursement of expenses and to the extent of the
Equity Shares held by them or their relatives and associates.

xi.

This Issue is being made through a 100% Book Building Process wherein not more than
50% of the Net Issue to Public shall be allocated on a proportionate basis to Qualified
Institutional Buyers, of which 5% shall be reserved for Mutual Funds. Further, not less
than 15% of the Net Issue shall be available for allocation on a proportionate basis to Non
Institutional Bidders and not less than 35% of the Net Issue shall be available for
allocation on a proportionate basis to Retail Individual Bidders, subject to valid bids being
received at or above the Issue Price.

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KHADIM INDIA LIMITED

xii.

Investors may contact the Book Running Lead Manager or the Compliance Officer for any
complaint/ clarification/information pertaining to the Issue.

xiii.

Trading in Equity Shares for all investors shall be in dematerialized form only, after the
Equity Shares are made fully paid-up.

xiv.

For details of related party transactions, please refer to page no. 186 of this Draft Red
Herring Prospectus.

xv.

Any clarification or information relating to the Offer shall be made available by the BRLM,
and the Company to the investors at large and no selective or additional information would
be available for a section of investors in any manner whatsoever. Investors may contact
the BRLM and the Syndicate Members for any complaints pertaining to the Offer.

29

KHADIM INDIA LIMITED

SUMMARY OF THE INDUSTRY


RETAIL
India has topped the AT Kearneys annual Global Retail Development Index (GRDI) for the third
consecutive year, maintaining its position as the most attractive market for retail investment.
The Indian retail market -- one of India's fastest growing industries -- is expected to grow from
US$ 350 billion to US$ 427 billion by 2010. According to Euromonitor International, the Indian
Retail market will grow in value terms by a total of 39.6 per cent between 2006 and 2011,
averaging growth of almost 7 per cent a year.
Modern retail accounts for about 4 per cent of the total retail market in India. This share is
expected to increase to about 15 -20 per cent with the entry of a number of corporates into the
segment. Modern retail formats have grown by 25-30 per cent in India in the last year and could
be worth US$ 175-200 billion by 2016.
Retail space
Retailers in India are the most aggressive in Asia in expanding their businesses, thus creating a
huge demand for real estate. Their preferred means of expansion is to increase the number of
outlets in a city, and also expand to other regions, revealed the Jones Lang LaSalle third annual
Retailer Sentiment Survey-Asia.
Driven by changing lifestyles, strong income growth and favourable demographic patterns, Indian
retail is expanding at a rapid pace. The country may have 600 new shopping centres by 2010. Mall
space, from a meagre one million square feet in 2002, is expected to touch 40 million square feet
by end-2007 and an estimated 60 million square feet by end-2008.
Size of the Indian Retail Sector
The Indian retail sector is estimated to have a market size of about $ 180 billion; but the
organized sector represents only 2% share of this market. Currently, Indian retail distribution is
completely fragmented with about 12 million players. The majority of these are very small players
operating from small shops (below 50 square feet in size) and handcarts. These retail outlets are
spread across the country in over 5,000 towns and 600,000 villages. Most of the organized
retailing in the country has just started recently, and has been concentrated mainly in the metro
cities. India is the last large Asian economy to liberalize its retail sector. In Thailand, more than
40% of all consumer goods are sold through the super markets and departmental stores. A similar
phenomenon has swept through all other Asian countries. Organized retailing in India has a huge
scope because of the vast market and the growing consciousness of the consumer about product
quality and services.
Footwear Industry
Footwear is a necessity to every person and at the same time is now a lifestyle as also a
performance enhancement product; and is thus a segment with vast potential. The India footwear
market is estimated to be worth Rs. 137,500 Million and constitutes just about one percent of
Indian retail. About 37.8 percent of Footwear retail is the organized segent, which qualifies it as
the second most organized retail category in India, next only to Watches.
The footwear market can be segmented into a number of categories: Premium/High-end, Medium
priced, low priced and plastic slippers/leather strapped one. Again, organized footwear retail has a
number of segments like sports footwear, semi-formal/casual footwear, and formalwear and utility
footwear. In terms of number of units sold in 2005-06, Casual comprises more than 50 percent of
the organized branded footwear market in India, followed by mass/economy range at about 20%
and Sports/active wear and Premium leather footwear at 7-10 percent each.
The booming Indian economy offers the prospect of higher disposable incomes and a change in
consumer preferences leading to a probable increase in per capita footwear ownership. Even as
India's share of the global footwear trade has been insignificant with a share of less than 3%, it

30

KHADIM INDIA LIMITED

could soon change due to a migration in installed capacities from developed to developing
countries on account of high wages and environmental issues. In the 2006 Union Budget, the rate
of excise duty on footwear with an MRP between Rs. 250 and Rs. 750 was reduced from 16% to
8%, which has helped footwear manufacturers address competition from the unorganized sector
and imports. The imposition of an anti-dumping duty by the European Union on imports of certain
footwear categories from China and Vietnam created an opportunity for Indian exporters.
The Indian footwear industry has witnessed a metamorphosed growth with the advent of new
retail brands and formats in the Indian markets. The Industry has grown by leaps and bounds in
the last decade with the introduction of new technologies and inflow of investments. The Industry
both at manufacturing and marketing sides continues to be fragmented into multiple regions. This
is largely because of the large size of the country resulting in local preferences due to the
economic, social and seasonal factors and absence of a proper distribution network.
SUMMARY OF OUR BUSINESS, STRENGTHS AND STRATEGIES
Overview
We are among the top 3 footwear retailers in India (on the basis of the number of stores) and our
flagship brand Khadims is considered the as most preferred footwear brand in Eastern India
(IMRB survey). We have over 260 retail outlets (including owned stores and exclusive dealers)
across 22 Indian states. We offer a wide range of footwear for the entire family, at various price
points, catering to the different income groups.
Our Company, with over a decades experience in retailing, has also forayed into value-lifestyle
retailing, through its brands Khadims Khazana in 2004 and more recently it has taken its
diversification plan a step further with the opening of two more Lifestyle Retail stores under the
name of Khadims Egaro in Kolkata and Howrah in the month of June 2007. These stores offer
garments, footwear, jewellery, gold, groceries, etc, at competitive prices and provide an exclusive
shopping environment, which was previously limited only to the high-end retail stores.
Our journey in the footwear sector began in the year 1965 when our chairman Mr. S. P. Roy
Burman took over K. M. Khadim & Co., a firm then owned by one Mr. K. M. Khadim. Thereafter,
the business of Khadims grew all across India under his able leadership. Mr. Roy Burman has
made a very significant contribution in making Kolkata Footwear Industry a vibrant and
competitive industry and putting it at par with other centers of excellence.
We have always followed the concept of value retail in India. In other words, our business
approach is to sell quality goods at reasonable prices by either manufacturing ourselves or directly
procuring from manufacturers (primarily from small and medium size vendors and manufacturers).
We endeavour to facilitate one-stop-shop convenience for our customers and to cater to the needs
of the entire family.
Our competitive strengths
We have a long-standing experience with a strong brand in the Indian footwear segment. We
believe that the following are our principal competitive strengths which have contributed to our
current position in the retail sector in India:Strong Infrastructure Availability
Khadims possesses about 40000 sq. ft. of area for footwear manufacturing facility across two
locations of the Kasba Industrial Estate in Kolkata with a consolidated capacity to produce 15000
pairs of footwear in a day. The technology and infrastructure used by the company are based on
industry standards. Our manufacturing capacity is further reinforced by an outsourcing
arrangement with a number of dedicated vendors who are located within close proximity to our
principal manufacturing facilities. We have a pan India retail presence marked by 52 owned outlets
and 212 Exclusive Dealers supported by more than 285 other dealers. Our distribution and
logistics network comprises of three distribution centers i.e. Kolkata, Delhi and Chennai comprising
of seven warehouses. We are also planning to set up a central distribution center in and around
Kolkata to cater to the regional distribution centers and stores.

31

KHADIM INDIA LIMITED

Geographical Spread
We have a pan India presence, which has enabled us to build our brand value and also facilitated
us to explore cost-effective sourcing from different locations, identify potential markets and
efficiently establish new stores in different locations. Khadim has done immensely well in the
footwear segment and has grown into an entity with more than 260 Exclusive stores selling its
products out of which 52 are owned by the company and the remaining are exclusive dealers are
located across 22 states, which, we believe, enables us to capture market share in locations where
a majority of our target customers are located.
Brand Positioning
The presence of the Khadims brand across user segments has been growing steadily over the
period of time. The shift from the unorganized to the organized market is on the rise and the
brand Khadims has been a beneficiary of the same. We have centered our brand building exercise
on the theme of emotional bonding, which has created the foundation of the Khadims brand. Over
the years, Khadims has reinforced emotional connect between the consumer and the product
through the following initiatives:

A distinctive positioning of the product for the growing middle-class around the unbeatable
price value proposition.
A responsible extension to the virtues of authenticity and affordability extending from
positioning to product to store presentation, leading to a credible recall.
A comprehensive exposure across the print, outdoor and electronic media to capture consumer
attention
A prudent visibility at major entry and exit points of towns helping the brand identify with the
floating target population

Wide Range of products


We provide a wide range of footwear for every age group and for all segments of the society. This
allows us to cater to the diverse demands of our customers and to consolidate and establish our
presence across diverse regions. The opening of gold jewellery stores under the brand name
Khadims Sona Khazana and our Lifestyle stores in the name of Khadims Egaro will further
enhance the Khadim brand by reaching out to a wider spectrum of the society by providing a
widest range of varied products.
Quality Control and Compliance
Our manufacturing facility has been accredited with ISO 9001:2000 management system
certificate from RWTUV Systems GmbH for manufacture and supply of PVC, Leather and
Synthetic Footwear.
Supply chain management
Our supply chain management involves planning, merchandizing, sourcing, standardization,
vendor management, production, logistics, quality control, pilferage control, replacement and
replenishment. It provides us flexibility to adapt to changing patterns in consumer behaviour and
our ability to add value at various steps/levels. In particular, it enhances our ability to undertake
in-house manufacturing, designing and development of contemporary footwear.
Logistics and distribution network
Our distribution and logistics network comprises of three distribution centers i.e. Kolkata, Delhi
and Chennai comprising of seven warehouses, five in Kolkata and one each in Delhi and Chennai.
Our distribution and logistics set up is well networked and allows us to fulfill the store requisition
within a shortest period of time from generation and receipt of order, which has helped us to
optimize in-store availability of merchandise and minimize transportation costs. Our strong
distribution and logistics network has enabled us to minimize the requirement of a dedicated
storage space at every store and instead undertake periodical replenishment of depleted stock.

32

KHADIM INDIA LIMITED

This provides us assistance in maintaining an optimum working capital level and thereby
minimizing carrying cost.
We have an experienced and competent management team
We have an experienced management team which is complemented by a committed workforce.
Our management team comprises of talented professionals who are highly experienced in footwear
and retail sector. This has assisted us in effective management of our business. For details of our
key managerial personnel, please refer to page no. 141 of this DRHP.
OUR STRATEGY
We intend to pursue the following strategies in order to consolidate our position as one of the
leading operators in the footwear and lifestyle retail segments in India. Our growth strategy is
based on:
Continue to expand our retail operations with Flexible Expansion Program
We intend to further expand our retail footwear operations by leveraging our existing sales and
distribution network and apply innovative retail marketing initiatives.
We already have a substantial presence in Eastern and Southern markets. We are now in the
process of expanding our presence in the growing Western and Northern markets.
Our strategy in the lifestyle retail segment is to target initially the metros and big towns in West
Bengal to expand our lifestyle brand Khadims Egaro. As the brand Khadims is already very
popular and enjoys excellent brand equity in these locations, we are confident to leverage the
same for our growth in this segment. The same strategy can be replicated in Eastern India and
subsequently to other parts of the Country.
We also intend to increase our footwear brand and product visibility and sales and distribution
network through strategic stores and outlets that will enable us to benefit from an increased store
density through a lower capital outlay. These smaller outlets will enable us to offer our product
aimed at the customer demography of the specific outlet and enable frequent renewal of our
inventory. We intend to continue to develop our existing network of independent footwear outlets
in various cities that sell our products through the appointment of additional distributors for
various cities and towns.
Expand In New Regions
Although we have a pan India presence in the footwear segment, still there are many regions
where we have a huge potential to grow. We now have to stretch our presence to these regions
also. We will focus on maintaining and reinforcing the image of our existing exclusive brand outlets
and also introduce our footwear to new geographic areas and consumer sectors that are presently
less familiar with our brand. For the Khadim brand, we have an established network in east/
south India and are rapidly consolidating our network in western and northern India.
Identifying new locations
We believe that we possess the ability to identify locations with potential for growth, in particular
in Tier II and Tier III cities. We have an exclusive site identification and assessment team, which
undertakes systematic analysis of the business prospects, taking into account factors such as
population, literacy levels, nature of occupation, income levels, accessibility, basic infrastructure
and establishment and running costs.
Further improving our cost structure
We believe in providing quality products at affordable prices. We have improved our operating
margins and cost structure by consolidating manufacturing and distribution operations and
reducing selling, general and administrative costs, and by actively seeking efficient sources of
production, whether through internal sources of supply or through outsourcing. We intend to

33

KHADIM INDIA LIMITED

continue to: (a) identify efficient manufacturing operations and improved raw material sourcing;
and (b) maintain and enhance a low cost infrastructure.
Strengthen relationship with our customers
We believe in having strong relationships with our customers so as to serve them over a long
period of time. We aim to continue to develop our relationship with our customers not only in
terms of increased sales but also in terms of increased variety in products. We aim to achieve this
by adding value to our client through quality, speed and reliability of our product delivery.
Procurement from low-cost production centres outside India
In addition to our strategy to continue procurement of goods from small and medium size vendors
and manufacturers which leads to cost efficiencies, we intend to procure footwear and apparels
from low-cost production centers located outside India. Towards this objective, we propose to
increase our procurement of finished and semi-finished goods from China and thereby realise
economies of scale and pass on the benefits so accrued to our customers.

34

KHADIM INDIA LIMITED

THE OFFER
Issue

5,500,000 Equity Shares

Of which:
Employee Reservation Portion

200,000 Equity Shares

Therefore,
Net Issue to the Public

5,300,000 Equity Shares

A. QIB Portion(1):

Upto 2,650,000 Equity Shares to be allocated


on proportionate basis

Of which
Available for allocation to Mutual Funds only

132,500 Equity Shares to be allocated on


proportionate basis

Balance for all QIBs including Mutual Funds

2,517,500 Equity Shares to be allocated on


proportionate basis

B. Non-Institutional Portion(2):

Not less than 795,000 Equity Shares available


for allocation on proportionate basis

C. Retail Portion(2):

Not less than 1,855,000 Equity Shares available


for allocation on proportionate basis

Equity Shares outstanding prior to the Issue:

12,135,238 Equity Shares

Equity Shares outstanding after the Issue:

17,635,238 Equity Shares

Objects of the Issue:

For details of the Objects of the Issue, see the


section titled Objects of the Issue beginning
on page 52 of this Draft Red Herring
Prospectus.

# (1) Allocation to QIBs is proportionate as per the terms of this Draft Red Herring Prospectus. 5%
of the QIB Portion shall be available for allocation to Mutual Funds. Mutual Funds participating in
the 5% reservation in the QIB Portion will also be eligible for allocation in the remaining QIB
Portion.
(2) Subject to valid Bids being received at or above the Issue Price, under-subscription, if any, in
the Non-Institutional Bidder and Retail Individual Bidder categories, would be allowed to be met
with spill over from other categories or combination of categories at the discretion of the Company
in consultation with the BRLM.

35

KHADIM INDIA LIMITED

SUMMARY FINANCIAL INFORMATION


The following tables set forth certain summary financial data derived from our restated financial
statements as of and for fiscal 2007, 2006, 2005, 2004 and 2003. These financial statements have
been prepared in accordance with Indian GAAP, the Companies Act and the SEBI Guidelines. The
restated financial statements have been restated as described in the auditors report included
therewith, in the section titled Financial Statements beginning on page 154.
The summary financial data presented below should be read in conjunction with our financial
statements, the notes thereto and the section titled Managements Discussion and Analysis of
Financial Condition and Results of Operations on page 191.
STATEMENT OF RESTATED PROFIT AND LOSS ACCOUNT
Year ended March 31st
INCOME:
Sales:
Of products manufactured by the
Company
Of products traded in by the Company
Total
Other Income
Increase/(Decrease) in Inventories
EXPENDITURE:
Purchase of raw materials and general
merchandise
Staff Costs
Other Direct Expenses
Administration Expenses
Selling and Distribution Expenses
Interest
Depreciation

Net Profit before tax and


extraordinary Items
Taxation
Net Profit before Extraordinary Items
Extraordinary Items (Net of tax)
Net Profit after Extraordinary
Items

(Rupees in Million)
2006
2007

2003*

2004*

2005

271.67
271.67
5.39
1.90
278.96

299.18
299.18
3.69
5.20
308.07

60.33
613.16
673.49
4.53
129.50
807.52

203.00
1112.37
1315.37
8.98
21.26
1345.61

209.17
1284.30
1493.47
10.16
121.00
1624.63

177.94
13.92
0.48
24.74

211.45
15.52
0.72
22.19

611.99
26.93
13.79
50.62

976.84
52.35
25.18
95.70

1163.66
83.65
36.22
107.28

39.01
4.60
3.07
263.76

34.68
5.00
3.86
293.42

53.99
14.07
9.75
781.14

101.67
28.47
21.93
1302.14

118.41
36.88
28.51
1574.61

15.20
5.70
9.50

14.65
6.26
8.39

26.38
2.53
23.85

43.47
16.19
27.28

50.02
21.02
29.00

9.50

8.39

23.85

27.28

29.00

* Pursuant to an order of the Honble High Court at Calcutta dated 22 June, 2005, approving the
Scheme of amalgamation, AAR ESS Land Development Private Limited, Colt Enterprises Private
Limited, Khadim Holdings Private Limited, Khadim industries Private Limited and Khadim Shoes
Private Limited (collectively called Transferor companies) were merged with Khadim Chain Stores
Private Limited (the Transferee Company) retrospectively from appointed date i.e 1 October, 2004.
The Scheme has become effective with the filing of the certified copy of the Order with the
Registrar of Companies, West Bengal, on 26 July, 2005. The Transferee Company was converted
into a Public Limited Company on 24 June, 2005 to become Khadim Chain Stores Limited.
Thereafter with effect from 26 August 2005, Khadim Chain Stores Limited was renamed as
Khadim India Limited.

36

KHADIM INDIA LIMITED

STATEMENT OF RESTATED ASSETS AND LIABILITIES


As at March 31st

2003*

A. Fixed Assets:
Gross Block
Less: Depreciation
Net Block
Capital Work-In-Progress
TOTAL
B. Investments:
C. Current Assets, Loans
Advances:
Inventories
Sundry Debtors
Cash and Bank Balances
Loans and Advances
Other Current Assets
TOTAL

2004*

2005

(Rupees in Million)
2006
2007

78.69
9.26
69.43
0.00
69.43

87.48
13.12
74.36
14.62
88.98

432.69
22.72
409.97
30.58
440.55

513.06
43.00
470.06
29.37
499.43

583.76
69.80
513.96
95.87
609.83

2.82

3.01

2.72

2.27

14.80

19.60
0.81
33.94
42.83
0.89
98.07

24.79
1.02
29.24
46.82
0.38
102.25

154.21
108.79
96.80
76.37
1.21
437.38

172.13
101.02
38.33
80.92
3.23
395.63

293.18
82.88
28.57
148.49
3.00
556.12

46.77
0.00
4.72
31.12
82.61

51.25
10.10
7.54
29.26
98.15

298.21
6.60
10.47
157.12
472.40

232.79
36.10
16.71
175.03
460.63

394.61
21.62
26.01
250.96
693.20

87.71

96.09

408.25

436.70

487.55

31.00
0.00
56.71
87.71

31.00
0.00
65.09
96.09

31.00
**56.39
320.86
408.25

87.39
0.00
349.31
436.70

109.24
0.00
378.31
487.55

and

D. Liabilities and Provisions:


Secured Loans
Unsecured Loans
Deferred Tax Liability
Current Liabilities and Provisions
TOTAL
E. Networth: [(A)+(B)+(C)-(D)]
Represented by:
1. Share Capital
2. Share Capital pending allotment
3. Reserves and Surplus
Networth

* Pursuant to an order of the Honble High Court at Calcutta dated 22 June, 2005, approving the
Scheme of amalgamation, AAR ESS Land Development Private Limited, Colt Enterprises Private
Limited, Khadim Holdings Private Limited, Khadim industries Private Limited and Khadim Shoes
Private Limited (collectively called Transferor companies) were merged with Khadim Chain Stores
Private Limited (the Transferee Company) retrospectively from appointed date i.e 1 October, 2004.
The Scheme has become effective with the filing of the certified copy of the Order with the
Registrar of Companies, West Bengal, on 26 July, 2005. The Transferee Company was converted
into a Public Limited Company on 24 June, 2005 to become Khadim Chain Stores Limited.
Thereafter with effect from 26 August 2005, Khadim Chain Stores Limited was renamed as
Khadim India Limited.
** Shares issued pursuant to Scheme of Amalgamation approved by the Hon'ble High Court at
Calcutta with effect from 1 October 2004 .

37

KHADIM INDIA LIMITED

GENERAL INFORMATION
We were incorporated as S.N. Footwear Industries Private Limited, by taking over the business of
S. N. Industries, a partnership firm on December 03, 1981 under the provisions of the Companies
Act, 1956 vide registration no. 21-34337. The CIN of the Company is U19129WB1981PLC034337.
The name of the Company was changed to Khadim Chain Stores Private Limited pursuant to a
fresh certificate of incorporation dated April 17, 1998. The name was subsequently changed to
Khadim Chain Stores Limited, on conversion into the public Limited Company, vide fresh certificate
of incorporation dated June 24, 2005. The name of the Company was further changed to Khadim
India Limited vide fresh certificate of incorporation dated August 26, 2005. The registered office
of the company was changed from P-22, Block A, Bangur Avenue, Kolkata-700055 to 24A,
Rabindra Sarani, 2nd Floor, Kolkata 700073 and subsequently to Kankaria Estate, 5th Floor, 6
Little Russell Street Kolkata 700071 w.e.f. March 8, 2006. We are registered with the RoC
described below:
The Registrar of Companies, West Bengal
Nizam Palace
IInd MSO Building
234/4, A J C Bose Road,
Kolkata 700 020
West Bengal
BOARD OF DIRECTORS
The following persons constitute the Board of Directors of the company:
Sl. No.

Name of Directors

Designation

Status

Chairman cum WholeTime Director

Promoter and Executive


Director
Promoter and Executive
Director
Non - Executive and NonIndependent Director
Independent Director
Independent Director
Independent Director

1.

Mr. Satya Prasad Roy Burman

2.

Mr. Siddhartha Roy Burman

Managing Director

3.

Mrs. Tanusree Roy Burman

Director

4.
5.
6.

Mr. Indranath Chatterjee


Prof. Ashoke Kumar Dutta
Prof. Amarnath Sadhu

Director
Director
Director

For more information about the Director(s) of our Company please refer to the section entitled
Our Management beginning on page no 132 of this Draft Red Herring Prospectus.
COMPANY SECRETARY, HEAD- LEGAL AND COMPLIANCE OFFICER
Mr. Joydev Sengupta
Company Secretary, Head- Legal and Compliance Officer
Khadim India Limited
Kankaria Estate, 5th Floor
6 Little Russell Street
Kolkata 700 071
Tele: (033) 91-33 4009 0501
Fax: (033) 91-33 4009 0500
E-mail Id: ipo@khadims.com
Investors can contact the compliance officer in case of any pre-issue and post-issue related
problems such as non-receipt of letter of allotment, credit of allotted shares in the beneficiary
account or refunds

38

KHADIM INDIA LIMITED

LEGAL ADVISORS TO THE COMPANY


KHAITAN & CO.
Advocates, Notaries, Patent & Trademark Attorneys
Emerald House
1B Old Post Office Street
Kolkata 700001
West Bangal
Tele: +91-33-22487000
Fax No.: + 91-33-2230 7857
Email ID: sucharita@khaitanco.com
Contact Person: Ms. Sucharita Basu
BANKERS TO THE COMPANY
State Bank of India
Samriddhi Bhavan
1 Strand Road
Kolkata 700001
Tele: +91 33 2213 3748
Fax: +91 33 22108321
Contact Person: Mr. Sisir Chakraborty
The Bank of Nova Scotia
12-13 Makers Chamber VI
220 Nariman Point
Mumbai 400 021
Tele: +91 22 6658 6902
Fax: +91 22 6658 6911
Email ID: ajit.mauskar@scotiabank.com
Contact Person: Mr. Ajit Mauskar
UCO Bank
Kolkata Main Branch
Landmark Building
10 B.T.M Sarani
Kolkata 700001
Tele: +91 33 2225 4120
Fax : +91 33 2225 4630
Contact Person: Mr. P.K.Ghose

Standard Chartered Bank


41, Chowringhee Road,
Kolkata - 700 001
Tele: +91 33 2288 4972
Fax: +91 33 2288 3047
Contact Person: Ms. Paramita Sengupta
UTI Bank
Eastern Zonal Office
5 Shakespeare Sarani
Kolkata 700071
Tele: +91 33 2282 2113/7116/5564
Fax : +91 33 2282 1727
Contact Person: Mr. B.K.Thakur
ICICI Bank Limited
Landmark Building, 11 F
228A A.J.C. Bose Road
Kolkata 700020
Tele: +91 33 2289 1433/34/36
Fax : +91 33 2289 1435
Email ID: kamalesh.verma@icicibank.com
Contact Person: Mr. Kamalesh Kumar
Verma

Andhra Bank
Kolkata Main Brach
14/1B Ezra Street
Kolkata - 700001
Tele: +91 33 2235 0352/7793
Fax : +91 33 22215654
Contact Person: Mr. Dilip K. Kumar
BOOK RUNNING LEAD MANAGER

MICROSEC CAPITAL LIMITED


74A, Mittal Tower, 7th Floor,
210, Nariman Point,
Mumbai - 400 021
Tel: +91-22-2285 5544 (4 Lines)
Fax: +91-22-2285 5548
Website: www.microsec.in
E-mail: khadims@microsec.in
Contact Person: Mr. Pankaj Harlalka

39

KHADIM INDIA LIMITED

REGISTRAR TO ISSUE

INTIME SPECTRUM REGISTRY LIMITED


C-13, Pannalal Silk Mills Compound,
L B S Marg, Bhandup (West),
Mumbai - 400 078
Tel: +91-22-2596 0320
Fax: +91-22-2596 0328
Website: www.intimespectrum.com
E-Mail: khadims@intimespectrum.com
Contact Person: Mr. Sachin Achar
AUDITORS OF THE COMPANY
Ray & Ray, Chartered Accountants
6 Church Lane
Kolkata- 700 001
Tel: +91-33-2248 4920/9861
Fax: +91-33-2248 0547
E-Mail: raynray@cal2.vsnl.net.in
BANKERS TO THE ISSUE AND ESCROW COLLECTION BANKS
To be finalized at the time of filing of the Red Herring Prospectus with ROC.
BROKERS TO ISSUE
All members of the recognized Stock Exchanges would be eligible to act as Brokers to the Issue.
SYNDICATE MEMBERS
To be finalized at the time of filing of the Red Herring Prospectus with ROC.
CREDIT RATING
This being the issue of equity shares, credit rating is not required.
IPO GRADING
We have opted for IPO Grading and appointed [] for grading the Issue. [] has assigned [] grade
to the initial public offering of our company.
The rationale/description of the grading shall be included in the Red Herring Prospectus prior to the
filing with ROC.
TRUSTEE
As this being an offer of Equity Shares, appointment of Trustee is not required.
MONITORING AGENCY
There is no requirement for a monitoring agency in terms of Clause 8.17 of the SEBI (DIP)
Guidelines. The Audit Committee appointed by the Board of Directors will monitor the utilization of
the issue proceeds.

40

KHADIM INDIA LIMITED

BOOK BUILDING PROCESS


Book Building Process, with reference to the Issue, refers to the process of collection of Bids, on
the basis of the Red Herring Prospectus within the Price Band. The Issue Price is fixed after the Bid
Closing Date.
The principal parties involved in the Book Building Process are:

The Company;

The Book Running Lead Manager;

The Syndicate Member, who is an intermediary registered with SEBI or registered as a


broker with NSE/ BSE and eligible to act as underwriters. The Syndicate Members are
appointed by the BRLM; and

The Registrar to the Issue.


The securities are being offered to the public through the 100% Book Building Process in
accordance with the SEBI Guidelines wherein: (i) upto 50% of the Net Issue to the public shall be
available for allocation on a proportionate basis to QIBs, of which 5% shall be available for
allocation to mutual funds on proportionate basis and the remaining QIB portion shall be available
for allocation to the QIB bidders including mutual funds (ii) not less than 35% of the Net Issue
shall be available for allocation on a proportionate basis to Retail Individual Bidders, and (iii) not
less than 15% of the Net Issue shall be available for allocation on a proportionate basis to the
Non-Institutional Bidders subject to valid Bids being received at or above the Issue Price in
accordance with the Red Herring Prospectus.
In accordance with the provisions of the SEBI Guidelines, QIBs are not allowed to withdraw their
Bid(s) after the Bid/ Issue Closing Date. For further details see section titled Terms of the Issue
on page 250 of this Draft Red Herring Prospectus.
Our Company shall comply with the SEBI Guidelines and any other ancillary directions issued by
SEBI for this Issue. In this regard, our Company has appointed Microsec Capital Limited as the
Book Running Lead Manager to manage the Issue and to procure the subscriptions to the Issue.
The investors are advised to make their own judgment about investment through this process of
Book Building prior to making a Bid.
Illustration of Book Building and Price Discovery Process
(Investors should note that this example is solely for illustrative purposes and is not specific to the
Issue)
Bidders can bid at any price within the price band. For instance, assume a price band of Rs. 50 to
Rs. 58 per share, issue size of 6,000 equity shares and receipt of nine bids from bidders out of
which one bidder has bid for 500 shares at Rs. 58 per share while another has bid for 700 shares
at Rs. 57 per share. A graphical representation of the consolidated demand and price would be
made available at the bidding centers during the bidding period. The illustrative book as shown
below shows the demand for the shares of the company at various prices and is collated from bids
from various investors.
Number of Equity
Shares bid for
500
700
1000
400
500
200
2800
800
2200

Bid Price (Rs.)


58
57
56
55
54
53
52
51
50

Cumulative shares
bid
500
1200
2200
2600
3100
3300
6100
6900
9100

Subscription
8.33
20.00
36.67
43.33
51.67
55.00
101.67
115.00
151.67

The price discovery is a function of demand at various prices. The highest price at which the issuer
is able to issue the desired number of shares is the price at which the book cuts off i.e., Rs. 52 in
the above example. The issuer, in consultation with the book running lead manager, will finalise
the issue price at or below such cut-off price, i.e., at or below Rs. 52. All bids at or above this

41

KHADIM INDIA LIMITED

issue price and cut-off bids are valid bids and are considered for allocation in the respective
categories.
Steps to be taken for Bidding

1.
2.
3.
4.

Check eligibility for making a Bid (see section titled Issue Procedure - Who Can Bid
beginning on page no. 257 of this Draft Red Herring Prospectus).
Ensure that you have a demat account and the demat account details are correctly
mentioned in the Bid cum Application Form.
Ensure that you have mentioned your PAN and attached copies of your PAN to the Bid cum
Application Form (see section titled Issue Procedure PAN or GIR Number beginning
on page 274 of this Draft Red Herring Prospectus).
Ensure that the Bid cum Application Form is duly completed as per instructions given in the
Draft Red Herring Prospectus and in the Bid cum Application Form.

Withdrawal of the Issue


The Company, in consultation with the BRLM, reserves the right not to proceed with the issue
anytime after the bid/issue opening date but before the allotment of equity shares without
assigning any reason.
Bidding Period/Issue Period
BID/ISSUE OPENS ON []
BID/ISSUE CLOSES ON []
Bids and any revision in Bids shall be accepted only between 10 a.m. and 3 p.m. (Indian
Standard Time) during the Bidding Period as mentioned above at the bidding centres mentioned on
the Bid cum Application Form except that on the Bid/Issue Closing Date, the Bids shall be accepted
only between 10 a.m. and 1 p.m. (Indian Standard Time) and uploaded till such time as
permitted by the BSE and the NSE on the Bid/Issue Closing Date. Bidders are cautioned that a
high inflow of bids typically experienced on the last day of the bidding may lead to some Bids
received on the last day not being uploaded due to lack of sufficient uploading time, and such Bids
that could not uploaded may not be considered for allocation
On the day of closing, extension of time will be granted by Stock Exchanges only for uploading the
bids received from Retail Investors after taking into account the total number of applications
received upto the closure of timings for acceptance of application forms as stated in prospectus
and reported by BRLM to the Exchange within half an hour of such closure.
Bids not uploaded in the book, would be rejected.
In case of discrepancy in the data entered in the electronic book vis a vis the data contained in the
physical bid form, for a particular bidder, the details as per physical application form of that bidder
may be taken as the final data for the purpose of allotment
Our Company reserves the right to revise the Price Band during the Bid/Issue Period in accordance
with the SEBI Guidelines. The Cap on the Price Band should not be more than 20% of the Floor
Price. Subject to compliance with the immediately preceding sentence, the Floor Price can be
revised up or down up to a maximum of 20% of the Floor Price disclosed in the Red Herring
Prospectus.
In case of revision of the Price Band, the bidding/ Issue Period will be extended for three additional
days after revision of the Price Band, subject to the total Bid/Issue Period not exceeding 10
working days. Any revision in the Price Band and the revised Bid/Issue Period, if applicable, will be
widely disseminated by notification to the BSE and the NSE, by issuing a press release and also by
indicating the changes on the websites of the BRLM and on the terminals of the Syndicate.

42

KHADIM INDIA LIMITED

Underwriting Agreement
After the determination of the Issue Price and allocation of our Equity Shares but prior to filing of
the Prospectus with the ROC, our Company will enter into an Underwriting Agreement with the
Underwriters for the Equity Shares proposed to be offered through this Issue. It is proposed that
pursuant to the terms of the Underwriting Agreement, the BRLM shall be responsible for bringing
in the amount devolved in the event that the Syndicate Member does not fulfill its underwriting
obligations. Under the Underwriting agreement, the obligations of the underwriter(s) are several
and are subject to certain conditions to closing as specified therein.
The Underwriter(s) have indicated their intention to underwrite the following number of Equity
Shares:
Name, address, telephone,
email of the Underwriters

fax,

Indicative Number of
Equity Shares to be
Underwritten
[]
[]

Amount
Underwritten
( Rs in Million)
[]
[]

The above-mentioned amount is indicative and this would be finalized after determination of Issue
Price and actual allocation of the Equity Shares. The above Underwriting Agreement is dated []
In the opinion of the Book Running Lead Manager and our Board of Directors (based on certificates
dated [] given to them by the BRLM and the Syndicate Member), the resources of the
Underwriter(s) are sufficient to enable them to discharge their respective underwriting obligations
in full. All the above-mentioned Underwriter(s) are registered with SEBI under Section 12(1) of the
SEBI Act or registered as brokers with the Stock Exchanges. The above Underwriting Agreement
has been accepted by the Board of Directors and our Company has issued letters of acceptance to
the Underwriter(s).
Allocation among Underwriter(s) may not necessarily be in proportion to their underwriting
commitments. Notwithstanding the above table, the Underwriter(s) shall be severally responsible
for ensuring payment with respect to the Equity Shares allocated to investors procured by them.
In the event of any default, the respective Underwriter in addition to other obligations to be
defined in the Underwriting Agreement, will also be required to procure/ subscribe to the extent of
the defaulted amount. Allocation to QIBs is on a proportionate basis as per the SEBI DIP
Guidelines, 2000 and the terms of this Draft Red Herring Prospectus.

43

KHADIM INDIA LIMITED

CAPITAL STRUCTURE
Our share capital as at the date of this Draft Red Herring Prospectus is set forth below:

No. Of
Shares

(Rs. in million, except share data)


Aggregate
Aggregate Value at
Nominal Value
Issue Price (Rs)
(Rs)

Description

AUTHORISED SHARE CAPITAL


25,000,000 Equity Shares of Rs. 10/- Each
ISSUED SUBSCRIBED & PAID UP EQUITY
CAPITAL
12,135,238
Equity Shares of Rs. 10/- Each
PRESENT ISSUE #
5,500,000

Equity Shares of Rs. 10/- each*

OF WHICH RESERVED FOR EMPLOYEES


200,000
Equity Shares of Rs. 10/- Each
NET ISSUE TO THE PUBLIC
5,300,000
Equity Shares of Rs. 10/- Each
OF WHICH
QIB Portion of upto 2,650,000
Equity Shares
Non-Institutional Portion of at least
795,000 Equity Shares
Retail Portion of at least 1,855,000
Equity Shares
PAID UP EQUITY SHARE CAPITAL AFTER ISSUE
17,635,238
Equity Shares of Rs. 10/- each
SHARE PREMIUM ACCOUNT
Existing Share Premium Account
Share Premium account after the
Public Issue

250.00

121.35
55.00

[]

2.00

[]

26.50

[]

7.95

[]

18.55

[]

176.35

[]

93.89
[]

*Our Company is considering a Pre-IPO placement of up to [] Equity Shares aggregating Rs. [] million with
certain investors, (Pre-IPO Placement). If the Pre-IPO placement is completed before the filing of the RHP
with RoC, the Issue Size offered to the public would be reduced to the extent of such Pre-IPO placement,
subject to a minimum of 25% of the post-issue paid up Equity Share Capital being offered to the public.

# The present Issue has been authorized by the Board of Directors in their meeting dated 24th
April 2007 and by the shareholders of our Company at the EGM dated 29th May 2007.
The Authorized Capital of the company was increased as follows:
Date of Resolution
3rd December, 1981
30th January, 1990
30th October, 1990
24th April, 1996
12th January, 1999
12th April, 2005

Particulars of Increase
Initial Authorised capital of Rs.0.15 million on Incorporation
Increase in the authorized share capital of the company from Rs.0.15
million to Rs.0.5 million.
Increase in the authorized share capital of the company from Rs. 0.5
million to Rs.1 million.
Increase in the authorized share capital of the company from Rs. 1 million
to Rs.2 million.
Increase in the authorized share capital of the company from Rs. 2 million
to Rs.50 million.
Increase in the authorized share capital of the company from Rs. 50
million to Rs.250 million.

44

KHADIM INDIA LIMITED

At the Annual General Meeting of the Company held on September 26, 1998, our shareholders
approved the subdivision of 1 Equity Share of Rs. 100/- each into 10 Equity Shares of Rs. 10/each. Consequently, our authorised capital was altered from Rs. 2 Million comprising 20,000 Equity
Shares of Rs. 100/- each to 2,00,000 Equity Shares of Rs. 10/- each.
Notes to the Capital Structure
1. Build up of Equity Share Capital
Our present Equity Capital has been built up as follows:
Date of
Allotment

No. of
equity
Shares
Allotted
225

Face
Value
(Rs)

Issue
Price
(Rs)

Consideration

Remarks

100

Cumulative
paidCapital
(in Rs.)
22,500

100

Cash

100

100

65,000

Cash

600

100

100

125,000

Cash

December
31, 1987(1)

250

100

100

150,000

Cash

March 31,
1991(1)

3500

100

100

June 30,
1996(1)
September
26, 1998

5000

100

100

1,000,000

10

1,000,000

May 22,
2000(1)
September
02, 2005

3000000

10

31,000,000

5639308

10

10

87,393,080

August 07,
2006
August 11,
2007

2184830

10

10

109,241,380

Cash

200000

10

50

111,241,380

Cash

August 11,
2007

511100

10

90

116,352,380

Cash

September
03, 2007

500000

10

100

121,352,380

Cash

Subscription to
the
Memorandum
Allotment to
promoters
and Promoter
Group
Allotment to
promoters and
Promoter
Group
Allotment to
promoters and
Promoter
Group
Allotment to
promoters and
Promoter
Group
Preferential
Allotment
One Equity
Share of Face
value of
Rs.100/- each
was split into
10 equity
shares of face
value of
Rs.10/- each
Bonus in the
ratio of 30:1
As per Scheme
of
Amalgamation*
Rights Issue in
the ratio of 1:4
Preferential
Allotment to
Adharshila
Venture Capital
Fund Limited
Preferential
Allotment to
certain
investors(2)
Preferential
Allotment to
BCCL

June 30,
1982(1)

425

June 30,
1983(1)

On
Incorporation

125,000

45

Cash

Cash

Cumulative
share
premium
(in Rs.)
-

8,000,000

48,888,000

93,888,000

KHADIM INDIA LIMITED

(1) The Form 2 for the above mentioned allotments are missing in our records and also in the
records of the Registrar of Companies. The capital build up has been prepared based upon the
physical share certificates issued by us and from the registeres maintained by us.
(2) Fresh issue of Equity shares to Mr. Hitesh Ajmera, Mr. Karan G. Mehta, Concept
Communication Limited, Mrs. Anjana Parthasarathy Harikar, Mr. Nikunj Saraf, Mrs. Vandana Saraf,
Mr. Shailesh Saraf, Mrs. Indra Saraf, Mr. Nar Narayan Saraf and Optimum Commercial Private
Limited.
*Pursuant to an order of the Honble High Court at Calcutta dated 22 June, 2005 (C.P. No. 250 of
2005 connected with C.A.No. 282 of 2005), approving the Scheme of amalgamation of five of our
group company i.e AAR ESS Land Development Private Limited, Colt Enterprises Private Limited,
Khadim Holdings Private Limited, Khadim industries Private Limited and Khadim Shoes Private
Limited (collectively called Transferor companies) were merged with Khadim Chain Stores Private
Limited (the Transferee Company) retrospectively from appointed date i.e 1 October, 2004. The
Scheme has become effective with the filing of the certified copy of the Order with the Registrar of
Companies, West Bengal, on 26 July, 2005. The Transferee Company was converted into a Public
Limited Company on 24 June, 2005 to become Khadim Chain Stores Limited. Pursuant to such
scheme of amalgamation, an aggregate of 56,39,308 Equity Shares of the Company were issued
to the existing shareholders of Khadim Chain Stores Private Limited, Khadim Holding Private
Limited, Khadim Shoe Private Limited, Colt Enterprises Private Limited, AAR ESS Land
Development Private Limited. For further details with respect to the scheme of amalgamation, see
the section titled History and Certain Corporate Matters beginning on page 124 of this Draft Red
Herring Prospectus.
The following is the history of issue of Equity shares for consideration other than cash
Date of allotment

No. of Equity Shares

May 22, 2000


September 02, 2005

3000000
5639308

Face
value
10
10

Considersation
Bonus in the ratio of 30:1
As per Scheme of Amalgamation

2. Promoters Contribution and Lock-in


a.
Promoters Contribution
Pursuant to the SEBI DIP Guidelines, an aggregate of 20% of our post issue capital held by our
Promoters shall be locked in for a period of three years from the date of Allotment in the Issue.
The details of the Equity Shares avaliable for such lock-in are given below:
Name

Mr. Satya
Prasad Roy
Burman
Mr.
Siddhartha
Roy Burman
Knightsville
Private
Limited
Total

Date of
Allotment/
Acquisition

Nature Of
considera
tion
(cash,
bonus,
Kind etc)

No. of
Shares
locked in

Face
Value
(Rs.)

Percenta
ge of
post
Issue
Paid up
Capital

Lock-in
Period

10

Issue
Price
/
Purch
ase
Price
(Rs.)
10

7-Aug-06

Cash

1,240,273

7.03%

3 Years

7-Aug-06

Cash

324,456

10

10

1.84%

3 Years

2-Sep-05

As per
Scheme of
Amalgama
tion

1,962,319

10

11.13%

3 Years

3,527,048

20.00%

The Promoters contribution has been brought in to the extent of not less than the specified
minimum lot and from the persons defined as Promoters under the SEBI Guidelines.

46

KHADIM INDIA LIMITED

The securities which are subject to lock-in shall carry inscription non-transferable along with
the duration of specified non-transferable period mentioned in the face of the security
certificate.

The above promoters have given their consent for lock in as stated above. Shares issued last
have been locked in first.

b.

Share Capital Locked in for One Year

In terms of clause 4.14.1 of the SEBI Guidelines, in addition to the lock-in of 20% of post-Offer
shareholding of our Company held by the Promoters for three years, as specified above, the entire
pre-Offer issued equity share capital of our Company will be locked-in for a period of one year
from the date of allotment in the present issue as follows:
Serial No.

Number of Shareholders

1
2
3
4

6,775,510
620,137
500,000
200,000

5
6
7
8
9
10
11
12

Knightsville Private Limited


Mrs.Namita Roy Burman
Bennett Coleman & Co. Limited
Adharshila Venture Capital Fund
Limited
Mr. Hitesh Ajmera
Mr. Karan G. Mehta
Concept Communication Limited
Mrs. Anjana Parthasathy Harikar
Mr. Nikunj Saraf
Mrs. Vandana Saraf
Mr. Shailesh Saraf
Mrs. Indra Saraf

13
14
15
16
17
18
19

Mr. Nar Narayan Saraf


Optimum Commercial Private Limited
Mr. Satya Prasad Roy Burman
Mr. Partha Roy Burman
Mr. Siddhartha Roy Burman
Mrs. Tanusree Roy Burman
Mrs. Basabdutta Roy Burman

9,000
5,000
476
429
429
60
48

0.05%
0.03%
Negligible
Negligible
Negligible
Negligible
Negligible

20

Mrs. Manjusree Roy Burman

Negligible

8,608,190

48.81%

Total
c.

No. of Equity Shares

% of Post
Issue

200,000
200,000
50,000
11,100
9,000
9,000
9,000
9,000

38.42%
3.52%
2.84%
1.13%
1.13%
1.13%
0.28%
0.06%
0.05%
0.05%
0.05%
0.05%

Other Requirements in Respect of Lock-in

As per clause 4.15.1 of the SEBI Guidelines, the locked in Equity Shares held by the Promoters can
be pledged only with banks or financial institutions as collateral security for loans granted by such
banks or financial institutions, provided that the pledge of the Equity Shares is one of the terms of
sanction of the loan.
In terms of Clause 4.16.1(a) of the SEBI DIP Guidelines, the Equity Shares held by persons other
than the Promoter prior to the Offer may be transferred to any other person holding the Equity
Shares which are locked-in as per Clause 4.14 of the SEBI DIP Guidelines, subject to continuation
of the lock-in in the hands of the transferees for the remaining period and compliance with SEBI
(Substantial Acquisition of Shares and Takeovers) Regulations, 1997, as applicable.
Further, in terms of Clause 4.16.1(b) of the SEBI DIP Guidelines, Equity Shares held by the
Promoter may be transferred to and among the Promoter group or to a new promoter or persons
in control of our Company subject to continuation of the lock-in in the hands of the transferees for

47

KHADIM INDIA LIMITED

the remaining period and compliance with SEBI (Substantial Acquisition of Shares and Takeover)
Regulations, 1997, as applicable.
Locked in Equity Shares held by the Promoter, as specified above, can be pledged with banks or
financial institutions as collateral security for loans granted by such banks or financial institutions
provided that the pledge of the Equity Shares is one of the terms of the sanction of the loan.
Provided that if securities are locked in as minimum Promoters contribution under clause 4.11.1
the same may be pledged, only if, in addition to fulfilling the requirements of the clause, the loan
has been granted by such banks or financial institutions for the purpose of financing one or more
of the objects of the issue.
In addition, the Equity Shares subject to lock-in will be transferable subject to compliance with the
SEBI DIP Guidelines, as amended from time to time.
3. Shareholding Pattern of our Company
The table below represents the shareholding pattern of the Company before the proposed Issue
and adjusted for this Issue.
Pre Issue
Post Issue
Category of Shareholder

Promoters
Knightsville Private Limited
Mr. Satya Prasad Roy Burman
Mr. Siddhartha Roy Burman
Sub-Total (A)
Promoter Group
Mrs. Namita Roy Burman
Mr. Partha Roy Burman **
Mrs. Tanusree Roy Burman

No. of
Equity
Shares

% of
Equity
share
capital

No. of
Equity
Shares

% of
Equity
share
capital

8,737,829
1,240,749
324,885
10,303,463

72.00%
10.22%
2.68%
84.91%

8,737,829
1,240,749
324,885
10,303,463

49.55%
7.04%
1.84%
58.43%

620,137
429
60

5.11%
Negligible
Negligible

620,137
429
60

3.52%
Negligible
Negligible

Mrs. Basabdutta Roy Burman **


Mrs. Manjusree Roy Burman
Sub-Total (B)
Total
Shareholding
of
the
Promoters and the Promoter Group
(A+B)
Public Shareholders

48
1
620,675
10,924,138

Negligible
Negligible
5.11%
90.02%

48
1
620,675
10,924,138

Negligible
Negligible
3.52%
61.94%

Bennett Coleman & Co. Limited


Adharshila
Venture
Capital
Fund
Limited
Mr. Hitesh Ajmera
Mr. Karan G. Mehta
Concept Communication Limited
Mrs. Anjana Parthasathy Harikar
Mr. Nikunj Saraf
Mrs. Vandana Saraf
Mr. Shailesh Saraf
Mrs. Indra Saraf
Mr. Nar Narayan Saraf
Optimum Commercial Private Limited
Others shareholders
Public (C)
Total (A+B+C)

500,000
200,000

4.12%
1.65%

500,000*
200,000*

2.84%
1.13%

200,000
200,000
50,000
11,100
9,000
9,000
9,000
9,000
9,000
5,000
1,211,100
12,135,238

1.65%
1.65%
0.41%
0.09%
0.07%
0.07%
0.07%
0.07%
0.07%
0.04%
9.98%
100.00%

200,000*
200,000*
50,000*
11,100*
9,000*
9,000*
9,000*
9,000*
9,000*
5,000*
5,500,000
6,711,100
17,635,238

1.13%
1.13%
0.28%
0.06%
0.05%
0.05%
0.05%
0.05%
0.05%
0.03%
31.19%
38.06%
100.00%

* Assuming that such shareholders do not Bid under under the Issue.
** Please refer to the section Our Promoter Group in page No. 143 of the DRHP in this regard.

48

KHADIM INDIA LIMITED

Details of the holding of Directors of the Promoting Company in the Issuer Company
The following Directors of Knightsville Private Limited, our Promoter, hold equity shares in our
Company:
Name of the Director

No. Of Shares (in Khadims India Limited)

Mr. Satya Prasad Roy Burman


Mr. Siddhartha Roy Burman
Mr. Partha Roy Burman
Total
4.

1,240,749
324,885
429
1,566,063

Except as disclosed below, our Company, our Directors, our Promoters and the BRLM have not
entered into any buy-back and/or standby arrangements for purchase of Equity Shares from
any person.
Our Company has entered into shareholders agreements with certain Investors in respect of
allotments dated August 11, 2007 and September 03, 2007, which contain certain provisions
for buy back of the shares allotted in case we are unable to meet certain conditions. The
details of these arrangements are as under:
Under the terms and conditions of the shareholders agreement with BCCL dated August
10, 2007, our Company has undertaken that in the event that our Company is not able to list
the shares of the Company with in 36 months from the date of the agreement, then at BCCLs
option, the Promoters shall buy-back the Shares held by BCCL or shall find a third party buyer
to buy the Shares held by BCCL at the price so as to give BCCL an annualized return of 18%
p.a.
Under the terms and conditions of the shareholders agreement with other investors, our
Promoters has undertaken that in the event that our Company is not able to list the shares of
the Company with in 12 months from the date of the respective agreements, then at the
option of the investors, the Promoters shall buy-back the Shares held by the investors at the
price so as to give the investors an annualized return of 18% p.a.

5.

The Equity Shares held by the Promoters are not subject to any pledge.

6.

Except as disclosed in this Draft Red Herring Prospectus, none of our Directors and key
managerial employees holds any Equity Shares in our Company.

7.

As on of filing of Draft Red Herring Prospectus the total number of shareholders of Equity
Shares in our Company was 20 (Twenty).

8. Particulars of Top 10 Shareholders


a.

Details of top ten shareholders on date of filing Draft Red Herring Prospectus

Serial No.
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.

Number of Shareholders

No. of Equity Shares

Knightsville Private Limited


Mr. Satya Prasad Roy Burman
Mrs.Namita Roy Burman
Bennett Coleman & Co. Limited
Mr. Siddhartha Roy Burman
Adharshila Venture Capital Fund Limited
Mr. Hitesh Ajmera
Mr. Karan G. Mehta
Concept Communication Limited
Mrs. Anjana Parthasathy Harikar
Total

49

8,737,829
1,240,749
620,137
500,000
324,885
200,000
200,000
200,000
50,000
11,100
12,084,700

KHADIM INDIA LIMITED

b.

Details of top ten shareholders ten days before the date of filing Draft Red Herring
Prospectus

Serial No.

Number of Shareholders

No. of Equity Shares

1.

Knightsville Private Limited

8,737,829

2.

Mr. Satya Prasad Roy Burman

1,240,749

3.

Mrs.Namita Roy Burman

620,137

4.

Mr. Siddhartha Roy Burman

324,885

5.

Adharshila Venture Capital Fund Limited

200,000

6.

Mr. Hitesh Ajmera

200,000

7.

Mr. Karan G. Mehta

200,000

8.

Concept Communication Limited

50,000

9.

Anjana Parthasathy Harikar

11,100

10.

Nikunj Saraf

11.

Vanadan Saraf

9,000

12.

Shailesh Saraf

9,000

13.

Indra Saraf

9,000

14.

Nar Narayan Saraf

9,000

9,000

Total

1,030,985

c.

Details of top ten shareholders two years prior to date of filing Draft Red Herring
Prospectus
Serial No.
Number of Shareholders
No. of Equity Shares
1.

Knightsville Private Limited

8,737,829

2.

Mr. Satya Prasad Roy Burman

476

3.

Mr. Siddhartha Roy Burman

429

4.

Mr. Partha Roy Burman

429

5.

Mrs.Namita Roy Burman

48

6.

Mrs. Tanusree Roy Burman

48

7.

Mrs. Basabdutta Roy Burman

48

8.

Mrs. Manjusree Roy Burman

Total
9.

8,739,308

The Promoters and the Promoters Group of the company have not purchased/ sold any equity
shares of the company during the last six months.

10. The Offer is being made through a 100% Book-Building Process wherein up to 50% of the Net
Offer will be allocated to Qualified Institutional Buyers (QIBs) on a proportionate basis. Out
of the portion available for allocation to the QIBs, 5% will be available for allocation on a
proportionate basis to Mutual Funds. Mutual Fund applicants shall also be eligible for
proportionate allocation under the balance available for the QIBs. Further, at least 15% of the
Net Offer will be available for allocation on a proportionate basis to Non-Institutional Bidders
and at least 35% of the Net Offer will be available for allocation on a proportionate basis to
Retail Individual Bidders, subject to valid bids being received at or above the Offer Price Under
subscription, if any, in the Employees Reservation Portion would be met with spill over from
the Net Issue at the sole discretion of our Company in consultation with the BRLM.
11. A total of up to 3.64% of the Issue size, i.e. up to 200,000 Equity Shares, has been reserved
for allocation to the Employees on a proportionate basis, subject to valid Bids being received at
or above the Issue Price and subject to the maximum Bid in this portion being 10,000 Equity
Shares. Only Employees would be eligible to apply in this Issue under Employees Reservation
Portion. Employees may bid in the Net Issue portion as well and such Bids shall not be
treated as multiple Bids. Any under subscription in the Equity Shares under the Employee
Reservation Portion would be treated as part of the Net Issue.

50

KHADIM INDIA LIMITED

12. Under-subscription, if any, in any of the categories will be met with spill, over from other
categories or combination of categories at our discretion in consultation with the BRLM.
13. An over-subscription to the extent of 10% of this Offer size can be retained for the purpose of
rounding off while finalizing the basis of allotment.
14. An investor cannot make a Bid for more than the number of Equity Shares offered through the
Offer, subject to the maximum limit of investment prescribed under relevant laws applicable to
each category of investor.
15. Except to the extent of Pre-IPO, there would be no further issue of capital whether by way of
issue of bonus shares, preferential allotment, rights issue or in any other manner during the
period commencing from submission of this Draft Red Herring Prospectus with SEBI until the
Equity Shares to be issued pursuant to the Offer have been listed.
16. We presently do not intend or propose to alter our capital structure for a period of six months
from the date of opening of the Offer, by way of split or consolidation of the denomination of
Equity Shares or further issue of Equity Shares (including issue of securities convertible into or
exchangeable, directly or indirectly for Equity Shares) whether preferential or otherwise except
that if we enter into acquisitions or joint ventures, we may, subject to necessary approvals and
in line with the relevant statutes/ regulations, consider raising additional capital to fund such
activity or use Equity Shares as currency for acquisition or participation in such joint ventures
with the consent of the shareholders, if applicable.
17. There shall be only one denomination of the Equity Shares, unless otherwise permitted by law.
We shall comply with such disclosure and accounting norms as may be specified by SEBI from
time to time.
18. We have not raised any bridge loans against the proceeds of the Offer.
19. We have not revalued any of our Fixed Assets. We have not issued any Equity Shares out of
revaluation reserves.
20. Save and except the issuance of bonus shares and the shares issued pursuant to the scheme
of amalgamation and as disclosed in the Draft Red Herring Prospectus, we have not issued any
equity shares for consideration other than cash.
21. As of the date of this Draft Red Herring Prospectus, there are no outstanding financial
instruments or warrants or any other right that would entitle the existing Promoters or
Shareholders, or any other person any option to receive Equity Shares after the offering.
22. Our Promoters and members of the Promoter Group will not participate in this Issue.
23. There are certain restrictive covenants in the agreements that we have entered into with the
Bank and financial institutionals for short-term loans and long term borrowing. For further
details of the terms of these agreements, please refer to the section entitled Financial
Indebtedness beginning on page 113.
24. We have not granted any options or issued any shares under any employee stock option or
employees stock purchase scheme.
25. The Equity Shares issued pursuant to the Issue shall be fully paid-up at the time of Allotment.
26. The promoters contribution that has been brought-in is not less than the specified minimum
lot of Rs. 25,000/- per application from each individual and Rs. 1,00,000/- from companies.
27. The equity shares to be held by the Promoters, their relatives & associates under the lock-in
period shall not be sold / hypothecated / transferred during the lock-in period. However, inter
se transfers between the promoters themselves as such would be permitted, provided that the
requirement of lock-in period guidelines continues to apply.

51

KHADIM INDIA LIMITED

OBJECTS OF THE ISSUE


The Objects of the Issue are to raise capital for setting up of Retail Stores, setting up of a new
Central Distribution Centre and improve the IT infrastructure of the company. We believe that
listing of our Equity Shares will also enhance our brand image and create a public market for our
equity shares in India.
We intend to utilize the proceeds of the Fresh Issue, after deducting underwriting and
management fees, selling commissions and other expenses associated with the Issue (the Net
Proceeds) for the following purposes:

Setting up of Exclusive Footwear Retail Stores;


Setting up Lifestyle Retail Stores;
Setting up of a Central Distribution Centre in Kolkata and
Improvement of our information technology infrastructure
General Corporate purposes

The main object clause of our Memorandum of Association and objects incidental to the main
objects enable us to undertake our existing activities and the activities for which funds are being
raised by us through this Issue.
The net proceeds of the Issue after deducting the expenses for the Issue are estimated at Rs. []
Million. The Fund requirement below is based on our current business plan. In view of the highly
competitive and dynamic nature of the industry in which we operate, we may have to revise our
business plan from time to time and consequently our fund requirement may also change. This
may include rescheduling of our capital expenditure programmes and increase or decrease in the
capital expenditure for a particular purpose vis--vis current plans at the discretion of our
Management.
The proceeds from the Issue of shares are intended to be deployed for:
Sl. No.
1.

Particulars of Expenditure
Exclusive Footwear Retail Stores

Rs. in Mn
Amount
314.01

2.

Lifestyle Retail Stores

3.

Central Distribution Centre

4.

Improvement of our Information Technology Infrastructure

55.00

5.

General Corporate Purpose

70.00

6.

Issue Expenses

424.26
90.56

[]

Total

[]

Will be finalized upon finalization of the Issue Price.


Fund requirements and deployment thereof are based on the estimates of our management and
has not been appraised by any Bank or Financial Institution or independent third party entity. In
case of any variations in the actual utilization of funds earmarked for the above activities,
increased fund deployment for a particular activity may be met with, in the first instance, by
surplus funds, if any available in respect of the other activity for which funds are being raised in
this Issue, otherwise by our internal accruals.
Means of Finance
The total cost of establishing the Retail Stores along with the Central Distribution Centre,
improvement of our IT Infrastructure and general corporate purposes is Rs. 953.83 million. The
proposed means of the finance for the Project is as under:

52

KHADIM INDIA LIMITED

Means of Finance

Amount

Term Loan from Banks

319.00

Preferential Allotment to outsiders

106.00

Proceeds from the proposed issue

[]

Internal Accruals

[]

Total

[]

1. Setting up Retail Stores


As part of our strategy, we intend to establish a number of retail stores in various parts of India.
We intend to utilize a part of net proceeds of the issue for establishing some of these stores.
a)

Footwear Retail

In the Footwear segment our company plans to set up 74 Exclusive stores in fiscal 2007-08 out of
which 39 would be our Own Footwear Retail Stores and 35 shall be Exclusive Dealers. We
propose to deploy Rs. 314.01 million towards establishment of the 39 own stores. The cost of
setting up of the 35 Exclusive stores shall be borne by the respective Exclusive Dealers. The
following are the details of our own stores, the estimated costs for establishment and proposed
schedule of deployment of funds:
Own Footwear Retail Stores
No.

Location

State

Sq. ft

Investment
(Rs. in
million)

Cost
Incurred
up
to
July 31,
2007
(Rs. Mn)

Hyderabad

Andhra Pradesh

1800

7.85

7.85

Warangal

Andhra Pradesh

1000

4.94

4.94

Rajamundry

Andhra Pradesh

2500

4.90

4.90

Bilaspur

Chattisgarh

1100

3.80

3.80

Bhilai

Chattisgarh

1000

6.30

6.30

Bhavnagar

Gujarat

1200

6.15

6.15

Ahmedabad

Gujarat

1500

9.70

9.70

Surat

Gujarat

1100

11.80

11.80

Rajkot

Gujarat

1500

12.10

12.10

10

Baroda

Gujarat

1500

21.00

21.00

11

Jamshedpur

Jharkhand

3000

7.70

7.70

12

Belgaum

Karnataka

1000

7.85

7.85

13

Bangalore

Karnataka

1000

9.25

9.25

14

Calicut

Kerala

2200

7.85

7.85

15

Bhopal

Madhya Pradesh

1100

10.20

9.58

0.62

16

Indore

Madhya Pradesh

1800

19.00

19.00

17

Akola

Maharashtra

780

5.50

4.37

1.13

18

Sangli

Maharashtra

2100

4.60

3.63

0.97

19

Aurangabad

Maharashtra

1000

2.78

2.78

20

Satara

Maharashtra

1000

3.71

3.71

21

Solapur

Maharashtra

1200

6.15

6.15

53

From
August
01, 2007
to March
31, 2008
(Rs. Mn)

KHADIM INDIA LIMITED

22

Kolhapur

Maharashtra

1200

7.00

7.00

23

Ahmednagar

Maharashtra

1200

5.40

5.40

24

Nanded

Maharashtra

1500

5.60

5.60

25

Bhubaneswar

Orissa

1100

9.29

9.29

26

Kota

Rajasthan

1200

5.65

5.65

27

Coimbatore

Tamilnadu

1632

5.90

5.90

28

Tirupur

Tamilnadu

1064

4.40

4.40

29

Tirunelvelli

Tamilnadu

2500

5.30

5.30

30

Trichy

Tamilnadu

1500

7.10

7.10

31

Chennai

Tamilnadu

1000

10.25

10.25

32

Chennai

Tamilnadu

1500

6.15

6.15

33

Lucknow

Uttar Pradesh

1600

9.55

9.55

34

Varanasi

Uttar Pradesh

1500

7.85

7.85

35

Bhowanipore, Kolkata

West Bengal

600

-*

36

Howrah

West Bengal

450

-*

37

Durgapur

West Bengal

2017

2.84

2.84

38

Barrackpur

West Bengal

1000

10.60

10.60

39

Gariahat, Kolkata

West Bengal

1500

38.00

38.00

54443

314.01

17.58

296.43

Total

* The investment in the store has been included in the cost of the LFR where the store is located
# As confirmed by our statutory auditors, Ray & Ray Chartered Accountants, vide their certificate
dated August 02, 2007
Details of agreements for the footwear retails stores already finalized
Location

Address

Counter Party

Bhopal

20, New Market,


Main
Road,T.
T.
Nagar,
Bhopal-462003.
MP

Mr.
Mr.
Mr.
Mr.
Mr.

Akola

Aditya
Thermoplastics Pvt.
Ltd. -

Leased

March 17,
2022

Sangli

Mrs.Chetna Kishor
Shah
And
Mrs.
Resma Sanjay Shah
-

Leased

May
2022

Howrah

Zuna Kapra Bazar,


Old Cloth Market,
Akola
444001
Maharastra
54 and 55, Maruti
Temple Road,P.S.
Ankali,Dist.

Sangli,Maharastra
416416
18,
G.T.Road
(South),Dist.
Howrah,

Bhagwati
Plasto
Works Pvt.Ltd.

Leased

February
19, 2027

Bhawanipore

Bhawanipur
Arch
Galaxy,45B,
Ashutosh Mukherjee
Road,Kolkata 26

Arch Enclave Pvt.


Ltd.

Leased

May
2025

54

Ravi Taparia,
Rohit Taparia,
Rahul Taparia,
A. S. Singhdeo,
T. S. Singhdeo

Nature
of
Our
Company's
Interest
Leased

Valid Till

No.

March 08,
2020

07,

31,

KHADIM INDIA LIMITED

Shop no. A-4, upper


floor, Vikas plaza,
Tilak
Path,
Aurangabad
PIN
431001,
Maharashtra
Khushi
Palace
Agrasan
Square,
Bilaspur, Chattisgarh

Mrs.. Tahseen Banu


(Licensor) , Mrs..
Roshan
Begum
(Confirming Party)

Leave
Licensed

Rituraj Steel Pvt Ltd


(Intending Lessor)

Durgapur

Dreamplex
Durgapur
City
Center,
Durgapur16, Burdwan, West
Bengal

Bhubaneshwar

Intending Sub
Lessee
(LOI
entered)

10

Rajamundry

Pal Heights J/7


(part)
and
J/7A,
Jayadev
Vihar,
Bhubaneshwar- 751
013
Immidi
Arcade,
Commercial
Complex, 7-30-33,
Main
Road,
Rajamundry533
101, District- East
Godavari,
Andhra
Pradesh

Mr. Amit Dalmia,


Mrs.
Manisha
Dalmia and Mrs.
Chandrakala
Dalmia(Intending
Lessees)
Hotel Pal Regency
Pvt. Limited

Intending
Lessee
(Letter
of
Intent
entered)
Intending Sub
Lessee
(LOI
entered)

Aurangabad

Bilaspur

Mr. I. V. V. S. S. R
Prasad,
Mrs.
I.
Radha Kumari, Mrs.
I.
Bhubaneswari,
Mrs. I. Meenakshi,
Mrs. I. Lakshmi,
Mrs.
I.
Bhagya
Lakshmi, Mrs. I.
Tripura Sundari

&

Leased

July
2012

27,

August
10, 2027

Exclusive Dealers Retail Stores


Out of the 35 Exclusive Dealers we have already finalized 26 stores of which 10 stores have
opened at the following locations:
Sl No

Location

State

Chaibasa

Jharkhand

Baripada

Orissa

Laheriya Sarai

Bihar

Mysore Ext

Deoria

Karur

Tamil Nadu

Bahrampore

West Bengal

Coochbihar

West Bengal

Asansol

West Bengal

10

Karnataka
Uttaranchal

Porbandar

Gujarat

The following stores are expected to open before November 2007:

55

KHADIM INDIA LIMITED

Sl No

b)

Location

State

1.

Hinoo Ranchi

Jharkhand

2.

Shilchar

3.

Hasimara

West Bengal

4.

Kumbakanam

Tamil Nadu

5.

Davangere

6.

Ardali Bazar Varanasi

Uttar Pradesh

7.

Korba

Chhattisgarh

8.

Kodarma

9.

Rajnandgaon

Chhattisgarh

10.

Bansdroni

West Bengal

11.

Mangalore

Karnataka

12.

Ambikapur

Chhattisgarh

13.

Raigarh

Maharashtra

14.

Beltala, Guwahati

15.

Hamiltanganj

16.

Jabalpur

Assam

Karnataka

Jharkhand

Assam
West Bengal
Madhya Pradesh

Lifestyle Retail Stores (LFR Stores)

Our Company has started operations of three Departmental stores in and around Kolkata. Retail
space for 3 additional outlets at Asansol, Burdwan & Sodepur has already been signed up and
these stores will be operational by the year 2008-09. The estimated cost of construction for the
same is as under:
No.

Location

State

Sq. ft.

Investment
(Rs in Mn)

Cost
Incurred up
to July 31,
2007
(Rs. Mn)
27.13

From
August
01, 2007
to March
31, 2008
(Rs. Mn)
35.00

Funds to
be
deployed
in 20082009
(Rs. Mn)
-

Howrah

West
Bengal

27,000

62.13

Bhawanipore,
Kolkata

West
Bengal

27,000

66.19

46.78

19.41

Asansol

West
Bengal

32,000

105.40

32.16

73.24

Burdwan

West
Bengal

30,000

68.97

15.00

53.97

Sodepur

West
Bengal

30,000

64.67

15.00

49.67

Not
yet
identified

West
Bengal

30,000

56.90

15.00

41.90

176,000

424.26

106.07

172.65

145.54

TOTAL

# As confirmed by our statutory auditors, Ray & Ray Chartered Accountants, vide their certificate
dated August 02, 2007

56

KHADIM INDIA LIMITED

Details of agreements for Lifestyle Retail Stores already finalized


No

Location

Address

Counter Party

Howrah

18,
G.T.Road
(South),Dist.
Howrah,

Bhagwati
Pvt.Ltd.

Bhawanipore

Asansol

Burdwan

Sodepur

Bhawanipur Arch
Galaxy,45B,
Ashutosh
Mukherjee
Road,Kolkata

26
32 (31), G.T.Road
(East), J.L. No.
37, Ward No. 20.
Asansol, WB
Radha Nagar,J.L.
No. 39, Mohalla
Kalna Road, R.S.
Plot No. 7003,
Burdwan, WB
Holding No. 730,
Barrackpore
Trunk
Road,
Sodepur, WB

c)

Plasto

Works

Arch Enclave Pvt. Ltd.

Nature of
Our
Company's
Interest
Leased

Valid Till

February
19, 2027

Leased

May 31,
2025

Mr. Vinod Sayal and Mr.


Bharat Thacker

Owned

N.A.

M/S
Dheeraj
Promoters
Contractor/Agent/Developer)

MOU
entered

May 21,
2026

MOU
entered

July 28,
2026

Mr. Raju Das

Setting up Central Distribution Centre

To support the inventory management of the footwear and LFR business there are five warehouses
in Kolkata totaling upto 80,000 sq. ft. of storing space, along with one Regional Distribution Centre
each at Chennai and Delhi covering an area of 35,000 sq. ft and 18,000 sq. ft. respectively. In
order to facilitate the smooth flow of goods and information, as well as the integration of business
processes across the supply chain, we plan to open a Central Distribution Centre in Kolkata
admeasuring approximately 100,000 sq ft. The setting up of this facility will achieve substantial
savings through better inventory management, reduction of product shrinkage and improvement
in supply chain efficiency, which will enhance our overall competitiveness and service quality.
The Central Distribution Centre shall offer the following benefits:
1.
2.
3.
4.
5.

