SMC GLOBAL SECURITIES LIMITED - Cmlinks.com PUBLIC OFFER OF [ ] EQUITY SHARES OF FACE VALUE OF ` 2...

DRAFT RED HERRING PROSPECTUS

Dated October 20, 2014

(This Draft Red Herring Prospectus will be updated upon filing with the RoC)

Please read Section 32 of the Companies Act, 2013

100% Book Building Issue

SMC GLOBAL SECURITIES LIMITED Our Company was incorporated in New Delhi on December 19, 1994 under the Companies Act, 1956, as amended, as SMC Global Securities Limited, a public limited company, with the

Registrar of Companies, National Capital Territory of Delhi and Haryana, 4th Floor, IFCI Tower, 61, Nehru Place, New Delhi 110 019. Our Company received a certificate of

commencement of business on January 2, 1995.

Registered and Corporate Office: 11/6B, Shanti Chamber, Pusa Road, New Delhi 110 005, India Tel: +91 (11) 3011 1000 Fax: +91 (11) 2575 4365

For information on change in the registered office of our Company, see the section titled History and Other Corporate Matters on page 162.

Executive Vice President (Corporate Affairs), Company Secretary and Compliance Officer: Mr. Suman Kumar Tel: +91 (11) 3011 1000 Fax: +91 (11) 2575 4365

E-mail: [email protected] Website: www.smcindiaonline.com

OUR PROMOTERS: MR. SUBHASH CHAND AGGARWAL, MR. MAHESH CHAND GUPTA, MS. SUSHMA GUPTA AND MR. DAMODAR KRISHAN AGGARWAL

FURTHER PUBLIC OFFER OF [] EQUITY SHARES OF FACE VALUE OF ` 2 EACH (EQUITY SHARES) OF SMC GLOBAL SECURITIES LIMITED (SMC GLOBAL OR OUR COMPANY) AGGREGATING up to ` 1,250 MILLION (HEREINAFTER REFERRED TO AS THE ISSUE). THE ISSUE COMPRISES A FRESH ISSUE OF [] EQUITY SHARES AGGREGATING UP TO ` 1,070 MILLION BY OUR COMPANY (THE FRESH ISSUE) AND AN OFFER FOR SALE OF [] EQUITY SHARES AGGREGATING UP TO ` 180 MILLION (THE OFFER FOR SALE) BY MILLENNIUM INVESTMENT & ACQUISITION COMPANY INC. (THE SELLING SHAREHOLDER), THE ISSUE WOULD CONSTITUTE [] % OF THE POST ISSUE PAID-UP EQUITY CAPITAL OF OUR COMPANY.

THE FACE VALUE OF THE EQUITY SHARE IS ` 2 EACH AND THE ISSUE PRICE IS [] TIMES THE FACE VALUE. THE PRICE BAND AND THE MINIMUM BID LOT WILL BE DECIDED BY OUR COMPANY AND THE SELLING SHAREHOLDER IN CONSULTATION WITH THE

BOOK RUNNING LEAD MANAGER AND THE CO-BOOK RUNNING LEAD MANAGER AND PUBLISHED ATLEAST ONE WORKING DAY PRIOR TO THE BID

OPENING DATE, IN ONE HINDI NATIONAL DAILY NEWSPAPER AND ONE ENGLISH NATIONAL DAILY NEWSPAPER, EACH WITH WIDE CIRCULATION

(HINDI ALSO BEING THE REGIONAL LANGUAGE IN THE STATE WHERE THE REGISTERED OFFICE IS LOCATED), WITH THE RELEVANT FINANCIAL

RATIOS CALCULATED AT THE FLOOR PRICE AND AT THE CAP PRICE AND WILL ALSO BE MADE AVAILABLE TO THE STOCK EXCHANGES (AS DEFINED

BELOW) FOR THE PURPOSE OF UPLOADING ON THEIR WEBSITES.

In case of revision in the Price Band, the Bidding Period will be extended for at least three additional Working Days after the revision of the Price Band subject to the Bidding Period not

exceeding 10 Working Days. Any revision in the Price Band and the revised Bidding Period, if applicable, will be widely disseminated by notification to the Stock Exchanges, by issuing a

press release, and also by indicating the change on the websites of the Book Running Lead Manager (BRLM) and the Co-Book Running Lead Manager (CBRLM) and the Self

Certified Syndicate Banks (SCSBs) and at the terminals of the members of the Syndicate.

This Issue is being made through the Book Building Process where 50% of the Issue will be allocated on a proportionate basis to Qualified Institutional Buyers (QIBs) (QIB Portion).

Our Company and the Selling Shareholder may, in consultation with the BRLM and the CBRLM, allocate up to 60% of the QIB Portion to Anchor Investors at the Anchor Investor

Allocation Price, on a discretionary basis, out of which at least one-third will be available for allocation to domestic Mutual Funds only. In the event of under-subscription or non-

allocation in the Anchor Investor Portion, the balance Equity Shares shall be added to the Net QIB Portion. Such number of Equity Shares representing 5% of the Net QIB Portion shall be

available for allocation on a proportionate basis to Mutual Funds only. The remainder of the Net QIB Portion shall be available for allocation on a proportionate basis to QIBs, including

mutual funds, subject to valid Bids being received from them at or above the Issue Price. However, if the aggregate demand from Mutual Funds is less than [] Equity Shares, the balance

Equity Shares available for allocation in the Mutual Fund Portion will be added to the Net QIB Portion and allocated proportionately to QIBs in proportion to their Bids. Further, not less

than 15% of the Issue shall be available for allocation on a proportionate basis to Non-Institutional Bidders and not less than 35% of the Issue shall be available for allocation to Retail

Individual Bidders, in accordance with SEBI ICDR Regulations, subject to valid Bids being received from them at or above the Issue Price. All Investors other than Anchor Investors may

participate in this Issue though the Application Supported by Blocked Amount (ASBA) process by providing the details of their respective ASBA Accounts. QIBs (other than Anchor

Investors) and Non-Institutional Bidders shall mandatorily participate in the Issue through the ASBA process. For more information, specific attention is invited to the section titled Issue

Procedure on page 430.

GENERAL RISKS

Investments in equity and equity-related securities involve a degree of risk and Bidders should not invest any funds in this Issue unless they can afford to take the risk of losing their

investment. Bidders are advised to read the Risk Factors carefully before taking an investment decision in this Issue. For making an investment decision, Bidders must rely on their own

examination of our Company and this Issue, including the risks involved. The Equity Shares offered in this Issue have not been recommended or approved by the Securities and Exchange

Board of India (SEBI), nor does SEBI guarantee the accuracy or adequacy of this Draft Red Herring Prospectus. Specific attention of the Bidders is invited to the section titled Risk

Factors on page 19.

COMPANYS AND THE SELLING SHAREHOLDERS ABSOLUTE RESPONSIBILITY

Our Company, having made all reasonable inquiries, accepts responsibility for and confirms that this Draft Red Herring Prospectus contains all information with regard to our Company

and the Issue, which is material in the context of the Issue, that the information contained in this Draft Red Herring Prospectus is true and correct in all material aspects and is not

misleading in any material respect, that the opinions and intentions expressed herein are honestly held and that there are no other facts, the omission of which make this Draft Red Herring

Prospectus as a whole or any of such information or the expression of any such opinions or intentions misleading in any material respect.

The Selling Shareholder having made all reasonable inquiries, accepts responsibility for and confirms the information relating to such Selling Shareholder contained in this Draft Red

Herring Prospectus is true and correct in all material aspects and is not misleading in any material respect.

LISTING

The Equity Shares of our Company are listed on the DSE, the LSE, the CSE and the ASE and we propose to list our Equity Shares on the BSE and the NSE. We have received in-principle

approval from the DSE, the LSE, the CSE, the ASE, the BSE and the NSE for the listing of the Equity Shares issued and transferred, as applicable, in the Issue pursuant to letters dated []

, [] , [] , [] , [] , [] and [] respectively. [] is the Designated Stock Exchange.

