Gennex Laboratories : Letter of offer of Gennex Laboratories Limited (Final Offer Document filed with Stock Exchanges)

Letter of Offer

Dated: 16th July, 2022

For Eligible Equity Shareholders only

GENNEX LABORATORIES LIMITED

The Company was originally incorporated on 25th June, 1985, as "Pharmasia Drugs and Chemicals Private Limited" under the Companies Act, 1956 as a private limited company with the Registrar of Companies, Bengaluru, Karnataka. The Registered Office of the Company was shifted from the state of Karnataka to Andhra Pradesh on 29th March, 1990 and subsequently the Company was converted into a public limited company on 15th February, 1995. The Company's name was changed to "Prudential Pharmaceuticals Limited" on 22nd February, 1995 and further to "Gennex Laboratories Limited" on 19th September, 2007.

Corporate Identification Number: L24230TG1990PLC011168.

Registered Office: Survey #133, IDA Bollaram, Jinnaram Mandal, Sanga Reddy District - 502 325, Telangana, India. Corporate Office: Akash Ganga, 03rd Floor, Plot No.144, Srinagar Colony, Hyderabad 500073, Telangana, India.

Phone: [phone];E-mail:[e-mail]; website: www.gennexlab.com Contact Person: Mr. Rajesh Vankadara, Company Secretary and Compliance Officer

PROMOTERS OF THE COMPANY: MR. ARIHANT BAID AND M/S. PREMIER FISCAL SERVICES PRIVATE LIMITED

FOR PRIVATE CIRCULATION TO THE ELIGIBLE EQUITY SHAREHOLDERS OF GENNEX LABORATORIES LIMITED ONLY

THE COMPANY, THE PROMOTERS AND THE DIRECTORS ARE NOT CATEGORISED AS WILLFUL DEFAULTERS OR

FRAUDULENT BORROWERS AS ON THE DATE OF THIS LETTER OF OFFER

ISSUE OF UPTO 6,32,51,500 EQUITY SHARES OF FACE VALUE OF ₹1.00 EACH ("RIGHTS EQUITY SHARES") OF THE COMPANY FOR CASH AT A PRICE OF ₹6 PER RIGHTS EQUITY SHARE INCLUDING A SHARE PREMIUM OF ₹5 PER RIGHTS EQUITY SHARE (THE "ISSUE PRICE") AGGREGATING UPTO ₹ 37. 951 CRORES* ("THE ISSUE") ON A RIGHTS BASIS TO THE EXISTING ELIGIBLE EQUITY SHAREHOLDERS OF THE COMPANY IN THE RATIO OF 1(ONE) RIGHTS EQUITY SHARE FOR EVERY 2(TWO) FULLY PAID-UP EQUITY SHARES HELD BY THE ELIGIBLE EQUITY SHAREHOLDERS ON THE RECORD DATE, THAT IS 22ND JULY, 2022 (THE "ISSUE"). THE ISSUE PRICE IS FOR THE RIGHTS EQUITY SHARES IS 6 TIMES THE VALUE OF THE EQUITY SHARES. FOR FURTHER DETAILS, PLEASE REFER TO THE CHAPTER TITLED "TERMS OF THE ISSUE" ON PAGE NO.179 OF THIS LETTER OF OFFER.

*Assuming full subscription and receipt of all Call Monies with respect to Rights Equity Shares.

PAYMENT SCHEDULE FOR RIGHTS EQUITY SHARES

Amount payable per Rights Equity Share*	Face Value (₹)	Premium (₹)	Total (₹)
On Application	0.25	1.25	1.50
On First and Final Call#	0.75	3.75	4.50
Total (₹)	1.00	5.00	6.00

*For further details on Payment Schedule, refer chapter titled "Terms of the Issue" on Page No. 179 of this Letter of Offer. #To be paid at such time as may be determined by the Board at its sole discretion.