Improved ability to plan, respond to and execute any store requirement


Improved utilization of resources
Reduction in carrying costs
Reduced inventory levels and number of items to be stocked
Reduction in pilferage

The cost of setting up the Central Distribution Centre has been estimated as follows:
Central Distribution Centre

Cost (Rs in Mn)

Land Cost

40.00

Development and Construction Costs

50.56

Total

90.56

57

KHADIM INDIA LIMITED

d)

Improvement of our Information Technology Infrastructure

We intend to integrate all our operations and improve our business process efficiency by further
upgrading our IT Infrastructure and by replacing the existing ERP system. This will help us in
reducing redundancy, enhance transparency, better planning of delivery schedules and reduce
inventory lead time.
The cost for setting of the IT Infrastructure is estimated to be as follows:
Particulars

Rs. in Mn
Amount

Implementation Cost

19.20

Product Cost

16.00

Hardware Cost

11.00

Network Enhancement

5.00

Software and Tools

3.80

Total
e)

55.00
General Corporate Purpose

We intend to incur expenditure on our brand building initiatives which apart from advertisements
include strengthening of our marketing capabilities and refurbishment and sprucing up of our
existing stores. We have already provided an advance to BCCL as per the agreement towards our
brand building exercise. Our management, in accordance with the policies of our Board, will have
the flexibility in utilizing the proceeds earmarked for general corporate purposes.
f)

Issue Related Expenses

The Issue related expenses include, among others, Lead Management Fees, underwriting and
selling commissions, printing and distribution expenses, legal fees, advertisement expenses,
registrar and depository fees. The estimated Issue expenses are as follows:
Activity
Lead Management Fees, underwriting and selling
commissions
Advertising and marketing expenses
Printing and Stationary expenses
Others (Registrar fees, legal fees etc.)
Total estimated Issue expenses
[] will be updated in the Red Herring Prospectus

Expense (Rs.
Million)
[]

% of net proceeds
of the Issue
[]

[]
[]
[]
[]

[]
[]
[]
[]

Undertaking by the Issuer Company


We hereby confirm that firm arrangements of finance through verifiable means towards 75% of
the stated means of finance, excluding the amount to be raised through proposed Public issue,
have been made.
Interim Use of Proceeds
Our management, in accordance with the policies set up by our Board, will have flexibility in
deploying the net proceeds received by us from the Issue. Pending utilization for the purposes
described above, we intend to temporarily invest the funds in high quality interest/dividend
bearing liquid instruments including money market mutual funds, deposit with banks for necessary
duration. We also intend to apply part of the proceeds of the Issue, pending utilization for the
purposes described above, to temporarily reduce our working capital borrowings from banks and
Financial Institutions. Such investments would be in accordance with investment policies approved
by our Board from time to time.
Monitoring Utilization of Funds
Our Board will monitor the utilization of the proceeds of the Issue. We will disclose the utilization
of the proceeds of the Issue under a separate heading in our Balance Sheet for the financial year

58

KHADIM INDIA LIMITED

ending 2008 and 2009 clearly specifying the purpose for which such proceeds have been utilized or
otherwise disclosed as per the disclosure requirements of listing agreement with the Stock
Exchanges.
No part of the proceeds of the Issue will be paid by us as consideration to our Promoters, our,
Directors key management personnel or companies promoted by our Promoters except in the
usual course of business.
Estimated schedule of Deployment of funds
Activity

Investment
(Rs in Mn)

Cost Incurred
up to July 31,
2007
(Rs. Mn)

From August
01, 2007 to
March 31, 2008
(Rs. Mn)

Funds to be
deployed in
2008-2009 (Rs.
Mn)

Own Footwear Retail


314.01
17.58
296.43
Stores
Lifestyle
Retail
424.26
106.07
172.65
145.54
Stores
Central Distribution
90.56
60.00
30.56
Centre
55.00
Improvement of our
55.00
Information
Technology
Infrastructure
General
Corporate
70.00
70.00
Purposes
Total
953.83
123.65
654.08
176.10
# As confirmed by our statutory auditors, Ray & Ray Chartered Accountants, vide their certificate
dated August 02, 2007

59

KHADIM INDIA LIMITED

BASIS FOR ISSUE PRICE


The Issue Price will be determined by the Company in consultation with the BRLM on the basis of
assessment of market demand for the Equity Shares offered by way of Book Building.
Investors should read the following summary with the Risk Factors beginning on page
number 10 and the details about the Company and its financial statements included in
this Draft Red Herring Prospectus. The trading price of the Equity Shares of our
Company could decline due to these risks and you may lose all or part of your
investments.
QUALITATIVE FACTORS
Strong Brand Equity
We are the third largest footwear retail Company in India in terms of the number of stores. Our
brand Khadims is well established and our products have been well accepted by the consumers
at large. Our company is regulalrly investing in design and product development to enhance the
product attributes thereby adding to the brand equity.
Experienced and skilled management team
We have an experienced management team which is ably supported by a team of professionals
having relevant expertise in footwear and retail sectors. This has helped us in spreading our
presence across the country and successfully managing our business.
Identifying new locations
We believe that we possess the ability to identify locations with potential for growth. We have an
exclusive site identification and assessment team, which undertakes systematic analysis of the
business prospects, taking into account factors such as population, literacy levels, nature of
occupation, income levels, accessibility, basic infrastructure and establishment and running costs.
Large base of loyal customers
We believe that the emotional connect that we have been able to create with our customers
through our service offering and special promotions has helped us convert many of them into loyal
customers.
Strong distribution and logistics network
Our distribution and logistics network comprises of three distribution centers i.e. Kolkata, Delhi
and Chennai comprising of seven warehouses, five in Kolkata and one each in Delhi and Chennai.
Our distribution and logistics set up is well networked and allows us to fulfill the store requisition
within a shortest period of time from generation and receipt of order, which has helped us to
optimize in-store availability of merchandise and minimize transportation costs. Our strong
distribution and logistics network has enabled us to minimize the requirement of a dedicated
storage space at every store and instead undertake periodical replenishment of depleted stock.
This provides us assistance in maintaining an optimum working capital level and thereby
minimizing carrying cost.
Efficient Supply Chain Management
Our supply chain management involves planning, merchandizing, sourcing, standardization,
vendor management, production, logistics, quality control, pilferage control, replacement and
replenishment. It provides us flexibility to adapt to changing patterns in consumer behaviour and
our ability to add value at various steps/levels. In particular, it enhances our ability to undertake
in-house manufacturing, designing and development of contemporary footwear.

60

KHADIM INDIA LIMITED

Geographical spread
Our stores and dealers are spread in various parts and regions of the country. This has not only
enabled us to build our brand value but also facilitated us to explore cost-effective sourcing from
different locations, identify potential markets and efficiently establish new stores in different
locations. An aggregate of 260+ exclusive retail outlets across India enables us to capture market
share in locations where a majority of our target customers are located.
Strong focus on systems and processes
We have a strong focus on systems and processes. We have been able to capture our learnings
over the years and use them to create Standard Operating Procedures (SOPs) for each of our
activities, right from planning and setting up of new stores to their day to day operations. Our
manufacturing units are ISO 9001:2000 certified and this reflects our commitment to quality and
the environment.
Quantitative Factors
The information presented in this section is derived from our standalone restated financial
statements prepared in accordance with Indian GAAP.
1. Adjusted Earnings per share (EPS) of face value of Rs.10
Period
Year ended March 31, 2005
Year ended March 31, 2006
Year ended March 31, 2007
Weighted Average

EPS
4.03
3.12
2.85
3.14

Weight used
1
2
3

2. Price/Earning (P/E) Ratio


Price/Earnings (P/E)* ratio in relation to Issue Price of Rs. []

Based on March 31, 2007 ended EPS of Rs. 2.85

Industry P/E (Leather /Leather Product)


a) Highest: 22.7
b) Lowest: 5.2
c) Industry Composite: 15.0

(Source: Capital Market, August 27, 2007 September 09, 2007, Sector Leather/Leather
Products)

Industry P/E (Textile Products)


a) Highest: 275.0
b) Lowest: 3.4
c) Industry Composite: 26.3

(Source: Capital Market, August 27, 2007 September 09, 2007, Sector Textile Products)
3. Average Return on Net Worth
Period
Year ended March 31, 2005
Year ended March 31, 2006
Year ended March 31, 2007
Weighted Average
* RONW = PAT/ Net Worth at the end of the year
4.

RONW*(%)
5.84%
6.25%
5.95%
6.03%

Weight used
1
2
3

Minimum Return on increased Net Worth required to maintain pre issue EPS is []

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KHADIM INDIA LIMITED

5. Net Asset Value per share


Net Asset Value per share for the year ended 31st March 2007 is Rs. 44.63.
The NAV per Equity Share after the Issue is []
Issue price per Equity share is Rs. []
6. Comparison with Industry Peers

Our Company (Fiscal 2007)

RONW (%)
5.95

EPS
2.85

Book Value
44.63

P/E
-

The comparable ratios of the companies which are to some extent similar in business are as given
below:
Name of the Company
Footwear
Bata India
Liberty Shoes
Relaxo Footwears
Retail
Pantaloon Retail
Shoppers Stop
Trent India Limited
Vishal Retail

RONW (%)

EPS

Book Value

P/E

22.2
25.7
7.3

6.1
9.8
5.5

28.6
57.9
42.8

22.7
13.4
7.1

17.2
9.3
8.8
24.3

4.3
7.3
14.3
5.6

67.1
84.7
288.3
96.9

104.8
78.3
40.5
-

EPS, RONW and Book Value are based on last year audited financial results for the year ended
March 31, 2007
(Source: Capital Market, August 27, 2007 September 09, 2007)
The BRLM believes that the Issue Price of Rs. [] is justified in view of the above qualitative and
quantitative parameters, see sections titled Risk Factors, Our Business and Financial
Statements beginning on pages 10, 80 and 154 respectively, to have a more informed view.
The face value of the Equity Shares is Rs. 10 each and the Issue Price is [] times the face value
of the Equity Shares.

62

KHADIM INDIA LIMITED

AUDITORS REPORT ON POSSIBLE TAX BENEFITS


To
The Board of Directors,
Khadim India Limited,
Kankaria Estate, 5th Floor,
6, Little Russel Street,
Kolkata- 700 071
Dear Sirs,
Re: Statement of tax benefits available to the Company and its prospective shareholders
We hereby report that the enclosed statement states the possible tax benefits available to Khadim
India. Limited (the Company) and to its shareholders under the current tax laws in India. Several
of these benefits are dependent on the Company or its shareholders fulfilling the conditions
prescribed under the relevant tax laws. Hence, the ability of the Company or its shareholders to
derive the tax benefits is dependent upon fulfilling such conditions which, based on business
imperatives the Company faces in the future, the Company may or may not choose to fulfill.
The benefits discussed in the enclosed statement are not exhaustive. This statement is only
intended to provide general information to the investors and is neither designed nor intended to be
a substitute for professional tax advice. In view of the individual nature of the tax consequences
and the changing tax laws and the fact that the Company will not distinguish between the shares
offered for subscription and the shares offered for sale by the selling shareholders, each investor is
advised to consult his or her own tax consultant with respect to the specific tax implications arising
out of their participation in the issue.
We do not express any opinion or provide any assurance whether:
Company or its shareholders will continue to obtain these benefits in future; or
The conditions prescribed for availing the benefits have been or would be complied with.
The contents of the enclosed statement are based on information, explanations and
representations obtained from the Company and on the basis of our understanding of the business
activities and operations of the Company.
No assurance is given that the revenue authorities/ Courts will concur with the views expressed
herein. Our views are based on the existing provisions of law and its interpretation, which are
subject to change from time to time. We do not assume responsibility to update the views
consequent to such changes. We will not be liable to any person in respect of this statement.

For RAY & RAY


Chartered Accountants

R. N. Roy
Partner
Membership No. F-8608
Place: Kolkata
Dated: 30 July, 2007

63

KHADIM INDIA LIMITED

STATEMENT OF TAX BENEFITS


The following key tax benefits are available to Khadim India Limited and prospective shareholders
under the current direct tax laws in India.
The tax benefits listed below are the possible benefits available under the current tax laws
presently in force in India. Several of these benefits are dependent on the Company or its
shareholders fulfilling the conditions prescribed under the relevant tax laws. Hence the ability of
the Company or its shareholders to derive the tax benefits is dependent upon fulfilling such
conditions, which based on business imperatives it faces in the future, it may choose to fulfill. This
statement is only intended to provide the tax benefits to the Company & its shareholders in a
general and summary manner and does not purport to be a complete analysis or listing of all the
provisions or possible tax consequences of the subscription, purchase, ownership or disposal etc.
of shares. In view of the individual nature of tax consequence and the changing tax laws, each
investor is advised to consult his/her own tax adviser with respect to specific tax implications
arising out of their participation in the issue.
1.

Key benefits available to the Company under the Income-tax Act, 1961 (the Act)

A)

Business Income:

A.i.

Depreciation
The Company is entitled to claim depreciation on specified tangible (being Buildings, Plant &
Machinery, Computer and Vehicles) and intangible assets (being Knowhow, Copyrights,
Patents, Trade marks, Licenses, Franchises or any other business or commercial rights of
similar nature acquired on or after 1st April, 1998) owned by it and used for the purpose of
its business under section 32 of the Act.
In case of any new plant and machinery (other than ships and aircraft) that will be acquired
and installed by the Company engaged in the business of manufacture or production of any
article or thing, the Company will be entitled to a further sum equal to twenty per cent of the
actual cost of such machinery or plant subject to conditions specified in section 32 of the Act.
Unabsorbed depreciation if any, for an Assessment Year (AY) can be carried forward & set off
against any source of income in subsequent AYs as per section 32 (2) subject to the
provisions of sub-section (2) of section 72 and sub-section (3) of section 73 of the Act.

A.ii.

Preliminary Expenditure:
As per Section 35D, the Company is eligible for deduction in respect of specified preliminary
expenditure incurred by the Company in connection with extension of its industrial
undertaking or in connection with setting up a new industrial unit for an amount equal to
1/5th of such expenses over 5 successive AYs subject to conditions and limits specified in
that section.

A. iii

Expenditure incurred on voluntary retirement scheme:


As per Section 35DDA, the Company is eligible for deduction in respect of payments made to
its employees in connection with his voluntary retirement for an amount equal to 1/5th of
such expenses over 5 successive AYs subject to conditions specified in that section.

A.iv

Expenditure on Scientific Research:


As per Section 35, the Company is eligible for

(a) Deduction in respect of any expenditure (not being in the nature of capital expenditure) on
scientific research related to the business subject to conditions specified in that section.
(b) As per section 35(2AA) a deduction of 125% shall be allowed as a deduction of the sum paid
by the Company, to a National Laboratory [or a University or an Indian Institute of
Technology or a specified person as specified in this section] with a specific direction that the

64

KHADIM INDIA LIMITED

sum shall be used for scientific research undertaken under a programme approved in this
behalf by the specified authority subject to conditions specified in that section.
A. v.

Carry forward of business loss


Business losses if any, for any AY can be carried forward and set off against business profits
for eight subsequent AYs.

A. vi.

MAT Credit:
As per section 115JAA(1A), the Company is eligible to claim credit for Minimum Alternate
Tax (MAT) paid under sub-section (1) of section 115JB for any AY commencing on or after
April 1, 2006 against normal income tax payable in subsequent AYs. MAT credit shall be
allowed under sub-section (1A) shall be the difference of the tax paid for any assessment
year under sub-section (1) of section 115JB and the amount of tax payable by the assessee
on his total income computed in accordance with the other provisions of this Act.
The amount of tax credit determined shall be carried forward and set off up to 7 (seven) AYs
immediately succeeding the assessment year in which tax credit becomes allowable.
All the deductions mentioned above, will result into reduction in tax liability of the Company.

B)

CAPITAL GAINS:

B. i. Capital asset means property of any kind held by an assessee whether or not connected with
his business or profession but does not include any stock-in-trade, consumables stores or
Raw Materials held for the purpose of his business or profession and personal effects ie
movable property held for personal use.
Capital assets may be categorised into short term capital assets and long term capital assets
based on the period of holding.
Shares in a company, listed securities or units of UTI or units of mutual fund specified under
section 10 (23D) or zero coupon bond will be considered as long term capital assets if they
are held for a period exceeding twelve months. In case of all other assets if the period of
holding exceeds thirty six months they are termed as long term capital assets.
B. ii. Long term Capital Gain (LTCG)
LTCG means capital gain arising from the transfer of a long term capital asset.
Short Term Capital Gain (STCG)
STCG means gain arising out of transfer of capital asset being share held in a Company or
any other security listed in a recognized stock exchange in India or unit of the Unit Trust of
India or a unit of a mutual fund specified under clause (23D) of section 10, held by an
assessee for 12 months or less.
In respect of any other capital asset, STCG means capital gain arising from the transfer of
capital asset, held by an assessee for 36 months or less.
B. iii. LTCG arising on transfer of equity share in a company or units of an equity oriented fund
(as defined) which has been set up under a scheme of a Mutual Fund specified under Section
10 (23D), on a recognized stock exchange on or after October 1, 2004 are exempt from tax
under Section 10(38) of the Act provided the transaction is chargeable to securities
transaction tax (STT) and subject to conditions specified in that section. However, the
income by way of long term capital gain of a Company exempted under section 10 (38) shall
be taken into account in computing book profit and income tax payable under section 115JB
@ 10% plus applicable surcharge and education cess on tax plus Surcharge (if any)
{hereinafter referred to as applicable SC+ EC}.

65

KHADIM INDIA LIMITED

B. iv. As per second proviso to section 48, LTCG arising on transfer of capital assets, other than
bonds and debentures excluding capital indexed bonds issued by Government, is to be
computed by deducting the indexed cost of acquisition and indexed cost of improvement
from the full value of consideration.
B.v.a As per section 112, LTCG is taxed @20% plus applicable SC +EC.
B.v.b However as per proviso to section 112(1), if such tax payable on transfer of listed
securities/units/Zero coupon bonds exceeds 10% of the LTCG, without availing benefit of
indexation, the excess tax will be ignored.
B.vi.

As per section 111A of the Act, STCG arising on sale of equity shares or units of equity
oriented mutual fund (as defined) under Section 10(23D), on a recognized stock exchange
are subject to tax at the rate of 10 per cent (plus applicable SC + EC), provided the
transaction is chargeable to STT.

B.vii. As per section 71 read with section 74, Short-term capital loss arising during a year is
allowed to be set-off against short-term as well as long-term capital gains of the said year.
Balance loss, if any, should be carried forward and set-off against short-term as well as longterm capital gains for subsequent 8 years.
B.viii. As per section 71 read with section 74, Long-term capital loss arising during a year is
allowed to be set-off only against long-term capital gains. Balance loss, if any, should be
carried forward and set-off against subsequent years long-term capital gains for subsequent
8 years.
B.ix. Under section 54EC of the Act, capital gains arising on the transfer of a long-term capital
asset will be exempt from capital gains tax if such capital gains are invested within a period
of 6 months after the date of such transfer in specified bond issued by the following and
subject to the conditions specified therein
National Highways Authority of India constituted under section 3 of National Highways
authority of India Act, 1988.
Rural Electrification Corporation Limited, a Company formed and registered under the
Companies act, 1956
If only part of the capital gains is so reinvested, the exemption shall be proportionately
reduced. However, after 1ST April, 2007, to avail the benefit of section 54EC, the investment
made in specified long term bonds should not exceed Rupees Fifty Lacs.
If the new bonds are transferred or converted into money within three years from the date
of their acquisition, the amount so exempted shall be taxable in the year of transfer.
C)

Income from Other Sources


Dividend Income:
Dividend (both interim and final) income, if any, received by the Company on its investment
in shares of another Domestic Company shall be exempt from tax under Section 10(34) read
with Section 115-O of the Act.
Income received in respect of units of a Mutual Fund specified under Section 10(23D) of the
Act shall be exempt from tax under Section 10(35) of the Act, subject to such income not
arising from transfer of units in such Mutual Fund.

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KHADIM INDIA LIMITED

2.

Key benefits available to the Members of the Company

2.1

Resident Members

2.1.a

Dividend income:
Dividend (both interim and final) income, if any, received by the resident shareholder from
a domestic Company is exempt under Section 10(34) read with Section 115O of the Act.

2.1.b Capital gains:


i.

Benefits outlined in Paragraph 1(B) above are also applicable to resident


shareholders. In addition to the same, the following benefits are also available to
resident shareholders.

ii.

As per Section 54F of the Act, LTCG arising to individual and HUF from transfer of
shares will be exempt from tax if net consideration from such transfer is utilised
within a period of one year before, or two years after the date of transfer, in
purchase of a new residential house, or for construction of residential house within
three years from the date of transfer and subject to conditions and to the extent
specified therein.

2.1. c Clubbing of Income:


Any income of minor children clubbed with the total income of the parent under section
64(1A) of the IT Act, will be exempt from tax to the extent of Rs. 1500/- per minor child
under section 10(32) of the IT Act.
2.1.d

Rebate:
In terms of Section 88E of the Act, STT paid by a shareholder in respect of taxable
securities transactions (i.e. transaction which is chargeable to STT) entered into in the
course of business would be eligible for rebate from the amount of income-tax on the
income chargeable under the head Profits and Gains under Business or Profession arising
from taxable securities transactions subject to conditions and limits specified in that
section.

2.2

Key Benefits available to Non-Resident Member

2.2.a

Dividend income:
Dividend (both interim and final) income, if any, received by the non-resident shareholders
from a domestic Company shall be exempt under section 10(34) read with Section 115-O
of the Act.

2.2.b

Capital gains:
Benefits outlined in Paragraph 2.1(b) above are also available to a non-resident
shareholder except that as per first proviso to Section 48 of the Act, the capital gains
arising on transfer of capital assets being shares of an Indian Company need to be
computed by converting the cost of acquisition, expenditure in connection with such
transfer and full value of the consideration received or accruing as a result of the transfer
into the same foreign currency in which the shares were originally purchased. The
resultant gains thereafter need to be reconverted into Indian currency. The conversion
needs to be at the prescribed rates prevailing on dates stipulated. Further, the benefit of
indexation as provided in second proviso to section 48 is not available to non-resident
shareholders.

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KHADIM INDIA LIMITED

2.2.c

Rebate:
Benefits outlined in Paragraph 2.1.d above are also applicable to the non-resident
shareholder.

2.2.d

Tax Treaty Benefits:


As per Section 90 of the Act, the shareholder can claim relief in respect of double taxation
if any as per the provision of the applicable double tax avoidance agreements.

2.2.e

Special provisions in respect of income / LTCG from specified foreign exchange


assets available to Non resident Indians under Chapter XII-A

2.2.e.i.

Non-Resident Indian (NRI) means a citizen of India or a person of Indian origin who is not
a resident, Person is deemed to be of Indian origin if he, or either of his parents or any of
his grand-parents, was born in undivided India.

2.2.e.ii. Specified foreign exchange assets include shares of an Indian


acquired/purchased/subscribed by NRI in convertible foreign exchange.

Company

2.2.e.iii. As per section 115E, income [other than dividend which is exempt under section 10(34)]
from investments and LTCG from assets (other than specified foreign exchange assets)
shall be taxable @ 20% (plus applicable SC + EC). No deduction in respect of any
expenditure allowance from such income will be allowed and no deductions under chapter
VI-A will be allowed from such income.
2.2.e.iv. As per section 115E, LTCG arising from transfer of specified foreign exchange assets
shall be taxable @ 10% (plus applicable SC + EC).
2.2.e.v. As per section 115F, LTCG arising from transfer of foreign exchange assets shall be
exempt in the proportion of the net consideration from such transfer being invested in
specified assets or savings certificates within six months from date of such transfer,
subject to further conditions specified under section 115F.
2.2.e.vi. As per section 115G, if the income of a NRI taxable in India consist only of income/ LTCG
from such shares and tax has been properly deducted at source in respect of such income
in accordance with the Act, it is not necessary for the NRI to file return of income under
section 139.
2.2.e.vii.As per section 115H of the Act, when a non-resident Indian become assessable as a
resident in India, he/she is entitled to furnish a declaration in writing to the Assessing
Officer along with the return of income to the effect that the provisions of Chapter XII-A
shall continue to apply to him in relation to such investment income derived from the
specified assets for that year and subsequent assessment years until such assets are
transferred or otherwise converted into money.
2.2.e.viii As per section 115I of the Act, a non-resident Indian may elect not to be governed by the
provisions of Chapter XII-A for any assessment year by furnishing the return of income for
that year under Section 139 of the Act, declaring therein that the provisions of Chapter
XII-A shall not apply to him for that assessment year and, accordingly, his total income for
that assessment year will be computed in accordance with the other provisions of the Act.
2.2.f.

Any income of minor children clubbed with the total income of the parent under section
64(1A) of the IT Act, will be exempt from tax to the extent of Rs. 1500/- per minor child
under section 10(32) of the IT Act.

68

KHADIM INDIA LIMITED

2.3

Key Benefits available to Foreign Institutional Investors (FIIs)

2.3.1

Dividend income:
Dividend (both interim and final) income, if any, received by the shareholder from the
domestic Company shall be exempt under Section 10(34) with Section 115O of the Act.

2.3.2

Capital Gains:
i.

Under Section 115AD, income (other than income by way of dividends referred
in Section 115-O) received in respect of securities (other than units referred to in
Section 115AB) shall be taxable at the rate of 20% (plus applicable SC & EC). No
deduction in respect of any expenditure /allowance shall be allowed from such
income.

ii.

Under Section 115AD, capital gains arising from transfer of securities (other
than units referred to in Section 115AB), shall be taxable as follows:

As per section 111A, STCG arising on transfer of securities where


transactions is chargeable to STT, shall be taxable at the rate of 10%
applicable SC {& EC). STCG arising on transfer of securities where
transaction is not chargeable to STT, shall be taxable at the rate of
(plus applicable SC & EC)

such
(plus
such
30%

LTCG arising on transfer of securities where such transaction is not


chargeable to STT, shall be taxable at the rate of 10% (plus applicable SC &
EC). The benefits, as mentioned under 1st and 2nd proviso to section 48
would not be allowed while computing the capital gains.

2.3.3.

Exemption of capital gains from Income tax

2.3.3.i.

LTCG arising on transfer of securities where such transaction is chargeable to STT is


exempt from tax under Section 10(38) of the Act.

2.3.3 ii. Benefit of exemption under Section 54EC shall be available as outlined in Paragraph
1(B)(ix) above.
2.3.4

Rebate
Benefit as outlined in Paragraph 2.1.c above are also available to FIIs.

2.3.5

Tax Treaty Benefits


As per Section 90 of the Act, a shareholder can claim relief in respect of double taxation, if
any, as per the provisions of the applicable double tax avoidance agreements.

2.4

Key Benefits available to Mutual Funds


As per the provisions of Section 10(23D) of the Act, any income of Mutual Funds registered
under the Securities and Exchange Board of India Act, 1992 or Regulations made there
under, the Mutual Funds set up by public sector banks or public financial institutions and
Mutual Funds authorized by the Reserve Bank of India, would be exempt from income tax,
subject to the prescribed conditions.

2.5

Key Benefits available to Venture Capital Companies/Funds


As per the provisions of section 10(23FB) of the Act, income of-

69

KHADIM INDIA LIMITED

3.

Venture Capital Company which has been granted a certificate of registration under
the Securities and Exchange Board of India Act, 1992 and notified as such in the
Official Gazette; and

Venture Capital Fund, operating under a registered trust deed or a venture capital
scheme made by Unit Trust of India, which has been granted a certificate of
registration under the Securities and Exchange Board of India Act, 1992 and notified
as such in the Official Gazette set up for raising funds for investment in a Venture
Capital Undertaking, is exempt from income tax.

However, the income distributed by the Venture Capital companies/funds to its


investors would be taxable in the hands of recipient.
Wealth Tax Act, 1957

Shares in a Company held by a shareholder are not treated as an asset within the meaning
of Section 2(ea) of Wealth Tax Act, 1957; hence, wealth tax is not leviable on shares held
in a Company.
4.

The Gift Tax Act, 1957


Gift of shares of the Company made on or after October 1, 1998 are not liable to Gift tax.

Notes:
a)

All the above benefits are as per the current tax law and will be available only to the
sole/first named holder in case the shares are held by joint holders.

b)

In respect of non-residents, the tax rates and the consequent taxation mentioned above
will be further subject to any benefits available under the relevant DTAA, if any, between
India and the country in which the non-resident has fiscal domicile.

c)

In view of the individual nature of tax consequences, each investor is advised to consult
his/her own tax advisor with respect to specific tax consequences of his/her participation in
the issue.

For RAY & RAY


Chartered Accountants

R. N. ROY
Partner
Membership No. F-8608
Place: Kolkata
Dated: 30 July, 2007

70

KHADIM INDIA LIMITED

INDUSTRY OVERVIEW

Footwear Industry

Footwear is a necessity to every person and at the same time is now a lifestyle as also a
performance enhancement product; and is thus a segment with vast potential. The India footwear
market is estimated to be worth Rs. 137,500 Million and constitutes just about one percent of
Indian retail. About 37.8 percent of Footwear retail is the organized segent, which qualifies it as
the second most organized retail category in India, next only to Watches.
The footwear market can be segmented into a number of categories: Premium/High-end, Medium
priced, low priced and plastic slippers/leather strapped one. Again, organized footwear retail has a
number of segments like sports footwear, semi-formal/casual footwear, and formalwear and utility
footwear. In terms of number of units sold in 2005-06, Casual comprises more than 50 percent of
the organized branded footwear market in India, followed by mass/economy range at about 20%
and Sports/active wear and Premium leather footwear at 7-10 percent each.

Volume Share of Product segments in footwear

Casuals
61%

Sports/Active
7%

Premium
Leather
7%

Casuals

Mass

Prem nonleather
3%

Prem non-leather

Mass
22%

Premium Leather

Sports/Active

Source: KSA Technopak Study


The semi-formal/casual formal and formalwear segment has a number of players and retailers with
a number of both homegrown as well as international brands. The utility footwear segment is the
most price sensitive and is dominated mostly by domestic players and retailers both organized and
unorganized.
Mens footwear comprises the largest share of the organized market accounting for about 52
percent in the value terms. The ladies footwear segment remains the most untapped as nearly 8090 percent purchases happen in the unorganized market largely due to the dressing habits of
women for whom consideration of durability or comfort are less important than colours and
designs that go with dress. The childrens and kids segment also accounts for a significant share
due to the increased emphasis on sporty looks.

71

KHADIM INDIA LIMITED

Volume Share in Footwear

Men's
58%
Ladies
13%

Children's/Kid
s'
29%

Children's/Kids'

Ladies

Men's

Source: KSA Technopak Study


A very unique aspect of modern lifestyle taste is that though consumers are more and more
becoming price conscious but when it comes to purchasing footwear, comfort somewhat tops in
their priority and this one reason why branded and organized segment has come to dominate the
market. Almost all of the worlds top active wear and sportswear brands are flourishing despite the
fact that awareness of fitness and performance enhancement products is much lower than in most
other South Asian Countries. The market indicates a shift in consumer preferences towards more
casual, cleaner and younger styles coupled with increased media penetration and awareness of
international trends and lifestyles among the Indian consumers especially in the working populace.
Even though India is the second largest manufacturer of footwear in the world, per capita
ownership of 1.1 pairs in India is among the lowest. Per capita ownership in Europe and other
developed countries is estimated at five pairs per annum.
However, a change may be in the offing. The booming Indian economy offers the prospect of
higher disposable incomes and a change in consumer preferences leading to a probable increase in
per capita footwear ownership. Even as India's share of the global footwear trade has been
insignificant with a share of less than 3%, it could soon change due to a migration in installed
capacities from developed to developing countries on account of high wages and environmental
issues. In the 2006 Union Budget, the rate of excise duty on footwear with an MRP between Rs.
250 and Rs. 750 was reduced from 16% to 8%, which has helped footwear manufacturers address
competition from the unorganized sector and imports. The imposition of an anti-dumping duty by
the European Union on imports of certain footwear categories from China and Vietnam created an
opportunity for Indian exporters.
The Indian footwear industry has witnessed a metamorphosed growth with the advent of new
retail brands and formats in the Indian markets. The Industry has grown by leaps and bounds in
the last decade with the introduction of new technologies and inflow of investments. The Industry
both at manufacturing and marketing sides continues to be fragmented into multiple regions. This
is largely because of the large size of the country resulting in local preferences due to the
economic, social and seasonal factors and absence of a proper distribution network.
The major production centers India are Chennai, Ranipet, Ambur in Tamil Nadu, Mumbai in
Maharashtra, Kanpur in U.P., Jalandhar in Punjab, Agra and Delhi.

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KHADIM INDIA LIMITED

Leading Players (Footwear)


Retailers
Bata
Liberty
Khadims
Woodlands
Metro/Mochi
Source: KSA Technopak Study

No of Stores
1400
334
260
200
52

In terms of volume, the market size of the footwear industry in the top 20 cities in the country is
estimated to be 100 mn pairs per annum. For the country as a whole, the annual domestic
consumption of footwear is approximately 1.1 billion pairs per annum, as per government
statistics. With a population base of 1 billion, this translates to a per capita consumption of 1.1
pairs per person per annum.
The step-by-step change process brought about for the footwear industry is shown below:

The Change Process


Though in absolute terms there is an increase in the exports of footwear products but in
percentage terms Indias share in world trade remain around 2%. Over the years there has been a
tremendous increase in competition at international level that is forcing footwear industry to be
competitive. All around the world the industry is getting automated making the whole process fast
and leading to high quality end product. The competition is shifting from the manufacturing end to
the product creation part of the value chain as shown below. With the use of latest Information
Technologies like Computer Aided Design (CAD) Computer Aided Manufacturing (CAM), there has
been an increase in the product variety. Also as this industry is highly fashion dominated there is a
continuous change in the product style. This requires continuous monitoring of changes in the
customer style and specific customer needs.

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KHADIM INDIA LIMITED

Footwear Value Creation


Major Highlights of the Indian Footwear Industry

India exports about 42 million pairs. This forms about 0.5% of the production of leather
footwear estimated at 776 million pairs in India.

42 million pairs provide a share of about 1.4 % in value terms. Even including the export
segment of uppers, the share is limited to 2.2% of the value of global trade.

A growth of about 2-2.5 billion pairs of additional footwear needs is forecasted.

Global CAGR (estimated 3.30% in terms of value and 3.10% in terms of volume).

When Indian share of footwear trade is 1% of the volume, a five fold increase in volume
implies only a 10% share of additionally created demands. It is achievable even without
having to replace other players

Comparative Advantage of the Indian Footwear Industry

Large raw material base

Large Installed capacity of production

Wide trained and skilled manpower base

Expertise to produce footwear

Strong domestic market

Enabling domestic market

Enabling government policies.

Technology and design capability

74

KHADIM INDIA LIMITED

SWOT Analysis of the Indian Footwear Industry


Strength

Availability of low cost man power-

Weakness

Poor Investment Climate for large scale

skilled and unskilled

investment.

Large domestic consumer base

Lack of labour policy reforms

World class institutional support

Weak physical and enabling

Access to relevant technology

Largest livestock wealth

Access to relevant technology and

Infrastructure

Inadequate availability of indigenous


footwear components

design capabilities

Opportunities

Migration in installed capacities from

Threats

Higher competition from global brands

European countries to Asia on account

of high wages and environmental issues

higher marketing costs

Emergence of marketing opportunities

from the advent of foreign brands

Diminishing margins on account of


Frequent change in consumer tastes
leading to quicker obsolescence and

Recent Government measure to lower

higher stocks

excise on footwear, expected to address

Possible environmental issues

competition from unorganised sector


and imports

Non Leather Footwear Industry


The estimated production of non-leather footwear in India is 960 million pairs per year according
to CLRI. The major demand in non leather footwear sector is chappals (Hawai and Eva) because it
is the cheapest footwear available in India. The chappals have captured 70% of demand in rural
areas, because in rural areas people use this product as multipurpose footwear.
The following chart shows the distribution of rural and urban population as per 2001 Census:

Urban & Rural Population Distribution

Rural
72%

Urban
28%

Earlier in the rural areas rubber based hawai chappals were used because there were no other
substitutes. The demand for rubber hawai upto 2002 was on an increasing trend. At that time EVA
injected products were very costly and far from the reach of rural people. With the improvement in
technology and reduction in the cost of production, there has been a surge in the demand for EVA

75

KHADIM INDIA LIMITED

injected product as EVA footwear is light in weight, durable and has cosmetic appeal as compared
to the traditional Hawai chappal. As of now 70% of the demand of rubber based chappals has been
replaced by EVA footwear.
Installed production capacities of EVA Footwear in India
Total machines
India
165 (Automatic)
220 (Manual)
Total

in

Average production
per machine per day
3000 pairs
500 pairs

Total production per


day
4.95 Mn pairs
1.10 Mn pairs

Total production per


year
148.5 Mn pairs
33.0 Mn pairs
181.5 Mn pairs

Demand and Supply Analysis of EVA Footwear


Demand
245.7 Mn pairs

Supply
181.5 Mn pair

Shortage
64.2 Mn pair

Demand Supply Ratio


1.35:1

Source: CLRI 2005, Delhi Footwear Market news, Footwear today

RETAIL
India has topped the AT Kearneys annual Global Retail Development Index (GRDI) for the third
consecutive year, maintaining its position as the most attractive market for retail investment.
The Indian retail market -- one of India's fastest growing industries -- is expected to grow from
US$ 350 billion to US$ 427 billion by 2010. According to Euromonitor International, the Indian
Retail market will grow in value terms by a total of 39.6 per cent between 2006 and 2011,
averaging growth of almost 7 per cent a year.
Modern retail accounts for about 4 per cent of the total retail market in India. This share is
expected to increase to about 15 -20 per cent with the entry of a number of corporates into the
segment. Modern retail formats have grown by 25-30 per cent in India in the last year and could
be worth US$ 175-200 billion by 2016.
Retail space
Retailers in India are the most aggressive in Asia in expanding their businesses, thus creating a
huge demand for real estate. Their preferred means of expansion is to increase the number of
outlets in a city, and also expand to other regions, revealed the Jones Lang LaSalle third annual
Retailer Sentiment Survey-Asia.
Driven by changing lifestyles, strong income growth and favourable demographic patterns, Indian
retail is expanding at a rapid pace. The country may have 600 new shopping centres by 2010. Mall
space, from a meagre one million square feet in 2002, is expected to touch 40 million square feet
by end-2007 and an estimated 60 million square feet by end-2008.

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KHADIM INDIA LIMITED

The fast-emerging Indian retail sector is becoming widely recognized amongst domestic
entrepreneurs and investors as one of the biggest opportunities in India. Apart from existing
players (such as Pantaloon) ramping up their retail chain store operations, many large business
groups, including Reliance Industries, Birla group, and Bharti Enterprises have announced their
intention to cumulatively invest over US$10 billion over the next five years to capture a share in
the fast-growing pie of the organized retail sector. In addition, various foreign players like Walmart
have announced their intentions to enter the domestic market via a joint venture with a domestic
Indian player. Major consumer spending items currently form part of the addressable market for
the retail chain stores format and include food and grocery, general merchandise (such as
furniture and furnishings), and apparels.
Retail Scenario in India:
Retail sales in India amounted to about Rs.7400 billion in 2002, expanded at an average annual
rate of 7% during 1999-2002. With the upturn in economic growth during 2003, retail sales are
also expected to expand at a higher pace of nearly 10%. Across the country, retail sales in real
terms are predicted to rise more rapidly than consumer expenditure during 2003-08. The forecast
growth in real retail sales during 2003- 2008 is 8.3% per year, compared with 7.1% for consumer
expenditure. Modernization of the Indian retail sector will be reflected in rapid growth in sales of
supermarkets, departmental stores and hypermarts.
Factors for growth of retail in India
The factors responsible for the development of the retail sector in India can be broadly
summarized as follows:

Rising incomes and improvements in infrastructure are enlarging consumer markets and
accelerating the convergence of consumer tastes.

Liberalization of the Indian economy which has led to the opening up of the market for
consumer goods has helped the MNC brands like Kellogs, Unilever, Nestle, etc. to make
significant inroads into the vast consumer market by offering a wide range of choices to
the Indian consumers.

Shift in consumer demand to foreign brands like McDonalds, Sony, Panasonic, etc.

The internet revolution is making the Indian consumer more accessible to the growing
influences of domestic and foreign retail chains. Reach of satellite T.V. channels is helping
in creating awareness about global products for local markets.

About 47% of Indias population is under the age of 20; and this will increase to 55% by
2015. This young population, which is technology-savvy, watch more than 50 TV satellite
channels, and display the highest propensity to spend, will immensely contribute to the
growth of the retail sector in the country.

As India continues to get strongly integrated with the world economy riding the waves of
globalization, the retail sector is bound to take big leaps in the years to come.

Size of the Indian Retail Sector


The Indian retail sector is estimated to have a market size of about $ 180 billion; but the
organized sector represents only 2% share of this market. Currently, Indian retail distribution is
completely fragmented with about 12 million players. The majority of these are very small players
operating from small shops (below 50 square feet in size) and handcarts. These retail outlets are
spread across the country in over 5,000 towns and 600,000 villages. Most of the organized
retailing in the country has just started recently, and has been concentrated mainly in the metro
cities. India is the last large Asian economy to liberalize its retail sector. In Thailand, more than
40% of all consumer goods are sold through the super markets and departmental stores. A similar
phenomenon has swept through all other Asian countries. Organized retailing in India has a huge
scope because of the vast market and the growing consciousness of the consumer about product
quality and services.

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KHADIM INDIA LIMITED

A study conducted by Fitch, expects the organized retail industry to continue to grow rapidly,
especially through increased levels of penetration in larger towns and metros and also as it begins
to spread to smaller cities and B class towns. Fuelling this growth is the growth in development of
the retail-specific properties and malls. According to the estimates available with Fitch, close to
25mn sq. ft. of retail space is being developed and will be available for occupation over the next
36-48 months. Fitch expects organized retail to capture 15%-20% market share by 2010.
A McKinsey report on India says organized retailing would increase the efficiency and productivity
of entire gamut of economic activities, and would help in achieving higher GDP growth. At 6%, the
share of employment of retail in India is low, even when compared to Brazil (14%), and Poland
(12%).
However, the shopping experience for Indian urban consumers is now changing completely. What
is triggering this change? On the demand side, rising per capita income of the fast emerging
middle-aged population and easier access to credit are triggering a change in consumption
patterns. On the supply side, the private sector is responding with investments, taking advantage
of the positive support from capital markets. Retail shopping space is also growing exponentially.
Mall space has increased to 54 million square feet (mn sq. ft) currently from 2.2 mn sq. ft four
years back.

Retail Sector in the East: Current Scenario, Growth Prospect and Upcoming Projects
The retail sector in Eastern India is largely Kolkata-centric. The city of Kolkata has come a long
way in terms of retail maturity with a proliferation of brands and organized retail chains. Shopping
trends in the city have witnessed a radical shift over the recent years; from the conventional
trader run stand alone shops to more organized & large retail formats. Evidently, the future of
retailing in the city lies in new-age shopping malls, which provide variety, value and convenience
in a more comfortable environment. This is also evident by a surge in the consumer spending on
branded goods in the recent times; The city has welcomed the other retail chains such as
Pantaloons, Westside and Shoppers Stop.

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KHADIM INDIA LIMITED

To a market strategist, West Bengal undoubtedly is an ideal location for the growth of the retail
industry. Cities like Asansol, Durpur, Burdwan, siliguri are potential centres of growth. Besides
being the principal retail-and-services market to a vast hinterland comprising of the eastern and
northeastern states of the country, the state also serves as a center of trade and commerce for the
region. Its proximity to Bangladesh, a country of 13 crore consumers, and to the South-East Asian
markets, is another factor for which the entire state is fast emerging as a vibrant business
destination.
HALLMARKED GOLD JEWELLERY RETAILING
The jewellery industry occupies an important position in the India economy. It is a leading foreign
exchange earner and also one of the fastest growing industries in the country. Gold jewellery
forms around 80 per cent of the Indian jewellery market, with the balance comprising fabricated
studded jewellery that includes diamond studded as well as gemstone studded jewellery. A
predominant portion of gold jewellery manufactured in India is consumed in the domestic market.
The Indian jewellery industry is competitive in the world market due to its low cost of production
and availability of skilled labour. In addition, the industry has a worldwide distribution network,
which has been established over a period of time.
India Jewellery Industry Highlights
Jewellery market size

US$ 13 billion

Gold jewellery market growth year on year

15%

The sector is largely unorganized at present with a small but growing organized sector
The Indian jewellery sector is largely unorganized at present. There are over 15000 players across
the country in the gold processing industry, of which only about 80 players have a turnover of over
US$ 4.15 million (Rs 200 million).

The industry is dominated by family jewellers, who constitute nearly 96 percent of the market.
Organised players such as Tata with its Tanishq brand, have, however, been growing steadily
carving a 4 per cent market share. As Indias jewellery market matures, it is expected to get more
organised and the share of family jewellers is expected to decline.
Jewellery Retailing
India has a large and growing domestic jewellery market of US$ 8.9 billion. Jewellery retailing in
India is undergoing a slow transformation from a largely unorganized sector to a more organized
one. While the family owned jewellery store remains the predominant retail format, new formats
such as boutiques, supermarkets and gold stores are emerging for jewellery retail. Indian
customers are displaying growing preference for quality, designs and branding. The jewellery
retailing sector can offer long term benefits to organized players investing in this area.

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KHADIM INDIA LIMITED

Overview

OUR BUSINESS

We are among the top 3 footwear retailers in India (on the basis of the number of stores) and our
flagship brand Khadims is considered the as most preferred footwear brand in Eastern India
(IMRB survey). We have over 260 retail outlets (including owned stores and exclusive dealers)
across 22 Indian states. We offer a wide range of footwear for the entire family, at various price
points, catering to the different income groups.
Our Company, with over a decades experience in retailing, has also forayed into value-lifestyle
retailing, through its brands Khadims Khazana in 2004 and more recently it has taken its
diversification plan a step further with the opening of two more Lifestyle Retail stores under the
name of Khadims Egaro in Kolkata and Howrah in the month of June 2007. These stores offer
garments, footwear, jewellery, gold, groceries, etc, at competitive prices and provide an exclusive
shopping environment, which was previously limited only to the high-end retail stores.
Our journey in the footwear sector began in the year 1965 when our chairman Mr. S. P. Roy
Burman took over K. M. Khadim & Co., a firm then owned by one Mr. K. M. Khadim. Thereafter,
the business of Khadims grew all across India under his able leadership. Mr. Roy Burman has
made a very significant contribution in making Kolkata Footwear Industry a vibrant and
competitive industry and putting it at par with other centers of excellence.
In 2004 our management consolidated five of our group companies with synergic interests into
Khadim India Limited, which resulted in a bigger, focused and a sustainable company.
We have always followed the concept of value retail in India. In other words, our business
approach is to sell quality goods at reasonable prices by either manufacturing ourselves or directly
procuring from manufacturers (primarily from small and medium size vendors and manufacturers).
We endeavour to facilitate one-stop-shop convenience for our customers and to cater to the needs
of the entire family.
OUR COMPETITIVE STRENGTH
We have a long-standing experience with a strong brand in the Indian footwear segment. We
believe that the following are our principal competitive strengths which have contributed to our
current position in the retail sector in India:Strong Infrastructure Availability
Khadims possesses about 40000 sq. ft. of area for footwear manufacturing facility across two
locations of the Kasba Industrial Estate in Kolkata with a consolidated capacity to produce 15000
pairs of footwear in a day. The technology and infrastructure used by the company are based on
industry standards. Our manufacturing capacity is further reinforced by an outsourcing
arrangement with a number of dedicated vendors who are located within close proximity to our
principal manufacturing facilities. We have a pan India retail presence marked by 52 owned outlets
and 212 Exclusive Dealers supported by more than 285 other dealers. Our distribution and
logistics network comprises of three distribution centers i.e. Kolkata, Delhi and Chennai comprising
of seven warehouses. We are also planning to set up a central distribution center in and around
Kolkata to cater to the regional distribution centers and stores.
Geographical Spread
We have a pan India presence, which has not only enabled us to build our brand value but also
facilitated us to explore cost-effective sourcing from different locations, identify potential markets
and efficiently establish new stores in different locations. Khadim has done immensely well in the
footwear segment and has grown into an entity with more than 260 Exclusive stores selling its
products out of which 52 are owned by the company and the remaining are exclusive dealers are
located across 22 states, which, we believe, enables us to capture market share in locations where
a majority of our target customers are located.

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KHADIM INDIA LIMITED

Brand Positioning
The presence of the Khadims brand across user segments has been growing steadily over the
period of time. The shift from the unorganized to the organized market is on the rise and the
brand Khadims has been a beneficiary of the same. We have centered our brand building exercise
on the theme of emotional bonding, which has created the foundation of the Khadims brand. Over
the years, Khadims has reinforced emotional connect between the consumer and the product
through the following initiatives:

A distinctive positioning of the product for the growing middle-class around the unbeatable
price value proposition.

A responsible extension to the virtues of authenticity and affordability extending from


positioning to product to store presentation, leading to a credible recall.

A comprehensive exposure across the print, outdoor and electronic media to capture consumer
attention

A prudent visibility at major entry and exit points of towns helping the brand identify with the
floating target population
Wide Range of productS
We provide a wide range of footwear for every age group and for all segments of the society. This
allows us to cater to the diverse demands of our customers and to consolidate and establish our
presence across diverse regions. The opening of gold jewellery stores under the brand name
Khadims Sona Khazana and our Lifestyle stores in the name of Khadims Egaro will further
enhance the Khadim brand by reaching out to a wider spectrum of the society by providing a
widest range of varied products.
Quality Control and Compliance
Our manufacturing facility has been accredited with ISO 9001:2000 management system
certificate from RWTUV Systems GmbH for manufacture and supply of PVC, Leather and
Synthetic Footwear.
Supply chain management
Our supply chain management involves planning, merchandizing, sourcing, standardization,
vendor management, production, logistics, quality control, pilferage control, replacement and
replenishment. It provides us flexibility to adapt to changing patterns in consumer behaviour and
our ability to add value at various steps/levels. In particular, it enhances our ability to undertake
in-house manufacturing, designing and development of contemporary footwear.
Logistics and distribution network
Our distribution and logistics network comprises of three distribution centers i.e. Kolkata, Delhi
and Chennai comprising of seven warehouses, five in Kolkata and one each in Delhi and Chennai.
Our distribution and logistics set up is well networked and allows us to fulfill the store requisition
within a shortest period of time from generation and receipt of order, which has helped us to
optimize in-store availability of merchandise and minimize transportation costs. Our strong
distribution and logistics network has enabled us to minimize the requirement of a dedicated
storage space at every store and instead undertake periodical replenishment of depleted stock.
This provides us assistance in maintaining an optimum working capital level and thereby
minimizing carrying cost.
Design and Technical Competency
We believe that any retail business requires efficient information technology systems for control
over the functioning of various stores including stock management, pricing and promotion,
replenishment, sales, quality control and financial accounting. We are currently in the process of
upgrading our information technology set up and have entered into arrangements with leading
vendors of information technology services for implementation of more advanced ERP applications.
We intend to periodically upgrade our information technology systems and processes. Over the

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KHADIM INDIA LIMITED

years, we have continuously evolved the fashion appeal towards a personality statement through
the following initiatives:

The creation of a specialized design team that matches prevailing fashion trends with product
functionality
A unique outsourcing model that makes it possible to translate concepts into successful
products in the shortest time
An ongoing collection of feedback from channel partners on evolving consumer preferences
leading to relevant product evolution.
An ongoing permutation of various styles, material, sizes and textures resulting in the most
aesthetic combination
An ongoing customization of geographic preferences into designs

Khadims footwear has become a product of choice for the now fashion conscious great Indian
Middle Class across all age groups.
We have an experienced and competent management team
We have an experienced management team which is complemented by a committed workforce.
Our management team comprises of talented professionals who are highly experienced in footwear
and retail sector. This has assisted us in effective management of our business. For details of our
key managerial personnel, please refer to page no. 141 of this DRHP.
Employee Strength
The company has around 648 employees on its rolls and a further 635 people are outsourced
taking the total manpower support of the company to approxiamtely 1283. Footwear is a labour
intensive industry but the company is now making headway in automating its manufacturing
process thereby reducing reliance on manual labour. The Human Resource policies are strictly
adhered to in the organisation and this has ensured a very peaceful industrial relation with our
employees. The department-wise break up of the employee strength is as under:
DEPARTMENT

NO. OF EMPLOYEES

Administration & Facilities Management

17

Buying & Merchandising

30

Corporate

Corporate Services

Finance & Accounts

40

HRM

11

Legal & Secretarial

Logistics

114

Marketing

Merchandising

Operations

164

Production

37

Project

Sales

187

System

20

Strategic Planning

Total Employees on our rolls

648

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KHADIM INDIA LIMITED

OUR STRATEGY
We intend to pursue the following strategies in order to consolidate our position as one of the
leading operators in the footwear and lifestyle retail segments in India. Our growth strategy is
based on:
Continue to expand our retail operations with Flexible Expansion Program
We intend to further expand our retail footwear operations by leveraging our existing sales and
distribution network and apply innovative retail marketing initiatives.
We already have a substantial presence in Eastern and Southern markets. We are now in the
process of expanding our presence in the growing Western and Northern markets.
Our strategy in the lifestyle retail segment is to target initially the metros and big towns in West
Bengal to expand our lifestyle brand Khadims Egaro. As the brand Khadims is already very
popular and enjoys excellent brand equity in these locations, we are confident to leverage the
same for our growth in this segment. The same strategy can be replicated in Eastern India and
subsequently to other parts of the Country.
We also intend to increase our footwear brand and product visibility and sales and distribution
network through strategic stores and outlets that will enable us to benefit from an increased store
density through a lower capital outlay. These smaller outlets will enable us to offer our product
aimed at the customer demography of the specific outlet and enable frequent renewal of our
inventory. We intend to continue to develop our existing network of independent footwear outlets
in various cities that sell our products through the appointment of additional distributors for
various cities and towns.
Expand In New Regions
Although we have a pan India presence in the footwear segment, still there are many regions
where we have a huge potential to grow. We now have to stretch our presence to these regions
also. We will focus on maintaining and reinforcing the image of our existing exclusive brand outlets
and also introduce our footwear to new geographic areas and consumer sectors that are presently
less familiar with our brand. For the Khadim brand, we have an established network in east/
south India and are rapidly consolidating our network in western and northern India.
Identifying new locations
We believe that we possess the ability to identify locations with potential for growth, in particular
in Tier II and Tier III cities. We have an exclusive site identification and assessment team, which
undertakes systematic analysis of the business prospects, taking into account factors such as
population, literacy levels, nature of occupation, income levels, accessibility, basic infrastructure
and establishment and running costs.
Further improving our cost structure
We believe in providing quality products at affordable prices. We have improved our operating
margins and cost structure by consolidating manufacturing and distribution operations and
reducing selling, general and administrative costs, and by actively seeking efficient sources of
production, whether through internal sources of supply or through outsourcing. We intend to
continue to: (a) identify efficient manufacturing operations and improved raw material sourcing;
and (b) maintain and enhance a low cost infrastructure.
Strengthen relationship with our customers
We believe in having strong relationships with our customers so as to serve them over a long
period of time. We aim to continue to develop our relationship with our customers not only in
terms of increased sales but also in terms of increased variety in products. We aim to achieve this
by adding value to our client through quality, speed and reliability of our product delivery.

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KHADIM INDIA LIMITED

Procurement from low-cost production centres outside India


In addition to our strategy to continue procurement of goods from small and medium size vendors
and manufacturers which leads to cost efficiencies, we intend to procure footwear and apparels
from low-cost production centers located outside India. Towards this objective, we propose to
increase our procurement of finished and semi-finished goods from China and thereby realise
economies of scale and pass on the benefits so accrued to our customers.
Effectively use information technology systems
We believe that efficient information technology systems, processes and business applications are
essential to handle retail chain of our magnitude. Our office processes are computerized which
support procurement, supply chain logistics, distribution centers management and store operations
including inventory management and billing. We are in the process of implementing SAP. All our
stores and distribution centers are connected through a company-wide virtual network connection
which helps to efficiently manage our network of outlets throughout the country.
Overview of our Operations
Business Profile and Scale of Operation
KIL is among the top 3 footwear retailers in India and its flagship brand Khadims is considered
the most preferred footwear brand in Eastern India (IMRB survey). KIL has 260 plus retail outlets
(including owned and exclusive dealers) across 22 Indian states.
The company with over a decades experience in retailing, has also forayed into large format
value-lifestyle retailing, through its brands Khadims Khazana in 2004 and more recently it has
taken its diversification plan a step further with the slated opening of two large Format Retail
stores called Khadims Egaro in Kolkata and Howrah in the month of June 2007. These stores
offer garments, footwear, jewellery, gold, groceries, etc, at competitive prices and provide an
exclusive shopping environment, which was previously limited only to the high-end retail stores.
Khadims presence in the industry pyramid
The presence of Khadim brand across the user segment has been growing steadily over the period
of time. The shift from the unorganized to the organized market is on the rise and the brand
Khadim has been a beneficiary of the same. The company expects the trend to continue in the
future which will further fuel the growth of brand in the country.
Historical insight
1947 - 1970: High excise and sales tax on factory-made footwear; growth of the outsourcing
strategy; creation of production clusters of small entities feeding the large and organised brands.
1971 1990: Extension of manufacturing licenses to medium and large factories against a 95%
export obligation, later revised to 50%; government controls a deterrent for global investments in
the sector, in contrast to Asian countries.
1991- 2005: Abolition of licenses and export quotas; easier import of shoe machinery leading to
sectoral modernization; leather industry now 'de-licensed' and 'de-reserved'; 100% foreign direct
investment and joint ventures permitted; 100% repatriation of profits and dividends (provided
original investment was made in convertible foreign currency) now a reality; rapid industry growth
enabling the Indian footwear industry to emerge as the eighth largest exporting sector in India.

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KHADIM INDIA LIMITED

Rs.2000 and
above

Rs.1000 and
above

Rs.250 to Rs
1000

Rs.50 and
below

Imported
products

Branded
products

Catered to by
regional brands

Constitute 70% of the market


Addressed largely by the unbranded
products

Our presence in India

Map not to scale

85

Khadims is
among the few
national brands
to span all the
pricing point in
the Indian
footwear
industry, with a
product range
from Rs. 50 per
pair to Rs. 2000
per pair

KHADIM INDIA LIMITED

Store Category

No of Outlets

Lifestyle Retail Stores

Own Footwear Retail outlets

52*

Exclusive Dealers

212

Footwear Distributors

109

Dealers

97

Multi Brand Dealers

89

Sona Khazana

4*

Total

566

* Includes three stores located within the Lifestyle Retail Stores.

DETAILS OF OUR EXISTING COMPANY OWNED STORES


Serial
No.

City

Address of Store

OWNED FOOTWEAR RETAIL STORES


1
KOLKATA
7A, Lindsay Street, Kolkata- 700 087
2
KOLKATA
12, Lindsay Street, Kolkata-700 087
3
KOLKATA
Hatibagan Market, 80, Bidhan
Sarani, Kolkata-700 004
4
KOLKATA
B-87-88, College Street Market,
Kolkata- 700 009
5
KOLKATA
14, Bentinck Street, Kolkata- 700
001
6
KOLKATA
433 - Diamond Harbour Road,
Kolkata- 700 034
7
KOLKATA
81/3A, Bentick Street, Kolkata- 700
001
8
KOLKATA
5, G.T. Road, Near Karzan Gate, Dist
:- Burdwan, West Bengal
9
KOLKATA
E 103, City Centre, DC -1, Sector 1,
Salt lake City Kolkata 700 064.
10
KOLKATA
30A, Rabindra Sarani , Kolkata-73
11
KOLKATA
G-42, Dakshinapan Shopping
Complex, Kolkata-68
12
BHUBANESWAR
P-127, Ashok Nagar, Janapath, UnitII, BBSR- 751009.
13
CUTTACK
Plot No. 282-287(p)503/A Mission
Road, Buxi Bazar,
P.S. - Mangalabag, Cuttack 753001.
14
BERHAMPUR
Annapurna Complex,Fire Station
Road, Bhapur Bazar, Berhampur,
Ganjam Dist. Orissa, Pin.- 760001.
15
CUTTACK
504-B/3, Dolamundai, Bajrakbati
Road, Infront of Krishna Arcade, P. S
- Purighat, Dist-Cuttack, Pin Code753001, Orissa
16
NOIDA
J-13, Sector - 18, Noida Pin
201301 U.P

86

Area
(Approx. in
square feet)

Year of
Opening

1350
1150
1700

2000
2000
1997

1590

1996

770

1996

640

1993

800

1998

1620

2005

1060

2004

260
1210

1996
1993

1620

1998

2800

2000

1150

2002

1400

2006

1500

2006

KHADIM INDIA LIMITED

17

ALLAHABAD

18

MORADABAD

19

JAIPUR

20

JODHPUR

21

AHMEDABAD

22

JAMNAGAR

23

VADODARA

24

BHOPAL

25

GWALIOR

26
27

CHENNAI
CHENNAI

28

CHENNAI

29

SALEM

30

COIMBATORE

31

SECUNDERABAD

32

HYDERABAD

33

VISHAKAPATNAM

34

HYDERABAD

35

HYDERABAD

36

HYDERABAD

Shop No. - 24A/12A/3, Sarder Patel


Marg, Lucky Range, Near Civil Lines
Crossing, Allahabad, Pin - 211001
Premises No. 5/10/26, Bazar Amroha
gate , Moradabad 244001 Uttar
Pradesh
Shop Nos. 296 & 297, Johari Bazar,
Opp. - L.M.B hotel, Jaipur 302003
Rajasthan
Plot No. - 35A & 35B, Nayi Sadak,
Dist. - Rajasthan 342001
Relief Road, Opp. Relief Theatre,
Ahmedabad, Gujarat
Opp. Anupam Talkies, Near
Teenbatti Chowk, Jamnagar 361
001 Gujarat
Shop No. 6 & 7, B.N.Chambers,
R.C.Dutt Road, Alkapuri, Vadodara 390 007.
20, New Market, Main Road, T. T.
Nagar, Bhopal - 462003 Madhya
Pradesh
50/48, Sarafa Bazaar, Sacheti
Bhawan, Opp Bank Of Baroda,
Gwalior 474 001, Madhya Pradesh
37,Mount Road, Chennai -600002
SMO Plaza, 121 Usman Road,
T.Nagar, Chennai-600017.
Shop no.G1-G2, Ground floor, Palace
Regency, Municipal door no. 80-93,
Puruswalkum high road, Chennai-600
010
Agraharam First Street, No.110/110A/680 Salem, Tami Nadu
636001
Opanakkara Street No.- 532,
Coimbatore, Tamilnadu- 641001
17-M.G.Road, Door No. 2-4-25
Secunderabad, Andhra Pradesh 500003.
Shop No. 2 & 3, Shivani Lodge
Complex,Door No. 4106.Durganagar, Dilsukhnagar,
Hyderabad - 500060.
Door No. 28-2-249/16, Ground Floor,
Daspalla Centre, Jagadamba Junction
Vishakapatnam - 530020. (AP)
Shop No.- 6 & 7, Upper Ground
Floor, VERTEX PLAZA COMMERCIAL
COMPLEX, Opp. Radhika Theatre, A S
Rao Nagar Main Road, Hyderabad
500062
Shop No.- 1-8-4/1/1/C & 1-8-4/1/3,
Ground Floor, (Near Sunanda Hotel
Chikkadpally Hyderabad - 500020
Shop No.3&4, Okaz Complex, Opp.
Mehndipatnam, Police Station, Mehd,
Hyderabad - 500028.

87

1092

2006

1823

2006

1500

2006

1010

2006

1496

2006

1036

2006

1200

2006

1150

2007

1867

2006

1420
1350

1999
1999

1260

2002

1650

2002

1300

2002

1800

1999

1500

2002

750

2005

750

2003

800

2003

950

2002

KHADIM INDIA LIMITED

37

AKOLA

38

NAGPUR

39

NASIK

40

SANGLI

41

RAIPUR

42

HUBLI

43

MUSORE

44

BANGALORE

45

BANGALORE

46

BANGALORE

47

TRIVANDRUM

48

ERNAKULAM

49

PONDICHERRY

LIFE STYLE STORE


1
KANCHRAPARA
2

KOLKATA

3
HOWRAH
SONA KHAZANA
1
KOLKATA

Zuna Kapra Bazar, Old Cloth Market,


Akola - 444001 Maharastra
Buti Building, Sitabuldi Main Road,
Opp. Hanuman Gali, Nagpur 440012, Maharastra
Vishwanath Sankul Building, Ground
Floor, Shop No. 2, College Road,
Opposite Vijan Hospital, Nashik 422005. Maharastra

780

2007

2088

2006

1057

2006

54 and 55, Maruti Temple Road, P.S.


Ankali, Dist. Sangli, Maharastra
416416
G.E.Road ,Old Bus Stand, Beside Raj
Talkies, Raipur - 492 001,
Chattisgarh
Shop No. - 9, N.D.Gadagkar
Complex, Broadway, Hubli - 580
020, Karnataka
Door.No.19, Devaraj URS Road,
Devaraja Mahalla, Mysore - 570001,
Karnataka.
Shop no. 4 & 5, No.63, 10th Main,
4th Block, Jaynagar, Bangalore 560011.
Shop Nos-229,229A,229G,
230,230A, 231, 231A, 232, 232A,
Alankar Pearl Plaza, 23, K.G. Road,
Bangalore - 560 009, Karnataka.

1671

2007

1104

2006

1428

2006

1800

2002

1300

2002

1200

2002

32 and 33, Kamraj Road, Civil


Station,Bangalore-560 042
M.G Road, Ground Floor, Jama Plaza,
Opp. - SMV High School, Trivandrum
- 695 001, Kerala
M.G. Road, Shenoys Junction, Opp. Shenoys Theatre, Ernakulam, Kerala
37, Jawarharlal Nehru Street, Near
Traffic Police Station,Pondicherry
605001

1200

1999

1200

2006

1300

2006

1500

2006

32, Kubiguru Rabindra Path,


Kanchrapara, 24 Parganas (N)
45B, A T Mukherjee Road,
Bhowanipur (Arch Galaxy), Kolkata
700 025
18, G. T. Road, Howrah-1
128/12A, Bidhan Sarani

88

30588

2005

26750

2007

24864

2007

750

2005

KHADIM INDIA LIMITED

DETAILS OF EXCLUSIVE DEALERS


Apart from the above owned stores, we also have 212 Exclusive Dealers spread across India as per
the table herein below:
State
Andra Pradesh
Arunachal Pradesh
Assam
Bihar
Gujarat
Jharkhand
Karnataka
Kerala
Madhya Pradesh
Maharastra
Manipur
Meghalaya
Nagaland
Orissa
Rajsthan
Tamilnadu
Tripura
Uttar Pradesh
Uttaranchal
West Bengal

No. of Exclusive Dealers


2
1
19
31
1
16
4
1
1
1
1
1
1
8
1
6
3
7
1
106
212

In all we have approximately 147,000 sqare feet of retail space already operational under the
Owned Stores Format spread across 13 states and approximately another 200,000 square feet of
retail space under the Exclusive Dealer Format spread across 20 states in India.
BUSINESS PROCESSES
Currently, our business plan involves implementation of the concept of value retail in India. We sell
quality products at reasonable prices by directly procuring from manufacturers and by
manufacturing it ourselves:
Our business process can be summarised as below:
A) Establishment of Stores

Selection of location

We consider the following factors while deciding the locations where we are going to operate.

Selection of city/ location

In selecting location for a new store, we start by identifying the city/town. We target primarily
cities/towns which may be classified as Tier II or Tier III cities. In this regard, an analysis of the
demography, literacy levels, nature of occupation and income levels.
Within a city/town, we target locations with good infrastructural facilities such as easy accessibility,
provision for water, electricity and other basic amenities. We prefer to locate our stores in strategic
areas where real estate is available at reasonable prices.

89

KHADIM INDIA LIMITED

Segmentation of Target Audience

The efforts of our retail business are targeted towards families having total income which can be
classified under the middle income groups. Accordingly, we plan our strategy to search for areas
within cities where such customers are domiciled in large numbers and make efforts to locate
ourselves within the reach of such customers.

Store Planning, Layout and Operations

We believe that adoption of standard formats for our stores has led to our brand establishment
and identification among our customers and will increase our base of loyal customers. In
pursuance of this, we have adopted standard parameters for store planning and establishment. For
ensuring standardised formats of our stores, we consider various factors, such as internal and
external dcor and colour schemes, allocation of store space, stock mix and pricing and accounting
methods.
Merchandise Planning
Our merchandise planning is based on the concept of category management rather than traditional
brand management practices. Further, we adopt various retail methods while formulating our
annual merchandising plans, which are based on certain factors discussed below:

Footwear

Product Development and Merchandising (PDM) plays a very vital role in our business. The fast
changing horizon of style and design has made PDM a way of life for us. In order to stay ahead of
our competitors in our product range and value proposition, a lot of new initiatives have been
taken.

Apparels and Non Apparels

Under category management for, say, apparels, we create and cater to products across length and
breadth of a category at different price points, fabrics, designs, shapes, seasons, colors and sizes.
We formulate annual merchandising plan for each division of merchandise taking into consideration
factors such as past sales data, regional customer tastes and preferences, number of stores
(established and proposed), likely fashion and trends, in-house production resources, vendor
management and price. Each division is further divided into major categories. These major
categories are in turn segregated into various sub-categories.
Regular visits to the stores are made by the category merchandising team to identify the slowmoving-SKUs and explore the options to expeditiously dispose of them. For certain non apparel
categories, our merchandise planning and scheduling also depends on introduction of new products
and schemes by the vendors.

FMCG
For FMCG products, the merchandising plans are not formulated in advance, since the products
and schemes are introduced, replaced and withdrawn regularly by the manufacturers. Accordingly,
we determine an overall annual target for sales of FMCG products.
Purchasing
Purchasing or vendor management assumes critical importance in retail business where one has to
deal with multiple products. We have in place a vendor management system, under which we
identify vendors all over the country and overseas and seek to develop alliances and arrangements
with them. We regularly interact with the vendors and share information such that the vendors
remain familiar with our goals and targets. It has been our strategy to procure goods from small
and medium sized vendors and manufacturers, which we believe has led to reduction in the cost of
goods we sell and increase in our profitability.

90

KHADIM INDIA LIMITED

Footwear

Footwear industry is highly driven by changing fashion and design. To meet the challenges of this
ever changing fashion and design, we use a business model where procurement and outsourcing
plays a very crucial role. A substantial part of our footwear is procured from various vendors
located mainly at Kolkata and Agra. We have an outsourcing arrangement with more than 100
dedicated vendors. These vendors supply footwear as per our requirements as to style, quality and
material. Recently we have also started sourcing from China. This helps us to move from one
design to another design, one style to another style effortlessly and thereby matching the
demands of the markets within shortest possible time.

Apparels and Non Apparels

Upon ascertaining the procurements needs based on each SKU, we explore the various options for
sourcing the products. We continuously strive to procure goods from the place of origin to reduce
the costs and control the quality. For identifying the vendors, we assess the various possible
options on factors such as capacity, credibility in the market, quality awareness and experience.
After identifying the vendors for the goods, we place purchase orders based on our SKU-wise plan,
estimated lead time of each vendor and quantity to be procured from each vendor. We follow a
policy of payment on delivery to negotiate better prices with the vendors and in certain cases we
also release payments in advance. To ensure quality of supplies, we check quality by way of
random sampling at the time of receipt of the goods. To verify that the quantity of supplies is as
ordered, we undertake count-check for every receipt of the goods.

FMCG

For FMCG products, we procure from large as well as small and medium size manufacturers. For
procurement from the large manufacturers or their distributors, we endeavour to enter into formal
arrangements for supply of products to all our stores, such that we are able to derive fixed
margins from sales of such products, irrespective of the locations. Under these agreements, we
benefit from special discretionary discounts and offers directly from the manufacturers or their
distributors.
Since most of the arrangements with the large manufacturers or their distributors are for supplies
across the country, they facilitate us to expeditiously launch new stores, as we do not have to
identify local sources for supplies of the FMCG products. Such arrangements also help us in
standardising the promotional schemes across all our stores.
Inventory Management, Distribution Network and Logistics
Our distribution network and logistics encompasses all activities to ensure that goods are
dispatched in right quantities and at right time to reach stores with sufficient time in hand to
promptly cater to customer demands and optimization of inventory position.
We have built a system to monitor the inventory position on a real-time basis at each store, under
which a stock requisition or delivery order is generated when pre-determined stock or re-order
levels are reached.
The re-order levels for stores are determined based on factors such as display levels, lead time for
replenishment and average daily sales. We review these re-order levels on continuous basis to
factor in variances in demand based on seasons, trends and promotional schemes.
We have clearly demarcated the stores which will be serviced by each distribution centre. The reorder levels for distribution centres are ascertained on the basis of factors like average daily sales
of all the stores services, lead time for replenishment and buffer stock, which caters to both the
existing and proposed stores to be fed. As for the stores, we regularly review these re-order levels.
Our distribution centres and stores are connected through company-wide virtual network
connection through broadband which helps to efficiently manage our network of stores and
distribution centres throughout the country.
We use the services of logistic solution providers including low cost transport service providers in
order to deliver products on time to our stores and optimize transportation costs. Distribution

91

KHADIM INDIA LIMITED

centres operations have been streamlined through the standardisation of racking system, layouts
and implementation of automatic replenishment system.
Advertising and Publicity
We undertake regular promotion of our stores through print media, television and local radio
channels and have organized press conferences in the past to promote ourselves. Outdoor
advertising such as banners, posters and hoardings are employed to advertise and to increase
visibility.
The Oglivy & Mather, one of the leading media advertisement agency in India has been retained by
us for our various brand promotions and advertisements.
We have entered into an advertisement agreement dated August 10, 2007 with BCCL for the
purpose of advertisement of our products and services, in BCCL print publications and non-print
media for three years starting from August 10, 2007 and ending on August 9, 2010. For further
details in this regard, please refer to the section titled History and Certain Corporate Matters
beginning on page no. 124 of this Draft Red Herring Prospectus.
Internal Controls and Cost Reduction Measures
As a value retail chain, we emphasize on reduction of costs at various stages and levels. In
addition to reduction of costs of procurement and by way of optimization of inventory, we employ
on the following measures to enhance efficiencies and reduce operational and administrative costs:

Resource Utilization

We believe in reducing operating and administrative costs by way of optimum utilization of our
human and other resources. For instance, we determine the staffing requirement on the basis of a
matrix containing factors such as store space and footfall intensity. We also train our employees to
assume cross-functional responsibilities. As a measure for optimum utilization of our space
resources, we have adopted an efficient racking system by deploying relatively higher racks to
maximize the space available in a store. The upper slabs of a rack are utilized for storage and the
lower ones for display. This helps us in eliminating the need of dedicated storage spaces is most of
our stores.

Efficiency of Processes

We adopt efficient processes like deploying of staff at a new store by transferring from our existing
stores. This helps in ensuring that a new store is operated efficiently and that the freshly recruited
staff receives on-the-job training from the experienced staff. We believe in continually reviewing
and re-engineering various operational and administrative processes to make them both more
efficient and cost effective.
Exclusive Dealership Arrangements
We have exclusive dealership arrangements for 212 stores all over the country and we have
strategised to open such outlets in areas with our strong presence so as to reduce advertisement
costs and ensure dealers financial viability. Under the exclusive dealership agreements, the
dealers operate the stores. The expenditure for establishing the stores and holding the inventory is
incurred by the dealers.
Competition
We face competition from other retailers of similar products and services. These include standalone stores in the organized and unorganized sector, as well as other chains of stores including
department stores. We focus on offering our customers a vast variety of products and services
catering to their diverse requirements and needs.

92

KHADIM INDIA LIMITED

MANUFACTURING PROCESS FOR FOOTWEAR


The manufacturing of footwear consists of conceptualization and designing, procuring raw
material, finalization of product and design, manufacturing footwear either internally or
outsourcing, finishing and packaging and storing in warehouse. The overall manufacturing process
flows in the following manner:

93

KHADIM INDIA LIMITED

Manufacturing process of PVC Footwear


On the basis of the activity performed, the manufacturing process of PVC injection moulding (Full
PVC footwear) has been divided into the following 6 Cost centres to capture operation related cost:

Raw-material Cost centre (A) This is a common Cost centre for all processes (PVC,
PVC-DIP & STUCK-ON except EVA) where raw materials are stored and thereafter, issued to
various departments on the basis of production requirements.

Raw-material Cost centre (B) This Cost centre is used for storing PVC granules which
are thereafter, issued to the compounding Cost centre, as explained below, for mixing
operations.

Compounding Cost centre The granules are mixed in the desired proportion to develop
PVC-Compound for further processing.

PVC Production (Moulding) Cost centre - Processed compounding materials are injected
in a Rotary machine (King-steel machines) along with other materials to produce the PVC
product.

PVC Spray Packing / Finishing Cost centre: Once the PVC footwear is produced, it is
sprayed with the desired colour, packed into boxes and sent to the finished goods Cost
centre.

Finished Goods Cost centre Once the finished goods are ready after spray packing, the
packing in cartons and dispatch functions are carried out in this Cost centre.

