UGRO Capital : Draft Prospectus (Debt Offer Document Draft filed with SE)

About this update from Ugro Capital Limited

Draft Prospectus Dated March 20, 2025 (Please scan this QR code to view the Draft Prospectus) UGRO Capital Limited UGRO Capital Limited (" Company " or the " Issuer ") was incorporated as "Chokhani Securities Private Limited" under the Companies Act, 1956 on February 10, 1993 with Registrar of Companies, Maharashtra at Bombay. Our Company was subsequently converted into a public limited company pursuant to the fresh Certificate of Incorporation issued by the Registrar of Companies, Maharashtra at Bombay on July 26, 1994. The name of our Company was subsequently changed from "Chokhani Securities Limited" to "UGRO Capital Limited" and a fresh Certificate of Incorporation was issued by Registrar of Companies, Maharashtra at Mumbai ("RoC") on September 26, 2018. Our Company is also registered with RBI as non-deposit taking Non-Banking Finance Company classified as NBFC- Middle Layer with registration no. 13.00325 dated October 26, 2018 and further our Company has obtained certificate of registration dated January 09, 2024 bearing no. N-13.02475, to commence/carry on the factoring business without accepting public deposits. For further details about our Company, see " General Information " and " History and Certain Corporate Matters " on pages 63 and 190. Registered and Corporate Office: Equinox Business Park, Tower 3, Fourth Floor, Off BKC, LBS Road, Kurla, Mumbai - 400070, Maharashtra, India; Tel .: +91 22 4182 1600; CIN : L67120MH1993PLC070739; PAN : AAACC2069E Website : www.ugrocapital.com ; Email : [email protected]; Company Secretary & Compliance Officer : Satish Chelladurai Kumar, Tel. : +91 22 4182 1600; Email : [email protected]; Chief Financial Officer : Kishore Kumar Lodha; Tel. : +91 22 4182 1600; Email : [email protected] PUBLIC ISSUE BY OUR COMPANY OF UPTO 20,00,000 SECURED, RATED, LISTED, REDEEMABLE, NON- CONVERTIBLE DEBENTURES OF FACE VALUE OF ₹ 1,000 EACH ("NCDS") FOR AN AMOUNT UP TO ₹ 10,000 LAKH ("BASE ISSUE SIZE") WITH AN OPTION TO RETAIN OVERSUBSCRIPTION UP TO ₹ 10,000 LAKH ("GREEN SHOE OPTION"), FOR AN AGGREGATE AMOUNT OF UP TO ₹ 20,000 LAKH ("ISSUE SIZE" OR "ISSUE LIMIT") (HEREINAFTER REFERRED TO AS THE "ISSUE") THROUGH THIS DRAFT PROSPECTUS. THE NCDS WILL BE ISSUED ON TERMS AND CONDITIONS AS SET OUT IN THE PROSPECTUS WHICH SHOULD BE READ TOGETHER WITH THIS DRAFT PROSPECTUS (COLLECTIVELY, THE "OFFER DOCUMENTS"). THIS ISSUE IS BEING MADE PURSUANT TO THE PROVISIONS OF THE SECURITIES AND EXCHANGE BOARD OF INDIA (ISSUE AND LISTING OF NON-CONVERTIBLE SECURITIES) REGULATIONS, 2021, AS AMENDED (THE "SEBI NCS REGULATIONS"), THE COMPANIES ACT, 2013 AND THE RULES MADE THERE UNDER, EACH AS AMENDED (THE "COMPANIES ACT, 2013") AND THE SEBI MASTER CIRCULAR. THIS ISSUE IS NOT UNDERWRITTEN. OUR PROMOTER Our Promoter is Poshika Advisory Services LLP; Tel .: +91 124 4091777; Email : [email protected] . For further details, see " Our Promoter " on page 224. GENERAL RISKS Investment in non-convertible securities is risky and investors should not invest any funds in such securities unless they can afford to take the risk attached to such investments. Investors are advised to take an informed decision and to read the risk factors carefully before investing in this offering. For taking an investment decision, investors must rely on their examination of the issue including the risks involved in it. Specific attention of investors is invited to statement of risk factors contained under " Risk Factors " and " Material Developments " on page 27 and 267 respectively of this Draft Prospectus. These risks are not, and are not intended to be, a complete list of all risks and considerations relevant to the NCDs or investor's decision to purchase such securities. This Draft Prospectus has not been and will not be approved by any regulatory authority in India, including the Securities and Exchange Board of India (" SEBI "), the Reserve Bank of India (" RBI "), RoC or any Stock Exchanges in India nor do they guarantee the accuracy or adequacy of this document. CREDIT RATING The NCDs proposed to be issued under the Issue have been rated "IND A+/STABLE for r an amount of ₹ 20,000 Lakh by India Ratings & Research Private Limited vide their rating letter dated February 25, 2025, and press release dated December 30,2024. The rating provided by India Ratings & Research Private Limited is valid as on the date of this Draft Prospectus and shall remain valid on date of the Issue and Allotment of NCDs and the listing of the NCDs on Stock Exchanges. Securities with this rating are considered to have adequate degree of safety regarding timely servicing of financial obligations. Such