HERITAGE FOODS LIMITED Letter of Offer
Dated: January 13, 2023
For Eligible Equity Shareholders Only
HERITAGE FOODS LIMITED
Heritage Foods Limited ("Company" or "Issuer") was originally incorporated as Heritage Foods (India) Limited on June 5, 1992, in Hyderabad under the Companies Act, 1956. Subsequently the name of our company was changed to Heritage Foods Limited vide fresh Certificate of Incorporation consequent to change of name dated August 16, 2013, issued by the office of Registrar of Companies, Hyderabad - Telangana (earlier in the erstwhile state of undivided Andhra Pradesh)
Registered & Corporate Office: # H. No.8-2-293/82/A/1286 Plot No: 1286, Road No. 1 & 65, Jubilee Hills, Hyderabad- 500033 Telangana, India
(For changes in Registered Office, please refer to page 50 of this Letter of Offer)
Tel: +91 40 23391221/2; Contact Person: Umakanta Barik, Company Secretary and Compliance Officer
E-mail: rights.issue@heritagefoods.in; Website: www.heritagefoods.in
Corporate Identification Number: L15209TG1992PLC014332
OUR PROMOTERS - NARA BHUVANESWARI, NARA LOKESH & MEGABID FINANCE AND INVESTMENT PRIVATE LIMITED
FOR PRIVATE CIRCULATION TO THE ELIGIBLE EQUITY SHAREHOLDERS OF HERITAGE FOODS LIMITED (THE "COMPANY" OR THE "ISSUER") ONLY
ISSUE OF UPTO 4,63,98,000 EQUITY SHARES OF FACE VALUE OF ₹5 EACH ("RIGHTS EQUITY SHARES") OF OUR COMPANY FOR CASH AT A PRICE OF ₹5 PER EQUITY SHARE (THE "ISSUE PRICE"), FOR AN AMOUNT AGGREGATING UPTO ₹2319.9 LAKHS# ON A RIGHTS BASIS TO THE EXISTING ELIGIBLE EQUITY SHAREHOLDERS OF OUR COMPANY IN THE RATIO OF 1 (ONE) RIGHTS EQUITY SHARE FOR EVERY 1 (ONE) FULLY PAID-UP EQUITY SHARE HELD BY SUCH EXISTING ELIGIBLE EQUITY SHAREHOLDERS ON THE RECORD DATE, THAT IS ON FRIDAY, JANUARY 20, 2023 (THE "ISSUE"). # Assuming full subscription
THE ISSUE PRICE OF EACH RIGHTS EQUITY SHARE IS 1.0 TIMES THE FACE VALUE OF THE EQUITY SHARE
FOR FURTHER DETAILS, PLEASE REFER TO THE CHAPTER TITLED "TERMS OF THE ISSUE" ON PAGE 260 OF THIS LETTER OF OFFER
Amount payable per Rights Equity Share | Face Value (in ₹) | Premium (in ₹) | Total (in ₹) |
On Application | 5 | - | 5 |
Total | 5 | - | 5 |
* For further details on Terms of Payment, see "Terms of the Issue" on page 260
WILFUL DEFAULTERS OR FRAUDULENT BORROWER
We hereby confirm that neither our Company, nor any of our Promoters or Directors has been categorized as a Willful Defaulter or a Fraudulent Borrower by any bank or financial institution (as defined under the Companies Act, 2013) or consortium thereof, in accordance with guidelines issued by the Reserve Bank of India as on date of this Letter of Offer.
GENERAL RISK
Investment 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 entire investment. Investors are advised to read the risk factors carefully before taking an investment decision in this Issue. For taking an investment decision, investors must rely on their own examination of our Company and the Issue, including the risks involved. The Rights Equity Shares 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 the contents of this Letter of Offer. Specific attention of the investors is invited to the section titled "Risk Factors" on page 32 of this Letter of Offer.
ISSUER'S ABSOLUTE RESPONSIBILITY
Our Company, having made all reasonable inquiries, accepts responsibility for and confirms that this Letter of Offer contains all information with regard to our Company and this Issue, which is material in the context of this Issue and, that the information contained in this Letter of Offer is true and correct in all material aspects and is not misleading in any material respect, that the opinions and intentions expressed herein are honestly held and that there are no other facts, the omission of which makes this Letter of Offer as a whole or any of such information or the expression of any such opinions or intentions, misleading in any material respect.
LISTING
The existing Equity Shares are listed on BSE Limited ("BSE/ "Stock Exchange") and National Stock Exchange of India Limited ("NSE/ "Stock Exchange"). Our Company has received 'in-principle' approval from the BSE and NSE for listing the Rights Equity Shares to be allotted pursuant to this Issue vide their letter number DCS/RIGHT/KK/FIP/2997/2022-23 dated January 6, 2023 and NSE/LIST/33876 dated December 29, 2022 respectively. Our Company will also make applications to the BSE and NSE to obtain trading approvals for the Rights Entitlements as required under the SEBI circular bearing reference number SEBI/HO/CFD/DIL2/CIR/P/2020/13 dated January 22, 2020. For the purposes of this Issue, the Designated Stock Exchange is BSE.