Manufacturing process of PVC-DIP Footwear


The manufacturing process of PVC - DIP has been classified into the following Cost centres:-

Raw-material Cost Centre (A) This is a common Cost centre shared with the PVC and
Stuck on Line where raw materials are stored and subsequently issued to various
departments for fulfilling production requirements.

Raw-material Cost centre (B) This Cost centre is used for storing granules which are
thereafter, issued to the compounding Cost centre for mixing operations.

Compounding Cost centre The granules are mixed in the desired proportion to develop
PVC-Compound for the purpose of direct injection into the sole mould.

Cutting Cost centre Synthetic / Textile uppers are cut into the suitable shapes with the
use of Cutting Machines and Cutting knifes to get upper cut pieces and thereafter sent to the
stitching Cost centre.

Stitching Cost centre- Cut pieces of Uppers are stitched into the proper shapes and some
adhesives are also applied wherefrom these are transferred to the printing Cost centre.

Printing Cost centre - Stamping and printing (size, brand, MRP etc.) on insole is done and
then transferred to the respective production Cost centers.

Production Cost centre: Processed compounding materials are injected into sole moulds in
various rotary machines involved along with uppers to produce the DIP products.

Finishing Cost centre - Once the finished goods are ready, the polishing, finishing, &
packing in cartons and dispatch functions are carried out in this Cost centre.

94

KHADIM INDIA LIMITED

Manufacturing process of STUCK-ON Footwear


Both domestic and export products are manufactured on this Assembly line (Stuck On process). Its
Installed capacity is 800 pairs per shift. This process has been divided into the following Cost
centre:
Raw-material Cost Centre This is a common Cost centre shared with the PVC and DIP

categories.
Cutting Cost centre Sheets for Uppers are cut into the suitable shapes with the use of

Cutting Machines and Knifes and thereafter sent to the stitching Cost centre.
Stitching Cost centre- Cut pieces of Uppers are stitched into the proper shapes and

adhesive is applied wherefrom these are transferred to the production Cost centre.
Production (Assembling) Cost centre Fixing and joining of upper and sole materials

through lasting, pasting, heating cooling and testing processes and sent to the Finishing and
Packing Cost centre.
Finishing and Packing Cost centre - Once the finished goods are ready, the polishing,

packing in cartons and despatch functions are carried out in this Cost centre.
Manufacturing process of EVA-based Footwear
The EVA Process includes production of two types of EVA-based footwear:
1. Full EVA footwear ( manufactured using the EVA Injection Moulding Machine & EVA
granules)
2. EVA sole with PVC upper (manufactured using the Horizontal Injection Moulding Machine
with PVC granules)
The production process of EVA has been divided into following Cost centre:
Raw-material Cost centre This is a separate storage centre for raw materials that are

specific to the EVA process.


EVA Production (Moulding) Cost centre -

Full EVA - EVA granules are injected in the EVA machine to prepare EVA sole and full EVA
products.

EVA with PVC Upper - PVC granules are injected in the Horizontal machine to prepare PVC
strap or Upper and thereafter sent to the subsequent Cost centre.

Fitting, Finishing, & Packing Cost centre - The EVA sole and PVC upper is manually fixed
here to get the finished goods. The polishing, finishing, packing in cartons and dispatch
functions are also carried out in this Cost centre.

95

KHADIM INDIA LIMITED

BUSINESS PROCESS FOR LIFESTYLE RETAIL STORES


For our Lifestyle Retail stores, majority of the items are procured from outside vendors and
manufacturers. The flow chart below depicts the business process for our lifestyle retail stores:

INSTALLED CAPACITY AND CAPACITY UTILIZATION


The installed manufacturing capacity of the company plants are categorized into PVC & PVC-DIP
Footwear, STUCK-ON Footwear and EVA Based Footwear
Pairs in 000
Product

PVC
&
PVC-DIP
Footwear/
STUCKON
Footwear
EVA
Based
Footwear

2006-07

2005-06

Installe
d
Capacity

Actual
Produc
tion

% of
Installed
Capacity

Installed
Capacity

2880

945

32.81%

3,645

Actual
Produc
tion

2004-05
% of
Installed
Capacity

Installed
Capacity

25.05%

3,465

913.00

1050

1164

110.86%

1,050

96

% of
Installed
Capacity
21.01%

728

84.57%
888.00

Actual
Produc
tion

1,050

20.26%
213

KHADIM INDIA LIMITED

OUR MANUFACTURING UNITS AND WAREHOUSES


1) Locations of Manufacturing Facilities
i. Plot/Shed No. P-31 and S-26, Phase III,
Kasba Industrial Estate, Anandapur, Kolkata 700 078
ii. P43 & P43A, Phase III,
Kasba Industrial Estate, Anandapur, Kolkata 700 078
2) Location of Warehouses
I.

II.
III.

Shed No. S-32/1, 32/2, 32/1A of Phase-I and


S-43, 43/1, 44, 44/1 of Phase-III at Kasba Industrial Estate,
Anandapur, Kolkata 700 078
49 Debendra Chandra Dey Road,
P. O. Tangra, Kolkata-700 015
Godown No. NC/1B at
Rehabilitation Industries Cooperation,
Industrial Estate, Bonhooghly,
Kolkata- 700032

IV. 29B, Rabindra Sarani,


Kolkata 700 073
V. 11 No., Sambhu Chatterjee Street,
Kolkata 700 007
VI. 25, Thirumallai Nagar,
Main Street, Kavangarai, Puzhal,
Chennai 600 066
VII. Shed No. 7, 8 and 9 at Khasara Nos. 50/6 (4-16), 7(4-16), 8(4-16)
Village Alipur,
Delhi 110 036
INSURANCE
We maintain comprehensive insurance coverage with National Insurance and Tata AIG for our
existing stores, distribution centres, corporate office and manufacturing facilities. Our insurance
policies include comprehensive coverage for electronic equipment, fire, earthquake, terrorism and
special perils and burglary.
QUALITY CONTROL
We have set high standards for ourselves to ensure that our customers get value for their money.
For our in-house products, we have installed quality check points at various stages in the
manufacturing process starting from the raw material feed points. Similar policies are followed in
respect of the outsourced products at the vendor levels. The finished products are also subjected
to strict quality and durability checks before they are despatched to the stores.
For EVA products, which constitute a major part of our production, we use pure granules which are
not manufactured from recycled materials to maintain the quality of our finished products.
Approximately 85% of the footwear we sell is outsourced from dedicated vendors, who
manufacture footwear as per specified quality standards prescribed by us. The quality check begins
right from the selection of raw material suppliers till the vendors who manufactures the final
product. Our sourcing team visits the vendors for inspecting the material before it is despatched to
our warehouses. Once the material arrives at our warehouses, we have another round of quality
checks to ensure product quality.

97

KHADIM INDIA LIMITED

MARKETING & SELLING ARRANGEMENT


Our footwear products are sold through the following channels:
1.
Owned Retail Outlets
2.
Exclusive Dealers
3.
Dealers
4.
Multi-brand Dealers
5.
Distributors
Our marketing strategy for our footwear business is schematically depicted below:

Owned Footwear Retail Outlets


We have 52 own Footwear retail stores across the Country. All these stores maintain the same
dcor and interiors so that the customers have the same feel irrespective of the store they are
visiting. The kind of stock depends on the location and the profile of the people in the particular
location.
Exclusive Dealers
There are 212 dedicated Exclusive Dealer outlets spread throughout the country. An exclusive
dealer procures its entire product requirement from us and sells the same at the Companys M.R.P.
Such outlets are in the name of Khadims and are identical in terms of its look and feel as any of
our owned outlets. The exclusivity remains in the fact that these dealers have contractual
obligation to sale exclusively our products from the premises to which the contract relates and also
to comply with the terms and conditions and policies of our Company.
Dealers
Like Exclusive Dealers, these stores also deal mainly in our footwear. We have at present 97 such
dealers. Such dealers procure their product requirements from us directly.

98

KHADIM INDIA LIMITED

Multi-brand Dealers
These stores sell footwear of various brands and makes alongwith our products.
Distributors
Distributors are an integral part of our supply chain. Although we directly supply to many Exclusive
Dealers and Dealers, our Distributors provide our footwear to dealers and multi-brand stores at
places where we do not find it feasible to set up our own distribution channels due to factors like
low requirements. However, these Distributors do not supply directly to customers through stores
or outlets.
INTELLECTUAL PROPERTY RIGHTS
Trademark Registrations
We own the Khadims trademark, which has been registered with the Registrar of Trademarks,
Kolkata. In total we have 77 trade marks registered in our name. Some of our important trade
marks are LAZARD, KAPLANS, PEDRO etc.
Apart from this we have also applied for 231 other marks for registrations in India.
The brand Khadims is registered in Bhutan, Mr. Lanka, UAE , Nepal and the European Union. The
application for registration of the mark is pending in Bangladesh and USA.
Copyright Registrations
We have in all registered 45 copyrights mainly in the form of Labels.
Design Registrations
We have in all 49 Footwear Design Registrations in our name of which 39 are registered under
Class 02-04 and 10 are registered under Class 10.
DETAILS OF IMMOVABLE PROPERTY
The following table sets forth the significant properties owned or leased by us or our affiliates as
on August 31, 2007:
Registered Office
Sl.
No.

City

Location

Kolkata

Kankaria Estate,
6, Russel Street,
Kolkata-700071
(5th Floor North
Block & South
East Block

Counter
Parties

Party/

Awanti
Corporation (Land
Lord) and Khadim
Chain
Stores
Limited(Tenant)

99

Nature of Our
Companys
Interest
Tenanted

Validity

July 28,
2014

KHADIM INDIA LIMITED

Owned Footwear Stores


Sl.
No
.

City/Town

Address

Counter Party/ Parties

Nature of
Our
Company
s Interest

Validity

IN THE STATE OF WEST BENGAL


1

Kolkata

G-42,
Dakshinapan
Shopping
Complex, Kolkata68

Kolkata
Metropolitan
Development
Authority
(Lessor) and Aar Ess
Land Development Pvt
Ltd (Lessee)

Leased

March 26,
2062

Kolkata

E
103,
City
Centre, DC -1,
Sector 1, Salt lake
City Kolkata - 700
064.

Bengal Ambuja Metro


Development
Limited(Lessor)
and
Khadim Chain Stores
Private Limited (Lessee)

Leased

June
2095

Kolkata

5,
G.T.
Road,
Near Karzan Gate,
Dist :- Burdwan,
West Bengal

Deb Narayan Koner, Deb


Raghu Koner, Goutam
Koner, Chandan Koner,
Suman
Koner
Mrs.
Dipika Mondal(Lessors)
and Khadim Chain Stores
Limited (Lessee)

Leased

June 30,
2020

Kolkata

7A,
Lindsay
Street, Kolkata-87

Property held
name
of
Departmental
Private Limited

in the
Sheila
Stores

As Per Note

Kolkata

12,
Lindsay
Street, Kolkata-87

Property held in the


name of St. Marys Clinic
&
Drug
stores
a
partnership firm

As Per Note

Kolkata

30,
Rabindra
Sarani , Kolkata73

Property held
name of S
Burman.

in
P

the
Roy

As Per Note

Kolkata

433 - Diamond
Harbour
Road,
Kolkata-34

Property held in
name of Partha
Burman.

the
Roy

As Per Note

100

6,

KHADIM INDIA LIMITED

Kolkata

14,
Bentinck
Street, Kolkata-1

Property held in the


name of Mrs. Basabdutta
Roy Burman & Mrs..
Tanushree Roy Burman

As Per Note

Kolkata

Hatibagan Market,
80,
Bidhan
Sarani, Kolkata-4

As Per Note

10

Kolkata

B-87-88, College
Street
Market,
Kolkata-9

11

Kolkata

81/3A,
Bentick
Street, Kolkata-1

Property held in the


name
of
Bee
Tee
Enterprises a Partnership
firm
Property held in the
name of Partha Roy
Burman, Tanushree Roy
Burman and Basab Dutta
Roy Burman
Property held in the
name of Satya Prasad
Roy Burman

IN THE STATE OF TAMIL NADU


12 Chennai
SMO Plaza, 121
Usman
Road,
T.Nagar, Chennai600017.

As Per Note

As Per Note

Mr.
Oumar
Catta
Marecar (Lessor) and
Khadim Chain Stores (P)
Limited (Lessee)

Leased

September
1, 2008
(subject to
fulfilling
enhanceme
nt condition
lease
can
be renewed
perpetually
)
April
1,
2009

13

Chennai

37,Mount
Road,
Chennai -600002

Mr. B. Mohandas (Land


Lord) and Khadim Chain
Stores (P) Ltd (Tenant)

Agreeme
nt of
Lease
entered

14

Chennai

Shop
no.G1-G2,
Ground
floor,
Palace Regency,
Municipal door no.
80-93,
Puruswalkum high
road,
Chennai600 010

(i) Mrs. Geetha Jhonson


(ii)
Mr.
Ashok
Thambuswamy(Lessors)
and Khadim Chain Stores
Pvt. LTD(Lessee).

Leased

April
2009

15

Coimbatore

Opanakkara
Street No.- 532,
Coimbatore,
Tamilnadu641001

Mr. Abdul Rahim(Lessor)


and Khadim Chain Stores
Private Limited (Lessee)

Leased

November
6, 2032

16

Salem

Agraharam
First
Street,
No.110/110A/680
Salem, Tami Nadu
- 636001

Mr.
Soora
Subramaniam(Lessor)S
mt. Sujata and Mr.. S.
Vignesh alias Rangiah
(Confirming Party) and
Khadim Chain Stores
Private Limited (Lessee)

Leased

November
1, 2023

101

9,

KHADIM INDIA LIMITED

IN THE STATE OF KARNATAKA


17

Bangalore

32
and
33,
Kamraj
Road,
Civil
Station,Bangalore
-560 042

Khuchand
K.
Baxani
(Vendor),
Ms.
Asha
Kishin
Chand
(Confirming Party) and
Khadim Chain Stores
Pvt. Ltd (Purchaser)

Owned

Registere
d Deed of
Sale
dated
Septembe
r
09,
1999

18

Bangalore

Shop
Nos229,229A,229G,
230,230A,
231,
231A, 232, 232A,
Alankar
Pearl
Plaza, 23, K.G.
Road, Bangalore 560
009,
Karnataka.

(1)
Alankar
Kiddys
Corner,
a
registered
partnership firm (2) Smt.
Nisha L. Melwani (3)
Smt. Komal S Melwani (
Vendors),
Purna
Developers
and
Investment
Limited
(Confirming Party) and
Khadim Chain Stores Pvt
Ltd (Purchaser)

Owned

Registere
d Deed of
Sale
dated
January
01, 2002

19

Bangalore

M. R Dinamani and R.
Jayapalan (Lessors) and
Khadim Chain Stores Pvt
Ltd (Lessee)

Leased

July 1,
2042

20

Mysore

(i) S. Shivanna (ii) S.


Shivaprasad
(Lessors)
and Khadim Chain Stores
Pvt Ltd (Lessee)

Leased

April 15,
2032

21

Hubli

Shop no. 4 & 5,


No.63, 10th Main,
4th
Block,
Jaynagar,
Bangalore
560011.
Door.No.19,
Devaraj
URS
Road,
Devaraja
Mahalla, Mysore 570001,
Karnataka.
Shop No. - 9,
N.D.Gadagkar
Complex,
Broadway, Hubli 580
020,
Karnataka

Nazeer Ahmed (Lessor)


and
Khadim
India
Limited (Lessee)

Leased

Septembe
r 16,
2021

(i) Nalin Kumar Shah (ii)


Krishna Kumar Shah (iii)
Sunita
Nalin
Shah
(Lessor)
and
Khadim
Chain
Stores
Private
Limited (Lessees)

Leased

June 1,
2019

IN THE STATE OF ANDHRA PRADESH


22 Secunderabad
17-M.G.Road,
Door No. 2-4-25
Secunderabad,
Andhra Pradesh 500003.

102

KHADIM INDIA LIMITED

23

Hyderabad

Shop No. 2 & 3,


Shivani
Lodge
Complex,Door
No.4106.Durganagar,
Dilsukhnagar,
Hyderabad
500060.

Mr.
Surapaneni
Ram,achandra
Rao
(H.U.F)(Lessor)
and
Khadim Chain Stores
Private Limited (Lessee)

Leased

July 2,
2023

24

Hyderabad

Shop
No.3&4,
Okaz
Complex,
Opp.
Mehndipatnam
Police
Station,
Mehd, Hyderabad
- 500028.

(i) Sameena Begum (ii)


Sumera
Nazima
(Lessors) and Khadim
Chain
Stores
Private
Limited (Lessees)

Leased

November
1, 2023

25

Hyderabad

Shop No.- 6 & 7,


Upper
Ground
Floor,
Vertex
Plaza Commercial
Complex,
Opp.
Radhika Theatre,
A S
Rao Nagar
Main
Road,
Hyderabad
500062

Mrs.
Yelle
LaKshmi
(Lessor) Vertex Homes
Pvt.
Ltd
(Confirming
Party) and Khadim Chain
Stores Private Limited
(Lessee)

26

Hyderabad

Shop No.- 1-84/1/1/C & 1-84/1/3,


Ground
Floor,
(Near
Sunanda
Hotel
Chikkadpally
Hyderabad
500020.

(i) Mr. Dilip Kumar M.


Gopani (ii) Mr.. Gulab M.
Gopani
(iii)
Mr..
Devendra
M.
Gopani
(Lessees) and Khadim
Chain
Stores
Private
Limited (Sub -Lessees)

Sub
Leased

December
18, 2021

27

Vishakapatnam

Door No. 28-2249/16,


Ground
Floor,
Daspalla
Centre,
Jagadamba
Junction
Vishakapatnam 530020. (AP)

D.Suresh
(Lessee)
Daspalla
Properties,
Partnership
Firm
(Confirming
Party)
Khadim Chain Stores
Private
Limited
(Sub
Lessee)

Sub
Leased

September
28, 2013

Shi Birendra Kumar Mitra


(Lessee) and Khadim
India
Limited
(Sub
Lessee).

Sub
Leased

February
24, 2034

IN THE STATE OF ORISSA


28 Bhubaneswar
P-127,
Ashok
Nagar, Janapath,
Unit-II,
BBSR751009.

103

Leased

December
23, 2017

KHADIM INDIA LIMITED

29

Cuttack

Plot
No.
282287(p)503/A
Mission
Road,
Buxi
Bazar,
P.S.
Mangalabag,
Cuttack
753001.

Jagat
Jiban
Prasad
(Licensor) and Khadim
Chain Stores Pvt Limited
(Licensee)

Licensed

30

Cuttack

504-B/3,
Dolamundai,
Bajrakbati Road,
Infront of Krishna
Arcade, P. S Purighat,
DistCuttack,
Pin
Code-753001
Orissa

Shi Ranjan Mulia &


Others (Lessors) and
Khadim India Limited
(Lessee).

Leased

31

Berhampur

Annapurna
Complex,Fire
Station
Road,
Bhapur
Bazar,
Berhampur,
Ganjam
Dist.
Orissa,
Pin.760001.

K. Jagannnath Rao alias


Tumula
Jagannath
(Owner) and Khadim
Chain Stores Pvt Ltd
(Tenant)

Tenanted

M. Amin & Company, a


partnership
firm
represented
by
its
partners (i) Gautambhai
Manubhai Amin and (ii)
Shreekant
Manubhai
Amin
(Vendor)
and
Khadim Chain Stores Ltd
(Purchaser)

Owned

Registered
Deed
of
Sale dated
August 11,
2005

IN THE STATE OF GUJARAT


32 Vadodara
Shop No. 6 & 7,
B.N.Chambers,
R.C.Dutt
Road,
Alkapuri,
Vadodara - 390
007.

February
1, 2020

May 1,
2021

February
8, 2026

33

Jamnagar

Opp. Anupam
Talkies,
Near
Teenbatti Chowk,
Jamnagar 361
001 Gujarat

Ntawarlal Vrajlal Thakar


(Vendor) and Khadim
India
Limited
(Purchaser)

Owned

Registered
Deed
of
Sale dated
September
20, 2006

34

Ahmedabad

Relief Road, Opp.


Relief Theatre,
Ahmedabad,
Gujarat

Mr. Mustufamiya Shaikh


(Lessor)
and
Khadim
India Limited(Lessee).

Leased

December
17, 2020

IN THE STATE OF UTTAR PRADESH

104

KHADIM INDIA LIMITED

35

Noida

J-13, Sector - 18,


Noida
Pin

201301 U.P

Jhangi
Ram
Arora
(Lessee) and Khadim
India
Limited
(Sub
Lessee).

Sub
Leased

October
26, 2014

36

Allahabad

Shop
No.
24A/12A/3,
Sarder
Patel
Marg,
Lucky
Range, Near Civil
Lines
Crossing,
Allahabad, Pin 211001

(i) Smt. Sova Rani De


(ii)Debashish
De
(Lessors) and Khadim
India Limited (Lessees).

Leased

February
2, 2021

37

Moradabad

Premises
No.
5/10/26,
Bazar
Amroha Gate ,
Moradabad

244001
Uttar
Pradesh

(i)Mr.Rajendra
Kumar
alias Rajendra Kumar
Saxena (ii) Smt. Usha
Saxena (Lessors) and
Khadim India Limited
(Lessee).

Leased

October
20, 2021

IN THE STATE OF MAHARASTRA


38

Nagpur

Buti
Building,
Sitabuldi
Main
Road,
Opp.
Hanuman
Gali,
Nagpur - 440012,
Maharastra

Mrs. Kavita (Lessor) And


Khadim India Limited
(Lessee).

Leased

February
10, 2024

39

Nashik

Vishwanath
Sankul
Building,
Ground
Floor,
Shop
No.
2,
College
Road,
Opposite
Vijan
Hospital, Nashik 422005.
Maharastra

Mrs. Rita Shailesh Shah


& Others (Lessors) and
Khadim India Limited
(Lessee).

Leased

November
30, 2021

40

Akola

Aditya
Thermoplastics
Pvt. Ltd (Lessors) And
Khadim India Limited
(Lessee).

Leased

March 17,
2022

41

Sangli

Zuna
Kapra
Bazar, Old Cloth
Market, Akola 444001
Maharastra
54 and 55, Maruti
Temple Road, P.S.
Ankali, Dist.
Sangli,
Maharastra
416416

(i) Mrs. Chetna Kishore


Shah (ii) Mrs. Reshma
Sanjay Shah (Lessors)
and
Khadim
India
Limited (Lessee).

Leased

May 7,
2022

IN THE STATE OF CHATTISGARH

105

KHADIM INDIA LIMITED

42

Raipur

G.E.Road ,Old Bus


Stand, Beside Raj
Talkies, Raipur 492
001,
Chattisgarh

J. Shukla & Company


(Lessee) and Khadim
India
Limited
(SubLessee)

SubLeased

May 12,
2021

IN THE STATE OF RAJASTHAN


Tenanted

43

Jodhpur

Plot No. - 35A &


35B, Nayi Sadak,
Jodhpur
Rajasthan
342001

(i)
Vishan
Dass
Makhijani, (ii) Chandra
Prakash Makhijani, (iii)
Kishore Kumar Makhijani
(iv)
Vinod
Kumar
Makhijani (Land Lords)
and
Khadim
India
Limited (Tenant)

44

Jaipur

Shop Nos. 296 &


297, Johari Bazar,
Opp.
L.M.B
hotel, Jaipur
302003
Rajasthan

Subhas
Singhi
(First
Party) and Khadim India
Limited (Second Party)

MOU
entered

July 7,
2021

October
15, 2021

IN THE STATE OF KERALA


45

Trivandrum

M.G Road, Ground


Floor, Jama Plaza,
Opp. - SMV High
School,
Trivandrum - 695
001, Kerala

(i) Abdul Salam (ii)


Abdul Majeed (Lessors)
and
Khadim
India
Limited (Lessee).

Leased

August 11,
2024

46

Ernakulam

M.G.
Road,
Shenoys
Junction, Opp. Shenoys Theatre,
Ernakulam, Kerala

Mr.
P.
Gopakumar
(Lessor)
and
Khadim
India Limited (Lessee).

Leased

November
22, 2021

IN THE STATE OF MADHYA PRADESH


47

Gwalior

50/48,
Bazaar,
Bhawan,
Bank Of
Gwalior
001,
Pradesh

Sarafa
Sacheti
Opp
Baroda,
474
Madhya

Rajendra Kumar Sacheti


(Lessor)
and
Khadim
India Limited (Lessee).

Leased

September
27, 2021

48

Bhopal

20, New Market,


Main Road, T. T.
Nagar, Bhopal 462003
Madhya
Pradesh

Mr.
Ravi
Taparia
&
Others (Lessors) and
Khadim India Limited
(Lessee).

Leased

March 8,
2020

106

KHADIM INDIA LIMITED

IN THE UNION TERRITORY OF PONDICHERRY


49

Pondicherry

37,
Jawarharlal
Nehru
Street,
Near Traffic Police
Station,Pondicherr
y - 605001

Mrs.V.
Unnamalai
(Lessor)
and
Khadim
India Limited (Lessee).

Leased

November
6, 2015

Note: The ownership, right to use of the immovable properties relating to the above stores are
not in the name of our company but in the name of our promoters and promoter group. A
commission of 0.75% on net sales of the respective stores is paid by the company and the same
has been disclosed in the Related Party transactions.
New Owned Retail Stores to be opened
Sl.
No.

City/ Town

Location

Counter Party/
Parties

Nature of
Our
Companys
Interest
Intending Sub
Lessee(LOI
Entered)

Validity

Durgapur

Dreamplex
Durgapur
City
Center
Durgapur16,
Burdwan, West
Bengal

Mr. Amit Dalmia,


Manisha Dalmia
and Chandrakala
Dalmia(Intending
Lessees)
and
Khadim
India
Limited(Intending
Sub Lessee)

Bilaspur

Khushi Palace
at
Ogrosen
Square,
Bilaspur,
Chattisgarh

Rituraj Steel Pvt


Ltd
(Intending
Lessor)
and
Khadim
India
Limited
(Intending
lessee)

Intending
Lessee( Letter
of
Intent
entered)

Aurangabad

shop no. A-4,


upper
floor,
Vikas
plaza,
Tilak
Path,
Aurangabad PIN
431
001,
Maharashtra

Leave
Licensed

Bhubaneshwar

Pal Heights J/7


(part) and J/7A,
Jayadev
Vihar,
Bhubaneshwar751 013

Smt.
Tahseen
Banu (Licensor) ,
Smt.
Roshan
Begum
(Confirming
Party)
and
Khadim
India
Limited(
Licensee)
Hotel
Pal
Regency
Pvt.
Limited

Rajamundry

Immidi Arcade,
Commercial
Complex, 7-3033, Main Road,
Rajamundry533
101,
DistrictEast
Godavari,
Andhra Pradesh

Mr. I. V. V. S. S.
R Prasad, Mrs. I.
Radha
Kumari,
Mrs.
I.
Bhubaneswari,
Mrs.
I.
Meenakshi, Mrs.
I. Lakshmi, Mrs.
I.
Bhagya
Lakshmi, Mrs. I.

Leased

107

&

July 27, 2012

Intending Sub
Lessee
(LOI
entered)

August 10, 2027

KHADIM INDIA LIMITED

Tripura Sundari

Life Style Stores


Sl. No.

City/ Town

Location

Counter
Parties

Burdwan

Radha
Nagar,
J.L
No.
39,
Mohalla- Kalna
Road, R.S Plot
No.
7003,
Burdman

(i)
Dheeraj
Promoters(Contractor/
Developer) (ii) M/s
Poddar
Hospital
&
Medical
Research
Ltd.(Agency)
(iii)
Khadim India Limited
(Lessee)

Sodepur

Shri Raju Das(Lessor)


and
Khadim India
limited (Lessee)

MOU entered.

Asansol

Municipal
Holding
No.
730,
Barrackpore
Trunk
Road,
Sodepur
32(31),
G.T
Road(East),
Asansol

(i) Vinod Sayal (ii)


Bharat Thacker
(
Vendors) and Khadim
India
Limited
(Purchaser)

Owned

Registered
Agreement for
Sale entered

Kanchrapara

32,
Kabiguru
Rabindra
Path
(North),
Kanchrapara,

(i) Sandhya Rani Das


(ii)
Subrata
Das
(Lessors) Tarak nath
Enterprise
(Confirming
Party)
and
Khadim Chain
Stores
Pvt
Ltd
(Lessee)

Leased

September 1,
2023

Howrah

18, G.T
(South),
Howrah711101

Leased

February 19,
2027

Bhawanipore

Arch
Galaxy
45 B, Ashutosh
Mukherjee
Road,
Police
Station
Bhawanipore,
District
South
24 Parganas,

i)
Bhagwati
Plasto
Works
Pvt.
Ltd.
(Lessor) and Khadim
India
Limited
(Lessee).
Arch
Enclave
Pvt.
Ltd.(Lessor)
and
Khadim India Limited
( Lessee)

Road

108

Party/

Nature of our
Companys
Interest
MOU entered.

MOU entered.

Validity

May 21, 2026.

July 28, 2026

May 31, 2025

KHADIM INDIA LIMITED

Factory
Sl. No.

City

Location

Kolkata

Plot No. P-31,


Phase

III,
Kasba Industrial,
Anandapur,
Kolkata 700 078

Kolkata

P43
&
P43A,
Phase

III,
Kasba Industrial,
Anandapur,
Kolkata 700 078

Kolkata

Shed No. S-26,


Phase

III,
Kasba Industrial,
Anandapur,
Kolkata 700 078

Kolkata

Shed No. S-19,


Phase

III,
Kasba Industrial,
Anandapur,
Kolkata 700 078

Kolkata

Shed No. S-20,


Phase

III,
Kasba Industrial,
Anandapur,
Kolkata 700 078

Kolkata

Shed No. S-21,


Phase

III,
Kasba Industrial,
Anandapur,
Kolkata 700 078

Counter
Parties

Party/

West
Bengal
Small
Industries
Development
Corporation
(Lessor)
and
Khadim
India
Limited (Lessee).
West
Bengal
Small
Industries
Development
Corporation
(Lessor)
and
Khadim
India
Limited (Lessee).
West
Bengal
Small
Industries
Development
Corporation
(Lessor)
and
Khadim
India
Limited (Lessee).
West
Bengal
Small
Industries
Development
Corporation
(Lessor)
and
Khadim
India
Limited (Lessee).
West
Bengal
Small
Industries
Development
Corporation
(Lessor)
and
Khadim
India
Limited (Lessee).
West
Bengal
Small
Industries
Development
Corporation
(Lessor)
and
Khadim
India
Limited (Lessee).

109

Nature of
Our
Companys
Interest
Leased

Validity

May 8, 2093

Leased

August 8,
2101

Leased

May 8, 2093

Leased

December 8,
2102

Leased

March 8, 2101

Leased

March 8, 2102

KHADIM INDIA LIMITED

WAREHOUSE
Sl. No.

City

Location

Counter
Party/ Parties

Kolkata

Shed No. S-32/1,


32/2,
32/1A
of
Phase-I and S-43,
43/1, 44, 44/1 of
Phase-III at Kasba
Industrial Estate,
Anandapur,
Kolkata 700 078.

West
Bengal
Small Industries
Development
Corporation
(Lessor)
and
Khadim
India
Limited
(Lessee).

Kolkata

49
Debendra
Chandra Dey Road,
P.
O.
Tangra,
Kolkata-700 015.

Kolkata

Godown No. NC/1B


at
Rehabilitation
Industries
Cooperation,
Industrial Estate,
Bonhooghly,
Kolkata-700032.

(1)
Naiyar
Sultan
(2)
Shahid
Sultan
(Lessors)
and
Khadim
India
Limited
(Lessee)
Central
Warehousing
Corporation
(One Part) and
Khadim
India
Limited (Other
Part)

Kolkata

Onkarnath
Mishra

Kolkata

29B,
Rabindra
Sarani, Kolkata
700 073
11 No., Sambhu
Chatterjee Street,
Kolkata 700 007

Chennai

25,
Thirumallai
Nagar,
Main
Street,
Kavangarai,
Puzhal, Chennai
600 066

Delhi

Shed No. 7, 8 and


9 at Khasara Nos.
50/6 (4-16), 7(416),
8(4-16)
Village
Alipur,
Delhi 110 036.

(i) Mrs. Sunita


M. Mehta (ii)
Mrs. Usha A.
Mehta (Lessors)
and
Khadim
India
Limited
(Lessee).
Mukesh
Garg
Parvesh
Garg
Dharm Pal Garg
Jai
Pal
Garg
Yash Pal Garg
(Owners)
and
Khadim
India
Limited(Tenant)

110

Murarka
Properties
Limited

Nature of our
Companys
Interest
Leased

Leased

Tenanted

Tenanted

Pvt.

Tenanted
(Tenancy right
in the name of
our
promoter
Mr. Siddhartha
Roy
Burman
and
rent
is
directly paid by
us
to
the
landlord)
Leased

Tenanted

Validity

November 8,
2078

February 20,
2010

Was valid up to
August 25,
2007. Renewal
intimation sent.

N.A.

N.A.

January 10,
2016

March 3, 2012

KHADIM INDIA LIMITED

Details of other Immovable Property


Sl.
No.

City/ Town

Location

Counter
Parties

Kolkata

49A, Gariahat
Road,Gariahat,
Kolkata700
019

Kolkata

49A, Gariahat
Road, Gariahat,
Kolkata700
019.

Kolkata

9
Hemanta
Basu
Sarani,
Kolkata

Kolkata

Plot No. BG-12,


Action Area-1B,
New
Town,
Kolkata,
P.S.
Rajerhat

Kolkata

Unit No. A 113


& A 114, Block:
A, First Floor,
City Centre ,
New
Town,

Smt. Bina Singhi


(Vendor)
and
Khadim Chain Stores
Pvt
Ltd,
Khadim
Shoe
Pvt
Ltd(Purchaser)
J.J Development Pvt
Ltd,
Padrone
Promoters Pvt Ltd,
Anvesha Promoters
Pvt
Ltd,
J.J
Grihanirman Pvt Ltd,
Renault Developers
Pvt
Ltd,
Prateek
Promoters Pvt Ltd,
Sreemukh
Construction Pvt Ltd,
Aekta Housing Pvt
Ltd,
Evergreen
Properties Pvt Ltd,
Aalay Builders Pvt
Ltd(Vendors)and
Khadim Chain Stores
Pvt
Ltd,
Khadim
Shoe
Pvt
Ltd(Purchaser)
Cooke and Kelvy
Properties
Private
Limited(
Vendor)
and Khadim Chain
Stores
Pvt.
Limited(Purchaser)
and
Cooke
and
Kelvey
Private
Limited (Confirming
Party)
West Bengal Housing
Board (First Party),
West Bengal Housing
Infrastructure
Development
Corporation Limited
(Second
Party),
Bengal
Greenfield
Housing
Development Co. Ltd
(Intending
Lessor)
and Khadim India
Limited
(Intending
Lessee)
Bengal
Ambuja
Housing
Development Limited
(Licensor)
and
Khadim
India

111

Party/

Nature of our
Companys
Interest
Owned

Validity
NA

Owned

NA

Owned

NA

MOU entered

LOI entered

January 17,
2025

KHADIM INDIA LIMITED

Rajerhat.

limited( Licensee)

Mahaveer
Construction
(Lessor) and Khadim
India
Limited(Lessee)
(i) Suresh Kumar (ii)
Yash Pal Gandhi,
directors
of
M/S
Suresh Yash Builders
Pvt Ltd as a General
Attorney
of
K.K
Mahajan
vide
registered
General
Power of Attorney
(Vendors)
and
Khadim Shoe Pvt Ltd
(Purchaser)
Ali
Ahmed
(Land
Lord) and Khadim
India
Limited
(Tenant)

Kharagpur

First
floor
,Block-C
,
Kharagpur,
East Midnapur.

New Delhi

Second
Floor
Block-C-1,
Janak
Puri,
New Delhi

Allahabad

40g/1, Sardar
Patel
Marg,
Vasant
Vehar
Colony,
Civil
Lines,
Allahabad, Pin211001,
Allahabad, U.P
37
and
38,
Topsia
Road,
Kolkata - 700
039

Kolkata

Ansarul Haq (Sub


Tenant)
and
S.N
Foot Wear Industries
(P)
Limited
(Assigned
Sub
Tenant) (Now known
as KIL)

112

Term
entered.

Sheet

Owned

Tenanted

Sub-Tenancy

November 11,
2021

Registered Sale
Deed
Dated
November
8,
2002

September 12,
2007

Agreement of
Assignment of
Sub-Tenancy
dated July 15,
1997.

KHADIM INDIA LIMITED

FINANCIAL INDEBTEDNESS
Set forth below is a brief summary of our significant outstanding borrowings of Rs. 431.72 million
as of 30th June 2007, together with a brief description of certain significant terms of such financing
arrangements
Bank

Facility and Loan


Documentation

State Bank of
India

Rs.130.00 million
Term Loan I vide
sanction letter dated
17.04.2006

UCO Bank

Amount
Outstanding
(in millions)
90.82 Dr.

Rs. 70.00 million


Term Loan II vide
Sanction Letter
Dated 17.11.2005

43.01 Dr.

Rs.20.00 million
Term Loan III vide
sanction letter dated
17.11.2005

16.13 Dr.

Cash Credit of
Rs.55.00 million
vide sanction letter
dated 17.04.2006

53.33 Dr.

BG Limit of Rs.22.50
million vide sanction
letter dated
17.04.2006
SLC Limit of Rs.9.00
million vide sanction
letter dated
17.04.2006

20.06 issued

Ad-hoc Credit Limit


of Rs.15 million vide
sanction letter dated
03.02.2007
Term Loan of
Rs.19.80 million
vide sanction letter
dated 15.12.2005
Cash Credit of
Rs.236 million vide
sanction letter dated
15.12.2005
LC/ BG Limit of
Rs.10 million vide

9.12 Dr.

14.26 Dr.

135.30 Dr.

1.45 million
issued

113

Interest Rate

Repayment
Schedule

0.25 above
State Bank
Advance Rate
minimum
effective rate
will be 10.50%
p.a. at monthly
rests
0.75 below State
Bank Advance
Rate effective
rate will be
minimum 9.50
p.a. at monthly
rests

To be Repaid in 20
equal quarterly
installments of
Rs.6.5 million
starting from June
2007
First Four quarterly
Installments of
Rs.1.5 million,
followed by 16
quarterly
Installments of Rs.4
million starting
from June 2006
After one year
moratorium,
repayable in 20
equal quarterly
installments of Rs.1
million commencing
from October 2006.

At State Bank
Advance Rate,
minimum
effective rate
will be 10.25%
P.A at monthly
rests

1% above the
interest rate
applicable to
regular working
capital
State Bank PLR
+ 0.75%
BPLR - 1.5%
with monthly
rest

20 Quarterly
installments of Rs.1
million each
January 2006.

KHADIM INDIA LIMITED

UTI Bank

Andhra Bank

ICICI Bank
Limited

State Bank of
India

sanction letter dated


15.12.2005
Term Loan I of
Rs.42.1 million vide
sanction letter dated
07.04.2007

25.50 Dr.

2.75% below
BPLR p.a. with a
minimum
interest rate of
11% p. a. over
and above the
agreed interest
rate.

Term Loan II of
Rs.42.90 million
vide sanction letter
dated 16 July 2007

Amount not
Disbursed

2.75% below
BPLR p.a.

Term Loan I of
Rs.91.0 million vide
sanction letters
dated 01.11.2006,
12.01.2007 and
20.02.2007
Term Loan II of
Rs.29.00 million
vide sanction letters
dated 09.01.2007,
20.02.2007

Amount not
Disbursed

BMPLR-0.50%
+0.25%(term
premia)

Amount not
Disbursed

BMPLR-0.50%
+0.25%(term
premia)

Demand Loan of
Rs.15 million vide
credit arrangement
letter dated 28th
November 2006

10.88 Dr.

Dropline Loan of
Rs.15 million vide
credit arrangement
letter dated 28th
November 2006

11.51 Dr.

Metal (Gold) Loan of


Rs.5 million Part of
Cash Credit Limit
Sanction of Rs.60.0
million, sanction for
gold Loan vide
sanction letter dated
12.04.2007 from
SBI Commercial
Branch Ballygunje

0.06 Cr.

Bank PLR
+C.C.Premia3.5% p.a.
subject to
minimum of
10.50%
Bank PLR
+C.C.Premia3.5% p.a.
subject to
minimum of
10.50%
As per scheme
at present
3.75% p.a.

114

Interest on the
Drawal amount for
the six months.
Thereafter
repayment will be
by way of 60
monthly
installments of
Rs.941819/- each.
Repayment by way
of 60 monthly
installments of
Rs.0.715 million
each after
moratorium period.
Repayable in 20
quarterly
installments with an
initial holiday of 12
months
Repayment shall
commence along
with the Term Loan
I (payable in 20
quarterly
installments with an
initial holiday of 12
months)
Equal weekly
installments of
demand loan for 52
weeks
Equal monthly
reduction of DLOD
for 12 month

Repayable on
demand. The
overall limit of Rs. 5
millions can be
utilized in phases.
The Loan is
repayable any time
within the
maximum period of
90 days and
minimum loan
period of 15 days.
Part repayment
may also be made
with a minimum of
1 Kg. The loan will
have to be repaid
by paying the
equivalent price of

KHADIM INDIA LIMITED

The Bank of
Nova Scotia

Standard
Chartered
Bank
ICICI Bank
Limited

US $ 620,000 or
800 fine troy ounces
of gold vide Gold
Loan agreement
dated May 04, 2007
Overdraft Facility of
Rs.12.8 million
against Fixed
Deposits
Car Loan of Rs.1.7
million
Total

0.16 Cr.

3.25%

9.26 Cr.

currently
12.50%

0.35 Dr.

4.62% p.a.
payable with
monthly
installments.

gold in rupee at the


prevailing rate on
the date of
repayment
including
commission, taxes
and other costs as
applicable.
Maximum 90 days
for individual
transaction

EMI of Rs.50465
each by PDC
starting from 01
March 2005

431.72 Dr.

Note: Dr and Cr in the above table denote Debit and Credit in our books of accounts.
The term Loan facilities from State Bank of India and UCO Bank are further secured by the
personal guarantees of the Directors of our Company. The Term Loan facility from Andhra Bank,
UTI Bank Limited and the Demand Loan & Drop line Loan facility from ICICI Bank are further
secured by the corporate guarantee of Knightstville Pvt. Ltd.
Securities offered against the above Rupee Term Loan & Foreign Currency Term Loan
STATE BANK OF INDIA
Term Loan
Primary Securities: Equitable Mortgage of Land at Gariahat (Value Rs.14.3 millions), Landed
Property at Kanchrapara (19Year Lease) (Value Rs.109.90 millions), Landed property at City
Centre Salt Lake (Leasehold, value 9.00 millions), Landed property at Baroda purchased at Rs.10.0
millions on 11/08/05, Landed property at Burdwan (Lease hold).
Collateral Securities: 1) The residual value of primary Securities in respect of the Term loan
would be available as collateral security for working capital facility. 2) EM of 14 shops at
Kempegowda Road bangalore purchased at Rs. 14.00 millions. 3) EM of 2 Shops Jaynagar
Bangalore (lease hold) valued at Rs.7.60 millions (security deposit). 4) One shop at oppanakkara
street, coimbatore, Tamil Nadu (lease hold) value Rs.4.50millions (security deposit) .5) Two shops
at Purasawalkam, Chennai (lease hold) valued at Rs. 0.50 million (security Deposit). 6) Two shops
at Devraj Urs Road, Mysore (lease hold) valued at Rs. 2.80 million (Security Deposit). 7) Extension
of EM of retail shop of Khadim Chain stores Pvt. Ltd at 32 & 33 Kamraj Road, Civil station,
Bangalore valued at Rs.2.40 million (as per amount of consideration in the sale deed). 8)EM of
office premises measuring 2976 Sq. Ft at Cooke & Kelvey Building 20, Old Court House Street,
Kolkata - 01 valued at Rs. 12.90 million as per our empanelled Valuer's Report dated 14.05.05. 9)
Shop No. 2 & 3 at shivani Lodge complex, Disukhnagar, Gaddiannaaram village, Andra Pradesh.
Valued at Rs. 2.20 millions (Security Deposit). Plot No. P-31 S-20 and S-26 of Kasba Industrial
Estate.
Term Loan II
Primary Securities: A) Gariahat land & proposed building. B) Kanchrapara landed property with
leasehold rights C) Equitable mortgage over landed property at city centre, Salt Lake city.

115

KHADIM INDIA LIMITED

Term Loan III


Primary Securities: EM over A) landed property at Baroda purchased at Rs.10.00 million on
11/08/2005 B) landed property at Burdwan (lease hold)
Cash Credit
Primary Securities: Hypothecation of all stock-in-trade, Receivables and other current assets of
Retail Division.
Metal (Gold) Loan
Primary Securities: Hypothecation on raw material, stock-in-process, finished goods, receivables
and other current assets both present and future.
Collateral Securities: Part of SBI Cash Credit Sanction.
UCO BANK
Primary Securities: Hypothecation charge of stock in trade & Book debts of wholesale and
manufacturing division. Hypothecation of all office equipment's, furniture and other accessories
and all other movable/ fixed assets of the company. Hypothecation of debts and movable assets of
the wholesale and manufacturing division.
Collateral Securities: EMTD industrial plot P-43 & P-43 A at Kasba Industrial Estate, S32/1
S32/2 S31/1A S43 S44 S43/1 S44/1 valued collectively at Rs.105 millions. EM of Flat at Janakpuri,
Delhi valued at Rs.0.04 million.
UTI BANK
Term Loan I
Primary Securities: EM of the Commercial Property in the name of Khadim India limited
admeasuring 30,000 sq.ft approx and situated at 32(31), G.T.Road (east), JL No. 37, ward No 20
under Asansol Municipal corporation
Term Loan II
Primary Securities: First charge on the entire movable fixed assets of the company at Ground
Floor, First Floor and Second Floor at 32(31), G T Road (east), J L No.37, Ward No.20 under
Asansol Municipal Corporation, Asansol, West Bengal both present and future.
Collateral Securities: Extension of charge on the immovable properties of the company at
showroom at Ground Floor, First Floor and Second Floor, at 32(31), G T Road (east), J Lno.37,
Ward No.20 under Asansol Municipal Corporation, Asansol West Bengal. (As per the valuation
report dated 12.06.2007, the value of the property was Rs.42.687 million
ANDHRA BANK
Term Loan I
Primary Securities: Hypothecation of assets to be created out of proposed term loan of value
Rs.121.282 millions
Collateral Securities: Mortgage of factory building (S 19 & S 21) of value Rs. 13.50 million at
Kasba Industrial Estate, Kolkata on lease hold land
Term Loan II
Collateral Securities: Extension of Mortgage of factory building (S 19 & S 21) of value Rs. 13.50
millions at Kasba Industrial Estate, Kolkata on lease hold land held for Term Loan I

116

KHADIM INDIA LIMITED

ICICI BANK LIMITED


Primary Securities: Hypothecation of all Credit Card Receivables, Present and future of Khadim
India Limited
THE BANK OF NOVA SCOTIA
Primary Securities: Letter of Credit issued by SBI.
STANDARD CHARTERED BANK
Primary Securities: Credit Facility against Fixed Deposits.
Standard Covenants:
1) The Bank will have the right to examine at all the times, the companys books of account
and to have companys factories inspected from time to time by officer(s) of the Bank
and/or qualified auditors and/or technical experts and/or management consultants of the
Banks choice. Cost of such inspection will be borne by the company.
2) During the currency of the Banks credit facilities, the company will not, without Banks
prior permission in writing effect any change in the companys capital structure, formulate
any scheme of amalgamation or reconstruction, implement any scheme of expansion or
acquired fixed assets, invest by way of share capital in or lend or advance funds to or place
deposits with any other concern, normal trade credit, security deposits in the normal
course of business or advances to employees can, however, be extended, enter into
borrowing arrangement either secured or unsecured with any Bank, Financial Institution,
Company or otherwise accept deposits, declare dividends for any year except out of profits
relating to that year after making all dues and necessary provisions and provided further
that no default had occurred in any repayment obligation and stipulated Net Working
Capital has been maintained. In any case, company should obtain Banks prior approval
before declaring dividends.
3) The company should not make any drastic change in their management set up without the
Banks permission.
4) The company will keep the Bank informed of the happening of any event likely to have
substantial effect on their profit and business.
5) The company shall keep the bank advised of any circumstance adversely affecting the
financial position of their subsidiaries/group companies in which it has invested, including
any action taken by any other repayment obligation, if any, due from the company to the
bank.
6) Companys plant & machinery and stock to be insured adequately against risk of fire,
burglary, riot, strike, flood and malicious damage with Bank clause.
7) The company should not embark upon new venture/expansion without the Banks prior
consent.
8) The borrower shall undertake that further charge shall not be created on its fixed assets,
the borrower shall not use short term fund for long term purpose and the borrower shall
not withdraw the unsecured loan during currency of Banks loan.
9) The borrower shall also give undertaking that prior permission of the bank shall be
obtained for making any borrowing arrangement, effecting any merger or acquisition,
giving guarantee on behalf of the third party, disposing of whole or substantially the whole
of the undertaking.
10) The Company and/or guarantors should give their consent for disclosure of credit
information to CIBIL/RBI in terms of directives issued by RBI and as per format prescribed
by the Bank.

117

KHADIM INDIA LIMITED

11) The loan shall not be utilized for subscription to or purchase of shares / debentures,
repayment of dues of banks or other institutions / associate concerns, extend loans to
subsidiary or associate companies or shall make inter-corporate deposits or any
speculative purpose.
12) The company must abide by all other terms and conditions as may be stipulated by the
Bank from time to time to safeguard the interest of the Bank.
13) In the event of any change of address of communication, any change in job, profession by
you or the guarantors, the same should be intimated to the Bank, immediately.
14) The Bank will have the right to add/ alter/ delete any terms and conditions of sanction and
the same addition/ alteration/ deletion shall be binding on the borrower.
15) The Company will not be entitled to sell, mortgage, lease, surrender or alienate the
mortgaged property, or any part thereof, during the subsistence of the mortgage.
16) The Bank will have a first charge on the profit of the company, after provision for taxation,
for repayment of installments under terms granted/deferred payments guarantees
executed by the bank or other repayment obligation, if any, due from the company to the
Bank.

118

KHADIM INDIA LIMITED

REGULATIONS AND POLICIES IN INDIA


Our Company is involved in footwear and retail businesses and we have to comply with certain
laws which are applicable to our business which have been briefly discussed hereinbelow.
However, the regulations set out below are not exhaustive and is only intended to provide general
information to the investors and is neither designed nor intended to be a substitute for
professional legal advice.
The following discussion details the important laws and regulations, which govern the our
business:
A.

Laws relating to property:

Our Company possesses about 40,000 sq ft of area of footwear manufacturing facility across two
locations in the Kasba Industrial Estate in Kolkata and has 2 over 260 footwear retail outlets in
India which include owned stores and retail outlets. Our Company also has retail outlet by the
name of KHADIM KHAZANA and Lifestyle Retail Stores under the name KHADIM EGARO in
Kolkata and Howrah. For maintaining and expanding our presence in the country we have to
procure properties for which we have to comply with the prevailing real estate laws and a brief
discussion of the same is as follows:
Central Laws:

Transfer of Property Act, 1882


The transfer of property, including immovable property, between living persons, as
opposed to the transfer of property by the operation of law, is governed by the Transfer of
Property Act, 1882 (T.P. Act). The T.P. Act establishes the general principles relating to
the transfer of property including among other things identifying the categories of property
that are capable of being transferred, the persons competent to transfer property, the
validity of restrictions and conditions imposed on the transfer and the creation of
contingent and vested interest in the property.

Registration Act, 1908


The Registration Act, 1908 (Registration Act) has been enacted with the object of
providing public notice of the execution of documents affecting a transfer of interest in
immoveable property. The purpose of the Registration Act is the conservation of evidence,
assurances, title, publication of documents and prevention of fraud. It details the
formalities for registering an instrument. Section 17 of the Registration Act identifies
documents for which registration is compulsory and includes, among other things, any
non-testamentary instrument which purports or operates to create, declare, assign, limit
or extinguish, whether in present or in future, any right, title or interest, whether vested or
contingent, in immovable property of the value of one hundred rupees or more, and a
lease of immovable property for any term exceeding one year or reserving a yearly rent.
An unregistered document will not affect the property comprised in it, nor be treated as
evidence of any transaction affecting such property (except as evidence of a contract in a
suit for specific performance or as evidence of part performance under the T.P. Act or as
collateral), unless it has been registered.

The Indian Stamp Act, 1899


There is a direct link between the Registration Act and the Indian Stamp Act, 1899
(Stamp Act). Stamp duty needs to be paid on all documents which are registered and the
rate varies from State to State. The Stamp Act provides for the imposition of stamp duty
at the specified rates on instruments listed in Schedule I of the said Act. The applicable
rates for stamp duty on these instruments, including those relating to conveyance, are
prescribed by State legislation. Instruments chargeable to duty under the Stamp Act which
are not duly stamped are incapable of being admitted in court as evidence of the
transaction contained therein.

119

KHADIM INDIA LIMITED

The Easements Act, 1882


The law relating to easements is governed by the Easements Act, 1882 (Easements Act).
The right of easement is derived from the ownership of property and has been defined
under the Easements Act to mean a right which the owner or occupier of land possesses
for the beneficial enjoyment of that land and which permits him to do or to prevent
something from being done in respect of certain other land not his own. Under this law an
easement may be acquired by the owner of immovable property, i.e. the dominant owner,
or on his behalf by the person in possession of the property. Such a right may also arise
out of necessity or by virtue of a local custom.

State Laws:
As our Company has properties in several States which may be owned and/or leased, tenanted or
licensed, the laws prevailing in the respective States shall have to be complied with. These would
inter alia, include, the State municipal and local corporation laws and building rules, the State land
reform laws, State estate acquisition laws, the State tenancy laws etc.
B.

Laws relating to Employment and Labour:

Our Company has to comply with the labour laws prevailing in the country which are relevant to
our employees and also to contract labours who are engaged by the contractors employed by our
Company for various services at our stores, inter alia, including gift wrapping, security,
housekeeping, maintenance, alteration, valet services etc.
A brief synopsis of the labour laws that may be applicable to our Company are as follows:

Factories Act, 1948 : This is an Act to consolidate and amend the law regulating labour
in factories.

Payment of Wages Act, 1936 : This is an Act to regulate the payment of wages to
certain classes of employed persons.

Public Liability Insurance Act, 1991 : This is an Act to provide for public liability
insurance for the purpose of providing immediate relief to the persons affected by accident
occurring while handling hazardous substance and for matters connected therewith or
incidental thereto.

Workmens Compensation Act, 1923 : This is an Act to provide for the payment by
certain classes of employers to their workmen of compensation for injury by accident.

Industrial Disputes Act, 1947 : This is an Act to make provision for the investigation
and settlement of certain industrial disputes and for certain other purposes.

Contract Labour (Regulation and Abolition) Act, 1970 and Rules framed there
under: This is an Act to regulate the employment of contract labour in certain
establishments and to provide for its abolition in certain circumstances and for matters
connected therewith. The said Act, inter alia, mandates registration of establishments
employing contract labour, revocation of such registration in prescribed cases, effects of
non registration, prohibition of employment of contract labour, licensing of contractors etc.

Apart from the above, certain other industrial and labour legislations which are applicable are as
follows:

Employees Provident Fund and Miscellaneous Provisions Act, 1952 and Rules
framed thereunder
Employees State Insurance Act, 1948 and Rules framed thereunder
Maternity Benefit Act, 1961
Minimum Wages Act, 1948
Payment of Bonus Act, 1965 and Rules framed thereunder
Payment of Gratuity Act, 1972 and Rules framed thereunder

120

KHADIM INDIA LIMITED

C.

Laws relating to Intellectual Property:

The presence of our brand KHADIMS has grown over a period of time. We have created several
brand names and logos which are required to be registered under the Trade Marks Act, 1999.
We also have several captions and slogans which require registration under the Copyright Act,
1957. Further, we also have licence for live musical performances and for playing music in the
stores under the provisions of the Copyright Act.
The designs of the shoes manufactured by us are required to be registered under the Designs Act,
2000.
The Intellectual Property laws which are applicable to us have been discussed in brief hereinbelow:

Trade Marks Act, 1999 and the Trade Marks Rules, 2002
This is an Act to amend and consolidate the law relating to trade marks, to provide for
registration and better protection of trade marks for goods and services and for the
prevention of the use of fraudulent marks.
The Trade Marks Rules, inter alia, provides for the procedure for registration of the Trade
Marks application, its renewal, restoration, assignment and transmission. The Schedules to
the said Rules provide for fees and forms for the said purposes and also lays down the
classification of goods and services in which the goods the services are to be registered.

Copyright Act, 1957 and Copyright Rules, 1958


Broadly, copyright subsists in original literary, dramatic, musical and artistic works,
computer programme, cinematograph films and sound recording.
The Copyright Act, inter alia, lays down provisions for ownership of copyright and rights of
the owner, term of copyright, licences by owners of copyright, registration and
infringement of copyright.
The Copyright Rules, inter alia, lays down the procedure and prescribes Forms for
relinquishment of copyright, licence for translation, publication, reproduction and
registration of copyright etc.

The Designs Act, 2000 and the Designs Rules, 2001


The Designs Act prescribes for registration of design. The said Act specifically lays down
the essentials of a design to be registered and inter alia, provides for application for
registration of designs, copyright in registered designs etc.
The Design Rules, 2002, inter alia, lays down the procedure and prescribes Forms and
fees for application for registration if design, marking of articles, inspections and searches,
etc.

D.

Laws relating to Consumer Protection

Our Company is engaged in the manufacture of footwear and retail of the same alongwith retail of
other products in its retail business and by virtue of the same, our Company is exposed to
consumer protection law prevailing in the country.
A brief discussion of the said laws is as follows:

Consumer Protection Act, 1986 and Consumer Protection Rules.


The Consumer Protection Act, 1986 is an Act to provide for the better protection of the
interests of the consumers and for that purpose has made provisions for the establishment
of consumer councils and other authorities for the settlement of consumer disputes and
matter connected therewith.

121

KHADIM INDIA LIMITED

The Consumer Protection Rules, 1987, inter alia, provides for constitution of the Central
Consumer Protection Council, its procedures, additional powers of the National
Commission, State Commission and District Forums etc.
Some of the States have their own Consumer Protection Rules which are framed under the
Consumer Protection Act.
E.

Laws relating to Environment

As our Company is engaged in the manufacturing of footwear, certain environment laws may be
applicable to our manufacturing units, which would broadly include the following:

F.

The Environment (Protection) Act, 1986


The Water (Prevention & Control of Pollution) Act 1974: The Water (Prevention &
Control of Pollution) Act 1974
The Air (Prevention & Control of Pollution) Act, 1981: The Air (Prevention &
Control of Pollution) Act, 1981
Hazardous Wastes (Management and Handling) Rules, 1989
Rules framed under the Environment (Protection) Act, 1986, the Water
(Prevention & Control of Pollution) Act 1974 and the Air (Prevention & Control of
Pollution) Act, 1981
Other legislations application to our business:

Shops and Establishments legislations in various States


Our Company will be governed by the State Shops and Establishments legislations, as
applicable, in the States where it has stores. These legislations regulate the conditions of
work and employment in shops and commercial establishments and generally prescribe
obligations in respect of inter alia registration, opening and closing hours, daily and weekly
working hours, holidays, leave, health and safety measures and wages for overtime work.

In respect of our goods and products that we manufacture and retail, our Company is required to
comply with the provisions of the Standards of Weights and Measures Act, 1976 and the Rules
made thereunder, particularly the Standards of Weights and Measures (Packaged Commodities)
Rules, 1977. A brief discussion of the said Acts is as follows:

Standards of Weights and Measures Act, 1976 : This is an Act to establish standards of
weights and measures, to regulate inter-State trade or commerce in weights, measures and
other goods which are sold or distributed by weight, measure or numbers and for matters
incidental or connected thereto.

Standards of Weights and Measures (Enforcement) Act, 1985: This is an Act for the
enforcement of standards or weights and measures established by or under the Standards of
Weights and Measures Act, 1976 and for matters incidental or connected thereto.

Similarly, our Company is required to comply with the provisions of the Prevention of Food
Adulteration Act, 1954 and the Rules framed thereunder which is discussed hereinbelow:

Prevention of Food Adulteration Act, 1954: This is an Act which provides for the
prevention of adulteration of food. It, inter alia, provides for prohibition of import of certain
articles of food, prohibition of manufacture, sale etc. of certain articles of food, analysis of
food etc.

Prevention of Food Adulteration Rules, 1955: The Rules lays down rules, inter alia, for
qualification and duties of public analysts and food inspectors, sealing fastening and dispatch
of samples, packing and labeling of food, prohibition and regulation of sales, conditions of
sale and licence, use of food additives in food products etc.
The said Rules are prevalent Statewise and we have to conform to the same in the
respective States.

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KHADIM INDIA LIMITED

Certain other laws and regulations that may be applicable to our Company include the following:

G.

All fiscal laws including Income Tax, Excise laws, Sales Tax, VAT and ancillary local
tax laws
Equal Remuneration Act, 1976
Apprentices Act, 1961
Fatal Accidents Acts, 1855
Trade Union Act, 1926
Negotiable Instrument Act, 1881
Laws relating to Foreign Direct Investment (FDI) in retail business:

As per the Press Note no. 3 of 2006, the Government of India has decided to allow FDI up to 51%,
with prior Government approval, in retail trade of Single Brand products. This is, inter alia, aimed
at attracting investments in production and marketing, improving the availability of such goods for
the consumer, encouraging increased sourcing of goods from India, and enhancing
competitiveness of Indian enterprises through access to global designs, technologies and
management practices.
FDI up to 51% in retail trade of Single Brand products would be subject to the following
conditions:
i. Products to be sold should be of a Single Brand only.
ii. Products should be sold under the same brand internationally.
iii. Single Brand product-retailing would cover only products which are branded during
manufacturing.
FDI would be allowed only with prior approval of the Government. Application seeking permission
of the Government for FDI in retail trade of Single Brand products would be made to the
Secretariat for Industrial Assistance (SIA) in the Department of Industrial Policy & Promotion. The
application would specifically indicate the product/ product categories which are proposed to be
sold under a Single Brand. Any addition to the product/ product categories to be sold under
Single Brand would require a fresh approval of the Government.
The said Applications would be processed in the Department of Industrial Policy & Promotion, to
determine whether the products proposed to be sold satisfy the notified guidelines, before being
considered by the FIPB for Government approval.

123

KHADIM INDIA LIMITED

HISTORY AND CERTAIN CORPORATE MATTERS


We were incorporated as S.N. Footwear Industries Private Limited, by taking over the business of
S. N. Industries Limited, a partnership firm on December 03, 1981 under the provisions of the
Companies Act, 1956 vide registration no. 21-034337. The name of the Company was
subsequently changed to Khadim Chain Stores Private Limited pursuant to a fresh certificate of
incorporation dated April 17, 1998.
Vide a court order dated June 22, 2005 five of our group companies were amalgamated with
Khadim Chain Stores Private Limited. Thereupon, the company was converted into a public limited
company to become Khadim Chain Stores Limited, vide a fresh Certificate of Incorporation dated
June 24, 2005. The name of the Company was further changed to Khadim India Limited vide
certificate of incorporation dated August 26, 2005.
Todays Khadim India Limited is a consolidated entity of six of the Khadim group companies
wherein five of the Khadim group companies with synergic interests got amalgamated with our
Company in a restructuring exercise.
Scheme of merger/amalgamation
Vide an Order of the Honble High Court at Calcutta dated June 22, 2005, five of our group
companies namely Khadim Holdings Private Limited, Khadim Shoe Private Limited, Khadim
Industries Private Limited, Colt Enterprises Private Limited and Aar Ess Land Development Private
Limited (hereinafter referred to as the merged entities) were merged with us with effect from 1st
October, 2004. The restructuring exercise was done with a view to consolidate the operation of
stores operated by us through various subsidiaries under the brand name of Khadims and also to
facilitate cost effective regulatory compliance. Some of the salient features of the Scheme of
Amalgamation were as follows:
1.

The entire business and whole of the undertakings of Khadim Holdings Private Limited,
Khadim Shoe Private Limited, Khadim Industries Private Limited, Colt Enterprises Private
Limited and Aar Ess Land Development Private Limited, as on the appointed date of 1st day
of October, 2004 were transferred to and vested in our Company so as to become assets
and properties of our Company.

2.

All the employees of the Transferor Companies were to become the employees of the
Transferee/our Company on the same terms and conditions on which they were engaged
by the Transferor Companies without any interruption in the service at same terms and
conditions not less favourable than those subsisting at transferor Companies.

3.

In consideration of the transfer and vesting of the undertaking and the assets and
liabilities of Transferor companies and in consideration of the mutual covenants agreed to
in the Scheme, our Company agreed to allot Equity Shares to the existing shareholders in
the transferor companies (as metioned in section titled Notes to the capital structureCapital Structure beginning on page 44 of this Draft Red Herring Prospectus).

MILESTONES
Year

Events

1981

2001

Our Company was incorporated as a Private Limited company and began its
Whole Sale Business
The company graduated to retail through owned and franchised stores for
footwear products
Began South Indian operations through 4 company owned footwear retail
outlets
ERP implemented for the entire organization through Matrix

2001

The company started manufacture of footwear and leather products

2004

The company Commissioned Khadim Khazana at Kanchrapara the first super


store providing a large range of products
Accredited with ISO 9001:2000 for the manufacturing facility

1993
2000

2005

124

KHADIM INDIA LIMITED

2005

Amalgamation of five group companies into our Company

2006

250th Exclusive showroom opened

2007

Launch of KHADIMS EGARO brand of Departmental Stores

MAIN OBJECTS OF THE COMPANY


1.

To acquire and take over the Business now being carried on under the names and style of M/S
S. N. Industries at plot No. 22, Block A, Bangur Avenue, Kolkata 55 as a going concern with
all its assets and liabilities and with a view there to enter in to an Agreement after
incorporation of the Company.

2.

To carry on the Business of manufacturer, importer, exporter, buyer, seller, dealer, wholeseller
retailer, agency, broker, distributors, dealers, contractors, consignors, consignee and
franchisee of various footwear and related accessories made from natural and synthetic
leather, bags, suitcases, and allied products for industrial, domestic and commercial purpose.

3.

To carry on the business of manufacturer, importer, exporter, tanner, dealer, processor,


agent, broker, distributor and contractor in leather, hides, skin and leather substance.

4.

To acquire, take over, promotes, establish and carry on the business and trade of
Departmental stores dealing in all goods, Hotels and Restaurants, dealing in food provision and
drinks of all kinds.

5.

To carry on the business of manufacturer, importer, exporter, buyer, seller, broker, agent,
distributor, contractor and dealing in gold and also in all other precious metals, of all hues and
colours and of all levels of purity, in bullion form or in the form of Jewellery or artefacts and
decorative items or the like.

6.

To carry on business of manufacturer, processor, importer, exporter, buyer, seller, broker,


agent, distributor, contractor and dealing in all forms of precious, semiprecious and other
stones, whether in the form of jewellery or set in or attached to any jewellery or artefacts or
decorative items or the like or otherwise.

7.

To carry on business of manufacturer, processor, importer, exporter, buyer, seller, broker,


agent, distributor, contractor and dealing in all forms of imitation jewellery, fashion wear,
artefacts or decorative items whether made out of metals, crystals, glass, stones, terracotta,
textiles, leather or any other material or a combination thereof.

8.

To produce, buy, sell, import, export or otherwise deal in cinematographic films, advertisement
/ promotional films, educational films, documentary films, television films, television serials
(fictional or nonfictional), video films and video cassettes, animation films products of
innovative idea, including Software and Hardware and any other multimedia productions
through digital, analogue or any other technological medium including Direct-To-Home (DTH)
systems and to establish, import, purchase, exchange take on lease or hire, develop or
otherwise acquire and maintain and to sell or hire studios, laboratories, cinemas, picture
places, halls, theatres, multiplexes, web sites, web servers, equipments etc. for development,
production, processing, printing and exhibition of films and multimedia productions and to
carry on the business of projection, exhibition and distribution of cinematographic films,
television films, video films, advertisement /promotional films, educational films, documentary
films, television films, television serials (fictional or non-fictional), video films, animation films
and any other multimedia productions, and acquiring or selling rights therein and also to
launch satellite channels and / or buy electronic media time in various channels to air various
programmes either acquired or produced.

9.

To carry on the business of producer, importer, exporter, buyer, seller, broker, agent,
distributor, contractor and dealer in rice, wheat, cereals of all kind, spices (both in original and
ground form), sugar, jaggery, table salt and salt of all variety, edible oils, flour of all variety,
capable of being used for domestic and commercial purpose.

10. To carry on the Business of manufacturer, importer, exporter, buyer, seller, broker, agent,
distributor, contractor and dealer in Bleaching preparations, and other substances for laundry
use, cleaning, polishing, scouring and abrasive preparations;, soaps, perfumery, essential oils,
cosmetics, hair lotions, disinfectants, germicide and herbicide, dentifrices and allied products
for industrial, domestic and commercial purpose.

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KHADIM INDIA LIMITED

11. To carry on the Business of manufacturer, importer, exporter, buyer, seller, broker, agent,
distributor, contractor and dealer in all kinds of electrical, electronic goods and other white
goods and allied products for industrial, domestic and commercial purpose.
12. To carry on the Business of manufacturer, importer, exporter, buyer, seller, broker, agent,
distributor, contractor and dealer in garments of all type, home linen, bath linen, bed linen,
and other derivatives cotton and cotton substitutes for industrial, domestic and commercial
purpose.
13. To carry on the Business of manufacturer, importer, exporter, buyer, seller, broker, agent,
distributor, contractor and dealer in toys of all kinds.
14. To carry on the Business of manufacturer, importer, exporter, buyer, seller, broker, agent,
distributor, contractor and dealer in toys of all kinds all kinds of School and Office Stationary
items, drawing and painting instruments, writing instruments, water bottles , Tiffin box, school
bag, gift set, files, folders, note books, diaries for industrial, domestic and commercial
purpose.
CHANGES IN THE MEMORANDUM OF ASSOCIATION
Date
of
shareholders
Approval
January 30, 1990
October 30, 1990
April 24, 1996
November 10, 1997
January 12, 1999
April 12, 2005
April 12, 2005

April 12, 2005

August 8, 2005

Amendments
Increase in the authorized share capital of the company from Rs.
0.15 million to Rs. 0.50 million
Increase in the authorized share capital of the company from Rs.
0.50 million to Rs. 1 million
Increase in the authorized share capital of the company from Rs.
1 million to Rs. 2 million
The name of S.N. Footwear Industries Private Limited was
changed to Khadim Chain Stores Private Limited. The certificate
for the change of name was issued on April 17, 1998
Increase in the authorized share capital of the company from Rs.
2 million to Rs. 50 million
Increase in the authorized share capital of the company from Rs.
50 million to Rs. 250 million
Clause 4 was inserted and Clause B (i) was deleted in the
Memorandum of Association by way of a Special Resolution.
4. To acquire, take over, promotes, establish and carry on
the business and trade of Departmental stores dealing in
all goods, Hotels and Restaurants, dealing in food
provision and drinks of all kinds.
The name of Khadim Chain Stores Private Limited was changed
to Khadim Chain Stores Limited. The certificate for the change of
name was issued on June 24, 2005
Clauses 5, 6, 7 were inserted in the Memorandum of Association
by way of a Special Resolution.
5.

6.

7.

To carry on the business of manufacturer, importer,


exporter, buyer, seller, broker, agent, distributor,
contractor and dealing in gold and also in all other
precious metals, of all hues and colours and of all levels
of purity, in bullion form or in the form of Jewellery or
artefacts and decorative items or the like.
To carry on business of manufacturer, processor,
importer, exporter, buyer, seller, broker, agent,
distributor, contractor and dealing in all forms of
precious, semiprecious and other stones, whether in the
form of jewellery or set in or attached to any jewellery
or artefacts or decorative items or the like or otherwise.
To carry on business of manufacturer, processor,
importer, exporter, buyer, seller, broker, agent,
distributor, contractor and dealing in all forms of

126

KHADIM INDIA LIMITED

August 8, 2005
November 3, 2005

September 26, 2006

January 25, 2007

imitation jewellery, fashion wear, artefacts or decorative


items whether made out of metals, crystals, glass,
stones, terracotta, textiles, leather or any other material
or a combination thereof.
The name of Khadim Chain Stores Limited was changed to
Khadim India Limited. The certificate for the change of name
was issued on August 26, 2005
Clauses 8 were inserted in the Memorandum of Association by
way of a Special Resolution.
8. To produce, buy, sell, import, export or otherwise deal in
cinematographic films, advertisement / promotional
films, educational films, documentary films, television
films, television serials (fictional or nonfictional), video
films and video cassettes, animation films products of
innovative idea, including Software and Hardware and
any other multimedia productions through digital,
analogue or any other technological medium including
Direct-To-Home (DTH) systems and to establish, import,
purchase, exchange take on lease or hire, develop or
otherwise acquire and maintain and to sell or hire
studios, laboratories, cinemas, picture places, halls,
theatres, multiplexes, web sites, web servers,
equipments
etc.
for
development,
production,
processing, printing and exhibition of films and
multimedia productions and to carry on the business of
projection,
exhibition
and
distribution
of
cinematographic
films, television films, video films,
advertisement /promotional films, educational films,
documentary films, television films, television serials
(fictional or non-fictional), video films, animation films
and any other multimedia productions, and acquiring or
selling rights therein and also to launch satellite
channels and / or buy electronic media time in various
channels to air various programmes either acquired or
produced.
A. Insertion of new Sub-Clause t after the existing sub
clause s of Clause B relating to Objects Incidental or
Ancillary to the Attainment of the Main Objects under the
Principal Clause III [Object Clause]
To guarantee the payment of money secured by or
payable under or in respect of bonds, debentures,
debenture-stocks,
contracts,
mortgages,
charges,
obligations and other securities of any company or of any
authority, Central, State, Municipal, local or otherwise, or
of any person howsoever, whether incorporated or not
incorporated.
B. Insertion of new Sub-Clause u after the newly inserted
sub clause t of Clause B relating to Objects Incidental
or Ancillary to the Attainment of the Main Objects under
the Principal Clause III [Object Clause]
To apply for, purchase or otherwise acquire, protect and renew
in any part of the world patents, licences, concessions, patent
rights, trade marks, designs and the like, conferring any
exclusive or non-exclusive or limited right to their use, any
secret or other information regarding any invention or research
which may seem capable of being used for any of the purposes
of the Company.
Clauses 9, 10, 11,12,13,14 were inserted in the Memorandum of
Association by way of a Special Resolution.
9.

