1
Notice pursuant to Section 110 of the Companies Act, 2013
Notice is hereby given pursuant to Section 110 of the Companies Act, 2013 (the ‘Act’), read with Rule 22 of the Companies (Management and
Administration) Rules, 2014, that the resolutions appended below are proposed to be passed by way of Postal Ballot. Members’ consent is
requested for the proposals contained in the resolutions appended below. The Explanatory Statement pursuant to section 102 of the Act
pertaining to the said resolutions setting out the material facts and the reasons thereof is annexed hereto along with a Postal Ballot Form.
We are pleased to offer e-voting facility also as an alternate for our Members which would enable you to cast your votes electronically, instead of
physical postal ballot form. E-voting is optional. Please carefully read and follow the instructions on e-voting printed in this notice.
SPECIAL BUSINESS
1. MODIFICATION IN THE TERMS OF THE REDEEMABLE NON-CONVERTIBLE PREFERENCE SHARES OF THE COMPANY
AND ISSUE OF OPTIONALLY CONVERTIBLE REDEEMABLE PREFERENCE SHARES
To consider and, if thought fit, to pass with or without modification(s), the following resolution as a Special Resolution:
“RESOLVED THAT in accordance with the provisions of Section 42, 62 and other applicable provisions, if any, of the Companies Act,
2013 (including any amendment thereto or re-enactment thereof for the time being in force), other applicable provisions, if any, of the
Companies Act, 1956, the foreign direct investment policy (“FDI Policy”), the Foreign Exchange Management Act, 1999 and the rules and
regulations made thereunder (including any amendment thereto or re-enactment thereof for the time being in force) and any other law for
the time being in force, and the provisions in the Memorandum and Articles of the Association of the Company, and subject to the
approvals, consents, permissions and sanctions of the Reserve Bank of India (“RBI”), the Foreign Investment Promotion Board (“FIPB”),
and any other concerned authorities, as may be necessary, and subject to such conditions and modifications as may be prescribed or
imposed by any of the aforementioned authorities while granting such approvals, consents, permissions and sanctions, which may be
agreed to by the Board of Directors of the Company (hereinafter referred to as the “Board” which term shall be deemed to include any
committee of directors duly constituted or to be constituted thereof to exercise its powers conferred by this resolution), the approval of the
members of the Company be and is hereby accorded to the Board:
(i) to change, vary, modify and amend the terms of the 10,000,000 (Ten Million)- 0.01% non-cumulative non-convertible redeemable
preference shares of Rs. 10 (Indian Rupees Ten) each (“NCRPS”) that have, in terms of the Subscription Agreement dated 10
September 2012 and the Second Subscription Agreement dated 12 June 2013, (together the “Subscription Agreements” which term
shall include all documents and addenda adding to, modifying, amending or supplementing the said Subscription Agreements),
been issued and allotted at a premium of Rs. 9,990 (Indian Rupees Nine Thousand Nine Hundred and Ninety) per share and which
may be issued hereinafter at the same premium, on preferential allotment basis, to INSITEL Services Private Limited (“INSITEL”),
into 0.01% optionally convertible non-cumulative redeemable preference shares of Rs. 10 (Indian Rupees Ten) each issued at a
premium of Rs. 9,990 (Indian Rupees Nine Thousand Nine Hundred and Ninety) per share (“OCRPS”), with each such OCRPS
being convertible into equity shares of the Company, in one or more tranches, at the sole option of the Company; and
(ii) to create, offer, issue and allot, in one or more tranches, at such time or times as the Board may in its absolute discretion thinks fit,
upto 10,000,000,000 (Ten Billion)] equity shares of the Company of Rs. 10 (Indian Rupees Ten) each (“Equity Shares”) to INSITEL
upon conversion of the OCRPS by the Company, subject to the valuation carried out in accordance with applicable law, on such
terms and conditions as may be decided and deemed appropriate by the Board at the time of issue and allotment of the Equity
Shares to INSITEL.’
‘RESOLVED FURTHER THAT the Equity Shares to be issued and allotted to INSITEL pursuant to conversion of the OCRPS by the
Company in terms of this resolution will rank pari passu with the existing equity shares of the Company in all respects, including
dividend.’
‘RESOLVED FURTHER THAT the Board be and is hereby authorized to finalize the terms of issue of the Equity Shares, decide the time
for conversion of OCRPS into Equity Shares, the ratio of conversion, the number of tranches and the number of OCRPS to be converted
into Equity Shares in each tranche, and the Equity Shares proposed to be issued on conversion of the OCRPS, to prescribe the forms of
application, enter into any agreements or other instruments and to take such actions, or give such directions as the Board may consider
necessary or desirable, and to obtain any approvals, permissions, sanctions which may be necessary or desirable as the Board may deem
fit.’
‘RESOLVED FURTHER THAT the Board be and is hereby authorized to take all such steps and to do all such acts, deeds, and things, as it
may in its absolute discretion considers necessary, expedient, usual, proper or desirable or incidental to give effect to the foregoing
resolutions and settle any question, remove any difficulty or doubt that may arise from time to time in relation thereto.’
‘RESOLVED FURTHER THAT the Board be and is hereby further authorized to delegate all or any of the powers herein conferred by this
resolution to any director(s) or to any committee of directors, as permitted under the law, to give effect to the aforesaid resolution.”
2. INCREASE IN AUTHORIZED SHARE CAPITAL AND AMENDMENT TO MEMORANDUM OF ASSOCIATION
To consider and, if thought fit, to pass with or without modification(s), the following resolution as a Special Resolution:
Regd. Office: MTS Tower, 3 Amrapali Circle, Vaishali Nagar, Jaipur, Rajasthan-302021. Tel: 0141-5100343, Fax: 0141-5100390
Corp. Office: MTS India Tower, 334, Udyog Vihar, Phase-IV, Gurgaon, Haryana-122001. Tel: 0124-4812500, Fax: 0124-4812825
CIN: U64201RJ1995PLC017779; Website: www.mtsindia.in; Email: cs.sstl@mtsindia.in
SISTEMA SHYAM TELESERVICES LIMITED
2 “RESOLVED THAT pursuant to the provisions of Sections 13 and 61 and all other applicable provisions, if any, of the Companies Act,
2013 (including any statutory modification(s) or re-enactment thereof for the time being in force) and other applicable provisions, if any,
of the Companies Act, 1956, the existing authorised share capital of the Company of Rs. 120,000,000,000 (Indian Rupees One Hundred
Twenty Thousand Million) divided into 6,000,000,000 (Six Thousand Million) equity shares of Rs. 10 (Indian Rupees Ten) each and
6,000,000,000 (Six Thousand Million) preference shares of Rs. 10 (Indian Rupees Ten) each be and is hereby increased to Rs.