BOOK RUNNING LEAD MANAGER CO-BOOK RUNNING LEAD MANAGER REGISTRAR TO THE ISSUE

ICICI Securities Limited

ICICI Centre,

H.T.Parekh Marg

Churchgate, Mumbai 400020

Tel: + 91 22 2288 2460/70

Fax: + 91 22 2282 6580

Email: [email protected]

Investor Grievance Email:

[email protected]

Website: www.icicisecurities.com

Contact Person: Mr. Abhishek Jain / Mr. Mangesh Ghogle

SEBI Registration No.: INM000011179

Elara Capital (India) Private Limited

Indiabulls Finance Centre, Tower 3, 21st Floor,

Senapati Bapat Marg, Elphinstone Road (West)

Mumbai 400 013

Tel: +91 (22) 3032 8599

Fax: +91 (22) 3032 8589



[email protected]

Website: www.elaracapital.com

Contact Person: Mr. Pavan Naik

SEBI Registration No.: INM000011104

Link Intime India Private Limited

C-13, Pannalal Silk Mills Compound,

L.B.S Marg, Bhandup (West)

Mumbai 400 078, India

Tel: +91 (22) 6171 5400

Fax: +91 (22) 2596 0329



[email protected]

Website: www.linkintime.co.in

Contact Person: Mr. Sachin Achar

SEBI Registration No: INR000004058

BID/ISSUE PROGRAMME

BID / ISSUE OPENING

DATE* []

BID CLOSES ON (FOR QIB BIDDERS)# []

BID CLOSES ON (FOR ALL OTHER BIDDERS) []

* Our Company and the Selling Shareholder in consultation with the BRLM and the CBRLM may consider participation by Anchor Investors. The Anchor Investors shall Bid

during the Anchor Investor Bidding Period, i.e., one Working Day prior to the Bid / Issue Opening Date. #Our Company and the Selling Shareholder in consultation with the BRLM and the CBRLM may consider closing the QIB Bidding Period a day before the Bid Closing Date

for other Bidders.

mailto:[email protected]://www.icicisecurities.com/

i

TABLE OF CONTENTS

SECTION I GENERAL .................................................................................................................................... 1

DEFINITIONS AND ABBREVIATIONS ......................................................................................................... 1 CERTAIN CONVENTIONS, USE OF FINANCIAL INFORMATION AND MARKET DATA AND

CURRENCY OF PRESENTATION ................................................................................................................ 15 FORWARD-LOOKING STATEMENTS ........................................................................................................ 18

SECTION II RISK FACTORS ...................................................................................................................... 19

RISK FACTORS .............................................................................................................................................. 19

SECTION III INTRODUCTION ................................................................................................................... 44

SUMMARY OF INDUSTRY ........................................................................................................................... 44 SUMMARY OF BUSINESS ............................................................................................................................ 47 SUMMARY OF FINANCIAL INFORMATION ............................................................................................. 54 THE ISSUE ...................................................................................................................................................... 65 GENERAL INFORMATION ........................................................................................................................... 67 CAPITAL STRUCTURE ................................................................................................................................. 78

SECTION IV PARTICULARS OF THE ISSUE .......................................................................................... 97

OBJECTS OF THE ISSUE ............................................................................................................................... 97 BASIS OF ISSUE PRICE ............................................................................................................................... 103 STATEMENT OF TAX BENEFITS .............................................................................................................. 107

SECTION V ABOUT US .............................................................................................................................. 124

INDUSTRY OVERVIEW .............................................................................................................................. 124 OUR BUSINESS ............................................................................................................................................ 135 KEY INDUSTRY REGULATIONS .............................................................................................................. 150 HISTORY AND OTHER CORPORATE MATTERS .................................................................................... 162 OUR MANAGEMENT .................................................................................................................................. 179 PROMOTER AND GROUP COMPANIES ................................................................................................... 194 DIVIDEND POLICY ..................................................................................................................................... 205

SECTION VI FINANCIAL INFORMATION ............................................................................................ 206

FINANCIAL STATEMENTS ........................................................................................................................ 206 MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF

OPERATION.................................................................................................................................................. 323 MARKET PRICE INFORMATION ............................................................................................................... 345 FINANCIAL INDEBTEDNESS .................................................................................................................... 346

SECTION VII LEGAL AND OTHER INFORMATION .......................................................................... 349

OUTSTANDING LITIGATION AND MATERIAL DEVELOPMENTS ..................................................... 349 GOVERNMENT AND OTHER APPROVALS ............................................................................................. 382 OTHER REGULATORY AND STATUTORY DISCLOSURES .................................................................. 406

SECTION VIII ISSUE INFORMATION .................................................................................................... 421

TERMS OF THE ISSUE ................................................................................................................................. 421 ISSUE STRUCTURE ..................................................................................................................................... 424 ISSUE PROCEDURE ..................................................................................................................................... 430 MAIN PROVISIONS OF THE ARTICLES OF ASSOCIATION .................................................................. 483

SECTION IX OTHER INFORMATION .................................................................................................... 526

MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION ........................................................ 526 DECLARATION BY THE SELLING SHAREHOLDER .............................................................................. 528 DECLARATION BY THE ISSUER............................................................................................................... 529

1

SECTION I GENERAL

DEFINITIONS AND ABBREVIATIONS

Unless the context otherwise indicates or implies, the following terms have the following meanings in this Draft

Red Herring Prospectus, and references to any statute or regulations or policies will include any amendments or

re-enactments thereto, from time to time. In case of any inconsistency between the definitions given below and

the definitions contained in the General Information Document (as defined below), the definitions given below

shall prevail.

Company Related Terms

Term Description

SMC Global, the

Company and Our

Company

SMC Global Securities Limited, a public limited company incorporated under the

Companies Act with its registered office at 11/6B, Shanti Chamber, Pusa Road, New

Delhi 110 005, India

AoA/Articles of

Association or Articles

The articles of association of our Company, as amended from time to time

Audit Committee The audit committee of the Board of Directors described in the section titled Our

Management on page 179

Auditors The statutory auditors of our Company, being M/s. R. Gopal & Associates,

Chartered Accountants

Board or Board of

Directors

The board of Directors of our Company, as duly constituted from time to time

including any committees thereof.

Corporate Office The corporate office of our Company, at 11/6B, Shanti Chamber, Pusa Road, New

Delhi 110 005

Director(s) Unless the context requires otherwise, the director(s) on our Board.

Group Companies/Group The companies, firms, ventures, etc. promoted by our Promoters, as described in the

section titled Our Promoters and Group Companies on page 194 of this Draft Red

Herring Prospectus, irrespective of whether such entities are covered under section

370 (1)(B) of the Companies Act or not.

Key Managerial

Personnel

The personnel listed as key managerial personnel in the section titled Our


Millennium Millennium Investment & Acquisition Company Inc. (formerly known as

Millennium India Acquisition Company Inc.)

MoA/Memorandum of

Association

The memorandum of association of our Company, as amended from time to time

Promoter The promoters of our Company - Mr. Subhash Chand Aggarwal, Mr. Mahesh Chand

Gupta, Ms. Sushma Gupta and Mr. Damodar Krishan Aggarwal

Promoter Group Unless the context otherwise requires, refers to such persons and entities constituting

the promoter group of our Company, in terms of regulation 2(1)(zb) of the SEBI

ICDR Regulations and mentioned in the section titled Promoter and Group

Companies on page 194

Public Issue and Listing

Committee

The public issue and listing committee of the Board of Directors described in the

section titled Our Management on page 179

Registered Office The registered office of our Company situated at 11/6B, Shanti Chamber, Pusa Road,

New Delhi 110 005, India

Selling Shareholder Millennium Investment & Acquisition Company Inc. (formerly known as

2

Term Description

Millennium India Acquisition Company Inc.)

Senior Management

Personnel

The personnel listed as senior management personnel in the section titled Our


Subsidiaries SMC Capitals Limited, SMC Comtrade Limited, SMC Insurance Brokers Private

Limited, SMC Comex International DMCC, Moneywise Financial Services Private

Limited, SMC ARC Limited, SMC Investments and Advisors Limited, SMC Finvest

Limited, Moneywise Finvest Limited and SMC Real Estate Advisors Private Limited

We or us or our Our Company and where the context requires, the Subsidiaries on a consolidated

basis

Issue Related Terms

Term Description

Allotted/Allotment/Allot Unless the context otherwise requires, means the allotment of Equity Shares

pursuant to the Fresh Issue and the transfer of Equity Shares pursuant to Offer for

Sale to successful Bidders pursuant to this Issue.

Allottee A successful Bidder to whom the Equity Shares are Allotted

Allotment Advice The advice or intimation of Allotment of the Equity Shares sent to the Bidders who

are to be Allotted the Equity Shares after the discovery of the Issue Price in

accordance with the Book Building Process.

Anchor Investor A Qualified Institutional Buyer, applying under the Anchor Investor Portion, who

has Bid for an amount of at least ` 1,00 million.

Anchor Investor

Allocation Notice

Notice or intimation of allocation of Equity Shares sent to Anchor Investors who

have been allocated Equity Shares, and includes any device, intimation or notice sent

to Anchor Investors in the event that the Issue Price is higher than the Anchor

Investor Allocation Price.

Anchor Investor

Allocation Price

The price at which Equity Shares will be allocated in terms of the Red Herring

Prospectus and Prospectus to the Anchor Investors, which will be decided by our

Company and the Selling Shareholder, in consultation with the BRLM and CBRLM

prior to the Bid Opening Date.

Anchor Investor Bidding

Date

The day, one Working Day prior to the Bid/Issue Opening Date on which Bids by

Anchor Investors shall be submitted, prior to or after which the members of the

Syndicate will not accept any Bids from Anchor Investors and allocation to Anchor

Investors shall be completed.