To carry on the business of producer, importer,


exporter, buyer, seller, broker, agent, distributor,

127

KHADIM INDIA LIMITED

August 6, 2007

contractor and dealer in rice, wheat, cereals of all kind,


spices (both in original and ground form), sugar,
jaggery, table salt and salt of all variety, edible oils,
flour of all variety, capable of being used for domestic
and commercial purpose.
10. To carry on the Business of manufacturer, importer,
exporter, buyer, seller, broker, agent, distributor,
contractor and dealer in Bleaching preparations, and
other substances for laundry use, cleaning, polishing,
scouring and abrasive preparations;, soaps, perfumery,
essential oils, cosmetics, hair lotions, disinfectants,
germicide and herbicide, dentifrices and allied products
for industrial, domestic and commercial purpose.
11. To carry on the Business of manufacturer, importer,
exporter, buyer, seller, broker, agent, distributor,
contractor and dealer in all kinds of electrical, electronic
goods and other white goods and allied products for
industrial, domestic and commercial purpose.
12. To carry on the Business of manufacturer, importer,
exporter, buyer, seller, broker, agent, distributor,
contractor and dealer in garments of all type, home
linen, bath linen, bed linen, and other derivatives cotton
and cotton substitutes for industrial, domestic and
commercial purpose.
13. To carry on the Business of manufacturer, importer,
exporter, buyer, seller, broker, agent, distributor,
contractor and dealer in toys of all kinds.
14. To carry on the Business of manufacturer, importer,
exporter, buyer, seller, broker, agent, distributor,
contractor and dealer in toys of all kinds all kinds of
School and Office Stationary items, drawing and painting
instruments, writing instruments, water bottles , Tiffin
box, school bag, gift set, files, folders, note books,
diaries for industrial, domestic and commercial purpose.
Existing Clause 2 was replaced by way of a Special Resolution
with the new Clause 2 as mentioned below:
To carry on the Business of manufacturer, importer, exporter,
buyer, seller, dealer, wholeseller retailer, agency, broker,
distributors, dealers, contractors, consignors, consignee and
franchisee of various footwear and related accessories made
from natural and synthetic leather, bags, suitcases, and allied
products for industrial, domestic and commercial purpose.

SUBSIDIARIES
Our Company does not have any subsidiary.
HOLDING COMPANY OF THE ISSUER COMPANY
At present the company Knightsville Private Limited holds 72.00% of the equity capital of our
company and is the holding company as per section 4A of the Companies Act 1956. However, upon
the completion of the issue, the company Knightsville Private Limited would cease to be our
holding company.
ADVERTISING AGREEMENT
The Company has entered into an advertisement agreement dated August 10, 2007 with BCCL for
the purpose of advertisement of its products or services, in BCCL print publications and non-print
media for five years starting from August 10, 2007 and ending on August 9, 2010. We have
agreed to release advertisements for a total value of Rs. 50 million (net of agency commission) in
the BCCL print publications and non print media during the three sub terms (years) as defined in
the agreement. As per the provisions of the agreement, the amount spent by us shall be Rs. 15

128

KHADIM INDIA LIMITED

million in each of the first two sub terms and Rs. 20 million in the third sub term. Under the terms
of the said agreement, we have paid the entire sum of Rs. 50 million to BCCL. In case the amount
specified for each Sub-Term is not spent in any of those Sub-Terms, the unspent amount shall be
carried forward to the subsequent years, but not beyond 4 months after the end of the each Subterm in which case it shall lapse. The amount of such carry forward to a subsequent year shall not
be more than 25 % of the yearly amount. The advertisements spend designated for each year can
increase, and the differential increase shall be deducted from the balance. The benefits and
incentives provided in the Advertising Agreement are exclusive to the Company and shall not be
available for any co-branded advertisements.
SHAREHOLDERS AGREEMENTS
Shardeholders Agreement dated August 10, 2007 (SA) between our Company,
Bennett & Coleman & Co. Limited (BCCL) and Mr. Siddhartha Roy Burman
As per the SA, BCCL agreed to subscribe to 500,000 Equity Shares at a price of Rs. 100 per Equity
Share.
The key provisions of the SA are as follows:
Anti Dilution Rights: If at any time prior to the Initial Public Offer (IPO) and after the entry of
BCCL, the Company proposes to issue or allot any Share or convertible security, the Company will
inform BCCL about such proposed allotment through a letter setting out the terms of issue and
identity of the proposed investor. If the issue price for the proposed allotment of Shares (other
than the allotment of Share pursuant to any Employee Stock Option Plan of the Company) is below
the price at which the shares are issued to BCCL (i.e. below Rs. 100 per share) then BCCL shall
have the irrevocable right (but not the obligation) to acquire such number of Shares of the
Company at par value, as may be necessary, so that the average issue price of all the Share held
by BCCL after such further allotment is equal to the issue price of the Shares proposed to be
allotted as per the notice of the Company. The company shall under no circumstances make its
IPO at a price (floor price) less than the price at which BCCL has entered (after adjusting for Bonus
and rights shares, if any)
Directors and Management: The management and the operational control of the Company shall
solely vest in the Company and its Board of Directors. BCCL shall be entitled to nominate/appoint
one Director on the Board of Directors of the Company at the discretion of the Company.
Passing of Resolution: Under the terms of the said SA, as long as BCCL holds not less than 2%
shares in the share capital of our Company, any decision having any bearing on the rights of BCCL
set out in the Agreement shall be taken after written prior consent of BCCL.
Exit option: Our Company has to come out with an initial public offering for the listing of its
Equity Shares on NSE and/or BSE within a period of 36 months from the closing date (defined
under the agreement). If the Equity Shares are not listed within the given time frame, then at
BCCLs option, our Promoters will buy back the Equity Shares held by BCCL or shall find a third
party buyer to buy the shares held by BCCL at the price so as to give BCCL an annualized return of
18% per annum.
Tag Along Provisions: If our Promoters propose to sell, transfer, assign any Equity Shares in
one transaction or in series of transactions to a third party (whether through private sale or stock
exchange), at any time, then BCCL shall have the right (but not the obligation) to participate in
the sale and transfer of the Equity Shares to such third party on proportionate basis.
Termination: The SA will terminate if BCCL ceases to hold any Equity Shares of the Company or
on the expiry of three years from the closing date, whichever is earlier.

129

KHADIM INDIA LIMITED

STRATEGIC PARTNERS
Exclusive Dealership Agreements
We have entered into exclusive dealership/ dealer agreement with various parties across India.
Such agreements were entered between the owners of the store and our company. The exclusive
dealership/ dealer agreements have similar terms and conditions, summary of which is as follows:
Stocks:
The Exclusive Dealer shall buy the Products directly from the Company at a price namely Exclusive
Dealer Price to sell the said Designated Products from its own Premises. Dealer shall lift and carry
the Designated Products from the Designated Distribution Centre at its own cost and the Company
shall have no rights or liabilities towards the stock of the Designated Products which has been
purchased and lifted by the Exclusive dealer from the Company for being displayed and sold by the
Exclusive Dealer through the Premises. Dealers sell the Designated Products from its Premises as
per target to be fixed by the Company from time to time. Interior Decoration in the Showroom
done as per the specification of the Company by a Company Approved Vendor at his own cost and
expenses. Hardware and software as approved/ given by the Company with the specifications
provided by the Authorized Representative of the Company at his/its own cost. Dealers shall
submit daily sale report along with stock report and other allied information in relation to the
current position of the business to the Company as sought for from time to time. They shall display
signage, hoarding, poster, banner and other materials bearing Companys trade name, trade mark
logo, artistic work, brand name etc. at the front portion or other places of the Showroom, in such a
manner as may be agreed / approved by the Company. Dealers are not allowed to display, sell and
or otherwise deal with any Product other than the Product by the Company from the Premises
approved by the Company. They shall not use any other brand name, trademark or artistic work
other than those supplied by the Company. Dealers shall not claim any credit facility from the
Company for lifting goods from the Distribution Centre under any circumstances.
Consideration:
The consideration for agreement shall be the difference between the Retail Sale Price specified by
the Company from time to time and the exclusive dealer Price.
Statutory compliance:
The Exclusive Dealer shall remain liable for all statutory compliance in relation to its functioning as
such and thus shall comply with all the provisions of laws and regulations of the Central and State
Governments, and of local authorities in the conduct of its business and shall keep Company
saved, harmless and indemnified against any loss the Company may suffer due to violation of any
such laws and regulations by the Exclusive Dealer.
Tenure:
The tenure of Agreement shall be 3 (three) year from the Commencement Date.
Termination:
Either of the parties herein shall have the right to terminate the Agreement by serving on the
other 60 (sixty) days prior notice in writing to that effect and on expiration of the period of such
notice, the Agreement shall stand revoked/cancelled, save and except the un-expired rights,
obligations and unfulfilled commitments, if any, under these presents, unless specifically exempted
in writing.
Note: The basic difference between Exclusive Dealership and Dealer is that Exclusive Dealer shall
get the interior decoration in the showroom as per our specificatiosn, where as in the case of
Dealer, they are not required do this.

130

KHADIM INDIA LIMITED

FINANCIAL PARTNERS
We do not have any financial partners.

131

KHADIM INDIA LIMITED

OUR MANAGEMENT
As per Article 92 of the Articles of Association, the Company must have a minimum of three (3)
and a maximum of twelve (12) Directors.
Presently, our Company has six (6) Directors out of which two are Executive Directors and four (4)
are Non- Executive Directors.
Board of Directors
The following table sets forth the details regarding the Board of Directors:
Sl.
No.

Name, Designation, Fathers


name, Address, DIN No.,
Occupation and Term of
Appointment
Mr. Satya Prasad Roy Burman
Chairman cum Whole-Time
Director
S/o Late Adinath Roy Burman
EC-212, sector I,
Salt Lake,
Kolkata 700 091
DIN No. 00050864
Occupation: Business
Term: upto 31/03/2008

Mr. Siddhartha Roy Burman


Managing Director
S/o Mr. Satya Prasad Roy Burman
BH 164 Sector II,
Salt Lake,
Kolkata 700 091
DIN No. 00043715
Occupation: Business
Term: upto 31/03/2008
Mrs. Tanusree Roy Burman
Director
W/o Mr. Siddhartha Roy Burman
BH 164 Sector II,
Salt Lake,
Kolkata 700 091
DIN No. 01582508
Occupation: Business
Term: Liable to retire by Rotation
Mr. Indra Nath Chatterjee
Director
S/o Late Monishi Nath Chatterjee
Row House No. 2,
Velentine Apartment,
General A.K. Vaidya Marg, Malad
East,
P.O. Malad, Mumbai 400 097
DIN No. 00122677
Occupation: Retired
Term: Liable to retire by Rotation

Date of
Appointment

Since
Incorporation

September
25, 1990

Other Directorship

1. Knightsville Private Limited


2. Moveiwallah Communication
Private Limited
3. Sheila Departmental Store
Private Limited
4. Khadim Development
Company Private Limited
5. Khadim Financial Services
Private Limited
6. Calcutta Leather Products and
Footwear Park (a section 25
company)
1. Knightsville Private Limited
2. Moveiwallah Communication
Private Limited
3. Sheila Departmental Store
Private Limited
4. Khadim Development
Company Private Limited
5. Khadim Financial Services
Private Limited

June 20,
2007
NIL

March 08,
2006

NIL

132

KHADIM INDIA LIMITED

Prof. Ashoke Kumar Dutta


Director
S/o Late Saliesh Chandra Dutta
50, Jatin Das Road,
Kolkata 700 029
DIN No. 00045170
Occupation: Service
Term: Liable to retire by Rotation

March
2006

Prof. Amar Nath Sadhu


Director
S/o Late Anath Nath Sadhu
73/1A, Palm Avenue,
Kolkata 700 019
DIN No. 00052579
Occupation: Service
Term: Liable to retire by Rotation

March
2006

08,

1. Allindia Technologies Limited


2. Computech International
Limited
3. Orissa Minerals Development
Co. Limited
4. International Sign Association
of India
5. Batchmates.com Private
Limited
6. Garden Reach Ship Builders
Limited
7. Intellisys Technologies &
Research Limited
08, 1. Tega Industries Limited
2. MM Aqua Technologies Limited
3. IFGL Limited
4. Heritage Health Services
Private Limited

BRIEF PROFILE OF DIRECTORS


Mr. Satya Prasad Roy Burman
Mr. Satya Prasad Roy, 77 years, is our Chairman cum Whole Time Director. In 1965, Mr. Roy
Burman took over K.M.Khadim & Co., then owned by Mr. K. M. Khadim. Thereafter, the business
of Khadims grew all over Eastern and North Eastern India under his able leadership. He has
tremendous contribution in making Kolkata Footwear Industry a vibrant and competitive industry
at par with other centers of excellence. The Achievements of Khadims would not have been
possible without his vision and values. It was he who made the common man to believe that they
can actually Afford a Branded Footwear.
Mr. Siddhartha Roy Burman
Mr. Siddhartha Roy Burman, 46 years, is our Managing Director and son of the founder Chairman
of Khadim Group Mr. S P Roy Burman. After completing his Graduation in Commerce in the year
1980, he joined the Khadims Group. With over 27 years of experience in the Group, he has now
been able to create a wide spread distribution network. He has been instrumental in taking the
footwear business of Khadims to the present heights through careful streamlining of operations,
processes, HR initiatives and through brand building. The recent diversification into Lifestyle
Retailing was the brainchild of Mr. Siddhartha Roy Burman.
Mrs. Tanusree Roy Burman
Mrs. Tanusree Roy Burman, 39 years, is one of the Non-executive Directors of our Company. She
is the wife of Mr. Siddhartha Roy Burman, our Managing Director and has been appointed as
Directors w.e.f. 20 June 2007 on resignation of Mrs. Namita Roy Burman from the Board. She
provided valuable inputs on changes in fashion and latest trends in women wear.
Mr. Indra Nath Chatterjee
Mr. Indra Nath Chatterjee, 62 yrs, is one of the non-executive Independent Director(s) of our
company. Mr. Chatterjee, an Alumnus of the Indian Institute of Management, Calcutta (IIMC) is
a fellow member of the Institute of Company Secretaries of India (ICSI) and the fellow member
of the Institute of Cost and Works Accountants of India (ICWAI) and comes with the rich
experience of 35 years in the related field and has served a number of renowned companies in the
capacity of Senior Executive/Director/Advisor/Consultant including ONGC, the Hinduja Group,
TELCo, Indian Airlines etc.

133

KHADIM INDIA LIMITED

Prof. Ashoke Kumar Dutta


Prof. Ashoke Kumar Dutta, 59 yrs, is one of the non-executive Independent Director(s) of our
company. Prof. Dutta, an Alumnus of the Indian Institute of Management, Calcutta (IIMC) is
currently the Director of the Indian Institute of Social Welfare and Business Management
(IISWBM). Prof. Dutta comes with an experience of more than 30 years and has served/is
serving a number of renowned companies in the capacity of Director/Advisor/Consultant.
Prof. Amar Nath Sadhu
Prof. Amar Nath Sadhu, 67 yrs, is one of the non-executive Independent Director(s) of our
company. Prof. Sadhu has been a Managing Partner of Pricewaterhouse. Currently, he is an
advisor to the Indian Institute of Technology, Kharagpur. Prof. Sadhu comes with the rich
experience of more than 40 yrs and has served/is serving a number of renowned companies in the
capacity of Director/Advisor/Consultant.
The rich academic profile coupled with diversified experience of all the Directors helps the
company to undergo vertical as well as horizontal expansion. The Company expects that their
visionary ideas and suggestions will further aid in its overall expansion.
BORROWING POWERS OF THE BOARD
Pursuant to a resolution of the shareholders of the Company dated August 08, 2005, the Board
has been authorised to borrow sums of money for the purpose of the Company upon such terms
and conditions and with or without security as the Board may think fit, provided that the money or
monies to be borrowed together with the monies already borrowed by the Company (apart from
the temporary loans obtained from the Companys bankers in the ordinary course of business)
shall not exceed, at any time, a sum of Rs. 1000 million.
DETAILS OF
DIRECTORS:

REMUNERATION,

APPOINTMENT

AND

SERVICE

CONTRACT

WITH

The terms of reappointment and remuneration of Mr. Satya Prasad Roy Burman, Chairman cum
Whole time Director and Mr. Siddhartha Roy Burman, Managing Director is as follows:
Terms
Period
of
Agreement
Salary
House
Rent
Allowance
Incentive

Perquisites
Motor Car

Medical
Reimbursement
Sweeper,
Gardener,
Watchman,
Personal
Attendant
Assets Provided
by
the
Company

Chairman and Whole-Time


Director
1st April, 2005 to 31st March, 2008

Managing Director

Rs. 1,68,000/- per month


40% of Basic Salary

1st April, 2005 to 31st March, 2008


(both days inclusive)
Rs. 1,68,000/- per month
40% of Basic Salary

Not Exceeding 50% Of Basic Salary


payable quarterly, for each financial
year, as may be decided by the Board
of Directors from time to time

Not Exceeding 50% Of Basic Salary


payable quarterly, for each financial
year, as may be decided by the Board
of Directors from time to time

The Company shall provide motor Car


with chauffeur and the perks shall be
valued in accordance with the Income
Tax Rules, 1962
Not exceeding 10% of Basic Salary

The Company shall provide motor Car


with chauffeur and the perks shall be
valued in accordance with the Income
Tax Rules, 1962
Not exceeding 10% of Basic Salary

As per Company Policy

As per Company Policy

Depreciation on such assets or cost of


hiring of such assets, as may be
applicable, not exceeding 10% of
Basic Salary

Depreciation on such assets or cost of


hiring of such assets, as may be
applicable, not exceeding 10% of
Basic Salary

134

KHADIM INDIA LIMITED

Telephone
Maximum of Rs. 2500/- per month
Maximum of Rs. 2500/- per month
Leave
Travel Not exceeding 12% of Basic Salary
Not exceeding 12% of Basic Salary
Allowance
Earned/Privilege As per Company Policy
As per Company Policy
Leave
Note: The emoluments and benefits shall be subject to taxes as may be applicable
We have received the approval from the Government of India, Ministry of Corporate Affairs vide
their letter no. 12/225/2007-CLVII dated July 06, 2007 under section 310 and 198(4)/309(3) of
the Companies Act, 1956 enabling our Chairman and Whote Time Director for a total remuneration
not exceeding Rs. 4.4 Mn per annum.
Another application has already been made for the remuneration of our Managing Director (MD)
wherein revised terms have also been included as per the new proposed contract for which grant
of such approval is awaited. In case the approval for the revised terms is received then
remuneration would be payable to our MD with effect from January 1, 2007 as per the revised
terms.
Minimum Remuneration
In the event of absence or inadequacy of profits of the company in any financial year, the
remuneration payable to Mr. Satya Prasad Roy Burman, Chairman cum Whole-Time Director and
Mr. Siddhartha Roy Burman, Managing Director shall be such minimum remuneration as might be
permissible under Sections 198 and 309 and other applicable provisions of the Companies Act,
1956 read with Schedule XIII thereto.
Terms and Conditions
i.

The Board or its constituted Committee may review from time to time the above
remuneration subject to the approval of the Members of the Company.

ii.

The aggregate money value of the total remuneration payable to executive Directors shall
not exceed such percentage of the net profit of the company, as the Board of Directors
may deem fit and appropriate, however subject to the overall statutory limit as applicable
from time to time.

iii.

As long as the executive Director(s) functions in the company they shall not be entitled to
enter any business arrangement with the company directly by himself or through his
relative or through any Body Corporate of firm.

Terms and Conditions of Employment of Non-Executive Directors


The non-executive Director(s) do not have service contracts with the Company. All the nonexecutive Director(s) has been appointed pursuant to a Board Resolution subject to the approval of
shareholders in the ensuing General Meeting of the company. The non-executive Director(s) are
not entitle to receive any remuneration from the company except the sitting fees for Board and
Committee meetings subject to the discretion of the Board and the overall Statutory limit
prescribed from time to time.
CORPORATE GOVERNANCE
The provisions of the Listing Agreement to be entered into with the Stock Exchanges with respect
to corporate governance and the SEBI Guidelines in respect of corporate governance will be
applicable to our Company immediately upon the listing of our Companys Equity Shares on the
Stock Exchanges. Our Company undertakes to adopt the corporate governance code as per Clause
49 of the Listing Agreement to be entered into with the Stock Exchanges prior to listing. Our
Company undertakes to comply with such provisions, including with respect to the appointment of
independent directors to its Board and the constitution of the Audit Committee, the
Remuneration/Compensation Committee and the Shareholders/Investors Grievance Committee.

135

KHADIM INDIA LIMITED

Committees of the Board


We have constituted the following committees of our Board of Directors for compliance with
corporate governance requirements:
(a) Audit Committee
(b) Remuneration / Compensation Committee
(c) Shareholders/ Investors Grievance Committee
(a) Audit Committee
We have an Audit Committee, which has been constituted pursuant to provisions of the Companies
Act, 1956. The Audit Committee was approved and constituted and formed by a meeting of the
Board of Directors held on March 8, 2006.
The Audit Committee comprises of the following Directors:
Sl.
No.
1
2
3
4

Name of the Committee Member


Prof. Amar Nath Sadhu
Prof. Ashoke Kumar Dutta
Mr. Indra Nath Chatterjee
Mr. Joydev Sengupta

Category

Position

Independent Director
Independent Director
Independent Director
Company Secretary &
Head Legal

Chairman
Member
Member
Secretary

General Functions and Powers of the Audit Committee

Overseeing the companys financial reporting process and the disclosure of its financial
information to ensure that the financial statement is correct, sufficient and credible.

Recommending to the Board, the appointment, re-appointment and, if required, the


replacement or removal of the statutory auditor and the fixation of audit fees.

Approval of payment to statutory auditors for any other services rendered by the statutory
auditors.

Appointment, removal and terms of remuneration of internal auditors.

Monitoring the use of the proceeds of the proposed initial public offering of the Company

Reviewing with the management, the annual financial statements before submission to
the Board for approval, with particular reference to :

Matters required to be included in the Directors Responsibility Statement to be


included in the Boards report in terms of clause (2AA) of Section 217 of the
Companies Act 1956;
Changes if any, in accounting policies and practices and reasons of the same;
Major accounting entries involving estimates based on the exercise of judgement
by management;
Significant adjustments made in the financial statements arising out of audit
findings;
Compliance with listing and other legal requirements relating to the financial
statements;
Disclosure of any related party transactions
Qualifications in the draft audit report

Reviewing, with the Management, the quarterly financial statements before submission to
the Board for approval.

Reviewing with the management, performance of statutory and internal auditors, and
adequacy of the internal control systems for the purpose of financial reporting.

136

KHADIM INDIA LIMITED

Reviewing the adequacy of internal audit function, if any including the structure of the
internal audit department, staffing and seniority of the official heading the department,
reporting structure, coverage and frequency of internal audit.

Discussions with internal auditors on any significant findings and follow up thereon.

Reviewing internal audit reports in relation to internal control weaknesses.

Reviewing management letters/ letters of internal control weaknesses issued by the


statutory auditors.

Reviewing the findings of any internal investigation by the internal auditors into matters
where there is suspected fraud or irregularity or a failure of internal control systems of a
material nature and reporting the matter to the Board.

Discussion with statutory auditors before the audit commences, about the nature and
scope of audit as well as post- audit discussion to ascertain any area of concern.

To look into the reasons for substantial defaults in the payment to the depositors,
debenture holders, shareholders (in case of non- payment of declared dividends) and
creditors.

To review the functioning of the whistle blower mechanism, when the same is adopted by
the Company and is existing.

To review Management discussion and analysis of financial condition and results of


operation;

To review Statement of significant related party transaction (as may be defined by the
Audit Committee) submitted by the Management;

Carrying out such other function as may be specifically referred to the Committee by the
Board of Directors and/or other Committee(s) of the Directors of the Company.

(b) Remuneration/Compensation Committee


The Remuneration/Compensation Committee was approved and constituted in the meeting of the
Board of Directors held on April 17, 2006 and presently comprises the following Directors:
Sl.
No.
1
2
3
4

Name of the Committee Member

Category

Position

Prof. Ashoke Kumar Dutta


Prof. Amar Nath Sadhu
Mr. Indra Nath Chatterjee
Mr. Joydev Sengupta

Independent Director
Independent Director
Independent Director
Company Secretary
Head Legal

Chairman
Member
Member
Secretary

&

Terms of Reference
Recommend to the Board, the remuneration packages of the Companys Managing/Joint
Managing/Deputy Managing/Whole time/ Executive Directors, including all elements of
remuneration package (i.e. salary, benefits, bonuses, perquisites, commission, incentives, stock
options, pension, retirement benefits, details of fixed component and performance linked
incentives along with the performance criteria, service contracts, notice period, severance fees
etc.);
(c) Shareholders/Investors Grievance Committee
The Shareholders/Investors Committee was approved and constituted in the meeting of the Board
of Directors held on April 24, 2007 and presently comprises the following Directors:

137

KHADIM INDIA LIMITED

Sl.
No.
1
2
3
4

Name of the Committee Member

Category

Position

Mr. Indra Nath Chatterjee


Prof. Ashoke Kumar Dutta
Mr. Siddhartha Roy Burman
Mr. Joydev Sengupta

Independent Director
Independent Director
Managing Director
Company Secretary
Head Legal

Chairman
Member
Member
Secretary

&

Duties and Responsibilities


The following are the duties of the Committee:

To attend to share transfer formalities at least once in a fortnight;

To report to the Board about decisions taken at the meeting periodically and noted by the
Board of Directors;

To refer the rejection of transfer (on grounds other than non-compliance of technical
requirements) to the Board of Directors for decision;

To attend to the investors complaints, solve and report to the Board as per requirements;

To attend the assignments delegated by the Board of Directors relating to the


Investors/Shareholders matters.

Other Committees:
In addition to the above, our Board constitutes, from time to time, such other committees, as may
be required, for the efficient functioning and smooth operations, namely:
a)
b)
c)
d)

Banking Committee
Acquisition of Immovable Property Committee
IPO Committee
Legal Committee

SHAREHOLDING OF DIRECTORS
Sl.
No.

Name of Director

Mr. Satya Prasad Roy Burman

2
3
4
5
6

Mr. Siddhartha Roy Burman


Mrs. Tanusree Roy Burman
Mr. Indra Nath Chatterjee
Prof. Ashoke Kumar Dutta
Prof. Amar Nath Sadhu
Total

No. of Shares held

Pre-issue % age
Shareholding

1,240,749

10.22%

324,885
60
Nil
Nil
Nil
1,565,694

2.68%
Negligible
Nil
Nil
Nil
12.90%

INTEREST OF DIRECTORS
All the directors of Khadim India Limited may be deemed to be interested to the extent of fees, if
any, payable to them for attending meetings of the Board or Committee thereof as well as to the
extent of other remuneration and/or reimbursement of expenses payable to them as per the
applicable laws. The Directors may also be regarded as interested in the shares & dividend payable
thereon, if any, held by or that may be subscribed by and allotted/transferred to them or the
companies, firms and trust, in which they are interested as Directors, Members, partners and or
trustees. All Directors may be deemed to be interested in the contracts, agreements
/arrangements entered into or to be entered into by Khadim India Limited with any Company in
which they hold Directorships or any partnership firm in which they are partners as declared in
their respective declarations. The Chairman cum Whole-Time Director and Managing Director of

138

KHADIM INDIA LIMITED

Khadim India Limited are interested to the extent of remuneration paid to them for services
rendered to the Company (For more details, please refer Related Party Disclosures as mentioned
on page no. 186 of the Auditors Report given in this Draft Red Herring Prospectus). Further, the
Directors are interested to the extent of Equity Shares that they are holding and or allotted to
them out of the present Issue, if any, in terms of the Draft Red Herring Prospectus and also to the
extent of any dividend payable to them and other distributions in respect of the said Equity
Shares.
Except as stated otherwise in this Draft Red Herring Prospectus, the Company has not entered into
any Contract, Agreements or Arrangements during the preceding two years from the date of this
Draft Red Herring Prospectus in which the Directors are interested directly or indirectly and no
payments have been made to them in respect of the contracts, agreements or arrangements which
are proposed to be entered with them.
The Directors do not have any interest in any property acquired by our Company within two years
of the date of this Draft Red Herring Prospectus.
CHANGES IN DIRECTORS DURING LAST THREE YEARS
Sl. No.
1
2
3
4
5
6

Name
Mr. Indranath Chatterjee
Mr. Ashoke Kumar Dutta
Mr. Amar Nath Sadhu
Mr. Partha Roy Burman
Mrs. Namita Roy Burman
Mrs. Tanusree Roy Burman

Date of Change
March 08, 2006
March 08, 2006
March 08, 2006
March 29, 2007
June 20, 2007
June 20, 2007

139

Reason
Appointed as Additional Director
Appointed as Additional Director
Appointed as Additional Director
Cessation from Directorship
Resignation from Directorship
Appointed as Additional Director

MANAGEMENT ORGANIZATION STRUCTURE

KHADIM INDIA LIMITED

KEY MANAGEMENT PERSONNEL


Name
Designation Qualification
Suman
Barman Roy
Arup Ghosh

President

Ishani Ray

Chief
Financial
officer

Manish
Chakraborty
Tapan Basu

COO

Experience
Overall
in the Co. Experience
17

K M Khadim

10 Yrs

15

M.Com, FCA

1 Yr

16 Yrs

Khadim
Exports
Saregam
India Limited
(A RPG group
Company)
Dunlop India
Limited
Khadim
Exports

10 Yrs

21 Yrs

Matriculate

10 Yrs

18 Yrs

Swarnendu
Chatterjee

B.Sc.,
DME,
PGDHRM

1 Yr

23 Yrs 9
Months

Abhishek
Kumar

Vice President
- LFR division

9 Months

14 Yrs

Joydev
Sengupta

Company
Secretary &
Head - Legal

MBA
(Marketing),
BE
(Mech.
Engg.)
B. Com (H),
ACS,
NCFM
(Corp
Gov.
Module)

3 Yrs

8 Yrs 1
Month

10 Yrs

13 Yrs

1 Yr 9
months
5 yrs 10
Months

MBA/PGDM
(Marketing)

Aranya Ray
Arindam
Roy Barman

Atanu Dutta

Lovelock
Lewes
Business

10 Yrs

B. Com

DGM Strategic
Planning
DGM
Logistics
DGM - Buying
&
Merchandising
and
Manufacturing
National Sales
Manager
(DGM)

Past
Employments

B.Com
(Hons), FCA
B. Com

Vice present
Projects
Vice president
- Corporate
Services
Vice President
HRM

Tapas
Ghosh

Last
Employment

B.Com (H)

M.Sc, PGDCA
B. Com

&

George
williamson
Assam Limited
Dunlop
India
Limited
Business

Infovision
Software
Private
Limited
Pantaloon
Retail
India
Limited

Tractors India
Limited

Initiating
Explosives
Systems
Private
Limited
(A
subsidiary of
ICI
India
Limited)
K M Khadim

Orr, Dignam &


Co., Solicitors;
Balmer Lawrie
& Co. Ltd.

8 Yrs 9
Months
10 yrs 6
Months

ITC Limited

ICI
Limited

1 Yr 6
Months

14 Yrs 6
Months

VIP
Industries
Limited
Shaw Wallace
Breweries
(SAB
Miller
Group)
Matrix

Joydeep
Basu Roy

DGM
Marketing

PGDBA,
BE
(Mech. Engg.)

2 Yrs 7
Months

10 yrs 9
Months

Kaliprasad
Majumder

Sr. Manager
Systems

B.Sc. (Hons.),
Dip.
In
Computer
Operation,
Dip
in
Programming
Tech., Dip. In
DTP

5 Yrs

15 Yrs

Subir
Rakshit

Head Internal Audit

B.Com, ACA

1 Yr

14 Yr

141

Usha
Martin
Industries
Limited

India

Bajaj
Auto
Finance
Limited

Maheshwari
& Associates

MRF Limited,
TTK
Prestige
Limited

DSPSC, E&Y,
Lovelock
&
Lewes

KHADIM INDIA LIMITED

SHAREHOLDING OF THE KEY MANAGERIAL PERSONNEL


No Key Managerial Personnel, other than Mr. Satya Prasad Roy Burman, Chairman cum Whole
Time Director and Mr. Siddharth Roy Burman, Managing Director are holding any shares of the
company.
BONUS OR PROFIT SHARING PLAN FOR OUR KEY MANAGERIAL EMPLOYEES
We do not have any profit sharing plan for the Managerial personnel. We make bonus payments to
the employees based on their performance, which is as per the terms of their appointment.
CHANGES IN KEY MANAGERIAL PERSONNEL DURING THE LAST THREE YEARS
Name

Bikram Gupta
Somnath Sarkar
Manoj Agarwal

Designation

Reason

Resignation

Date of
Resignation/
Appointment
November 30, 2006

COO

Resignation

October 06, 2006

DGM- Finance & Accounts

Resignation

August 25, 2006

Head Procurement

Swarnendu
Chatterjee
Subir Rakshit

Vice president - HRM

Appointment

May 17, 2006

Head - Internal Audit

Appointment

April 26, 2006

Ishani Ray

Chief Financial Officer

Appointment

March 22, 2006

GM-HR & Admin

Resignation

February 27, 2006

National sales Manager


(DGM)
DGM - Logistics

Appointment

November 01, 2005

Appointment

August 13, 2005

DGM - Marketing

Appointment

October 04, 2004

Subhasish Roy
Atanu Dutta
Aranya Ray
Joydeep Basuroy

EMPLOYEES SHARE PURCHASE SCHEME/EMPLOYEE STOCK OPTION SCHEME


We do not have any stock option scheme or stock purchase scheme for the employees of our
Company.
PAYMENT OR BENEFIT TO THE OFFICERS OF COMPANY
Except statutory benefits upon termination of their employment in our Company or
superannuation, no officer of our Company is entitled to any benefit upon termination of his
employment in our Company.

142

KHADIM INDIA LIMITED

OUR PROMOTERS AND PROMOTER GROUP


Mr. Satya Prasad Roy Burman, founder Chairman took over the business of K.M. Khadim & Co.
then owned by Mr. K. M. Khadim in 1965. Mr. Satya Prasad Roy Burman is presently the Chairman
cum Whole-Time Director and his son Mr. Siddhartha Roy Burman is the Managing Director.
The Individual promoters are:
1.
2.

Mr. Satya Prasad Roy Burman


Mr. Siddhartha Roy Burman

The corporate promoter is:


1.

Knightsville Private Limited.

Together with the individual promoters, the Promoters


1. Mr. Satya Prasad Roy Burman, Chairman cum Whole-Time Director
Residential Address

EC-212, sector I, Salt Lake,


Kolkata 700 091
Business
01.03.1930
School Final
52 years of experience in
footwear business
A6368068
DKN4388252
Standard Chartered, Kolkata
Metro Main Branch
Savings Account
328-1-006166-3

Occupation
Date of Birth
Qualification
Experience
Passport Details
Voter ID Number
Name of Bank and Address
Type of Account
Account Number

2. Mr. Siddhartha Roy Burman, Managing Director


Residential Address
Occupation
Date of Birth
Qualification
Experience
Passport Details
Voter ID Number
Name of Bank and Address
Type of Account
Account Number

143

BH 164 Sector II, Salt Lake,


Kolkata 700 091
Business
19.11.1961
B.Com
22 years experience in footwear
Business
F5325322
DKN4703971
Standard Chartered, Kolkata Metro
Main Branch
Savings Account
328-1-006169-8

KHADIM INDIA LIMITED

3. Knightsville Private Limited


Knightsville Private Limited was incorporated vide Certificate of Incorporation No. 103948 of 200506 on 29 June 2005 having registered office at Kankaria Estate, 5th Floor, 6, Little Russell Street,
Kolkata 700 071, West Bengal. The company is primarily engaged in the real estate and the
footwear business in India.
Presently, the Knightsville Private Limited is holding 8,737,829 equity shares in Khadim India
limited representing 72% of the pre-issue capital of our Company. Knightsville Private Limited is
our holding company pursuant to section 4 of the Companies Act, 1956.
Corporate Identity Number:
Bank Account Number:
Name of the Bank:

U45209WB2005PTC103948
331-0-512032-6
Standrad Chartered Bank
N.S.Road Branch, Kolkata

Shareholding Pattern
The current shareholding pattern of Knightsville Private Limited is as follows:
Sl. No.
1
2
3
4
5
6

Name of the Member

No. of Shares Held

Mr. Satya Prasad Roy Burman


Mrs. Namita Roy Burman
Mr. Siddhartha Roy Burman
Ms. Tanusree Roy Burman
Mr. Partha Roy Burman
Ms. Basabdutta Roy Burman
Total

9509
9509
1198120
57033
570533
57033
1901737

% age Shareholding
0.50
0.50
63.00
3.00
30.00
3.00
100.00

Board of Directors
As on date of filing of this DRHP, the Board of Directors of Knightsville Private Limited comprises
of:
Sl. No.
1
2
3

Name
Mr. Satya Prasad Roy Burman
Mr. Siddhartha Roy Burman
Mr. Partha Roy Burman

Designation
Director
Director
Director

Change in the management


There has been no change in the management of Knightsville Private Limited since incorporation.
Financial Performance
The company was incorporated on 29 June 2005. Since then the financial performance of the
company is as follows:
(Rs. in million)
Particulars
31.03.2006
31.03.2007
Total Income
Profit after Taxation
(0.08)
(0.09)
Equity Capital
19.02
19.02
Reserves (Excluding Revaluation Reserve)
12.17
12.08
Misc. Expenditure
0.29
0.22
Net Worth
30.89
30.88
NAV per share
16.25
16.24
EPS per share
(0.04)
(0.05)
No. of Equity Shares (Face Value Rs. 10)
1901737
1901737

144

KHADIM INDIA LIMITED

Companies with which Promoters have dissociated in the last three years
Our Promoters have not dissociated with any company in the last three years.
Other Confirmations
We confirm that the Permanent Account Number, Bank Account Number, Passport Numbers (for
Individuals) and Company Registration Number have been submitted to the Stock Exchanges at
the time of filing of the Draft Red Herring Prospectus.
Further, our Promoters have not been identified as a willful defaulter by the Reserve Bank of India
or any other Government authority and there are no violations of securities laws committed by our
Promoters in the past or any such proceedings are pending against our Promoters.
OUR PROMOTER GROUP
Promoter Group Companies & Entities
In addition to our Promoters, the following individuals (being the immediate relatives of our
Promoters), companies and entities shall form part of our Promoter group:

Mrs. Namita Roy Burman wife Mr. Satya Prasad Roy Burman and mother of Mr. Siddhartha
Roy Burman

*Mr. Partha Roy Burman son of Mr. Satya Prasad Roy Burman and brother of Mr.
Siddhartha Roy Burman

*Mrs. Basabdutta Roy Burman wife of Mr. Partha Roy Burman

Mrs. Tanushree Roy Burman wife of Mr. Siddhartha Roy Burman


Mrs. JayaMr. Maity daughter of Mr. Satya Prasad Roy Burman and sister of Mr. Siddhartha
Roy Burman
Mrs. Manjushree Pandey daughter of Mr. Satya Prasad Roy Burman and sister of Mr.
Siddhartha Roy Burman
Mr. Ritik Roy Burman son of Mr. Siddhartha Roy Burman
Mr. Ritaban Roy Burman son of Mr. Siddhartha Roy Burman
Ms. Rilina Roy Burman daughter of Mr. Siddhartha Roy Burman
Mrs. Subrana Roy Burman sister of Mr. Satya Prasad Roy Burman

*Mr. Partha Roy Burman, son of Mr. Satya Prasad Roy Burman and brother of Mr. Siddhartha Roy
Burman ceased to be a Director in our Company from the close of business of March 26, 2007, by
operation of law in accordance with the provisions of Section 273(1)(g) of the Companies Act, and
after that we have not been able to gather or provide any information relating to
companies/concerns which are exclusively his ventures or ventures of his spouse and / or children.
Moreover, our Promoters are not interested in any such ventures.
Companies which are the part of our promoters Group other than promoters is as
follows:
a) Khadim Financial Services Private Limited
b) Sheila Departmental Store Private Limited
c) Moviewallah Communications Private Limited
d) Khadim Development Company Private Limited
Firms which are the part of our Promoters Group other than promoters is as follows:
a)
b)
c)
d)
e)

ST. Marys Clinic & Drug Stores


Bee Tee Enterprise
K. M. Khadim & Co.
Khadim Enterprise
Khadim Export

145

KHADIM INDIA LIMITED

a) Khadim Financial Services Private Limited


Khadim Financial Services Private Limited was incorporated vide Certificate of Incorporation No.
59823 of 1993-94 on 19 August 1993 having registered office at Kankaria Estate 5F, 6 Little
Russell Street Kolkata - 700071, West Bengal. The company is presently engaged in the business
of investment in equity shares of companies and the other related activities.
Corporate Identity Number:
Bank Account Number:
Name of the Bank:

U67120WB1993PTC059823
331-0-502207-3
Standard Chartered Bank
N.S.Road Branch, Kolkata

Shareholding Pattern
The current shareholding pattern of Khadim Financial Services Private Limited is as follows:
Sl. No.

Name of the Member

No. of Shares Held

Mr. Satya Prasad Roy Burman

Mr. Partha Roy Burman

Mr. Siddhartha Roy Burman


Total

% age shareholding
10

0.06

5500

34.38

10490

65.56

16000

100.00

Board of Directors
As on date of filing of this DRHP, the Board of Directors of Khadim Financial Services Private
Limited comprises of:
Sl. No.
1
2
3

Name
Mr. Satya Prasad Roy Burman
Mr. Partha Roy Burman
Mr. Siddhartha Roy Burman

Designation
Director
Director
Director

Change in the Management


There has been no change in the management of Khadim Financial Services Private Limited in the
last three years.
Financial Performance
The financial performance of the company for the last three years is as follows:
Particulars
Total Income
Profit after Taxation
Equity Capital
Reserves
(Excluding
Revaluation Reserve)
Misc. Expenditure
Net Worth
NAV per share
EPS per share
No. of Equity Shares
(Face Value Rs. 10)

31.03.2005
0.75
0.50
0.16
5.00

31.03.2006
(2.53)
(2.60)
0.16
2.39

(Rs. in Million)
31.03.2007
0.36
0.27
0.16
2.70

0.00

5.16
322.30
31.26

2.55
159.66
(162.76)

2.86
178.88
17.14

16,000

16,000

16,000

146

KHADIM INDIA LIMITED

b) Sheila Departmental Store Private Limited


Sheila Departmental Store Private Limited was incorporated vide Certificate of Incorporation No.
24604 of 1960-1961 on 1 April 1960 having registered office at Kankaria Estate 5F, 6 Little
Russel Street Kolkata - 700071, West Bengal. The main object of the company is to run
Departmental Store, business of ready made garments etc.
Corporate Identity Number:
Bank Account Number:
Name of the Bank:

U93090WB1960PTC024604
331-0-503184-6
Standard Chartered Bank
N.S.Road Branch, Kolkata

Shareholding Pattern
The current shareholding pattern of Sheila Departmental Store Private Limited is as follows:
Sl. No.

Name of the Member

Mr. Satya Prasad Roy Burman

Mr. Siddhartha Roy Burman

Mr. Partha Roy Burman

No. of Shares Held

Total

% age shareholding
50

2.50

1304

65.20

646

32.30

2000

100.00

Board of Directors
As on date of filing of this DRHP, the Board of Directors of Sheila Departmental Store Private
Limited comprises of:
Sl. No.
1
2
3

Name
Mr. Satya Prasad Roy Burman
Mr. Partha Roy Burman
Mr. Siddhartha Roy Burman

Designation
Director
Director
Director

Change in the management


There has been no change in the management of Sheila Departmental Store Private Limited in the
last three years.
Financial Performance
The financial performance of the company for the last three years is as follows:
Particulars
Total Income
Profit after Taxation
Equity Capital
Reserves
(Excluding
Reserve)
Misc. Expenditure
Net Worth
NAV per share
EPS per share
No. of Equity Shares
(Face Value Rs. 100)

31.03.2005
2.22
0.58
0.20

31.03.2006
1.87
0.06
0.20

(Rs. in Million)
31.03.2007
0.39
0.15
0.20

Revaluation
5.28

5.33

5.47

5.48
2,738.03
287.74

5.53
2,766.98
28.95

5.67
2,832.87
76.66

2,000

2,000

2,000

147

KHADIM INDIA LIMITED

c) Moviewallah Communications Private Limited


Moviewallah Communications Private Limited was incorporated vide Certificate of Incorporation No.
93473 of 2001-2002 on 18 July 2001 having registered office at Kankaria Estate 5F, 6 Little
Russell Street Kolkata - 700071, West Bengal. The business of the company is production of TV
programs, serials, advertisement releases through its advertising agencies.
Corporate Identity Number:
Bank Account Number:
Name of the Bank:

U92112WB2001PTC093473
331-0-503931-6
Standard Chartered Bank
N.S.Road Branch, Kolkata

Shareholding Pattern
The current shareholding pattern of Moviewallah Communications Private Limited is as follows:
Sl. No.

Name of the Member

No. of Shares Held

% age shareholding

Mr. Satya Prasad Roy Burman

10

0.03

Mr. Partha Roy Burman

13000

32.50

Mr. Siddhartha Roy Burman

26990

67.47

40000

100.00

Total
Board of Directors

As on date of filing of this DRHP, the Board of Directors of Moviewallah Communications Private
Limited comprises of:
Sl. No.
1
2
3

Name
Mr. Satya Prasad Roy Burman
Mr. Partha Roy Burman
Mr. Siddhartha Roy Burman

Designation
Director
Director
Director

Change in the management


There has been no change in the management of Moviewallah Communications Private Limited in
the last three years.
Financial Performance
The financial performance of the company for the last three years is as follows:
Particulars
Total Income
Profit after Taxation
Equity Capital
Profit & Loss Account
(Debit Balance)
Misc. Expenditure
Net Worth
NAV per share
EPS per share
No. of Equity Shares
(Face Value Rs. 10)

(Rs. in Million)

31.03.2005
37.90
(3.29)
0.40

31.03.2006
30.52
(0.05)
0.40

31.03.2007
7.84
(3.31)
0.40

12.24
0.01
(11.86)
(296.39)
(82.31)

12.29
(11.89)
(297.30)
(1.22)

15.63
(15.23)
(380.63)
(82.87)

40,000

40,000

40,000

148

KHADIM INDIA LIMITED

d) Khadim Development Company Private Limited


Khadim Development Company Private Limited (formally Khadim Constructions Private limited)
was incorporated vide Certificate of Incorporation No. 55972 of 1992-93 on 17 July 1992 having
registered office at Kankaria Estate 5th Floor, 6 Little Russell Street Kolkata - 700071, West
Bengal. The company is presently engaged in the business of construction and development of
residential and commercial properties.
Corporate Identity Number:
Bank Account Number:
Name of the Bank:

U70101WB1992PTC055972
331-0-501336-8
Standard Chartered Bank
N.S. Road Branch, Kolkata

Shareholding Pattern
The current shareholding pattern of Khadim Development Company Private Limited is as follows:
Sl. No.

Name of the Member

No. of Shares Held

% age shareholding

Mr. Satya Prasad Roy Burman

10

0.14

Mrs. Namita Roy Burman

10

0.14

Mrs. Siddhartha Roy Burman

4330

61.86

Mrs. Tanusree Roy Burman

250

3.57

Mr. Partha Roy Burman

2300

32.86

Mrs. Basabdutta Roy Burman


Total

100

1.43

7000

100.00

Board of Directors
As on date of filing of this DRHP, the Board of Directors of Khadim Development Company Private
Limited comprises of:
Sl. No.
1
2
3

Name
Mr. Satya Prasad Roy Burman
Mr. Partha Roy Burman
Mr. Siddhartha Roy Burman

Designation
Director
Managing Director
Director

Change in the management


There has been no change in the management of Khadim Development Company Private Limited
in the last three years.
Financial Performance
The financial performance of the company for the last three years is as follows:
Particulars
Total Income
Profit after Taxation
Equity Capital
Reserves (Excluding Revaluation
Reserve)
Misc. Expenditure
Net Worth
NAV per share
EPS per share
No. of Equity Shares
(Face Value Rs. 100)

(Rs. in Million)

31.03.2005
7.33
0.72
0.70

31.03.2006
13.78
0.32
0.70

31.03.2007
5.44
0.16
0.70

19.52
20.22
2,888.83
102.44

19.84
20.54
2,934.04
45.21

20.00
20.70
2,957.47
23.43

7,000

7,000

7,000

149

KHADIM INDIA LIMITED

e) ST. Marys Clinic & Drug Stores


St. Marys Clinic & Drug Stores is a partnership firm which was acquired by us on February 01,
1996 and modified by a supplemental deed dated on February 24, 1997 and March 31, 1999. The
firm is in the business of retailing of Footwear or allied goods on franchise basis or otherwise.
Profit and Loss Sharing Ratios
The ratio for sharing of profits and losses in the firm is as provided below:

Sl. No.

Name of Partners

Profit & Loss Sharing Ratio

1.
2.

Mr. Siddhartha Roy Burman


Mr. Satyaprasad Roy Burman

25%
25%

3.

Mr. Partha Roy Burman

25%

4.

Mrs. Namita Roy Burman

5%

5.

Mrs. Basabdutta Roy Burman

5%

6.

Mrs. Tanusree Roy Burman

5%

7.

Mrs. Jaysree Roy Burman

5%

8.

Mrs. Manjusree Pandey

5%

Financial Performance
The financial performance of the firm for the last three years is as follows:
Particulars
Total Income
Net Profit
Partners Capital
f)

31.03.2004
0.15
(0.17)
2.16

31.03.2005
0.12
(0.07)
2.09

(Rs. In Million)
31.03.2006
0.09
(0.13)
1.96

Bee Tee Enterprise

Bee Tee Enterprise is a partnership firm and was formed pursuant to a Deed of Partnership dated
September 27, 1996 and modified by a supplemental deed dated April 01, 2002. The firm is in the
business of retailing of Footwear or allied goods on franchise basis or otherwise.
Profit and Loss Sharing Ratios
The ratio for sharing of profits and losses in the firm is as provided below:
Sl. No.
1
2

Name of Partners

Profit & Loss Sharing Ratio

Mr. Basabdutta Roy Burman


Mrs. Tanusree Roy Burman

50%
50%

Financial Performance
The financial performance of the firm for the last three years is as follows:

Particulars
Total Income
Net Profit/Loss
Partners Capital

31.03.2004

31.03.2005

(Rs in Million)
31.03.2006

2.48

2.11

7.16

0.31

0.14

0.00

1.69

1.83

1.79

150

KHADIM INDIA LIMITED

g) K. M. Khadim & Co.


K.M.Khadim & Co. is a partnership firm and was formed pursuant to a Deed of Partnership dated
March 09, 1993 and modified by a supplemental deed dated August 14, 1995 and April 01, 2005.
The firm is in the business of manufacture, wholesale and retail of footwear and footwear
materials.
Profit and Loss Sharing Ratios
The ratio for sharing of profits and losses in the firm is as provided below:
Sl. No.

Name of Partners

Profit & Loss Sharing Ratio

1
2

Mr. Siddhartha Roy Burman


Mr. Satya Prasad Roy Burman

30%
35%

Mr. Partha Roy Burman

35%

Financial Performance
The financial performance of the firm for the last three years is as follows:

Particulars

31.03.2004

31.03.2005

(Rs. In Million)
31.03.2006

41.26
2.94

42.47
2.86

41.79
1.20

13.08

15.71

16.62

Total Income
Net Profit/Loss
Partners Capital
h) Khadim Enterprise

Khadim Enterprise is a partnership firm and was formed pursuant to a Deed of Partnership dated
March 9, 1993 and modified by a supplemental deed dated June 30, 1995 and August 25,
1999.The firm are in the business of manufacturing, wholeselling, retailing and exporting of
footwear and footwear related material.
Profit and Loss Sharing Ratios
The ratio for sharing of profits and losses in the firm is as provided below:
Sl. No.
1.
2.
3.
4.

Name of Partners
Mr. Satya Prasad Roy Burman
Mr. Siddhartha Roy Burman
Mrs. Namita Roy Burman
Mr. Partha Roy Burman

Profit & Loss Sharing Ratio


17.50%
17.50%
17.50%
17.50%

5.

Mrs. Basabdutta Roy Burman

15.00%

6.

Mrs. Tanusree Roy Burman

15.00%

Financial Performance
The financial performance of the firm for the last three years is as follows:
Particulars
Total Income
Net Profit/Loss
Partners Capital

31.03.2004

31.03.2005

31.03.2006

1.82
0.29

1.53
0.11

1.41
0.01

0.70

0.80

0.81

151

KHADIM INDIA LIMITED

i)

Khadim Export

Khadim Export is a partnership firm and was formed pursuant to a Deed of Partnership dated April
1, 1995. The firm is in the business of manufacturing and exporting of leather goods.
Profit and Loss Sharing Ratios
The ratio for sharing of profits and losses in the firm is as provided below:
Sl. No.

Name of Partners

Profit & Loss Sharing Ratio

1
2

Mr. Siddhartha Roy Burman


Mr. Partha Roy Burman

40%
40%

Mr. Satya Prasad Roy Burman

20%

Financial Performance
The financial performance of the firm for the last three years is as follows:
Particulars
Total Income
Net Profit/Loss
Partners Capital

31.03.2005
0.00
0.00
0.20

31.03.2006
0.01
0.01
0.20

(Rs in million)
31.03.2007
0.00
0.00
0.20

Common Pursuits
Except as disclosed in this Draft Red Herring Prospectus under the section titled Our Promoters
and Promoter Group, the Promoters do not have an interest in any venture that is involved in any
activities similar to those conducted by the Company or any member of the Promoter Group.
Defunct Promoter Group Companies
There are no defunct Promoter Group companies.
Companies with which Promoters have disassociated
Our Promoters have not disassociated with any company in the last three years.
Other confirmations
None of our Promoter Group companies have become sick companies under the meaning of the
Sick Industrial Companies Act and no winding up proceedins have been initiated against them.
Further, no application has been made in respect of any of the Promoter Group companies, to the
Registrar of Companies for striking off their names.
Litigations
For details relating legal proceedings involving our Promoters and members of the Promoter
Group, please refer to the section titled Outstanding Litigations and Material Developments
beginning on page no. 200.
Interest in promotion of Company
The Promoters may be deemed to be interested to the extent of shares held by them in the
companys equity capital, their friends or relatives, and benefits arriving from their holding
Directorship in the company. The Promoters are not interested in any property acquired by the
company within two years from the date of this Draft Red Herring Prospectus.

152

KHADIM INDIA LIMITED

Payment of benefits to our Promoters during the last two years


Except as stated in the section titled Financial Statements - Related Party Transactions beginning
on page no. 186, there has been no payment of benefits to our Promoters during the last two
years from the date of filing of this Draft Red Herring Prospectus.
Related Party Transactions
For details of the related party transactions, see section titled Financial Statements- Related Party
Transactions beginning on page no. 186.
CURRENCY OF PRESENTATION
Throughout this Draft Red Herring Prospectus unless the context otherwise requires, all references
to Rupees and Rs. and Indian Rupees are to the legal currency of the Republic of India.
DIVIDEND POLICY
The Company has a dividend policy for dividend payment as written in the Articles of association of
the Company. The declaration and payment of dividends will be recommended by the Board of
Directors and the shareholders, in their discretion, and will depend on a number of factors,
including but not limited to earnings, capital requirements and overall financial condition.
The company has not declared dividend at any time during the last five years.

153

KHADIM INDIA LIMITED

FINANCIAL STATEMENTS
The
Board of Directors,
Khadim India Limited,
Kankaria Estate, 5th Floor,
6, Little Russel Street,
Kolkata-700071

AUDITORS REPORT

We have examined the annexed financial information of Khadim India Limited (the Company)
(previously known as Khadim Chain Stores Private Limited up to 23rd June, 2005 and as Khadim
Chain Stores Limited from 24th June, 2005 to 25th August, 2005) for the five financial years ended
31stMarch 2003, 31st March 2004, 31st March 2005, 31st March 2006 and March 31, 2007 being
the last date to which the accounts of the Company have been made up and audited.
These financial information are extracted from the accounts for the years ended March 31, 2003,
March 31, 2004 and March 31, 2005 audited & reported by M/S Agarwal Raj K. Associates,
Chartered Accountants, accounts the year ended March 31, 2006 audited and reported by M/S
D.B. Desai & Co, Chartered Accountants and accounts for the year ended March 31, 2007 audited
and reported by us.
These financial information was approved by the Board of Directors of the Company for the
purpose of inclusion and disclosure in the offer document in connection with its Proposed Initial
Public Offer (IPO) of equity shares of the Company. The IPO will be for a fresh issue by the
Company of 5,500,000 equity Shares of Rs 10 each, at such premium, by way of book building
process, as may be decided by the Board of Directors (referred to as the Offer). The Offer is being
made through the 100 per cent book building process.
The annexed financial information have been prepared in accordance with the requirements of:
(i) Paragraph B (1) of Part II of Schedule II to the Companies Act, 1956 (the Act);
(ii) The Securities and Exchange Board of India (Disclosure and Investor Protection) Guidelines,
2000 and amendments thereto ( SEBI Guidelines) issued by SEBI in pursuance of section 11 of
The Securities and Exchange Board of India Act, 1992 and
(iii) Our terms of reference pursuant to request letter dated 2nd July, 2007, received from the
Company requesting us to carry out work in connection with proposed IPO of the Company.
Financial information as per audited financial statements
1. We have examined the attached the restated summary statement of assets and liabilities of the
Company as at March 31, 2003, 2004, 2005, 2006 and 2007 and the attached restated summary
statement of profit and loss for each of the years ended on those dates as set out in Annexure-I
and Annexure II and restated cash flow statements based on restated financial information as set
out in Annexure III to this report. These profits and state of affairs have been arrived at after
making such adjustments and regrouping as in our opinion are appropriate and more fully
described in Annexures IV and VI of the report.
.
Based on our examination of the summary statements, we confirm that;
The impact of changes in accounting policies adopted by the Company as at the end of 31
March, 2007, have been adjusted with retrospective effect in the attached summary statements;
The prior period items have been adjusted in the summary statements in the years to which
they relate;
There are no qualifications in the auditors reports, which require any adjustments to the
summary statements.

154

KHADIM INDIA LIMITED

2. Summary of significant accounting policies and notes to accounts are stated in Annexure V and
VI respectively to this report.
Other financial information
3. We have examined the following financial information of the Company proposed to be included
in the offer document as approved by you and annexed to the report
i.

Statement of Secured Loans outstanding as at the end of above-mentioned years is


enclosed in Annexure- VII and security of loans outstanding as at 31 March, 2007 is given
in Annexure VIII to this report.

ii.

Details of Unsecured Loans outstanding as at the end of above-mentioned five financial


years are given in Annexure- IX to this report.

iii.

Capitalization Statement (Pre issue) of the Company as at 31 March, 2007 is shown in


Annexure-X to this report.

iv.

Statement of Tax Shelters for five financial years is given in Annexure-XI to this report.

v.

Age wise details of Sundry Debtors as at the end of above-mentioned five financial years is
given in Annexure-XII to this report.

vi.

Breakup of Loans and Advances as at the end of above-mentioned five financial years is
given in Annexure- XIII to this report.

vii.

Statements of Investments as at the end of above-mentioned five financial years is given


in Annexure- XIV to this report.

viii.

Statements of Other Income for above-mentioned five financial years is given in AnnexureXV to this report.

ix.

Details of transaction with Related Parties (Related Parties within the meaning of AS 18
issued by ICAI) are enclosed in Annexure-XVI to this report.

x.

Accounting Ratios computed on the basis of Restated Financial Statements for five financial
years are shown in Annexure- XVII to this report.

4. The Company has not distributed dividend on equity shares for any of the five financial years.
5. In respect
ended March
Agarwal Raj
Accountants,

of financial information contained in the Summary Statements relating to the years


31, 2003, 2004, 2005 and 2006, we have reviewed the audit reports issued by M/S
K. Associates, Chartered Accountants and M/S D.B. Desai & Co, Chartered
as well as audited financial statements of those years and relied on the same.

6. We report that the Summary Statements of the Company as of and for the years ended March
31, 2003, 2004, 2005, 2006 and 2007 read with significant accounting policies and notes thereto,
after making adjustments/restatements and regroupings as considered appropriate have been
prepared in conformity with the accounting principles generally accepted in India and in
accordance with Part II of Schedule II of the Act and the SEBI Guidelines.
7. The above review as stated in paragraph 5 is substantially less in scope than an audit conducted
in accordance with generally accepted auditing standards, the objective of which is the expression
of an opinion regarding the Financial Statements taken as a whole and includes audit procedures
such as test of controls and verification of assets and liabilities. Accordingly, we do not express any
such an opinion.

155

KHADIM INDIA LIMITED

8. This report is intended solely for your information and for inclusion in the offer document in
connection with the proposed IPO of the Company and is not to be used, referred to or distributed
for any other purpose without our prior written consent.
For RAY & RAY
Chartered Accountants

R. N. Roy
Partner
Membership No. F- 8608
Place: Kolkata
Dated: 30 July, 2007

156

KHADIM INDIA LIMITED

ANNEXURE - I
STATEMENT OF RESTATED PROFIT AND LOSS ACCOUNT

Year ended March 31st


INCOME:
Sales:
Of products manufactured by the
Company
Of products traded in by the Company
Total
Other Income
Increase/(Decrease) in Inventories

2003*

299.18
299.18
3.69
5.20
308.07

60.33
613.16
673.49
4.53
129.50
807.52

203.00
1112.37
1315.37
8.98
21.26
1345.61

209.17
1284.30
1493.47
10.16
121.00
1624.63

177.94
13.92
0.48
24.74

211.45
15.52
0.72
22.19

611.99
26.93
13.79
50.62

976.84
52.35
25.18
95.70

1163.66
83.65
36.22
107.28

39.01
4.60
3.07
263.76

34.68
5.00
3.86
293.42

53.99
14.07
9.75
781.14

101.67
28.47
21.93
1302.14

118.41
36.88
28.51
1574.61

15.20
5.70
9.50

14.65
6.26
8.39

26.38
2.53
23.85

43.47
16.19
27.28

50.02
21.02
29.00

Net Profit before tax and extraordinary


Items
Taxation
Net Profit before Extraordinary Items
Extraordinary Items (Net of tax)
Net Profit after Extraordinary Items

(Rupees in Million)
2006
2007

2005

271.67
271.67
5.39
1.90
278.96

EXPENDITURE:
Purchase of raw materials and general
merchandise
Staff Costs
Other Direct Expenses
Administration Expenses
Selling and Distribution Expenses
Interest
Depreciation

2004*

9.50

8.39

23.85

27.28

29.00

* Company erstwhile named and styled as "Khadim Chain Stores Private Limited" [Refer Note 1(a)
on Annexure VI]

157

KHADIM INDIA LIMITED

ANNEXURE - II
STATEMENT OF RESTATED ASSETS AND LIABILITIES

As at March 31st

2003*

A. Fixed Assets:
Gross Block
Less: Depreciation
Net Block
Capital Work-In-Progress
TOTAL
B. Investments:
C. Current Assets, Loans
Advances:
Inventories
Sundry Debtors
Cash and Bank Balances
Loans and Advances
Other Current Assets
TOTAL

2004*

2005

(Rupees in Million)
2006
2007

78.69
9.26
69.43
0.00
69.43

87.48
13.12
74.36
14.62
88.98

432.69
22.72
409.97
30.58
440.55

513.06
43.00
470.06
29.37
499.43

583.76
69.80
513.96
95.87
609.83

2.82

3.01

2.72

2.27

14.80

19.60
0.81
33.94
42.83
0.89
98.07

24.79
1.02
29.24
46.82
0.38
102.25

154.21
108.79
96.80
76.37
1.21
437.38

172.13
101.02
38.33
80.92
3.23
395.63

293.18
82.88
28.57
148.49
3.00
556.12

46.77
0.00
4.72
31.12
82.61

51.25
10.10
7.54
29.26
98.15

298.21
6.60
10.47
157.12
472.40

232.79
36.10
16.71
175.03
460.63

394.61
21.62
26.01
250.96
693.20

87.71

96.09

408.25

436.70

487.55

31.00
0.00
56.71
87.71

31.00
0.00
65.09
96.09

31.00
**56.39
320.86
408.25

87.39
0.00
349.31
436.70

109.24
0.00
378.31
487.55

and

D. Liabilities and Provisions:


Secured Loans
Unsecured Loans
Deferred Tax Liability
Current Liabilities and Provisions
TOTAL
E. Networth: [(A)+(B)+(C)-(D)]
Represented by:
1. Share Capital
2. Share Capital pending allotment
3. Reserves and Surplus
Networth

* Company erstwhile named and styled as "Khadim Chain Stores Private Limited" [Refer Note 1(a)
on Annexure VI]
** Shares issued pursuant to Scheme of Amalgamation approved by the Hon'ble High Court at
Calcutta with effect from 1 October 2004 [Refer Note 1(a) on Annexure VI]

158

KHADIM INDIA LIMITED

ANNEXURE - III
RESTATED CASH FLOW STATEMENTS
YEAR ENDED

CASH
FLOW
ACTIVITIES

FROM

31st
March
2005

(Rupees in Millions)
31st
31st
March
March
2006
2007

31st
March
2003

31st
March
2004

15.20

14.65

26.38

43.47

50.02

3.07

3.86

9.75

21.93

28.51

0.03

0.01

0.29

OPERATING

Net Profit before Tax & Extraordinary


Items
Adjustments for:
Depreciation
Preliminary expenses w/off
Assets written off
Sundry Balances w/off
(Profit) / Loss on Sale of Fixed Assets
(Net)

0.01

(1.41)

(0.21)

0.41

3.74

Dividend received

(0.07)

(0.03)

Interest Received

(3.01)

(3.12)

(1.21)

(2.88)

(1.82)

Profit on Sale of Investment

(0.67)

(0.16)

(1.22)

4.60

4.89

5.86

28.47

36.88

(0.97)

Operating Profit before Working


Capital Changes

17.75

20.07

40.92

90.18

116.33

Adjustments for:
Trade & Other Receivables

(18.62)

(4.29)

52.77

14.84

(46.30)

Inventories

(1.90)

(5.20)

(66.64)

(17.93)

(121.05)

Trade Payables

10.58

(1.86)

97.45

18.11

75.85

Cash Generated from Operations

7.81

8.72

124.50

105.20

24.83

(5.71)

(2.88)

(16.52)

(22.47)

(14.62)

2.10

5.84

107.98

82.73

10.21

2.10

5.84

107.98

82.73

10.21

(44.69)

(23.42)

(106.35)

(81.33)

(143.72)

Interest paid
Provision for impairment written back

Payment of Direct Taxes


Cash Flow before Extraordinary
Items

Extra Ordinary Items


Net cash from Operating Activities
- (A)

CASH FLOW FROM INVESTING


ACTIVITIES

Purchase of Fixed Assets

159

KHADIM INDIA LIMITED

Sale of Fixed Assets

1.81

0.41

0.65

2.05

(1.05)

(0.36)

(51.00)

(12.50)

Sale of Investments

3.07

0.90

52.67

Dividend received

0.07

Interest Received
Net Cash from Investing Actvities
- (B)

2.22

3.14

0.18

2.85

1.44

(38.57)

(20.23)

(105.27)

(76.16)

(152.73)

21.85

43.73

4.48

(4.18)

(65.42)

161.84

10.10

13.13

29.50

(14.48)

(4.60)

(4.89)

(5.66)

(29.12)

(36.44)

39.13

9.69

3.29

(65.04)

132.76

2.66

(4.70)

6.00

(58.47)

(9.76)

31.28

33.94

29.24

96.80

38.33

33.94

29.24

35.24

38.33

28.57

Purchase of Investments

CASH FLOW FROM FINANCING


ACTIVITIES

Proceeds from Issue of Share Capital


Secured Loans
Unecured Loans
Interest paid
Net Cash used in Financing
Activities - ( C)
Net Increase / (Decrease) in Cash &
Cash Equivalents(A+B+C)
Cash and Cash Equivalents at
beginning of year
Cash and Cash Equivalents at end
of year

(Note1)
Notes:
1.

Net of Cash and Cash equivalents aggregating to Rs.61.56 millions acquired on


amalgamation pursuant to Scheme of Amalgamation approved by the Hon'ble Hogh Court at
Calcutta [Refer Note 1(a) on Annexure VI]

2.

Figures in parantheses represents outflows

160

KHADIM INDIA LIMITED

ANNEXURE-IV
STATEMENT OF
STATEMENTS

SIGNIFICANT

ADJUSTMENTS

MADE

IN

RESTATED

FINANCIAL

As required in terms of The Security and Exchange Board of India (Disclosure and Investor
Protection Guidelines, 2000, the following adjustments have been carried out while preparing the
Restated Profit & Loss Account and Balance Sheet
ADJUSTMENTS MADE FOR RESTATEMENT OF PROFIT AND LOSS ITEMS
a) IMPACT ON PROFITABILITY DUE TO CHANGES IN ACCOUNTING POLICIES.
YEAR ENDED
Profit after tax as per audited
Profit and Loss Account
(Less)/Add
Provision for Gratuity
[Refer Note 2(b) on Annexure VI]
Provision for Leave Encashment
[Refer Note 2(b) on Annexure VI]
Depreciation differential due to
change in method from Written
Down Value method to Straight
Line Method
[Refer Note 2(c) on Annexure VI]
Tax effect for re-computation of
Deferred taxation
Profit
after
tax
as
per
restated
Profit
and
Loss
Statement

(Rupees in Million)
31st March
31st March
2005
2006
20.66
38.79

31st March
2003
9.30

31st March
2004
5.81

(0.18)

(0.09)

0.27

(0.03)

0.03

0.01

3.07

4.06

4.75

(16.97)

(2.66)

(1.42)

(1.84)

5.46

9.50

8.39

23.85

27.28

b) RESTATEMENT OF SALES DUE TO CHANGE IN ACCOUNTING POLICIES


(Rupees in Million)
YEAR ENDED
31st March
31st March
31st March
31st March
31st March
2003
2004
2005
2006
2007
Sales as per
295.43
327.07
673.48
1315.37
1493.47
Audited Profit and
Loss Account
23.76
27.89
Less:- Sales Tax
[Refer Note 2(d) on
Annexure VI]
271.67
299.18
673.48
1315.37
1493.47
Net sales as per
Restated
Profit
and Loss Account

YEAR ENDED
Sales of products
traded
by
the
Company
Sales of products
manufactured by the
Company
Sales as per
restated
Profit
and
Loss
Statement

31st March
2003
271.67

COMPOSITION OF SALES
31st March
31st March
2004
2005
299.18
613.16

31st March
2006
1112.37

31st March
2007
1284.30

60.33

203.00

209.17

271.67

299.18

673.48

1315.37

1493.47

161

KHADIM INDIA LIMITED

c) INCREASE/(DECREASE) IN INVENTORY
YEAR ENDED
(Accretion)/
Decretion in Stock
as per audited Profit
and Loss Account
Add:- Closing
Stock as per
audited accounts
Less:- Opening
Stock as per
audited accounts
Add:- Opening
Vat Input
Add:- Inter
Company profit
on amalgamation
included in
opening stock
(Less)/Add:(Accretion/
Decretion in
Stock
of
Raw
materials
(Accretion)/
Decretion in Stock
as per Restated
Profit and Loss
Statement

(Rupees in Million)
31st March
31st March
2006
2007
(121.67)

31st March
2003
-

31st March
2004
-

31st March
2005
-

19.60

24.79

154.21

172.13

17.70

19.60

24.79

154.21

3.34

0.08

0.67

(1.90)

(5.19)

(129.50)

(21.26)

(121.00)

Note- Till 2005-06, (Accretion)/ Decretion in Stock were shown as part of cost of sales.
(Accretion)/ Decretion in Stock has been shown as separate item in audited accounts of 2006-07.
Therefore, such movement in stock has been shown as separate line item in Restated Profit and
Loss Statement for earlier years.
(d) PURCHASE OF RAW MATERIALS AND GENERAL MERCHANDISE
YEAR ENDED
Purchase of Footwear
Purchase of other materials
Purchase of Packing materials
Stock taken over Pursuant to
Amalgamation
Purchase of raw Materials
Purchase of Life Style Retailing
Purchase of Gold Jewellery
Total
purchase
of
Raw
materials
and
General
Merchandise as per restated
Profit and Loss Statement

31st March
2003
164.99
6.13
6.82
-

31st March
2004
198.08
5.98
7.39
-

177.94

211.45

(Rupees in Million)
31st March
31st March
2005
2006
411.86
713.41
12.69
30.89
25.71
33.97
53.48
41.32
57.85
9.08
611.99

99.19
70.45
28.93
976.84

Note- Till the financial year, 2005-06, purchase of footwear, other materials, packing materials,
raw materials, Life Style Retailing materials and Gold and Jewellery items were shown as part of
cost of sales in audited accounts. During 2006-07, such purchases have been shown as part of
purchase of Raw materials and General Merchandise account. Therefore, for restated Profit and
Loss Statement of earlier years such items have been shown as part of purchase of Raw Materials
and General Merchandise Account.