securities carry low credit risk. The ratings provided by India Ratings & Research Private Limited may be suspended, withdrawn or revised at any time on the basis of factors such as new information by the assigning rating agency and should be evaluated independently of any other rating. These ratings are not a recommendation to buy, sell or hold securities and Investors should take their own decisions. In case of any change in credit ratings till the listing of NCDs, our Company will inform the investors through public notices/ advertisements in all those newspapers in which pre issue advertisement will be given. For the rationale, rating letters and press release for these ratings, see " Annexure A " of this Draft Prospectus, on page 492. There are no unaccepted ratings and any other ratings other than as specified in this Draft Prospectus. LISTING The NCDs offered through this Draft Prospectus are proposed to be listed on BSE Limited (" BSE ") and National Stock Exchange of India Limited (" NSE "). NSE shall be the Designated Stock Exchange. Our Company has received an 'In - Principle' approval from BSE vide their letter bearing reference number [●], dated [●] and NSE vide their letter bearing reference numbe r [●], dated [●]. PUBLIC COMMENTS This Draft Prospectus dated March 20, 2025 has been filed with BSE and NSE, pursuant to Regulation 27(2) of the SEBI NCS Regulations and will be open for public comments for a period of One Working Days (i.e., until 5 p.m.) from the date of filing of this Draft Prospectus with the Stock Exchanges. All comments on this Draft Prospectus are to be forwarded to the attention of Company Secretary and Compliance Officer of our Company. All comments received on this Draft Prospectus will be suitably addressed prior to filing of the Prospectus with the RoC. COUPON RATE, COUPON PAYMENT FREQUENCY, REDEMPTION DATE, REDEMPTION AMOUNT & ELIGIBLE INVESTORS For details relating to Coupon Rate, Coupon Payment Frequency, Redemption Date, Redemption Amount, please refer to " Terms of the Issue " on page 306 . For details relating to Eligible Investors, please refer to " Issue Structure " on page 273. LEAD MANAGER TO THE ISSUE REGISTRAR TO THE ISSUE Tipsons Consultancy Services Private Limited 1st Floor, Sheraton House, Opposite Ketav Petrol Pump, Polytechnic Road, Ambawadi, Ahmedabad - 380 015, Gujarat, India Tel.: +91 79 66828064 / 66828127 Email: [email protected] Investor Grievance Email : [email protected] Contact person: Divyani Koshta Website: www.tipsons.com SEBI registration number: INM000011849 MUFG Intime India Private Limited (Formerly known as Link Intime India Private Limited) C 101, 247 Park, L B S Marg Vikhroli West, Mumbai - 400 083 Tel. : +91 810 811 4949 Fax : +91 22 49186160 Email : [email protected] Investor Grievance Email: [email protected] Contact person: Shanti Gopalkrishnan Website: www.in.mpms.mufg.com SEBI registration number: INR000004058 Credit Rating Agency Debenture Trustee** Statutory Auditor M/s Sharp & Tannan Associates Chartered Accountants India Ratings and Research MITCON Credentia Trusteeship 87, Nariman Bhavan, 227 Nariman Point, Private Limited Services Limited Mumbai 400021 Wockhardt Towers, 4 th Floor, West Registered Address : Kubera Tel. : +91 22 6153 7500, 2202 2224/8857; Wing, Bandra Kurla Complex, Chambers, 1 st Floor, Shivajinagar, Email : [email protected] , Bandra (E) Mumbai - 400 051, Pune 411005, Maharashtra, India Contact Person : Mr. Tirtharaj Khot Maharashtra, India Corporate Address : 1402/03, B- Tel: +91 22 40001700 Wing, Dalamal Tower, 14th Floor, Fax: +91 22 40001701 Free Press Journal Marg, 211, Nariman Email: [email protected] Point, Mumbai- 400021, India Website: www.indiaratings.co.in Tel. : +91 22828200 Contact Person: Mr. Karan Gupta Fax: +91 22024553 SEBI Registration No.: Email : [email protected] IN/CRA/002/1999 Investor Grievance Email : [email protected] Contact person : Ms Vaishali Urkude Website: www.mitconcredentia.com SEBI registration number: IND000000596 ISSUE PROGRAMME * Issue Closes on [●] [●] Issue Opens on * This Issue shall remain open for subscription on Working Days from 10:00 a.m. to 5:00 p.m. (Indian Standard Time) during the period indicated in the Prospectus, except that the Issue may close on such earlier date or extended date (subject to a minimum period of two Working Days and a maximum period of ten Working Days from the date of opening of the Issue) as may be decided by the Board of Directors of the Company or the Investment and Borrowing Committee, subject to compliance with Regulation 33A of the SEBI NCS Regulations. In the event of an early closure or extension of the Issue, our Company shall ensure that notice of the same is provided to the prospective