Anchor Investor Issue

Price

The price at which Allotment will be made to Anchor Investors in terms of the Red

Herring Prospectus and the Prospectus, which shall be higher than or equal to the

Issue Price. The Anchor Investor Issue Price will be decided by our Company and

the Selling Shareholder, in consultation with the BRLM and the CBRLM

Anchor Investor Pay-in

Date

With respect to Anchor Investors, it shall be the Anchor Investor Bidding Date, and,

in the event the Anchor Investor Allocation Price is lower than the Issue Price, not

later than two Working Days after the Bid/Issue Closing Date.

Anchor Investor Portion Up to 60% of the QIB Portion, which may be allocated by our Company and the

Selling Shareholder, in consultation with the BRLM and the CBRLM, to Anchor

Investors on a discretionary basis, out of which one-third shall be reserved for

domestic Mutual Funds, subject to valid Bids being received from domestic Mutual

Funds at or above the Anchor Investor Allocation Price.

Application Supported by

Blocked Amount/

Application (whether physical or electronic) used by a Bidder to make a Bid

authorizing the SCSB to block the Bid Amount in the specified bank account

maintained with the SCSB. ASBA is mandatory for QIBs (except Anchor Investors)

3

Term Description

ASBA and Non-Institutional Bidders participating in the Issue

ASBA Account An Account maintained with an SCSB and specified in the Bid cum Application

Form submitted by ASBA Bidders for blocking the amount mentioned in the Bid

cum Application Form

ASBA Bid A Bid made by an ASBA Bidder

ASBA Bidder Any Bidder, other than Anchor Investors, who Bids through ASBA

ASBA Form The form, whether physical or electronic, by which an ASBA Bidder can make a

Bid, authorising an SCSB to block the Bid Amount in the ASBA Account

maintained with such SCSB pursuant to the terms of the Red Herring Prospectus

ASBA Revision Form The form used by an ASBA Bidder to modify the quantity of Equity Shares or the

Bid Amount in any of its ASBA Forms or previous ASBA Revision Forms (if

submitted in physical form)

Bankers to the

Issue/Escrow Collection

Banks

The banks which are clearing members and registered with SEBI as bankers to an

issue and with whom the Escrow Account will be opened, in this case being []

Basis of Allotment The basis on which the Equity Shares will be Allotted to the successful Bidders

under the Issue, as described in the section titled Issue Procedure Basis of

Allotment on page 471

Bid An indication to make an offer during the Bidding/Issue Period by a Bidder (other

than an Anchor Investor) or on the Anchor Investor Bidding Date by an Anchor

Investor, pursuant to submission of an ASBA Form or a Bid-cum-Application Form

to subscribe for Equity Shares, at a price within the Price Band, including all

revisions and modifications thereto

Bidding The process of making a Bid

Bid Amount The highest value of optimal Bids indicated in the Bid cum Application Form and in

the case of Retail Individual Bidders Bidding at Cut-Off Price, the Cap Price

multiplied by the number of Equity Shares Bid for by such Retail Individual Bidder

and mentioned in the Bid cum Application Form

Bid/Issue Closing Date Except in relation to Anchor Investors, the date after which the Syndicate, the

SCSBs and the Registered Brokers will not accept any Bids, and which shall be

notified in an English national daily newspaper, a Hindi national daily newspaper

(Hindi also being the regional language in the state where the Registered Office is

located), each with wide circulation and in case of any revision, the extended Bid

Closing Date also to be notified on the website and terminals of the Syndicate and

SCSBs, as required under the SEBI ICDR Regulations. Further, our Company and

the Selling Shareholder, in consultation with the BRLM and the CBRLM, may

decide to close Bidding by QIBs one day prior to the Bid Closing Date.

Bidding Centre / Bidding

Location

Centres for acceptance of the Bid-cum-Application Forms and Revision Forms and

shall include Registered Broker Centres.

Bid cum Application

Form

The form used by a Bidder, including an ASBA Bidder, to make a Bid and which

will be considered as the application for Allotment in terms of the Red Herring

Prospectus

Bidder A prospective investor in this Issue, and unless otherwise stated or implied, includes

an ASBA Bidder and Anchor Investor.

Bid/Issue Opening Date Except in relation to Anchor Investors, the date on which the Syndicate, the SCSBs

and the Registered Brokers shall start accepting Bids, and which shall be the date

notified in an English national daily newspaper, a Hindi national daily newspaper

4

Term Description

each with wide circulation (Hindi also being the regional language in the state where

the Registered Office is located).

Bid/Issue Period The period between the Bid/Issue Opening Date and the Bid/Issue Closing Date or

the QIB Bid/Issue Closing Date, as the case may be (in either case inclusive of such

date and the Bid Opening Date) during which Bidders, other than Anchor Investors,

can submit their Bids. Provided however that the Bidding shall be kept open for a

minimum of three Working Days for all categories of Bidders, other than Anchor

Investors.

Book Building Process The method of book building as described in Part A of Schedule XI of the SEBI

ICDR Regulations, in terms of which the Issue is being made

Book Running Lead

Managers / BRLM

The book running lead manager to the Issue, i.e. ICICI Securities Limited

CAN/Confirmation of

Allotment Note

In relation to Anchor Investors, the note or advice or intimation of allocation of

Equity Shares sent to successful Anchor Investors who have been allocated Equity

Shares after discovery of the Anchor Investor Issue Price, including any revisions

thereof

Cap Price Higher end of the Price Band, including revisions thereof, above which the Issue

Price will not be determined and above which no Bids will be accepted

Client ID Client identification number of the bidders beneficiary account

Co-Book Running Lead

Manager/CBRLM

The Co-Book Running Lead Manager, i.e. Elara Capital (India) Private Limited

Controlling Branches of

the SCSBs

Such branches of the SCSBs which coordinate Bids under the Issue by the ASBA

Bidders with the Registrar to the Issue and the Stock Exchanges, a list of which is

available on the SEBI website

Cut-off Price Any price within the Price Band determined by our Company and the Selling

Shareholder in consultation with the BRLM and the CBRLM, as the Issue Price, at

which only the Retail Individual Bidders are entitled to Bid, for Equity Shares of an

amount not exceeding ` 2,00,000.

Demographic Details The address, the bank account details, MICR code and occupation of a Bidder

Depository A depository registered with the SEBI under the Depositories Act, 1996.

Depositories Act The Depositories Act, 1996, as amended from time to time.

Depository Participant

or DP

A depository participant registered with the SEBI under the Depositories Act.

Designated Branches Such branches of the SCSBs which will collect the Bid cum Application Form used

by ASBA Bidders, a list of which is available on

http://www.sebi.gov.in/pmd/scsb.html or at such other website which may be

prescribed by SEBI from time to time

Designated Date The date on which funds are transferred from the Escrow Accounts to the Public

Issue Account and the Registrar to Issue issues instructions to SCSBs for transfer of

funds from ASBA Accounts to the Public Issue Account in terms of the Red Herring

Prospectus

Designated Stock

Exchange

[]

Draft Red Herring

Prospectus or DRHP

This draft red herring prospectus dated October 20, 2014, filed with SEBI, prepared

and issued in accordance with the SEBI ICDR Regulations, which does not contain

complete particulars of the price at which the Equity Shares will be Allotted and the

5

Term Description

size of the Issue

Elara Elara Capital (India) Private Limited

Eligible NRI NRI(s) from jurisdictions outside India where it is not unlawful to make an offer or

invitation under the Issue and in relation to whom the Bid cum Application Form

and the Red Herring Prospectus will constitute an invitation to purchase the Equity

Shares

Eligible QFI Qualified Foreign Investors from such jurisdictions outside India where it is not

unlawful to make an offer or invitation under the Offer and in relation to whom the

Draft Red Herring Prospectus constitutes an invitation to purchase the Equity Shares

offered thereby and who have opened dematerialised accounts with SEBI registered

qualified depositary participants and are deemed as FPIs under the SEBI FPI

Regulations

Equity Listing

Agreement(s)

Equity listing agreement(s) entered into by our Company with the Stock Exchanges,

including all amendments made thereto from time to time.

Equity Share(s) Equity shares of our Company with a face value of ` 2 each.