250,000,000,000 (Indian Rupees Two Hundred Fifty Thousand Million) divided into 19,000,000,000 (Nineteen Thousand Million) equity
shares of Rs. 10 (Indian Rupees Ten) each and 6,000,000,000 (Six Thousand Million) preference shares of Rs. 10 (Indian Rupees Ten) each.’
‘RESOLVED FURTHER THAT the Memorandum of Association of the Company be and is hereby altered by substituting the existing
Clause V thereof by the following new Clause V:
V. The Authorised Share Capital of the Company is Rs. 250,000,000,000 (Indian Rupees Two Hundred Fifty Thousand Million) divided into
19,000,000,000 (Nineteen Thousand Million) equity shares of Rs.10 (Indian Rupees Ten) each and 6,000,000,000 (Six Thousand Million)
preference shares of Rs. 10 (Indian Rupees Ten) each.’
‘RESOLVED FURTHER THAT any of the Directors of the Company and Mr. Vishal Kohli, Company Secretary of the Company, be and
are hereby jointly or severally authorized to do all such acts, deeds and things including signing, execution, authentication and filing of all
applications, documents, forms, statements, declarations with the authorities concerned as may be required or considered necessary or
incidental thereto to give effect to the aforesaid resolution.”
3. AUTHORIZATION TO THE BOARD TO OFFER/ ISSUE UPTO 4,000,000 NON-CONVERTIBLE REDEEMABLE PREFERENCE
SHARES (NCRPS) RS. 10/- EACH.
To consider and, if thought fit, to pass with or without modification(s), the following resolution as a Special Resolution:
“RESOLVED THAT in accordance with the provisions of Section 42, 55 and 62 and other applicable provisions, if any, of the Companies
Act, 2013 and the rules made thereunder (including any amendment thereto or re-enactment thereof for the time being in force), other
applicable provisions, if any, of the Companies Act, 1956, the approval of the members of the Company be and is hereby accorded to the
Board of directors of the Company ((hereinafter referred to as the “Board” which term shall be deemed to include any committee of
directors duly constituted or to be constituted thereof to exercise its powers conferred by this resolution) to create, offer, issue and allot on
preferential basis, in one or more tranches, up to 4,000,000 (Four Million) Non-Convertible Redeemable Preference Shares (“NCRPS”) of
nominal value of INR 10/- (Indian Rupees Ten) each; whether Cumulative, Non-Cumulative, to such person(s) being institutional
investors, corporate bodies, mutual funds, banks, insurance companies, trusts, foreign investors and/ or individuals or otherwise,
whether or not such persons / entities / investors are Members of the Company as the Board may deem appropriate in its absolute
discretion on the following general terms:
S. No. Particulars Terms
1 Priority w.r.t. to Dividend or NCRPS shall be entitled to receive dividend (if any declared by the Company)
repayment of Capital or repayment of capital in priority to any payment of dividend or repayment of
capital to the holders of any other class of shares.
2 Participation in surplus funds/ assets NCRPS shall be non-participating and therefore, will not be entitled for
and profits on winding up. participation in surplus funds / assets and profits on winding up.
3 Payment of Dividend The Preferential Dividend shall be non-cumulative, and accordingly, if and to the
extent that the profits available for distribution are not sufficient to pay the full
amount (or any part thereof) of the Preferential Dividend due for payment in any
financial year, then the investor(s)shall not have the right to receive the unpaid
Preferential Dividend in the future financial years.
4 Conversion into Equity Shares. NCRPS are non-convertible.
5 Voting Rights The Investor(s) shall, by virtue of and in respect of its holding of NCRPS, have the
right to receive notice of, attend, speak and vote at a general meeting of the
Company if a resolution is to be proposed abrogating, varying or modifying any of
the rights or privileges of the Investor(s), or for the winding-up of the Company, or
for sanctioning the sale of a undertaking of the Company or for repayment or
reduction of share capital. Notwithstanding the aforesaid, the Investor(s)will be
entitled to receive notice of and attend all general meetings. It is clarified that the
Investor(s) will not be entitled to vote on any matter which does not abrogate, vary
or modify any of the rights or privileges of the Investor(s).
6 Redemption NCRPS shall be redeemed upon completion of a period of 10 years from the date on
which they are issued. The tenure of the NCRPS may exceed 10 years from the date
of issue, but shall in no circumstances exceed 20 years from the date of issue.
However, any variation (extension or reduction) in the tenure of the NCRPS will be
subject to the mutual agreement of both Parties.
7 Premium NCRPS can be issued at a premium of Rs.9,990/- per NCRPS.
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‘RESOLVED FURTHER THAT:
(a) The Board be and is hereby authorized to take all such steps and to do all such acts, deeds, and things, as it may in its absolute
discretion consider necessary, expedient, usual, proper or desirable or incidental to give effect to this resolution and settle any
question, remove any difficulty or doubt that may arise from time to time in relation to the offer, issue and allotment of NCRPS and
to finalize and issue the offer letter, to prescribe the forms of application, enter into any agreements or other instruments and to take
such actions or give such directions as the Board may consider necessary or desirable and to obtain any approvals, permissions,
sanctions which may be necessary or desirable as the Board may deem fit.
(b) The Board be and is hereby further authorized to delegate all or any of the powers herein conferred by this resolution to any
Director(s) or to any Committee of Directors, as permitted under the law, to give effect to the aforesaid resolution.”