investors through an advertisement in all the newspapers in which pre-issue advertisement for opening of this Issue has been given on or before such earlier or initial date of Issue closure. Application Forms for this Issue will be accepted only from 10:00 a.m. to 5:00 p.m. (Indian Standard Time). On the Issue Closing Date, the Application Forms will be accepted only between 10:00 a.m. and 3:00 p.m. (Indian Standard Time) and uploaded until 5:00 p.m. (Indian Standard Time) or such extended time as may be permitted by the Stock Exchanges. Further, pending mandate requests for bids placed on the last day of bidding will be validated by 5:00 p.m. (Indian Standard Time) on one Working Day post the Issue Closing Date. For further details please refer to "Issue Related Information" on page 273 . ** MITCON Credentia Trusteeship Services Limited under Regulation 8 of SEBI NCS Regulations has vide its letter dated March 20, 2025 given its consent for its appointment as Debenture Trustee to the Issue and for its name to be included in the Draft Prospectus, Prospectus and in all the subsequent periodical communications sent to the holders of the NCDs issued pursuant to the Issue. A copy of the Prospectus shall be filed with the Registrar of Companies, Maharashtra at Mumbai in terms of sub-section (4) of Section 26 of Companies Act, 2013, along with the endorsed/certified copies of all requisite documents. For further details, please refer to "Material Contracts and Documents for Inspection" on page 488 and "Issue Related Information" on page 273. TABLE OF CONTENTS SECTION I: GENERAL .................................................................................................................. 1 DEFINITIONS AND ABBREVIATIONS ....................................................................................... 1 FORWARD LOOKING STATEMENTS ...................................................................................... 21 CERTAIN CONVENTIONS, USE OF FINANCIAL, INDUSTRY AND MARKET DATA AND CURRENCY OF PRESENTATION ............................................................................................. 23 SECTION II: RISK FACTORS ..................................................................................................... 27 SECTION III: INTRODUCTION ................................................................................................. 63 GENERAL INFORMATION ......................................................................................................... 63 CAPITAL STRUCTURE ................................................................................................................ 77 OBJECTS OF THE ISSUE .......................................................................................................... 124 STATEMENT OF POSSIBLE TAX BENEFITS ........................................................................ 129 SECTION IV: ABOUT THE ISSUER AND INDUSTRY OVERVIEW .................................. 145 INDUSTRY OVERVIEW ............................................................................................................. 145 OUR BUSINESS ........................................................................................................................... 169 HISTORY AND CERTAIN CORPORATE MATTERS ............................................................ 190 OUR MANAGEMENT ................................................................................................................. 194 OUR PROMOTER ....................................................................................................................... 224 SECTION V: FINANCIAL INFORMATION ............................................................................ 228 DISCLOSURES ON EXISTING FINANCIAL INDEBTEDNESS .......................................... 228 MATERIAL DEVELOPMENTS ................................................................................................. 267 RELATED PARTY TRANSACTIONS ....................................................................................... 268 SECTION VI: ISSUE RELATED INFORMATION ................................................................. 273 ISSUE STRUCTURE ................................................................................................................... 273 TERMS OF THE ISSUE .............................................................................................................. 306 ISSUE PROCEDURE ................................................................................................................... 329 SECTION VII: LEGAL AND OTHER INFORMATION ........................................................ 