Escrow Account(s) Accounts opened with the Escrow Collection Banks for the Issue and in whose

favour the Bidders (excluding ASBA Bidders) will issue cheques or drafts in respect

of the Bid Amount

Escrow Agreement Agreement to be entered into by our Company, the Selling Shareholder, the

Registrar to the Issue, the BRLM, the CBRLM, the Syndicate Members, the Escrow

Collection Bank(s) and the Refund Bank(s) for collection of the Bid Amounts and

where applicable, refunds of the amounts collected from the Bidders (excluding the

ASBA Bidders), on the terms and conditions thereof

First Bidder The Bidder whose name appears first in the Bid cum Application Form or the

Revision Form as the case may be

Floor Price Lower end of the Price Band and any revisions thereof, below which the Issue Price

will not be finalized and no Bids will be accepted

Fresh Issue Fresh issue of [] Equity Shares by our Company aggregating up to ` 1,070 million, in terms of this Draft Red Herring

General Information

Document

The General Information Document for investing in public issues prepared and

issued in accordance with the circular (CIR/CFD/DIL/12/2013) dated October 23,

2013, notified by SEBI and included in Issue Procedure on page 430

ICICI Securities/I-Sec ICICI Securities Limited

Issue Further public Issue up to ` 1,250 million comprising of the Fresh Issue and the Offer for Sale

Issue Agreement The agreement dated October 15, 2014 entered into amongst our Company, the

Selling Shareholder, the BRLM and the CBRLM pursuant to which certain

arrangements are agreed to in relation to the Issue

Issue Price The price at which Allotment will be made, as determined by our Company and the

Selling Shareholder in consultation with the BRLM and the CBRLM. Unless

otherwise stated or the context otherwise implies, the term Issue Price refers to the

Issue Price applicable to investors other than Anchor Investors.

Issue Proceeds The proceeds of the Issue that is available to our Company and the Selling

Shareholder

Maximum RII Allottees The maximum number of RIIs who can be allotted the minimum Bid Lot. This is

computed by dividing the total number of Equity Shares available for Allotment to

RIIs by the minimum Bid Lot

6

Term Description

Maximum RII Allottees The maximum number of RIIs who can be allotted the minimum Bid Lot. This is

computed by dividing the total number of Equity Shares available for Allotment

to RIIs by the minimum Bid Lot

Mutual Funds Mutual funds registered with SEBI under the SEBI (Mutual Funds) Regulations,

1996, as amended

Mutual Funds Portion 5% of the Net QIB Portion or [] Equity Shares available for allocation to Mutual

Funds only.

Net Proceeds Proceeds from the Issue after deducting the proportionate Underwriting and Issue

management fee, selling commission and other deductions of Issue expenses along

with deducting the proceeds from the Offer for Sale.

Net QIB Portion The portion of the QIB Portion less the number of Equity Shares Allotted to the

Anchor Investors.

Non-Institutional Bidders All Bidders, that are not QIBs and Retail Bidders who have Bid for Equity Shares

for an amount more than ` 2,00,000 (but not including NRIs other than Eligible NRIs)

Non-Institutional Portion The portion of the Issue being not less than 15% of the Issue consisting of [] Equity

Shares, available for allocation to Non-Institutional Bidders, on a proportionate

basis.

Non-Resident A person resident outside India, as defined under FEMA and includes a Non-

Resident Indian and FIIs registered with SEBI

Non-Resident Indian or

NRI

A person resident outside India, who is a citizen of India or a person of Indian origin

and will have the same meaning as ascribed to such term in the Foreign Exchange

Management (Deposit) Regulations, 2000, as amended

Offer for Sale Offer for Sale of [] Equity Shares aggregating up to ` 180 million by the Selling Shareholder

Price Band The price band ranging from the Floor Price to the Cap Price, including any

revisions thereof.

Pricing Date The date on which our Company and the Selling Shareholder, in consultation with

the BRLM and the CBRLM will finalize the Issue Price

Prospectus The prospectus of our Company to be filed with the RoC for this Issue after the

Pricing Date, in accordance with Sections 26 of the Companies Act, 2013 and the

SEBI ICDR Regulations, containing amongst other things, the Issue Price as

determined at the end of the Book Building Process, the size of the Issue and certain

other information.

Public Issue Account The bank account opened with the Escrow Collection Banks by our Company under

Section 40 of the Companies Act, 2013 to receive money from the Escrow Accounts

on the Designated Date and where the funds shall be transferred by the SCSBs from

the ASBA Accounts.

Qualified Foreign

Investors or QFIs

Non-resident investors, other than SEBI registered FIIs or sub-accounts or SEBI

registered FVCIs, who meet know your client requirements prescribed by SEBI

and are resident in a country which is (i) a member of Financial Action Task Force

or a member of a group which is a member of Financial Action Task Force; and (ii) a

signatory to the International Organization of Securities Commissions Multilateral

Memorandum of Understanding or a signatory of a bilateral memorandum of

understanding with SEBI.

Provided that such non-resident investor shall not be resident in a country which is

listed in the public statements issued by Financial Action Task Force from time to

time on: (i) jurisdictions having a strategic anti-money laundering/combating the

7

Term Description

financing of terrorism deficiencies to which counter measures apply; and (ii)

jurisdictions that have not made sufficient progress in addressing the deficiencies or

have not committed to an action plan developed with the Financial Action Task

Force to address the deficiencies.

Provided that such non-resident investor has opened a dematerialized account with a

qualified depository participant as a qualified foreign investor

Qualified Institutional

Buyers or QIBs

Qualified institutional buyers as defined under Regulation 2(1)(zd) of the SEBI

ICDR Regulations

QIB Bid/Issue Closing

Date

In the event our Company and the Selling Shareholder, in consultation with the

BRLM and the CBRLM, decides to close Bidding by QIBs one Working Day prior

to the Bid/Issue Closing Date, the date one Working Day prior to the Bid/Issue

Closing Date; otherwise it shall be the same as the Bid/Issue Closing Date.

QIB Category or QIB

Portion

The portion of the Issue being 50% of the Issue or [] Equity Shares available for

allocation to QIBs (including the Anchor Investor Portion), on a proportionate basis.

Red Herring Prospectus

or RHP

The red herring prospectus dated [] to be issued in accordance with Section 32 of

the Companies Act, 2013 and the SEBI ICDR Regulations, which does not contain

inter-alia, complete particulars of the price at which Equity Shares are offered.

Refund Accounts Account(s) opened with Refund Bank(s) from which refunds of the whole or part of

the Bid Amount (excluding the ASBA Bidders), if any, will be made

Refund Bank(s) The banks which are clearing members and registered with SEBI under the SEBI

(Bankers to an Issue) Regulations, 1994 with whom the Refund Account(s) will be

opened, in this case being []

Registered Broker(s) Broker(s) registered with the stock exchanges having its office at any of the

Registered Broker Centres and shall not include Syndicate and sub-Syndicate

members.

Registered Broker

Centres

Broker centres as notified by the Stock Exchanges, where Bidders can submit the

Bid-cum-Application Forms to a Registered Broker. The details of such broker

centres are available on the websites of BSE and NSE at http://www.bseindia.com/

and http://www.nseindia.com/, respectively.

Refunds through

electronic transfer of

funds

Refunds through NECS, NEFT, direct credit or RTGS, as applicable.

Registrar or Registrar

to the Issue

Link Intime India Private Limited

Registrars Agreement The agreement dated October 14, 2014 entered into between our Company, the

Selling Shareholder and the Registrar to the Issue pursuant to which certain

arrangements are agreed to in relation to the Issue

Retail Individual Bidders Individual Bidders (including HUFs and Eligible NRIs), who have Bid for an

amount less than or equal to ` 2,00,000 in any of the bidding options in the Issue.

Retail Portion The portion of the Net Issue, being not less than 35% of the Issue, or [] Equity

Shares at the Issue Price, available for allocation to Retail Bidders

Revision Form The form used by the Bidders, other than ASBA Bidders, to modify the quantity of

Equity Shares or the Bid Amount in any of their Bid cum Application Forms or any

previous Revision Form(s), as applicable.

Self-Certified Syndicate

Bank or SCSB

The list of banks that have been notified by SEBI to act as SCSBs for the ASBA

process is available on the SEBI website at the link

http://www.sebi.gov.in/sebiweb/home/list/5/33/0/0/Recognised-Intermediaries, and

8

Term Description

at such other websites as may be prescribed by SEBI from time to time. For details

of the Designated Branches with which ASBA Forms can be physically submitted,

please refer to the above-mentioned link.

Specified Cities Cities specified in the SEBI circular no. CIR/CFD/DIL/1/2011 dated April 29, 2011,

namely, Mumbai, Chennai, Kolkata, Delhi, Ahmedabad, Rajkot, Jaipur, Bengaluru,

Hyderabad, Pune, Baroda and Surat.

Stock Exchanges Refers collectively to the Delhi Stock Exchange Limited (DSE), Ludhiana Stock

Exchange Limited (LSE), Calcutta Stock Exchange Limited (CSE), Ahmedabad

Stock Exchange Limited (ASE), the BSE Limited (BSE) and the National Stock

Exchange of India Limited (NSE)

Syndicate Collectively, the BRLM, the CBRLM and the Syndicate Members

Syndicate Agreement The agreement to be entered into amongst the Syndicate, the Selling Shareholder and

our Company in relation to the collection of Bids (excluding Bids from the ASBA

Bidders) in this Issue

Syndicate ASBA A Bid submitted by an ASBA Bidder through the members of the Syndicate or their

respective sub-Syndicate members at the Syndicate ASBA Centres instead of the

Designated Branches.