4. AUTHORISATION TO BOARD UNDER SECTION 180(1)(c) OF THE COMPANIES ACT, 2013
To consider and, if thought fit, to pass with or without modification(s), the following resolution as a Special Resolution:
“RESOLVED THAT pursuant to the provisions of Section 180 (1)(c) of the Companies Act 2013 consent of the members of the Company
be and is hereby accorded to the Board of Directors of the Company to borrow such sums of money (including by way of secured or
unsecured debenture/loans or otherwise) in one or more tranches from time to time for the purpose of the Company’s business at its
discretion either from the Company’s bank or any other bank(s), financial institutions or any other lending institutions or persons on such
terms and conditions as it may deem suitable and proper notwithstanding that the moneys to be so borrowed together with moneys
already borrowed by the Company, if any, (apart from temporary loans obtained from the Company’s Bankers in the ordinary course of
business) may exceed the aggregate for the time being of the paid up capital of the company and its free reserves, if any, that is to say,
reserves not set apart for any specific purpose provided that the total amount of the moneys to be so borrowed by the Board together with
moneys already borrowed (apart from temporary loans obtained from the Company’s bankers in the ordinary course of business) shall
not exceed Rs. 200,000 Million (Rupees Two Hundred Thousand Million only) outstanding at any one time and that for the
implementation of this resolution the Board may act through any constituted committee / member thereof or any other person duly
authorized by the Board in that behalf.’
‘RESOLVED FURTHER THAT the Board of Directors of the Company be and is hereby authorized to do all such acts, deeds and things
and to execute, sign and deliver all such applications, documents, papers, deeds, agreements etc. (including the power to delegate such
other officers of the company) as may be required to give effect to the above resolution from time to time.”
5. AUTHORISATION TO BOARD UNDER SECTION 180(1)(a) OF THE COMPANIES ACT, 2013
To consider and, if thought fit, to pass with or without modification(s), the following resolution as a Special Resolution:
“RESOLVED FURTHER THAT pursuant to the provisions of Section 180(1)(a) and other applicable provisions, if any, of the Companies
Act, 2013 consent of the members of Company be and is hereby accorded to the Board of Directors to create the charge, mortgage,
hypothecate and/or pledge any or all of the Company’s present and future moveable and immoveable, tangible and intangible assets of
the Company, wheresoever situated as security for the loans, issue of debentures or other facilities in such form and in such manner and
on such terms and conditions as the Board of the Directors of the Company may consider and think fit and proper in the interest of the
Company, in favour of the Company’s bank or any other bank, financial institutions or any other lending institutions or persons
(“Lender”) to secure the loan/ financial facilities upto an aggregate of Rs. 200,000 Million (Rupees Two Hundred Thousand Million only)
together with interests, costs, charges, expenses, commitment charges and fees thereon and all other monies as may become due and
payable by the Company in that behalf to the Lender(s) to secure the loan/ financial facilities already obtained or to be obtained by the
Company from time to time.’
‘RESOLVED FURTHER THAT the Board of Directors of the Company be and is hereby authorized to do all such acts and deeds
including creation of security over the moveable and immoveable assets and the undertakings of the company and to execute, sign and
deliver all such applications, documents, papers, deeds, agreements etc. (including the power to delegate such other officers of the
company) as may be required to give effect to the above resolution from time to time.”
By Order of the Board
For Sistema Shyam Teleservices Limited
Sd/-
Place: Gurgaon Vishal Kohli
Dated: 17.04.2014 Company Secretary
4 Notes:
1. An explanatory statement as required under Section 102 of the Companies Act, 2013 in respect of the business specified above is annexed
hereto.
2. In terms of Section 110 of the Companies Act, 2013 read with the Companies (Management and Administration) Rules, 2014, the items of
business set out in the Notice above are sought to be passed by Postal Ballot.
3. The Notice is being sent to all the Members by post (and electronically by email to those Members who have registered their email IDs
with the Depository Participant / Company), whose names appear in the Register of Members/Record of Depositories as on May 2, 2014.
The voting shall be reckoned in proportion to a Members share of the paid up equity share capital of the Company as on May 2, 2014.
4. The Board of Directors has appointed CS Awanish K. Dwivedi of M/s. Awanish Dwivedi & Associates, Company Secretaries, as the
Scrutinizer for conducting the Postal Ballot voting process in accordance with the law and in a fair and transparent manner.
5. The shareholders are requested to carefully read the instructions printed in the attached Postal Ballot Form. The Postal Ballot Form, duly
completed and signed should be returned in the enclosed self-addressed postage prepaid envelope directly to the Scrutinizer so as to
reach the Scrutinizer before the close of working hours (17:30 hours) on or before June 21, 2014. Any Postal Ballot Form received after the
aforesaid date shall be treated as if the reply from the shareholders has not been received.
6. The shareholders are requested to exercise their voting rights by using the attached Postal Ballot Form or voting through electronic mode.
Shareholders who do not receive the Postal Ballot Form may apply to the Company/ Registrar (einward.ris@karvy.com) and obtain a
duplicate thereof. No other form or photocopy of the form is permitted.
7. The Scrutinizer will submit the report to the Chairman of the Company after completion of scrutiny.
8. The results of the Postal Ballot will be announced by the Chairman of the Company or by the Whole Time Director or any other Director or
Company Secretary on June 26, 2014 at the Corporate Office of the Company at MTS India Towers, 334 Udyog Vihar, Phase-IV, Gurgaon,
Haryana at 11:00 AM and the same result shall also be available at the Registered office of the Company i.e. MTS Towers, 3, Amrapali
Circle, Vaishali Nagar, Jaipur - 302021, Rajasthan, INDIA on the same day and will be hosted on Company’s website - www.mtsindia.in .
9. All documents referred to in the accompanying Notice and the Explanatory Statement is open for inspection at the Registered Office of the
Company during the office hours on all working days except Saturdays, between 10.00 a.m. to 12.00 Noon up to June 21, 2014.
10. The Special Resolutions proposed to be passed above shall be declared as passed and approved if votes cast in favour of the item is three
times more than the votes cast against.
11. The Notice and the Explanatory Statement has also been published on the website of the Company - www.mtsindia.in.
Instructions:-
Voting through Physical Postal Ballot Form
1. A member desiring to exercise vote by Postal ballot shall complete the enclosed Postal ballot Form with assent (for) or dissent (against)
and send it to the Scrutinizer at 334, Udyog Vihar, Phase-IV, Gurgaon-122001 in the enclosed self -addressed Business Reply Envelope.
Postage will be borne and paid by the Company. However, envelopes containing Postal Ballots, if sent by courier or by Registered Post at
the expense of the Registered Member will also be accepted. The envelopes may also be deposited personally at the address given thereon.