162

KHADIM INDIA LIMITED

(e) STAFF COST


YEAR ENDED
Staff Cost as per audited
Profit and loss Account
Add:- Transferred from
Manufacturing, Selling and
Administrative Expenses
Add:- Adjustments for
Provision for Gratuity
[Refer
Note
2(b)
on
Annexure VI]
Add:- Adjustments for
Provision For Leave
Encashment
[Refer
Note
2(b)
on
Annexure VI]
Staff
cost
as
per
Restated Profit and Loss
Statement

31st March
2003
-

31st March
2004
-

13.70

15.46

0.18

0.09

0.04

13.92

31st March
2005
27.21

(Rupees in Million)
31st March 31st March
2006
2007
52.35

83.65

(0.28)

(0.03)

15.52

26.93

52.35

83.65

Note:- For financial years 2003, 2004, 2006 and


2007, staff cost has been shown as part of
Manufacturing, Selling and Administrative Expenses in audited accounts. For the purpose of
restatement, staff cost has been segregated from Manufacturing, Selling and Administrative
Expenses and shown separately in Restated Profit and Loss Statement for above mentioned years.
However, for the financial year 2005, staff cost has been shown separately in Audited Profit and
Loss Account. Therefore, no adjustment in respect of staff cost has been made for restatement
purpose for the financial year 2005.
(f) OTHER DIRECT EXPENSES
YEAR ENDED
Other Direct Costs as
per Audited Profit
And Loss Account
Add:- Transfer
from cost of sales
Add:- Transfer
from Manufacturing ,
Selling,
and
Administrative
Expenses
Other Direct Costs
as
per
restated
Profit
and
Loss
Statement

31st March
2004
-

31st March
2005
-

0.48

0.72

13.79

25.18

36.22

0.48

0.72

13.79

25.18

36.22

31st March
2003
37.85

31st March
2004
36.97

31st March
2005
50.33

0.01

0.41

0.03

(g) ADMINISTRATION EXPENSES


YEAR ENDED
Administrative
Expenses as per Profit
and Loss Account
Add:- Assets
written off shown
separately in audited
Profit
and
Loss
Account
Add:- Preliminary

(Rupees in Million)
31st March
31st March
2006
2007
-

31st March
2003
-

163

(Rupees in Million)
31st March
31st March
2006
2007
96.26
345.56

KHADIM INDIA LIMITED

Expenses written
off shown separately
in audited Profit and
Loss Statement
Add:- Loss on sale
of assets shown
separately in audited
Profit
and
Loss
Account
Add:- Rates and
Taxes (Net of
adjustments with
sales)
Less:- Staff costs
shown separately
Less:- Other
Manufacturing
expenses shown
separately
Less:- Selling and
Distribution expenses
shown separately
Less: Impairment
of Fixed Assets
transferred to
Depreciation Account
Administrative
Expenses
as
per
Restated Profit and
Loss Statement

0.15

0.18

0.29

0.41

0.50

13.70

15.46

83.65

36.22

118.41

0.97

24.74

22.19

50.62

95.70

107.28

(h) SELLING AND DISTRIBUTION EXPENSES

(Rupees in Million)
YEAR ENDED
31st March 2007
Selling and distribution expenses as per
audited Profit and Loss Account
Add: Transferred from Manufacturing,
118.41
Selling, and Administrative expenses
Selling and distribution expenses as per
118.41
restated Profit and Loss Statement
Note: Till Financial year 2005-06, Selling and Distribution expenses have been shown separately in
Audited Profit and Loss Account. During the Financial year 2006-07, Selling and Distribution
expenses have been shown as part of Manufacturing, Selling and Administrative expenses in
Audited Profit and Loss Account. Therefore, for restatement purpose, Selling and Distribution
expenses have been segregated from Manufacturing, Selling and Administrative expenses and
shown separately in restated Profit and Loss Statement for the Financial year 2006-07.
i) TAXATION (CHARGE TO PROFIT & LOSS ACCOUNT)
YEAR ENDED
Taxation
as
per
Audited
Accounts
(Less)/ Add:
Tax effect for recomputation of
Deferred tax due to change in
accounting policy
[Refer Note 2 on Annexure VI]
Taxation as per Restated
Profit and Loss Statement

(Rupees in Million)
31st March
31st March
2005
2006
0.69
21.66

31st March
2003
3.04

31st March
2004
4.82

2.66

1.44

1.84

(5.47)

5.70

6.26

2.53

16.19

164

KHADIM INDIA LIMITED

j) DEPRECIATION
YEAR ENDED
Depreciation as per audited
Profit and Loss account
Add:- Impairment of fixed
assets transferred from
Administrative Expenses
Add/(Less):Depreciation
differential due to change in
method from Written Down
Value method to Straight Line
Method
[Refer Note 2(c) on Annexure
VI]
Depreciation
as
per
Restated Profit and Loss
Statement

(Rupees in Million)
31st March
31st March
2005
2006
14.50
3.99

31st March
2003
6.14

31st March
2004
7.92

0.97

(3.07)

(4.06)

(4.75)

16.97

3.07

3.86

9.75

21.93

ADJUSTMENTS MADE FOR RESTATEMENT OF BALANCE SHEET ITEMS


1) PROVISION FOR DEPRECIATION
AS AT
Accumulated Depreciation as per
audited Balance Sheet
Less: Decrease due to change in
method of depreciation from Written
Down Value method to Straight Line
Method
[Refer Note 2(c) on Annexure VI]
Accumulated Depreciation as per
restated Balance Sheet

31st March 2003


16.71

(Rupees in Million)
31st March 2004 31st March 2005
24.64
38.98

7.45

11.52

16.26

9.26

13.12

22.72

2) CAPITAL WORK IN PROGRESS


(Rupees in Million)
31st March 2004
14.62
14.62

AS AT
Capital Work-in-Progress as per audited Balance Sheet
Add:- Transferred from Loans and Advances of 2003-04
Capital Work-in Progress as per restated Balance Sheet

Note- In the audited accounts of Financial year 2003-04, Capital advances paid for acquisition of
Land, Shop and Fixed assets amounting to Rs. 14.62 million were included in Loans and Advances.
In restated Balance Sheet, abovementioned advances have been shown as Capital Work In
Progress.
3) INVESTMENTS
AS AT
Investments as per audited Balance Sheet
Less:- Fixed Deposit included in Investments shown as
part of Cash and Bank Balances
[Refer Note 2(a) on Annexure VI]
Less: Interest Accrued on Fixed Deposits included in
Investments shown as Other Current Assets
[Refer Note 2(a) on Annexure VI]
Investments as per Restated Balance Sheet

165

(Rupees in Million)
31st March 2003
31st March
2004
33.86
28.46
30.17
25.18
0.87

0.27

2.82

3.01

KHADIM INDIA LIMITED

4) CASH AND BANK BALANCES


AS AT
Cash and Bank Balances as per Balance Sheet
Add: Fixed Deposits transferred from Investment
[Refer Note 2(a) on Annexure VI]
Less:- Interest Accrued on Recurring Deposits transferred
to other current assets
[Refer Note 2(a) on Annexure VI]
Cash and Bank Balance as per restated Balance
Sheet

(Rupees in Million)
31st March 2003 31st March 2004
3.78
4.05
30.17
25.18
0.01

33.94

29.23

5) LOANS AND ADVANCES


AS AT
Loans and Advances as per
Audited Balance Sheet
Less:- Interest Accrued and
Other Receivable
transferred to Other Current
Assets
Less:Adjustment
for
Provision for Taxation
Less:- Transferred to Capital
Work- In- Progress
Less:- Prepaid expenses
transferred to other current
assets
Loans and Advances as
per
Restated
Balance
Sheet

31st March
2004
64.63

0.11

1.21

1.24

5.02

3.08

29.21

26.97

14.62

1.99

42.83

46.82

76.37

80.92

31st March
2003
-

31st March
2004
-

0.87

0.27

0.02

1.99

0.11

1.21

1.24

0.89

0.38

1.21

3.23

6) OTHER CURRENT ASSETS


AS AT
Other Current Assets as per
audited Balance Sheet
Add:- Interest accrued on
Fixed deposits transferred
from Investments
Add: Interest accrued on
Recurring Deposit transferred
from Cash and Bank Balances
Add:- Prepaid expenses
transferred from Loans and
Advances
Add:- Interest and Other
Receivable transferred
from Loans & Advances
Other Current Assets as
per restated Balance Sheet

(Rupees in Million)
31st March
31st March
2005
2006
106.79
111.12

31st March
2003
47.85

166

(Rupees in Million)
31st March
31st March
2005
2006
-

KHADIM INDIA LIMITED

7) UNSECURED LOAN

(Rupees in Million)
31st March 2004
10.10
10.10

AS AT
Unsecured Loan as per audited Balance Sheet
Add: transferred from other liabilities
Unsecured Loan as per restated Balance Sheet

Note- In the audited accounts of Financial year 2003-04, Unsecured loans from Directors and
group concerns and Khadim Holdings Private Limited amounting to Rs 3.84 million and Rs. 6.26
million respectively were included in Current Liabilities and Provisions, which have been shown as
Unsecured Loan in Restated Balance Sheet.
8) DEFERRED TAX LIABILITY
31st March
2003
2.06 (*)

AS AT
Deferred Tax Liability as per audited Balance
Sheet
Add:- Deferred tax liability recomputed on
account of Depreciation differential and
provision for Gratuity and Leave Encashment
[Refer Note 2(b) and 2(c) on Annexure VI]
Deferred Tax liability as per restated
Balance Sheet

(Rupees in Million)
31st March
31st March
2004
2005
3.44
4.53

2.66

4.10

5.94

4.72

7.54

10.47

* Deferred tax liability as at 31st March, 2003 was included in Reserve & Surplus
9) CURRENT LIABILITIES AND PROVISIONS
AS AT
Current Liabilities and
Provisions as per Audited
Balance Sheet
Less: Provision for Taxation
adjusted with
Loans and Advances
Add:- Provision for
Gratuity
Add:- Provision for Leave
Encashment
Less:- Loans from Director
and
Group
Companies
transferred to
Unsecured Loan
Current Liabilities and
Provisions as per
Restated Balance Sheet

(Rupees in Million)
31st March
31st March
2005
2006
186.33
202.00

31st March
2003
35.92

31st March
2004
42.17

5.02

3.09

29.21

26.97

0.18

0.28

0.04

0.003

10.10

31.12

29.26

157.12

175.03

167

KHADIM INDIA LIMITED

10) RESERVES AND SURPLUS


31st March
2003
54.20

AS AT
Reserve and Surplus as per audited Balance
Sheet
Add: Depreciation Differential adjusted due to
change in Method of depreciation
Less: Provision for Leave Encashment and
Gratuity
Less: Recomputed Deferred Tax Liability due
to change in Accounting policy
Reserve and Surplus as per restated
Balance Sheet

(Rupees in Million)
31st March
31st March
2004
2005
57.94
310.53

7.45

11.52

16.27

0.22

0.27

4.72

4.10

5.94

56.71

65.09

320.86

ANNEXURE-V
SIGNIFICANT ACCOUNTING POLICIES
(a) Basis of preparation
The financial statements are prepared in accordance with the Indian Generally Accepted
Accounting Principles (GAAP) under historical cost convention, on accrual basis and the relevant
provisions of the Companies Act, 1956.
(b)

Use of Estimates

While preparing the financial statements in conformity with accounting principles generally
accepted in India, management is required to make estimates and assumptions that affect the
reported amount of assets and liabilities and the disclosure of contingent liabilities as at the date of
financial statements and the amount of revenue and expenses during that reported period. Actual
results may differ from those estimates. Any revision to such estimates is recognized in the period
in which the same is determined/materialised.
(c)

Fixed Assets

(i) Fixed Assets are stated at their original cost, which includes freight taxes, duties (net of
CENVAT) and other incidental expenses relating to acquisition and installation.
(ii) Costs of leasehold rights of land and buildings, including incidental charges thereto are
amortised over the period of lease.
(iii) Intangible Assets (Trademarks, Copyrights and Designs, Audio-Visuals and Computer
Softwares) are stated at their cost less accumulated amortisation. An intangible asset is
recognised, where it is probable that the future economic benefits attributable to the asset will flow
to the Company and where its costs can be reliably measured. The depreciable / amortised
amount of intangible assets is allocated over the best estimate of its useful life on a straight-line
basis. The carrying value is reviewed at each Balance Sheet date.
(iv) Capital expenses, pending installation / commercial use, certain expenses of revenue nature
and advances, which can be regarded as incidental and directly related to project set-up are
transferred to Capital Work-in-Progress. These expenses are allocated to fixed assets in the year
of installation / commencement of commercial usage.

168

KHADIM INDIA LIMITED

(d)

Depreciation

(i) Depreciation is provided on Straight Line Method (SLM) at the rates and in the manner
specified in Schedule XIV of the Companies Act, 1956.
(ii) Leasehold improvements are depreciated over the respective lease periods.
(e)

Investments

(i)

Long Term investments are stated at cost. Diminution of permanent nature, if any, is
provided for.
Current investments (other than long term) are carried at lower of cost and net realizable
value.

(ii)

(f)

Inventories

Inventories are valued at cost or net realizable value, whichever is lower. For this purpose, basis of
ascertainment of cost is as under:
-

Raw materials

At cost on First-in-First out basis.

Stock-in-process

Raw material cost plus conversion cost upto the stage of


completion.

- Finished goods and finished

goods in transit
-

Trading goods

(g)

Raw material cost and other related overhead costs


inclusive of excise duty payable on clearance.

At landed cost plus related overhead costs.

Retirement Benefits

1.

Contribution to Provident Fund and other Funds in accordance with the relevant plans /
schemes (Defined Contribution Schemes), are charged to Profit and Loss Account on accrual
basis.

2.

The Companys employees are covered under Group Gratuity Scheme with the Life
Insurance Corporation of India (LICI), which is a Defined Benefit Scheme and is funded in
accordance with the LICIs demand. The same is appropriately expensed to the revenue
account on accrual basis. Actuarial valuation is carried out at the Balance Sheet date and
incremental liability, if any, is also provided for.

3.

Leave Encashment (Defined Benefit Scheme) is provided annually based on actuarial


valuation carried out by an independent actuary as at the Balance Sheet date.

(h)

Foreign Currency Transactions

Foreign Currency Transactions are recorded at the prevalent exchange rates as on the dates of the
respective transactions. Year-end monetary assets / liabilities, denominated in foreign currencies,
are realigned at the applicable exchange rates or at forward contract rates, wherever applicable,
prevailing at the Balance Sheet date. All exchange variations are recognized in the Profit and Loss
Account, other than those relating to acquisition of fixed assets which are adjusted to the carrying
cost of the related assets.

169

KHADIM INDIA LIMITED

(i)

Taxes on Income

Income Tax expenses are accounted in the same period to which the revenue and expenses relate.
Current tax is determined on the amount of tax payable in respect of taxable income for the year.
Deferred tax is provided and recognised on timing differences between the taxable income and
accounting income subject to prudential consideration.
Deferred tax assets on unabsorbed depreciation and carry forward of losses are not recognised
unless there is virtual certainty about availability of future taxable income to realise such assets.
(j)
(i)
(ii)
(iii)
(iv)

(k)

Recognition of Income and Expenditure


Items of income and expenditure are recognised on accrual basis, except otherwise stated.
Sales and retail revenues, net off trade discounts and taxes but inclusive of Excise duty,
are recognized on delivery of the goods / merchandise to the dealers/customers.
Revenue from displays and sponsorships are based on the period for which the products /
displays are sponsored/carried out.
Income on investments is accounted for when the right to receive the payment is
established.
Leases

Leases of assets under which the lessor effectively retains all the risks and benefits of ownership
are classified as operating lease. Payments made under operating lease are charged to Profit and
Loss Account on a straight line basis over the period of the lease.
(l)
i.
ii.

Treatment of prior period and extra ordinary items

Any material items (other than those arising out of over / under estimation of earlier years)
arising as a result of error or omission in preparation of earlier years financial statements are
separately disclosed.
Any material gains/losses, which arise from the events or transactions, which are distinct from
ordinary activities of the Company, are separately disclosed.

(m)

Provisions, Contingent Liabilities and Contingent Assets

A provision is made based on a reliable estimate when it is probable that an outflow of resources
embodying economic benefits will be required to settle an obligation. Contingent Liabilities, if
material, are disclosed in notes to accounts. Contingent Assets are not recognized or disclosed in
the
financial
statements,
as
a
matter
of
prudence.

170

KHADIM INDIA LIMITED

ANNEXURE- VI
NOTES ON RESTATED STATEMENTS OF PROFIT & LOSS ACCOUNT AND BALANCE SHEET
1. a) Pursuant to an order of the Honble High Court at Calcutta dated 22 June, 2005, approving
the Scheme of amalgamation, AAR ESS Land Development Private Limited, Colt Enterprises Private
Limited, Khadim Holdings Private Limited, Khadim industries Private Limited and Khadim Shoes
Private Limited (collectively called Transferor companies) were merged with Khadim Chain Stores
Private Limited (the Transferee Company) retrospectively from appointed date i.e 1 October, 2004.
The Scheme has become effective with the filing of the certified copy of the Order with the
Registrar of Companies, West Bengal, on 26 July, 2005. The Transferee Company was converted
into a Public Limited Company on 24 June, 2005 to become Khadim Chain Stores Limited.
Thereafter with effect from 26 August 2005, Khadim Chain Stores Limited was renamed as
Khadim India Limited.
b) With the effectuation of the Scheme of Amalgamation, difference between the value of net
assets taken over and the purchase consideration amounting to Rs 231.92 million has been
credited to Amalgamation (Capital) Reserve.
2. Details of significant changes in accounting policies effected by the Company and considered
for restatement are set out below:
a) Till the financial year 2003-04, Fixed Deposits along with interest accrued thereon were shown
as part of Investments. From financial year 2004-05, Fixed Deposits and Interest accrued thereon
have been disclosed as part of Cash and Bank Balances and Other Current Assets respectively.
This, however, has no impact on the profitability of the Company.
b) Until the financial year 2003-04, Provision for Leave Encashment and Gratuity were not
provided for in the accounts of the Company. But from financial year 2004-05, provision for the
same, based on actuarial valuation, has been provided for in the accounts.
c) Depreciation, on fixed assets acquired on amalgamation of AAR ESS Land Development Pvt.
Ltd., Colt Enterprises Pvt. Ltd., Khadim Holdings Pvt Ltd., Khadim Industries Pvt Ltd. and Khadim
Shoe Pvt. Ltd (Transferror companies) with the company with effect from 1 October 2004 and also
in respect of the Life Style Retailing Division and additions thereto, is provided at the rates under
Straight Line Method (SLM), prescribed in Schedule XIV to the Companies Act, 1956.
Depreciation, on existing fixed assets, other than above and additions thereto were provided at the
rates under Written Down Value Method (WDV), prescribed in Schedule XIV to the Companies
Act, 1956. The method of providing depreciation on Fixed Assets other than assets of the
transferor companies and life style retailing divisions and additions thereto, has been changed
from the Written Down Value Method (WDV) to Straight Line Method (SLM), with retrospective
effect from financial year 1996-97. This has resulted in surplus amounting to Rs.16.97 million and
credited to the Profit and Loss Account in the financial year 2004-05.
d) Upto financial year 2004-05, sales were stated exclusive of excise duty but inclusive of sales
tax. With effect from the financial year 2005-06, sales are stated exclusive of excise duty and
sales tax. This has a revenue neutral impact on the accounts.
e) Till the financial year 2005-06, liability for excise duty (dutiable) lying at factory /warehouse
was not provided in the accounts. From financial year 2006-07, the same is accounted for in the
financial statements with a corresponding impact in the valuation of the year-end closing stock,
the treatment of which is revenue neutral.

171

KHADIM INDIA LIMITED

3. Contingent Liabilities not provided for:

31st
March
2004

31st
March
2005

31st
March
2006

2.83

15.29

25.60

43.72

b)
Sales
tax
demandunder
appeal

14.29

13.96

19.00

47.25

c)
Excise
Demand
appeal

Duty
Under

0.39

5.2

0.09

5.68

d) T.D.S demand
under appeal

1.58

1.58

e) Others

4.28

4.28

0.63

0.63

11.75

10.12

23.13

As At

a)

Claims
against
the Company not
acknowledged as
debt
a)
Income
Tax
demandunder
appeal

b)

Bank Guarantee
and Bonds

4.
As at
Estimated
amount
of
contracts
remaining to be executed on Capital
Account and not provided for

31st
March
2003
Nil

31st
March
2004
Nil

31st
March
2005
Nil

(Rupees in Million)
31st
31st
March
March
2006
2007
3.39
68.53

31st
March
2003
0.03

31st
March
2004
0.03

31st
March
2005
0.06

(Rupees in Million)
31st
31st
March
March
2006
2007
0.35
0.35

0.01

0.01

0.15

0.15

0.02

0.08

0.06

0.04

0.04

0.06

0.60

0.56

5. Auditors Remuneration:
As at
Statutory Audit Fee
Tax Audit Fee
Others Matters
Reimbursement of Expenses
TOTAL

(Rupees in Million)
31st
TOTAL
March
2007

31st
March
2003

Sl No.

172

KHADIM INDIA LIMITED

6. a) Small Scale Industrial Undertakings to whom the Company owed for more than 30 days as
on 31 March, 2007 are as below :Sooky Leather, Dutta Enterprise,Charan Paduka Industries (P) Ltd, Sabitri Udyog, Delta Packaging
Centre, Select Footwear, Sahara Footwear, Abhi Footwear.
The above information has been determined to the extent such parties have been identified on the
basis of the information available with the Company, which has been relied upon by us.
b) The Company has not received any claim for interest on such dues from the said parties.
7. The Company has not received any information from its suppliers regarding registration under
The Micro, Small and Medium Enterprises Development Act, 2006. Hence, the information, as
required to be given in accordance with Section 22 of the said Act have not been disclosed.
8. Arising out of the policy decision of funding gratuity liability to LICI, a sum of Rs. 1.54 million
(Previous Year Rs. Nil) on the basis of actuarial valuation, made in earlier years by an actuary for
the purpose, has been written back as income and a sum of Rs. 2.51 million (Previous Year Rs.
Nil), being the Companys contribution to the gratuity fund has been charged to Profit and Loss
Account for the year.
9. Details of Managerial Remuneration is as below:PARTICULARS
Salary
Commission
Perquisites
TOTAL

2002-03
2.04
1.35
0.30
3.69

2003-04
2.04
2.28
0.36
4.68

2004-05
3.86
2.69
0.43
6.98

(Rupees in Million)
2005-06
2006-07
8.53
11.49
0.77
0.61
9.30
12.10

In view of inadequacy of profits, remuneration paid to directors for financial years ended
31.03.2006 and 31.03.2007 respectively pursuant to Section II (C) of Part-II of Schedule XII of
the Companies Act, 1956 has exceeded the relevant ceiling for which applications with the Central
Government of India have already been made. Necessary approvals in this respect are still
awaited.
10. Capital advances include advance of Rs 29.23 Million paid for acquisition of lands/immovable
properties, for which the related Deed of Conveyance/ Lease Deed are yet to be executed. Out of
the said advance, Rs 22.50 Million has been paid to Kolkata Municipal Authority (KMDA) as lease
premium for a land measuring 45 cottahs for lease period of 99 years against which permissive
possession has been received. The Company expects to get the Lease Deed registered shortly.
11. The Company is primarily engaged in
footwear, leather accessories and other
predominantly to the domestic market and
Single Segment Company, as envisaged in
of Chartered Accountants of India.

the business of manufacturing / retail business of


lifestyle / household consumer goods catering
therefore, according to the management, this is a
the Accounting Standard 17, issued by The Institute

12. The Company has taken various premises including offices, warehouses and retails under
operating lease arrangements. As per legal opinion obtained by the Company, such lease
arrangements are mostly not non-cancellable leases, as envisaged in Accounting Standard 19 on
Leases issued by The Institute of Chartered Accountants of India and are renewable by mutual
consent or mutually agreed terms. However, the overall future lease commitments of such lease
arrangements entered into by the Company will be Rs.718.22 Million.
13. a) Trademarks/Copyrights are amortised uniformly over the useful life, generally ranging over
a period of ten years.
b) Software acquired by the Company, having an endurable useful life, is amortised over the
best estimate of its useful life ranging from three to five years.

173

KHADIM INDIA LIMITED

14. Additional Information pursuant to provisions of paragraph 3, 4C and 4D of Part-II of Schedule


VI to the Companies Act, 1956:(a) Licensed, Installed Capacity and Actual Production:
Product

Units

PVC Sandals / Slippers & Direct


Injection

Shoes/Stuck

Pairs

Licensed

Installed

Actual

Capacity

Capacity

Production

In Million

In Million

2.88

0.95

1.05

1.16

Refer Note (i)

on

below

process
EVA

Pairs

Refer Note (i)


below

Notes:
(i)
The Company did not require any industrial licence at the time of the establishment of its
manufacturing setup but required registration under the applicable laws and regulations were
obtained.
(ii) Installed capacity, as certified by the companys technical experts.
(b)

Particulars in respect of Stocks and Sales of Manufactured Goods:


Opening Stock

Product

Quantity

Sales

Closing Stock

Amount

Quantity

Amount

Quantity

Amount

Rs. in

In Million

Rs. in

In Million

Rs. in

Million

Million

Million

PVC Sandals / Slippers


&
Direct
Injection
Shoes/Stuck on

0.11

9.95

1.01

105.57

0.05

3.90

EVA
Notes:

0.05

2.77

1.19

81.18

0.02

1.11

(i)

Quantity stated in pairs

(ii)

Sales include inter-unit transfers.

(c)

Particulars in respect of Trading Goods-Footwear:


2006 07

Particulars
Opening Stock
Purchase
Sales
Closing Stock

Quantity
In Million

Amount
Rs. In Million

0.07
13.06
12.56
1.15

83.63
835.28
1444.17
198.38

Notes:
(i)

Quantity stated in pairs

(ii)

Purchases include inter-unit transfers.

(iii)

Sales is inclusive of Excise duty and other related taxes.

174

KHADIM INDIA LIMITED

(d)

Value of Raw Material, Stores and Spare parts consumed:


Item

2006-07

Unit
Quantity
In Million

Amount
Rs. in Million

PVC Compound

Kgs

0.59

41.82

EVA Compound
Leather
Others
Total

Mtrs.
SDM

0.15
1.04

14.89
4.95
28.55
90.21

The above includes consumption of imported items Rs.0.62 0.64%


(e)

Value of Imports on CIF Basis:


Particulars

2006-07
(Rs. in Million)

Raw Materials, Components and Spare Parts (including


materials

lying

in

bonded

warehouse

of

the

0.46

Custom

authorities)
Capital Goods, including Moulds

2.14

Total

2.60

(f)

Expenditure in Foreign Currency:


Particulars

2006-07
(Rs. in Million)
1.24
1.02
2.26

Traveling
Others
Total
(g)

Earnings in Foreign Currency:


Particulars

2006-07
(Rs. in Million)

FOB Value of Exports (on accrual basis)

3.02

Others

Nil

Total

3.02

175

KHADIM INDIA LIMITED

ANNEXURE VII
DETAILS OF SECURED LOANS
As at
Particulars of Loans
A. Term Loan from Banks
State Bank of India
Allahabad Bank
United Commercial Bank
Sub Total

31st
March
2003*

31st
March
2004*

31st
March
2005

(Rupees in Million)
31st
31st
March
March
2006
2007

36.00
36.00

28.00
28.00

27.76
22.00
49.76

58.89
18.70
77.59

116.34
15.21
131.55

1.56
1.56

0.63
0.63

C. Bank Overdrafts
Standard Chartered Bank
State Bank of India
ICICI Bank Limited
Sub Total

9.99
9.99

3.39
3.39

21.25
18.13
11.59
50.97

5.43
5.43

0.35
15.11
15.46

D. Vehicle Loans
ICICI Bank Limited
Sub Total

0.78
0.78

0.36
0.36

2.52
2.52

1.52
1.52

0.50
0.50

9.54
9.96
-

39.98
4.58
148.84
-

40.66
4.99
92.87
9.10

64.23
159.50
14.24
9.12

46.77

19.50
51.25

193.40
298.21

147.62
232.79

0.01
247.10
394.61

B. Corporate Loan from Banks


State Bank of India
Sub Total

E. Working Capital Loan from


banks
Cash Credit-State Bank of India
Cash Credit- Allahabad Bank
Cash Credit-United Commercial Bank
Demand Loan- State Bank of India
Demand Loan- ICICI Bank Limited
Stand by Line of Credit-State Bank of
India
CP Link Credit-State Bank of India
Sub Total
Total Secured Loan

*Company erstwhile named and styled as "Khadim Chain Stores Private Limited" [Refer Note 1(a)
on Annexure VI]

176

KHADIM INDIA LIMITED

ANNEXURE-VIII
DETAILS OF PRINCIPAL TERMS OF LOANS AND ASSETS CREATED AS SECURITY
Rs. in million
Nature
of Name
of
Amount
Balance as
Rate of Repayment
Securities
Loan
the bank
sanctioned
at 31st interest
schedule
offered
March 2007
Term loan

State Bank
of India

130.00

State Bank
of India

20.00

State Bank
of India

16.13

9.50%

44.51

9.50%

19.80

15.21

9.50%

20
equal
quarterly
instalments
of Rs 65
million
starting
from June,
2007
20
equal
quarterly
instalments
of Rs 100
million
starting
from
October,
2006
20 unequal
quarterly
instalments
of Rs 1.5
million per
quarter
during
2006-07,
thereafter of
Rs 4 million
per quarter
from 200708.
Repayment
will
start
from June,
2006
20
quarterly
instalments
of
Rs
1
million each
starting
from
Jan,
2007

REFER
NOTE-1
BELOW

Equal
monthly
reduction of
DLOD for 12
months
Annual
Renewals

Secured by
pledging of
term
deposits
with the
banks

131.55
ICICI Bank
Limited

Standard
Chartered
Bank
SubTotal

10.75%

70.00

United
Commercial
Bank

Subtotal
(A)
Bank
Overdraft

55.70

15.00

15.11

13.25%

0.35

9.75%

10.00
15.46

177

KHADIM INDIA LIMITED

(B)
Vehicle
Loan

ICICI Bank
Limited

SubTotal( C
)
Working
Capital
Loan from
Banks
Demand
Loan

Cash Credit

Stand
line
Credit

by
of

4.62%

36 EMIs of
Rs
0.05
each
starting
from 1-4-05

Secured by
way of the
Vehicle
financed

14.24

13.25%

REFER
NOTE-2
BELOW

64.24

10.25%

Equal
weekly
instalment\s
for
52
weeks
Annual
renewals
Annual
renewals
Annual
renewals

0.50

1.70

0.50

ICICI Bank
Limited

State Bank
of India
State Bank
of India
United
Commercial
Bank
State Bank
of India

15.00

60.00

12.25%

15.00
236.00

9.00

159.50

9.50%

223.74
9.12

11.25%

SubTotal
(D)

247.10

Grand Total

394.61

Can
be
availed for
any number
of times in a
year for a
maximum
period of 2
months

Notes:
1. Secured by way of equitable mortgage by deposit of respective title/lease deeds of certain
immovable properties and mortgage of leasehold rights of certain retails and extension of charges
including collateral created by way of hypothecation of certain stock-in-trade, receivables and
other current assets of retail division. It is additionally secured by personal guarantees of certain
Directors and corporate guarantee by a group corporate
2. Secured by way of hypothecation of certain current assets and further secured by creating
collateral charges on certain owned/leased properties of the Company. It is additionally secured by
personal guarantees of certain Directors, corporate guarantee by holding company and residual
value of properties funded through term loan

178

KHADIM INDIA LIMITED

ANNEXURE-IX
DETAILS OF UNSECURED LOANS*
(Rupees in Million)
As At

31st
March
2003

31st
March
2004

31st
March
2005

31st
March
2006

31st
March
2007

From Directors
Inter Corporate Deposits
Others

3.84
6.26

6.40
0.20

5.81
21.05
9.24

17.00
4.62

Total

10.10

6.60

36.10

21.62

* Includes following payables to Promoters/Promoter group/Group Companies.


(Rupees in Million)
As At

31st
March
2003*

31st
March
2004*

31st
March
2005

31st
March
2006

31st
March
2007

3.90
6.26
0.01

8.00
-

(0.06)
10.11

4.52
0.81
0.34
0.74
0.10
0.10
6.61

2.95
2.18
0.67
5.80

8.00

Name of the Party


Khadim Development Company Private
Limited
Erstwhile Khadim Holdings Private Limited
Erstwhile Khadim Shoes Private Limited
Moviewalla
Communications
Private
Limited
Satya Prasad Roy Burman
Partha Roy Burman
Siddhartha Roy Burman
Namita Roy Burman
Basabdutta Roy Burman
Tanusree Roy Burman
Total

179

KHADIM INDIA LIMITED

ANNEXURE- X
CAPITALISATION STATEMENT
Rupees in Millions
PARTICULARS
Debts
Short Term Debt
Long Term Debt
Total
Shareholders Funds
Share Capital

Pre-issue as at 31st
March 2007

Post-issue*

276.18
140.05
416.23
109.24

Capital Reserve
General Reserve
Profit and Loss Account
Total

231.92
4.34
142.05
487.55

Total Capitalisation

903.78

Long Term Debt to Total Shareholders'


Funds

Will be determined after


finalisation of the issue
price

0.29

Notes:
1. Short term debts are debts maturing within one year from the end of the year.
2. The above ratio of long term debts to shareholders' funds has been computed on the basis of
restated statement of accounts as at 31 March 2007

180

KHADIM INDIA LIMITED

ANNEXURE-XI
TAX SHELTER STATEMENT
For the year ended

A.

Profit Before Tax


audited accounts

31st
March
2003
as

per

31st
March
2004

31st
March
2005

(Rs in Million)
31st
31st
March
March
2006
2007

12.35

10.63

21.35

60.45

50.02

36.75%

35.88%

36.59%

33.66%

33.66%

4.54

3.82

7.81

20.35

16.84

0.02

0.15

0.14

0.16

0.16

0.18

0.29

0.41

3.74

0.01

0.05

0.08

0.01

0.04

(0.97)

(0.39)

(0.10)

(0.16)

(0.47)

Provision for doubtful debts


and advances

2.02

Dividend Income exempt


under section 10(34)

(0.01)

(0.04)

(0.03)

Interest
Income
exempt
under section 10 (35)

(0.02)

(0.02)

(0.03)

Total
Permanent
Differences (Net)

(0.91)

(0.21)

0.31

0.16

5.87

Timing Differences
Add:
Provision
for
Leave
Encashment
Provision for Gratuity

0.05
1.00

0.13
0.54

0.14
-

Effective Tax Rate


Tax at actual rate on Profit
as per audited accounts
Adjustments:
Permanent Differences
Add :
Donations u/s 80G (Net of
deductions u/s 80G)
Loss on sale of fixed
assets/Assets written off
Wealth
Tax
and
Penal
Interest
Disallowances as per tax
audit report under section
40(a) of IncomeTax Act,
1961
Less:
Profit on sale of flats (Net of
Capital gain on sale of flats)
Profit on sale of investments
(Net of capital gain on sale
of investment)

B.

Disallowance of expenses
under section 43B
Less:

181

KHADIM INDIA LIMITED

Difference of depreciation
between
Income
Tax
Act,1961 and Companies
Act, 1956

C.

D.

Provision no longer required


written back
Preliminary Expenses
Admissible
expenses
claimed on payment basis
u/s 43B
Total Timing Differences
(Net)
Net Adjustments ( B ) + (
C)
Tax savings thereon
Profit as per income tax
return (A)+/(-)(D)
Business Income
Long Term Capital Gain
Total Taxable Income
Income
Tax
including
Interest
On Business Income
On Long Term Capital gain
Tax as per return

(5.76)

(1.81)

(17.00)

(39.33)

(26.08)

(0.02)

(0.02)

(1.44)
(0.01)

0.00

(0.04)

(5.76)

(1.81)

(15.97)

(38.72)

(27.39)

(6.67)
(2.45)

(2.02)
(0.73)

(15.66)
(5.73)

(38.56)
(12.98)

(21.52)
(7.24)

5.68
4.52
1.17
5.69

8.61
8.61
8.61

5.69
5.69
5.69

21.89
21.89
21.89

28.50
28.50
28.50

1.66
0.18
1.84

3.09
3.09

2.08
2.08

7.37
7.37

9.59
**9.59

*Company erstwhile named and styled as "Khadim Chain Stores Private Limited" [Refer Note 1(a)
on Annexure VI]
** Tax return yet to be filed

182

KHADIM INDIA LIMITED

ANNEXURE-XII
STATEMENT OF DEBTORS
As At

(Unsecured)
Debts Outstanding
Months
- Considered Good
- Considered Doubtful
SubTotal

over

for

31st
March
2004

31st
March
2005

0.39
0.39

0.10
0.10

6.39
6.39

18.54
18.54

11.89
1.68
13.57

0.42
0.42

0.92
0.92

102.40
102.40

82.48
82.48

70.99
70.99

0.81

1.02

108.79

101.02

1.68
82.88

Six

Others
- Considered Good
SubTotal
Less:Provision
Debts
Total

(Rupees in Million)
31st
31st
March
March
2006
2007

31st
March
2003

Doubtful

Notes:
Receivables from Promoters/Promoters group or those related to promoters included in
above
As At

Debts Outstanding over Six


Months
K M Khadim & Co
Khadim
Constructions
Private
Limited
Bee Tee Enterprises
Total
Others
K M Khadim & Co
Khadim
Constructions
Limited
Bee Tee Enterprises
Total

31st
March
2003

31st
March
2004

31st
March
2005

31st
March
2006

31st
March
2007

2.18

0.02
2.20

43.86
43.86

1.92

1.57

0.02

0.02
1.94

0.03
0.04
1.64

0.02

Private

183

KHADIM INDIA LIMITED

ANNEXURE-XIII
STATEMENT OF LOANS AND ADVANCES GIVEN
As At
Advances recoverable in cash or in kind or for
value to be received*
Balance
with
Central
Excise
and
other
Government Authorities
Security
Deposits
including
deposits
with
Government Authorities
Income
Tax
and
Fringe
Benefit
Tax
Payments/Refunds
Provision for Doubtful Advances
Total

(Rupees in Million)
31st
31st
31st
March
March
March
2005
2006
2007
31.29
11.55
9.68

31st
March
2003
0.68

31st
March
2004
4.76

0.18

2.15

8.93

35.60

35.60

33.92

43.27

102.67

6.55

6.46

10.98

23.95

27.56

42.83

46.82

76.37

80.92

(0.35)
148.49

* Includes in respect of Promoters/Promoters' Group/other related parties


As At

Erstwhile Khadim Industries Pvt. Ltd.


Satya Prasad Roy Burman
Siddharatha Roy Burman
Namita Roy Burman
Partha Roy Burman
Moviewallah Communications Pvt.Ltd.
Bee Tee Enterprise
St. Mary's Clinic & Drug Stores
Khadim Enterprise
Total

184

31st
March
2003

31st
March
2004

31st
March
2005

31st
March
2006

31st
March
2007

3.92
0.08
0.16
(0.02)
(0.11)
4.03

18.96
0.12
19.08

0.24
0.23
0.47

0.27
0.12
0.39

KHADIM INDIA LIMITED

ANNEXURE-XIV
STATEMENT OF INVESTMENTS
As At

(Rupees in Million)
31st
31st
March March
2006
2007

31st
March
2003

31st
March
2004

31st
March
2005

Long Term- Non Trade (At Cost)


Quoted
US 64 Bonds of UTI
UTI A/C MIP 2000
UTI Bond Fund
Alliance Equity Fund

0.64
0.46
0.27
-

0.47
0.47
0.27
-

0.47
0.45

0.47
-

0.47
-

SubTotal

1.37

1.21

0.92

0.47

0.47

2.50

10.03

1.37

1.21

0.92

0.47

12.53
13.00

1.37

1.21

0.92

0.47

13.00

1.09

1.21

1.11

0.48

13.15

Current - Non Trade (At Cost)


Quoted
Units of JM Arbitrage Advantage Fund
Units of JM High Liquidity FundArbitrage
Advantage Fund
SubTotal
Total
Investment in Subsidiary Companies
Aggregate
Book
Value
Investments
Aggregate Market Value
Investments

Of

Quoted

Of

Quoted

185

KHADIM INDIA LIMITED

ANNEXURE- XV
STATEMENT OF OTHER INCOME
For the year ended

(Rupees in Millions)
31st
Remarks
March
2007
0.15
Recurring
0.03
Recurring

31st
March
2003
0.07

31st
March
2004
0.01

31st
March
2005
0.28
-

31st
March
2006
0.77
-

2.81
0.20
-

2.42
0.69
-

2.90
0.09
0.93

2.64
0.24
1.22
1.38

1.11
0.71
2.04
1.79

Profit on sale of Investment


Liabilities no longer back written
back

0.67

0.16

1.22

0.47

2.65

Profit on sale of Flats


Miscellaneous

1.56
0.08

0.40
0.17

0.17

1.04

1.68

Total

5.39

3.69

4.53

8.98

10.16

Royalty
Dividend Income
Interest on Bank/Other Deposits
and Bonds
Other Interest
Rent
Scrap Sales

Recurring
Recurring
Recurring
Recurring
Non
recurring
Non
recurring
Non
recurring
Recurring

ANNEXURE XVI
DETAILS OF RELATED PARTY TRANSACTIONS
Related parties are classified as:
Particulars
Ultimate
Holding
Company
Key
Management
Personnel

Enterprises
over which
KMP
and
their relative
have
substantial
interests

2006-07

2005-06

2004-05

2003-04

2002-03

Knightsville
Private Limited

Knightsville
Private Limited

Mr.Satya Prasad
Roy Burman
Mr.Siddhartha
Roy Burman
Mr.Partha
Roy
Burman
(Note
1)

Mr.Satya Prasad
Roy Burman
Mr.Siddhartha
Roy Burman

Mr.Satya Prasad
Roy Burman
Mr.Siddhartha
Roy Burman

Mr.Satya Prasad
Roy Burman
Mr.Siddhartha
Roy Burman

Mr.Satya Prasad
Roy Burman
Mr.Siddhartha
Roy Burman

Mr.Partha
Burman

Roy

Mr.Partha
Roy
Burman
Mrs.Namita Roy
Burman

Mr.Partha
Roy
Burman
Mrs.Namita Roy
Burman

Mr.Partha
Roy
Burman
Mrs.Namita Roy
Burman

Khadim
Financial
Services
Pvt.
Ltd.
Khadim
Development
Co. Pvt. Ltd.
Khadim
Enterprises
K M Khadim &
Co.
St. Mary's Clinic
& Drug Stores

Khadim
Financial
Services
Pvt.
Ltd.
Khadim
Development
Co. Pvt. Ltd.
Khadim
Enterprises
K M Khadim &
Co.
St. Mary's Clinic
& Drug Stores

Khadim
Financial
Services
Pvt.
Ltd.
Khadim
Development
Co. Pvt. Ltd.
Khadim
Enterprises
K M Khadim &
Co.
St. Mary's Clinic
& Drug Stores

Khadim
Financial
Services
Pvt.
Ltd.
Khadim
Development
Co. Pvt. Ltd.
Khadim
Enterprises
K M Khadim &
Co.
St. Mary's Clinic
& Drug Stores

Khadim
Financial
Services
Pvt.
Ltd.
Khadim
Development
Co. Pvt. Ltd.
Khadim
Enterprises
K M Khadim &
Co.
St. Mary's Clinic
& Drug Stores

186

KHADIM INDIA LIMITED

Relatives of
KMP

Sheila
Departmental
Stores Pvt. Ltd.
Bee
Tee
Enterprises
Moviewallah
Communications
Pvt. Ltd.

Sheila
Departmental
Stores Pvt. Ltd.
Bee
Tee
Enterprises
Moviewallah
Communications
Pvt. Ltd.

Sheila
Departmental
Stores Pvt. Ltd.
Bee
Tee
Enterprises
Moviewallah
Communications
Pvt. Ltd.

Sheila
Departmental
Stores Pvt. Ltd.
Bee
Tee
Enterprises
Moviewallah
Communications
Pvt. Ltd.
Erstwhile
Khadim
Industries Pvt.
Ltd.
Erstwhile
Khadim
Shoes
Pvt. Ltd.
Erstwhile
Aar
Ess
Land
Development
Pvt. Ltd.
Erstwhile
Khadim
Holdings
Pvt.
Ltd.

Sheila
Departmental
Stores Pvt. Ltd.
Bee
Tee
Enterprises
Moviewallah
Communications
Pvt. Ltd.
Erstwhile
Khadim
Industries Pvt.
Ltd.
Erstwhile
Khadim
Shoes
Pvt. Ltd.
Erstwhile
Aar
Ess
Land
Development
Pvt. Ltd.
Erstwhile
Khadim
Holdings
Pvt.
Ltd.

Mr.Partha
Roy
Burman
Mrs. Basabdutta
Roy Burman
Mrs.
Tanusree
Roy Burman
Mrs. Namita Roy
Burman

Mrs. Basabdutta
Roy Burman
Mrs.
Tanusree
Roy Burman
Mrs. Namita Roy
Burman

Mrs. Basabdutta
Roy Burman
Mrs.
Tanusree
Roy Burman

Mrs. Basabdutta
Roy Burman
Mrs.
Tanusree
Roy Burman

Mrs. Basabdutta
Roy Burman
Mrs.
Tanusree
Roy Burman

Note:
1. Mr. Partha Roy Burman ceased to be a Director w.e.f. 26-03-07 due to vacation of office by
operation of law pursuant to Section 283(1)(g) of the Companies Act, 1956

187

Details of related party transactions


Particulars
Ultimate
Holding
Company

Advances given
Advances taken
Advances
repaid
Loans taken
Loans repaid
Loans given
Loans refunded
Sales
Purchases
Royalty paid
Royalty
received
Commission
paid
Rent received
Rendering
of
services

(Amount in millions)

2006-07
KMP Enterprises
over which
KMP &
relatives
have
substantial
interest

Ultimate
Holding
Company

2005-06
KMP Enterprises
over which
KMP &
relatives
have
substantial
interest

KMP

2004-05
Enterprises
over which
KMP &
relatives
have
substantial
interest

KMP

2003-04
Enterprises
over which
KMP &
relatives
have
substantial
interest

KMP

2002-03
Enterprises
over which
KMP &
relatives
have
substantial
interest

47.52

20.53
-

0.23
-

26.62
-

0.23
-

5.81
-

8.00
3.56
-

1.85
2.44
-

47.52
14.52
-

4.00
0.75
4.00
1.10
-

12.15
10.32
10.33
7.80
-

26.55
2.50
3.04
12.31
5.30

0.27
6.05
1.63
6.95
5.62

0.15

0.77

0.28

0.98
-

5.35
0.44

5.96
-

8.75
-

8.71
-

12.10

7.81

9.30

27.34

8.38

19.80

4.68

0.98

3.69

Note:
Break-up of remuneration paid to KMP for rendering of services
Name of the KMP
Mr.Satya Prasad Roy Burman
Mr.Siddhartha Roy Burman
Mr.Partha Roy Burman
Mrs.Namita Roy Burman

2006-07

2005-06

4.01
4.07
4.02
12.10

2004-05

3.03
3.21
3.06
9.30

2.46
2.79
2.89
0.24
8.38

2003-04
0.84
1.76
1.84
0.24
4.68

2002-03
0.77
1.30
1.38
0.24
3.69

ANNEXURE-XVII
STATEMENT OF RESTATED ACCOUNTING RATIOS
For the year ended

Weighted average number of


equity shares of Rs. 10 each
i) Number of Shares at the
beginning of the year
ii) Number of Shares at the end
of the year
iii) Weighted average number of
outstanding equity shares
iv) Share Application Money (Rs.)
v) Weighted Average number of
Outstanding
equity
shares(Diluted)
Net Profit after tax available for
Equity Shareholders as per
Restated Profit & Loss Account
(Rs)
Basic Earning Per Share (EPS)
(Rs)
Dilutive Earning Per Share (EPS)
(Rs)
Return on Net Worth (%)
Net Asset Value Per Share (Rs)

31st
31st
March
March
2003
2004
(Note 1)

31st
March
2005

31st March
2007

31st
March
2006

3,100,000

3,100,000

3,100,000

8,739,308

8,739,308

3,100,000

3,100,000

8,739,308

8,739,308

10,924,138

3,100,000

3,100,000

5,911,929

8,739,308

10,157,951

56,393,080

3,100,000

3,100,000

5,911,929

8,739,308

10,157,951

9,500,000

8,390,000

23,850,000

27,280,000

29,000,000

3.06

2.71

4.03

3.12

2.85

3.06
10.83

2.71
8.73

4.03
5.84

3.12
6.25

2.85
5.95

28.29

31.00

46.71

49.97

44.63

Notes:
1. Company erstwhile named and styled as "Khadim Chain Stores Private Limited" [Refer Note 1(a) on
Annexure VI]
2. The earnings of the Company for the year 2004-05 includes six months' earnings of the five
transferor companies for the period 01-10-04 to 31.03.05 merged with the Company with effect from
01-10-04. The weighted number of equity shares outstanding for the year has been arrived at by
adding 5,639,708 no of equity shares pending to be allotted to the shareholders of transferor

189

companies in terms of the Scheme of amalgamation approved by the Hon'ble High Court w.e.f 01-1004
3. In respect of 2006-07, 2,184,830 no of equity shares have been issued by the Company on
07.08.2006 to existing shareholders. which has been considered for computation of weighted number
of equity shares outstanding for the year.
The Ratios have been computed as below:Earning per Share (Basic):

Net profit attributable to Equity Shareholders


Weighted Average number of Equity Shares
Outstanding during the year

Earning per Share (Diluted):

Net Profit attributable to Equity Shareholders


Weighted Average number of Diluted Equity Shares
Outstanding during the year

Return on Net Worth %:

Net Profit After Tax


Net Worth at the end of the year

Net Asset Value per Share (Rs.):

Net Worth at the end of the year


Equity Share Outstanding during the year

190

MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF


OPERATIONS
The following discussion and analysis is derived from and should be read together with the restated
financial statements of our company for the years ended March 31, 2003, 2004, 2005, 2006 and 2007
included elsewhere in this Draft Red Herring Prospectus. Our financial statements included elsewhere
herein, from which this discussion is derived, were prepared in accordance with Indian GAAP.
Our financial statements as of and for the years ended March 31, 2002, 2003, 2004, 2005 were
audited by M/S Agarwal Raj K. Associates, for the year ended March 31 2006 was audited by M/s. D.
B. Desai & Associates, Chartered Accountants and for the year ended March 31, 2007 was audited by
M/s. Ray & Ray, Chartered Accountants., our statutory auditor in conformance with provisions of the
Companies Act, 1956 and the SEBI guidelines. The restatement of our financial statements as of and
for the years ended March 31, 2003, 2004, 2005, 2006 and 2007 has been done by M/s. Ray & Ray,
our statutory auditor, for conformance with provisions of the Companies Act, 1956 and the SEBI
guidelines, placing reliance on the audit reports delivered by audit firm.
Overview of our Company
We, Khadim India Limited (Khadims), are the 3rd largest footwear retailer in India (based on the
number of stores) and our flagship brand Khadims is considered the most preferred footwear brand
in Eastern India (as per IMRB survey). We have more than 260 retail outlets (including owned and
exclusive dealers) across 22 Indian states. We offer a wide range of footwear for the entire family, at
various price points, catering to the different income groups. Our expertise in footwear retailing dates
back to 1993 when we started three high street stores at Kolkata.
Recently, we have forayed into value-lifestyle retailing by utilizing our expertise in footwear retailing.
The first departmental store of the Company came up in Kanchrapara in the outskirts of Kolkata.
During the current financial year we have added two more departmental stores, one at Bhowanipore in
Kolkata and the other at Howrah, under the brand Khadims Egaro. These stores offer garments,
footwear, jewellery, fashion accessories, groceries, etc. under one roof and provide an exclusive
shopping environment, which was previously limited only to the high-end retail stores.
We also have entered the arena of retailing of gold jewellery under the brand name Sona Khazana. As
on date we have 4 outlets of Sona Khazana from where we sell 100% hallmarked gold jewellery.
Our Company is a part of the Kolkata based Khadims group which was acquired in 1965, by Mr. S. P.
Roy Burman, presently the Chairman of the Company. Todays Khadim India Limited is a consolidated
entity of six of the Khadim group companies. In the year 2005, five of the Khadim group companies
with synergic interests got amalgamated to form Khadim India Limited and thus has achieved critical
mass and volume.
Our Business:
We have the following businesses:
1. Footwear
2. Lifestyle Retail
3. Gold Jewellery
In the following paragraphs we give an overview of the business along with certain key
drivers of these businesses:
FOOTWEAR
We are into footwear retail since 1993. Before that we were into wholesaling and distribution of
footwear. Currently we are engaged in manufacturing, wholesaling and retailing of footwear. We are
present across 22 Indian states with over 260 plus retail outlets which makes us the 3rd largest
footwear retailer in India. On an average we have 4000 SKUs at any point of time.

191

Right from our foray in footwear retailing, Khadim's is synonymous with quality products at
affordable prices. We use a mix of outsourced product and manufactured products that help us to
provide the consumers the best, not only in terms of style and quality, but also in terms of price.
The Key Drivers:
Procurement:
Footwear industry is highly driven by changing fashion and design. To meet the challenges of this ever
changing fashion and design, we use a business model where procurement and outsourcing plays a
very crucial role. A substantial part of our footwear is procured from various vendors located mainly at
Kolkata and Agra. We have an outsourcing arrangement with more than 100 dedicated vendors. These
vendors supply footwear as per our requirements as to style, quality and material. Recently we have
also started sourcing from China. This helps us to move from one design to another design, one style
to another style effortlessly and thereby matching the demands of the markets within shortest
possible time.
Manufacturing:
We manufacture certain products which are strategically important for our business. We use
manufacturing as a tool for backward integration. Our facility started in 2001. The manufacturing
setup at Phase III, Kasba Industrial Estate, Kolkata -700 107 is an ISO: 9001:2000 certified unit and
has a capacity to manufacture throughout the year around 3.5 million pairs of PVC & PVC-DIP, 0.2
million pairs of STUCK-ON and 1 million pairs of EVA Based Footwear. In 2006-2007 our production
grew by 17 % compared to its corresponding performance in 2005-2006.
Supply Chain Management:
Our business model for the footwear business calls for strong supply chain management so that the
4000 plus SKUs can move seamlessly across 22 states without any loss of opportunity. We have
Distribution centre at Kolkata and Regional Distribution Centres at Chennai and Delhi. This centres act
as a hub for the movement of the product from the nearby stores.
We have engaged renowned logistic management companies like GATI and AFL for supply of
merchandise to the sales/storage points including our retail stores on a just-in-time basis.
Quality Control:
Quality Control plays a very important role in our footwear business as a substantial part of the
product is outsourced. To this end a team of dedicated professionals is constantly engaged in
benchmarking procurement and outsourcing plans and in the process has brought in certain strategic
modifications in the areas of vendor selection, standardization of size and fittings, better quality
control by designing stringent quality checks and balances of the products and also introducing unique
identification code for better control and strengthening of supply back up.
Our manufacturing facility has been accredited with ISO 9001:2000 management system
certificate from RWTUV Systems GmbH for manufacture and supply of PVC, Leather and Synthetic
Footwear.
Product Development and Merchandising:
Product Development and Merchandising (PDM) plays a very vital role in our business. The fast
changing horizon of style and design has made PDM a way of life for us. In order to stay ahead of our
competitors in our product range and value proposition, a lot of new initiatives have been taken.

192

LIFESTYLE RETAILING
Our journey in the LFR segment started in the year 2004 with the opening of the 1st store at
Kanchrapara in the outskirts of Kolkata under the Brand name Khadims Khazana. On June 01, 2007
we came up with 2 more LFR stores in Kolkata and Howrah under the brand Khadims Egaro. These
stores offer garments, footwear, jewellery, fashion accessories, groceries, etc. under one roof and
provide an exclusive shopping environment, which was previously limited only to the high-end retail
stores. We want to place ourselves at the value lifestyle segment so that the great Indian Middle Class
can fulfill their aspirational needs at our LFR stores. In these stores we have our own private labes like
evinson, Manjira, Adriana, Bonito, Cleo etc.as well as renowned brands like Allen Solly, Raymonds,
Park Avenue, Wrangler, Gini & Jony, etc. In the Cosmetics section we have Lakme, Loreal etc. We
also have a cafeteria operated by Java Green.
GOLD JEWELLERY
In Kolkata, gold-trade has been one of the most ancient trades and from times deep in the British
regime Kolkata, has areas specifically identified as gold trading zones; Shyambazar, Bowbazar,
Bhowanipore and Gariahat to name a few. Predominantly the gold business had been a family
enterprise associating the pride, trust and goodwill needed to sell gold. Gold trade has mainly been in
the ornament business.
For its intrinsic value it is still one of the most common and liquid investment. People have invested in
gold through ages and continue to do so more than ever in recent times.
With the assistance of our brand image in retailing, which is identified with goodwill and trust, we have
recently entered into the business of gold jewellery under the brand name Khadims Sona Khazana.
Only Hallmarked Gold ornaments in 22 carats and 18 carats is sold from Khadims Sona Khazana.
With the skills of retailing and advantage of a strong mother brand and the trust enjoyed by us, we
are confident of replicating our footwear retailing success in the gold jewellery business.
INTELLECTUAL PROPERTY RIGHTS AND BRAND
As on date we have 77 registered trade marks in our name and 231 trade mark applications. Our
principal brand Khadims is registered in India, Bhutan, Mr. Lanka, UAE and EU. Application for the
mark is pending in USA. Application for our trade mark Khadims Egaro is pending at the trade mark
registry. Some of our well established brands in the footwear business are Lazzard, Wash n Wear
etc., which are all registered with the Trade Mark Registry. In the apparels section under the LFR
format we have launched some private labels like evinson, Manjira, Adriana, Bonito, Cleo etc.

193

STATEMENT OF RESTATED PROFIT AND LOSS ACCOUNT


Year ended March 31st
INCOME:
Sales:
Of products manufactured by the
Company (Note 3)
Of products traded in by the Company
Total Sales
Other Income
Increase/(Decrease) in Inventories
Total Income
EXPENDITURE:
Purchase of raw materials and general
merchandise
Staff Costs
Other Direct Expenses
Administration Expenses
Selling and Distribution Expenses
Interest
Depreciation
Total Expenditure
Net Profit before tax and extraordinary
Items
Taxation
Net Profit before Extraordinary Items
Extraordinary Items (Net of tax)
Net Profit after Extraordinary Items

2003
2004
(Note 1)

2005

(Rupees in Million)
2006
2007
(Note 2)

271.67
271.67
5.39
1.90
278.96

299.18
299.18
3.69
5.20
308.07

60.33
613.16
673.49
4.53
129.50
807.52

203.00
1112.37
1315.37
8.98
21.26
1345.61

209.17
1284.30
1493.47
10.16
121.00
1624.63

177.94
13.92
0.48
24.74
39.01
4.60
3.07
263.76

211.45
15.52
0.72
22.19
34.68
5.00
3.86
293.42

611.99
26.93
13.79
50.62
53.99
14.07
9.75
781.14

976.84
52.35
25.18
95.70
101.67
28.47
21.93
1302.14

1163.66
83.65
36.22
107.28
118.41
36.88
28.51
1574.61

15.20
5.70
9.50
9.50

14.65
6.26
8.39
8.39

26.38
2.53
23.85
23.85

43.47
16.19
27.28
27.28

50.02
21.02
29.00
29.00

Notes:
1.
2.
3.

The figures for the year ended 31st March 2003 and 31st March 2004 respectively pertain to
audited accounts of erstwhile Khadim Chain Stores Private Limited
The figures for the year ended 31st March 2005, 31st March 2006 and 31st March 2007
respectively pertain to audited accounts of Khadim India Limited
The manufacturing unit was under a separate Company namely Khadim Industries Limited till
September 30, 2004. Hence, the manufacturing sales have been shown from FY 2005 onwards.

194

Our Results of Operations


PARTICULARS
Sales
Raw
Material
and
Merchandise consumed
Raw
Material
and
Merchandise consumed as
a % of Sales
Staff Costs

31.03.03
271.67

31.03.04
299.18

31.03.05
673.49

31.03.06
1,315.37

Rs. in Million
31.03.07
1,493.47

176.04

206.25

482.49

955.58

1,042.66

64.80%

68.94%

71.64%

72.65%

69.81%

13.92

15.52

26.93

52.35

83.65

Staff Cost % Sales


Other Direct Expenses
Other Direct Expenses %
of Sales
Administrative Expenses

5.12%
0.48
0.18%

5.19%
0.72
0.24%

4.00%
13.79
2.05%

3.98%
25.18
1.91%

5.60%
36.22
2.43%

24.74

22.19

50.62

Administrative Expenses
% of Sales
Selling and Distribution
Expenses
Selling and Distribution
Expenses % of Sales

9.11%

7.42%

7.52%

95.70
7.28%

39.01

34.68

53.99

101.67

118.41

14.36%

11.59%

8.02%

7.73%

7.93%

22.87
8.42%

23.51
7.86%

4.60
1.69%

5.00
1.67%

50.20
7.45%
14.07

93.87
7.14%
28.47

115.41
7.73%
36.88

2.09%

2.16%

2.47%

3.07
1.13%

3.86
1.29%

9.75
1.45%

21.93
1.67%

28.51
1.91%

15.20
5.60%

14.65
4.90%

26.38
3.92%

43.47
3.30%

50.02
3.35%

9.50
3.50%

8.39
2.80%

23.85
3.54%

27.28
2.07%

29.00
1.94%

PBIDT
PBIDT % sales
Interest
Interest Expenses % of
Sales
Depreciation
Depreciation % of Sales

107.28
7.18%

PBT
PBT as a % of Sales
PAT
PAT as a % of Sales

COMPARISON OF FISCAL 2007 AND FISCAL 2006


Sales
Sales have been stated at net realized value i.e. net of excise and VAT. Sales from the footwear
business amounted to Rs. 1,354.87 million in 2006-07 as compared to Rs. 1,198.47 million in 200506. The LFR sales were Rs. 138.6 million in 2006-07 as against Rs. 116.90 million in 2005-06.
The total sales increased by 13.54% in fiscal 2007 as compared to Fiscal 2006. This growth was
primarily due to the increase in the number of footwear outlets. During the year 2006-07 we opened
35 new retails outlets of which 16 were company owned and 19 were through exclusive dealer
network.

195

Raw Material and Merchandise consumed


Raw Material and Merchandise consumed amounted to Rs. Rs. 1042.66 million for 2006-07 as
compared to Rs. 955.58 million for 2005-06. In absolute terms, the increase was 9.11% as compared
to an increase of 13.54% in our sales.
Our own manufactured footwear constitutes only 20% of our total footwear sale and the balance is
sourced from dedicated vendors. The fiscal 2007 saw a reduction in the cost of consumption, which is
primarily attributable to the reduction of excise duty from 16% to 8% for footwear of MRP between
Rs. 250 and Rs. 750. Improved vendor management and negotiation also resulted in favourable
procurement cost resulting in the reduction of raw materials as a percentage to sales.
Staff cost
Our payment to and provision for employees increased by 59.79 % to Rs. 83.65 million in fiscal 2007
from Rs. 52.35 million in fiscal 2006. This is primarily due to induction of certain key personnels for
managing the LFR business and also for increase in the store level personnel at our various footwear
and LFR stores. We reviewed the salary structure and reworked the salary packages for our employees
to bring it at par with the latest industry trend. Further, the retail industry is human resource driven,
thus recruiting and retaining trained man power is a priority for the management.
Administrative
Our administrative and general expenses increased by 12.1% to Rs. 107.28 million in fiscal 2007 from
Rs.95.70 million in fiscal 2006. The increase in administrative expenses was driven by an increase in
the size of our operations. As a percentage of sales, our administrative expenses decreased marginally
from 7.28% in FY 2006 to 7.18% in FY 2007.
Selling & Distribution Expenses
Our selling & distribution expenses increased by 16.46 % to Rs. 118.41 million in fiscal 2007 from Rs.
101.67 million in fiscal 2006. Advertisement and publicity expenses increased 11.46 % from Rs. 82.53
million in 2006 to Rs. 91.99 million in 2007.
The increase in the advertisement expenses was due to a conscious effort on the part of the
management to aggressively promote the brand Khadims on a national platform. During this
financial year our company came out with its advertisement in the national television channels as a
part of its brand building exercise. Enhancement of brand equity was a strategic move necessary to
have a strong brand recall nationally with a resultant increase in our revenue.
With the opening of new retail outlets across different states in India and the regional distribution
centres at Chennai and Delhi the company has witnessed a corresponding increase in its distribution
cost to the tune of 21.73% from Rs.15.65 million in 2006 to Rs.19.05 million in the FY 2007.
Interest and financial charges
Our interest and financial charges increased by 29.54 % to Rs. 36.88 million in fiscal 2007 from Rs.
28.47 million in fiscal 2006. This increase was primarily due to increase in our debt portfolio. As a
percentage of sales, our interest and financial charges increased from 2.16 % in fiscal 2006 to 2.47 %
in fiscal 2007.
Depreciation
In the financial 2006 there was a change in the method of depreciation from Written down value
method to straight line method. Depreciation differential due to afore mentioned reason amounting to
Rs. 16.97 million has been adjusted in the restated accounts. Depreciation increased by 30% to Rs.
28.51 million in fiscal 2007 from Rs. 21.93 million as restated in fiscal 2006.

196

The increase was due to addition of fixed assets in the form of mostly freehold and leasehold
buildings, plant & machinery and furniture-fixtures.
Net Profit before tax
Our company posted a net profit before tax of Rs.50.02 million in the financial year 2007 as against a
restated profit of Rs.43.47 million in the year 2006. Our profit before tax increased by 15.07%.
However, the profit before tax as a percentage of sales saw a marginal increase from 3.30% in 2006
to 3.35% fiscal 2007.
This moderate growth in the profit before tax despite the reasonable growth in turnover is attributable
to the fact that the Company has incurred huge costs on developing its infrastructure in the area of
manpower, information technology and immovable properties. From our past experience we have seen
that our new footwear stores generally have a gestation period that varies from store to store.
Similarly, from the industry data it is seen that any large format retail takes time to break even.
All these expenses are in effect an investment for future as we expect to get benefits from the amount
spent.
Net Profit after Tax
As a result of the foregoing, our net profit after tax increased by 6.30 % to Rs. 29 million in fiscal
2007 from Rs. 27.28 million in fiscal 2006. As a percentage of sales, net profit after tax decreased
marginally from 2.07% in FY 2006 to 1.94% in FY 2007.
COMPARISON OF FISCAL 2006 AND FISCAL 2005
In the fiscal 2005, five group companies having synergic interest were merged with Khadim Chain
Stores Private Limited (subsequently name changed to Khadim India Limited) pursuant to an order of
the Honble High Court at Kolkata, dated 22nd, June 2005 approving the scheme of amalgamation with
retrospective effect from 1st.October, 2004. In view of the aforesaid information the figures for the FY
2005 and 2006 are not strictly comparable.
FINANCIAL INDEBTEDNESS
For details of our secured and unsecured loans see sections titled "Financial Indebtedness" and
Financial Statements beginning on pages 113 and 154 of this Draft Red Herring Prospectus.
LIQUIDITY AND CAPITAL RESOURCES
Our primary liquidity requirements have been to finance working capital as well as cost of projects. We
have met these requirements from cash flows from operations, short-term and long-term borrowings.
NET WORTH
As of March 31, 2007, March 31, 2006, March 31, 2005 , March 31, 2004, March 2003 our net worth,
which is defined as the difference between (a) total assets and (b) total liabilities and provisions, was
Rs. 487.55 million, Rs. 436.70 million, Rs. 408.25 million and Rs. 96.09 million and Rs. 87.71 million
respectively.
Analysis of Factors Affecting Our Business, Financial Condition and Results of Operations
A number of general factors affected our financial performance in the past, and may continue to affect
our financial performance in the future as per clause 6.10.5.5(a) of the SEBI Guidelines are discussed
below:
1. Unusual or infrequent events or transactions
There are no unusual or infrequent events or transactions.

197

2. Significant Economic changes that can materially affect income from continuing
operations
Variation in Interest rate
At present, debt funding constitutes a significant part of total capital requirements. In future, we may
have to rely heavily on borrowed funds to meet our expansion plan. In that case, any rise in interest
rate could have material adverse affect on our bottom line.
Inflation
Inflation may have a major impact in our kind of business and may materially affect our future
profitability.
3. Known trends or Uncertainties that may have material adverse impact on our sales,
revenue or income
Other than as described in this section in this Draft Red Herring Prospectus, to the best of our
knowledge, there are no known trends or uncertainties that have or had or are expected to have a
material adverse impact on revenue or income of the Company from continuing operations.
4. Future changes in relationship between costs and revenues in case of certain events
Rise in Real-Estate Price
Real Estate sector is going through a boom phase. This in turn means increase cost in real estate
prices. We are exposed to this threat of increase in cost as we are planning to open several new stores
across the Country. This can affect our expansion plan as well as profitability adversely.
Increase in Material Price
Substantial increase in material costs may have significant impact on our bottom-line.
5. Material increase / decrease in net sales / revenue due to increased sales volume,
introduction of new products or increased sales prices.
We have achieved a growth of 14% in our top line for FY 2007. Introduction of new products is part of
our business necessity to sustain the sales levels. We have opened two new Lifestyle Retail stores in
the current year, which shall materially add to our revenues.
6. Turnover of the industry segment in which we operate
Please refer to the discussions in the section entitled Industry Overview on page 71 of this Draft Red
Herring prospectus.
7. New products or business segments
We are in retailing of various consumer goods. In order to meet the changing requirements of our
customers, we may launch new product range/category or new brands.
8. Seasonality in Revenue Cycle
The performance of our business depends largely on our performance during the festival period.
Moreover, in our LFR business we may have to continuously replace our existing product range with
new ones depending upon fashion cycles as well as weather condition In order to achieve the same,
we need to conduct end-of-period clearance sale which might affect our profit margins.

198

9. Dependence on single or few suppliers / customers


We source our products from a very diverse group of suppliers and thus our operations are risk averse
from supplier side. Similarly we sell our products to a wide variety of customer segments and do not
foresee business risk arising from our customers.
10. Competitive Conditions
We are well positioned to enhance our position as a preferred shopping destination for customers in
the business segments in which we operate. On account of our competitive strengths we feel we are
well positioned to serve our customers. Such strengths include:

Brand equity and early mover advantage


Entrepreneur led, professionally managed by experienced team
Focus on systems and processes
Large base of loyal customers

Significant development after March 31, 2007 that may affect our future results of
operations
Rent accounts for a substantial portion of our total expenditure as many of our properties are rented.
With the introduction of service tax @ 12.36% on rent payable in the Union Budget 2007, our
bottomline may be impacted. Apart from this, to our knowledge, no circumstances have arisen since
the date of the last financial statements as disclosed in this Draft Red Herring Prospectus, which
materially and adversely affect or are likely to affect, the profitability of our Company.

199

OUTSTANDING LITIGATION AND MATERIAL DEVELOPMENTS


Except as disclosed hereunder, there are no outstanding litigations, suits or criminal or civil
prosecutions, proceedings initiated for offences (including past cases, economic offences etc)
irrespective of whether specified in paragraph (1) of part 1 of Schedule XIII of the Companies Act and
proceedings or tax liabilities against our Company, our Promoters, Directors and Group Companies
that would have a material adverse effect on our business. Except those disclosed here, there are also
no defaults, non-payment or overdues of statutory dues, institutional/ bank dues that would have a
material adverse effect on our business other than unclaimed liabilities against our Company or
Promoters or Directors.
A.

CASES FILED AGAINST OUR COMPANY

i)

Show cause Notices

a)
A notice has been issued by the Registrar of Companies, West Bengal (ROC) dated March
14, 2007 to Khadim India Ltd upon scrutiny of Balance Sheet and Profit & Loss Account as on March
31, 2006, wherein ROC has requested in terms of the provisions of Sec. 234 (Power of Registrar to call
for information) of the Companies Act, 1956 (the Act) for explanations as to why prosecutions should
not be launched against the Company and the Companys officers who were in default for the alleged
violation of the provisions of the Act, which were noticed upon such scrutiny and have been stated in
Annexure-I and Annexure II to the said notice and as summarized hereinbelow:
Annexure I:

Research and Development expenditure not disclosed in the Directors Report contrary to the
Companies (Disclosure of Particulars in the Report of Board of Directors) Rules 1988.

The Investments not categorized as Long Term Investment or Current Investments, violating
Accounting Standard-13.

The Investments categorized into Trade Investments and other Investments contrary to Part-I
of Schedule-VI to the Act.

The nature of Interest income (Rs. 2,878,920/-) not specified resulting in alleged violation of
the provisions of Part-II of Schedule VI to the Act.

Profit on Sale of Investments (Rs. 1,218,673/-) not categorized into Profit from sale of long
term investments and from sale of current investments, contrary to Accounting Standard-13.

Capital work in progress is reported inclusive of capital advance contrary to Schedule-VI to the
Act and Accounting Standard-10.

Sundry Creditors (Rs. 143.56 million) not categorized into Small Scale Industrial undertakings
and others contrary to Part-I of Schedule-VI to the Act.

Cost formula not disclosed in respect of Inventories contrary to Accounting Standard-2.

Excise Duty not included in valuation of finished goods violating Accounting Standard-2.

Expenses on Research and Development not disclosed in Profit & Loss Account as it appears,
contrary to Accounting Standard-26.

No provision made for excise duty on stock finished goods resulting in violation of section
209(3)(b) (Books of account to be kept by company) of the Act.

200

Annexure II
In Annexure II, several violations of the Act has been alleged, inter alia, including irregularities
relating to Notices, Directors Report in terms of Section 217 (2A) (Boards Report), Auditors Report,
Borrowings, Investments, compliance of provisions of Sections 417 (Employees securities to be
deposited in post office savings bank account or Scheduled bank) and 418 (Provisions applicable to
provident fund of employees) of the Act, Loans given, Dividends, Unpaid and Unclaimed Dividends,
Selling arrangements, whether there is any transaction falling under Sections 297 (Boards sanction to
be required for certain contracts in which particular directors are interested) /299 (Disclosure of
interest by Director) /301 (Register of Contracts, companies and firms in which Directors are
interested) of the Act, whether all the assets of the company stand registered in the name of the
Company, whether the provisions of section 314 of the Act have been complied with in regard to the
appointment of directors in any office of profit with the company, whether the details and break-up of
the following furnished in Profit & Loss Account.
Certain details and documents have also been requested for submission, inter alia, including copies of
Forms 2, 5, 32, 23, dates for increase of paid up capital of the Company, details of appointment of
whole time Company Secretaries, copies of special resolutions under Section 81(1A) (Further Issue of
Capital), particulars of regrouping of figures in Balance Sheet and Profit and Loss Accounts, list of
Miscellaneous Expenses in Profit and Loss Account, details of secured and unsecured loans, details of
scheme of arrangement / amalgamation, depreciation, managerial remuneration, Notice of Annual
General Meeting for 2003 to 2006, constitution of Remuneration Committee.
The following past and present Directors and officers of the Company were also requested to show
cause as to why prosecutions should not be filed for the aforesaid alleged violation of the provisions of
the Act:
1.
2.
3.
4.
5.
6.
7.
8.

Mr. Siddhartha Roy Burman


Mr. Satya Prasad Roy Burman
Mr. Partha Royburman
Mr. Amar Nath Sadhu
Mr. Indra Nath Chatterjee
Mr. Ashoke Kumar Dutta
Mrs. Namita Royburman
Mr. Joydev Sengupta

The Company has filed its reply along with supportings with the ROC. Thereafter, ROC has issued
Show Cause Notices to the aforesaid persons wherein all the above violations referred in Annexure-I
has been mentioned alongwith violation of Section 211(1) read with Schedule VI of the Act. The
Company has applied application for extension of time to reply to the said show cause notices.
Compounding petitions for all the above persons, except for Mr. Partha Roy Burman, have been filed.
Amount involved is not ascertainable.
b)
The Company and its 2 directors, namely, Mr. Satya Prasad Roy Burman, Mr. Siddhartha Roy
Burman and the President, Mr. Suman Barman Roy were served with a notice/ summon under the
Minimum Wages Act, 1948 to appear before the relevant Authority on 17/07/2007 for an alleged
violation of the Minimum Wages Act, 1948 and levying a penalty of Rs. 13,716/-. The matter was not
taken up on that date and the same is pending.
ii)

Civil Suits

a)

Property Related Litigation

There are no property related litigations against the Company.

