As Filed with the Securities and Exchange Commission on December 16, 2015
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM F-1
REGISTRATION STATEMENT
Under
The Securities Act of 1933
Azure Power Global Limited
(Exact name of Registrant as specified in its Constitution)
Mauritius | 4931 | Not Applicable | ||
(State or other jurisdiction of
incorporation or organization) |
(Primary Standard Industrial
Classification Code Number) |
(I.R.S. Employer
Identification Number) |
Inderpreet Singh Wadhwa
Chief Executive Officer
8 Local Shopping Complex
Pushp Vihar, Madangir, New Delhi 110062, India
Telephone: (91-11) 49409800
(Address, including zip code, and telephone number, including area code, of Registrants principal executive offices)
CT Corporation System
111 Eighth Avenue, 13 th Floor, New York, NY 10011
Telephone: (212) 894-8940
(Name, address, including zip code, and telephone number, including area code, of agent for service)
Copies to:
Thomas J. Ivey, Esq. Andrea Nicolas, Esq. Rajeev Duggal, Esq. Skadden, Arps, Slate, Meagher & Flom LLP 525 University Avenue #1400 Palo Alto, CA 94301 |
Kirk A. Davenport II, Esq. Wesley C. Holmes, Esq. Latham & Watkins LLP 885 Third Avenue New York, NY 10022 |
Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. ¨
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨
CALCULATION OF REGISTRATION FEE
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Title of each class of
securities to be registered |
Proposed
maximum
offering price(1)(2) |
Amount of
registration fee |
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Equity shares, par value US$0.01 per equity share |
US$ 100,000,000 | US$ 10,070 | ||
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(1) | Includes (a) all equity shares that may be purchased by the underwriters pursuant to an over-allotment option, and (b) all equity shares initially offered and sold outside the United States that may be resold from time to time in the United States either as part of their distribution or within 40 days after the later of the effective date of this Registration Statement and the date the equity shares are first bona fide offered to the public. The equity shares are not being registered for the purpose of sales outside the United States. |
(2) | Estimated solely for the purpose of calculating the registration fee in accordance with Rule 457(o) under the Securities Act of 1933. |
The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission acting pursuant to said Section 8(a) may determine.
The information in this prospectus is not complete and may be changed. Neither we nor the selling shareholder may sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and we are not soliciting offers to buy these securities in any state where the offer or sale is not permitted.
Subject to Completion, dated December 16, 2015
PROSPECTUS
Equity Shares
Azure Power Global Limited
This is the initial public offering of the equity shares of Azure Power Global Limited. We are offering equity shares and the selling shareholder identified in this prospectus is offering equity shares. We will not receive any of the proceeds from the sale of the shares by the selling shareholder. No public market currently exists for our equity shares.
We have applied to list our equity shares on the New York Stock Exchange under the symbol AZRE.
We anticipate that the initial public offering price will be between US$ and US$ per equity share.
We are an emerging growth company as that term is used in the Jumpstart Our Business Startups Act of 2012 and, as such, have elected to comply with certain reduced public company reporting requirements.
Investing in our equity shares involves risks. See Risk Factors beginning on page 18 of this prospectus.
Per Share | Total | |||||||
Price to the public |
US$ | US$ | ||||||
Underwriting discounts and commissions(1) |
US$ | US$ | ||||||
Proceeds to us (before expenses) |
US$ | US$ | ||||||
Proceeds to the selling shareholder (before expenses) |
US$ | US$ |
(1) | We refer you to Underwriting beginning on page 164 of this prospectus for additional information regarding total underwriter compensation. |
We have granted the underwriters the option to purchase additional equity shares on the same terms and conditions set forth above if the underwriters sell more than equity shares in this offering.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed on the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.
The underwriters expect to deliver the equity shares on or about , 2015.
Barclays
Prospectus dated , 2015
Indias first private grid connected MW Solar Plant
Largest owner & operator of NSM projects
Pan-India portfolio of solar assets in 13 States
Indias First distributed MW scale rooftop solar project
Commited & Under Construction
Operating
POWERING UTILITIES
Developed Indias first utility scale solar project in 2009
17 operational utility scale projects
100 MW, LARGEST OPERATING PROJECT UNDER NATIONAL SOLAR MISSION
555 KW, INDUSTRIAL ROOFTOP SOLAR PLANT, CHEAPER THAN GRID POWER
POWERING COMMERCIAL
First distributed solar rooftop project operational in India
200 + Rooftop covered across the country
COMMUNITY ENGAGEMENT
We hire from local communities
Lease land that has few alternative uses
Provide a stream of discretionary cash flow without displacing alternative businesses
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F-1 |
You should rely only on the information contained in this prospectus and any related free-writing prospectus that we authorize to be distributed to you. We and the selling shareholder have not, and the underwriters have not, authorized any person to provide you with information different from that contained in this prospectus or any related free-writing prospectus that we authorize to be distributed to you. This prospectus is not an offer to sell, nor is it seeking an offer to buy, these securities in any state where the offer or sale is not permitted. The information in this prospectus speaks only as of the date of this prospectus unless the information specifically indicates that another date applies, regardless of the time of delivery of this prospectus or of any sale of the securities offered hereby.