The Postal Ballot Form, duly completed and signed should be returned in the enclosed self-addressed postage prepaid envelope directly
to the Scrutinizer so as to reach the Scrutinizer before the close of working hours on or before Saturday, the 21st June, 2014. Any Postal
Ballot Form received after 30 days of issuance of this notice shall be treated as if the reply from the shareholders has not been received.
2. The members are requested to exercise their voting rights by using the attached Postal Ballot Form only. No other form or photocopy of
the form is permitted.
E-Voting Facility:
INSTRUCTIONS FOR VOTING:
The Company is pleased to offer e-voting facility for the members to enable them to cast their votes electronically instead of dispatching Postal
Ballot Form. Members have an option to vote either through e-voting or through Ballot Form. If a member has opted for e-voting, then he/she
should not vote by Postal Ballot also and vice-a-versa. However, in case members cast their vote both via physical ballot and e-voting, then
voting through physical ballot shall prevail and voting done by e-voting shall be treated as invalid. The instructions for members for e-voting
are as under:
(i) Open your web browser during the voting period and navigate to “https://evoting.karvy.com.
(ii) Enter the login credentials (i.e., user–id & password) mentioned on the Postal Ballot Form. Your folio/DP/Client ID will be your User
–ID.
(iii) Now, fill up the following details in the appropriate boxes.
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Enter For Members holding shares in Demat Form For Members holding shares in Physical Form
User-ID a) For NSDL:- 8 Character DP ID followed by
8 digits Client ID. the Company.
b) For CDSL:- 16 digits Beneficiary ID.
Password Your Unique Password is printed on the Postal Ballot Your Unique Password is printed on the Postal Ballot Form.
Form/ sent via email forwarded through the
electronic notice.
Captcha Enter the Verification code i.e., Please enter the alphabets Enter the Verification code i.e., Please enter the alphabets
and numbers in the exact way as they are displayed for and numbers in the exact way as they are displayed for
security reasons. security reasons.
After entering these details appropriately, click on “SUBMIT” tab.
(iv) Please contact toll free No.1-800-34-54-001 for any clarifications.
(v) After entering these details appropriately, click on “LOGIN”.
(vi) Members holding shares in Demat/Physical from will now reach Password change menu wherein they are required to mandatorily
change their login password in the new password field. The new password has to be minimum eight characters consisting of at least one
upper case (A-Z), one lower case (a-z), one numeric value (0-9) and a special character. Kindly note that this password can be used by the
Demat holders for voting for resolution of any other Company on which they are eligible to vote, provided that Company opts for evoting
through Karvy Computershare Private Limited e-Voting platform. System will prompt you to change your password and update
any contact details like mobile number, email ID etc on 1st login. You may also enter the Secret Question and answer of your choice to
retrieve your password in case you forget it. It is strongly recommended not to share your password with any other person and take
utmost care in keeping your password confidential.
(vii) You need to login again with the new credentials.
(viii) On successful login, system will prompt to select the ‘Event’ i.e., ‘Company Name’.
(ix) If you are holding shares in Demat form and have logged on to https://evoting.karvy.com and casted your vote earlier for any company,
then your existing login id and password are to be used.
(x) On the voting page, you will see Resolution Description and against the same the option ‘FOR/AGAINST /ABSTAIN’ for voting. Enter
the number of shares (which represents number of votes) under ‘FOR/AGAINST/ABSTAIN’ or alternatively you may partially enter
any number in ‘FOR’ and partially in ‘AGAINST’, but the total number in ‘FOR/AGAINST’ taken together should not exceed your total
shareholding. If the shareholders do not want to cast, select ‘ABSTAIN’.
(xi) After selecting the resolution you have decided to vote on, click on ‘SUBMIT’. A confirmation box will be displayed. If you wish to confirm
your vote, click on “OK’’, else to change your vote, click on “CANCEL’ and accordingly modify your vote.
(xii) Once your ‘CONFIRM’ your vote on the resolution, you will not be allowed to modify your vote.
(xiii) Members can cast their vote online till they have voted on all the Resolutions till the end of the voting period i.e., till the last date of receipt
of Postal Ballot Form.
(xiv) Corporate/ Institutional Members (corporate/FIs/FIIs/Trust/Mutual Funds/Banks, etc) are required to send scan (PDF format) of the
relevant Board Resolution to the Scrutinizer through email to adassociates.asia@gmail.com with copy to evoting@karvy.com. The file
scanned image of the Board Resolution should be in the naming format “Corporate Name_ Event no.”
(xv) Kindly note that the members can opt only one mode of voting i.e., either by Physical Ballot or e-voting. If you are opting for e-voting,
then do not vote by Physical Ballot also and vice versa. However, in case members(s) cast their vote both via Physical Ballot and evoting,
then voting done through Physical Ballot shall prevail and voting done by e-voting will be ignored.
(xvi) The Portal will be open for voting from : 23.05.2014 to 21.06.2014
ANNEXURE TO NOTICE
EXPLANATORY STATEMENT PURSUANT TO SECTION 102 OF THE COMPANIES ACT, 2013
Item Nos. 1 and 2
The members of the Company at their meeting held on March 30, 2012, had authorized the Board of Directors of the Company (“Board”) to issue
upto 6,000,000,000 non-convertible non-cumulative redeemable preference shares (“NCRPS”) on such terms and conditions as may be decided
by the Board (“2012 Shareholders Resolution”). Pursuant to this, the Company entered into a NCRPS Subscription Agreement dated 10
Event no. followed by Folio Number registered with
6 September 2012 with INSITEL Services Private Limited (“INSITEL”) (“First RPS Agreement which term shall include all documents and
addenda adding to, modifying, amending or supplementing the said First RPS Agreement)”) for subscription, issuance and allotment of
6,000,000 NCRPS of Rs. 10 each at a premium of INR 9,990 per NCRPS for an aggregate amount of INR 60,000,000,000. The Company further
executed a Second NCRPS Subscription Agreement dated 12 June 2013 with INSITEL (the “Second RPS Agreement” which term shall include
all documents and addenda adding to, modifying, amending or supplementing the said Second RPS Agreement), ( First RPS Agreement and the
Second RPS Agreement are hereinafter collectively referred to as the “Subscription Agreements”) for subscription, issuance and allotment of
4,000,000 NCRPS of Rs. 10 each at a premium of INR 9,990 per NCRPS for an aggregate amount of INR 40,000,000,000.