201

b)

Employee Related Litigation

Employees Provident Fund Matter


i)
Proceedings under Section 7A (Determination of moneys due from employers) of the
Employees Provident Fund and Miscellaneous Provisions Act, 1952 (EPF & MPA, 1952) was initiated
against Khadim Industries Pvt. Ltd. (now Khadim India Limited) for the period 09.06.2001 to
31.08.2003 alleging that our company has falied to remit Provident Fund, Employees Pension Fund
and Insurance Fund contribution in respect of employees engaged in the Company and issued a Notice
dated November 17, 2006 under Section 32 (Penalty for default) of the Code of Civil Procedure, 1908
in favour of (i) Mr. Satya Prasad Roy Burman and (ii) the Company. Thereafter, a Notice of Show
Cause (R-NE/WB/40794/C.C.-V/730) dated December 11, 2006 as to why warrant of arrest should not
be issued in respect of the said proceedings under Section 7A of EPF &MPA, 1952 was initiated against
Mr. Satya Prasad Roy Burman. Thereafter, Mr. Satya Prasad Roy Burman moved a Writ Petition being
no. 28344(W) of 2006 before the Honble High Court at Calcutta challenging the above Notices of
Show Cause. The matter came up for hearing on January 2, 2007 before Honble Justice Aniruddha
Bose and His Lordship was pleased to stay the impugned notice permanently and directed the
Provident Fund authorities to issue fresh notice. Fresh notice being no. R-NE/WB/40794/C.C.-V/1151
was issued directing to produce certain documents. In the meantime, the officials of the Provident
Fund Authorities had visited the office of the Khadim India Ltd and certain documents have been
furnished to him and representatives of Khadim India Ltd. have also appeared before the Assistant
Provident Fund Commissioner and the next date in the matter is October 11, 2007.
ii)
Proceedings under Section 7A (Determination of moneys due from employers) of the
Employees Provident Fund and Miscellaneous Provisions Act, 1952 (EPF & MPA, 1952) was initiated
against Khadim Chain Stores Pvt. Ltd. (now Khadim India Limited) for alleged evasion of membership
from coverage under the EPF & MPA, 1952. A Notice of Show Cause (R-NE/WB/28840/C.C.-III/) dated
December 20, 2006 as to why warrant of arrest should not be issued in respect of the said
proceedings under Section 7A of EPF & MPA, 1952 was initiated against Mr. Siddhartha Roy Burman.
Thereafter, Mr. Siddhartha Roy Burman moved a Writ Petition being no. 2062(W) of 2006 before the
Honble High Court at Calcutta challenging the above Notice of Show Cause. The matter came up for
hearing before Honble Justice Aniruddha Bose and His Lordship was pleased to stay the operation of
the impugned notice dated January 17, 2007 and directed the parties to file Affidavit in Opposition and
Affidavit in Reply. The said interim order was subsequently extended until further orders. The Affidavit
in Opposition has been served on us and the Affidavit in Reply is to be submitted. Matter is pending.
c)

Intellectual Property Matters

Sl.No.
Parties
Court/Case No.
Date Instituted
Background
of
the Case

Present Status
Amount
Involved
/

1
Bata ( India ) Limited (Plaintiff) vs. Khadim Shoe (P) Limited (now
known as Khadim India Limited) ( Defendant )
C.S No.389 of 1998
September 21, 1998
The Plaintiff has filed the suit against the Defendant, inter alia, to the
effect that by praying for an injunction restraining the Defendant from (i)
infringing wholly or in part the registered trademark Nos.189601, 189603
and 489948B by using the word HAWAI on footwear and /or
advertisement as its trademark (ii)
using the word HAWAI as its
trademark to deceive and induce the people (iii) passing off or attempting
to pass off the business of the Defendant .
The Plaintiff filed an application being G.A.No.3902 of 1998 praying for an
interim injunction which came up for hearing before Honble Justice
Aniruddha Bose for on November 21, 2006 who was pleased to pass an
order interalia, to the effect that directing the parties to file affidavit in
opposition and affidavit in reply.
Matter is pending
Not Ascertainable

202

Financial
Implications on
the issuer
Provision made
in the Financial
Statement

Sl.No.
Parties
Court/Case No.
Date Instituted
Background
of
the Case

Present Status
Amount
Involved
/
Financial
Implications on
the issuer
Provision made
in the Financial
Statement

Sl.No.
Parties
Court/Case No.
Date Instituted
Background
of
the Case

Nil

2
Subhas Chand Bansal (Plaintiff) Vs (i) Khadims and (ii) Khadim India
Limited (Defendant)
C.S.(OS) NO.2392 of 2006
December 18, 2006
The Pplaintiff has made an application before the Honble High Court at
New Delhi U/s 135(2) of Trade Marks Act, 1999 read with Order 39 Rules
1 & 2 and Sec.151 C.P.C alleging, inter alia, to the effect that the Plaintiff
is the proprietor of the registered trademark KHAZANA under
No.1070231 in Class: 25 in respect of the specification of goods to be
read as Boots, Shoes and Slippers.
The matter came up for hearing before the Honble Justice G.S. Sistani on
January 8, 2007 and the Honble High Court of Delhi granted an exparte
ad interim injunction against the Defendant restraining the Defendant, its
dealers etc. from manufacturing, selling, advertising directly or indirectly
in Boots, Shoes and Slippers under the trademark KHAZANA till
September 10, 2007 and the respondents are to file their Affidavit in
Reply and Written Statement.
Matter is pending
Not Ascertainable

Nil

3
Bata India Limited (Plaintiff) Vs. Khadim Shoe Pvt. Ltd. (Defendant)
High Court at Calcutta / C. S. 184 of 1999
March 1999
Plaintiff claims to be the owner of three designs of its rubber footwear
called 1. MASSAGE HAWAI for footwear as a whole (D. Reg No.
159337), 2. MASSAGE HAWAI for sole only (D. Reg No. 159185) and 3.
IMPULSE (D. Reg. No. 177386) as well as the owner of the Copyright
on the technical drawings of the components of the mould used for the
manufacture of the products having those designs and its allegation is
that the Defendant is marketing two rubber slippers under the name
HEALTH CARE and VIBRATO under item Nos. 223016 and 223052 the
design of which are fraudulent imitations of the plaintiffs registered
designs mentioned above and thereby infringing its right on those
registered designs and the copyright on the technical drawings as
mentioned above.
The Plaintiff, inter alia, has prayed for a permanent injunction against the
Defendant from infringing any of the above designs, selling, marketing
any products which violate its right on such designs and from infringing
the copyright in the technical drawings of the component of the moulds.
The Plaintiff has made an application vide G.A. No. 1267 of 1999 praying

203

Present Status
Amount
Involved
/
Financial
Implications on
the issuer
Provision made
in the Financial
Statement

Sl.No.
Parties
Court/Case No.
Date Instituted
Background
of
the
Case

for an interim injunction. The Defendant has opposed such application by


filing an Affidavit in Opposition. Further the Plaintiff has filed an Affidavit
in Reply.
Matter is pending
Not Ascertainable

Nil

4
Bata ( India ) Limited [BIL(Plaintiff) ] vs. Khadim Shoe (P) Limited [now
known as Khadim India Limited ( Defendant )]
C.S. 75 OF 2004
March 2004
The Plaintiff has filed this Suit inter alia, praying for decree of permanent
injunction before the Honble High Court at Calcutta, restraining the
Defendant and its servants, etc. from allegedly infringing the footwear
design no.176333 registered in favour of the Plaintiff.
The Plaintiff has further made an application for ad-interim order of
injunction vide G.A no.1135 of 2004. This application for ad-interim order
was taken up on 18 November 2005 by the Honble Justice Kalyan Jyoti
Sengupta. The Honble Court, after hearing the Defendant, was pleased
to dismiss for default the matter since no one appeared on behalf BIL.

Present Status
Amount
Involved
/
Financial
Implications on
the issuer
Provision made
in the Financial
Statement

The main suit being C.S. 75 of 2004 is still pending.


Not Ascertainable

NIL

5.
Bata India Limited has filed 5 applications being Case nos. 1 to 5 of 2004 under Section 50 of
the Copyright Act, 1957 for the mark Hawai and prayed for rectification and expunging of entry no.
A 56218/99 from the Copyright Register before the Honble Copyright Board, New Delhi. We have filed
our replies to the same refuting all its allegations. Matters are pending.
6.
Our Company has filed for registration of certain trademarks including Word marks and Label
marks both in colour and black and white before the Registrar of Trade Marks against which
Oppositions have been filed by various parties alleging that such marks are deceptively similar to
theirs. At present we have received opposition for 14 trademark applications and such applications are
pending at various stages.

204

d)

Consumer Disputes

Sl.No.
Court / forum
Parties
Court/Case No.
Date Instituted
Background
of
the Case
Present Status
Amount
Involved
/
Financial
Implications on
the issuer
Provision made
in the Financial
Statement

Sl.No.
Court / Forum
Parties
Court/Case No.
Date Instituted
Background
of
the Case

Present Status
Amount
Involved/
Financial
Implications on
the issuer
Provision made
in the Financial
Statement

1
District Consumer Redressal Forum, Balia
Ajay Kumar Pandey (Complainant) Vs. 1. Proprietor, Khadims,
Aukdengang, Balia, U. P. (Opposite Party no. 1) 2. Khadim Holdings Pvt.
Ltd. 24/A, Rabindra Sarani, 2nd Floor, Kolkata (Opposite Party no. 2)
235 of 2006
November 4, 2006
This case was instituted by the Plaintiff with allegation against the
Opposite Party No. 1 for selling footwear at a price more than the
Maximum Retail Price printed on the label of the footwear.
Matter is pending.
Not Ascertainable

Nil

2
District Consumer Redressal Forum, Jamnagar
Sanjay C. Daudia (Complainant) Vs. (1) Authorised Dealer of
Khadim Leather Manager, Khadim Leather (Opposite party no. 1) &
(2) Khadim India Limited (Opposite party no. 2).
Complaint No. 60 of 2007
April 2007
The Complainant has filed this petition alleging that the
Complainant has purchased one ladies chappal amounting to Rs.
245/- for his wife on December 1, 2006 and the same got damaged
within 15 days i.e. within the warranty period. The Complainant
approached the Opposite party no.1 who told him that the same
pair is not available with them at present but will be available within
a day or two and thereafter Opponent party no.1 will change it. It
has been alleged by the Complainant that subsequently the
Complainant had visited the shop several times but Opposite party
no.1 did not change the broken chappals but rather harassed him
by giving evasive reply. This has resulted in the present complaint
demanding a new pair of chappal amounting to Rs. 245/-, interest
at the rate of 18% from the date of purchase till date and Rs.
5,000/- for harassing him mentally and physically.
Matter is pending
Not ascertainable

Nil

205

Sl.No.
Court / Forum
Parties
Court/Case No.
Date Instituted
Background
of
the Case

Present Status
Amount
Involved/
Financial
Implications on
the issuer
Provision made
in the Financial
Statement
e)

3
District Consumer Redressal Forum, Jamshedpur
Bhagwanlal Lal Chaudhary (Complainant) Vs. (1) M/s. Khadim
Shoe Pvt. Ltd., Kolkata (Opposite party no. 1) & (2) M/s. Khadims,
Jamshedpur (Opposite party no. 2)
Complaint No. 29 of 2007
June 2007
The Complainant has filed this petition alleging that the complainant
has purchased one pair of shoe from the shop of Opposite party
No.2 amounting to Rs. 740/- but within 3 months the sole cracked
and the same became defective. It has been alleged that the
Opposite Party no. 2 did not entertain his request resulting in filing
of this Complaint demanding Rs. 740/- as compensation.
Matter is pending
Not ascertainable

Nil

Miscellaneous

Sl. No.
Parties
Court/Case No.
Date Instituted
Background
of
the Case

1
HDFC Bank Ltd. (Plaintiff) Vs. (1) Adhyatma Adhikary (Defendant) &
(2) Khadim Chain Stores Pvt. Ltd.( Proforma Defendant)
Title Suit No.649 of 2006
May 2006
The Plaintiff has instituted the suit before the Honble City Civil Court,
Calcutta against the Defendant praying for a (1)decree for declaration
that the Defendant has no legal character or right towards the sum of
Rs.5,50,000/- that was erroneously credited to his savings a/c . instead
of crediting the savings a/c of the Proforma Defendant drawn by the
through cheque no.393930 dated 11/05/05 (2) for transfer decree of
Rs.33,247.41 together with an interim
interest and
interest on
judgment @36% per annum and (3) also an order of permanent
injunction restraining the defendant from in anyway disturbing or
interfering the smooth function of the plaintiffs bank.
The Proforma defendant has filed an application on 28 May 2007 for
striking out its name from the proceeding. The Ld. Court has directed to
serve copies of the above application on the parties.

Present Status
Amount
Involved
/
Financial
Implications on
the issuer
Provision made
in the Financial
Statement

Matter is pending.
Not Ascertainable

Nil

206

ii)

Tax Related Litigation:

There are certain tax disputes in relation to the Company and the details thereof are as follows:
a)

Pending Excise Matters

SL NO
COMPANY
STAGE PENDING
DUTY INVOLVED
FACTS

ALLEGATIONS

CURRENT
STATUS

SL NO
COMPANY
STAGE PENDING
DUTY INVOLVED
FACTS

1
Khadim India Ltd in relation to M/s Pacific Shoes
Commissioner of Central Excise (Appeals) Kolkata
6,40,153.68 against M/s Pacific Shoes. Redemption fine of Rs 7000/- and
Penalty Rs 20000/- on Khadim India Limited.
A team of Central Excise officers of Kolkata I Commissionerate visited our
factory premises on 22-08-2001 and seized 48 pairs of Khadims branded
footwear. The said seized pairs were released by us on provisional basis after
execution of Bond and Bank guarantee on 19-10-2001. Thereafter on 10-102001 the said officers also visited the premises of M/s Pacific Shoes who are
manufacturer and supplier of unbranded footwear and seized eight challan books
from their premises. The said bill book contained the details of sale of unbranded
footwear. During the search proceedings, statement of various personnel of our
Company and proprietor of M/s Pacific Shoes were recorded. It was submitted by
them that the goods manufactured by M/s Pacific Shoes contained specific item
numbers to identify product design and that the goods were manufactured and
supplied by M/s Pacific Shoes in unbranded form to our Company. On the basis
of various depositions a Show Cause Notice dated 16-12-2003 was issued by
Joint Commissioner, Central Excise, Kolkata I Commissionerate to our Company
and M/s Pacific Shoes.
It has been alleged that M/s Pacific Shoes had manufactured and removed goods
from their factory in a clandestine manner during the period 25-01-1999 to 3006-2001 with an intention to evade duty to the tune of Rs. 6,40,153.68. It has
also cleared goods bearing the brand name of 'Khadim' without observing
Central Excise formalities. Further it was alleged that our Company had received
branded goods, which were cleared without payment of Central Excise duty and
hence such branded footwear were liable for confiscation.
M/s Pacific Shoes and our company were unable to file the reply to the said show
cause notice due to unavailibility of relied upon documents not provided by the
Central Excise Authorities. The Additional Commissioner of Central Excise,
Kolkata - I Commissionerate vide Order in Original No. 37/03 (Ch-64) (15)227CE/kol-1/02/JC18/2006 dated 29-12-2006 demanded Rs. 6,40,153.68/- from
M/s Pacific Shoes and redemption fine of Rs 7000/- and penalty of Rs. 20000/from Khadim India Ltd. Aggrieved by this order we filed an appeal before
Commissioner of Central Excise (Appeals) on 15-03-2007.

2
Khadim India Ltd in relation to M/s Sona Leathers
Commissioner of Central Excise (Appeals) Kolkata
6,96,568 against M/s Sonaleathers. Redemption fine of Rs 36000/- and Penalty
of Rs 29517 on Khadim India Limited.
A team of Central Excise officers of Kolkata I Commissionerate visited our
factory premises on 22-08-2001 and seized 1177 pairs of Khadims branded
footwear. The said seized pairs were released by us on provisional basis after
execution of Bond and Bank guarantee on 19-10-2001. Thereafter on 10-102001 the said officers also visited the premises of M/s Sonaleathers who are
manufacturer and supplier of unbranded footwear and seized three bill books
from their premises. The said bill book contained the details of sale of unbranded
footwear. During the search proceedings, statement of various personnel of our

207

ALLEGATIONS

CURRENT
STATUS

SL NO
COMPANY
STAGE PENDING
DUTY INVOLVED
FACTS

ALLEGATIONS

CURRENT
STATUS

Company and proprietor of M/s Sonaleathers were recorded. It was submitted by


them that the goods manufactured by M/s Sonaleathers contained specific item
numbers to identify product design and that the goods were manufactured and
supplied by M/s Sonaleathers in unbranded form to our Company. On the basis
of various depositions a Show Cause Notice dated 28-05-2004 was issued by
Joint Commissioner, Central Excise, Kolkata I Commissionerate to our Company
and M/s Sonaleathers.
It has been alleged that M/s Sonaleathers had manufactured and removed goods
from their factory in a clandestine manner during the period 16-10-2000 to 3006-2001 with an intention to evade duty to the tune of Rs. 6,96,568. It has also
cleared goods bearing the brand name of 'Khadim' without observing Central
Excise formalities. Further it was alleged that our Company had received
branded goods, which were cleared without payment of Central Excise duty and
hence such branded footwear were liable for confiscation.
M/s Sonaleathers and our company filed reply to the said show cause notice on
20-8-2004.The Additional Commissioner of Central Excise, Kolkata - I
Commissionerate vide Order in Original No. 12/04 (Ch-64) (15)300-CE/kol1/02/JC16/2006 dated 29-12-2006 demanded Rs. 6,96,568/- from M/s
Sonaleathers and redemption fine of Rs 36000/- and penalty of Rs. 29517/from Khadim India Ltd. Aggrieved by this order we filed an appeal before
Commissioner of Central Excise (Appeals) on 15-03-2007.Personal Hearing was
done on 20.07.2007. Orders awaited.

3
Khadim India Limited in relation to Dutta Enterprises
Awaiting personal hearing before Deputy Comissioner of Central Excise Central
IV Division Kolkata I Commissionerate
1,06,123 against M/s Dutta Enterprises
A team of Central Excise officers of Kolkata I Commissionerate visited our
factory premises on 22-08-2001 and seized 12 pairs of Khadims branded
footwear. Thereafter on 10-10-2001 the said officers also visited the premises of
M/s Dutta Enterpriseswho are manufacturer and supplier of footwear and various
bills, challans along with 107 pairs of shoes were seized. Among them there
were 96 pairs of Khadims branded footwear. During the search proceedings,
statements of various executives of M/s Dutta Enterprises were recorded. It was
submitted by them that the pricing of the goods were done at the premises of
M/s Dutta Enterprises. On the basis of various depositions a Show Cause Notice
dated 28-03-2004 was issued by Deputy Commissioner of Central Excise,
Central IV Division Kolkata I Commissionerate to our Company and M/s Dutta
Enterprises.
It has been alleged that M/s Dutta Enterprises had manufactured and removed
branded footwear in a clandestine manner during the period 20-07-2000 to 0210-2001 without payment of Central Excise duty of Rs. 1,06,123. Further it was
alleged that our Company had received branded goods, which were cleared
without payment of Central Excise duty and hence such branded footwear were
liable for confiscation.
M/s Dutta Enterprises and our Company filed the reply to the said Show Cause
Notice on 30-08-2004. But the date of personal hearing has still not been fixed
and conveyed to us by the Central Excsie authorities.

208

SL NO
COMPANY
STAGE PENDING
DUTY INVOLVED
FACTS

ALLEGATIONS
CURRENT
STATUS

4
Khadim India Limited (erstwhile Khadim Chain Stores Limited)
Awaiting a date of personal hearing for the appeal filed before the Hon'ble
Customs, Excise, Service Tax Appellate Tribunal, Eastern Zonal Bench, Kolkata
by the Assistant Commissioner of Central Excise Kolkata V Commissionerate
39,27,053
Interest - 8,94,731.24
The Finance Bill 2003 amended the definition of manufacture to include the
process of packing, re-packing, labelling and re-labelling of goods. This
amendment became effective from 14-05-2003. With this, the activity of our
Company which included procuring goods from small shoe makers and labelling
them fell within the purview of manufacture. We paid duty with effect from 1405-2003 on 08-08-2003 and interest of Rs. 66,430 on 20-10-2003. On 22-082005, the Assistant Commissioner of Central Excise, Tiljala Division
communicated that during the period from 01-03-2003 to 13-05-2003 we have
cleared excisable goods worth Rs. 2,45,44,084 without payment of duty and
directed us to pay duty of Rs. 39,27,053.40 along with interest of Rs.
8,94,731.24. Aggrieved by this decision we filed an stay application before the
Commissioner of Central Excise (Appeals - I) who directed us to deposit Rs. 16
lakhs as pre deposit and the same was done by us. Along with it we filed an
appeal before the Commissioner of Central Excise (Appeals -I), who quashed the
aforesaid decision on 27-09-2005.Thereafter we asked for refund of Rs. 16 lakh
but the Assistant
Commissioner of Central Excise vide his letter dated 17-3-2006 replied that
the amount cannot be refunded as the matter is still subjudice. Aggrieved
by the order of Commissioner of Central Excise (Appeals - I) the Assistant
Commissioner of Central Excise, Kolkata V Commissionerate filed an appeal
before the CESTAT, Eastern Zonal Bench, Kolkata.
It has been alleged that we have cleared excisable goods worth Rs. 2,45,44,084
without payment of duty for the period between 1-03-2003 to 13-05-2003.
The Commissioner of Central Excise (Appeals - I) vide order dated 27-09-2005
quashed the order of Assistant Commissioner of Central Excise. Aggrieved by
this order, the Assistant Commissioner of Central Excise, Kolkata V
Commissionerate filed an appeal before the CESTAT, Eastern Zonal Bench,
Kolkata to which we have filed our cross objection on 19-04-2007.

SL NO
COMPANY
STAGE PENDING

5
Khadim India Limited (erstwhile Khadim Chain Stores Limited)
The Addiional Commissioner passed order dated 24.08.2007confirming demand
of Rs 12,76,913 with penalty of Rs 12,76,913. Aggrieved bythe order we will file
an appeal before Commissioner of Central Excise (Appeals-i)

DUTY INVOLVED

Duty Rs 12,76,913 Penalty Rs 12,76,913

FACTS

ALLEGATIONS
CURRENT
STATUS

A team of Central Excise officers of Anti Evasion Unit of Kolkata - V


Commissionerate visited our factory premises on 29-07-2005. During the
investigation proceedings, the statement of various personnel of our Company
were recorded. The officers repeatedly revolved around various set of questions
to conclude without corroborative evidence that we were aware of imposition of
duty effective from 01-03-2003 and that we have evaded the payment of such
duty and therefore extended period of limitation would apply. On the basis of the
various depositions a Show Cause Notice dated 18-08-2006 was issued by the
Commissioner of Central Excise Kokata V Commissionerate to us.
It has been alleged that we have cleared excisable goods having duty Rs.
34,34,565 without proper assesment and payment of central excise duty and
that we have also failed to observe the central excise formalities.
We have filed our reply to the Show Cause Notice on 23-10-2006. The personal
hearing with the Assistant Commissioner of Central Excise took place on 15-02-

209

2007. Order In Original No. 37/ADDL. COMMR/CE/KOL-V/ADJN/2007 dated 2408-2007 passed by the Additional Commissioner of Central Excise,Kolkata V
Commissionerate in view of the show cause notice dated 18-08-2006. The
amount of excise duty confirmed Rs 12,76,913/- with penalty of Rs 12,76,913
and interest at appropriate rate. We would file appeal before Commissioner (A).

SL NO
COMPANY
STAGE PENDING
DUTY INVOLVED

FACTS
ALLEGATIONS
CURRENT
STATUS

6
Khadim India Limited (erstwhile Khadim Shoe Pvt. Limited)
Awaiting personal hearing before the Additional Commissioner of Central Excise,
Kolkata - I Commissionerate.
24,75,468
The Finance Bill 2003 amended the definition of manufacture to include the
process of packing, re-packing, labelling and re-labelling of goods. This
amendment became effective from 14-05-2003. With this, the activity of our
Company which included procuring goods from small shoe makers and labelling
them fell within the purview of manufacture. We paid duty with effect from 1405-2003 and interest of Rs. 74,231 on 08-08-2003 and informed the Range
Superintendent. On 03-08-2006,the Superintendent of Central Excise, Anti
Evasion, Kolkata-I Commissionerate sought the date from which finished goods
were assessed to central excise duty, to which we furnished a reply. The
deposition of Shri. Indrajit Chaudhuri, Senior Manager-Taxation was recorded on
16-11-2006, wherein the questions asked by the aforesaid authority revolved
around the fact that we were aware of the imposition of duty effective from 0103-2003 and that we have evaded the payment of such duty therefore extended
period of limitation shall apply. On the basis of this deposition a Show Cause
Notice dated 21-06-2007 was issued by the Additional Commissioner of Central
Excise,Kolkata I Commissionerate to our Company.
It has been alleged that we have cleared excisable goods having duty Rs.
24,75,468 without proper assesment and payment of central excise duty and
that we have failed to observe the central excise formalities.
We have filed our reply to the Show Cause Notice on 25-07-2007. Awaiting
personal hearing before the Additional Commissioner of Central Excise, Kolkata I Commissionerate.

210

KHADIM INDIA LIMITED

b)
SL
NO

Pending Income Tax Disputes


COMPANY

A.Y.

STAGE
PENDI
NG /
Court/
Forum
APPEAL
-CIT
(A)

DUTY
INVOLVED
(Rs/)

KHADIM
INDIA
LIMITED
(ERSTWHILE
KHADIM
CHAIN
STORES PVT LTD.)

20042005

KHADIM
INDIA
LIMITED
(ERSTWHILE
KHADIM
CHAIN
STORES PVT LTD.)

20032004

APPEAL
-CIT
(A)

19359296

KHADIM
INDIA
LIMITED
(ERSTWHILE
KHADIM SHOE PVT
LTD.)

20032004

APPEAL
CIT (A)

3266519

139437

211

REMARKS/STATUS

The Company filed its return of income on 3009-2004 wherein total income returned was Rs
86,00,220. Notice u/s 143(2) and 142(1)
dated 05-05-2006 and 02-08-2006 was served
on the Company by the Learned Assistant
Commissioner of Income Tax, Circle-3, Kolkata
. Order u/s 143(3) was passed on 21-12-2006
by the Learned ACIT disallowing depreciation
claimed on use of Glow Sign and raising a
demand
of
Rs
1,39,437.The
Company
aggrieved by the above order filed appeal
before the CIT (Appeals) -III on 25.01.2007.
The appeal is still pending before CIT
(Appeals)-III
The Company filed its return of income on
27.10.2003 showing total income of Rs
56,84,376/-. Subsequently, the said return
was taken up for scrutiny. Statutory notices
u/s 143(2) & 142(1) were duly served on the
appellant. The Ld. ACIT, Circle 3 passed order
u/s 143(3) on 30-03-2006 assessing the total
income at Rs 3,90,93,210. The Ld ACIT made
various
disallowances.
The
Company
aggrieved by the aforesaid order filed appeal
before the CIT (Appeals)-III on 19.04.2006.
The appeal is pending before CIT (Appeals)III.
The Company filed its return of income on 3010-2003 wherein total income returned was
Rs3,13,33,350.The return was not processed
and notice under section 148 dated 10-112005 was issued. Thereafter questionaire
dated 23-12-2005 was issued to the assessee
requestioning various details. Subsequently
notice u/s 143(2) and 142(1) dated 26-052006 and 05-09-2006 was served on the
Company
by
the
Learned
Assistant
Commissioner of Income Tax, Circle-3,
Kolkata. Order u/s 147/143(3) was passed on
26-12-2006 by the Ld. ACIT determining total
income at Rs 3,83,09320 and raising a
demand of Rs 32,66,519. The Ld. ACIT
disallowed Royalty Expenses for use of Brand
name
of
Rs
69,75,968.The
Company
aggrieved by the order filed appeal before the
CIT (Appeals)-III on 24.01.2007. The appeal is
still pending before CIT (Appeals)-III.

KHADIM INDIA LIMITED

SL
NO

COMPANY

A.Y.

KHADIM
INDIA
LIMITED
(ERSTWHILE
KHADIM SHOE PVT
LTD.)

20022003

KHADIM
INDIA
LIMITED
(ERSTWHILE
KHADIM SHOE PVT
LTD.)

20042005

STAGE
PENDI
NG /
Court/
Forum
APPEAL
-CIT
(A)

DUTY
INVOLVED
(Rs/)

HONBL
E HIGH
COURT

1714232

2833645

212

REMARKS/STATUS

The Company filed its return of income on 1110-2002 wherein total income returned was Rs
2,94,72,860. The return was processed u/s
143(1) on 27.02.2003.Thereafter,notice u/s
143(2) dated 15.10.2003 was served on the
appellant
by
ACIT,
Cricle-12,
Kolkata.
Subsequently, the files were transfered to the
jurisdiction of the ACIT-3. Thereafter notice
u/s 142(1) dated 01-11-2004 was served
along with questionaire.Order u/s 143(3) was
passed on 14-03-2005 by the Ld. ACIT
determining total income at Rs 3,50,54,276
and raising a demand of Rs 28,33,645. The
Learned ACIT disallowed Royalty Expenses for
use of Brand name of Rs 55,60,595.The
Company aggrieved by the order filed an
appeal before the CIT (Appeals)-III on
28.05.2005. The appeal is been heard by CIT
(Appeal) -III on various dates. The decision is
pending.
For the assessment year under consideration,
a proceeding being survey u/s 133A of the
Income Tax Act, 1961 was conducted by the
department at the premises belonging to the
appellant.
During
the
survey
relevant
documents were examined and copies of
certain documents out of them were taken by
the department. The Ld ACIT, Cricle 58 passed
an order raising demand of Rs 1,06,30,267
including interest of Rs 11,38,956 for non
deduction of TDS on the entire purchase for FY
2003-04. The assessee being aggrieved by the
order filed an appeal before CIT (A) -XL. CIT
(A) passed an order dated 15/09/2005 giving
assessee partial relief to the tune of Rs
87,97,655 by allowing purchases of footwear
from supplier without affixing khadim brand
name is not required for TDS. However CIT (A)
confirmed the liability for deduction of Tax for
footwear supplied with Khadim brand name.
The assessee filed an appeal before ITAT
against the order of CIT (A)-XL on
04.10.2005. The Hon'ble ITAT passed an order
dated 12-05-2006 giving full relief to the
assessee. The Income Tax Department filed an
appeal before the Hon'ble High Court and also
for
condonation
of
delay
pettion
on
02.03.2007. The delay of 136 days have been
condoned by the Hon'ble High Court.The
assessee has also filed an cross objection
against the petition filed by the Department.
The date of hearing is not yet fixed.

KHADIM INDIA LIMITED

c)

Pending Sales Tax Disputes

Name of the
Company

Name of
the
Statute

Nature of
Dues

Khadim India
Limited
(erstwhile
Khadim Shoe
Pvt Ltd.)
Khadim India
Limited
(erstwhile
Khadim Shoe
Pvt Ltd.)
Khadim India
Limited
(erstwhile
Khadim Chain
Stores
Pvt
Ltd.)
Khadim India
Limited
(erstwhile
Khadim Chain
Stores
Pvt.
Ltd.)
Khadim India
Limited
(erstwhile
Khadim Shoe
Pvt. Ltd.)
Khadim India
Limited
(erstwhile
Khadim
Industries Pvt
Ltd.)
Khadim India
Limited
(erstwhile
Khadim Shoe
Pvt. Ltd.)
Khadim India
Limited
(erstwhile
Khadim Chain
Stores
Pvt.
Ltd.)
Khadim India
Limited
(erstwhile
Khadim Shoe
Pvt. Ltd.)
Khadim India

Central
Sales
Tax
Act, 1956

Dispute
on
account
of
Assessment

Central
Sales
Tax
Act, 1956

Dispute
on
account
of
Assessment

Central
Sales
Tax
Act, 1956

Period for
which
amount
relates
FY 200203

Forum where
the dispute
is pending

Amount
(Rs.)

Addl.
Commissioner
(Appeals)

265,237.00

FY 200304

Deputy
Commissioner
(Appeals)

3,542,462.00

Dispute
on
account
of
Assessment

FY 200304

Deputy
Commissioner
(Appeals)

7,677,589.00

West
Bengal
Sales
Tax
Act, 1994

Dispute
on
account
of
Assessment

FY 200304

Deputy
Commissioner
(Appeals)

1,646,548.00

West
Bengal
Sales
Tax
Act, 1994

Dispute
on
account
of
Assessment

FY 200304

Deputy
Commissioner
(Appeals)

5,570,293.00

West
Bengal
Sales
Tax
Act, 1994

Dispute
on
account
of
Assessment

FY 200304

Deputy
Commissioner
(Appeals)

288,271.00

Central
Sales
Tax
Act, 1956

Dispute
on
account
of
Assessment

FY 200405

Note 1

1,848,464.00

Central
Sales
Tax
Act, 1956

Dispute
on
account
of
Assessment

FY 200405

Note 1

1,792,458.00

West
Bengal
Sales
Tax
Act, 1994

Dispute
on
account
of
Assessment

FY 200405

Note 1

4,103,608.00

West

Dispute

FY 2004-

Note 1

2,143,769.00

on

213

KHADIM INDIA LIMITED

Name of the
Company

Name of
the
Statute

Nature of
Dues

Limited
(erstwhile
Khadim Chain
Stores
Pvt.
Ltd.)
TOTAL

Bengal
Sales
Tax
Act, 1994

account
of
Assessment

Period for
which
amount
relates
05

Forum where
the dispute
is pending

Amount
(Rs.)

28,878,699.00

Note 1: Assessment Order Received on 23.08.2007. Appeal to be filed before Addl. Commissioner
iii)

Criminal cases

a)
C/ 1001 of 1999 before the Learned Chief Metropolitan Magistrate, Calcutta, Bata
India Ltd (Complainant) vs- Khadim Shoe (P) Ltd (Accused) and G.R. Case No. 1242 of
1999 State vs- Mr. S.P. Roy Burman & Ors.
C/ 1001 of 1999 before the Learned Chief Metropolitan Magistrate, the Ld. Chief Metropolitan
Magistrate passed an order under Section 156(3) of the Criminal Procedure Code on the complaint of
M/s. Bata India Ltd. Accordingly, investigation was taken up by the police and after completion of the
same Charge Sheet was submitted against Mr. S.P. Roy Burman, Mr. Partha RoyBurman and Mr.
Siddhartha Roy Burman and others under Section 120B / 420 I P Code and Sections 63 and 69 of the
Copyright Act, The Ld. Court took up the cognizance of the said offences and issued process against
said Mr. Roy Burman and others in G.R. Case No. 1242 of 1999 (State vs- Mr. S.P. Roy Burman &
Ors.). Upon receiving the summon from the Ld. Court Mr. Sidhartha Roy Burman, one of the Directors
of the Company appeared before the Ld. 3rd Metropolita Magistrate, Calcutta and was granted bail.
Current Status : Subsequently a Revisional application has been preferred by Mr. S.P. Roy Burman
and others being C.R.R. No. 217/2006 before the Honble High Court at Calcutta for quashing the
proceedings of the above G.R. No. 1242/99 pending before the Ld. 3rd Metropolitan Magistrate,
Calcutta. The Honble High Court at Calcutta was pleased to grant an interim order of stay of G.R. No.
1242/99. Next date has been fixed on 17/1/2008 for awaiting order of the Honble High Court.
Amount Involved: Not Ascertainable
b)
Matters under West Bengal Shops and Establishments Act, 1953 and Rules framed
thereunder.
The Labour Department had on or about March 2, 2005 granted permission to the Company to avail
exemption from operation of provisions of Section 5(1) and 6(1) of the West Bengal Shops and
Establishments Act and the Rules framed thereunder for its multi departmental store by the name and
style of KHADIM KHAZANA at 32, Kabiguru Rabindra Path, Kanchrapara, 24 Parganas (North) and
thus allowing the Company to keep the said store open for 365 days a year. Thereafter, the Company
applied for renewal of the said exemption on or about December, 2006. In the meantime, the officials
of the Deputy Labour Commissioner caused inspection of the said store and issued notices alleging
certain violations, inter alia, including violations of Section 21 (1), 5(1) (a), 5(3), 17 and 18 of the
West Bengal Shops and Establishments Act and the Rules framed thereunder for not displaying the
notice of weekly closure in Form G, notice of holidays in Form H in a conspicuous place and by not
keep and/or producing the registers and records maintainable under Rules 13, 18(2), 21, 30, 40 and
52 for verification on demand and also by not furnishing every person employed in the shop/
establishment with a letter of appointment in Form X and for keeping the shop / establishment open
and conducting business on the day of weekly closure. The Company duly replied to the said notices
and appeared before the concerned authorities. Subsequently, on or about April, 2007, summons
under Section 68 of the Criminal Procedure Code, was issued by the Court of the Sub Divisional
Judicial Magistrate and the following cases have been initiated:

214

KHADIM INDIA LIMITED

Sl No

Case No

Pending
Before

Parties

Current
Status

S.E.Case No. 3
of 2007

Ld.
Judicial
Magistrate, 3rd
Court,
Barrackpore,
24
Parganas
(North)

Pending

S.E.Case No. 5
of 2007

Ld.
Judicial
Magistrate, 3rd
Court,
Barrackpore,
24
Parganas
(North)

S.E.Case
No.
17 of 2007

Ld.
Judicial
Magistrate, 3rd
Court,
Barrackpore,
24
Parganas
(North)

State
(K.N.
Mitra,
Inspector,
Shop
&
Establishment)
vs1.
Siddhartha Roy
Burman
2.
Barun Banerjee
3.
Debashis
Bhowmick
4.
Khadim
India
Ltd
(Khadim
Khazana), 32,
K.G. R. Path,
Kanchrapara
State
(K.N.
Mitra,
Inspector,
Shop
&
Establishment)
vs1.
Siddhartha Roy
Burman
2.
Partha
Roy
Burman
3.
Satya
Prasad
Roy Burman 4.
Namita
Roy
Burman
5.
Barun Banerjee
6.
Debashis
Bhowmick
7.
Khadim
India
Ltd
(Khadim
Khazana), 32,
K.G. R. Path,
Kanchrapara
State
(K.N.
Mitra,
Inspector,
Shop
&
Establishment)
vs1.
Siddhartha Roy
Burman
2.
Partha
Roy
Burman
3.
Satya
Prasad
Roy Burman 4.
Namita
Roy
Burman
5.
Barun Banerjee

215

Amount
Involved
(Rs./-)
Not
Ascertainable

Pending

Not
Ascertainable

Pending

Not
Ascertainable

KHADIM INDIA LIMITED

Sl No

Case No

Pending
Before

Parties

Current
Status

Amount
Involved
(Rs./-)

6.
Debashis
Bhowmick
7.
Khadim
India
Ltd
(Khadim
Khazana), 32,
K.G. R. Path,
Kanchrapara
B.

CASES FILED BY OUR COMPANY

i)

Notices
One Khadim Network Marketing Private Limited (KNMPL) is a company incorporated under the
Companies Act, 1956 on or about January 2005 with its Registered Office at Shop No. 12,
S.P.PL.Penta Galaxx, Opp. Fire Brigade, Sec-7th Road, Antop Hill, Wadala, Mumbai, Maharashtra
400037 and the Company came to know about its existence from the website of the Ministry of
Company Affairs.
As the name Khadim Network Marketing Private Limited has been registered in violation of the
provisions of Sec 20(2) of the Companies Act, 1956 as it is identical with the word Khadim, a
trademark which is registered in the name of the Company, the Company issued a Notice dated
June 21, 2006 through its Advocates, Daswani & Daswani to Khadim Network Marketing Private
Limited (KNMPL), inter alia, to, desist from using the mark Khadim in their trading style, name,
trademark in any form, handing over all materials incl. literatures etc. containing the word
Khadim to the Company, withdrawing application for registration of trademark Khadim, filing
petition before Registrar of Companies, Maharashtra for changing the word Khadim and making
advertisement for apology for wrongly using the name of Khadim.
Copy of the said letter was forwarded to Registrar of Companies, Maharashtra, Registrar of
Companies, West Bengal and to the Secretary, Ministry of Company Affairs, Government of India
for necessary action on their part.
Thereafter, a second letter dated September 5, 2006 was issued to KNMPL by Daswani & Daswani
on behalf of the Company but the same was returned back as the office of KNMPL was not found.
Subsequently, on November 19, 2006, the Company published a Trademark Caution Notice in the
Time of India, Mumbai and Maharashtra Times.
The Regional Director, Western Region requested Daswani & Daswani vide its letter dated May 17,
2007 to furnish the address and whereabouts of the Directors of KNMPL as the Show Cause Notice
issued by the Regional Director, Western Region to KNMPL returned undelivered. The said details
as requested for could not be furnished for lack of information.
Current Status: The Ministry Of Corporate Affairs website still shows the name of the KNMPL.
Amount Involved : Not Ascertainable

ii)

Property Related Litigation

There are no property related litigation which have been filed by the Company.

216

KHADIM INDIA LIMITED

iii)

Civil cases

Intellectual Property Matters


Sl.No.
Parties
Court/Case No.
Date Instituted
Background
of
the Case

Present Status
Amount
Involved
/
Financial
Implications on
the issuer
Provision made
in the Financial
Statement

1
Khadim Shoe (P) Limited (now known as Khadim India Limited
(Petitioner) vs. Bata ( India ) Limited ( Respondent )
A.T.M No.2 of 1998
June 1998
The Petition has been filed by the Petitioner in respect of a cautionary
notice published by the respondent to the effect that the respondent was
the exclusive owner and proprietor of the Trade Marks below mentioned
and that any party guilty of infringement or passing off of any mark or
marks similar thereto was warned of appropriate civil or criminal or both
actions being taken against such party, praying ,inter alia, for (i) for
cancellation of the registration of the marks HAWAI having the
registration no.189601 dated March 23, 1959, HAWAI WEDGES having
the registration no.189603 dated March 23, 1959 and HAWAIANA
having the registration no.189603 dated April 21, 1988 (ii) An Ad-interim
order restraining the respondent from taking any step or initiating any
proceeding against the petitioner on the basis of the registration of the
marks mentioned above (iii) An Ad-interim order suspending all
proprietory and other right and interest of the respondent over or in
respect of the above marks or any of them till the disposal of the instant
application (iv) A further Ad-interim order restraining the respondent
from representing itself to be the registered proprietor or owner of the
above marks or any of them or from taking any step or steps on the
basis thereof.
By the order dated June 29, 1998 which was exparte an ad interim order
of status quo was passed till further orders with liberty to the respondent
to apply for modification or variation of the order upon notice to the other
party. The Respondent sought for a clarification of the above order which
was clarified on July 10, 1998, inter alia, to the effect that no steps are to
be taken by the respondent pursuant to the impugned caution notice by
filing any suit or other proceedings against the petitioner.
The Respondent filed a petition being G.A. No2797 of 1998 challenging
the order dated June 29, 1998 as clarified on July 10, 1998 and
continued on July 24, 1998.
The Division Bench of the Calcutta High Court consisting of Honble
Justice Ruma Pal and Honble Justice Basudev Panigrahi on August 4,
1998 was pleased to pass an order, interalia, to the effect that the appeal
is allowed to the extent that the interim order of injunction is set aside in
so far as it seeks to restrain the respondent from initiating any
proceeding in any court not subordinate to the High Court.
The A.T.M. no. 2 of 1998 is pending
Not Ascertainable

Nil

217

KHADIM INDIA LIMITED

Sl.No.
Parties
Court/Case No.
Date Instituted
Background
of
the Case

Present Status
Amount
Involved
/
Financial
Implications on
the issuer
Provision made
in the Financial
Statement

iv)

2
Khadim Shoe (P) Limited [now known as Khadim India Limited] and K. M.
Khadim & Co. (Plaintiffs/Petitioners) vs. Md. Awaz,( Defendant )]
C.S. 108 OF 1999
February 1999
The Plaintiffs has filed this Suit inter alia, praying for (1) declaration that
the Plaintiffs are exclusively entitled to use the trade mark Khadim /
Khadims in class 25 of IV Schedule of Trade and Merchandise Marks
Act and Rules thereunder, (2) decree of perpetual injunction against the
Defendant. (3) decree directing the Defendant to deliver up all goods,
materials etc. bearing the mark Khadim / Khadims.
The Plaintiffs have further made an application for ad-interim order of
injunction vide G.A no.884 of 1999.This application for ad-interim order
was taken up on March 3, 1999 by the Honble Justice Sujit Kumar Sinha.
The Honble Court, after hearing the Defendant, gave an order
restraining the Defendant from using the mark Khadim and/or any
colourable imitation thereof in respect made and sold by him.
Matter is pending.
Not Ascertainable

NIL

Criminal cases

Sl.No.
Parties
Court/Case No.
Date Instituted
Background
of
the Case

1
Khadim India Limited Vs. Bata India Limited and Anr.
C.R.R. No. of 217 OF 2006
19/01/07
Bata India Limited (BIL) on 30/03/1999 has made an application u/s
156(3) of the Criminal Procedure Code before the learned Chief
Metropolitan Magistrate alleging, interalia, to the effect that the petitioner
herein has copied the engineering drawings of BIL to make illegal and
wrongful gains. The petition was allowed and D C Enforcement Branch,
Calcutta was directed to treat the petition as F.I.R vide GR No. 1242/99
and thereafter Enforcement Branch lodged an FIR vide no.162 dated
13/05/1999.
The petitioner has filed an application under Section 482 of Criminal
Procedure Code on 19 January 2006 for quashing of proceedings in
G.R.No.1242/99 pending before the learned Metropolitan Magistrate, 3rd
Court, Calcutta Under section 120B of I.P.C and Under Sections 63 and
69 of the Copyright Act, 1963 and all orders passed therein including the
order dated 09.08.05.
On 30/01/2006 the matter came up for hearing before Honble Justice
S.P.Talukdar and His Lordship after hearing the petitioners was pleased
to stay the proceeding of the G.R.No.1242/99 pending before the learned
Metropolitan Magistrate, 3rd Court, Calcutta for a period of 6 weeks from
this date and directed the matter to come as Contested Application .

218

KHADIM INDIA LIMITED

Present Status
Amount
Involved
/
Financial
Implications on
the issuer
Provision made
in the Financial
Statement

Matter is pending
Not Ascertainable

Sl.No.
Parties
Court/Case No.
Date Instituted
Background
of
the Case

2
State of West Bengal Vs. Proprietor of Padasova Katwa, Burdwan
Court of the A. C. J. M., Katwa, Burdwan / G. R. Case No. 102/06
24-03-2006
The case was started by the State with reference to the FIR No. 55/06
dated 24-03-2006 based on the Complaint lodged on behalf of the
Company regarding infringement of its registered Copyright by the
Proprietor of Podasova.
Charge Sheet has been filed vide no.66/2007 dated 20/03/07
Not Ascertainable

Present Status
Amount
Involved
/
Financial
Implications on
the issuer
Provision made
in the Financial
Statement

Not Ascertainable

Nil

3.
The Company has filed an Application under Section 138 of the Negotiable Instruments Act,
1881 as Complainant againt one Mr. Subhendu Bhattacharya (Accused) in the Court of the Ld. Chief
Metropolitan Magistrate being Case No. C / 8223/ 07 complaning that a cheque of Rs. 2,66,924/issued by the Accused has been dishonoured. The matter is pending.
C.

CASES INVOLVING OUR DIRECTORS

1. Mr. Satya Prasad Roy Burman, Chairman cum Whole-Time Director :


j)

Notices : a)
The notice of the ROC dated March 14, 2007 and the Show Cause Notice for
the violations stated in Annexure I alongwith violation of Section 211(1) read with Schedule
VI of the Act is, as discussed above, pending against Mr. Satya Prasad Roy Burman. Time for
filing reply to the said Show Cause Notices have been prayed for. Compounding petition has
been filed. Amount involved is not ascertainable.
b)
Mr. Satya Prasad Roy Burman (alongwith the Company, Mr. Siddhartha Roy Burman
and the President, Mr. Suman Barman Roy) was served with a notice/ summon under the
Minimum Wages Act, 1948 to appear before the relevant Authority on 17/07/2007 for an
alleged violation of the Minimum Wages Act, 1948 and levying a penalty of Rs. 13,716/-. The
matter was not taken up on that date and the same is pending.

219

KHADIM INDIA LIMITED

ii)

Criminal Matters :

a)
C/ 1001 of 1999 before the Learned Chief Metropolitan Magistrate, Calcutta, Bata
India Ltd (Complainant) vs- Khadim Shoe (P) Ltd (Accused) and G.R. Case No. 1242 of
1999 State vs- Mr. Satya Prasad Roy Burman & Ors.
C/ 1001 of 1999 before the Learned Chief Metropolitan Magistrate, the Ld. Chief Metropolitan
Magistrate passed an order under Section 156(3) of the Criminal Procedure Code on the complaint of
M/s. Bata India Ltd. Accordingly, investigation was taken up by the police and after completion of the
same Charge Sheet was submitted against Mr. Satya Prasad Roy Burman, Mr. Partha RoyBurman and
Mr. Siddhartha Roy Burman and others under Section 120B / 420 I P Code and Sections 63 and 69 of
the Copyright Act, The Ld. Court took up the cognizance of the said offences and issued process
against said Mr. Roy Burman and others in G.R. Case No. 1242 of 1999 (State vs- Mr. S.P. Roy
Burman & Ors.). Upon receiving the summon from the Ld. Court Mr. Sidhartha Roy Burman, one of
the Directors of the Company appeared before the Ld. 3rd Metropolita Magistrate, Calcutta and was
granted bail.
Current Status : Subsequently a Revisional application has been preferred by Mr. Satya Prasad Roy
Burman and others being C.R.R. No. 217/2006 before the Honble High Court at Calcutta for quashing
the proceedings of the above G.R. No. 1242/99 pending before the Ld. 3rd Metropolitan Magistrate,
Calcutta. The Honble High Court at Calcutta was pleased to grant an interim order of stay of G.R. No.
1242/99. Next date has been fixed on 17/1/2008 for awaiting order of the Honble High Court.
Amount Involved : Not Ascertainable
b)
Matters under West Bengal Shops and Establishments Act, 1953 and Rules framed
thereunder.
Notices alleging certain violations, inter alia, including violations of Section 21 (1), 5(1) (a), 5(3), 17
and 18 of the West Bengal Shops and Establishments Act and the Rules framed thereunder for not
displaying the notice of weekly closure in Form G, notice of holidays in Form H in a conspicuous
place and by not keep and/or producing the registers and records maintainable under Rules 13, 18(2),
21, 30, 40 and 52 for verification on demand and also by not furnishing every person employed in the
shop/ establishment with a letter of appointment in Form X and for keeping the shop /
establishment open and conducting business on the day of weekly closure has been issued, inter alia,
against Mr. Satya Prasad Roy Burman upon inspection of the Companys departmental store KHADIM
KHAZANA at 32, Kabiguru Rabindra Path, Kanchrapara, 24 Parganas (North) by Office of the Deputy
Labour Commissioner. The Company duly replied to the said notices and appeared before the
concerned authorities. Subsequently, on or about April, 2007, summons under Section 68 of the
Criminal Procedure Code, was issued by the Court of the Sub Divisional Judicial Magistrate and the
following cases have been initiated inter alia, against Mr. Satya Prasad Roy Burman:
Sl No

Case No

Pending
Before

Parties

Current
Status

S.E.Case No. 5
of 2007

Ld.
Judicial
Magistrate, 3rd
Court,
Barrackpore,
24
Parganas
(North)

State
(K.N.
Mitra,
Inspector,
Shop
&
Establishment)
vs1.
Siddhartha Roy
Burman
2.
Partha
Roy
Burman
3.

Pending

220

Amount
Involved
(Rs./-)
Not
Ascertainable

KHADIM INDIA LIMITED

Sl No

iii)

Case No

S.E.Case
No.
17 of 2007

Pending
Before

Ld.
Judicial
Magistrate, 3rd
Court,
Barrackpore,
24
Parganas
(North)

Parties
Satya Prasad
Roy Burman
4. Namita Roy
Burman
5.
Barun Banerjee
6.
Debashis
Bhowmick
7.
Khadim
India
Ltd
(Khadim
Khazana), 32,
K.G. R. Path,
Kanchrapara
State
(K.N.
Mitra,
Inspector,
Shop
&
Establishment)
vs1.
Siddhartha Roy
Burman
2.
Partha
Roy
Burman
3.
Satya Prasad
Roy Burman
4. Namita Roy
Burman
5.
Barun Banerjee
6.
Debashis
Bhowmick
7.
Khadim
India
Ltd
(Khadim
Khazana), 32,
K.G. R. Path,
Kanchrapara

Current
Status

Amount
Involved
(Rs./-)

Pending

Not
Ascertainable

Employees Provident Fund Matter

Proceedings under Section 7A (Determination of moneys due from employers) of the Employees
Provident Fund and Miscellaneous Provisions Act, 1952 (EPF & MPA, 1952) was initiated against
Khadim Industries Pvt. Ltd. (now Khadim India Limited) for the period 09.06.2001 to 31.08.2003 for
having falied to remit Provident Fund, Employees Pension Fund and Insurance Fund contribution in
respect of employees engaged in the Company and issued a Notice dated November 17, 2006 under
Section 32 (Penalty for default) of the Code of Civil Procedure, 1908 in favour of (i) Mr. Satya Prasad
Roy Burman and (ii) the Company. Thereafter, a Notice of Show Cause (R-NE/WB/40794/C.C.-V/730)
dated December 11, 2006 as to why warrant of arrest should not be issued in respect of the said
proceedings under Section 7A of EPF &MPA, 1952 was initiated against Mr. Satya Prasad Roy Burman.
Thereafter, Mr. Satya Prasad Roy Burman moved a Writ Petition being no. 28344(W) of 2006 before
the Honble High Court at Calcutta challenging the above Notices of Show Cause. The matter came up
for hearing on January 2, 2007 before Honble Justice Aniruddha Bose and His Lordship was pleased
to stay the impugned notice permanently and directing the Provident Fund authorities to issue fresh
notice. Fresh notice being no. R-NE/WB/40794/C.C.-V/1151 was issued directing to produce certain
documents. In the meantime, the officials of the Provident Fund Authorities had visited the office of
the Khadim Industries Pvt. Ltd and certain documents have been furnished to him and representatives

221

KHADIM INDIA LIMITED

of Khadim Industries Pvt. Ltd. have also appeared before the Assistant Provident Fund Commissioner
and the next date for in the matter is October 11, 2007.
2.

Mr. Siddhartha Roy Burman, Managing Director:

Notices : a)
The notice of the ROC dated March 14, 2007 and the Show Cause Notice for the
violations stated in Annexure I alongwith violation of Section 211(1) read with Schedule VI of the
Act is, as discussed above, pending against Mr. Siddhartha Roy Burman. Time for filing reply to the
said Show Cause Notices have been prayed for. Compounding petition has been filed. Amount involved
is not ascertainable.
b)
Mr. Siddhartha Roy Burman (alongwith the Company, Mr. Satya Prasad Roy Burman and the
President, Mr. Suman Barman Roy) was served with a notice/ summon under the Minimum Wages Act,
1948 to appear before the relevant Authority on 17/07/2007 for an alleged violation of the Minimum
Wages Act, 1948 and levying a penalty of Rs. 13,716/-. The matter was not taken up on that date
and the same is pending.
ii)

Criminal Matters :

a)
C/ 1001 of 1999 before the Learned Chief Metropolitan Magistrate, Calcutta, Bata
India Ltd (Complainant) vs- Khadim Shoe (P) Ltd (Accused) and G.R. Case No. 1242 of
1999 State vs- Mr. Satya Prasad Roy Burman & Ors.
C/ 1001 of 1999 before the Learned Chief Metropolitan Magistrate, the Ld. Chief Metropolitan
Magistrate passed an order under Section 156(3) of the Criminal Procedure Code on the complaint of
M/s. Bata India Ltd. Accordingly, investigation was taken up by the police and after completion of the
same Charge Sheet was submitted against Mr. Satya Prasad Roy Burman, Mr. Partha Roy Burman and
Mr. Siddhartha Roy Burman and others under Section 120B / 420 I P Code and Sections 63 and 69 of
the Copyright Act. The Ld. Court took up the cognizance of the said offences and issued process
against said Mr. Roy Burman and others in G.R. Case No. 1242 of 1999 (State vs- Mr. S.P. Roy
Burman & Ors.). Upon receiving the summon from the Ld. Court Mr. Siddhartha Roy Burman,
appeared before the Ld. 3rd Metropolitan Magistrate, Calcutta and was granted bail.
Current Status : Subsequently a Revisional application has been preferred by Mr. Satya Prasad Roy
Burman and others being C.R.R. No. 217/2006 before the Honble High Court at Calcutta for quashing
the proceedings of the above G.R. No. 1242/99 pending before the Ld. 3rd Metropolitan Magistrate,
Calcutta. The Honble High Court at Calcutta was pleased to grant an interim order of stay of G.R. No.
1242/99. Next date has been fixed on 17/1/2008 for awaiting order of the Honble High Court.
Amount Involved : Not Ascertainable
b)
Matters under West Bengal Shops and Establishments Act, 1953 and Rules framed
thereunder.
Notices alleging certain violations, inter alia, including violations of Section 21 (1), 5(1) (a), 5(3), 17
and 18 of the West Bengal Shops and Establishments Act and the Rules framed thereunder for not
displaying the notice of weekly closure in Form G, notice of holidays in Form H in a conspicuous
place and by not keep and/or producing the registers and records maintainable under Rules 13, 18(2),
21, 30, 40 and 52 for verification on demand and also by not furnishing every person employed in the
shop/ establishment with a letter of appointment in Form X and for keeping the shop /
establishment open and conducting business on the day of weekly closure has been issued, inter alia,
against Mr. Siddhartha Roy Burman upon inspection of the Companys departmental store KHADIM
KHAZANA at 32, Kabiguru Rabindra Path, Kanchrapara, 24 Parganas (North) by Office of the Deputy
Labour Commissioner. The Company duly replied to the said notices and appeared before the
concerned authorities. Subsequently, on or about April, 2007, summons under Section 68 of the
Criminal Procedure Code, was issued by the Court of the Sub Divisional Judicial Magistrate and the
following cases have been initiated inter alia, against Mr. Siddhartha Roy Burman:

222

KHADIM INDIA LIMITED

Sl No

Case No

Pending
Before

Parties

Current
Status

S.E.Case No. 3
of 2007

Ld.
Judicial
Magistrate, 3rd
Court,
Barrackpore,
24
Parganas
(North)

Pending

S.E.Case No. 5
of 2007

Ld.
Judicial
Magistrate, 3rd
Court,
Barrackpore,
24
Parganas
(North)

S.E.Case
No.
17 of 2007

Ld.
Judicial
Magistrate, 3rd
Court,
Barrackpore,
24
Parganas
(North)

State
(K.N.
Mitra,
Inspector,
Shop
&
Establishment)
vs1.
Siddhartha
Roy Burman
2.
Barun
Banerjee
3.
Debashis
Bhowmick
4.
Khadim
India
Ltd
(Khadim
Khazana), 32,
K.G. R. Path,
Kanchrapara
State
(K.N.
Mitra,
Inspector,
Shop
&
Establishment)
vs1.
Siddhartha
Roy Burman
2. Partha Roy
Burman
3.
Satya
Prasad
Roy Burman 4.
Namita
Roy
Burman
5.
Barun Banerjee
6.
Debashis
Bhowmick
7.
Khadim
India
Ltd
(Khadim
Khazana), 32,
K.G. R. Path,
Kanchrapara
State
(K.N.
Mitra,
Inspector,
Shop
&
Establishment)
vs1.
Siddhartha
Roy Burman
2. Partha Roy
Burman
3.
Satya
Prasad
Roy Burman 4.
Namita
Roy
Burman
5.
Barun Banerjee

223

Amount
Involved
(Rs./-)
Not
Ascertainable

Pending

Not
Ascertainable

Pending

Not
Ascertainable

KHADIM INDIA LIMITED

Sl No

Case No

Pending
Before

Parties

Current
Status

Amount
Involved
(Rs./-)

6.
Debashis
Bhowmick
7.
Khadim
India
Ltd
(Khadim
Khazana), 32,
K.G. R. Path,
Kanchrapara
iii)

Employees Provident Fund Matter

Proceedings under Section 7A (Determination of moneys due from employers) of the Employees
Provident Fund and Miscellaneous Provisions Act, 1952 (EPF & MPA, 1952) was initiated against
Khadim Chain Stores Pvt. Ltd. (now Khadim India Limited) for alleged evasion of membership from
coverage under the EPF & MPA, 1952. A Notice of Show Cause (R-NE/WB/28840/C.C.-III/) dated
December 20, 2006 as to why warrant of arrest should not be issued in respect of the said
proceedings under Section 7A of EPF & MPA, 1952 was initiated against Mr. Siddhartha Roy Burman.
Thereafter, Mr. Siddhartha Roy Burman moved a Writ Petition being no. 2062(W) of 2006 before the
Honble High Court at Calcutta challenging the above Notice of Show Cause. The matter came up for
hearing before Honble Justice Aniruddha Bose and His Lordship was pleased to stay the operation of
the impugned notice January 17, 2007 and directing the parties to file Affidavit in Opposition and
Affidavit in Reply. The said interim order was subsequently extended until further orders. The Affidavit
in Opposition has been served on us and the Affidavit in Reply is to be submitted. Matter is pending.
iv)

Property Related Matters:

The following matters have been filed Mr. Siddhartha Roy Burman along with Mr. Partha Roy Burman:
Sl No.
Parties
Court/Case No.
Date Instituted
Background
of
the Case

Present Status
Amount
Involved
/
Financial
Implications on
the issuer
Provision made
in the Financial
Statement

1
Mr. Partha Roy Burman and Siddhartha Roy Burman as Ref. Claimants
LRA Case No. 53 of 2003 (A)
2003
Originally the Case was started by Ld. District Judge of Dist. South 24pargarnas along with a valuation case being No. LRA 52 of 2003(V) upon
reference made by the Collector, Land Acqusition, Calcutta for valuation
and apportionment of title as a result of an application of the Ref.
Claimants U/S 18 of the L. A. Act I, against an award declared in the
name of Owner in the process of acquisition of premises No. 8/4 Topsia
Road, Kolkata by the Collector, Land Acquisition, Calcutta
by a
notification U/S 9(3)(B) of L. A. Act-I.
As the learned Special L.A. Judge at Alipore in L.R.A. Case No. 44 of 2003
(C.D.) has been pleased to allow to withdraw the compensation amount
by an order dated December 21, 2005 a further petition has been filed
with a prayer for disposal of the case declaring that the Ref. Claimants
are absolute owners in respect of the acquired premises.
Matter is pending
Not Ascertainable

Nil

224

KHADIM INDIA LIMITED

Sl.No.
Parties
Court/Case No.
Date Instituted
Background
of
the Case

2
Partha Roy Burman and Siddhartha Roy Burman as Ref. Claimants
LRA Case No. 52 of 2003 (V)
2003
Originally the Case was started by Ld. District Judge of Dist. South 24pargarnas along with an apportionment case being No. LRA 53 of
2003(A) upon reference made by land Acquisition Collector Calcutta for
valuation and apportionment of title as a result of an application of the
Ref. Claimants U/S 18 of the L. A. Act I, against an award declared in
the name of Owner in the process of acquisition of premises No. 8/4
Topsia Road, Kolkata by the Land Acquisition Collector, Calcutta by a
notification U/S 9(3)(B) of L. A. Act-I.
Writ application under W.P. No. 20139 (W) of 2003 filed by Ref.
Claimants against such award, was disposed of by the Honble High Court
at Calcutta by an order dated July 23, 2004 with a direction to determine
the value of the acquired land as on the date of the said order dated July
23, 2004.

Present Status
Amount
Involved
/
Financial
Implications on
the issuer
Provision made
in the Financial
Statement
4.

Additional application was made in view of the order of the Honble High
Court at Calcutta along with an application for Addition of Party
Matter is pending for Service Return
Not Ascertainable

Nil

Mr.. Indra Nath Chatterjee, Director:

Notices : The notice of the ROC dated March 14, 2007 and the Show Cause Notice for the violations
stated in Annexure I alongwith violation of Section 211(1) read with Schedule VI of the Act is, as
discussed above, pending against Mr. Indra Nath Chatterjee. Time for filing reply to the said Show
Cause Notices have been prayed for. Compounding petition has been filed. Amount involved is not
ascertainable.
5.

Prof. Ashoke Kumar Dutta, Director:

Notices : The notice of the ROC dated March 14, 2007 and the Show Cause Notice for the violations
stated in Annexure I alongwith violation of Section 211(1) read with Schedule VI of the Act is, as
discussed above, pending against Prof. Ashoke Kumar Dutta. Time for filing reply to the said Show
Cause Notices have been prayed for. Compounding petition has been filed. Amount involved is not
ascertainable.
6.

Prof. Amar Nath Sadhu, Director:

i)
Notices : The notice of the ROC dated March 14, 2007 and the Show Cause Notice for the
violations stated in Annexure I alongwith violation of Section 211(1) read with Schedule VI of the
Act is, as discussed above, pending against Prof. Amar Nath Sadhu. Time for filing reply to the said
Show Cause Notices have been prayed for. Compounding petition has been filed. Amount involved is
not ascertainable.

225

KHADIM INDIA LIMITED

ii)
Criminal Case: Prof. Amar Nath Sadhu, was a nominee director in Prudential AMC Limited
being nominated by Vinod Gupta School of Management, Indian Institute of Technologies, Kharagpur.
The Company was incorporated on 18 March 1997. On 8 April 1997, Prof. Sadhu resigned from the
Board of Prudential AMC Limited.
Thereafter, on 13 August 2002 certain criminal cases being Nos. C-1836 to C-1843 of 2002 was
initiated against the Company and some of the Director / ex Director, before the Learned Chief Judicial
Magistrate at Alipore, on the basis of a complaint made by the Deputy Registrar of Companies, West
Bengal for non holding of Annual General Meeting and non-filing of Balance Sheet & Profit & Loss
Account and non-filing of the Annual Returns by Company, made upto the date i.e. 31-03-2001
The Ld. Chief Judicial Magistrate took cognizance of the said offences. Upon receiving the summon
from the Ld. Chief Judicial Magistrate, Prof. Amarnath Sadhu, one of the ex-Directors of the Company
appeared before the Ld. Chief Judicial Magistrate, Alipore and was granted bail.
F.

CASES FILED BY OR AGAINST OUR PROMOTERS

The Promoters of our Company are as follows:


The individual Promoters are :
1.
2.

Mr. Satya Prasad Roy Burman


Mr. Siddhartha Roy Burman

The litigation in which the above are involved have been discussed above under the heading C being
CASES INVOLVING OUR DIRECTORS since they are our Chairman cum Whole-Time Director and our
Managing Director, respectively.
Our corporate Promoter is Knightsville Private Limited and there are no litigation in which the same is
involved.
G.

CASES FILED BY OR AGAINST OUR SUBSIDIARIES

Our Company does not have any Subsidiaries as on date.


H. CONTINGENT LIABILITIES AS ON MARCH 31, 2007

Sl. No.
1.
2.
3.
4.
5.

Particulars
Sales tax Demand (Under Appeal)
Income Tax Demand (under appeal)
Excise Duty Demand (Under appeal)
Others
Bank Guarantees
Total

226

(Rs. in Million)
2006-2007
19.00
25.60
0.09
4.28
10.12
59.09

KHADIM INDIA LIMITED

I.
CASES FILED BY OR AGAINST COMPANIES FORMING PART OF THE PROMOTER
GROUP
The following Companies form part of our Promoter Group and their respective litigation status is as
follows:
SL No.
1

Name of Company
Khadim Development Company
Limited
Khadim Financial Services
Limited
Sheila Departmental Store
Limited
Moviewallah Communications
Limited

2
3
4

Private

Litigation Status
No Litigation

Private

No Litigation

Private

No Litigation

Private

No Litigation

The following entities form part of our Promoter Group and their respective litigation is as follows:
SL No.
1

Name of Entity
St. Marys Clinic & Drug Stores

2
3
4

Bee Tee Enterprise


K.M. Khadim & Co.
Khadim Enterprise

Khadim Export

(a)

Litigation of St. Marys Clinic & Drug Stores

i)

Civil

Litigation Status
Litigation as discussed hereinbelow in
(a)
No Litigation
No Litigation
Litigation as discussed hereinbelow in
(b)
No Litigation

Suit No. 1236 of 1965, In the High Court at Calcutta, Madan Properties Pvt. Ltd. (Plaintiff)
vs- Mrs. L.R. Warren & Others (there are 30 Defendants and St. Marys Clinic & Drug Stores
is Defendant no. 2) (Defendants) and G.A. no. 3662 of 2005 in the said Suit.
Facts: This Suit had been originally filed by the Plaintiff, inter alia, for the eviction of Defendant no. 1
from premises no. 12, Lindsay Street, Kolkata (Suit Premises). The Defendant nos. 2 to 30, being in
possession of different portions of the Suit Premises as sub tenant have been added for proper
adjudication of the Suit. During the procedure of the Suit, Receiver has been appointed by the Honble
Court on the Suit Premises and thereafter the Honble Court was pleased to direct that no construction
shall be made in the Suit Premises without leave of the Honble Court. The Defendant no. 2 filed the
application being G.A. No. 3662 of 2005 for obtaining leave of Honble Court to carry our certain
necessary repairs in their shop room at the Suit Premises. The said Application has been opposed by
the Plaintiff and it has alleged that the Defendant no. 2 by the Plaintiff that the Defendant no. 2 is
wrongfully enjoying the possession of the Suit Premises and has further assigned and/or transferred
its tenanted portion in favour of third party. The Defendant no. 2 is contesting the said Suit and has
also filed its Reply to the Opposition of the Plaintiff in the said Application denying and disputing all the
allegations against it.
Current Status : Matter is pending
Amount Involved : Not Ascertainable.

227

KHADIM INDIA LIMITED

ii)

Criminal

On or about 1992, 17 criminal cases were originally instituted before the Court of the Learned
Metropolitan Magistrate, Kolkata at the instance of Provident Fund Authority through the Provident
Fund Inspector against Saint Marys Clinic & Drug Stores and the then partners of the firm for
violation/non-compliance of the relevant provisions of the Employees Provident Fund and
Miscellaneous Provisions Act.
All the then partners of St Marys Clinic & Drug Stores at that point of time have expired now. Though
our individual Promoters are partners in the said firm as of now, the said criminal matters are not
against them. Out of the said 17 cases, 7 have been disposed off after giving fine / penalty as per the
order of the Ld. Court. The rest are pending adjudication.
(b)

Litigation of Khadim Enterprise

The following Income Tax dispute is pending in Khadim Enterprise:


Asst Yr
2002-03

J.

Stage Pending
Commissioner
of
Income
Tax
(Appeals)

Tax Involved
Rs 5,667

Status/Remarks
The assessee firm filed its return
on 26.07.2002. Notice u/s
143(2)(ii) and 142(1)
was
issued
on
12.11.02.
The
assessment was completed and
a sum of Rs 10,425 was
disallowed and levied penalty
u/s 271(1)(c ). The assessee
being aggrieved by the said
order filed an appeal 30/12/03
with
Comm
(A)-XXIV.
The
appeal
is
pending
before
Commissioner of Income Tax
(Appeals).

MATERIAL DEVELOPMENTS

There have been no material developments, since the date of the last balance sheet otherwise than as
disclosed in the section 'Management's Discussion and Analysis of Financial Condition and Results of
Operations' on page 191.

228

KHADIM INDIA LIMITED

GOVERNMENT AND OTHER APPROVALS


In view of the approvals listed below, we can undertake this Issue and our current business activities.
No further major approvals from any governmental or regulatory authority or any other entity are
required to undertake the Issue or continue our business activities. Unless otherwise stated, these
approvals are all valid as of the date of this Draft Red Herring Prospectus.
APPROVALS MATERIAL TO THE ISSUE
We have received the following material approvals relating to the Issue:
Our Board of Directors has, pursuant to resolution passed at its meeting held on April 24, 2007,
authorized the Issue, subject to the approval by the shareholders of our Company under section 81
(1A) of the Companies Act.
The Shareholders have, pursuant to a resolution dated May 29, 2007 under Section 81 (1A) of the
Companies Act, authorized the Issue.
APPROVAL MATERIAL TO OUR CURRENT BUSINESS ACTIVITIES
We have received the following major government and other approvals pertaining to our business:
1) FACTORY RELATED APPROVALS (KASBA INDUSTRIAL ESTATE)
Serial No.
1.
2.
3.
4.

Description
Factory License
Registration under the Employee
State Insurance Act, 1948
Generator License
Trade License

Registration/
License/Reference
Number
15318
41-29251-22
06-531
610800003910

Validity
December 31, 2007
August 30, 2008
March 31, 2007

2) APPROVALS RELATING TO THE COMPANY


A) SERVICE TAX REGISTRATIONS
Serial No.
1.

Description

Registration Number

Date of Issue

Certificate of Registration, under


the Finance Act 1994 read with the
Service Tax Rules, 1994 for the
premises Kankaria Estate, 5th Floor,
6 Nandalal Bose Sarani, Middleton
Row, Kolkata

AABCK3341AST001

June 14, 2006

Registration Number

Date of Issue

B) EXCISE REGISTRATIONS
Serial No.
1.

Description
Certificate of Registration, under
the Central Excise Act 1944 read
with the Central Excise Rules, 2002
for the premises P31 S19-26 Phase
III Kasba Industrial Estate, East

229

AABCK3341AXM002

November 23, 2005

KHADIM INDIA LIMITED

Kolkata Township, Kolkata


2.

3.

4.

5.

6.

7.

8.

9.

10.