375 OUTSTANDING LITIGATIONS AND DEFAULTS ................................................................. 375 OTHER REGULATORY AND STATUTORY DISCLOSURES .............................................. 398 KEY REGULATIONS AND POLICIES .................................................................................... 443 PROVISIONS OF ARTICLES OF ASSOCIATION .............................................................. 464 MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION ................................. 488 DECLARATION ........................................................................................................................... 491 ANNEXURE A- RATING, RATIONALE AND PRESS RELEASE ........................................ 492 ANNEXURE B- DEBENTURE TRUSTEE CONSENT LETTER .......................................... 493 ANNEXURE C- FINANCIAL STATEMENTS .......................................................................... 494 SECTION I: GENERAL DEFINITIONS AND ABBREVIATIONS This Draft Prospectus uses certain definitions and abbreviations which, unless the context otherwise indicates or implies, shall have the meaning ascribed to such definitions and abbreviations set forth. References to any legislation, act, regulation, rules, guidelines, clarifications or policies shall be to such legislation, act, regulation, rules, guidelines, clarifications or policies as amended, supplemented or re-enacted from time to time until the date of this Draft Prospectus, and any reference to a statutory provision shall include any subordinate legislation notified from time to time pursuant to such provision. The words and expressions used in this Draft Prospectus but not defined herein shall have, to the extent applicable, the same meaning ascribed to such words and expressions under the SEBI NCS Regulations, the Companies Act, 2013, the SCRA, the Depositories Act, the RBI Act and the rules and regulations notified thereunder. Notwithstanding the foregoing, the terms defined as part of "General Information", "Risk Factors", "Industry Overview", "Key Regulations and Policies", "Statement of Possible Tax Benefits", "Provisions of Articles of Association", "Financial Information" and "Other Regulatory and Statutory Disclosures" on pages 63, 27, 145, 443, 129, 464, 228 and 397, respectively shall have the meaning ascribed to them as part of the aforementioned sections. Terms not defined as part of the sections "Our Business", "Risk Factors", "Industry Overview" and "Key Regulations and Policies", on pages 169, 27, 145 and 443, respectively, shall have the meaning ascribed to them hereunder. General Terms Term Description "Issuer" / "UGRO" / "Company" Unless the context otherwise indicates or implies, refers to UGRO Capital Limited, a public limited company incorporated in India under the Companies Act, 1956 and validly existing under the Companies Act 2013, having its registered and corporate office at Equinox Business Park, Tower 3, Fourth Floor, Off BKC, LBS Road, Kurla, Mumbai - 400070, Maharashtra, India We / us / our Unless the context otherwise indicates or implies, refers to the Company Company related terms : Term Description Articles / Articles of Association / AoA Articles of association of our Company Asset Committee Liability Asset Liability Committee as constituted by the Board of Directors of our Company in accordance with applicable laws Audit Committee Audit committee as constituted by the Board of Directors of our Company in accordance with applicable laws Term Description Audited Statements Financial Collectively, the audited financial statements of our Company as of and for the years ended March 31, 2024, March 31, 2023 and March 31, 2022 which have been prepared in accordance with the Ind AS, as specified under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended and other relevant provisions of the Companies Act, 2013 to the extent applicable, each comprising of the audited balance sheet, audited statement of profit and loss (including other comprehensive income), audited statement of changes in equity and the audited statement of cash flow for the years then ended, and notes to the respective financial statements Board / Directors Board of Board of directors of our Company and includes any committee constituted thereof CEO Chief Executive Officer CFO Chief Financial Officer Corporate Social Responsibility Committee Corporate social responsibility committee of Board of Directors of our Company constituted in accordance with applicable laws Company and Officer Secretary Compliance The Company Secretary and Compliance Officer of our Company, namely, Satish Chelladurai Kumar Compliance Committee The Compliance Committee of Board of Directors of our Company constituted in accordance with applicable