As per the terms of issue of the NCRPS, they carry a redemption premium ranging between 9.63% to 9.87% per annum and can be redeemed
only upon completion of 10 years from the date of their issue. Since the redemption of the NCRPS after the stipulated time period of 10 years may
not be economically beneficial for the Company, the management is of the view that the Company should have the discretion to convert the
NCRPS into equity shares of the Company in a phased manner. Pursuant to Section 106 of the Companies Act, 1956 (as in force at that time),
INSITEL has conveyed its consent to the Company in writing to modify the terms of the NCRPS to make them optionally convertible noncumulative
redeemable preference shares (“OCRPS”), which will be convertible into equity shares of the Company (“Equity Shares”), in one or
more tranches, at the option of the Company.
As on the date of this notice, the Company has foreign investment of 73.95%. Since INSITEL is the wholly owned subsidiary of a foreign
company in terms of the FDI Policy, the Equity Shares proposed to be issued and allotted to INSITEL pursuant to conversion of OCRPS (post
modification in the terms of the NCRPS into OCRPS) will be considered as downstream foreign investment and will be counted as FDI towards
the overall sectoral cap in the Company. Since the proposed conversion of OCRPS into Equity Shares (post change in terms of the NCRPS) will
result in an increase in the foreign equity investment beyond 74%, in the share capital of the Company, the Company has also made an
application to FIPB on March 4, 2013, for seeking its approval for consequent increase in foreign investment beyond 74% in the Company (“FIPB
Approval”).
In terms of the provisions of Section 62 and other notified provisions of the Companies Act, 2013, and other applicable laws, rules, regulations
and guidelines, approval of the members of the Company by way of a special resolution as set out under Item No. 1, is being sought to
(i) modify the terms of NCRPS to make them OCRPS;
(ii) issue and allot the Equity Shares to INSITEL upon conversion of the OCRPS, in one or more tranches, at the option of the Company.
The Board believes that the proposed modification in the terms of the NCRPS to make them OCRPS and the option to subsequently convert the
OCRPS into Equity Shares as aforesaid is in the best interest of the Company and its members and will provide much needed financial support
to the Company and will also contribute positively to maintain the net-worth of the Company.
Pursuant to Rule 13 of the Companies (Share Capital and Debenture) Rules 2014 the following disclosure pertaining to the preferential allotment
of equity shares (on conversion of OCRPS into Equity) has been set out for the consideration of the members of the Company:
A. Objects of the issue:
As the redemption of the NCRPS that have been issued and allotted, and may be issued, by the Company in terms of the Subscription
Agreement after the stipulated time period of 10 years may not be economically beneficial, the management is of the view that the
Company should have the discretion to convert the NCRPS into equity shares of the Company in a phased manner. Since the NCRPS are
not convertible instruments, the Company proposes to (i) modify the terms of NCRPS to make them OCRPS; and (ii) issue and allot the
Equity Shares to INSITEL upon conversion of the OCRPS, in one or more tranches, at the option of the Company.
B. Number of shares proposed to be issued:
The Company proposes to issue and allot up to 10,000,000,000 (Ten Billion) equity shares of Rs. 10/- each to INSITEL upon conversion of
the OCRPS, in one or more tranches, at the option of the Company..
C. Price/ price band at which the allotment is proposed and basis of valuation:
If and when the OCRPS are converted into Equity Shares, the number of Equity Shares issued will be determined as per the following
formula Total Subscription Price of the OCRPS being converted/Rs. 101
The valuer’s report on the basis of which the foregoing Subscription Price and the conversion ratio/formula, and the price of the Equity
Shares to be issued post conversion of OCRPS has been arrived at is enclosed. The relevant date for the determining the valuation the
Equity Shares that may be issued upon conversion of the OCRPS is March 31, 2014. The valuation report has been annexed to the
Explanatory statement.
1 As the value of an equity share of the Company determined by the Valuer is less than the par value (i.e. Rs.10/-) and in terms of section 53 of the Companies
Act, 2013, the Company is not allowed to issue equity shares below the par value, therefore, Rs.10/- (Rupees Ten) has been considered to be the value of the
equity shares to determine the conversion ratio.
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D. Name of proposed allottees/class of persons to whom the allotment is proposed to be made:
INSITEL, a wholly owned subsidiary of a foreign company registered in Singapore, is the sole holder of the NCRPS that have been
allotted by the Company till the date of this notice. Any future issuances of NCRPS, and the Equity Shares issued upon conversion of the
OCRPS by the Company, as per these resolutions, will be made to INSITEL. Upon conversion of OCRPS into Equity, INSITEL will become
the majority equity shareholder of the company with 75.79% equity holding.
E. Intention of the Promoters/Directors/Key Management Persons to subscribe to the offer:
The directors and the key management persons have no intention to subscribe to the proposed issuance of Equity Shares pursuant to
conversion of the OCRPS, However, Sistema, JSFC, being a promoter of the Company and being the ultimate holding company of
INSITEL, may be deemed to be indirectly subscribing to the offer.
F. Proposed time within which the allotment will be completed:
Subject to FIPB Approval, the Company proposes to modify the terms of NCRPS into OCRPS and convert the OCRPS into Equity Shares in
one or more tranches within 12 months from the date of passing of this resolution.
G. Whether a change in control is intended or expected:
Upon conversion of OCRPS into Equity Shares, INSITEL will become the majority shareholder in the Company holding more than 51% of
the total share capital of the Company, and consequently, the Company will become a subsidiary of INSITEL.
H. Number of persons to whom allotment on preferential basis have already been made during the year:
During the current financial year 2014-15 till the date of this notice, the company has not made any allotment of shares on preferential
basis.