LEAD MANAGER TO THE ISSUE | REGISTRAR TO THE ISSUE | |||
CHARTERED FINANCE MANAGEMENT PRIVATE LIMITED | KFin TECHNOLOGIES LIMITED | |||
(Formerly known as Chartered Finance Management Limited) | Karvy Selenium, Tower B, Plot No. 31 & 32, Gachibowli, Financial District, | |||
2nd Floor, Wakefield House, | Nanakramguda, Serilingampally, | |||
Sprott Road, Ballard Estate, | Hyderabad, Rangareddi - 500032, Telangana, India | |||
Mumbai - 400038, Maharashtra, India | Tel No.: +91 40 67162222 | |||
Tel. No.: +91 22 22696944 | Toll Free No.: 1-800-309-4001 | |||
Email: rights.issue@cfml.in | Email: heritagefoods.rights@kfintech.com | |||
Website: www.cfml.in | Website: www.kfintech.com | |||
Investor Grievance Email: investor.grievance@cfml.in | Investor Grievance Email: einward.ris@kfintech.com | |||
Contact Person: Mr. R. Ramnath | Contact Person: Mr. M. Murali Krishna | |||
SEBI Registration No.: INM000012052 | SEBI Registration No.: INR000000221 | |||
Validity: Permanent | CIN: U72400TG2017PLC117649 |
ISSUE PROGRAMME
ISSUE OPENS ON | LAST DATE FOR ON MARKET RENUNCIATION | ISSUE CLOSES ON |
MONDAY, JANUARY 30, 2023 | WEDNESDAY, FEBRUARY 8, 2023 | MONDAY, FEBRUARY 13, 2023 |
- Eligible Equity Shareholders are requested to ensure that renunciation through off-market transfer is completed in such a manner that the Rights Entitlements are credited to the demat account of the Renouncees on or prior to the Issue Closing Date.
- Our Board or a duly authorized committee thereof will have the right to extend the Issue period as it may determine from time to time, provided that this Issue will not remain open in excess of 30 (Thirty) days from the Issue Opening Date (inclusive of the Issue Opening Date). Further, no withdrawal of Application shall be permitted by any Applicant after the Issue Closing Date.
THIS PAGE IS INTENTIONALLY LEFT BLANK
TABLE OF CONTENTS | |
1 | |
1 | |
NOTICE TO OVERSEAS INVESTORS | 14 |
ENFORCEMENT OF CIVIL LIABILITIES | 17 |
PRESENTATION OF FINANCIAL INFORMATION AND USE OF MARKET DATA | 19 |
FORWARD LOOKING STATEMENTS | 22 |
SECTION II - SUMMARY OF THS LETTER OF OFFER | 25 |
SECTION III - RISK FACTORS | 32 |
SECTION IV - INTRODUCTION | 49 |
THE ISSUE | 49 |
GENERAL INFORMATION | 50 |
CAPITAL STRUCTURE | 57 |
SECTION V - PARTICULARS OF THE ISSUE | 66 |
OBJECTS OF THE ISSUE | 66 |
STATEMENT OF TAX BENEFITS | 72 |
KEY INDUSTRY REGULATIONS | 83 |
SECTION VI - ABOUT THE ISSUER COMPANY | 84 |
INDUSTRY OVERVIEW | 84 |
BUSINESS OVERVIEW | 96 |
OUR MANAGEMENT | 122 |
OUR PROMOTERS | 136 |
RELATED PARTY TRANSACTIONS | 138 |
DIVIDEND DISTRIBUTION POLICY | 139 |
SECTION VII - FINANCIAL INFORMATION | 143 |
FINANCIAL STATEMENTS………………………………………………………………………………………………………………………………..144 | |
STATEMENT OF ACCOUNTING RATIOS……………………………………………………………………………………………………………208 | |
MANAGEMENT'S DISCUSSION & ANALYSIS OF FINANCIAL POSITION & RESULTS OF OPERATIONS | 210 |
STATEMENT OF MATERIAL DEVELOPMENT | 224 |
MARKET PRICE INFORMATION | 225 |
SECTION VIII - LEGAL AND OTHER INFORMATION | 228 |
OUTSTANDING LITIGATIONS AND DEFAULTS | 228 |
GOVERNMENT AND OTHER APPROVALS | 250 |
SECTION IX - OTHER REGULATORY AND STATUTORY DISCLOSURES | 251 |
SECTION X - OFFERING INFORMATION | 260 |
TERMS OF THE ISSUE | 260 |
RESTRICTIONS ON FOREIGN OWNERSHIP OF INDIAN SECURITIES | 297 |
SECTION XI - STATUTORY AND OTHER INFORMATION | 299 |
MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION | 300 |
DECLARATION | 302 |
SECTION I - GENERAL
DEFINITIONS AND ABBREVIATIONS
In this Letter of Offer, unless the context otherwise requires, the terms defined, and abbreviations expanded below shall have the same meaning as stated in this section. The words and expressions used in this Letter of Offer, but not defined herein, shall have the same meaning (to the extent applicable) ascribed to such terms under the Companies Act, 2013, the SEBI ICDR Regulations, the SEBI Listing Regulations, the SCRA, the Depositories Act, and/or the rules and regulations made thereunder, each as amended. References to statutes, rules, regulations, guidelines, and policies will be deemed to include all amendments and modifications notified thereto and any reference to a statutory provision shall include any subordinate legislation made from time to time under that provision.