Syndicate ASBA Centre The bidding centres of the members of the Syndicate or their respective sub

Syndicate located at the locations of the Registered Brokers and such other centres as

may be prescribed by SEBI from time to time, wherein, pursuant to the SEBI

circular dated January 23, 2013 bearing no. CIR/CFD/DIL/4/2013, ASBA Bidders

are permitted to submit their Bids in physical form.

Syndicate Members []

Transaction Registration

Slip or TRS

The slip or document issued by any of the members of the Syndicate, or the SCSBs

or the Registered Brokers, as the case may be, to a Bidder upon demand as proof of

registration of the Bid.

Underwriters The BRLM, the CBRLM and the Syndicate Members

Underwriting

Agreement(s)

The agreement to be entered into between the CBRLM, the BRLM, the Selling

Shareholder and our Company, before filing of the Red Herring Prospectus with

RoC and/or the agreement to be entered into between the Underwriters, the Selling

Shareholder and our Company, on or immediately after the Pricing Date.

Working Day Any day, other than Saturdays and Sundays, on which commercial banks in Mumbai

are open for business, provided however, for the purpose of the time period between

the Bid/Issue Closing Date and listing of the Equity Shares on the Stock Exchanges,

Working Days shall mean all days excluding Sundays and bank holidays in Delhi

or Mumbai in accordance with the SEBI circular no. CIR/CFD/DIL/3/2010 dated

April 22, 2010

Conventional and General Terms/ Abbreviations and References to Other Business Entities

Term Description

ACIT Assistant Commissioner of Income Tax

AIFs Alternative Investment Funds as defined and registered with SEBI under the AIF

Regulations

AIF Regulations Securities and Exchange Board of India (Alternative Investments Funds)

Regulations, 2012, as amended

AGM Annual General Meeting

9

Term Description

AS Accounting Standards as issued by the Institute of Chartered Accountants of India

A.Y. Assessment Year

BAN Beneficiary account number

BSE The BSE Limited

Category I Foreign

Portfolio Investors

FPIs who are registered as Category I foreign portfolio investors under the FPI

Regulations

Category II Foreign

Portfolio Investors

FPIs who are registered as Category II foreign portfolio investors under the FPI

Regulations

Category III Foreign

Portfolio Investors

FPIs who are registered as Category III foreign portfolio investors under the FPI

Regulations

CAGR Compounded annual growth rate

CDSL Central Depository Services (India) Limited

CIT(A) Commissioner of Income Tax (Appeals)

Companies Act The Companies Act, 1956 (without reference to the provisions thereof that have

ceased to have effect upon the notification of the Notified Sections) and the

Companies Act, 2013.

Companies Act, 1956 The Companies Act, 1956, as amended.

Companies Act, 2013 The Companies Act, 2013, to the extent in force pursuant to the notification of the

Notified Sections

Competition Act The Competition Act, 2002, as amended

CSR Corporate social responsibility

DCIT Deputy Commissioner of Income Tax

Depositories NSDL and CDSL

Depositories Act SEBI Depositories Act, 1996, as amended

Depository Participant or

DP

A depository participant as defined under the Depositories Act

DGCX Dubai Gold and Commodities Exchange DMCC

DIN Directors Identification Number

DP ID Depository participants identity

EBITDA Earnings before interest, taxes, depreciation and amortization

ECS Electronic clearing service

EGM Extraordinary general meeting of the shareholders of a company

EPF Act Employees (Provident Fund and Miscellaneous Provisions) Act, 1952, as amended

EPS Earnings per share

Euro or The single currency of the participating member states in the third stage of the

European Economic and Monetary Union of the Treaty establishing the European

Community, as amended.

10

Term Description

FCNR Account Foreign currency non-resident account established in accordance with the FEMA

FDI Foreign direct investment

FEMA Foreign Exchange Management Act, 1999, as amended, together with rules and

regulations thereunder

FEMA Regulations Foreign Exchange Management (Transfer or Issue of Security by a Person Resident

Outside India) Regulations, 2000, as amended.

FIs Financial Institutions

FII Foreign Institutional Investors, as defined under the FII Regulations and registered

with SEBI under applicable laws in India.

FII Regulations Securities and Exchange Board of India (Foreign Institutional Investors)

Regulations, 1995, as amended.

FIPB Foreign investment promotion board

Fiscal or fiscal or

Financial Year or FY

A period of twelve months ended on March 31 of that particular year, unless

otherwise stated.

FPI Foreign Portfolio Investors, as defined under the FPI Regulations and registered with

SEBI under applicable laws in India.

FPI Regulations Securities and Exchange Board of India (Foreign Portfolio Investors) Regulations,

2014, as amended.

FPO Further public offering

FVCI Foreign venture capital investor registered under the FVCI Regulations.

FVCI Regulations Securities and Exchange Board of India (Foreign Venture Capital Investors)

Regulations, 2000, as amended.

GBP or Pound Sterling

GIR No General index register number

GoI or Government of

India or Central

Government

The Government of India

HUF Hindu Undivided Family

IEC Importer-Exporter Code.

IFRS International financial reporting standards

Income Tax Act or I.T.

Act

Income Tax Act, 1961, as amended

Indian GAAP Generally accepted accounting principles in India

IPO Initial Public Offer

Industrial Policy The policy and guidelines relating to industrial activity in India, issued by the GoI

from time to time

Insurance Regulatory and

Development Authority

or IRDA

Statutory body constituted under the Insurance Regulatory and Development

Authority Act, 1999, as amended

11

Term Description

IT Information Technology.

ITAT Income Tax Appellate Tribunal.

IT Act Income Tax Act, 1961, as amended.

IT Department Income Tax Department, GoI.

Limited Liability

Partnership or LLP

Limited Liability Partnership registered under the Limited Liability Partnership Act,

2008.

MCA Ministry of Corporate Affairs, GoI

MCX Multi Commodity Exchange of India Limited

MCX-SX MCX Stock Exchange Limited

Minimum Wages Act Minimum Wages Act, 1948, as amended

MoU Memorandum of understanding

Mutual Funds Mutual funds registered with the SEBI under the Securities and Exchange Board of

India (Mutual Funds) Regulations, 1996.

N/A or NA or N.A Not Applicable

NAV Net Asset Value

NBFC Non-banking financial company

NECS National Electronic Clearing System.

NEFT National electronic fund transfer

NIF National Investment Fund set up by resolution no. F. No. 2/3/2005-DDII dated

November 23, 2005 of the Government of India.

No. Number

NOC No Objection Certificate

Non-Resident or NR A person resident outside India, as defined under the FEMA and includes a non-

resident Indian

Notified Sections The sections of the Companies Act, 2013 that have been notified by the Government

NRE Account Non-Resident external account established in accordance with the FEMA

NRO Account Non-Resident ordinary account established in accordance with the FEMA

NSDL National Securities Depository Limited

NSE National Stock Exchange of India Limited

OCB A company, partnership, society or other corporate body owned directly or indirectly

to the extent of at least 60% by NRIs including overseas trusts in which not less than

60% of the beneficial interest is irrevocably held by NRIs directly or indirectly and

which was in existence on October 3, 2003 and immediately before such date was

eligible to undertake transactions pursuant to the general permission granted to

OCBs under the FEMA. OCBs are not allowed to invest in this Issue.

PA or P.A or p.a Per Annum

PAN Permanent account number allotted under the IT Act

12

Term Description

PAT Profit After Tax

P/E Ratio Price/Earnings Ratio

Pvt. Private

Preference Shares Preference Shares of our Company of ` 10 each

RBI Reserve Bank of India

` or Rupees or Rs or INR

One Indian rupee

Regulation S Regulation S of the U.S. Securities Act, 1933

RoC Registrar of Companies, National Capital Territory Delhi and Haryana

RTGS Real time gross settlement

RTI Right to information

SCRA Securities Contract (Regulations) Act, 1956, as amended

SCRR Securities Contracts (Regulation) Rules, 1957, as amended

SEBI Securities and Exchange Board of India constituted under the SEBI Act

SEBI Act Securities and Exchange Board of India Act, 1992, as amended

SEBI Insider Trading

Regulations

SEBI (Prohibition of Insider Trading) Regulations, 1992, as amended

SEBI ICDR Regulations SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009, as amended

Securities Act Securities Act of 1933

STT Securities transaction tax

State government The government of a state of Republic of India.

Supreme Court Supreme Court of India

Sub-Account Sub-accounts registered with SEBI under the Securities and Exchange Board of India

(Foreign Institutional Investor) Regulations, 1995, other than sub-accounts which are

foreign corporates or foreign individuals.

Takeover Code The Securities and Exchange Board of India (Substantial Acquisition of Shares and

Takeovers) Regulations, 2011, as amended.

TAN Tax deduction account number allotted under the IT Act.

U.S. or US or

U.S.A or United

States

The United States of America, together with its territories and possessions.

USD/ US$/U.S.$ United States Dollars.

US GAAP or U.S. GAAP Generally accepted accounting principles in the United States of America

VCFs Venture Capital Funds as defined and registered with SEBI under the Securities and

Exchange Board of India (Venture Capital Fund) Regulations, 1996.