I. Shareholding pattern of promoters and other classes of shareholders as on the date of the notice & the proposed shareholding pattern of
the promoters and other classes of shareholders after the allotment of Equity Shares pursuant to conversion of OCRPS :
(i) Equity Shares:
As on the date of notice Post conversion of OCRPS into Equity
CLASS OF NO. OF SHARES AMOUNT (Rs) % of NO. OF SHARES AMOUNT (Rs) % of
SHAREHOLDER Holding Holding
Promoters :
Sistema JSFC, Russia 1,810,289,400 18,102,894,000 56.68 1,810,289,400 18,102,894,000 13.72
Indian Promoters 766,575,760 7,665,757,600 24.00 766,575,760 7,665,757,600 5.81
INSITEL Services Pvt. Ltd. - - - 10,000,000,000* 100,000,000,000 75.79
Total (A) 2,576,865,160 25,768,651,600 80.68 12,576,865,160 125,768,651,600 95.32
Non Promoters :
Rosimuschestvo
(Federal Agency for State
Property Management of
Russian Federation) 547,312,918 5,473,129,180 17.14 547,312,918 5,473,129,180 4.15
Public Shareholding 69,741,922 697,419,220 2.18 69,741,922 697,419,220 0.53
Total (B) 617,054,840 6,170,548,400 19.32 617,054,840 6,170,548,400 4.68
TOTAL (A+B) 3,193,920,000 31,939,200,000 100.00 13,193,920,000 131,939,200,000 100.00
* The Company proposes to convert upto 10,000,000 OCRPS into equity shares of Rs. 10/- each to INSITEL upon conversion of the OCRPS.
(ii) Redeemable Preference Shares:
As on the date of notice Post conversion of OCRPS into Equity
CLASS OF NO. OF SHARES AMOUNT (Rs) % of NO. OF SHARES AMOUNT (Rs) % of
SHAREHOLDER Holding Holding
Promoters - - - - - -
Non Promoters :
INSITEL Services
Private limited 9,433,500 94,335,000 100.00 - - -
TOTAL 9,433,500 94,335,000 100 - - -
8 As on date of this notice, the authorised and paid-up share capital of the Company is as under:
Type of Shares Authorised Issued and Paid up
No. of Shares Nominal Value No. of Shares Nominal Value
@Rs.10/- per share @Rs.10/- per share
Equity Shares 6,000,000,000 60,000,000,000 3,193,920,000 31,939,200,000
Preference Shares 6,000,000,000 60,000,000,000 9,433,500 94,335,000
Total Capital 12,000,000,000 120,000,000,000 3,203,353,500 32,033,535,000
Having considered the pre-requisite of the proposed resolution under Item No. 1, it also become imperative to increase the authorized share
capital of the Company and to alter the respective capital clauses of Memorandum of Association of the Company as the present authorised
share capital of the Company will be insufficient to accommodate the proposed increase in the equity share capital post conversion of the
OCRPS. Therefore, it is proposed to increase the authorised share capital of the Company from INR 120,000,000,000- (One Hundred Twenty
Thousand Million) to INR 250,000,000,000 (Two Hundred Fifty Thousand Million) divided into 19,000,000,000 (Nineteen Thousand Million)
equity shares of INR 10 (Rupees Ten) each and 6,000,000,000 (Six Thousand Million) preference shares of INR 10 (Rupees Ten) each by passing
the resolution as set out under Item No.2.
In terms of the provisions of Sections 13 and 61 of the Companies Act, 2013 and other applicable provisions of the Companies Act, 1956, if any,
the proposed increase in the authorized share capital of the Company requires members’ approval by way of a special resolution. Therefore,
approval of the members of the Company is being sought to increase the authorised capital of the Company by passing a special resolution as set
out under Item No. 2.
The Board recommends the resolutions set forth under Item Nos. 1 and 2 above for approval of the members.
The Directors or Key Managerial Personnel or their relatives are not directly or indirectly concerned or interested in the proposed resolutions,
except to the extent of their shareholding/directorship in the Company/INSITEL.
Detailed valuation Report, referred in the Explanatory Statement shall be open for inspection at the Registered Office of the Company on all
working days between 1100 hrs to 1300 hrs upto the date of declaration of the result of Postal Ballot.
Item No. 3
To meet the long term funds requirements of the Company, it is proposed to offer/ issue upto 4,000,000 Non-Convertible Redeemable
Preference Shares (NCRPS) of Rs. 10/- each to prospective investors at a premium of Rs. 9,990/- each as contemplated in the resolution set out
under Item No. 3. The proposed issue of NCRPS may be made in one or more tranches.
The final terms and conditions of the offer / issue as and when made will be determined by the Board of Directors at the time of the offer
depending on the prevailing market conditions.
Pursuant to the provisions of Section 42, 55 and 62 of the Companies Act, 2013 and Companies (Prospectus and Allotment of Securities) Rules
2014, prior approval of shareholders by Special Resolution is required for the issue of preference shares. Accordingly, approval of the members
of the Company by way of Special Resolution as set out under Item No. 3 is being sought to issue upto 4,000,000 (Four Million) Non-Convertible
Redeemable Preference Shares of the face value of INR 10/- (Indian Rupees Ten) each and to authorise the Board to create, offer, issue and allot
shares as stated in the said resolution, which would result in issuance of further shares of the Company. The proposed Special Resolution gives
discretion to the Board (including a committee thereof) to finalize the persons to whom shares will be offered /issued, finalize the letter of offer
and to do all acts and deeds which may be required to offer, issue and allot NCRPS at appropriate time(es) including the decision of tranches.
Pursuant to Rule 9 of the Companies (Share Capital and Debenture) Rules 2014, material facts relating the issue of NCRPS have been set out as
under:
A.
S. No. Particulars Terms
1 Nature of instrument Non-Cumulative Non-Convertible Redeemable Preference Shares
2 Face value Rs. 10/- (Rupees Ten only)
3 Offer/Issue price Rs. 10,000/- (Rupees Ten Thousand only)
4 Offer/Issue size 4,000,000 NCRPS to be issued in tranches
5 Tenure The NCRPS shall be issued for a period of ten (10) years from the date on which they
are issued. The tenure of the NCRPS may exceed 10 years from the date of issue, but
shall in no circumstances exceed 20 years from the date of issue. However, any
variation (extension or reduction) in the tenure of the NCRPS will be subject to the
mutual agreement of both Parties.
9
6 Basis / Justification for the Price The redemption premium is payable on total subscription amounts and give full
return on total amounts invested. Further the premium shall provide the flexibility to
shareholders to utilize the premium in accordance with the provisions of Section 52 of
Companies Act 2013.