Certificate of Registration, under


the Central Excise Act 1944 read
with the Central Excise Rules, 2002
for the premises P-43 & 43a Phase
III, Kasba Industrial Estate, East
Kolkata Township, Kolkata
Certificate of Registration, under
the Central Excise Act 1944 read
with the Central Excise Rules, 2002
for the premises Third Floor, S43 &
44 Phase I, Kasba Industrial Estate,
East Kolkata Township, Kolkata
Certificate of Registration, under
the Central Excise Act 1944 read
with the Central Excise Rules, 2002
for
the
premises
S32/1,
32/2,32/1A, S43, 44, 43/1, 44/1
Phase I, Kasba Industrial Estate,
East Kolkata Township, Kolkata
Certificate of Registration, under
the Central Excise Act 1944 read
with the Central Excise Rules, 2002
for the premises 37B, Topsia Road,
Tiljola, Kolkata, West Bengal, 700
039
Certificate of Registration, under
the Central Excise Act 1944 read
with the Central Excise Rules, 2002
for the premises 11, Shambhu
Chatterjee Street, Bara Bazar Ho,
Kolkata, West Bengal, 700 007
Certificate of Registration, under
the Central Excise Act 1944 read
with the Central Excise Rules, 2002
for the premises 29B, Rabindra
Sarani,
Chittaranjan
Avenue,
Kolkata, West Bengal, 700 073
Certificate of Registration, under
the Central Excise Act 1944 read
with the Central Excise Rules, 2002
for the premises Shed No. 7, 8, 9
Khasra No. 50/6, 7 & 8, Village
Alipur, North West Delhi 110 036
Certificate of Registration, under
the Central Excise Act 1944 read
with the Central Excise Rules, 2002
for the premises 24C, Rabindra
Sarani,
Chittaranjan
Avenue,
Kolkata, West Bengal 700 073
Certificate of Registration, under
the Central Excise Act 1944 read
with the Central Excise Rules, 2002
for the premises 49, Debandra
Chandra
Dey
Road,
Tangra,
Kolkata, West Bengal 700 015

230

AABCK3341AXM003

November 23, 2005

AABCK3341AXM004

November 23, 2005

AABCK3341AXM005

November 25, 2005

AABCK3341AXM006

December 1, 2005

AABCK3341AXM007

December 2, 2005

AABCK3341AXM008

December 14, 2005

AABCK3341AXM009

March 27, 2006

AABCK3341AXM010

February 6, 2007

AABCK3341AXM011

June 28, 2007

KHADIM INDIA LIMITED

C) SALES TAX REGISTRATIONS


Serial No.

Description

1.
2.

Reference Number

New Delhi
U.P

3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.

07290307463
ND 0339808
VAT TIN 27930536865V
CST TIN 27930536865C
TIN No. 32010812605
TIN No. 29260135960
TIN No. 08932558513
TIN No. 28370138116
TIN No. 34090004342
TIN No. 23625104783
TIN No. 33901521672
TIN No.24190202906
TIN No. 22121305051
TIN No. 19200174084
TIN No. 21081102990

Maharastra
Kerala
Karnataka
Rajasthan
Andra Pradesh
Pondicherry
Madhya Pradesh
Tamil Nadu
Gujarat
Chattisgarh
West Bengal
Orissa

D) INCOME TAX REGISTRATIONS


Serial
No.
1.
2.

Description

Reference Number

Permanent Account Number


TAN Number

AABCK3341A
CALS06535E

E) PROVIDENT FUND REGISTRATION


Serial
No.
1.

Description

Registration Number

Provident fund

WB/28840

F) CONTRACT LABOURS REGISTRATION


Serial
No.
1.

Description

Registration Number

Contract Labours Registration

R-011/2007/LCC

3) OWNED FOOTWEAR RETAIL STORES LICENSES


A) Registration under Shops and Establishment Act
Serial
No.
1.
2.
3.
4.

Address of Store

Registration no.

Validity

7A, Lindsay Street, Kolkata- 700


087
12, Lindsay Street, Kolkata-700
087
Hatibagan Market, 80, Bidhan
Sarani, Kolkata-700 004
B-87-88, College Street Market,

C/TAL/P1/2553/05

November 21, 2008

C/TAL/P-1/8490

May 12, 2009

CAL/SHYAM/P-1/5850/07

April 28, 2010

Cal/JSK/PI/9271

June 7, 2009

231

KHADIM INDIA LIMITED

5.
6.
7.
8.
9.
10.
11.
12.

13.

14.

15.
16.

17.
18.
19.
20.
21.
22.
23.
24.

Kolkata- 700 009


14, Bentinck Street, Kolkata700 001
433 - Diamond Harbour Road,
Kolkata- 700 034
5, G.T. Road, Near Karzan Gate,
Dist :- Burdwan, West Bengal
E 103, City Centre, DC -1,
Sector 1, Salt lake City Kolkata 700 064.
30A, Rabindra Sarani , Kolkata73
G-42, Dakshinapan Shopping
Complex, Kolkata-68
P-127, Ashok Nagar, Janapath,
Unit-II, BBSR- 751009.
Plot No. 282-287(p)503/A
Mission Road, Buxi Bazar,
P.S. - Mangalabag, Cuttack 753001.
Annapurna Complex,Fire Station
Road, Bhapur Bazar,
Berhampur, Ganjam Dist.
Orissa, Pin.- 760001.
504-B/3, Dolamundai,
Bajrakbati Road, Infront of
Krishna Arcade, P. S - Purighat,
Dist-Cuttack, Pin Code753001, Orissa
J-13, Sector - 18,
Noida Pin 201301 U.P
Shop No. - 24A/12A/3, Sarder
Patel Marg, Lucky Range, Near
Civil Lines Crossing, Allahabad,
Pin - 211001
Premises No. 5/10/26, Bazar
Amroha gate , Moradabad
244001 Uttar Pradesh
Shop Nos. 296 & 297, Johari
Bazar, Opp. - L.M.B hotel, Jaipur
302003 Rajasthan
Plot No. - 35A & 35B, Nayi
Sadak, Dist. - Rajasthan 342001
Relief Road, Opp. Relief
Theatre, Ahmedabad, Gujarat
Opp. Anupam Talkies, Near
Teenbatti Chowk, Jamnagar
361 001 Gujarat
Shop No. 6 & 7, B.N.Chambers,
R.C.Dutt Road, Alkapuri,
Vadodara - 390 007.
20, New Market, Main Road, T.
T. Nagar, Bhopal - 462003
Madhya Pradesh
50/48, Sarafa Bazaar, Sacheti
Bhawan, Opp Bank Of Baroda,

CAL/HARE/P-1/10008

February 17, 2009

KOL/BEH/P-1/10952/04

March 3, 2010

BDN/BDN/P1/28048/06

May 12, 2009

N24P/BNG(N)/P1/58077/07

January 16, 2010

C/BOW/P-1/9264

May 24, 2008

C/LAKE/P1/460/06

October 7, 2009

I-557

December 31, 2007

I-153

December 31, 2007

I-634

December 31, 2007

I-1944

December 31, 2007

35/4004

March 31, 2010

4/503

March 31, 2011

233/2006-07

April 30, 2011

296997

December 31, 2007

K/2797/2006

VALID FOR LIFE TIME

PII/SHA2/08/0000041

December 31, 2007

I-11284

December 31, 2007

A-13344

December 9, 2008

80311/BPL/S/2007

December 31, 2011

15649/G/CF/06

March 31, 2010

232

KHADIM INDIA LIMITED

25.
26.
27.

28.
29.
30.
31.

32.

33.

34.

35.

36.
37.
38.

39.
40.

Gwalior 474 001, Madhya


Pradesh
37,Mount Road, Chennai 600002
SMO Plaza, 121 Usman Road,
T.Nagar, Chennai-600017.
Shop no.G1-G2, Ground floor,
Palace Regency, Municipal door
no. 80-93, Puruswalkum high
road, Chennai-600 010
Agraharam First Street, No.110/110A/680 Salem, Tami
Nadu - 636001
Opanakkara Street No.- 532,
Coimbatore, Tamilnadu641001
17-M.G.Road, Door No. 2-4-25
Secunderabad, Andhra Pradesh 500003.
Shop No. 2 & 3, Shivani Lodge
Complex,Door No.
4-106.Durganagar,
Dilsukhnagar, Hyderabad 500060.
Door No. 28-2-249/16, Ground
Floor, Daspalla Centre,
Jagadamba Junction
Vishakapatnam - 530020. (AP)
Shop No.- 6 & 7, Upper Ground
Floor, VERTEX PLAZA
COMMERCIAL COMPLEX, Opp.
Radhika Theatre, A S Rao Nagar
Main Road, Hyderabad - 500062
Shop No.- 1-8-4/1/1/C & 1-84/1/3, Ground Floor, (Near
Sunanda Hotel Chikkadpally
Hyderabad - 500020
Shop No.3&4, Okaz Complex,
Opp. Mehndipatnam, Police
Station, Mehd, Hyderabad 500028.
Zuna Kapra Bazar, Old Cloth
Market, Akola - 444001
Maharastra
Buti Building, Sitabuldi Main
Road, Opp. Hanuman Gali,
Nagpur - 440012, Maharastra
Vishwanath Sankul Building,
Ground Floor, Shop No. 2,
College Road, Opposite Vijan
Hospital, Nashik - 422005.
Maharastra
54 and 55, Maruti Temple Road,
P.S. Ankali, Dist. Sangli,
Maharastra - 416416
G.E.Road ,Old Bus Stand, Beside
Raj Talkies, Raipur - 492 001,

R/DIS/500/2000

VALID FOR LIFE TIME

R/DIS/505/00

VALID FOR LIFE TIME

R/DIS/330/2002

VALID FOR LIFE TIME

R/DIS/377/2003

VALID FOR LIFE TIME

125/2003

VALID FOR LIFE TIME

Al022/HYD/2/2000

December 31, 2007

D/4667/02

December 31, 2007

ALO II/VSP/3275/2005

December 31, 2007

M/3298/07

December 31, 2007

AL020/HYD/9/2003

December 31, 2007

ALO27/HYD/77/02

December 31, 2007

99333/2007

December 16, 2007

II-1-2148

March 31, 2009

2064

December 19, 2009

I/27240/07

March 31, 2009

24490/RPR/5166

December 31, 2010

233

KHADIM INDIA LIMITED

41.
42.
43.
44.

45.
46.
47.
48.

Chattisgarh
Shop No. - 9, N.D.Gadagkar
Complex, Broadway, Hubli - 580
020, Karnataka
Door.No.19, Devaraj URS Road,
Devaraja Mahalla, Mysore 570001, Karnataka.
Shop no. 4 & 5, No.63, 10th
Main, 4th Block, Jaynagar,
Bangalore -560011.
Shop Nos-229,229A,229G,
230,230A, 231, 231A, 232,
232A, Alankar Pearl Plaza, 23,
K.G. Road, Bangalore - 560 009,
Karnataka.
32 and 33, Kamraj Road, Civil
Station,
Bangalore-560 042
M.G Road, Ground Floor, Jama
Plaza, Opp. - SMV High School,
Trivandrum - 695 001, Kerala
M.G. Road, Shenoys Junction,
Opp. - Shenoys Theatre,
Ernakulam, Kerala
37, Jawarharlal Nehru Street,
Near Traffic Police
Station,Pondicherry - 605001

38/S/497/06-07

December 31, 2010

0583/2003

December 31, 2007

0366/2002

December 31, 2011

No/27/0877/0203

December 31, 2011

70/S/755/2000

December 31, 2008

THPR 15(A)-07

December 31, 2007

MGR 1353

December 31, 2007

7507

March 31, 2008

B) Trade Licence Number


Serial
No.
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.

Address of Store
7A, Lindsay Street, Kolkata-700 087
12, Lindsay Street, Kolkata-700 087
Hatibagan Market, 80, Bidhan
Sarani, Kolkata- 700 004
B-87-88, College Street Market,
Kolkata- 700 009
14, Bentinck Street, Kolkata-700
001
433 - Diamond Harbour Road,
Kolkata- 700 034
81/3A, Bentick Street, Kolkata- 700
001
5, G.T. Road, Near Karzan Gate,
Dist :- Burdwan, West Bengal
E 103, City Centre, DC -1, Sector 1,
Salt lake City Kolkata - 700 064.
30A, Rabindra Sarani , Kolkata-73
G-42, Dakshinapan Shopping
Complex, Kolkata-68
P-127, Ashok Nagar, Janapath, UnitII, BBSR- 751009.
20, New Market, Main Road, T. T.
Nagar, Bhopal - 462003 Madhya
Pradesh
17-M.G.Road, Door No. 2-4-25

234

Registration no.

Validity

306335003366
306335003012
011103200016

March 31, 2007


March 31, 2007
March 31, 2007

303999001862

March 31, 2007

3046-0300-9184

March 31, 2007

712000006300

March 31, 2007

304303009884

March 31, 2007

2899

March 31, 2008

6248

March 31, 2008

304325011672
409300008973

March 31, 2007


March 31, 2007

55929

December 31, 2007

34/798

March 31, 2008

218-346-2663

March 31, 2008

KHADIM INDIA LIMITED

Secunderabad, Andhra Pradesh 500003.


Shop No. 2 & 3, Shivani Lodge
Complex,Door No.
4-106.Durganagar, Dilsukhnagar,
Hyderabad - 500060.
Door No. 28-2-249/16, Ground
Floor, Daspalla Centre,
Jagadamba Junction
Vishakapatnam - 530020. (AP)
Shop No.- 6 & 7, Upper Ground
Floor, VERTEX PLAZA COMMERCIAL
COMPLEX, Opp. Radhika Theatre, A
S Rao Nagar Main Road, Hyderabad
- 500062
Shop No.- 1-8-4/1/1/C & 1-8-4/1/3,
Ground Floor, (Near Sunanda Hotel
Chikkadpally Hyderabad - 500020
Shop No.3&4, Okaz Complex, Opp.
Mehndipatnam, Police Station,
Mehd, Hyderabad - 500028.
Zuna Kapra Bazar, Old Cloth Market,
Akola - 444001 Maharastra
G.E.Road ,Old Bus Stand, Beside Raj
Talkies, Raipur - 492 001,
Chattisgarh
Shop No. - 9, N.D.Gadagkar
Complex, Broadway, Hubli - 580
020, Karnataka
M.G Road, Ground Floor, Jama
Plaza, Opp. - SMV High School,
Trivandrum - 695 001, Kerala
M.G. Road, Shenoys Junction, Opp.
- Shenoys Theatre, Ernakulam,
Kerala
37, Jawarharlal Nehru Street, Near
Traffic Police Station, Pondicherry 605001

15.

16.

17.

18.
19.
20.
21.
22.
23.
24.
25.

40006008

March 31, 2008

3247

December 31, 2007

060109160

March 31, 2008

009-320-0846

March 31, 2008

0933463900

March 31, 2008

00049

March 31, 2008

5318

March 31, 2008

32/52 -06-07

March 31, 2011

511537

March 31, 2008

023623

March 31, 2008

PM/ROII/TL/A4/2007/3976

March 31, 2008

C) Employee State Insurance Registration


Serial No.
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.

Address of Store

ESIC Sub-Code

7A, Lindsay Street, Kolkata-700 087


12, Lindsay Street, Kolkata-700 087
Hatibagan Market, 80, Bidhan Sarani, Kolkata700 004
B-87-88, College Street Market, Kolkata- 700 009
14, Bentinck Street, Kolkata-700 001
433 - Diamond Harbour Road, Kolkata- 700 034
81/3A, Bentick Street, Kolkata- 700 001
E 103, City Centre, DC -1, Sector 1, Salt lake City
Kolkata - 700 064.
30A, Rabindra Sarani , Kolkata-73
G-42, Dakshinapan Shopping Complex, Kolkata68
5, G.T. Road, Near Karzan Gate, Dist :- Burdwan,

41-22868G-102
41-22868G-102
41-22868C-102

235

41-22868D-102
41-22868J-102
41-22868I-102
41-22868F-102
41-22868K-102
41-22868E-102
41-22868H-102
41-22868-102

KHADIM INDIA LIMITED

12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
22.
23.
24.
25.

26.
27.
28.
29.
30.
31.
32.
33.
34.

West Bengal
P-127, Ashok Nagar, Janapath, Unit-II, BBSR751009.
Plot No. 282-287(p)503/A Mission Road, Buxi
Bazar,
P.S. - Mangalabag, Cuttack - 753001.
Annapurna Complex,Fire Station Road, Bhapur
Bazar, Berhampur, Ganjam Dist. Orissa, Pin.760001.
504-B/3, Dolamundai, Bajrakbati Road, Infront of
Krishna Arcade, P. S - Purighat, Dist-Cuttack,
Pin Code-753001, Orissa
Shop No. - 24A/12A/3, Sarder Patel Marg, Lucky
Range, Near Civil Lines Crossing, Allahabad, Pin 211001
Shop No. 6 & 7, B.N.Chambers, R.C.Dutt Road,
Alkapuri, Vadodara - 390 007.
37,Mount Road, Chennai -600002
SMO Plaza, 121 Usman Road, T.Nagar, Chennai600017.
Shop no.G1-G2, Ground floor, Palace Regency,
Municipal door no. 80-93, Puruswalkum high
road, Chennai-600 010
Agraharam
First
Street,
No.-110/110A/680
Salem, Tami Nadu - 636001
Opanakkara Street No.- 532, Coimbatore,
Tamilnadu- 641001
17-M.G.Road, Door No. 2-4-25 Secunderabad,
Andhra Pradesh - 500003.
Shop No. 2 & 3, Shivani Lodge Complex, Door No.
4-106. Durganagar, Dilsukhnagar, Hyderabad 500060.
Door No. 28-2-249/16, Ground Floor, Daspalla
Centre,
Jagadamba
Junction
Vishakapatnam - 530020. (AP)
Shop No.- 6 & 7, Upper Ground Floor, VERTEX
PLAZA COMMERCIAL COMPLEX, Opp. Radhika
Theatre, A S Rao Nagar Main Road, Hyderabad 500062
Shop No.- 1-8-4/1/1/C & 1-8-4/1/3, Ground
Floor, (Near Sunanda Hotel
Chikkadpally
Hyderabad - 500020
Shop
No.3&4,
Okaz
Complex,
Opp.
Mehndipatnam, Police Station, Mehd, Hyderabad 500028.
Shop No. - 9, N.D.Gadagkar Complex, Broadway,
Hubli - 580 020, Karnataka
Door.No.19, Devaraj URS Road, Devaraja
Mahalla, Mysore - 570001, Karnataka.
Shop no. 4 & 5, No.63, 10th Main, 4th Block,
Jaynagar, Bangalore -560011.
Shop Nos-229,229A,229G, 230,230A, 231, 231A,
232, 232A, Alankar Pearl Plaza, 23, K.G. Road,
Bangalore - 560 009, Karnataka.
32 and 33, Kamraj Road, Civil Station,
Bangalore-560 042
M.G Road, Ground Floor, Jama Plaza, Opp. - SMV

236

41-22868-102 (44-BBSR)
41-22868B-102 (44-CUTTACK)
41-22868-102(44-BAM)
41-22868B-102 (44-CUTTACK)
41-22868-102/UP4158/(ALLAHABAD)
41-22868-102 (BRD)
41-22868/102/B.O-CNI
41-22868-102(B.O.CNI-2)
41-22868-102( B.O.CNI-3)
41-22868/102/BO/SALEM
41-22868-102(CBE)
41-22868-102(SECBAD)
41-22868-102(HYD)
41-22868-102 (VSP)
41-22868-102 (A.S.R.N)

41-22868-102(CHP)
41-22868-102(MPM)
41-22868-102(HBL)
41-22868-102 (MYS)
41-22868-102(BNG-4)
41-22868-102(BNG-3)
41-22868-102 (BNG-1)
41-22868-102/TVM

KHADIM INDIA LIMITED

35.
36.
37.

High School, Trivandrum - 695 001, Kerala


M.G. Road, Shenoys Junction, Opp. - Shenoys
Theatre, Ernakulam, Kerala
37, Jawarharlal Nehru Street, Near Traffic Police
Station,Pondicherry - 605001
Buti Building, Sitabuldi Main Road, Opp. Hanuman
Gali, Nagpur - 440012, Maharastra

41-22868-102/EKM
41-22868-102/BO/PDY
41-22868-102/(NGP)

OUR LIFE STYLE RETAIL STORES LICENSES


A) Store at 45B, Ashutosh Mukherjee Road, Bhowanipur (Arch Galaxy), Kolkata 700 025

Serial No.
1.
2.
3.
4.
5.
6.

Description

Registration /
Reference no.

Validity

Registration under Shops and


Establishment Act
Trade License
No objection certificate from fire
authority
Certificate of verification (Under
the Standards of weight and
Measure (Enforcement) Act, 1985
Generator License

KOL/BHOW/P-1/8203

July 18, 2010

L340959
WBEES/4245/KolCB/75/05 (82/05)
575270

March 31, 2008


March 31, 2008

06-572(New)

June 17,2010

BIS certification for Hallmarking


of Gold Jewellery

CM/L-5335763

May 15, 2010

Description

Registration/
Reference no.

Validity

Registration under Shops and


Establishment Act
Trade License
Certificate of verification (Under
the Standards of weight and
Measure (Enforcement) Act, 1985
Food license to store FMCG
products
Generator License
Pollution no objection certificate
BIS certification for Hallmarking
of Gold Jewellery

How/How/P-1/51867

July 9, 2010

13330
1999431

March 31, 2008


-

92

March 31, 2008

03-490
049631
CM/L-5335662

June 17, 2010


June 30,2012
May 15, 2010

B) Store at 18, G.T. Road (s), Howrah


Serial No.
1.
2.
3.
4.
5.
6.
7.

C) Store at 32, Kabiguru Rabindra Path, Kanchrapara, 24 Parganas (N)


Serial No.
1.
2.

Description
Registration under
Establishment Act
Trade License

Shops

Registration/
Demand no.

Validity

N24P/Biz/P-1/56690

December 6, 2007

1017 to 1024 and 1026

December 31, 2007

and

237

KHADIM INDIA LIMITED

3.
4.
5.
6.
7.

Certificate of verification (Under


the Standards of weight and
Measure (Enforcement) Act, 1985
Baby food license
Registration under the Employee
State Insurance Act, 1948
Generator License
BIS certification for Hallmarking
of Gold Jewellery

P-000879

4716/BFR/Bizpur
41-22868L-102

December 31, 2007

21-679
CM/L-5231347

April, 24 2010
January 03, 2009

SONA KHAZANA
Store at 128/12A, Bidhan Sarani, Kolkata 700 004
Serial No.
1.
2.
3.

Description

Registration no.

Validity

Registration under Shops and


Establishment Act
Trade License
BIS certification for Hallmarking
of Gold Jewellery

KOL/SHYAM/P-I/6236/07

February 7, 2010

000252001802
CM/L-5252153

March 31, 2007


January 16, 2009

WAREHOUSE
Serial No

Place

Trade license

Validity

Shed No. S-32/1, 32/2, 32/1A of


Phase-I and S-43, 43/1, 44, 44/1 of
Phase-III at Kasba Industrial Estate,
Anandapur, Kolkata 700 078
49 Debendra Chandra Dey Road, P.
O. Tangra, Kolkata-700 015
IV.
Godown
No.
NC/1B
at
Rehabilitation
Industries
Cooperation,
Industrial
Estate,
Bonhooghly, Kolkata- 700032
29B, Rabindra Sarani, Kolkata 700
073
11 No., Sambhu Chatterjee Street,
Kolkata 700 007

001296101184

March 31, 2007

002021005472

March 31, 2008

N.A

304541003950

March 31, 2007

303919000396

March 31, 2007

RC No. 89/2007

VALID FOR LIFE TIME

2
3

4
5
6

25, Thirumallai Nagar, Main Street,


Kavangarai, Puzhal, Chennai 600
066

APPROVALS MATERIAL TO OUR CURRENT BUSINESS ACTIVITIES FOR


APPLICATIONS HAVE BEEN MADE BUT APPROVALS ARE YET TO BE OBTAINED:

WHICH

No objection certificate from Fire Authority: Application dated August 6, 2007 has been made to
the Collector Fire License Section, western side Kolkata, for issuance of a no objection certificate for
our factory in Kolkata.
Registration under Shops and Establishment Act: application dated October 13, 2006 has been
made for registration under shops and establishments for our store at 81/3A, Bentick Street, Kolkata700 001.

238

KHADIM INDIA LIMITED

Factory License: Application dated August 24, 2007 has been made to Chief Inspector of Factories
for grant of registration of factory at P43 and 43A, Kasba Industrial Estate.
Registration under Employees State Insurance Corporation: Application has been made to the
Regional Director, for registration of our under mentioned stores under the Employees State Insurance
Corporation Act.
Serial No.
1.
2.
3.
4.
5.
6.
7.

Details of Store
Premises No. 5/10/26, Bazar Amroha gate , Moradabad 244001 Uttar Pradesh
Shop Nos. 296 & 297, Johari Bazar, Opp. - L.M.B hotel, Jaipur 302003 Rajasthan
Plot No. - 35A & 35B, Nayi Sadak, Dist. - Rajasthan 342001
Opp. Anupam Talkies, Near Teenbatti Chowk, Jamnagar 361 001 Gujarat
20, New Market, Main Road, T. T. Nagar, Bhopal - 462003 Madhya Pradesh
50/48, Sarafa Bazaar, Sacheti Bhawan, Opp Bank Of Baroda, Gwalior 474 001,
Madhya Pradesh
G.E.Road
,Old
Bus
Stand,
Beside
Raj
Talkies,
Raipur
492
001,
Chattisgarh

Baby Food License: Application has been made to department of Non-Cereal Essential Commodities,
for registration of our under mention stores.
Serial No.
1.
2.

Details of Store
45B, Ashutosh Mukherjee Road, Bhowanipur (Arch Galaxy), Kolkata 700 025
18, G.T. Road (s), Howrah

Registration under Standard Weights and Measures (Packaged Commodities) Rules, 1977:
application dated July 20, 2007 has been made to the Controller of Legal Metrology, Kolkata, for
issuance of license for Packaged Commodities for our factory and warehouses.
APPROVALS MATERIAL TO OUR CURRENT
APPLICATIONS HAS NOT BEEN MADE:

BUSINESS

ACTIVITIES

FOR

WHICH

Permission to use signboards, glow signs, illuminated sky sign boards, illuminated totem
pole signs: we have not applied for permission to use signboards, glow signs, illuminated sky sign
boards, illuminated totem pole signs, wherever applicable as per required laws.
License to operate store for 365 days in a year: We are in the process of applying for license to
operate store for 365 days in a year for our stores.
Trade License : We are in the process of applying municipal corporation of Delhi for our ware house
at Shed No. 7, 8 and 9 at Khasara Nos. 50/6 (4-16), 7(4-16), 8(4-16) Village Alipur, Delhi 110 036.
Registration under Employees State Insurance Corporation: The applications for following
stores for Employees State Insurance Corporation registrations are currently pending.
Serial No.
Details of Store
1.
Zuna Kapra Bazar, Old Cloth Market, Akola - 444001 Maharastra
2.
Vishwanath Sankul Building, Ground Floor, Shop No. 2, College Road, Opposite Vijan
Hospital, Nashik - 422005. Maharastra
3.
54 and 55, Maruti Temple Road, P.S. Ankali, Dist. Sangli, Maharastra - 416416
4.
Relief Road, Opp. Relief Theatre, Ahmedabad, Gujarat
5.
J-13, Sector - 18, Noida Pin 201301 U.P
6.
128/12A, Bidhan Sarani, Kolkata 700 004
7.
18, G.T. Road (s), Howrah
8.
45B, Ashutosh Mukherjee Road, Bhowanipur (Arch Galaxy), Kolkata 700 025

239

KHADIM INDIA LIMITED

No objection certificate from fire authority: We are in the process of applying for no objection
certificate from fire authority for our life style stores at Kanchrapara and Howrah.
Pollution Certificate: We are in the process of applying for pollution certificate for our factory and
for our life style store at Bhowanipur and Kanchrapara.
APPROVALS MATERIAL TO OUR CURRENT BUSINESS ACTIVITIES WHICH HAVE EXPIRED
AND FOR WHICH RENEWAL APPLICATIONS HAVE NOT BEEN MADE:
Trade License: The trade license for many of our stores/Factory/Warehouse in Kolkata is expired on
March 31, 2007. The KMC (Kolkata Municipal Corporation) trade license demand order is expect arrive
by September.

240

KHADIM INDIA LIMITED

OTHER REGULATORY AND STATUTORY DISCLOSURES


AUTHORITY FOR THE ISSUE
The present Issue of Equity Shares has been authorized by shareholders vide a Special Resolution
passed at the Extraordinary General Meeting of the Company held on 29th May 2007. The Board of
Directors of the Company had approved the present Issue of Equity Shares vide a resolution passed at
their meeting held on 24th April 2007.
PROHIBITION BY SEBI
We, our Directors, our Promoters, their Directors or person(s) in control of our Promoters or Group
Companies and affiliates and companies with which the Directors are associated with as directors have
not been prohibited from accessing or operating in capital markets under any order or direction passed
by SEBI.
ELIGIBILITY FOR THE ISSUE
We are eligible for this Issue as per clause 2.2.1 of the SEBI Guidelines as we are in compliance with
the conditions specified therein:

We have net tangible assets of at least Rs. 30 million in each of the preceding 3 full financial
years (of 12 months each), of which not more than 50% is held in monetary assets;
We have a track record of distributable profits in terms of Section 205 of the Companies Act,
1956, for at least three (3) out of immediately preceding five (5) years.
We have a net worth of not less than Rs.10 million in each of the preceding 3 full years (of 12
months each);
There has been no change in the name of our company in the last one year; and
The aggregate of the proposed issue and all previous issues made in the same financial year in
terms of size does not exceed five (5) times of our pre-issue net worth as per the audited
balance sheet of the last financial year.

Our Company's net tangible assets, monetary assets, net profit and net worth derived from the
Auditor's Report included in this Draft Red Herring Prospectus under the section titled "Financial
Statements", as at, and for the last three years ended fiscal are set forth below:
(Rs. in million)
Particulars

Fiscal 2005

Fiscal 2006

Fiscal 2007

723.53

722.30

929.79

Net Profit, as restated

205.59
23.85

139.35
27.28

111.45
29.00

Net Worth, as restated

408.25

436.70

487.55

Net Tangible Assets*


Monetary Assets**

*Net tangible assets is defined as the sum of fixed assets (including capital work in progress and
excluding revaluation reserves), current assets (excluding deferred tax assets) less current liabilities
(excluding deferred tax liabilities and long term liabilities).
**Monetary assets include Sundry Debtors and cash and bank Balances. Detailed figures are given in
the section titled "Financial Statements" on page 154 of this Draft Red Herring Prospectus
Hence, we are eligible for the issue under clause 2.2.1 of the SEBI Guidelines.
Further, in accordance with Clause 2.2.2A of the SEBI Guidelines, we undertake that the number of
allottees, i.e., Persons receiving allotment in the Issue shall be at least 1,000 otherwise, the entire

241

KHADIM INDIA LIMITED

application money will be refunded forthwith. In case of delay, if any, in refund, our Company shall
pay interest on the application money at the rate of 15% per annum for the period of delay.
DISCLAIMER CLAUSE
AS REQUIRED, A COPY OF THE DRAFT RED HERRING PROSPECTUS HAS BEEN SUBMITTED TO
SEBI. IT IS TO BE DISTINCTLY UNDERSTOOD THAT SUBMISSION OF THE DRAFT RED
HERRING PROSPECTUS TO SEBI SHOULD NOT, IN ANY WAY, BE DEEMED OR CONSTRUED
THAT THE SAME HAS BEEN CLEARED OR APPROVED BY SEBI. SEBI DOES NOT TAKE ANY
RESPONSIBILITY EITHER FOR THE FINANCIAL SOUNDNESS OF ANY SCHEME OR THE
PROJECT FOR WHICH THE ISSUE IS PROPOSED TO BE MADE OR FOR THE CORRECTNESS OF
THE STATEMENTS MADE OR OPINIONS EXPRESSED IN THE DRAFT RED HERRING
PROSPECTUS. THE BOOK RUNNING LEAD MANAGER, MICROSEC CAPITAL LIMITED HAVE
CERTIFIED THAT THE DISCLOSURES MADE IN THE DRAFT RED HERRING PROSPECTUS ARE
GENERALLY ADEQUATE AND ARE IN CONFORMITY WITH SEBI (DISCLOSURE AND INVESTOR
PROTECTION) GUIDELINES, 2000 AS FOR THE TIME BEING IN FORCE. THIS REQUIREMENT
IS TO FACILITATE INVESTORS TO TAKE AN INFORMED DECISION FOR MAKING AN
INVESTMENT IN THE PROPOSED ISSUE.
IT SHOULD ALSO BE CLEARLY UNDERSTOOD THAT WHILE THE COMPANY IS PRIMARILY
RESPONSIBLE FOR THE CORRECTNESS, ADEQUACY AND DISCLOSURE OF ALL RELEVANT
INFORMATION IN THE DRAFT RED HERRING PROSPECTUS, THE BOOK RUNNING LEAD
MANAGER ARE EXPECTED TO EXERCISE DUE DILIGENCE TO ENSURE THAT THE COMPANY
DISCHARGES ITS RESPONSIBILITY ADEQUATELY IN THIS BEHALF AND TOWARDS THIS
PURPOSE, THE BOOK RUNNING LEAD MANAGER, MICROSEC CAPITAL LIMITED HAVE
FURNISHED TO SEBI, A DUE DILIGENCE CERTIFICATE DATED SEPTEMBER 03, 2007 IN
ACCORDANCE WITH THE SEBI (MERCHANT BANKERS) REGULATIONS, 1992 WHICH READS
AS FOLLOWS:
I.

WE HAVE EXAMINED VARIOUS DOCUMENTS INCLUDING THOSE RELATING TO


LITIGATION LIKE COMMERCIAL DISPUTES, PATENT DISPUTES, DISPUTES WITH
COLLABORATORS ETC. AND OTHER MATERIALS, MORE PARTICULARLY REFERRED TO
IN THE ANNEXURE, IN CONNECTION WITH THE FINALIZATION OF THE DRAFT RED
HERRING PROSPECTUS PERTAINING TO THE SAID ISSUE.

II.

ON THE BASIS OF SUCH EXAMINATION AND THE DISCUSSIONS WITH THE


COMPANY,
ITS
DIRECTORS
AND
OTHER
OFFICERS,
OTHER
AGENCIES,
INDEPENDENT VERIFICATION OF THE STATEMENTS CONCERNING THE OBJECTS OF
THE ISSUE, PROJECTED PROFITABILITY, PRICE JUSTIFICATION AND THE CONTENTS
OF THE DOCUMENTS MENTIONED IN THE ANNEXURE AND OTHER PAPERS
FURNISHED BY THE COMPANY.
WE CONFIRM THAT:
A. THE DRAFT RED HERRING PROSPECTUS FORWARDED TO SEBI IS IN
CONFORMITY WITH THE DOCUMENTS, MATERIALS AND PAPERS RELEVANT TO
THE ISSUE;
B. ALL THE LEGAL REQUIREMENTS CONNECTED WITH THE SAID ISSUE AS ALSO THE
GUIDELINES, INSTRUCTIONS, ETC. ISSUED BY SEBI, THE GOVERNMENT AND ANY
OTHER COMPETENT AUTHORITY IN THIS BEHALF HAVE BEEN DULY COMPLIED
WITH; AND
C. THE DISCLOSURES MADE IN THE DRAFT RED HERRING PROSPECTUS ARE TRUE,
FAIR AND ADEQUATE TO ENABLE THE INVESTORS TO MAKE A WELLINFORMED
DECISION AS TO THE INVESTMENT IN THE PROPOSED ISSUE.

242

KHADIM INDIA LIMITED

III.

BESIDES OURSELVES, ALL THE INTERMEDIARIES NAMED IN THE DRAFT RED


HERRING PROSPECTUS ARE REGISTERED WITH SEBI AND THAT UNTIL DATE SUCH
REGISTRATIONS ARE VALID.

IV.

WHEN UNDERWRITTEN, WE SHALL SATISFY OURSELVES ABOUT THE WORTH OF THE


UNDERWRITERS TO FULFIL THEIR UNDERWRITING COMMITMENTS.

V.

WE CERTIFY THAT WRITTEN CONSENT FROM PROMOTERS HAS BEEN OBTAINED FOR
INCLUSION OF ITS SECURITIES AS PART OF PROMOTERS CONTRIBUTION SUBJECT
TO LOCK-IN AND THE SECURITIES PROPOSED TO FORM PART OF THE PROMOTERS
CONTRIBUTION
SUBJECT
TO
LOCK-IN,
WILL
NOT
BE
DISPOSED/SOLD/TRANSFERRED BY THE PROMOTERS DURING THE PERIOD
STARTING FROM THE DATE OF FILING THE DRAFT RED HERRING PROSPECTUS WITH
SEBI UNTIL THE DATE OF COMMENCEMENT OF LOCK-IN PERIOD AS STATED IN THE
DRAFT RED HERRING PROSPECTUS.

ALL LEGAL REQUIREMENTS PERTAINING TO THE ISSUE WILL BE COMPLIED WITH AT THE
TIME OF FILING OF RED HERRING PROSPECTUS WITH THE ROC IN TERMS OF SECTION 60B
OF THE COMPANIES ACT, 1956.
ALL LEGAL REQUIREMENTS PERTAINING TO THE ISSUE WILL BE COMPLIED WITH AT THE
TIME OF REGISTRATION OF THE PROSPECTUS WITH THE ROC IN TERMS OF SECTION 56,
SECTION 60 AND SECTION 60B OF THE COMPANIES ACT, 1956.
THE FILING OF THE DRAFT RED HERRING PROSPECTUS DOES NOT, HOWEVER, ABSOLVE
THE COMPANY FROM ANY LIABILITIES IN THE NATURE OF LIABILITIES UNDER SECTION 63
AND SECTION 68 OF THE COMPANIES ACT OR FROM THE REQUIREMENT OF OBTAINING
SUCH STATUTORY AND OTHER CLEARANCES AS MAY BE REQUIRED FOR THE PURPOSE OF
THE PROPOSED ISSUE. SEBI FURTHER RESERVES THE RIGHT TO TAKE UP AT ANY POINT OF
TIME, WITH THE BOOK RUNNING LEAD MANAGER, ANY IRREGULARITIES OR LAPSES IN THE
DRAFT RED HERRING PROSPECTUS.
DISCLAIMER FROM THE COMPANY AND THE BOOK RUNNING LEAD MANAGER
Our company, its Directors and the Book Running Lead Manager accept no responsibility for
statements made otherwise than in this Draft Red Herring Prospectus or in the advertisements or any
other material issued by or at the instance of the Issuer and that anyone placing reliance on any other
source of information, including Companys web site, www.khadims.com would be doing so at his or
her own risk.
The BRLM accepts no responsibility, save to the limited extent as provided in the Memorandum of
Understanding entered into between the Book Running Lead Manager and our company.
All information shall be made available by our company and the Book Running Lead Manager to the
public and investors at large and no selective or additional information would be available for a section
of the investors in any manner whatsoever including at road show presentations, in research or sales
reports, at collection centers or elsewhere.
CAUTION
Investors that bid in this Issue will be required to confirm and will be deemed to have represented to
the Company and the Underwriters and their respective directors, officers, agents, affiliates and
representatives that they are eligible under all applicable laws, rules, regulations, guidelines and
approvals to acquire Equity Shares and will not offer, sell, pledge or transfer the Equity Shares to any
person who is not eligible under applicable laws, rules, regulations, guidelines and approval to acquire
Equity Shares. The Company and the Underwriters and their respective directors, officers, agents,
affiliates and representatives accept no responsibility or liability for advising any investor on whether
such investor is eligible to acquire Equity Shares.

243

KHADIM INDIA LIMITED

DISCLAIMER IN RESPECT OF JURISDICTION


This Issue is being made in India to Indian Nationals, who are resident in India and are Adult
Individuals and are not lunatic, in single name or joint names (not more than three); Hindu Undivided
Families through the Karta of the Hindu Undivided Family; Companies, Bodies Corporate and Societies
registered under the applicable laws in India and authorized to invest in the Shares; Indian Mutual
Funds registered with SEBI; Indian Financial Institutions & Banks; Indian Venture Capital Funds
registered with SEBI subject to the applicable RBI Guidelines and Approvals, if any; State Industrial
Development Corporations; Insurance Companies registered with Insurance Regulatory and
Development Authority; Provident Funds with minimum corpus of Rs.250 Million; Pension Funds with
minimum corpus of Rs.250 Million; Trusts or Societies registered under the Societies Registration Act,
1860 or any other applicable Trust Law and are authorized under its constitution to hold and invest in
Equity Shares of a Company; Commercial Banks and Regional Rural Banks, Co-operative Banks may
also apply subject to permission from Reserve Bank of India. This Draft Red Herring Prospectus does
not, however, constitute an Issue to sell or an invitation to subscribe to shares offered hereby in any
other jurisdiction to any person to whom it is unlawful to make an Offer or invitation in such
jurisdiction. Any person into whose possession this Draft Red Herring Prospectus comes is required to
inform himself or herself about and to observe any such restrictions. Any dispute arising out of this
Issue will be subject to the jurisdiction of appropriate court(s) in Kolkata, West Bengal only.
No action has been or will be taken to permit a public offering in any jurisdiction where action would
be required for that purpose, except that this Draft Red Herring Prospectus has been submitted to
SEBI. Accordingly, the Equity Shares, represented thereby may not be offered or sold, directly or
indirectly, and this Draft Red Herring Prospectus may not be distributed, in any jurisdiction, except in
accordance with the legal requirements applicable in such jurisdiction. Neither the delivery of this
Draft Red Herring Prospectus nor any sale hereunder shall, under any circumstances, create any
implication that there has been no change in the affairs of the Company since the date hereof or that
the information contained herein is correct as of or at any time subsequent to this date.
DISCLAIMER CLAUSE OF THE STOCK EXCHANGES
Disclaimer Clause of BSE
As required, a copy of this Draft Red Herring Prospectus has been submitted to BSE. BSE has given
vide its letter dated . permission to our Company to use the Exchanges name in this draft
offer document as one of the stock exchanges on which our Companys securities are proposed to be
listed. BSE has scrutinized this offer document for its limited internal purpose of deciding on the
matter of granting the aforesaid permission to our Company.
BSE does not in any manner:

warrant, certify or endorse the correctness or completeness of any of the contents of this offer
document; or

warrant that this Companys securities will be listed or will continue to be listed on BSE; or

take any responsibility for the financial or other soundness of this Company, its promoters, its
management or any scheme or project of this Company;

and it should not for any reason be deemed or construed to mean that this offer document has been
cleared or approved by BSE. Every person who desires to apply for or otherwise acquires any
securities of this Company may do so pursuant to independent inquiry, investigation and analysis and
shall not have any claim against BSE whatsoever by reason of any loss which may be suffered by such
person consequent to or in connection with such subscription/acquisition whether by reason of
anything stated or omitted to be stated herein or for any other reason whatsoever.

244

KHADIM INDIA LIMITED

Disclaimer Clause of NSE


As required, a copy of this Draft Red Herring Prospectus has been submitted to NSE. NSE has given
vide its letter dated .. permission to this Company to use the Exchanges name in this
Draft Red Herring Prospectus as a Non Designated Stock Exchanges on which this Companys
securities are proposed to be listed. NSE has scrutinized this offer document for its limited internal
purpose of deciding on the matter of granting the aforesaid permission to this Company.
NSE does not in any manner:

warrant, certify or endorse the correctness or completeness of any of the contents of this offer
document; or

warrant that this Companys securities will be listed or will continue to be listed on NSE; or

take any responsibility for the financial or other soundness of this Company, its promoters, its
management or any scheme or project of this Company;

and it should not for any reason be deemed or construed to mean that this offer document has been
cleared or approved by NSE. Every person who desires to apply for or otherwise acquires any
securities of our Company may do so pursuant to independent inquiry, investigation and analysis and
shall not have any claim against NSE whatsoever by reason of any loss which may be suffered by such
person consequent to or in connection with such subscription/acquisition whether by reason of
anything stated or omitted to be stated in the Draft Red Herring Prospectus or for any other reason
whatsoever.
FILING OF PROSPECTUS WITH THE BOARD AND THE REGISTRAR OF COMPANIES
A copy of this Draft Red Herring Prospectus, along with the documents required has been filed with
SEBI (Head Office) Securities and Exchange Board of India Plot No.C4-A,'G' Block Bandra Kurla
Complex, Bandra (East), Mumbai- 400 051.
A copy of the Red Herring Prospectus, along with the material contracts and documents required to be
filed under Section 60B of the Companies Act would be delivered for registration to the Registrar of
Companies, West Bengal located at Nizam Palace, IInd MSO Building, 2nd floor, 234/4, A.J.C. Bose
Road, Kolkata-700 020.
LISTING
The initial listing applications have been made to Bombay Stock Exchange Limited (BSE) and The
National Stock Exchange of India Limited (NSE) for permission to list the Equity Shares and for an
official quotation of the Equity Shares of the Company. BSE will be the Designated Stock Exchange.
If the permissions to list the Equity Shares of the company are not granted by any of the Stock
Exchanges mentioned above, the Company would forthwith repay, without interest, all moneys
received from the applicants in pursuance of this Draft Red Herring Prospectus. If such money is not
repaid within 8 days after the Company become liable to repay it, then our Company, and every
Director of the Company who is an officer in default shall, on and from such expiry of 8 days, be
jointly and severally liable to repay the money, with interest as prescribed under Section 73 of the
Companies Act.
Our Company shall ensure that all steps for the completion of the necessary formalities for listing and
commencement of trading at all the Stock Exchanges mentioned above are taken within 7 working
days of finalization of the Basis of Allotment for the Issue.

245

KHADIM INDIA LIMITED

IMPERSONATION
Attention of applicants is specifically drawn to the provisions of sub-section (1) of Section
68A of the Companies Act, which is reproduced below:
any person who:
a) Makes in a fictitious name an application to a company for acquiring or subscribing for,
any Shares therein, or
b) Otherwise induces a company to allot, or register any transfer of Shares therein to him,
or any other person in a fictitious name,
shall be punishable with imprisonment for a term which may extend to five years.
CONSENTS
The written consents of Directors, Company Secretary, BRLM to the Issue, Legal Advisor to the Issue,
Registrar to the Issue, Auditors, Bankers to the Company and Bankers to the Issue to act in their
respective capacities, have been obtained and filed along with a copy of the Draft Red Herring
Prospectus with the Registrar of Companies, West Bengal located at Nizam Palace, IInd MSO Building,
2nd floor, 234/4, A.J.C. Bose Road, Kolkata-700 020 as required under Section 60B of the Companies
Act and such consents have not been withdrawn up to the time of delivery of the Prospectus for
registration.
EXPERT OPINION
Except the report of [] in respect of the IPO grading of this Offer annexed herewith and except as
stated elsewhere in this Draft Red Herring Prospectus, we have not obtained any expert opinions.
PUBLIC ISSUE EXPENSES
The expenses of the Issue include, among others, underwriting and management fees, selling
commission, printing and distribution expenses, legal fees, statutory advertisement expenses and
listing fees. The details of the Issue expenses are as follows:
Serial
No.
1.
2.
3.
4.
5.
6.

Particulars
Fees of Lead Manager, Registrar, Legal Advisor, Auditors etc.
Printing & Stationery, Distribution, Postage, etc.
Underwriting, Brokerage & Selling Commission
Advertisement & Marketing Expenses
Other Expenses (incl. Filing Fees, Listing Fees, Depository
Charges, etc.)
Contingencies
Total

Details of Fees Payable


Name of the party

Amount *
(Rs. Million)
[]

Book Running Lead Manager


to the Issue
Registrars to the issue
Legal Advisor to the Issue
Auditors
Total
*(Will be completed after finalization of

[]
[]
[]
[]
the issue price)

246

% of Total
Issue Expenses
[]
[]
[]
[]
[]

Amount
(Rs. Million)
[]
[]
[]
[]
[]
[]
[]

% of Total
Issue Size
[]
[]
[]
[]
[]

KHADIM INDIA LIMITED

All expenses with respect to the issue will be borne by us.


FEES PAYABLE TO THE BOOK RUNNING LEAD MANAGER
The total fees payable to the Book Runner Lead Manager will be as per the Memorandum of
Understanding signed with the Book Runner Lead Manager, copy of which is available for inspection at
the Registered Office of the Company.
FEES PAYABLE TO REGISTRAR TO THE ISSUE
The total fees payable to the Registrar to the Issue will be as per the Memorandum of Understanding
signed with the Registrar, copy of which is available for inspection at the Registered Office of the
Company.
The Registrar will also be reimbursed with all relevant out-of-pocket expenses such as cost of
stationery, postage, stamp duty, communication expenses, etc. Adequate funds will be provided to the
Registrar to the Issue to enable them to send refund order(s) / letter(s) of allotment / share
certificate(s) by registered post.
PREVIOUS PUBLIC OR RIGHTS ISSUES DURING THE LAST FIVE YEARS
Our Company has not made any public issue of Equity Shares or a rights issue during last five year.
PREVIOUS ISSUES OF SHARES OTHERWISE THAN FOR CASH
Save and except the issuance of bonus shares and the shares issued pursuant to the scheme of
amalgamation and as disclosed in under the head Capital Structure, we have not issued any equity
shares for consideration other than cash.
Commission and Brokerage paid on Previous Equity Issues by Us
Since this is the initial public offer of the Company, no sum has been paid or has been payable as
commission or brokerage for subscribing to or procuring or agreeing to procure subscription for any of
our Equity Shares since our inception.
STOCK MARKET DATA FOR THE EQUITY SHARES OF THE COMPANY
This being the initial public issue of the Company, the Equity Shares of the Company are not listed on
any stock exchange.
PROMISE VIS--VIS PERFORMANCE
Our Company has not made any public issue since its inception. None of our group companies have
made any public issue since their respective dates of inception.
PROMISE VS. PERFORMANCE LAST PUBLIC ISSUE BY PROMOTER GROUP COMPANIES
There has not been any public issue of Equity Shares by our Promoter and promoter group.
OUTSTANDING DEBENTURES OR BONDS AND REDEEMABLE PREFERENCE SHARES
Our Company does not have any outstanding debentures or bonds and redeemable preference shares
as on the date of filing this Draft Red Herring Prospectus.

247

KHADIM INDIA LIMITED

INVESTOR GRIEVANCE
MECHANISM EVOLVED FOR REDRESSAL OF INVESTOR GRIEVANCES
The Company has an Investor Shareholders Grievances Committee to redress the complaints of the
share holders in respect of matters pertaining to transfer of shares, non-receipt of annual report,
dematerialization of shares, non-receipt of dividend etc. The committee will handle Investors
grievances pertaining to the Issue. A fortnightly status report of the complaints received and
redressed by them would be forwarded to the company. The committee would also be co-coordinating
with the Registrar to the issue in attending to the grievances of the investor. The composition of the
committee as on the date of filing of this Draft Red Herring Prospectus is as follows:
Sl.
No.
1
2
3
4

Name of the Committee


Member
Mr. Indra Nath Chatterjee
Prof. Ashoke Kumar Dutta
Mr. Siddhartha Roy Burman
Mr. Joydev Sengupta

Category

Position

Independent Director
Independent Director
Managing Director
Company Secretary & Head
Legal

Chairman
Member
Member
Secretary

DISPOSAL OF INVESTOR GRIEVANCES


The company estimates that the average time required by it or the Registrar to the Issue for the
redressal of routine investor grievances shall be seven working days from the date of receipt of the
complaint. In case of non-routine complaints and where external agencies are involved, the company
or the Registrars will seek to redress these complaints as expeditiously as possible.
The Company has appointed Mr. Joydev Sengupta, Company Secretary, as Compliance Officer who will
deal with various regulatory authorities with respect to implementation / compliance of various laws,
rules, regulations and other directives issued by SEBI / Stock Exchanges and matters related to
investor complaints.
Registrar to the Issue will also handle the investors grievances related to the Issue in co-ordination
with Compliance Officer of the Company. All grievances relating to the Present Issue may be
addressed to the Registrar with a copy to the Compliance Officer, giving full details such as name of
the applicant, address, number of Equity Shares applied for, amount paid on application and bank and
branch. The Company would monitor the work of the Registrar to ensure that the investors grievances
are settled expeditiously and satisfactorily.
As per the agreement entered with Registrar to the Issue, the following investors grievances would be
handled by it upto 12 months after the Issue:
Type of Investors Grievance
Non-receipt of Refund Order
Non-receipt of Share Certificates
Transfer of Shares
Change of Address
Correction of Address

Time Taken for Reply (No. Of Days)


7
7
30
15
7

248

KHADIM INDIA LIMITED

Mr. Joydev Sengupta, Company Secretary & Head Legal has been appointed as the Compliance Officer
and may be contacted in case of any pre-issue or post-issue at the following Address:
Name of the Compliance Officer: Mr. Joydev Sengupta
Company Secretary and Head-Legal
Name of the Company: Khadim India Limited
Kankaria Estate, 5th Floor
6 Little Russell Street
Kolkata 700 071
Tel: 91-33 4009 0501
Fax: 91-33 4009 0500
E-mail: joydev.sengupta@khadims.com
CHANGES IN AUDITORS DURING LAST 3 YEARS AND REASONS THEREOF
Sl.
No.
1.

Name of the outgoing


Auditor
Agarwal
Raj
K
&
Associates,
Chartered
Accountants

Name of the incoming Auditors


D B Desai & Co.,
Chartered
Accountants

Date of
Appointment
November
03,
2005 at the AGM

2.

D B Desai & Co.,


Chartered Accountants

Ray & Ray, Chartered


Accountants

September
26,
2006 at the AGM

Reasons for Change


Unwillingness of the
Retiring auditors vide
their
letter
dated
October 10, 2005
Unwillingness of the
Retiring auditors vide
their
letter
dated
September,11 2006

CAPITALIZATION OF RESERVES OR PROFITS DURING LAST FIVE YEARS


Our Company has not capitalized its reserve or profit at any time during the last five years.
REVALUATION OF ASSETS
None of the assets of our company have been revalued during the last five years.

249

KHADIM INDIA LIMITED

TERMS OF THE ISSUE


The Equity Shares being offered are subject to the provisions of the Companies Act, the Companys
Memorandum of Association and Articles of Association, the terms of the Draft Red Herring
Prospectus, the Red Herring Prospectus, and the Prospectus, the Bid-cum-Application Form, the
Revision Form, the CAN and other terms and conditions as may be incorporated in the Allotment
advice and other documents/certificates that may be executed in respect of the Issue. The Equity
Shares shall also be subject to applicable laws, guidelines, notifications and regulations relating to the
issue of capital and the listing and trading of securities issued from time to time by SEBI, the
Government of India, the Stock Exchanges, the RoC, RBI and/or other authorities, as in force on the
date of the Issue and to the extent applicable.
Authority for the Issue
The present Issue of Equity Shares has been authorized by shareholders vide a Special Resolution
passed at the Extraordinary General Meeting of the Company held on 24th April 2007. The Board of
Directors of the Company had approved the present Issue of Equity Shares vide a resolution passed at
their meeting held on 29th May 2007.
Ranking of Equity Shares
The Equity Shares being offered shall be subject to the provisions of the Companies Act, the
Companys Memorandum of Association and Articles of Association and shall rank pari-passu in all
respects with the existing Equity Shares of the Company including rights in respect of dividends.
Mode of Payment of Dividend
We shall pay dividends to our shareholders as per the provisions of the Companies Act.
Compliance with SEBI Guidelines
We shall comply with all disclosure and accounting norms as specified by SEBI from time to time.
Face Value and Issue Price
The Equity Shares are being offered pursuant to the terms of this Draft Red Herring Prospectus at a
price of Rs. [] per Equity Share. At any given point of time there shall be only one denomination for
the Equity Shares.
The face value of each Equity Share is Rs. 10 and the Issue Price is [] times the face value.
Rights of the Equity Shareholder
Subject to applicable laws, rules, regulations and guidelines and the Articles of Associations, the
holders of our Equity Shares shall have the following rights:

Right to receive dividend, if declared;


Right to attend general meetings and exercise voting powers, unless prohibited by law;
Right to vote on a poll either in person or by proxy;
Right to receive offers for rights shares and be allotted bonus shares, if announced;
Right to receive surplus on liquidation;
Right of free transferability; and
Such other rights, as may be available to a shareholder of a listed public company under the
Companies Act and our Companys Memorandum and Articles.

For a detailed description of the main provisions of our Articles relating to voting rights, dividend,
forfeiture and lien and/or consolidation/splitting, please refer to Main Provisions of the Articles of
Association on page 286 of this Draft Red Herring Prospectus.

250

KHADIM INDIA LIMITED

Market Lot and Trading Lot


In terms of Section 68B of the Companies Act, the Equity Shares shall be allotted only in
dematerialized form. As per the existing SEBI Guidelines, the trading of our Equity Shares shall only
be in dematerialized form for all investors.
Since trading of our Equity Shares is in dematerialized form, the tradable lot is one Equity Share.
Allotment in this Issue will be only in electronic form in multiples of one Equity Share subject to a
minimum Allotment of [] Equity Shares. For details of allocation and Allotment, please refer to Issue
Procedure on page 257 of this Draft Red Herring Prospectus.
Nomination Facility to Investor
In accordance with Section 109A of the Companies Act, the sole or first Bidder, along with other joint
Bidders, may nominate any one person in whom, in the event of the death of the sole Bidder or in
case of joint Bidders, death of all the Bidders, as the case may be, the Equity Shares allotted, if any,
shall vest. A person, being a nominee, entitled to the Equity Shares by reason of the death of the
original holder(s), shall in accordance with Section 109A of the Companies Act, be entitled to the same
advantages to which he or she would be entitled if he or she were the registered holder of the Equity
Share(s). Where the nominee is a minor, the holder(s) may make a nomination to appoint, in the
prescribed manner, any person to become entitled to Equity Share(s) in the event of his or her death
during the minority. A nomination shall stand rescinded upon a sale of Equity Share(s) by the person
nominating. A buyer will be entitled to make a fresh nomination in the manner prescribed. Fresh
nomination can be made only on the prescribed form available on request at the registered office of
our Company, or to the Registrar to the Issue and transfer agents of our Company.
In accordance with Section 109B of the Companies Act, any person who becomes a nominee by virtue
of Section 109A of the Companies Act shall, upon the production of such evidence as may be required
by the Board, elect either:

to register himself or herself as the holder of the Equity Shares; or


to make such transfer of the Equity Shares as the deceased holder could have made.

Further, the Board may at any time give notice requiring any nominee to choose either to be
registered himself or herself or to transfer the Equity Shares, and if the notice is not complied within a
period of ninety days, the Board may thereafter withhold payment of all dividends, bonuses or other
moneys payable in respect of the Equity Shares, until the requirements of the notice have been
complied with.
Since Allotment of Equity Shares in the Issue will be made only in dematerialized form,
there is no need to make a separate nomination with us. Nominations registered with the
respective Depository Participant of the applicant would prevail. If the investors require to
change their nomination, they are requested to inform their respective Depository
Participant.
As per the policy of RBI, Overseas Corporate Bodies cannot participate in this Issue. The
Equity Shares have not been and will not be registered under the U.S. Securities Act or any
state securities laws in the United States and may not be offered or sold within the United
States or to, or for the account or benefit of, U.S. persons (as defined in Regulation S),
except pursuant to an exemption from, or in a transaction not subject to, the registration
requirements of the U.S. Securities Act and applicable U.S. state securities laws.
Accordingly, the Equity Shares are being offered and sold only to (1) qualified institutional
buyers (as defined under Rule 144A under the U.S. Securities Act) in the United States in
transactions exempt from registration under the U.S. Securities Act, and (2) investors in
India pursuant to a public offering in India, and (3) institutional investors outside the
United States and India in transactions compliant with Regulations and the applicable laws
of the jurisdiction where those offers and sales occur.

251

KHADIM INDIA LIMITED

The Equity Shares have not been and will not be registered, listed or otherwise qualified in any other
jurisdiction outside India and may not be offered or sold, and Bids may not be made by persons in any
such jurisdiction, except in compliance with applicable laws of such jurisdiction.
Application in Issue
Equity Shares being issued through this Draft Red Herring Prospectus can be applied for in the
dematerialized form only.
Minimum Subscription
"If the Company does not receive the minimum subscription of 90% of the Issue to public including
devolvement of Underwriters within 60 days from the date of closure of this Issue, the company shall
forthwith refund the entire subscription amount received. If there is a delay beyond 8 days after the
Company becomes liable to pay the amount, the Company shall pay interest prescribed under Section
73 of the Companies Act, 1956."
Further, in terms of clause 2.2.2A of the SEBI DIP Guidelines, the Company shall ensure that the
number of prospective allottees to whom Equity Shares will be allotted will not be less than 1000.
Arrangement for Disposal of Odd Lots
There are no arrangements for disposal of odd lots
Restriction on Transfer of Shares
There are no restrictions on transfers and transmissions of share and on their consolidation/splitting
except as provided in our Articles of Association. For details see the section titled Main Provisions of
our Articles of Association beginning on page 286 of this Draft Red Herring Prospectus.
Jurisdiction
Exclusive jurisdiction for the purpose of this Issue is with competent courts/authorities in Kolkata,
India.

252

KHADIM INDIA LIMITED

ISSUE STRUCTURE
Issue of 55,00,000 Equity Shares for cash at a price of Rs. [] per Equity Share (including share
premium of Rs. [] per Equity Share) aggregating to Rs. [] million. The Issue comprises a Net Issue
to the public of 53,00,000 Equity Shares and an Employee Reservation Portion of up to 2,00,000
Equity Shares. The Net Issue to public will constitute 30.05% of the fully diluted post Issue paid up
capital of the Company.
The Issue is being made through the 100% Book Building Process:
Eligible
Employees

QIBs

Number
of
Equity
Shares
available
for
allocation
Percentage
of
Net Offer to
Public available
for Allocation

Up to 2,00,000
Equity Shares.

Up to 26,50,000
Equity Shares.

Minimum
7,95,000
Shares.

3.63% of the Issue

Minimum of 15% of
the Net Offer to
Public or the Net
Offer to Public less
allocation to QIB
Bidders and Retail
Individual Bidders.

Minimum of 35% of
the Net Offer to
Public or the Net
Offer to Public less
allocation to QIB
Bidders and NonInstitutional
Bidders.

Basis
Allocation

Proportionate

Up to 50% of the
Net
Offer
to
Public
or
the
Issue
less
allocation to NonInstitutional
Bidders and Retail
Individual
Bidders.
However, up to
5% of the QIB
Portion shall be
available
for
allocation
proportionately to
mutual funds.
Proportionate
(a)
1,32,500
Equity
Shares
shall be allocated
on
a
proportionate
basis to Mutual
Funds
in
the
Mutual
Funds
Portion; and
(b)
25,17,500
Equity
Shares
shall be allocated
on
a
proportionate
basis to all QIBs
including Mutual
Funds
receiving
allocation as per
(a) above
Such number of
Equity
Shares
that
the
Bid
Amount exceeds
Rs. 1,00,000 and

Proportionate

Proportionate

Such number of
Equity Shares that
the
Bid
Amount
exceeds
Rs.
1,00,000 and in

[] Equity Shares
and in multiples of
[] Equity Shares

Minimum Bid

of

[] Equity Shares
and in multiples of
[] Equity Shares

253

Non-Institutional
Bidders
of
Equity

Retail Individual
Bidders
Minimum
18,55,000
Shares.

of
Equity

KHADIM INDIA LIMITED

in multiples of []
Equity Shares.

multiples
of
Equity Shares

Such number of
Equity Shares in
multiples of []
Equity Shares so
that the number of
Equity Shares Bid
for
does
not
exceed 10,000
Compulsorily
in
dematerialized
mode.

Such number of
Equity Shares not
exceeding the Net
Offer to Public,
subject
to
Applicable limits.

Such number of
Equity Shares not
exceeding the Net
Offer
to
Public,
subject
to
Applicable limits.

Such number of
Equity Shares so as
to ensure that the
Bid amount does
not
exceed
Rs.
1,00,000.

Compulsorily
in
dematerialized
mode.

Compulsorily
dematerialized
mode.

Compulsorily
dematerialized
mode.

Bid/ Allotment
lot

[] Equity Shares
and in multiples of
[] Equity Shares.

[] Equity Shares
and in multiples of
[] Equity Shares.

[] Equity Shares
and in multiples on
[] Equity Shares.

Trading Lot

One Equity Share

[] Equity Shares
and in multiples
of
[]
Equity
Shares.
One Equity Share

One Equity Share

One Equity Share

Who can
Apply

All or any of the


following:
Permanent
employees of the
Company including
the
directors
thereof who are
Indian
nationals
based in India and
are
present
in
India on the date
of submission of
Bid-cumApplication Form.
However,
the
Directors who are
the Promoters and
forming part of the
Promoter Group of
the Company shall
not be considered
to
be
Eligible
Employees.

Public
financial
Institutions
as
specified
in
Section 4A of the
Companies
Act,
Scheduled
Commercial
Banks,
Mutual
Funds,
Venture
Capital
Funds
registered
with
SEBI,
State
Industrial
Development
Corporations,
permitted
insurance
companies
registered
with
the
Insurance
Regulatory
and
Development
Authority,
Provident Funds
with
minimum
corpus of Rs. 250
million
and
Pension
Funds
with
minimum
corpus of Rs. 250
million
in
accordance with
applicable law.
Margin
Amount
applicable to QIB
Bidders shall be

Resident
Indian
Individuals,
and
HUF (in the name
of
Karta),
companies,
corporate
bodies,
scientific
institutions,
Societies
and
trusts.

Resident
Indian
Individuals,
and
HUF (in the name
of Karta), applying
for such number of
shares such that
the Bid Amount
does not exceed
Rs.
100,000
in
value.

Margin Amount
applicable to NonInstitutional Bidders

Margin
Amount
applicable to Retail
Individual Bidders

Maximum Bid

Mode of
Allotment

Terms
Payment

of

Margin
Amount
applicable
to
Employees at the

254

[]

in

in

KHADIM INDIA LIMITED

time of submission
of
Bid
cum
Application
Form
to the
members of the
Syndicate
Margin Amount

Full Bid Amount on


Bidding

payable at the
time
of
submission of Bid
cum
Application
Form
to
the
members of the
syndicate.
At least 10% of
the Bid Amount
on bidding.

at the time of
submission of Bid
cum
Application
Form
to
the
members of the
syndicate.

at the time of
submission of Bid
cum
Application
Form
to
the
members of the
Syndicate.

Full Bid Amount on


bidding.

Full Bid Amount on


Bidding.

Under-subscription, if any, in any category, would be allowed to be met with spill-over from
any other category or combination of categories at the discretion of our Company, in
consultation with the BRLM and the Designated Stock Exchange. However, if the aggregate
demand by Mutual Funds is less than [] Equity Shares (assuming QIB Portion is 50% of the
Net Offer to Public, i.e. [] Equity Shares), the balance Equity Shares available for allocation in
the Mutual Fund Portion will first be added to the QIB Portion and be allocated proportionately
to the QIB Bidders. In the event that the aggregate demand in the QIB Portion has been met,
under-subscription, if any, would be allowed to be met with spillover from any other category
or combination of categories at the discretion of our Company, in consultation with the BRLM,
and the Designated Stock Exchange.

In case the Bid cum Application Form is submitted in joint names, the investors should ensure
that the demat account is also held in the same joint names and are in the same sequence in
which they appear in the Bid cum Application Form.

After the Bid/Issue Closing Date, depending on the level of subscription, additional Margin
Amount, if any, may be called for from the QIB Bidders.

Withdrawal of the Issue


Our company in consultation with the BRLM reserves the right not to proceed with the Issue at
anytime including after the Bid Closing Date but prior to Allotment, without assigning any reason
therefore.
Letters of Allotment or Refund Orders
We shall give credit to the beneficiary account with depository participants within two working days
from the date of the finalisation of basis of allocation. Applicants residing at 15 centres where clearing
houses are managed by the RBI, will get refunds through ECS only except where applicant is
otherwise disclosed as eligible to get refunds through direct credit, RTGS and NEFT. We shall ensure
despatch of refund orders, if any, of value up to Rs.1,500 by Under Certificate of Posting, and shall
dispatch refund orders above Rs.1,500, if any, by registered post or speed post or ECS, direct credit,
RTGS or NEFT at the sole or First Bidders sole risk within 15 days of the Bid/Offer Closing Date.
Applicants to whom refunds are made through electronic transfer of funds will be send a letter through
ordinary post intimating them about the mode of credit of refund within 15 days of closure of Offer.
Interest in Case of Delay in Despatch of Allotment Letters/ Refund Orders
In accordance with the Companies Act, the requirements of the Stock Exchanges and SEBI DIP
Guidelines, the Company undertakes that:

Transfer shall be made only in dematerialised form within 15 days from the Bid/ Offer Closing
Date;
Despatch of refund orders, except for Bidders who shall receive refunds through ECS, direct
credit, RTGS or NEFT, shall be done within 15 days from the Bid/ Offer Closing Date; and
Our company shall pay interest at 15% per annum, if the Transfer is not made, refund orders
are not dispatched and/ or demat credits are not made to investors within the 15 day time

255

KHADIM INDIA LIMITED

prescribed above or if, in a case where the refund or portion thereof is made in electronic
manner through ECS, direct credit, RTGS or NEFT, the refund instructions have not been given
to the clearing system in the disclosed manner within 15 days from the Bid/Offer Closing Date.
Our company will provide adequate funds required for despatch of refund orders or Transfer advice to
the Registrar to the Offer.
Refunds will be made by cheques, pay orders or demand drafts drawn on the Refund Banks and
payable at par at places where Bids are received. Bank charges, if any, for encashing such cheques,
pay orders or demand drafts at other centres will be payable by the Bidders.
Bidding Period / Issue Period
BID / ISSUE OPENS ON
BID / ISSUE CLOSES ON

[]
[]

Bids and any revision in Bids shall be accepted only between 10 a.m. and 3 p.m. (Indian Standard
Time) during the Bidding Period as mentioned above at the bidding centres mentioned on the Bid cum
Application Form except that on the Bid/Issue Closing Date, the Bids shall be accepted only between
10 a.m. and 1 p.m. (Indian Standard Time) and uploaded till such time as permitted by the BSE and
the NSE on the Bid/Issue Closing Date. Bidders are cautioned that a high inflow of bids typically
experienced on the last day of the bidding may lead to some Bids received on the last day not being
uploaded due to lack of sufficient uploading time, and such Bids that could not uploaded may not be
considered for allocation
On the day of closing, extension of time will be granted by Stock Exchanges only for uploading the
bids received from Retail Investors after taking into account the total number of applications received
upto the closure of timings for acceptance of application forms as stated in prospectus and reported by
BRLM to the Exchange within half an hour of such closure.
Bids not uploaded in the book, would be rejected.
In case of discrepancy in the data entered in the electronic book vis a vis the data contained in the
physical bid form, for a particular bidder, the details as per physical application form of that bidder
may be taken as the final data for the purpose of allotment
Our Company reserves the right to revise the Price Band during the Bid/Issue Period in accordance
with the SEBI Guidelines. The Cap on the Price Band should not be more than 20% of the Floor Price.
Subject to compliance with the immediately preceding sentence, the Floor Price can be revised up or
down up to a maximum of 20% of the Floor Price disclosed in the Red Herring Prospectus.
In case of revision of the Price Band, the bidding/ Issue Period will be extended for three additional
days after revision of the Price Band, subject to the total Bid/Issue Period not exceeding 10 working
days. Any revision in the Price Band and the revised Bid/Issue Period, if applicable, will be widely
disseminated by notification to the BSE and the NSE, by issuing a press release and also by indicating
the changes on the websites of the BRLM and on the terminals of the Syndicate.

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ISSUE PROCEDURE
Book Building Procedure
The Issue is being made through the 100% Book Building Process wherein up to 50% of the Net Issue
shall be available for allocation on a proportionate basis to QIBs, including up to 5% of the QIB Portion
which shall be available for allocation to Mutual Funds only . Further not less than 35% of the Net
Issue shall be available for allocation on a proportionate basis to the Retail Individual Bidders and not
less than 15% of the Net Issue shall be available for allocation on a proportionate basis to NonInstitutional Bidders, subject to valid Bids being received at or above the Issue Price. Further, up to
2,00,000 Equity Shares shall be available for allocation on a proportional basis to Eligible Employees,
subject to valid bids being received at or above the Issue Price.
Bidders are required to submit their Bids through the Syndicate. Company, in consultation with the
BRLM, may reject any Bid procured from QIBs, by any or all members of the Syndicate, for reasons to
be recorded in writing provided that such rejection shall be made at the time of acceptance of the Bid
and the reasons therefore shall be disclosed to the Bidders. In case of Non-Institutional Bidders, Retail
Individual Bidders and bids under the Employee Reservation Portion,
our company would have a
right to reject the Bids only on technical grounds.
Investors should note that the Equity Shares would be allotted to all successful Bidders
only in the dematerialized form. Bidders will not have the option of getting allotment of the
Equity Shares in physical form. The Equity Shares on allotment shall be traded only in the
dematerialized segment of the Stock Exchanges.
Bid-cum-Application Form
Bidders shall only use the specified Bid cum Application Form bearing the stamp of a member of the
Syndicate for the purpose of making a Bid in terms of this Draft Red Herring Prospectus. The Bidder
shall have the option to make a maximum of three Bids in the Bid cum Application Form and such
options shall not be considered as multiple Bids. Upon the allocation of Equity Shares, dispatch of the
CAN, and filing of the Prospectus with the ROC, the Bid cum Application Form shall be considered as
the Application Form. Upon completing and submitting the Bid cum Application Form to a member of
the Syndicate, the Bidder is deemed to have authorized our Company to make the necessary changes
in this Draft Red Herring Prospectus and the Bid cum Application Form as would be required for filing
the Prospectus with the ROC and as would be required by ROC after such filing, without prior or
subsequent notice of such changes to the Bidder.
The prescribed colour of the Bid cum Application Form for various categories, is as follows:
Category
Indian public applying on a non-repatriation basis
Bidders in the Employee Reservation Portion

Colour of Bid cum Application Form


White
Blue

Who can Bid


1.
2.
3.

4.

Persons eligible to invest under all applicable laws, rules, regulations and guidelines;
Indian nationals resident in India who are majors, or in the names of their minor children as
natural/legal guardians, in single or joint names (not more than three);
HUFs in the individual name of the Karta. The Bidder should specify that the Bid is being made
in the name of the HUF in the Bid cum Application Form as follows: Name of Sole or First
Bidder: XYZ Hindu Undivided Family applying through XYZ, where XYZ is the name of the
Karta. Bids by HUFs would be considered at par with those from individuals;
Insurance companies registered with the Insurance Regulatory and Development Authority,
India;

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KHADIM INDIA LIMITED

5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.