In this Letter of Offer, the terms "we", "us", "our", "the Company", "our Company" or "HFL", unless the context otherwise implies, refers to Heritage Foods Limited. All references to "Re", "Rs", "INR" or "₹" refer to Rupees, the lawful currency of India, "USD" or "US$" refer to the United States Dollar, the lawful currency of the United States of America, references to the singular also refers to the plural and one gender also refers to any other gender, wherever applicable, and the words "Lakh" or "Lac" means "100 thousands" and the word "million" or "mn" means "10 lakhs" and the word "crore" means "10 million" or "100 lakhs" and the word "billion" means "1000 million" or "100 crores". Any discrepancies in any table between the total and the sums of the amounts listed are due to rounding off.
Provided that terms used in the sections/ chapters titled "Industry Overview", "Summary of this Letter of Offer", "Financial Information", "Statement of Special Tax Benefits", "Outstanding Litigations and Defaults" and "Offering Information" on pages 84, 25, 143, 72, 228, and 260 respectively, shall, unless indicated otherwise, have the meanings ascribed to such terms in the respective sections / chapters.
Unless otherwise specified, the capitalized terms used in this Letter of Offer shall have the meaning as defined hereunder. References to any legislations, acts, regulation, rules, guidelines, circulars, notifications, policies, or clarifications shall be deemed to include all amendments, supplements or re- enactments and modifications thereto notified from time to time and any reference to a statutory provision shall include any subordinate legislation made from time to time under such provision.
The following list of capitalized terms used in this Letter of Offer is intended for the convenience of the reader/prospective investor only and is not exhaustive.
CONVENTIONAL OR GENERAL TERMS AND ABBREVIATIONS
TERM
A/c
AGM
AIF
Air Act
AS
DESCRIPTION
Account
Annual General Meeting
Alternative Investment Fund, as defined and registered with SEBI under the Securities and Exchange Board of India (Alternative Investment Funds) Regulations, 2012
Air (Prevention and Control of Pollution) Act, 1981, as amended.
Accounting Standards issued by the Institute of Chartered Accountants of India
1
TERM | DESCRIPTION |
BSE | BSE Limited |
CAGR | Compounded Annual Growth Rate |
CDSL | Central Depository Services (India) Limited |
CENVAT | Central Value Added Tax |
CFO | Chief Financial Officer |
CIN | Corporate Identification Number |
CIT | Commissioner of Income Tax |
CLRA | Contract Labour (Regulation and Abolition) Act, 1970 |
"Companies Act, 1956" or "CA | The Companies Act, 1956, and the rules thereunder |
1956" | |
"Companies Act, 2013" or "CA | The Companies Act, 2013 and rules issued thereunder, as amended. |
2013" | |
CSR | Corporate Social Responsibility |
Depository(ies) | A depository registered with SEBI under the Securities and Exchange |
Board of India (Depositories and Participants) Regulations, 1996. | |
meaning NSDL and CDSL | |
Depositories Act | The Depositories Act, 1996, as amended |
DIN | Director Identification Number |
DP ID | Depository Participant's Identification Number |
EBITDA | Earnings before Interest, Tax, Depreciation and Amortisation |
EGM | Extra Ordinary General Meeting |
EPF Act | Employees' Provident Fund and Miscellaneous Provisions Act, 1952 |
EPS | Earnings Per Share |
ESI Act | Employees' State Insurance Act, 1952 |
FCNR Account | Foreign Currency Non-Resident (Bank) account established in |
accordance with theFEMA | |
FEMA | The Foreign Exchange Management Act, 1999 read with rules and |
regulationsthereunder | |
FEMA Rules | The Foreign Exchange Management (Non-debt instruments) Rules, |
2019 | |
Financial Year/Fiscal | The period of 12 months commencing on April 1 of the immediately |
preceding calendar year and ending on March 31 of that particular | |
calendar year | |
FPIs | A foreign portfolio investor who has been registered pursuant to the |
SEBI FPI Regulations, provided that any FII who holds a valid certificate | |
of registration shall be deemed to be an FPI until the expiry of the | |
block of three years for which fees have been paid as per the | |
Securities and Exchange Board of India (Foreign Institutional | |
Investors) Regulations, 1995 | |
Fugitive Economic Offender | An individual who is declared a fugitive economic offender under |
Section 12 of the Fugitive Economic Offenders Act, 2018 | |
Foreign Venture Capital Investors (as defined under the Securities | |
FVCI | and Exchange Board of India (Foreign Venture Capital Investors) |
Regulations, 2000) registered with SEBI | |
GDP | Gross Domestic Product |
GoI / Government | The Government of India |
2 |
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Heritage Foods Ltd. published this content on 25 January 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 27 January 2023 01:14:06 UTC.