7 Mode and Manner of Redemption and NCRPS shall be redeemed upon the completion of ten (10) years from the date on
Payment of Redemption Premium which they are issued. The rate of redemption premium (“Rate”) shall be finally
agreed by the Parties based on the valuation carried out by a Category-1 Merchant
Banker (‘Merchant Banker’) or a Chartered Accountant. It is however agreed between
the Parties, that the Rate shall not be lower than the rate determined by the said
Merchant Banker or the Chartered Accountant, as the case may be, as the appropriate
rate of return on similar instruments with similar profile, etc. Specifically, it shall be
calculated for the period from (and including) the date of issue of NCRPS until the date
of redemption, on the aggregate sum received by the Company in relation to such
NCRPS (including the face value and any issuance premium paid thereon).
8 Terms of Conversion NCRPS are non convertible.
9 Expected dilution of Equity upon
conversion Not Applicable
10 Voting rights NCRPS holders shall, by virtue of as per applicable laws and in respect of its holding of
NCRPS, have the right to receive notice of, attend, speak and vote at a general meeting
of the Company if a resolution is to be proposed abrogating, varying or modifying any
of the rights or privileges of holders of NCRPS, or for the winding-up of the Company,
or for the repayment or reduction of its equity or preference share capital.
Notwithstanding the aforesaid, NCRPS Holder will be entitled to receive notice of and
attend all general meetings. It is clarified that holders of NCRPS will not be entitled to
vote on any matter which does not abrogate, vary or modify any of their rights or
privileges.
11 Amount payable The amount shall be called in tranches i.e. application, allotment and calls to be
determined by the board of directors of the Company.
12 Rate of dividend Out of the profits of the Company available for distribution and resolved by the Board
of Directors to be distributed, NCRPS holders shall be entitled in priority to any
payment of dividend to the holders of any other class of shares to be paid in respect of
each financial year or other accounting period of the Company other than any other
preference share a fixed non-cumulative preferential dividend (‘Preferential
Dividend’) of Rs 0.001 per NCRPS.
13 Nature of NCRPS based on dividend The Preferential Dividend shall be non-cumulative, and accordingly, if and to the
extent that the profits available for distribution are not sufficient to pay the full amount
(or any part thereof) of the Preferential Dividend due for payment in any financial
year, then holders of NCRPS shall not have the right to receive the unpaid Preferential
Dividend in the future financial years.
14 Non-marketable NCRPS shall be non-marketable i.e. they are not capable of being sold on a recognized
stock exchange.
B. Current Shareholding Pattern of the Company
I. Equity Shares:
CLASS OF SHAREHOLDER NO. OF SHARES AMOUNT (Rs) % of Holding
Promoters :
Sistema JSFC, Russia 1,810,289,400 18,102,894,000 56.68
Indian Promoters 766,575,760 7,665,757,600 24.00
- - -
Total (A) 2,576,865,160 25,768,651,600 80.68
10 Non Promoters :
Rosimuschestvo (Federal Agency for State Property
Management of Russian Federation) 547,312,918 5,473,129,180 17.14
Public Shareholding 69,741,922 697,419,220 2.18
Total (B) 617,054,840 6,170,548,400 19.32
TOTAL (A+B) 3,193,920,000 31,939,200,000 100.00
II. Non- Cumulative Non - Convertible Redeemable Preference Shares (NCRPS):
CLASS OF SHAREHOLDER NO. OF SHARES AMOUNT (Rs) % of Holding
Promoters - - -
Non Promoters :
INSITEL Services Private limited 9,433,500 94,335,000 100.00
TOTAL 9,433,500 94,335,000 100
Your Directors, commend the resolution proposed at Item No. 3 for the approval of Shareholders by way of special resolution.
The Directors or Key Managerial Personnel or their relatives are not directly or indirectly concerned or interested in the proposed resolutions,
except to the extent of their shareholding in the Company.
Item Nos. 4 & 5
The existing borrowing limits of Rs.200,000 Million was approved by the shareholders at the 16th Annual General Meeting held on 05.09.2011 by
passing an Ordinary Resolution under erstwhile section 293(1)(d) of the Companies Act 1956. The shareholders at the same meeting also
accorded their approval by an ordinary resolution passed under the erstwhile section 293(1)(a) of the Companies Act 1956 to enable the Board to
create mortgage, hypothecate and/or pledge any or all of the assets, properties or undertakings of the Company to provide security on the
funds, loans, other financial facilities taken / availed from various Banks, Financial Institutions, Bodies Corporate, Firms and/or individuals
upto an aggregate amount of Rs.200,000 Million.
In terms of the provisions of Section 180 (1) (c) and (a) of the Companies Act, 2013 notified by the Ministry of Company Affairs on 12.09.2013 the
shareholders’ approval by way of special resolution is required for any borrowing in excess of the paid up capital and free reserves and also for
create mortgage, hypothecate and/or pledge any or all of the assets, properties or undertakings of the Company.
The Ministry of Corporate Affairs has also vide circular no. 4/2014 dated 25.03.2014 has clarified that the existing approval under section 293 (1)
(d) and 1(a) of Companies Act, 1956 shall continue to be valid for a period of one year from the date of applicability of section 180 of the
companies Act, 2013. Pursuant to the said circular the resolution passed by the company at the Annual General Meeting held on 05.09.2011
increasing the borrowing powers upto Rs. 200,000 Million shall continue to be valid till 11.09.2014. Hence, the Board proposes to secure the fresh
shareholders’ approval by mean of a special resolution under the provisions of the Section 180 of Companies Act, 2013.
Your Directors, therefore, commend the resolution proposed at Item No. 4 for the approval of Shareholders by way of special resolution.
The Directors or Key Managerial Personnel or their relatives are not directly or indirectly concerned or interested in the proposed resolutions,
except to the extent of their shareholding in the Company.
By Order of the Board
For Sistema Shyam Teleservices Limited
Sd/-
Place: Gurgaon Vishal Kohli
Dated: 17.04.2014 Company Secretary
Encl:
(i) Postal Ballot Form
(ii) Self-addressed Envelope
11
ANNEXURE
To,
The Board of Directors
Sistema Shyam TeleServices Limited
MTS Tower, 334, Udyog Vihar, Phase -IV,
Gurgaon-122 001Haryana
Valuation Summary Report
Ladies and gentlemen,
1. Introduction
Ernst & Young Merchant Banking Services Private Limited (“EY”) has been appointed by the Management (the “Management”) of Sistema
Shyam Teleservices Limited (“SSTL” or “the Company”) to undertake a valuation of the Company, as required under provisions of Section 62 of
Companies Act, 2013 for the purpose of issue of equity shares by SSTL upon conversion of outstanding preference shares.