VCF Regulations Securities and Exchange Board of India (Venture Capital Fund) Regulations, 1996,

as amended.

13

Term Description

wef. With effect from

Industry/ Business Related Terms, Definitions and Abbreviations

Term Description

AMC Asset Management Company

AMFI Association of Mutual Funds of India

Commodities Segment An exchange for buying and selling of commodities for future delivery

Currency Segment Market where currency futures are traded

Derivatives Derivative is a financial product which derives its value from an underlying asset

(either financial or physical) on which it is based. The underlying asset can be

equity, currency, commodity or any other derivative

Equities (Cash) Segment Market where equities are traded and settlements are done in cash

Equities (Derivatives)

Segment

Markets where derivatives based on equities are traded; such derivatives are

typically futures contracts and options

Extreme Loss Margin Margins collected to cover losses than could occur outside the coverage of VaR

margins; fixed at the beginning of the month

F&O Futures and Options

Fixed Income Securities Debt instruments issued typically by corporate, Central and State governments,

public bodies, statutory corporations, banks, financial institutions, and other

corporate bodies. Typically such instruments pay a constant coupon and thus are

called fixed-income instruments

FPO Further (Follow-On) Public Offer

Futures Contract A standardised contract to buy or sell a specified security (also, commodity with

specific characteristics) in the future on a certain date at a market-determined price

(futures price). These contracts are traded on the futures exchange

FX / Foreign Exchange

Segment

Markets where foreign exchange (or currency or forex) is traded

FMC Forward Market Commission

HNI High Net worth Individual

IP Intellectual Property

IPR Intellectual Property Rights

IRDA Insurance Regulatory and Development Authority

IS Information System

Mark-to-Market Margin Margin requirement that triggers when the transaction price of a security differs from

its closing price on a particular day

M-Cap / Market

Capitalisation

Number of securities outstanding multiplied by the price of one unit of the security

Options Contract A financial product which provides a right, but not an obligation, to buy or sell an

14

Term Description

asset or a derivative on an asset at a specified price during a specified period of time

OTC Market An over-the-counter contract is a bilateral contract in which two parties agree on

how a particular trade or agreement is to be settled in the future

OTCEI OTC Exchange of India

PE Private Equity; Investment made by a fund through equity or convertible instruments

in a company

PMS Portfolio Management Services

Portfolio Manager A portfolio manager as defined under the SEBI (Portfolio Managers) Regulations,

1993, as amended

RMS Risk Management System

SENSEX BSE Sensitive Index

SPAN Standard Portfolio Analysis of Risk; a method of calculating initial margins

Strike Price The fixed price at which an option contract owner can purchase/sell the underlying

asset

STT Securities Transaction Tax

TWS Trading Working Station

VaR Margin Value at Risk Margin; margin collected upfront and intended to cover largest loss

scenario

VSAT Very Small Aperture Terminal

Wholesale Debt Market A market for the issuance, trading and settlement in fixed income securities of

various types

The words and expressions used in this Draft Red Herring Prospectus but not defined herein shall have the same

meaning as is assigned to such words and expressions under the SEBI ICDR Regulations, the Companies Act,

the SCRA, the Depositories Act and the rules and regulations made thereunder.

Notwithstanding the foregoing, terms in the sections titled Main Provisions of the Articles of Association,

Statement of Tax Benefits and Financial Statements beginning on pages 483,107 and 206 of this Draft Red

Herring Prospectus, respectively, have the meanings given to such terms in these respective sections.

15

CERTAIN CONVENTIONS, USE OF FINANCIAL INFORMATION AND MARKET DATA AND

CURRENCY OF PRESENTATION

Certain Conventions

Unless otherwise specified or the context otherwise requires, all references to India in this DRHP are to the

Republic of India, together with its territories and possessions, and all references to the US, the USA, the

United States or the U.S. are to the United States of America, together with its territories and possessions.

Unless the context otherwise requires, a reference to the "Company" is a reference to SMC Global Securities

Limited and unless the context otherwise requires, a reference to "we", "us" and "our" refers to SMC Global

Securities Limited and its subsidiaries, as applicable in the relevant fiscal period, on a consolidated basis.

Financial Information

In this Draft Red Herring Prospectus, we have included (i) the audited restated unconsolidated financial

statements for fiscal 2010, 2011, 2012, 2013, 2014 and for the period ended on June 30, 2014 and (ii) the

audited restated consolidated financial statements for fiscal 2010, 2011, 2012, 2013, 2014 and for the period

ended on June 30, 2014. These financial statements have been prepared in accordance with the Companies Act

and Indian GAAP and have been restated in accordance with the SEBI ICDR Regulations.

The fiscal year commences on April 1 and ends on March 31, and unless otherwise specified or the context

otherwise requires, all references to a particular fiscal year are to the twelve-month period ended on March 31 of

that year.

Indian GAAP differs in certain material respects from U.S. GAAP and IFRS. We have not attempted to quantify

the impact of IFRS or U.S. GAAP on the financial data included in this Draft Red Herring Prospectus, nor do

we provide a reconciliation of the financial statements to those under U.S. GAAP or IFRS. Accordingly, the

degree to which the financial information prepared in accordance with Indian GAAP, Companies Act and the

SEBI ICDR Regulations included in this Draft Red Herring Prospectus will provide meaningful information is

entirely dependent on the readers level of familiarity with Indian accounting standards and accounting

practices, Indian GAAP, the Companies Act and the SEBI ICDR Regulations. See the section titled Risk

Factors The proposed adoption of IFRS could result in the financial condition and results of operations

appearing materially different than under Indian GAAP. on page 19. Any reliance by persons not familiar with

Indian accounting practices, Indian GAAP, the Companies Act and the SEBI ICDR Regulations on the financial

disclosures presented in this Draft Red Herring Prospectus should accordingly be limited. In making an

investment decision, investors must rely upon their own examination of our Company, the terms of the Issue and

the financial information relating to our Company. Potential investors should consult their own professional

advisors for an understanding of these differences between Indian GAAP and IFRS or U.S. GAAP, and how

such differences might affect the financial information contained herein.

Currency and Units of Presentation

All references to Rupees, Rs., INR or ` are to Indian Rupees, the official currency of the Republic of India. All references to US$ or USD or U.S. Dollar are to United States Dollars, the official currency of

the United States of America. All references to AED are to United Arab Emirates Dirham, the official

currency of the United Arab Emirates. In this Draft Red Herring Prospectus, any discrepancies in any table

between the total and the sums of the amounts listed therein are due to rounding-off. All figures mentioned in

this Draft Red Herring Prospectus are denominated in million, unless otherwise specified.

Industry and Market Data

Unless stated otherwise, industry and market data used throughout this Draft Red Herring Prospectus have been

derived 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 we believe that the industry and market data

used in this Draft Red Herring Prospectus is reliable, neither we nor the Selling Shareholder, BRLM and the

CBRLM nor any of their respective affiliates nor advisors have prepared or verified it independently. The extent

to which the market and industry data used in this Draft Red Herring Prospectus is meaningful depends on the

readers familiarity with and understanding of the methodologies used in compiling such data.

16

Such data involves risks, uncertainties and numerous assumptions and is subject to change based on various

factors, including those discussed in the section titled Risk Factors on page 19. Accordingly, investment

decisions should not be based on such information.

In accordance with the SEBI ICDR Regulations, we have included in the section titled Basis for the Issue

Price on page 103, information pertaining to the peer group companies of our Company. Such information has

been derived from publicly available annual reports of the peer group companies.

Exchange Rates

This Draft Red Herring Prospectus contains translations of U.S. Dollar and other currency amounts into Indian

Rupees that have been presented solely to comply with the requirements of item (VIII) sub-item (G) of Part A of

Schedule VIII of the SEBI ICDR Regulations. It should not be construed as a representation that such currency

amounts could have been, or can be converted into Indian Rupees, at any particular rate or at all.

The exchange rates of the USD and AED into Indian Rupees for the last five Financial Years i.e. 2010, 2011,

2012, 2013 and 2014.