GENERAL RISKS

Investment in equity and equity related securities involve a degree of risk and investors should not invest any funds in the Issue unless they can afford to take the risk of losing such investment. Investors are advised to read the risk factors carefully before taking an investment decision in the Issue. For taking an investment decision, investors must rely on their own examination of the Company and this Issue including the risks involved. The Rights Equity Shares being offered in the Issue have not been recommended nor approved by the Securities and Exchange Board of India ("SEBI"), nor does SEBI guarantee the accuracy or adequacy of this Letter of Offer, Specific attention of the investors is invited to "Risk Factors" beginning on page no.21 of this Letter of Offer.

COMPANY'S ABSOLUTE RESPONSIBILITY

The Company, having made all reasonable inquiries, accepts responsibility for and confirms that this Letter of Offer contains all information with regard to the Company and the Issue, which is material in the context of this Issue; 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 of the Company are listed on BSE limited ("BSE"). The Company has received "In-Principle" approval from BSE for the Rights Equity Shares to be allotted pursuant to this Issue vide E-LetterDCS/RIGHT/VJ/FIP/2380/2022-23 dated 30th June, 2022. For the purpose of this Issue, BSE is the Designated Stock Exchange.

LEAD MANAGER TO THE ISSUE	REGISTRAR TO THE ISSUE
Quintessence Enterprises Private Limited	Bigshare Services Private Limited
Regd and Corporate office:	Corporate Office No S6-2, 6th floor Pinnacle Business Park, Next to Ahura
8-2-603/1/VP, Plot No.8A, Road No.10,	Centre, Mahakali Caves Road, Andheri (East), Mumbai - 400072
Banjara Hills, Hyderabad-500082.	Tel. No.: +91 - 22 - 6263 8200
Tel No: [phone]	e-mail:[e-mail] website: www.bigshareonline.com
e-mail:[e-mail],web: www.qeplindia.com	Investor Grievance Email: [e-mail]
Contact Person: Ms.Lavanya Chandra	Contact Person: Mr. Vijay Surana
SEBI Registration No.: INM000011997	SEBI Regn. No.: INR000001385

ISSUE SCHEDULE

ISSUE OPENS ON	LAST DATE FOR ON MARKET RENUNCIATION*	ISSUE CLOSES ON#
5 AUGUST, 2022	12 AUGUST, 2022	19 AUGUST, 2022

*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.

# The 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

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that this Issue will not remain open in excess of 30 (thirty) days from the Issue Opening Date. Further, no withdrawal of Application shall be permitted by any Applicant after the Issue Closing Date.

TABLE OF CONTENTS

PARTICULARS	PAGE #
SECTION-I: GENERAL
DEFINITIONS AND ABBREVIATIONS	3
NOTICE TO INVESTORS	13
CERTAIN CONVENTIONS, USE OF FINANCIAL INFORMATION AND	16
CURRENCY OF PRESENTATION
FORWARD LOOKING STATEMENTS	17
SECTION II: SUMMARY OF LETTER OF OFFER	19
SECTION III: RISK FACTORS	21
SECTION IV: INTRODUCTION
THE ISSUE	32
GENERAL INFORMATION	34
CAPITAL STRUCTURE	38
SECTION V: PARTICULARS OF THE ISSUE
OBJECTS OF THE ISSUE	40
STATEMENT OF TAX BENEFITS	47
SECTION VI: ABOUT THE COMPANY
INDUSTRY OVERVIEW	51
BUSINESS OVERVIEW	53
MANAGEMENT	62
SECTION VII: FINANCIAL INFORMATION
FINANCIAL STATEMENTS	68
ACCOUNTING RATIOS	164
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL	165
CONDITION AND RESULTS OF OPERATIONS
SECTION VIII: LEGAL AND OTHER INFORMATION
OUTSTANDING LITIGATIONS AND DEFAULTS	169
MATERIAL DEVELOPMENTS	172
GOVERNMENT AND OTHER STATUTORY APPROVALS	172
OTHER REGULATORY AND STATUTORY DISCLOSURES	173
SECTION IX: ISSUE RELATED INFORMATION
TERMS OF THE ISSUE	179
RESTRICTIONS ON FOREIGN OWNERSHIP OF INDIAN SECURITIES	213
SECTION X: OTHER INFORMATION
MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION	215
DECLARATION	216

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SECTION -I: GENERAL DEFINITIONS AND ABBREVIATIONS

In this Letter of Offer, unless the context otherwise requires, the terms and abbreviations stated hereunder shall have the meanings as assigned therewith. References to statutes, rules, regulations, guidelines and policies will be deemed to include all amendments, modifications or re-enactment notified thereto.