laws Director(s) Director(s) of our Company CSL Employee Stock Option Scheme 2017 The Employee Stock Option Scheme of our Company approved by board of directors on December 31, 2017 and by the shareholders through postal ballot on May 07, 2018 (Results of which were declared on May 09, 2018) and ratified by the shareholders in Extra-ordinary General Meeting held on September 18, 2018 and amended by the shareholders through postal ballot on May 5, 2022 (Results of which were declared on May 6, 2022) and December 1, 2024 (Results of which declared on December 3, 2024) UGRO Capital Employee Stock Option Scheme 2022 The Employee Stock Option Scheme of our Company approved by board of directors on July 22, 2022, and by the shareholders through postal ballot on September 04, 2022 Equity Shares Equity shares of our Company Group Companies As on the date of this Draft Prospectus, we do not have any identifiable group companies Term Description Independent Directors(s) Independent director(s) of our Company, as disclosed under " Our Management ", on page 194 Investment and Borrowing Committee / IB Committee The Investment and Borrowing Committee of Board of Directors of our Company, constituted in accordance with applicable laws IT Strategy Committee The IT Strategy Committee of Board of Directors of our Company, constituted in accordance with applicable laws Key Managerial Personnel(s) / KMP(s) The Key Managerial Personnel(s) of our Company as disclosed under " Our Management ", on page 194 and appointed in accordance with Section 203 of the Companies Act, 2013 and defined under regulation 2(1) (sa) of SEBI NCS Regulations and Section 2(51) of the Companies Act, 2013 "Memorandum" / "Memorandum of Association" / "MoA" Memorandum of association of our Company Nomination Remuneration Committee/ NRC and Nomination and remuneration committee of Board of Directors of our Company, constituted in accordance with applicable laws Non-Executive Director(s) Non- executive director(s) of our Company, as disclosed under " Our Management ", on page 194 Previous Auditors Statutory The previous statutory auditors of our Company, MSKA & Associates, Chartered Accountants Promoter The promoter of our Company namely, Poshika Advisory Services LLP Promoter Group Includes such persons and entities constituting the promoter group of our Company pursuant to Regulation 2 (1) (pp) of the SEBI ICDR Regulations, 2018, as amended Registered Corporate Office and Equinox Business Park, Tower 3, Fourth Floor, Off BKC, LBS Road, Kurla, Mumbai - 400070, Maharashtra, India Registrar of Companies / RoC Registrar of Companies, Maharashtra at Mumbai Risk Management Committee The Risk Management Committee of Board of Directors of our Company, constituted in accordance with applicable laws Securities and Committee Allotment Transfer The Securities Allotment and Transfer Committee of Board of Directors of our Company, constituted in accordance with applicable laws Term Description "Senior Management Personnel" or "SMP" Senior Management of our Company in accordance with Regulation 2(1)(iia) of the SEBI NCS Regulations Shareholders Equity Shareholders of our Company from time to time Statutory Auditor Auditor/ The current statutory auditors of our Company, M/s Sharp & Tannan Associates, Chartered Accountants Stakeholders' Relationship Committee The Stakeholders' Relationship Committee of Board of Directors of our Company, constituted in accordance with applicable laws Unaudited Results Financial Our unaudited financial results for the six months ended September 30, 2024 and for the quarter and nine months ended December 31, 2024, along with the limited review report, prepared in accordance with the recognition and measurement principles laid down in Indian Accounting Standard 34, Interim Financial Reporting ('Ind AS 34'), prescribed under section 133 of the Companies Act, 2013, and other accounting principles generally accepted in India and is in compliance with the presentation and disclosure requirements of Regulation 33 and Regulation 52 of the SEBI LODR Regulations Issue related terms: Term Description Abridged Prospectus The memorandum containing the salient features of the Prospectus Acknowledgement Slip The slip or document issued by the Designated Intermediary to an Applicant as proof of registration of the Application Form Allot/ Allotted Allotment / Unless the context otherwise requires, the issue and allotment of the NCDs pursuant to this Issue to the Allottees Allotment Advice The communication sent to the Allottees conveying details of NCDs allotted to the Allottees in accordance with the Basis of Allotment Allottee(s) The successful Applicant to whom the NCDs are Allotted, either in full or in part in