USD - INR

Fiscal Year Year End Average* High Low

2010 45.14 47.42 50.53 44.94

2011 44.65 45.58 47.57 44.03

2012 51.16 47.95 54.24 43.95

2013 54.39 54.45 57.22 50.56

2014 60.10 60.50 68.36 53.74

Month Ended Month End Average* High Low

October 31, 2013 61.41 61.62 62.36 61.16

November 30, 2013 62.39 62.63 63.65 61.79

December 31, 2013 61.90 61.91 62.38 61.18

January 31, 2014 62.48 62.08 62.99 61.35

February 28, 2014 62.07 62.25 62.69 61.94

March 31, 2014 60.10 61.01 61.90 60.10

April 30, 2014 60.34 60.36 61.12 59.65

May 31, 2014 59.03 59.31 60.23 58.43

June 30, 2014 60.09 59.73 60.37 59.06

July 31, 2014 60.25 60.06 60.33 59.72

August 31, 2014 60.47 60.90 61.56 60.43

September 30, 2014 61.61 60.86 61.61 60.26

*Average of the official rate for each working day of the relevant period

Source: www.rbi.org.in

AED - INR


2010 12.26 12.96 14.04 12.24

2011 12.34 12.46 12.94 12.01

2012 14.15 13.16 15.00 12.05

2013 14.84 14.82 15.54 14.02

2014 16.28 16.43 18.48 14.53

Month Ended Month End Average* High Low

October 31, 2013 16.63 16.68 17.06 16.51

November 30, 2013 16.94 17.02 17.36 16.67

December 31, 2013 16.84 16.81 16.95 16.57

January 31, 2014 17.07 16.85 17.14 16.66

17


February 28, 2014 16.87 16.90 17.05 16.79

March 31, 2014 16.28 16.62 16.86 16.28

April 30, 2014 16.46 16.44 16.64 16.28

May 31, 2014 16.06 16.12 16.41 15.87

June 30, 2014 16.33 16.23 16.40 16.02

July 31, 2014 16.37 16.32 16.4127 16.22

August 31, 2014 16.48 16.56 16.71 16.43

September 30, 2014 16.75 16.56 16.75 16.39

*Average of the official rate for each working day of the relevant period.

Source: www.oanda.com

18

FORWARD-LOOKING STATEMENTS

All statements contained in this Draft Red Herring Prospectus that are not statements of historical facts

constitute forward-looking statements. Investors can generally identify forward-looking statements by

terminology such as aim, anticipate, believe, continue, estimate, expect, intend, may,

objective, plan, potential, project, pursue, should, will, would, or other words or phrases of

similar import. Similarly, statements that describe the strategies, objectives, plans or goals are also forward-

looking statements.

All statements regarding the expected financial condition and results of operations, business, plans and

prospects are forward-looking statements. These forward-looking statements include statements as to the

business strategy, the revenue, profitability, planned initiatives. These forward-looking statements and any other

projections contained in this Draft Red Herring Prospectus (whether made by us or any third party) are

predictions and involve known and unknown risks, uncertainties and other factors that may cause the actual

results, performance or achievements to be materially different from any future results, performance or

achievements expressed or implied by such forward-looking statements or other projections. Important factors

that could cause actual results, performance or achievements to differ materially include, but are not limited to,

those discussed under the sections titled Risk Factors, Managements Discussion and Analysis of Financial

Condition and Results of Operations, Industry Overview and Our Business on pages 19, 323, 124 and 135

of this Draft Red Herring Prospectus respectively.

The forward-looking statements contained in this Draft Red Herring Prospectus are based on the beliefs of our

management, as well as the assumptions made by and information currently available to our management.

Although we believe that the expectations reflected in such forward-looking statements are reasonable at this

time, we cannot assure investors that such expectations will prove to be correct. Given these uncertainties,

investors are cautioned not to place undue reliance on such forward-looking statements. If any of these risks and

uncertainties materializes, or if any of the underlying assumptions prove to be incorrect, the actual results of

operations or financial condition could differ materially from that described herein as anticipated, believed,

estimated or expected. All subsequent written and oral forward-looking statements attributable to us are

expressly qualified in their entirety by reference to these cautionary statements.

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. Our Company, the Selling Shareholder, the BRLM, the CBRLM, the Syndicate Members

or their respective affiliates do not have any obligation to, and do not intend 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 SEBI requirements, our

Company, the Selling Shareholder, the BRLM and the CBRLM will ensure that investors are informed of

material developments until the time of the grant of final listing and trading permissions with respect to Equity

Shares being offered in this Issue, by the Stock Exchanges. The Company and the Selling Shareholder will

ensure that investors are informed of material developments in relation to statements about our Company and

the Selling Shareholder in this Draft Red Herring Prospectus, Red Herring Prospectus and Prospectus until the

Equity Shares are Allotted to the investors.

19

SECTION II RISK FACTORS

RISK FACTORS

An investment in equity securities involves a high degree of risk. You should carefully consider all the

information in this Draft Red Herring Prospectus, including our financial statements and the related notes and

the sections titled Our Business and Managements Discussion and Analysis of Financial Condition and

Results of Operations beginning on pages 135 and 323, respectively, and the risks and uncertainties described

below, before making an investment in our Equity Shares. If anyone or some combination of the following risks

were to occur, our business, financial condition and results of operations could suffer, and the price of our

Equity Shares could decline and you may lose all or part of your investment. Unless specified in the relevant

risk factors below, we are not in a position to quantify the financial implication of any of the risks mentioned

below. Additional risks not presently known to us or that we currently deem immaterial may also impair our

business operations. The following factors have been considered for determining the materiality:

1. Some events may not be material individually but may be found material collectively;

2. Some events may have material impact qualitatively instead of quantitatively;

3. Some events may not be material at present but may have a material impact in the future.

The Risks described below are not the only risks which may affect our Company. This Draft Red Herring

Prospectus also contains forward-looking statements that involve risks and uncertainties. The actual results of

our operations could differ materially from those anticipated in these forward-looking statements as a result of

certain factors, including the risks we face as described below. You should also consider the warning regarding

forward looking statements in the section titled Forward-Looking Statements beginning on page 18.

Unless otherwise stated, financial information included in this section for the period ended on June 30, 2014

and the Financial Years 2014, 2013, 2012, 2011 and 2010 has been derived from our restated and audited

consolidated financial statements as of and for the period ended on June 30, 2014 and the Financial Years

ended on March 31, 2014, March 31, 2013, March 31, 2012, March 31, 2011 and March 31, 2010. For further

information, see the section titled Certain Conventions, Use of Financial Information and Market Data and

Currency of Presentation Financial Information and the section titled Financial Statements.

You should not invest in this Issue unless you are prepared to accept the risk of losing all or part of your

investment, and you should consult your tax, financial and legal advisors about the particular consequences to

you of an investment in the Equity Shares.

INTERNAL RISK FACTORS

1. Restrictive or penal order may be passed against us by SEBI in on-going and / or future proceedings that could restrict, stop or hamper our operations or services, or a part thereof, or levy penalties in connection

therewith, which may in turn adversely affect our operations and profitability.

SEBI issued a Show Cause Notice (SCN) dated January 6, 2014 to eight entities including, SAM Global

Securities Limited (SAM), now merged with SMC Global Securities Limited (SMC), alleging therein that

SAM was in violation of Regulation 12 (A) (a), 12 (A) (b), 12 (A) (c) of the SEBI Act, 1992 along with

Regulations 3 (a), 3 (a), 3 (b), 3 (c), 3 (d), 4 (1), 4 (2) (a), 4 (2) (e) and 4 (2) (g) of the SEBI (Prohibition of

Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003, (PFUTP

Regulations) and Regulations 7 read with clause A (1), A (2), A (3), A (4) and A (5) of the Code of Conduct

for Stock Brokers specified under Schedule II of the SEBI (Stock Brokers and Sub Brokers) Regulations 1992,

(Stock Broker Regulations), with regards to its activities on behalf of its client ISF Securities Limited

(ISF) for engaging in synchronised trading in the scrip of M/s. Gangotri Textiles Limited (Gangotri), for

the period from April 7, 2006 to May 31, 2006 (Investigation Period). In SCN, SEBI show caused as to why

the certificate of registration granted to SAM should not be cancelled or suspended or why any other suitable

action as stipulated under the Intermediaries Regulations should not be taken against SAM.

SEBI conducted an investigation in respect of buying, selling and dealing in the shares of Gangotri, on the NSE

and BSE, during the Investigation Period and observed that the price of the scrip rose from ` 50.30 on April 7, 2006 to ` 70.40 on May 4, 2006. SEBI in the SCN, alleged violation of the aforementioned regulations against 8 entities, including SAM, for trading in the said scrip of Gangotri, however, with regards to SAMs participation,

SEBI noted that SAM being the Broker for ISF, its activity was limited for trades executed only on the BSE. It

was further alleged that ISF acting through SAM, in collusion with the other entities, indulged in Off Market

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Transfers from Master Finlease Limited and also entered into synchronised trades with other related entities.

Further in the SCN, SEBI alleged that along with 8 other entities ISF through SAM, was involved in circular

trading on 29 out of the 37 trading days during the Investigation Period and created artificial volumes, by buying

and selling amongst themselves, which amounted to price manipulation in the said scrip.

SEBI, vide a letter dated May 7, 2014 advised SMC to submit a reply to the aforementioned SCN within a

period of 21 days. In response to SEBIs letter SMC, vide a letter dated May 22, 2014 requested SEBI for an

extension of period within which to file a reply. Further SEBI, vide a letter dated June 3, 2014 informed SMC

that a personal hearing would be scheduled on July 7, 2014, within which time the reply to the SCN could be

filed. However, SEBI on its own accord vide letter dated June 30, 2014, postponed the date of hearing to July

16, 2014.