In this Letter of Offer, unless otherwise indicated or the context otherwise requires, all references to "Gennex Laboratories Limited", "Gennex", the/our "Company", "we", "our", "us" or similar terms are to Gennex Laboratories Limited or, as the context requires, and references to "you" are to the equity shareholders and/ or prospective investors in the Equity Shares.

Notwithstanding the foregoing, terms under the sections titled "Industry Overview", "Statement of Tax Benefits", "Financial Statements" and "Outstanding Litigation and Other Defaults" shall have the meanings given to such terms in these respective sections/chapters.

Term	Description
"Gennex Laboratories	Gennex Laboratories Limited, a public limited company incorporated under
Limited", or "GLL", or	the provisions of the Companies Act, 1956.
"Company" or "Our
Company" or "we" or "us"
or "the issuer"
"We" or "us" or "our"	Unless the context otherwise indicates or implies, refers to Gennex
Laboratories Limited
Company Related Terms
Term	Description
Article of Association or	Articles of Association of the Company, as amended.
AoA
Audit Committee	The audit committee of the Company comprising Y Ravinder Reddy, T M
Gopalakrishnan, Sadhana Bhansali, A S Nageswara Rao.
	The audited consolidated financial statements of the Company, comprising the
	consolidated balance sheet as at March 31, 2022, the consolidated statement of
	profit and loss for the financial year ended March 31, 2022, the consolidated
Audited Consolidated	statement of changes in equity and the consolidated statement of cash flows for
Financial Statements	the financial year ended March 31, 2022, prepared in conformity with Indian
	Accounting Standards prescribed under Section 133 of the Companies Act read
	with the Companies (Indian Accounting Standards) Rules, 2015, as amended,
	and other accounting principles generally accepted in India.
Auditor or Statutory Auditor	M/s. PPKG & Co, Chartered Accountants.
Board or Board of Directors	Board of directors of the Company or a duly constituted committee thereof.
Chairman	Chairman of the Company, Mr. Arihant Baid
Chief Financial Officer or	Chief Financial Officer of the Company, Mr. Laxmipat Baid
CFO
Company Secretary &	Company Secretary & Compliance Officer of the Company Mr. Rajesh
Compliance Officer	Vankadara
Consolidated Financial	Audited Consolidated Financial Statements
Statements
Equity Shareholder	A holder of Equity shares, from time to time.
Equity Shares	The Equity Shares of the Company of face value ₹.1/- each, unless otherwise
specified in the context thereof.