We understand that as at 31 March 2014, SSTL has outstanding preference shares worth ` 94,335 million, which have been issued to Insitel
Services Private Limited (‘Insitel’). As informed to us, these preference shares are proposed to be converted into equity shares (the
‘Transaction’).
This summary report has been prepared for the purpose of disclosure as an Appendix to the explanatory statement to the notice to be issued to
shareholders in relation to the issue of equity shares to Insitel upon conversion of preference shares. It is a summary of the information contained
in our Independent Valuation Report dated 15 April 2014 (the “Report”). Accordingly, this summary report should be read in conjunction with
the full text of the Report.
2. Terms of reference
The objective of this summary report is to provide a view of the fair market value of the equity shares of SSTL, post the conversion of preference
shares into equity, assessed on a stand-alone and going concern basis.
We are not expressing an opinion on the commercial merits and structure of the Transaction, and accordingly this summary report and the
Report do not purport to contain all the information that may be necessary or desirable to fully evaluate the commercial merits or structure of the
Transaction. Additionally, our work should not be construed as investment advice to the current and prospective equity shareholders of the
Company.
The scope of our engagement does not require us to express, and we do not express, a view on the future prospects of the Company. We are,
therefore not expressing any views on the future price of the equity shares of the Company.
Where specialist advice has been obtained by the Management of the Company and made available to us, we have considered and where
appropriate, relied upon such advice. Our work is not of the same nature as an audit, and does not constitute an audit. We are not, therefore
issuing an audit opinion. Instead, our work is in the nature of a review of the information provided to us, and discussions with members of the
Management.
The fee for the Engagement is not contingent upon the results reported.
3. Use of our summary report
As required under Section 62 of the Companies Act, 2013, in case of increase of share capital of a company by issue of further shares either for
cash or for consideration other than cash, the issue price of such shares is to be determined by a registered valuer. In this connection, SSTL has
approached us to perform the valuation.
Given the aforementioned background about the Transaction and in accordance with our engagement letter dated 19 March 2014 and its
addendum via letter dated 12 April 2014 (“Engagement Letter”), EY has carried out valuation of SSTL in its capacity as a Category - I Merchant
Banker. EY holds a Certificate of Registration granted by Securities and Exchange Board of India vide registration code number INM000010700
dated 1 January 2013.
It is to be noted that the Ministry of Corporate Affairs had not commenced the process of registration of valuers. As and when this process is
commenced, EY would be applying for the same.
4. Reliance on information and representation
In the course of our work, we have held discussions with the Management of the Company. We have also examined and relied on information
provided by them and reviewed other relevant publicly available information. We have not independently verified or sought the views of third
party industry specialists for all such information provided or any representation or assurance made by them, whether written or verbal, and
16 April 2014
12
Note: Detailed Valuation Report shall be open for inspection at the Registered Office of the Company on all working days between 1100
hrs to 1300 hrs upto the date of declaration of the result of Postal Ballot.
accordingly cannot and do not warrant or accept responsibility for the accuracy or completeness of such information, representation or
assurance. Nevertheless, the Director of the Company have confirmed to us that, to the best of their knowledge and belief after making
reasonable enquiries, the information provided to us constitute a full and true disclosure, in all material respects, of all material facts relating to
the Company as required for the purposes of our valuation (and there is no omission of material information, which would make any of the
information considered herein inaccurate, incomplete, or misleading in any material respect).
In no circumstances shall we be liable, other than in the event of our bad faith, negligence or wilful default, for any loss or damage, of whatsoever
nature arising from information material to our work being withheld or concealed from us or misrepresented to us by the Directors, employees,
or agents or any person of whom we may have made inquiries during the course of our work.
5. Valuation methodology
We have computed value of the Company under Discounted Cash Flow (DCF), Comparable Companies’ Multiples (CCM) and Comparable
Transaction Multiples (CTM) methods. In view of the fact that the business operations have not yet reached its sustainable level and in the
absence of historical track record of profitability, we have assigned 100% weight to DCF method.
The enterprise value was then appropriately adjusted for fair value of net debt and liabilities, to arrive at appropriate equity value. The number
of shares were considered on a fully diluted basis (including the preference shares being convertible into equity) to arrive at per share equity
value.
Fair market value is generally defined as the amount at which an asset could be exchanged between a knowledgeable, willing but not anxious
buyer and a knowledgeable, willing but not anxious seller, acting in an arm’s length transaction, in an open and unrestricted market.
Our valuation is based on various assumptions with respect to the Company, including its present and future financial condition, business
strategies and the environment in which it will operate in the future. These assumptions are based on the information that we have been
provided with and our discussions with the Management, and reflect current expectations and views regarding future events, and therefore
necessarily involve known and unknown risks and uncertainties.
The estimates of earnings and cash flow data, to the extent they relate to the future, reflects the expectations of the Management as to the
business prospects of the Company and are solely for use in our valuation exercise.
Furthermore, there will usually be differences between estimated and actual results because events and circumstance may, or often do not occur
as expected and those differences may be material.
We have set out in the Report the key assumptions used in our valuation as well as factors that, in our opinion, may have a material impact on the
valuation of the Company. It should be noted that it is not an exhaustive list of all factors relevant to the business of the Company.
6. Conclusion
In summary and as detailed in the Report, which should be read in conjunction with this summary report to the Directors, as instructed, EY has
adopted the fair market value as the standard of value. The fair market value of the fully diluted equity shares of the Company, assessed on a
stand-alone and going concern basis is ` 58,368 million, as at the Valuation Date. This works out to equity value per share of ` 4.62.
Our views are based on the current economic, market, industry, regulatory, monetary and other conditions and on the information made
available to us as of the date of this summary report and the Report. Such conditions may change significantly over a relatively short period of
time and we assume no responsibility and are not required to update, revise or reaffirm our conclusion set out in this summary report to reflect
events or developments subsequent to the date of this summary report and the Report.
Yours faithfully,
For and on behalf of
Ernst & Young Merchant Banking Services Private Limited
Sd/-
CA Pradeep Gupta
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