SMC, owing to the merger with SAM in 2008, vide a letter dated July 11, 2014, filed the Reply to the SCN

(Reply),to SEBI on SAMs behalf. In the Reply, SMC had categorically denied and refuted all the allegations

levied in the SCN and raised legal objections to the issuance of the SCN. Further, along with requesting a

personal hearing, SMC requested SEBI to consider its Reply and to drop the SCN. Pursuant to the Reply, a

personal hearing was conducted by SEBI on July 16, 2014, wherein the matter was heard in length and a period

of 10 days till July 26, 2014 was allowed to SMC, to make further submissions. SMC vide a letter dated July 26,

2014 requested for an extension till the August 7, 2014 within which to file further written submissions. Vide a

letter dated August 4, 2014, SMC made additional submissions to SEBI, wherein all the submissions made in

the Reply, were substantiated. SEBI was requested to consider the submissions and to refrain from pursuing the

charges under the SCN against SAM. While the matter is currently pending before the appointed Adjudicating

Officer of SEBI, there can be no assurance that SEBI will not pass an order levying penalties, which may in turn

adversely affect our reputation, business, operations and profitability. For details of the SEBIs show cause

notice, please refer to the section titled Outstanding Litigation and Material Developments beginning on page

349 of this Draft Red Herring Prospectus.

2. There are certain criminal cases pending against us and some of our Directors.

There are certain criminal cases pending against our Company and some of our Directors. These include 11

criminal cases against us and eight cases against some of our Directors under various sections of Indian Penal

Code including 406, 409, 420, 467, 468, 120(B) which have been pending before various Courts, adjudicatory

authorities. Out of these 11 cases, 6 cases against our Company and its Directors have been stayed by the

concerned Courts. Further, in 7 of these cases, quashing applications u/s 482 of Code of Criminal Procedure,

1973, are pending. Any adverse outcome from these proceedings may have an adverse effect on our reputation

and business or cause the price of our Equity Shares to decline. For details of the above criminal cases, please

refer to the section titled Outstanding Litigation and Material Developments beginning on page 349 of this

Draft Red Herring Prospectus.

Litigations against the Directors

Sr. No. Name of the Directors Number of Cases Nature of Case

1. Mr. Subhash Chand

Aggarwal

8 Criminal

2. Mr. Mahesh Chand Gupta 3 Criminal

3. Mr. Ajay Garg* 2 Criminal

* The 2 cases against Mr Garg have been filed against him in his capacity of a director of SMC Insurance

Brokers Private Limited.

3. Our Company and our Subsidiaries are involved in a number of legal and regulatory proceedings that, if determined against us or our Subsidiaries, could have a material adverse impact on our business, financial

conditions and results of operations.

There are certain outstanding legal proceedings against us pending at various levels of adjudication before

various courts, tribunals, authorities and appellate bodies in India. Should any new development arise, such as

change in applicable laws or rulings against us by the appellate courts or tribunals, we may need to make

provisions in our financial statements, which may increase our expenses and current liabilities. We cannot give

you any assurance that these legal proceedings will be decided in our favour. Any adverse decision may have a

significant effect on our business and financial condition, the implementation of our current or future projects

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and our results of operations. Details of the proceedings that have been initiated against us and the amounts

claimed against us in these proceedings, to the extent ascertainable, are set forth below:

Litigations against the Company

Sr. No. Nature of the litigation Number of outstanding

litigations

Aggregate amount involved

(`) in million 1. Show Cause Notice 1 0

2. Criminal Cases 11 0

i Quantifiable 0 0

ii Unquantifiable 11 0

3. Civil Cases 6 0

4. Regulatory Appeals 2 0

5. Cases under the Negotiable

Instruments Act, 1881

0 0

6. Consumer Complaints 23 5.24

i Quantifiable 23 5.24


7. Arbitration Proceedings 15 11.32



8. Labour Matters 5 0

9. Tax Cases 1 1.02

Total 64 17.58

Litigations against the Companys Subsidiaries

Sr. No. Nature of the litigation Number of outstanding

litigations

Aggregate amount involved

(`) in million 1. Criminal Cases 10 0

i Quantifiable 0 0


2. Civil Cases 5 2.59



3. Cases under Negotiable

Instruments Act, 1881

0 0

4. Consumer Complaints 15 4.27



5. Arbitration Proceedings 0 0

6. Labour Matters 1 0.28

7. Tax Cases 3 1

Total 34 8.22

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The natures of cases under each of the categories as mentioned in the tables above are as follows:

Litigation against the Company

1. Civil Cases These matters are filed against the Company in respect to recovery suits and money claims.

2. Consumer Complaints These matters are filed against the Company alleging deficiency in services and are pending before various forums.

3. Arbitration Proceedings These matters are filed against the Company in relation to trade disputes pending before arbitration at NSE and BSE.

4. Labour Matters - These matters are filed before the labour tribunal by ex-employees against the Company relating to employment related disputes under relevant applicable statutes.

Litigation against the Subsidiaries

1. Civil Cases These are in respect of recovery suits filed against the Subsidiaries of the Company, recovery of salary dues along with interest and other expenses in relation to the applicable provisions of

various statutes.

2. Consumer Complaints These are filed against the Companys Subsidiaries alleging deficiency in services and other related matters and are pending before various forums.

3. Labour Matters These are employee matters relating to employment disputes, filed against the Companys Subsidiary which is pending before various labour/industrial tribunals.

4. Tax Matters These matters relate to notices received by the Companys Subsidiaries in relation to Income Tax, Income Tax returns filed and non-payment of duty chargeable under the Indian Stamp Act

and appeal filed against the demand levied by the Tax authorities.

For further details of the legal proceedings, please see the section titled Outstanding Litigation and Material

Developments on page 349 of this Draft Red Herring Prospectus.

4. We have been penalized in past for not complying with the directions and circulars by stock exchanges and regulator(s) and may face further penalties from any stock exchange and/or other regulatory bodies that

govern us in cases of non-compliance in future. Further, we have settled in past certain proceedings under

SEBI consent mechanism and paid settlement fee for such proceedings. There can be no assurance that we

will not be subjected to such consent orders in the future, which may in turn adversely affect our operations

and profitability.

We have been penalized by the NSE, BSE and MCX-SX in the past with a gross penalty of ` 3.68 million out of which ` 0.46 million was refunded to our Company making the net penalty to ` 3.22 million imposed on our Company for certain deficiencies noticed by exchanges and regulators on account of lapses such as

discrepancies pertaining to settlement of funds and wrong reporting of margin collections, the PAN number not

being available on contract note, shortfall in collection of daily margins, receipts from clients through own bank

accounts in some instances/ payments to clients through own bank account in some instances, non-issue of

statement of accounts to some constituents and error in format of contract notes.

Further, in past we had settled and disposed certain proceedings against our Company under the SEBI settlement

mechanism, where in, violations of certain SEBI regulations and circulars, like the SEBI (Stock Broker and Sub-

broker) Regulations, 1992, SEBI (Prohibition of Fraudulent and unfair Trade Practices relating to the Securities

Market) Regulations, 2003, were alleged by SEBI. The same were disposed of, without the admission of guilt by

our Company. The aggregated amount paid towards the settlement proceedings under such consent orders by

our Company was ` 7.43 million. There can be no assurance that we will not be subjected to such penalties or such consent orders in the future, which may in turn adversely affect our operations and profitability. For details

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of the past penalties, please refer to the section titled Outstanding Litigation and Material Developments

beginning on page 349.

5. Certain of our Subsidiaries have incurred losses during the last three fiscal years and the period ended on June 30, 2014, which may adversely affect our results of operations.

Certain of our Subsidiaries have incurred losses in the last three fiscal years and the period ended on June 30,

2014, as set forth in the table below:

(` in million)

Subsidiary Period ended on June

30, 2014 Fiscal 2014 Fiscal 2013 Fiscal 2012

SMC Investments

and Advisors

Limited

(5.43) (18.96) (37.82) (95.46)

SMC Capitals

Limited

- (17.76) - (12.84)

SMC Comex

International

DMCC

- (6.38) - -

SMC ARC Limited - (0.85) - -

SMC Real Estate

Advisors Private

Limited

(8.73) - (1.39) -

In the event that these Subsidiaries continue to incur losses or any of our other Subsidiaries incur losses, our

Companys consolidated results of operations and financial condition will be adversely affected. For further

details, see the section titled History and Other Corporate Matters beginning on page 162.

6. Some of our Group Companies has incurred losses in the past and we cannot assure you that these companies will not incur further losses in the future.

Some of our Group Companies have incurred losses. Please see below the profit / (loss) figures for these Group

Companies for the past three financial years:

(` in million)

Group Company Fiscal 2014 Fiscal 2013 Fiscal 2012

MVR Share Trading Private Limited (0.03) (1.13) (1.06)

Pulin Investments Private Limited (0.03) 0.47 (1.10)

Dee Faces Herbal Private Limited (0.09) 0.07 0.37

SMC Sh

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