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		The independent director(s) of the Company, in terms of Section 2(47) and
Independent Directors		Section 149(6) of the Companies Act and Regulation 16(1)(b) of the SEBI
	Listing Regulations. For further details, please refer to the chapter entitled
		'Management' beginning on page no.62.
		Key management / managerial personnel of the Company in accordance with
Key Managerial Personnel		Regulation 2(1)(bb) of the SEBI ICDR Regulations and as described in the
		chapter entitled 'Management' beginning on page no.62.
Managing Director		The Managing Director of the Company, Mr. Arihant Baid
Manufacturing Facility		The Company Manufacturing facility located at Survey #133, IDA Bollaram,
	Jinnaram Mandal, Sangareddy - 502 325 Telangana State, India.
Memorandum of		Memorandum of Association of the Company, as amended.
Association or MoA
Nomination and		The Nomination and Remuneration Committee of the Company comprising Y
Remuneration Committee		Ravinder Reddy, Sadhana Bhansali, A S Nageswar Rao, A R R Pantulu
Non-Executive Director(s)		A Director not being an Executive Director.
Product (s)		Bulk Drugs & API's manufactured by the Company. For more details, please
	refer to the chapter entitled 'Business Overview' beginning on page 53.
Promoters		Arihant Baid & M/s. Primer Fiscal Services Private Limited
Registered Office		Survey #133, IDA Bollaram, Jinnaram Mandal, Sangareddy District - 502 325,
	Telangana State, India.
		The Rights Issue Committee of the Company constituted vide Board resolution
Rights Issue Committee		dated 06th April, 2022, and compromising Arihant Baid, Y Ravinder Reddy and
		A S Nageswar Rao.
Stakeholder's Relationship		The Stakeholder's Relationship Committee of the Company comprising Y
Committee		Ravinder Reddy, Sadhana Bhansali, A S Nageswar Rao, A R R Pantulu
Conventional or General Terms
Term		Description
₹/Rs./Rupees /INR		Indian Rupee, the official currency of the Republic of India.
A/c		Account
AGM		Annual General Meeting
		Alternative investment fund, as defined and registered with SEBI
AIF		under the Securities and Exchange Board of India (Alternative
	Investment Funds) Regulations, 2012
AS		Accounting Standards issued by the Institute of Chartered Accountants of
	India
		The audited financial statements of the Company for FY 22 comprising of the
		balance sheet, the statement of profit and loss, including other comprehensive
		income, the cash flow statement and the statement of changes in equity for
Audited Financial Statements		the year then ended, and notes to the financial statements, including a
		summary of significant accounting policies and other explanatory
		information.
Auditors / Statutory Auditors		The Statutory Auditors of the Company being M/s. PPKG & Co.,
	Chartered Accountants
BSE		BSE limited also known as Bombay Stock Exchange

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CAGR	Compound Annual Growth Rate
CDSL	Central Depository Services (India) Limited
Central Government or	Central Government of India
Government of India or GoI
CIN	Corporate Identification Number
Companies Act, 1956	Erstwhile Companies Act, 1956 along with the relevant rules made
Companies Act or	Companies Act, 2013, along with the relevant rules, regulations,
Companies Act, 2013	clarifications, circulars and notifications issued thereunder.
Depositories	A depository registered with SEBI under the SEBI (Depositories and
Participant) Regulations, 1996, in this case being NSDL and CDSL.
DIN	Director Identification Number
DIPP	Department of Industrial Policy and Promotion
DP ID	Depository Participant's Identification
EBITDA	Profit before tax + depreciation and amortization expenses and Interest cost
+ share of profit from associates-other income.
EGM	Extraordinary General Meeting
EPS	Earnings per Share
FCNR Account	Foreign Currency Non-Resident Account
FDI	Foreign Direct Investment
	Consolidated FDI Policy dated 15th October, 2020 issued by the Department
FDI Circular 2020	for Promotion of Industry and Internal Trade, Ministry of Commerce and
	Industry,
FEMA	The Foreign Exchange Management Act, 1999 read with rules and regulations
thereunder.
Financial Year, Fiscal,	Unless stated otherwise, the period of 12 months ending March 31 of that
fiscal, Fiscal Year or FY	particular year.
FIPB	The erstwhile Foreign Investment Promotion Board
FPI(s)	Foreign Portfolio Investors as defined under the SEBI FPI Regulations
FVCI	Foreign Venture Capital Investors as defined and registered under the SEBI
GDP	Gross Domestic Product
GAAR	General Anti Avoidance Rules
IFRS	International Financial Reporting Standards
IFSC	Indian Financial System Code
Income Tax Act	The Income Tax Act, 1961 and amendments thereto
India	Republic of India
	Indian Accounting Standards prescribed under Section 133 of the Companies
Ind AS	Act, 2013, as notified under Companies (Indian Accounting Standards) Rules
2015, as amended
Ind GAAP	Generally Accepted Accounting Principles in India
Insider Trading	Securities and Exchange Board of India (Prohibition of Insider
Regulations	Trading) Regulations, 2015
Insolvency Code	Insolvency and Bankruptcy Code, 2016
ISIN	International Securities Identification Number
IT	Information Technology
KL	Kilo Liters
KYC	Know Your Customer
LATNAM	Latin American Countries
MCA	Ministry of Corporate Affairs
Mn/mn	Million

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