As permitted by the applicable laws, provident funds with minimum corpus of Rs. 250 million
and who are authorized under their constitution to invest in equity shares;
Pension funds with a minimum corpus of Rs. 250 million and who are authorized under their
constitution to invest in equity shares;
Companies, corporate bodies and societies registered under the applicable laws in India and
authorized to invest in equity shares;
Mutual Funds registered with SEBI;
Indian financial institutions, commercial banks, regional rural banks, co-operative banks
(subject to the RBI regulations and the SEBI guidelines and regulations, as applicable);
State Industrial Development Corporations;
Trusts/societies registered under the Societies Registration Act, 1860, as amended, or under
any other law relating to trusts/societies and who are authorized under their constitution to hold
and invest in equity shares;
Scientific and/or industrial research organizations authorized to invest in equity shares;
Venture Capital Funds registered with SEBI *;
Any others QIBs permitted to invest, subject to compliance with all applicable laws, rules,
regulation, guidelines and approvals in the issue; and
Eligible Employees, who are Indian Nationals and are based in India. The permanent employees
should be on the payroll of the Company as of [] and the Directors should be Directors on the
date of the Red Herring Prospectus.

*Under the SEBI (Venture Capital Funds) Regulations, 1996, a venture capital fund may raise monies
from any investor, whether (i) Indian, (ii) foreign or (iii) non-resident Indian, by way of issue of units.
In this Issue, venture capital funds, which have raised monies from foreign and non-resident Indian
investors (i.e., categories (ii) and (iii) above) are not eligible to participate.
Note: The Equity Shares are being offered in this Issue to the Indian public only. Nonresidents such as foreign institutional investors, non resident Indian, foreign venture
capital funds, multilateral and bilateral development financial institutions are not permitted
to participate in the Issue. As per the existing policy of the government of India, OCBs
cannot participate in this Issue.
Participation by Associates of the BRLM and Syndicate Members:
The BRLM and Syndicate Members shall not be entitled to subscribe to this Issue in any manner
except towards fulfilling their underwriting obligation. However, associates and affiliates of the BRLM
and syndicate Members are entitled to Bid and subscribe to Equity Shares in the Issue either in the
QIB Portion or in the Non Institutional Portion as may be applicable to such investors, where the
allotment will be on a proportionate basis. Such bidding and subscription may be on their own account
or on behalf of their clients.
Maximum and Minimum Bid size
For Retail Individual Bidders
The Bid must be for a minimum of [] Equity Shares and in multiples of [] Equity Shares thereafter
and it must be ensured that the Bid Amount payable by the Bidder does not exceed Rs. 100,000. In
case of revision of Bids, the Retail Individual Bidders have to ensure that the Bid Amount does not
exceed Rs. 100,000. In case the Bid Amount is over Rs. 100,000 due to revision of the Bid or revision
of the Price Band or on exercise of option to bid at Cut-off Price, the Bid would be considered for
allocation under the Non Institutional Portion. The option to bid at Cut-off Price is an option given only
to the Retail Individual Bidders indicating their agreement to Bid and purchase at the final Issue Price
as determined at the end of the Book Building Process.

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For Non-Institutional Bidders and QIB Bidders


The Bid must be for a minimum of such number of Equity Shares such that the Bid Amount exceeds
Rs. 100,000 and in multiples of [] Equity Shares thereafter. A Bid cannot be submitted for more than
the Net Issue size. However, the maximum Bid by a QIB investor should not exceed the investment
limits prescribed for them by applicable laws. Under existing SEBI guidelines, a QIB Bidder cannot
withdraw its Bid after the Bid /Issue Closing Date.
In case of revision in Bids, the Non Institutional Bidders, who are individuals, have to ensure that the
Bid Amount is greater than Rs. 100,000 for being considered for allocation in the Non Institutional
Portion. In case the Bid Amount reduces to Rs. 100,000 or less due to a revision in Bids or revision of
the Price Band, Bids by Non Institutional Bidders who are eligible for allocation in the Retail Portion
would be considered for allocation under the Retail Portion. Non Institutional Bidders and QIB Bidders
are not entitled to the option of bidding at Cut-off Price.
Bidders are advised to ensure that any single Bid from them does not exceed the investment limit or
maximum number of Equity Shares that can be held by them under applicable law or regulation or as
specified in this Draft Red Herring Prospectus. Refund amount following a permitted withdrawal of a
Bid shall be paid in the manner described under Payment of Refund beginning on Page 284 of this
Draft Red Herring Prospectus.
For Bidders in the Employee Reservation Portion
The Bid must be for a minimum of [] Equity Shares and in multiples of [] Equity Shares thereafter
subject to a maximum of 10,000 shares. Bidders in the Employee Reservation Portion applying for a
maximum Bid in any of the bidding options not exceeding Rs.100,000 may bid at Cut-off Price. The
allotment in the Employee Reservation Portion will be on a proportionate basis.
Bidders are advised to ensure that any single Bid from them does not exceed the
investment limits or maximum number of Equity Shares that can be held by them under
applicable law or regulation or as specified in this Draft Red Herring Prospectus.
Refund amounts following a permitted withdrawal of a Bid shall be paid in the manner described under
paragraph Payment of Refund.
Information for the Bidders
a)

Our Company will file the Red Herring Prospectus with the RoC at least three days before the
Bid/Issue Opening Date.

b)

The members of the Syndicate will circulate copies of the Red Herring Prospectus along with the
Bid Cum Application Form to potential investors.

c)

Any investor (who is eligible to invest in the Equity Shares according to the terms of this Draft
Red Herring Prospectus and applicable law) who would like to obtain the Red Herring Prospectus
and/or the Bid cum Application Form can obtain the same from the registered office of the
Issuer or from any of the members of the Syndicate.

d)

Investors who are interested in subscribing for the Issuers Equity Shares should approach any
of the members of the Syndicate or their authorised agent(s) to register their Bid.

e)

The Bids should be submitted on the prescribed Bid cum Application Form only. Bid cum
Application Forms should bear the stamp of the members of the Syndicate. Bid cum Application
Forms, which do not bear the stamp of the members of the Syndicate, will be rejected.

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KHADIM INDIA LIMITED

Method and Process of Bidding


1.

Our Company and the BRLM shall declare the Bid/Issue Opening Date, Bid/Issue Closing Date at
the time of filing the Red Herring Prospectus with RoC and also publish the same in two widely
circulated newspapers (one each in English and Hindi) and a regional newspaper (Bengali). This
advertisement shall contain the minimum disclosures as specified under Schedule XX-A of the
SEBI DIP Guidelines. The Syndicate Members shall accept Bids from the Bidders during the Issue
Period, in accordance with the terms of the Syndicate Agreement.

2.

The Bidding Period shall be a minimum of 3 working days and shall not exceed 7 working days.
In case the Price Band is revised, the revised Price Band and the Bidding Period will be published
in two widely circulated newspapers (one each in English and Hindi) and one regional newspaper
(Bengali) and the Bidding Period may be extended, if required, by an additional 3 days, subject
to the total Bidding Period not exceeding 10 working days.

3.

Each Bid cum Application Form will give the Bidder the choice to bid for up to three optional
prices (for details please see section titled Issue Procedure - Bids at Different Price Levels
beginning on page 260) within the Price Band and specify the demand (i.e. the number of Equity
Shares bid for) in each option. The price and demand options submitted by the Bidder in the Bid
cum Application Form will be treated as optional demands from the Bidder and will not be
cumulated. After determination of the Issue Price, the maximum number of Equity Shares Bid for
by a Bidder at or above the Issue Price will be considered for allocation and the rest of the Bid(s),
irrespective of the Bid Price, will become automatically invalid.

4.

During the Bid/Issue Period, eligible investors who are interested in subscribing for the Equity
Shares should approach the members of the Syndicate or their authorised agents to register their
Bid.

5.

The Bidder cannot bid on another Bid cum Application Form after Bids on one Bid cum Application
Form have been submitted to any member of the Syndicate. Submission of a second Bid cum
Application Form to either the same or to another member of the Syndicate will be treated as
multiple Bids and is liable to be rejected either before entering the Bid into the electronic bidding
system, or at any point of time prior to the allocation or allotment of Equity Shares in this Issue.
However, the Bidder can revise the Bid through the Revision Form, the procedure for which is
detailed under the section titled Issue Procedure - Build up of the Book and Revision of Bids
beginning on page 264.

6.

The Syndicate Members will enter each Bid option into the electronic bidding system as a
separate Bid and generate a Transaction Registration Slip (TRS), for each price and demand
option and give the same to the Bidder. Therefore, a Bidder can receive up to three TRSs for
each Bid cum Application Form.

7.

During the Bidding Period, Bidders may approach the members of the Syndicate to submit their
Bid. Every member of the Syndicate shall accept Bids from all clients/investors who place orders
through them and shall have the right to vet the Bids.

8.

Along with the Bid cum Application Form, all Bidders will make payment in the manner described
under the paragraph titled Issue Procedure - Terms of Payment beginning on page 263.

Bids at Different Price Levels


1.

The Price Band has been fixed at Rs. [] to Rs. [] per Equity Share of Rs. 10 each, Rs. [] being
the Floor Price and Rs. [] being the Cap Price. The Bidders can bid at any price within the Price
Band, in multiples of Re. 1.

2.

In accordance with the SEBI Guidelines, Company reserves the right to revise the Price Band
during the Bidding Period. The cap on the Price Band should not be more than 20% of the floor of

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the Price Band. Subject to compliance with the immediately preceding sentence, the floor of the
Price Band can move up or down to the extent of 20% of the floor of the Price Band.
3.

In case of revision in the Price Band, the Issue Period will be extended for three additional days
after revision of Price Band subject to the total Bidding Period not exceeding 10 working days.
Any revision in the Price Band and the revised Bidding /Issue Period, if applicable, will be widely
disseminated by notification to the BSE and the NSE, by issuing a public notice in two national
newspapers (one each in English and Hindi) and a regional newspaper, and also by indicating the
change on the website of the BRLM and at the terminals of the members of the Syndicate.

4.

We, in consultation with the BRLM can finalize the Issue Price within the Price Band in accordance
with this clause, without the prior approval of, or intimation to, the Bidders.

5.

The Bidder can bid at any price within the Price Band. The Bidder has to bid for the desired
number of Equity Shares at a specific price. Retail Individual Bidders and Bidders in the Employee
Reservation Portion applying for a maximum Bid in any of the bidding options not exceeding Rs.
100,000 may bid at Cut-off Price. However bidding at Cut-off Price is prohibited for QIB Bidders
and Non Institutional Bidders and such Bids shall be rejected.

6.

Retail Individual Bidders who bid at Cut-off Price and Employees bidding under the Employee
Reservation Portion at Cut-Off Price agree that they shall purchase the Equity Shares at any price
within the Price Band. Retail Individual Bidders bidding at Cut-Off Price and Employees bidding
under the Employee Reservation Portion at Cut-Off Price shall deposit the Bid Amount in the
Escrow Account. In the event the Bid Amount is higher than the allocation amount payable by the
Retail Individual Bidders (i.e. the total number of Equity Shares allocated in the offer multiplied
by the offer price), Retail Individual Bidders shall receive the refund of the excess amount from
the respective Refund Account.

7.

In case of an upward revision in the Price Band announced as above, Retail Individual Bidders
Employees bidding under the Employee Reservation Portion at Cut-Off Price can either (i) revise
their Bid or (ii) make additional payment based on the Cap of the revised Price Band (such that
the total amount i.e. original Bid Amount plus additional payment does not exceed Rs. 100,000 if
the Bidder wants to continue to bid at Cut-off Price), with the Syndicate Member to whom the
original Bid was submitted. In case the total amount (i.e. original Bid Amount plus additional
payment) exceeds Rs. 100,000, the Bid will be considered for allocation under the NonInstitutional Portion in terms of this Draft Red Herring Prospectus. If, however, the Bidder does
not either revise the Bid or make additional payment and the Issue Price is higher than the cap of
the Price Band prior to revision, the number of Equity Shares bid for shall be adjusted downwards
for the purpose of allotment, such that no additional payment would be required from the Bidder
and the Bidder is deemed to have approved such revised Bid at Cut-off Price.

8.

In case of a downward revision in the Price Band, announced as above, Retail Individual Bidders
Employees bidding under the Employee Reservation Portion at Cut-Off Price could either revise
their Bids or the excess amount paid at the time of bidding would be refunded from the
respective Refund Account.

9.

In the event of any revision in the Price Band, whether upwards or downwards, the minimum
application size shall remain [] Equity Shares irrespective of whether the Bid Amount payable on
such minimum application is in the range of Rs. 5,000 to Rs. 7,000 or not.

Option to Subscribe
Equity Shares being issued through this Draft Red Herring Prospectus can be applied for in the
dematerialized form only. Bidders will not have the option of getting Allotment in physical form. The
Equity Shares, on Allotment, shall be traded only in the dematerialized segment of the Stock
Exchanges.

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KHADIM INDIA LIMITED

Application in the Issue


Equity Shares being issued through this Draft Red Herring Prospectus can be applied for in the
dematerialized form only.
Bids by Mutual Funds
An eligible Bid by a Mutual Fund shall first be considered for allocation proportionately in the Mutual
Fund Portion. In the event that the demand is greater than [] Equity Shares, full allocation shall be
made to Mutual Funds, to the extent of the Mutual Funds Portion. The remaining demand by Mutual
Funds shall, as part of the aggregate demand by QIBs, be made available for allocation
proportionately out of the remainder of the QIB Portion, after excluding the allocation in the Mutual
Fund Portion.
As per the current regulations, the following restrictions are applicable for investments by Mutual
Funds:
No Mutual Fund scheme shall invest more than 10% of its net asset value in the Equity Shares or
Equity related instruments of any Company provided that the limit of 10% shall not be applicable for
investments in index funds or sector or industry specific funds.
No Mutual Fund under all its schemes should own more than 10% of any Companys paid-up capital
carrying voting rights. These limits would have to be adhered to by mutual funds for investment in the
Equity Shares.
Multiple Bids
In case of a mutual fund, a separate Bid can be made in respect of each scheme of the Mutual Fund
registered with SEBI and such Bids in respect of more than one scheme of the Mutual Fund will not be
treated as multiple Bids provided that the Bids clearly indicate the scheme concerned for which the Bid
has been made.
The above information is given for the benefit of the Bidders. Our Company, the Selling
Shareholders and the BRLM, are not liable for any amendments or modification or changes
in applicable laws or regulations, which may happen after the date of this Prospectus.
Bidders are advised to ensure that any single Bid from them does not exceed the
investment limits or maximum number of Equity Shares that can be held by them under
applicable law.
Escrow Mechanism
We shall open Escrow Accounts with one or more Escrow Collection Banks in whose favour the Bidders
shall make out the cheque or demand draft in respect of his or her Bid and/or revision of the Bid.
Cheques or demand drafts received for the Bid Amount from Bidders in a certain category would be
deposited in the Escrow Account. The Escrow Collection Banks will act in terms of this Draft Red
Herring Prospectus and the Escrow Agreement. The monies in the Escrow Account shall be maintained
by the Escrow Collection Bank(s) for and on behalf of the Bidders. The Escrow Collection Bank(s) shall
not exercise any lien whatsoever over the monies deposited therein and shall hold the monies therein
in trust for the Bidders. On the Designated Date, the Escrow Collection Banks shall transfer the monies
from the Escrow Account to the Issue Account as per the terms of the Escrow Agreement. Payments of
refund to the Bidders shall also be made from the Escrow Accounts/refund account(s) as per the terms
-of the Escrow Agreement and this Draft Red Herring Prospectus.
The Bidders should note that the escrow mechanism is not prescribed by SEBI and has been
established as an arrangement between us, the Syndicate, the Escrow Collection Bank(s) and the
Registrar to the Issue to facilitate collections from the Bidders.

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Terms of Payment and payment into the Escrow Collection Account


Each Bidder, shall pay the applicable Margin Amount, with the submission of the Bid cum Application
Form and draw a cheque or demand draft for the maximum amount of his/ her Bid in favour of the
Escrow Account of the Escrow Collection Bank(s) (for details please see the section titled Issue
Procedure - Payment Instructions beginning on page 272) and submit the same to the member of the
Syndicate to whom the Bid is being submitted. The Bidder may also provide the applicable Margin
Amount by way of an electronic transfer of funds through RTGS mechanism or any similar method.
Each QIB shall provide its QIB Margin Amount only to a BRLM or syndicate Member duly authorized by
the BRLM in this regard. Bid cum Application Forms accompanied by cash/Stock invest/money order
shall not be accepted. The maximum Bid price has to be paid at the time of submission of the Bid cum
Application Form based on the highest bidding option of the Bidder.
The members of the Syndicate shall deposit the cheque or demand draft with the Escrow Collection
Bank(s), which will hold the monies for the benefit of the Bidders till the Designated Date. On the
Designated Date, the Escrow Collection Bank(s) shall transfer the funds in respect of those Bidders
whose Bids have been accepted from the Escrow Account, as per the terms of the Escrow Agreement,
into the Public Issue Account. The balance amount after transfer to the Public Issue Account, lying
credited with the Escrow Collection Bank shall, on the Designated Date be transferred to the Refund
Account, held by the Refund Banker for the benefit of the Bidders who are entitled to refund. No later
than 15 days from the Bid /Issue Closing Date, the Refund Bank(s) shall also refund all Amounts
payable to unsuccessful Bidders and also the excess amount paid on bidding, if any, after the
adjustment for allocation, to the Bidders.
Each category of Bidders i.e. QIB Bidders, Non Institutional Bidders, Retail Individual Bidders and
Employees bidding under the Employee Reservation Portion would be required to pay their applicable
Margin Amount at the time of the submission of the Bid cum Application Form. The Margin Amount
payable by each category of Bidders is mentioned in the section titled Issue Structure beginning on
page 253. Where the Margin Amount applicable to the Bidder is less than 100% of the Bid Amount,
any difference between the amount payable by the Bidder for Equity Shares allocated at the Issue
Price and the Margin Amount paid at the time of Bidding, shall be payable by the Bidder no later than
the Pay-in-Date, which shall be a minimum period of two days from the date of communication of the
allocation list to the members of the Syndicate by the BRLM. If the payment is not made favouring the
Escrow Account within the time stipulated above, the Bid of the Bidder is liable to be cancelled.
Where the Bidder has been allocated lesser number of Equity Shares than he or she had bid for, the
excess amount paid on bidding, if any, after adjustment for allotment, will be refunded to such Bidder
within 15 days from the Bid /Issue Closing Date, failing which we shall pay interest at 15% per annum
for any delay beyond the periods as mentioned above.
Electronic Registration of Bids
i.
ii.

iii.

iv.

The Syndicate Members will register the Bids using the on-line facilities of the BSE and the NSE.
There will be at least one on-line connectivity in each city where a stock exchange is located in
India and where bids are accepted.
The Stock Exchanges will offer a screen-based facility for registering bids for the Issue. This
facility will be available on the terminals of Syndicate Members and their authorised agents
during the Bidding Period. Syndicate Members can also set up facilities for off-line electronic
registration of bids subject to the condition that they will subsequently download the off-line
data file into the on-line facilities for book building on a regular basis. On the Bid Closing Date,
the Syndicate Member will upload the Bids till such time as permitted by the Stock Exchanges.
The aggregate demand and price for bids registered on each of the electronic facilities of the
BSE and the NSE will be downloaded on a regular basis, consolidated and displayed online at all
bidding centers and the websites of the BSE and the NSE. A graphical representation of
consolidated demand and price would be made available at the bidding centers during the
Bidding Period.
At the time of registering each bid, the Syndicate Members shall enter the following details of
the investor in the online system:

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KHADIM INDIA LIMITED

Name of the investor (Investors should ensure that the name given in the Bid-cum
Application Form is exactly the same as the name in which the Depository Account is held. In
case the Bid-cum-Application Form is submitted in the joint names, investors should ensure
that the Depository Account is held in the same joint names in the same sequence as that in
which they appear in the Bid-cum-Application Form)

Investor category Individual/Corporate/ Mutual Fund etc

Number of Equity Shares bid for

Bid Price

Bid-cum-Application Form number

Margin Amount paid upon submission of Bid cum Application Form

Depository participant identification no. and client identification no. of the beneficiary
account of the Bidder.
v. A system generated Transaction Registration Slip (TRS) will be given to the Bidder as a proof of
the registration of each of the bidding options. It is the Bidders responsibility to obtain the TRS
from the Syndicate Members. The registration of the bid by the Syndicate Members does not
guarantee that the Equity Shares shall be allocated either by the Syndicate Members or our
Company.
vi. Such TRS will be non-negotiable and by itself will not create any obligation of any kind.
vii. The Syndicate Members have the right to review the Bid. Consequently, QIB Bids procured can
be rejected by any or all members of the Syndicate provided the rejection is at the time of
receipt of such Bids and the reason for rejection of such Bid is communicated to the Bidder at
the time of rejection of the Bid. In case of Non-Institutional Bidders and Retail Bidders Bids shall
not be rejected except on the technical grounds listed on page 274 of the Draft Red Herring
Prospectus.
viii. It is to be distinctly understood that the permission given by the Stock Exchanges to use their
network and the software of the online IPO system should not in any way be deemed or
construed to indicate that the compliance with various statutory and other requirements by the
Company or the BRLM are cleared or approved by the BSE and the NSE; nor does it in any
manner warrant, certify or endorse the correctness or completeness of any compliance with
statutory and other requirements nor does it take any responsibility for the financial or other
soundness of the Company, its promoters, its management or any scheme or project.
ix. It is also to be distinctly understood that the approval given by the Stock Exchanges should not
in any way be deemed or construed to indicate that this Draft Red Herring Prospectus has been
cleared or approved by the BSE and NSE; nor does it in any manner warrant, certify or endorse
the correctness or completeness of any of the contents of the Draft Red Herring Prospectus, nor
does it warrant that our Equity Shares will be listed or continue to be listed on the BSE and the
NSE.
Build Up of the Book and Revision of Bids
i.

Bids registered by various Bidders through the Syndicate Members shall be electronically
transmitted to the BSE or the NSE mainframe on a regular basis.

ii.

The book gets built up at various price levels. This information will be available with the BRLM
on a regular basis.

iii.

During the Bidding Period/Issue Period, any Bidder who has registered his or her interest in
the Equity Shares at a particular price level is free to revise his or her Bid within the Price
Band using the printed Revision Form which is a part of the Bid cum Application Form.

iv.

Revisions can be made in both the desired number of Equity Shares and the Bid price by using
the Revision Form. Apart from mentioning the revised options in the revision form, the Bidder
must also mention the details of all the options in his or her Bid cum Application Form or
earlier Revision Form. For example, if a Bidder has Bid for three options in the Bid cum
Application Form and he is changing only one of the options in the Revision Form, he must still
fill the details of the other two options that are not being changed in the Revision Form.
Incomplete or inaccurate Revision Forms will not be accepted by the members of the
Syndicate.

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KHADIM INDIA LIMITED

v.

The Bidder can make this revision any number of times during the Bidding Period. However,
for any revision(s) in the Bid, the Bidders will have to use the services of the same member of
the Syndicate through whom he or she had placed the original Bid. Bidders are advised to
retain copies of the blank Revision Form and the revised Bid must be made only in
such Revision Form or copies thereof.

vi.

Any revision of the Bid shall be accompanied by payment in the form of cheque or demand
draft for the incremental amount, if any, to be paid on account of the upward revision of the
Bid. The excess amount, if any, resulting from downward revision of the Bid would be returned
to the Bidder at the time of refund in accordance with the terms of this Draft Red Herring
Prospectus. In the case of QIB Bidders, the members of the Syndicate shall collect the
payment in the form of cheque or demand draft for the incremental amount in the QIB Margin
Amount, if any, to be paid on account of upward revision of the Bid at the time of one or more
revisions by the QIB Bidders.

vii.

When a Bidder revises his or her Bid, he or she shall surrender the earlier TRS and get a
revised TRS from the members of the Syndicate. It is the responsibility of the Bidder to
request for and obtain the revised TRS, which will act as proof of his or her having
revised the previous Bid.

viii.

Only Bids that are uploaded on the online IPO system of the BSE and the NSE shall be
considered for Allocation. In case of discrepancy of data between the BSE or the NSE and the
members of the Syndicate, the decision of the BRLM, based on the physical records of Bid cum
Application Forms, shall be final and binding on all concerned.

Price Discovery and Allocation


i.

After the Bid /Issue Closing Date, the BRLM will analyse the demand generated at various
price levels and discuss pricing strategy with us.

ii.

Our Company in consultation with the BRLM shall finalise the Issue Price, the number of
Equity Shares to be allotted and the allotment to successful Bidders.

iii.

The allocation to Non-Institutional Bidders and Retail Individual Bidders of not less than 15%
and 35% of the Net Issue respectively, and the allocation to QIBs for up to 50% of the Net
Issue, would be on proportionate basis, in the manner specified in the SEBI Guidelines,
subject to the sectoral cap and this Draft Red Herring Prospectus, in consultation with
Designated Stock Exchange, subject to valid Bids being received at or above the Issue Price.

iv.

Any under subscription in the Employee Reservation Portion would be included in the Net
Issue. Under subscription, if any, in any category would be allowed to be met with spill over
from any of the other categories at the discretion of our Company in consultation with the
BRLM. However, if the aggregate demand by Mutual Funds is less than [] Equity Shares, the
balance Equity Shares available for allocation in the Mutual Fund Portion will first be added to
the QIB Portion and be allocated proportionately to the QIB Bidders. In the event that the
aggregate demand in the QIB Portion has been met, under-subscription, if any, would be
allowed to be met with spillover from any other category or combination of categories at the
discretion of our Company, in consultation with the BRLM and the Designated Stock Exchange.

v.

The BRLM in consultation with us shall notify the members of the Syndicate of the Issue Price
and allocations to their respective Bidders, where the full Bid Amount has not been collected
from the Bidders.

vi.

We reserve the right to cancel the Issue any time after the Bid /Issue Opening Date but before
the Allotment without assigning any reasons whatsoever.

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vii.

In terms of the SEBI Guidelines, QIBs shall not be allowed to withdraw their Bid after the Bid
/Issue Closing Date.

Signing of Underwriting Agreement and RoC Filing


i.

Our Company, the BRLM and the Syndicate Members shall enter into an Underwriting
Agreement on finalization of the Issue Price and allocation(s) to the Bidders.

ii.

After signing the Underwriting Agreement, we would update and file the updated Red Herring
Prospectus with ROC, which then would be termed Prospectus. The Prospectus would have
details of the Issue Price and Issue size and would be complete in all material respects.

iii.

Our company will file a copy of the Prospectus with the RoC in terms of Section 56, Section
60, and Section 60B of the Companies Act.

Advertisement regarding Issue Price and Prospectus


After filing of the Prospectus with the ROC, a statutory advertisement will be issued by our Company
in a widely circulated English and Hindi national newspapers, regional language newspaper with wide
circulation in the place where our Registered Office is situated. This advertisement, in addition to the
information that has to be set out in the statutory advertisement, shall indicate the Issue Price. Any
material updates between the date of Red Herring Prospectus and the date of Prospectus will be
included in such statutory advertisement
Issuance of Confirmation of Allocation Note and Allotment for the Issue
i.

Upon approval of the basis of allotment by the Designated Stock Exchange, the BRLM or the
Registrar to the Issue shall send to the members of the Syndicate a list of their Bidders who
have been allocated Equity Shares in the Issue. The approval of the basis of allocation by the
Designated Stock Exchange for QIB Bidders may be done simultaneously with or prior to the
approval of the basis of allocation for the Retail and Non-Institutional Bidders. However,
Bidders should note that the Bank shall ensure that the date of Allotment of the Equity Shares
to all Bidders, in all categories, shall be done on the same date.

ii.

The BRLM or the members of the Syndicate would then send the CAN to their Bidders who
have been allocated Equity Shares in the Issue. The dispatch of a CAN shall be deemed a
valid, binding and irrevocable contract for the Bidder to pay the entire Issue Price for all the
Equity Shares Allocated to such Bidder. Those Bidders who have not paid into the Escrow
Account at the time of bidding shall pay in full the amount payable into the Escrow Account by
the Pay-in Date specified in the CAN ; and

iii.

Bidders who have been allocated Equity Shares and who have already paid into the Escrow
Account at the time of bidding shall directly receive the CAN from the Registrar to the Issue
subject, however, to realisation of their cheque or demand draft paid into the Escrow Account.
The dispatch of a CAN shall be deemed as a valid, binding and irrevocable contract for the
Bidder to pay the entire Issue Price for all the Equity Shares to be allotted to such Bidder.

Allotment Reconciliation and Revised CANs


After the Bid/Offer Closing Date, an electronic book will be prepared by the Registrar to the Offer on
the basis of Bid applications received. Based on the electronic book, QIBs will be sent a CAN indicating
the number of Equity Shares that may be allocated to them. This CAN is subject to the basis of final
Transfer, which will be approved by the Designated Stock Exchange and reflected in the reconciled
book prepared by the Registrar to the Offer. Subject to the SEBI DIP Guidelines, certain Bid
applications may be rejected due to technical reasons, non-receipt of funds, cancellation of cheques,
cheque bouncing, incorrect details, etc., and these rejected applications will be reflected in the
reconciliation and the basis of Transfer as approved by the Designated Stock Exchange and specified
in the physical book. As a result, a revised CAN may be sent to QIBs and the allocation of Equity

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Shares in such revised CAN may be different from that specified in the earlier CAN. QIBs should note
that they may be required to pay additional amounts, if any, by the Pay-in Date specified in the
revised CAN, for any increased allocation of Equity Shares. The CAN will constitute the valid, binding
and irrevocable contract (subject only to the issue of a revised CAN) for the QIB to pay the entire
Offer Price for all the Equity Shares allocated to such QIB. The revised CAN, if issued, will supersede in
entirety the earlier CAN.
Designated Date and Allotment of Equity Shares
1.

Our Company will ensure that the Allotment of Equity Shares is done within 15(fifteen) days of
the Bid Closing Date. After the funds are transferred from the Escrow Account to the Issue
Account on the Designated Date, our Company would ensure the credit to the successful
Bidders' depository accounts of the allotted Equity Shares to the allottees within two working
days of the date of Allotment.

2.

As per the SEBI Guidelines, Equity Shares will be issued and allotted only in the
dematerialized form to the allottees. Allottees will have the option to re-materialise the
Equity Shares so allotted, if they so desire, as per the provisions of the Companies Act and the
Depositories Act.

Investors are advised to instruct their Depository Participant to accept the Equity Shares
that may be allocated to them pursuant to this Issue.
Mode of Making Refunds
The payment of refund, if any, would be done through various modes in the following order of
preference:
1.

ECS Payment of refund would be done through ECS for applicants having an account at any
of the 15 centres where clearing houses for ECS are managed by the Reserve Bank of India,
namely Ahmedabad, Bangalore, Bhubneshwar, Kolkata, Chandigarh, Chennai, Guwahati,
Hyderabad, Jaipur, Kanpur, Mumbai, Nagpur, New Delhi, Patna and Thiruvanthapuram. This
mode of payment of refunds would be subject to availability of complete bank account details
including the nine digit Magnetic Ink Character Recognition (MICR) code as appearing on a
cheque leaf, from the depository. The payment of refund through ECS is mandatory for
applicants having a bank account at any of the 15 centers named herein above, except where
applicant is otherwise disclosed as eligible to get refunds through direct credit, RTGS or NEFT.

2. Direct Credit Applicants applying through the web/internet whose service providers opt to
have the refund amounts for such applicants being by way of direct disbursement by the
service provider through their internal networks, the refund amounts payable to such
applicants will be directly handled by the service providers and credited to bank account
particulars as registered by the applicant in the demat account being maintained with the
service provider. The service provider, based on the information provided by the Registrar,
shall carry out the disbursement of the refund amounts to the applicants.
3.

RTGS Applicants having a bank account at any of the 15 centers detailed above, and whose
bid amount exceeds Rs. 1 Million, shall be eligible to exercise the option to receive refunds, if
any, through RTGS. All applicants eligible to exercise this option shall mandatorily provide the
Indian Financial System Code (IFSC) code in the Bid cum Application Form, the refund shall
be made through the ECS or direct credit, if eligibility disclosed.

4.

NEFT-Payment of refund may be undertaken through NEFT wherever the applicants bank has
been assigned the Indian Financial System Code (IFSC), which can be linked to a Magnetic
Ink Character Recognition (MICR), if any, available to that particular bank branch. IFSC
Code will be obtained from the website of RBI as at a date immediately prior to the date of
payment of refund, duly mapped with MICR numbers. Wherever the applicants have registered
their nine digit MICR number and their bank account number while opening and operating the

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demat account, the same will be duly mapped with the IFSC Code of that particular bank
branch and the payment of refund will be made to the applicants through this method.
Please note that only applicants having a bank account at any of the 15 centers where
clearing houses for ECS are managed by the RBI are eligible to receive refunds through the
modes detailed in 1, 2, 3 & 4 hereinabove. For all the other applicants, including applicants
who have not updated their bank particulars along with the nine digit MICR Code, the
refund orders would be dispatched Under Certificate of Posting for refund orders of value
upto Rs. 1,500 and through speed post / registered post for refund orders of above Rs.
1,500.
GENERAL INSTRUCTIONS
Dos:

Check if you are eligible to apply.

Read all the instructions carefully and complete the Resident Bid cum Application Form.

Ensure that the details about your Depository Participant and beneficiary account are correct,
as Equity Shares will be allotted in the dematerialized form only.

Ensure that the Bids are submitted at the bidding centers only on forms bearing the stamp of
a member of the Syndicate.

Ensure that you have been given a TRS for all your Bid options.

Ensure that the Bid is within the Price Band.

QIBs shall submit their bids only to the BRLM or to Syndicate Members duly appointed in this
regard.

Submit Revised Bids to the same member of the Syndicate through whom the original Bid was
placed and obtain a revised TRS.

The Bidder or in the case of a Bid in joint names, each of the Bidders, should mention his/ her
PAN allotted under the I.T. Act. The copy of the PAN card or PAN allotment letter is required to
be submitted with the application form. Applications without this information and documents
will be considered incomplete and are liable to be rejected.

If you have mentioned Applied For or Not Applicable, in the Bid cum Application Form in
the section dealing with PAN number, ensure that you submit Form 60 or 61, as the case may
be, together with permissible documents as address proof.

Ensure that the name(s) given in the Bid cum Application Form is exactly the same as the
name(s) in which the beneficiary account is held with the Depository Participant. In case the
Bid cum Application Form is submitted in joint names, ensure that the beneficiary account is
also held in same joint names and such names are in the same sequence in which they appear
in the Bid cum Application Form.

Don'ts:

Do not Bid for lower than the minimum Bid size.

Do not Bid/revise Bid price to less than the lower end of the Price Band or higher than the
higher end of the Price Band.

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Do not Bid on another Bid cum Application Form after you have submitted a Bid to the
members of the Syndicate.

Do not pay the Bid amount in cash, by money order or by postal order or by Stock Invest.

Do not send Bid cum Application Forms by post; instead submit the same to a member of the
Syndicate only.

Do not Bid at Cut-off Price (for QIB Bidders and Non-Institutional Bidders).

Do not Bid for an amount exceeding Rs.100,000 (for Retail Individual Bidders)

Do not fill up the Bid cum Application Form such that the Equity Shares bid for exceeds the
Issue size and/or investment limit or maximum number of Equity Shares that can be held
under the applicable laws or regulations or maximum amount permissible under the applicable
regulations.

Do not submit the GIR number instead of the PAN as the Bid is liable to be rejected on this
ground.

Do not submit the Bid without the QIB Margin Amount, in case of a Bid by a QIB.

INSTRUCTIONS FOR FILLING UP THE BID-CUM-APPLICATION FORM


Bidders can obtain Bid-cum-Application Forms and/or Revision Forms from the Syndicate Members.
Bids and Revision of Bids
Bids and Revisions of Bids must be:
i.

Made only in the prescribed Bid cum Application Form or Revision Form.

ii.

In single name or in joint names (not more than three, and in the same order as their
Depository Participant details).

iii.

Completed in full, in BLOCK LETTERS in ENGLISH and in accordance with the instructions
contained herein, in the Bid cum Application Form or in the Revision Form. Incomplete Bid
cum Application Forms or Revision Forms are liable to be rejected.

iv.

The Bids from the Retail Individual Bidders must be for a minimum of [] Equity Shares and in
multiples of [] Equity Shares thereafter subject to a maximum Bid Amount of Rs. 100,000.

v.

For Non-Institutional Bidders and QIB Bidders, Bids must be for a minimum of such number of
Equity Shares such that the Bid Amount exceeds Rs. 100,000 and in multiples of [] Equity
Shares thereafter. Bids cannot be made for more than the Net Issue size. Bidders are advised
to ensure that a single Bid from them should not exceed the investment limits or maximum
number of shares that can be held by them under the applicable laws or regulations.

vi.

For Bidders bidding under the Employee Reservation Portion, the Bid must be for a minimum
of [] Equity Shares in multiple of [] thereafter subject to a maximum of 10,000 Equity
Shares.

vii.

Thumb impressions and signatures other than in the languages specified in the Eighth
Schedule in the Constitution of India must be attested by a Magistrate or a Notary Public or a
Special Executive Magistrate under official seal

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Bidders Bank Details


Bidders should note that on the basis of name of the Bidders, Depository Participants name and
identification number and the beneficiary account number provided by them in the Bid cum Application
Form, the Registrar to the Issue will obtain from the Depository the details of the Bidder's bank
account. These bank account details would be printed on the refund order, if any, to be sent
to Bidders. In case the refunds are made through Electronic Clearing Service (ECS), the
refund amount, if any, would be electronically credited to the bank account of the applicant.
For further details, please refer to the section titled Mode of making refunds on page no.
267 of this Draft Red Herring Prospectus. Hence, Bidders are advised to immediately update
their bank account details as appearing on the records of the Depository Participant. Please
note that failure to do so could result in delays in credit of refunds to Bidders at the Bidders sole risk
and neither the BRLM nor the Company shall have any responsibility and undertake any liability for the
same.
Bidders Depository Account Details
IT IS MANDATORY FOR ALL THE BIDDERS TO GET THE EQUITY SHARES IN
DEMATERIALISED FORM. ALL BIDDERS SHOULD MENTION THEIR DEPOSITORY
PARTICIPANTS NAME, DEPOSITORY PARTICIPANT IDENTIFICATION NUMBER AND
BENEFICIARY ACCOUNT NUMBER IN THE BID CUM APPLICATION FORM. INVESTORS MUST
ENSURE THAT THE NAME GIVEN IN THE BID CUM APPLICATION FORM IS EXACTLY THE
SAME AS THE NAME IN WHICH THE DEPOSITORY ACCOUNT IS HELD. IN CASE THE BID CUM
APPLICATION FORM IS SUBMITTED IN JOINT NAMES, IT SHOULD BE ENSURED THAT THE
DEPOSITORY ACCOUNT IS ALSO HELD IN THE SAME JOINT NAMES AND ARE IN THE SAME
SEQUENCE IN WHICH THEY APPEAR IN THE BID CUM APPLICATION FORM.
Bidders should note that on the basis of name of the Bidders, Depository Participants name
and Identification Number and Beneficiary Account Number provided by them in the Bid
cum Application Form, the Registrar to the Issue will obtain from the Depository
demographic details of the Bidders such as address, bank account details for printing on
refund orders and occupation (Demographic Details). Hence, Bidders should carefully fill
in their Depository Account details in the Bid cum Application Form. Please note that failure
to do so could result in delays in credit of refund to Bidders at the Bidders sole risk, and
neither the BRLM nor the Company shall have any responsibility or undertake any liability
for the same.
These Demographic Details would be used for all correspondence with the Bidders including mailing of
the refund orders / CANs / Allocation Advices and printing of bank particulars on the refund orders as
per the modes disclosed and the Demographic Details given by the Bidders in the Bid cum Application
Form would not be used for these purposes by the Registrar to the Issue.
Hence, Bidders are advised to update their Demographic Details as provided to their Depository
Participants and ensure that they are true and correct. By signing the Bid cum Application Form, the
Bidder would deemed to have authorised the Depositories to provide, upon request, to the Registrar to
the Issue, the required Demographic Details as available on its records.
Refund orders/allocation advices /CANs would be mailed at the address of the Bidder as
per the Demographic Details received from the Depositories. Bidders may note that delivery
of refund orders/allocation advice/CANs may get delayed if the same once sent to the
address obtained from the Depositories are returned undelivered. In such an event, the
address and other details given by the Bidder in the Bid cum Application Form would be
used only to ensure dispatch of refund orders. Please note that any such delay shall be at
the Bidders sole risk and neither the Escrow Collection Bank(s) nor the BRLM shall be liable
to compensate the Bidder for any losses caused to the Bidder due to any such delay or
liable to pay any interest for such delay.

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In case no corresponding record is available with the Depositories that matches three parameters,
namely, names of the Bidders (including the order of names of joint holders), the Depository
Participants identity (DP ID) and the beneficiary account number, then such Bids are liable to be
rejected.
We in our absolute discretion, reserve the right to permit the holder of the power of attorney to
request the Registrar that for the purpose of printing particulars on the refund order and mailing of
the refund order/CANs/allocation advice/ refunds through electronic transfer of funds, the
Demographic Details given on the Bid cum Application Form should be used (and not those obtained
from the Depository of the Bidder). In such cases, the Registrar shall use Demographic Details as
given in the Bid cum Application Form instead of those obtained from the depositories.
Bids under Power of Attorney
In case of Bids made pursuant to a power of attorney or by limited companies, corporate bodies,
registered societies, a certified copy of the power of attorney or the relevant resolution or authority,
as the case may be, along with a certified copy of the memorandum and articles of association and/or
bye laws must be lodged along with the Bid cum Application Form. Failing this, our Company the right
to accept or reject any Bid in whole or in part, in either case, without assigning any reason thereof.
In case of the Bids made by insurance companies registered with the Insurance Regulatory and
Development Authority, a certified copy of certificate of registration issued by Insurance Regulatory
and Development Authority must be lodged along with the Bid cum Application Form. Failing this, our
Company reserves the right to accept or reject any Bid in whole or in part, in either case, without
assigning any reason thereof.
In case of Bids made by Mutual Funds registered with SEBI, Venture Capital Investor registered with
SEBI and foreign venture capital investor registered with SEBI, a certified copy of their SEBI
registration certificate must be submitted with the Bid-cum-Application form. Falling this, our company
reserves the right to accept or reject any Bid in whole or in part, in either case, without assigning any
reason thereof.
In case of the Bids made by provident funds, subject to applicable law, with minimum corpus of Rs.
250 million and pension funds with minimum corpus of Rs. 250 million, a certified copy of certificate
from a chartered accountant certifying the corpus of the provident fund/pension fund must be lodged
along with the Bid cum Application Form. Failing this, our Company reserves the right to accept or
reject any Bid in whole or in part, in either case, without assigning any reason thereof.
We, in our absolute discretion, reserve the right to relax the above condition of simultaneous lodging
of the power of attorney along with the Bid cum Application Form, subject to such terms and
conditions that we/the BRLM may deem fit.
We, in our absolute discretion, reserve the right to permit the holder of the power of attorney to
request the Registrar that for the purpose of printing particulars on the refund order and mailing of
the refund order/CANs/allocation advice, the Demographic Details given on the Bid cum Application
Form should be used (and not those obtained from the Depository of the Bidder). In such cases, the
Registrar shall use Demographic Details as given in the Bid cum Application Form instead of those
obtained from the depositories.
Bids by Eligible Employees
For the sake of clarity, the term Employee shall mean all or any of the following all of whom should
be Indian Nationals and are based in India:

A permanent employee of the Company and on the payroll of the Company as of []

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A director of the Company, whether a whole-time Director, part-time Director or otherwise,


who is a Director on the date of the Red Herring Prospectus except for Directors who are a
part of the Promoter Group.

Bids under Employee Reservation Portion by Eligible Employees shall be

Only in the prescribed Bid cum Application Form or Revision Form (i.e. Blue colour form);

Eligible Employees, as defined above, should mention Employee Number at the relevant place
in the Bid cum Application Form.

The sole / first bidder should be Eligible Employee as defined above. In case the Bid cum
Application Form is submitted in joint names, it should be ensured that the Depository account
is also held in the same joint names and in the same sequence in which they appear in the Bid
cum Application Form.

Only Eligible Employees would be eligible to apply in this Issue under the Employee
Reservation Portion

Bids by Eligible Employees will have to be like any other Bidder. Only those bids, which are
received at or above the Issue Price, would be considered for allocation under this category.

Eligible Employees who apply or bid for securities of or for a value of not more than Rs.
1,00,000 in any of the bidding options can apply at Cut-off. This facility is not available to
other Eligible Employees whose Bid Amount exceeds Rs. 1,00,000.

Bid/ Application by Eligible Employees can be made also in the Net Issue to the Public and
such bids shall not be treated as multiple bids.

If the aggregate demand in this category is greater than 2,00,000 Equity Shares at or above
the Issue Price, the allocation shall be made on a proportionate basis.

If the aggregate demand in this category is less than 2,00,000 Equity Shares at or above the
Issue Price, full allocation shall be made to the Employees to the extent of their demand.
Under-subscription, if any, in the Employee Reservation Portion will be added back to the Net
Issue to the Public, and the ratio amongst the investor categories will be at the discretion of
the Company and the BRLM. In case of under subscription in the Net Issue, spillover to the
extent of under-subscription shall be permitted from the Employee Reservation Portion.

BIDS BY NON-RESIDENTS
The Equity Shares are being offered in this Issue to the Indian public only. Non-residents such as
foreign institutional investors, non resident Indian, foreign venture capital funds, multilateral and
bilateral development financial institutions are not permitted to participate in the Issue. As per the
existing policy of the government of India, OCBs cannot participate in this Issue.
PAYMENT INSTRUCTIONS
We shall open Escrow Accounts with the Escrow Collection Bank(s) for the collection of the Bid
Amounts payable upon submission of the Bid cum Application Form and for amounts payable pursuant
to allocation in the Issue.
Each Bidder shall draw a cheque or demand draft or remit funds electronically through RTGS
mechanism for the amount payable on the Bid and/or on allocation/Allotment as per the following
terms:
Payment into Escrow Account
i.

The Bidders for whom the applicable margin is equal to 100% shall, with the submission of the
Bid-cum-Application Form, draw a payment instrument for the Bid Amount in favour of the
Escrow Account and submit the same to the members of the Syndicate.

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ii.

In case the above Margin Amount paid by the Bidders during the Bidding Period is less than
the Issue Price multiplied by the Equity Shares allocated to the Bidder, the balance amount
shall be paid by the Bidders into the Escrow Account within the period specified in the CAN
which shall be subject to a minimum period of two days from the date of communication of the
allocation list to the members of the Syndicate by the BRLM.

iii.

The payment instruments for payment into the Escrow Account should be drawn in favour of:
a)
In case of QIB Bidders: Escrow Account Khadims Public Issue-QIB
b)
In case of Non-Institutional Bidders and Retail Individual Bidders: Escrow Account
Khadims Public Issue
c)
In case of Employees: Escrow Account Khadims Public Issue Employee

iv.

Where a Bidder has been allocated a lesser number of Equity Shares than the Bidder has Bid
for, the excess amount, if any, paid on bidding, after adjustment towards the balance amount
payable on the Equity Shares allocated, will be refunded to the Bidder from the Refund
Accounts.

v.

The monies deposited in the Escrow Account will be held for the benefit of the Bidders till the
Designated Date.

vi.

On the Designated Date, the Escrow Collection Banks shall transfer the funds from the Escrow
Account as per the terms of the Escrow Agreement into the Issue Account.

vii.

On the Designated Date and not later than 15 days from the Bid /Issue Closing Date, the
Escrow Collection Banks shall refund all amounts payable to unsuccessful Bidders and the
excess amount paid on Bidding, if any, after adjusting for allocation to the Bidders.

viii.

Payments should be made by cheque, or demand draft drawn on any bank (including a cooperative bank), which is situated at, and is a member of or sub member of the bankers
clearing house located at the center where the Bid cum Application Form is submitted.
Outstation cheques/bank drafts drawn on banks not participating in the clearing process will
not be accepted and applications accompanied by such cheques or bank drafts are liable to be
rejected. Cash/stock invests/money orders/postal orders will not be accepted.

Payment by Stock Invest


In terms of the Reserve Bank of India Circular No. DBOD No. FSC BC 42/24.47.00/2003-04 dated
November 5, 2003, the option to use the stock invest instrument in lieu of cheques or bank drafts for
payment of Bid money has been withdrawn.
SUBMISSION OF BID CUM APPLICATION FORM
All Bid cum Application Forms or Revision Forms duly completed and accompanied by account payee
cheques or drafts shall be submitted to the members of the Syndicate at the time of submission of the
Bid.
Separate receipts shall not be issued for the money payable on the submission of Bid cum Application
Form or Revision Form. However, the collection center of the members of the Syndicate will
acknowledge the receipt of the Bid cum Application Forms or Revision Forms by stamping and
returning to the Bidder the acknowledgement slip. This acknowledgement slip will serve as the
duplicate of the Bid cum Application Form for the records of the Bidder.

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OTHER INSTRUCTIONS
Joint Bids in case of Individuals
Bids may be made in single or joint names (not more than three). In case of joint Bids, all payments
will be made out in favour of the Bidder whose name appears first in the Bid cum Application Form or
Revision Form. All communication will be addressed to the first Bidder and will be dispatched to his or
her address.
Multiple Bids
A Bidder should submit only one Bid (and not more than one) for the total number of Equity Shares
required. Two or more Bids will be deemed to be multiple Bids if the sole or First Bidder is one and the
same.
i.

All applications with the same name and age will be accumulated and taken to a separate
process file as probable multiple master.

ii.

In this master, a check will be carried out for the same PAN/GIR Numbers. In cases where the
PAN/GIR Numbers are different, the same will be deleted from this master.

iii.

The Registrar will obtain, from depositories, details of the applicants address based on the DP
ID and Beneficiary Account Number provided in the Bid cum Application Form and create an
address master.

iv.

Then the addresses of all these applications from the address master will be strung. This
involves putting the addresses in a single line after deleting non-alpha and non-numeric
characters i.e. commas, full stops, hash etc. Sometimes, the name, the first line of address and
pin code will be converted into a string for each application received and a photo match will be
carried out amongst all the applications processed. A print-out of the addresses will be taken to
check for common names. Applications with the same name and same address will be treated
as multiple applications.

v.

The applications will be scanned for similar DP ID and Client ID numbers. In case applications
bear the same numbers, these will be treated as multiple applications.

vi.

After consolidation of all the masters as described above, a print out of the same will be taken
and the applications physically verified to tally signatures as also father/husband names. On
completion of this, the applications will be identified as multiple applications

In case of a Mutual Fund, a separate Bid can be made in respect of each scheme of the Mutual Fund
registered with SEBI and such Bids in respect of more than one scheme of the Mutual Fund will not be
treated as multiple Bids provided that the Bids clearly indicate the scheme for which the Bid has been
made.
Bids made by Employees both under Employees Reservation Portion as well as in the Net Issue shall
not be treated as multiple Bids.
The company reserves the right to reject, in our absolute discretion, all or any multiple Bids in any or
all categories.
PAN or GIR Number
The Bidder or in the case of a Bid in joint names, each of the Bidders, should mention his/ her PAN
allotted under the I.T. Act. The copy of the PAN card or PAN allotment letter is required to be
submitted with the application form. Applications without this information and documents will be
considered incomplete and are liable to be rejected. It is to be specifically noted that Bidders
should not submit the GIR number instead of the PAN, as the Bid is liable to be rejected on

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this ground. In case the sole/ First Bidder and joint Bidder(s) is/ are not required to obtain PAN, each
of the Bidder(s) shall mention Not Applicable and in the event that the sole Bidder and/ or the joint
Bidder(s) have applied for PAN which has not yet been allotted each of the Bidder(s) should mention
Applied for in the Bid cum Application Form. Further, where the Bidder(s) has mentioned Applied
for or Not Applicable, the sole/ First Bidder and each of the joint Bidder(s), as the case may be,
would be required to submit Form 60 (form of declaration to be filed by a person who does not have a
permanent account number and who enters into any transaction specified in Rule 114B of the Income
Tax Rules, 1962), or, Form 61 (form of declaration to be filed by a person who has agricultural income
and is not in receipt of any other income chargeable to income-tax in respect of transactions specified
in Rule 114B of the Income Tax Rules, 1962), as may be applicable, duly filled along with a copy of
any one of the following documents in support of the address: (a) ration card (b) passport (c) driving
license (d) identity card issued by any institution (e) copy of the electricity bill or telephone bill
showing residential address (f) any document or communication issued by any authority of the Central
Government, state government or local bodies showing residential address (g) any other documentary
evidence in support of address given in the declaration. It may be noted that Form 60 and Form
61 have been amended by a notification issued on December 1, 2004 by the Central Board
of Direct Taxes, Department of Revenue, Ministry of Finance. All Bidders are requested to
furnish, where applicable, the revised Form 60 or Form 61 as the case may be.
Unique Identification Number MAPIN
Pursuant to circulars dated April 27, 2007(No. MRD/DoP/Cir-05/2007) and June 25, 2007 (No.
MRD/DoP/Cir-08/2007) issued by SEBI, the requirement of UIN under the SEBI (Central database of
Market Participants) Regulations, 2005 has been discontinued and irrespective of the amount of
transaction, PAN has been made the sole identification number for all participants in the securities
market.
Right to reject Bids
In case of QIB Bidders, the Company, in consultation with the BRLM may reject a bid placed by a
qualified QIB for reasons to be recorded in writing, provided that such rejection shall be made at the
time of acceptance of the Bid and the reasons therefore shall be disclosed to the QIB Bidders. In case
of Non-Institutional Bidders, Retail Individual Bidders, Bidders in the Employee Reservation Portion,
we have a right to reject Bids based on technical grounds. Consequent refunds shall be made by
cheque or pay order or draft and will be sent to the Bidders address at the Bidders risk.
Grounds for Technical Rejections
Bidders are advised to note that Bids are liable to be rejected on, inter alia, the following technical
grounds:
1)

Amount paid does not tally with the amount payable for the highest value of Equity Shares bid
for;

2)

Age of first Bidder not given;

3)

Bank account details (for refund are not given);

4)

In case of partnership firms, Equity Shares may be registered in the names of the individual
partners and no such partnership firm, shall be entitled to apply;

5)

Bids by Non-Residents;

6)

Bids by persons not competent to contract under the Indian Contract Act,1872 including minors,
insane persons;

7)

PAN not stated and GIR number furnished instead of PAN;

8)

Bids for lower number of Equity Shares than specified for that category of investors;

9)

Bids at a price less than lower end of the Price Band;

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KHADIM INDIA LIMITED

10) Bids at a price more than the higher end of the Price Band;
11) Bids at cut-off Price by Non-Institutional Bidders and QIB Bidders;
12) Bids for number of Equity Shares, which are not in multiples of [];
13) Category not ticked;
14) Multiple Bids as defined in this Draft Red Herring Prospectus;
15) In case of Bid under power of attorney or by limited companies, corporate, trust etc., relevant
documents are not submitted;
16) Bids accompanied by stock invest/money order/postal order/cash;
17) Bids that are not accompanied by the applicable Margin Amount;
18) Signature of sole and/or joint Bidders missing;
19) Bid cum Application Form does not have the stamp of the BRLM or the Syndicate Members;
20) Bid cum Application Form does not have the Bidders depository account details;
21) Bid cum Application Form is not delivered by the Bidder within the time prescribed as per the Bid
cum Application Form, Bid /Issue Opening Date advertisement and this Draft Red Herring
Prospectus and as per the instructions in this Draft Red Herring Prospectus and the Bid cum
Application Form;
22) In case no corresponding record is available with the Depositories that matches three parameters
namely, names of the Bidders (including the order of names of joint holders), the depositary
participants identity (DP ID) and the beneficiary account number;
23) Bids for amounts greater than the maximum permissible amounts prescribed by the regulations.
See the details regarding the same in the section titled Issue Procedure Bids at Different Price
Levels beginning on page 260;
24) Bids by OCBs;
25) Bids by QIBs not submitted through members of the Syndicate;
26) Bids by persons who are not eligible to acquire Equity Shares in terms of applicable laws, rules,
regulations, guidelines and approvals;
27) Bids in respect whereof the Bid cum Application Forms do not reach the Registrar prior to the
date of finalization of basis of allotment;
28) Bids in respect whereof clear funds are not available in the escrow account upto the date of
receipt of final certificates from escrow collection banks.
29) Bids that do not comply with the securities laws of their respective jurisdictions are liable to be
rejected;
30) Bids by employees of the Company or Directors of the Company not eligible to apply in the
Employee Reservation Portion; and
31) Bids by U.S. persons or U.S. Residents other than Qualified Institutional Buyers as defined in
Rule 144A of the U.S. Securities Act of 1933.
32) Bids made by Venture Capital Funds, which have raised monies from foreign and non-resident
Indian investors.
Equity Shares in Dematerialized form with NSDL & CDSL
As per the provisions of Section 68B of the Companies Act, the Equity Shares in this Issue shall be
allotted only in a dematerialised form (i.e., not in the form of physical certificates but fungible
statements issued in electronic mode).
The Company has recently appointed Intime Spectrum Registry Limited as Registrar to the Issue. To
facilitate the connectivity with NSDL & CSDL, the company has signed the following tripartite
agreements with both the Depositories and the Registrar to the Issue:

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KHADIM INDIA LIMITED

i.

an agreement dated [], 2007 between NSDL, us and the Registrar to the Issue; and

ii.

an agreement dated [], 2007 between CDSL, us and the Registrar to the Issue.

The companys shares bear an ISIN no. .


i.

All Bidders can seek Allotment only in dematerialised mode. Bids from any Bidder without
relevant details of his or her depository account are liable to be rejected.

ii.

A Bidder applying for Equity Shares must have at least one beneficiary account with the
Depository Participants of either NSDL or CDSL prior to making the Bid.

iii.

The Bidder must necessarily fill in the details (including the beneficiary account number and
Depository Participants identification number) appearing in the Bid cum Application Form or
Revision Form.

iv.

Equity Shares allotted to a successful Bidder will be credited in electronic form directly to the
beneficiary account (with the Depository Participant) of the Bidder

v.

Names in the Bid cum Application Form or Revision Form should be identical to those
appearing in the account details with the Depository. In case of joint holders, the names
should necessarily be in the same sequence as they appear in the account details with the
Depository.

vi.

If incomplete or incorrect details are given under the heading Bidders Depository Account
Details in the Bid cum Application Form or Revision Form, it is liable to be rejected.

vii.

The Bidder is responsible for the correctness of his or her demographic details given in the Bid
cum Application Form vis--vis those with his or her Depository Participant.

viii.

It may be noted that Equity Shares in electronic form can be traded only on the Stock
Exchanges having electronic connectivity with NSDL and CDSL. All the Stock Exchanges where
our Equity Shares are proposed to be listed have electronic connectivity with CDSL and NSDL.

ix.

The trading of the Equity Shares would be in dematerialised form only for all investors in the
demat segment of the respective Stock Exchanges.

COMMUNICATIONS
All future communication in connection with Bids made in this Issue should be addressed to the
Registrar to the Issue quoting the full name of the sole or First Bidder, Bid cum Application Form
number, details of Depository Participant, number of Equity Shares applied for, date of Bid cum
Application Form, name and address of the member of the Syndicate where the Bid was submitted
and cheque or draft number and issuing bank thereof.
DISPOSAL OF INVESTOR GRIEVANCES BY OUR COMPANY
We estimate that the average time required by us or the Registrar to the Issue for the redressal of
routine investor grievances shall be seven days from the date of receipt of the complaint. In case of
non-routine complaints and complaints where external agencies are involved, we will seek to redress
these complaints as expeditiously as possible.
We have appointed Mr. Joydev Sengupta, Company Secretary as the Compliance Officer and he may
be contacted in case of any Pre-Issue or Post-Issue problems. He can be contacted at the following
address:

277

KHADIM INDIA LIMITED

KHADIM INDIA LIMITED


Kankaria Estate, 5th Floor,
6, Little Russell Street,
Kolkata- 700 071
Tel no: 91 33 40090501
Fax no: 91 33 40090500
E-mail: ipo@khadims.com
Website: www.khadims.com
IMPERSONATION
Attention of the applicants is specifically drawn to the provisions of sub-section (1) of
Section 68 A of the Companies Act, which is reproduced below:
Any person who:
(a) makes in a fictitious name, an application to a company for acquiring or subscribing for,
any shares therein, or
(b) otherwise induces a company to allot, or register any transfer of shares therein to him,
or any other person in a fictitious name,
shall be punishable with imprisonment for a term which may extend to five years.
Basis of Allotment
A.

For Retail Individual Bidders

Bids received from the Retail Individual Bidders at or above the Issue Price shall be grouped
together to determine the total demand under this category. The Allotment to all successful
Retail Individual Bidders will be made at the Issue Price.

The Issue size less allocation to Non-Institutional Bidders, QIB Bidders and Bidders under the
Employee Reservation Portion shall be available for allocation to Retail Individual Bidders who
have bid in the Issue at a price that is equal to or greater than the Issue Price.

If the aggregate demand in this category is less than or equal to 1,855,000 Equity Shares at
or above the Issue Price, full allotment shall be made to the Retail Individual Bidders to the
extent of their demand.

If the aggregate demand in this category is greater than 1,855,000 Equity Shares at or above
the Issue Price, the allocation shall be made on a proportionate basis subject to a minimum
allotment of [] Equity Shares. For the method of proportionate basis of allocation, refer
below.

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KHADIM INDIA LIMITED

B.

For Non-Institutional Bidders

Bids received from Non-Institutional Bidders at or above the Issue Price shall be grouped
together to determine the total demand under this category. The Allotment to all successful
Non-Institutional Bidders will be made at the Issue Price.

The Issue size less allocation to QIB Bidders, Retail Individual Bidders and Bidders under the
Employee Reservation Portion shall be available for allocation to Non-Institutional Bidders who
have bid in the Issue at a price that is equal to or greater than the Issue Price.

If the aggregate demand in this category is less than or equal to 795,000 Equity Shares at or
above the Issue Price, full allotment shall be made to Non-Institutional Bidders to the extent
of their demand.

In case the aggregate demand in this category is greater than 795,000 Equity Shares at or
above the Issue Price, allocation shall be made on a proportionate basis subject to a minimum
of [] Equity Shares . For the method of proportionate basis of allocation refer below.

C.

For QIBs

Bids received from the QIB Bidders at or above the Issue Price shall be grouped together to
determine the total demand under this category. The Allotment to all the QIB Bidders will be
made at the Issue Price.

The Issue size less allocation to Non-Institutional Portion, Retail Portion and Bidders under the
Employee Reservation Portion shall be available for proportionate allocation to QIB Bidders
who have bid in the Issue at a price that is equal to or greater than the Issue Price.

However, eligible Bids by Mutual Funds only shall first be considered for allocation
proportionately in the Mutual Fund Portion. After completing proportionate allocation to Mutual
Funds for an amount of up to 132,500 Equity Shares (the Mutual Fund Portion), the remaining
demand by Mutual Funds, if any, shall then be considered for allocation proportionately,
together with Bids by other QIBs, in the remainder of the QIB Portion (i.e. after excluding the
Mutual Fund Portion). For the method of allocation in the QIB Portion please see the paragraph
titled Illustration of Allotment to QIBs appearing below. If the aggregate demand by Mutual
Funds is less than 132,500 Equity Shares, the balance Equity Shares available for allocation in
the Mutual Fund Portion will first be added to the QIB Portion and allocated proportionately to
the QIB Bidders. In the event that the aggregate demand in the QIB Portion has been met,
under-subscription, if any, would be allowed to be met with spillover from any other category
or combination of categories at the discretion of our Company in consultation with the BRLM
and the Designated Stock Exchange. For the purposes of this paragraph it has been assumed
that the QIB Portion for the purposes of the Issue amounts to 50% of the Net Issue size, i.e.
2,650,000 Equity Shares.

Subject to the sectoral caps, allotment shall be undertaken in the following manner:
(a) In the first instance allocation to Mutual Funds for 5% of the QIB Portion shall be
determined as follows:
(i) In the event that Mutual Fund Bids exceeds 5% of the QIB Portion, allocation to
Mutual Funds shall be done on a proportionate basis for up to 5% of the QIB Portion.
(ii) In the event that the aggregate demand form Mutual Funds is less than 5% of the
QIB Portion then all Mutual Funds shall get full allotment to the extent of valid bids
received above the Issue Price.

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KHADIM INDIA LIMITED

(iii) Equity Shares remaining unsubscribed, if any, not allocated to Mutual Funds shall
be available to all QIB Bidders as set out in (b) below;
(b) In the second instance allocation to all QIBs shall be determined as follows:
(i) In the event that the over subscription in the QIB Portion, all QIB Bidders who have
submitted Bids above the Issue Price shall be allotted Equity Shares on a proportionate
basis for up to 95% of the QIB Portion.
(ii) Mutual Funds, who have received allocation as per (a) above, for less than the
number of Equity Shares Bid for by them, are eligible to receive Equity Shares on a
proportionate basis along with other QIB Bidders.
(iii) Under-subscription below 5% of the QIB Portion, if any, from Mutual Funds, would
be included for allocation to the remaining QIB Bidders on a proportionate basis;

D.

Except for any Equity Share allocated to QIB Bidders due to under subscription in the Retail
Portion and/or Non Institutional Portion, the aggregate allocation to QIB Bidders shall be made
on a proportionate basis up to a maximum of 2,650,000 Equity Shares and in multiples of []
Equity Shares thereafter. For the method of proportionate basis of allocation refer below.
For Employee Reservation Portion

Bids received from the Employees at or above the Issue Price shall be grouped together to
determine the total demand under this category. The allocation to all the successful Employees
will be made at the Issue Price.
If the aggregate demand in this category is less than or equal to 200,000 Equity Shares at or
above the Issue Price, full allocation shall be made to the Employees to the extent of their
demand.
If the aggregate demand in this category is greater than 200,000 Equity Shares at or above
the Issue Price, the allocation shall be made on a proportionate basis up to a minimum of
2,00,000 Equity Shares. For the method of proportionate basis of allocation, refer below.
Only Employees (as defined above) are eligible to apply under Employee Reservation Portion.

Method of Proportionate basis of allocation in the Issue


In the event the Issue is oversubscribed, the basis of Allotment shall be finalised by the
Company in consultation with the Designated Stock Exchange. The executive director (or
any other senior official nominated by them) of the Designated Stock Exchange along with
the BRLM and the Registrar to the Issue shall be responsible for ensuring that the basis of
Allotment is finalised in a fair and proper manner. Allotment to Bidders shall be made in
marketable lots on a proportionate basis as explained below:
Bidders will be categorized according to the number of Equity Shares applied for by them.
i.

The total number of Equity Shares to be allotted to each category as a whole shall be arrived
at on a proportionate basis, which is the total number of Equity Shares applied for in that
category (number of Bidders in the category multiplied by the number of Equity Shares
applied for) multiplied by the inverse of the over-subscription ratio.

ii.

Number of Equity Shares to be allotted to the successful Bidders will be arrived at on a


proportionate basis, which is total number of Equity Shares applied for by each Bidder in that
category multiplied by the inverse of the over-subscription ratio.

In all Bids where the proportionate allotment is less than [] Equity Shares per Bidder, the allotment
shall be made as follows:

Each successful Bidder shall be allotted a minimum of [] Equity Shares; and

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KHADIM INDIA LIMITED

The successful Bidders out of the total Bidders for a category shall be determined by
draw of lots in a manner such that the total number of Equity Shares allotted in that
category is equal to the number of Equity Shares calculated in accordance with (i)
above; and

If the proportionate allotment to a Bidder is a number that is more than [] but is not a multiple of
one (which is the market lot), the decimal would be rounded off to the higher whole number if that
decimal is 0.5 or higher. If that number is lower than 0.5, it would be rounded off to the lower whole
number. All Bidders in such categories would be allotted Equity Shares arrived at after such rounding
off.
If the Equity Shares allocated on a proportionate basis to any category are more than the Equity
Shares allotted to the Bidders in that category, the remaining Equity Shares available for allotment
shall be first adjusted against any other category, where the allotted Equity Shares are not sufficient
for proportionate allotment to the successful Bidders in that category. The balance Equity Shares, if
any, remaining after such adjustment will be added to the category comprising Bidders applying for
minimum number of Equity Shares.
Illustration of Allotment to QIBs and Mutual Funds (MF)
A. Issue Details
Sr. No.
1
2

Particulars
Issue Size
Allocation to QIB (50% of the Net Issue)
Of which:
a.
Reservation for Mutual Funds (5%)
b.
Balance for all QIBs including Mutual
Funds
Number of QIB Applicants
Number of Equity Shares applied for

3
4

Issue Details
200 million Equity Shares
100 million Equity Shares
5 million Equity Shares
95 million Equity Shares
10
500 million Equity Shares

B. Details of QIB Bids


SL. No.

Type of QIB Bidders *

No. of Equity Shares bid for (in million)

Q1

50

Q2

20

Q3

130

Q4

50

Q5

50

M1

40

M2

40

M3

80

M4

20

10

M5

20

Total

500

Q1-Q5 are QIB Bidders other than Mutual Funds


M1-M5 are QIB Bidders who are Mutual Funds

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KHADIM INDIA LIMITED

C. Details of Allotment to QIB Bidders/Applicants

Type of QIB
Bidders

Allocation of 5 million
Number of
Equity Shares Equity Shares to MF
Bid
Proportionately (Please
see Note 2 below)

(Number of Equity Shares in million)


Allocation of Balance 95 Aggregate
million Equity Shares to Allocation to
QIBs Proportionately
Mutual
(Please see Note 4
Funds
below)

(I)

(II)

(III)

(IV)

(V)

Q1

50

9.5

Q2

20

3.8

Q3

130

24.7

Q4

50

9.5

Q5

50

9.5

M1

40

7.6

8.6

M2

40

7.6

8.6

M3

80

15.2

17.2

M4

20

0.5

3.8

4.3

M5

20

0.5

3.8

4.3

500

95

43

Please Note:
1.

The illustration presumes compliance with the requirements specified in this Draft Red Herring
Prospectus in the section titled Issue Structure beginning on page 253.

2.

Out of 100 million Equity Shares allocated to QIBs, 5 million Equity Shares (i.e. 5%) will be
allocated on proportionate basis among the five Mutual Fund applicants who applied for 200
million Equity Shares in the QIB Portion.

3.

The balance 95 million Equity Shares [i.e. 100-5 (available for Mutual Funds only)] will be
allocated on proportionate basis among 10 QIB Bidders who applied for 500 million Equity
Shares (including 5 Mutual Fund applicants who applied for 200 million Equity Shares).

4.

The figures in the fourth column titled Allocation of balance 95 million Equity Shares to QIBs
proportionately in the above illustration are arrived as under:

For QIBs other than Mutual Funds (Q1 to Q5)= Number of Equity Shares Bid for * 95/495

For Mutual Funds (M1 to M5)= [(No. of shares bid for (i.e in column II of the table above)
less Equity Shares allotted ( i.e., column III of the table above)] * 95/495

The numerator and denominator for arriving at allocation of 95 million Equity Shares to
the 10 QIBs are reduced by 5 million Equity Shares, which have already been allotted to
Mutual Funds in the manner specified in column III of the table above.

DISPOSAL OF APPLICATIONS AND APPLICATION MONEYS


We shall ensure dispatch of allotment advice, refund orders, instructions to the clearing system for
electronic credit of refunds and give benefit to the beneficiary account with Depository Participants
within 15 days from the closure of the issue. We shall submit the documents pertaining to the
allotment to the Stock Exchanges within 2 (two) working days of date of finalisation of allotment of
Equity Shares. We shall dispatch refund orders, if any, of value up to Rs. 1,500, Under Certificate of

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KHADIM INDIA LIMITED

Posting, and shall dispatch refund orders above Rs. 1,500, if any, by registered post or speed post at
the sole or First Bidders sole risk.
For the purpose of refund, the details of bank accounts of applicants would be taken directly from the
Depositories database. The Registrar will send the electronic files with the refund data to the Bankers
to the Issue and the bankers to the issue shall send the refund files to the RBI system within 15 days
from the Bid/Issue Closing Date. A suitable communication shall be sent to the Bidders receiving
refunds through this mode within 15 days of Bid/Issue Closing Date, giving details of the bank where
refunds shall be credited along with amount and expected date of electronic credit of refund.
We shall use best efforts to ensure that all steps for completion of the necessary formalities for listing
and commencement of trading at all the Stock Exchanges where the Equity Shares are proposed to be
listed, are taken within 7 (seven) working days of finalisation of the basis of allotment.
In accordance with the Companies Act, the requirements of the Stock Exchanges and the SEBI
Guidelines we further undertake that:

allotment of Equity Shares shall be made only in dematerialised form within 15 (fifteen) days
of the Bid /Issue Closing Date;

dispatch of refund orders/ instructions to the clearing system for electronic credit of refunds
within 15 (fifteen) days of the Bid /Issue Closing Date would be ensured; and

we shall pay interest at 15% (fifteen) per annum (for any delay beyond the 15 (fifteen)-day
time period as mentioned above), if Allotment is not made and refund orders are not
dispatched/ instructions to the clearing system for electronic credit of refunds and/or demat
credits are not made to investors within the 15 (fifteen)-day time prescribed above as per the
guidelines issued by the Government of India, Ministry of Finance pursuant to their letter No.
F/8/S/79 dated July 31, 1983, as amended by their letter No. F/14/SE/85 dated September
27, 1985, addressed to the stock exchanges, and as further modified by SEBIs Clarification
XXI dated October 27, 1997, with respect to the SEBI Guidelines.

Refunds will be made by cheques, pay orders or demand drafts drawn on the Escrow Collection Banks
and payable at par at places where Bids are received except where the refund or portion thereof is
made in Electronic manner as described above. Bank charges, if any, for cashing such cheques, pay
orders or demand drafts at other centers will be payable by the Bidders.
Letters of allotment or refund orders
We shall give credit to the beneficiary account with Depository Participants within two working days
from the date of the allotment of Equity Shares. Applicants having bank accounts at any of the 15
centres where clearing houses are managed by the Reserve Bank of India (RBI) will get refunds
through Electronic Credit Service (ECS) only, except where applicant is otherwise disclosed as eligible
to get refunds through direct credit or Real Time Gross Settlement (RTGS). In case of other
applicants, the Company shall ensure dispatch of refund orders, if any, of value up to Rs. 1,500 by
Under Certificate of Posting, and shall dispatch refund orders above Rs. 1,500, if any, by registered
post or speed post. Applicants to whom refunds are made through Electronic transfer of funds will be
sent a letter (refund advice) through Under Certificate of Posting intimating them about the mode of
credit of refund within 15 days of closure of Issue.
The Company shall ensure dispatch of refund orders / refund advice, if any, by Under Certificate of
Posting or registered post or speed post or Electronic Clearing Service or Direct Credit or RTGS, as
applicable, only at the sole or First Bidders