terms of this Issue Applicant / Investor / ASBA Applicant The person who applies for issuance and Allotment of NCDs through ASBA process or through UPI Mechanism pursuant to the terms of this Draft Prospectus, the Prospectus, the Abridged Prospectus and Application Form Application/ASBA Application/Applicati on Supported by An application (whether physical or electronic) to subscribe to the NCDs offered pursuant to the Issue by submission of a valid Application Form and authorized an SCSB to block the Application Amount in the ASBA Account or to block the Application Amount using the UPI Mechanism, where the Bid Term Description Blocked Amount/ASBA Amount or an Application Amount of up to UPI Application Limit will be blocked upon acceptance of UPI Mandate Request by retail investors which will be considered as the application for Allotment in terms of this Draft Prospectus Application Amount The aggregate value of the NCDs applied for, as indicated in the Application Form for the Issue Application ASBA Form Form/ The form in terms of which the Applicant shall make an offer to subscribe to the NCDs through the ASBA process or through the UPI Mechanism and which will be considered as the Application for Allotment of NCDs in terms of this Draft Prospectus ASBA Account A bank account maintained by an ASBA Bidder with an SCSB, as specified in the ASBA Form submitted by ASBA Applicants for blocking the Bid Amount mentioned in the ASBA Form, and will include a bank account of a retail individual investor linked with UPI, for retail individual investors submitting application value up to UPI Application Limit ASBA Applicant Any Applicant who applies for NCDs through the ASBA process Banker to the Issue Collectively Public Issue Account Bank, Refund Bank and Sponsor Bank. Base Issue Size/ Base Issue ₹ 10,000 lakh Basis of Allotment The basis on which NCDs will be allotted to applicants as described in " Issue Procedure- Basis of Allotment for NCDs " on page 372 Bidding Centres Centres at which the Designated Intermediaries shall accept the Application Forms, i.e., Designated Branches of SCSB, Specified Locations for Consortium, Broker Centres for Registered Brokers, Designated RTA Locations for RTAs and Designated CDP Locations for CDPs Broker Centres Broker centres notified by the Stock Exchange where Applicants can submit the ASBA Forms (including ASBA Forms under UPI in case of UPI Investors) to a Registered Broker. The details of such Broker Centres, along with the names and contact details of the Registered Brokers are available on the website of the Stock Exchanges a t www.bseindia.com and www.nseindia.com BSE BSE Limited Category I Investor - Institutional Investors • Public financial institutions, scheduled commercial banks, and Indian multilateral and bilateral development financial institutions which are authorized to invest in the NCDs; Term Description • Provident funds and pension funds each with a minimum corpus of ₹ 2,500 lakh superannuation funds and gratuity funds, which are authorized to invest in the NCDs; • Alternative Investment Funds, subject to investment conditions applicable to them under the Securities and Exchange Board of India (Alternative Investment Funds) Regulations, 2012; • Resident Venture Capital Funds registered with SEBI; • Insurance companies registered with the IRDAI; • State industrial development corporations; • Insurance funds set up and managed by the army, navy, or air force of the Union of India; • Insurance funds set up and managed by the Department of Posts, the Union of India; • Systemically Important Non-Banking Financial Company registered with the RBI; • National Investment Fund set up by resolution no. F.No. 2/3/2005-DDII dated November 23, 2005 of the Government of India published in the Gazette of India; and • Mutual funds registered with SEBI. Category II Investor - Non- Institutional Investors • Companies within the meaning of Section 2(20) of the Companies Act, 2013; • Statutory bodies/ corporations and societies registered under the applicable laws in India and authorized to invest in the NCDs; • Co-operative banks and regional rural banks; • Trusts including public/private charitable/religious trusts which are authorized to invest in the NCDs; • Scientific and/or industrial research organisations, which are authorized to invest in the NCDs; • Partnership firms in the name of the partners; • Limited liability partnerships formed and registered under the provisions of the Limited Liability Partnership Act, 2008 (No. 6 of 2009); • Association of Persons; and Attention : This is an excerpt of the original content. To continue reading it, access the original document here .

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