No action is being taken in any jurisdiction outside the United States to permit a public offering of the equity shares or possession or distribution of this prospectus in that jurisdiction. Persons who come into possession of this prospectus in jurisdictions outside the United States are required to inform themselves about and to observe any restrictions as to this offering and the distribution of the prospectus applicable to that jurisdiction.
STATISTICAL AND OTHER INDUSTRY AND MARKET DATA
This prospectus includes statistical and other industry and market data that we obtained from industry publications and research, surveys and studies conducted by third parties. Industry publications and third-party research, surveys and studies generally indicate that their information has been obtained from sources believed to be reliable, although they do not guarantee the accuracy or completeness of such information. While we believe these industry publications and third-party research, surveys and studies are reliable, we have not independently verified such data.
We have rights to trademarks and trade names that we use in connection with the operation of our business, including our corporate name, logos, product names and website names. Other trademarks and trade names appearing in this prospectus are the property of their respective owners. Solely for your convenience, some of the trademarks and trade names referred to in this prospectus are listed without the ® and TM symbols, but we will assert, to the fullest extent under applicable law, our rights to our trademarks and trade names.
CONVENTIONS THAT APPLY TO THIS PROSPECTUS
Except where the context requires otherwise and for purposes of this prospectus only:
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Azure Power Global, we, us or our refer to Azure Power Global Limited, together with its subsidiaries (including Azure Power India Private Limited, or AZI, its predecessor and current subsidiary). |
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Our holding company refers to Azure Power Global Limited on a standalone basis. |
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GAAP refers to the Generally Accepted Accounting Principles in the United States. |
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US$ or U.S. dollars refers to the legal currency of the United States. |
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Rs., rupees or Indian rupees refers to the legal currency of India. |
In this prospectus, references to U.S. or the United States are to the United States of America, its territories and its possessions. References to India are to the Republic of India, and references to Mauritius are to the Republic of Mauritius.
Unless otherwise indicated, the consolidated financial statements and related notes included in this prospectus have been presented in Indian rupees and prepared in accordance with GAAP. References to a particular fiscal year are to our fiscal year ended March 31 of that year, which is typical in our industry and in the jurisdictions in which we operate. Our fiscal quarters end on June 30, September 30, December 31 and March 31. References generally to a fiscal year refer to the Indian fiscal year ended March 31 of the respective period.
This prospectus contains translations of certain Indian rupee amounts into U.S. dollars at specified rates solely for the convenience of the reader. Unless otherwise stated, the translation of Indian rupees into U.S. dollars has been made at Rs. 63.59 to US$1.00, which is the noon buying rate in New York City for cable transfer in non-U.S. currencies as certified for customs purposes by the Federal Reserve Bank of New York on June 30, 2015, which is the date of our last reported financial statements. We make no representation that the Indian rupee or U.S. dollar amounts referred to in this prospectus could have been converted into U.S. dollars or Indian rupees, as the case may be, at any particular rate or at all.
As used in this prospectus, all references to watts (e.g., megawatts, gigawatts, kilowatt hour, terawatt hour, MW, GW, kWh, etc.) refer to measurements of power generated.
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This summary highlights selected information contained elsewhere in this prospectus and is qualified in its entirety by the more detailed information and consolidated financial statements and the related notes thereto included elsewhere in this prospectus. This summary does not contain all the information you should consider before investing in our equity shares. You should read this entire prospectus carefully, including Risk Factors, Managements Discussion and Analysis of Financial Condition and Results of Operations, and our consolidated financial statements and the related notes thereto included elsewhere in this prospectus, before making an investment decision.
Overview
Our mission is to be the lowest-cost power producer in the world. We sell solar power in India on long-term fixed price contracts to our customers, at prices which in many cases are at or below prevailing alternatives for these customers. We are also developing micro-grid applications for the highly fragmented and underserved electricity market in India. Since inception, we have achieved a 66% reduction in total solar project cost, which includes a significant decrease in balance of systems costs due in part to our value engineering, design and procurement efforts.
We developed Indias first utility scale solar project in 2009. As of September 30, 2015, we operated 17 utility scale projects and several commercial rooftop projects with a combined rated capacity of 242MW which represents a compound annual growth rate, or CAGR, of 135% from May 2012. As of such date we were also constructing eleven projects with a combined rated capacity of 244MW and had an additional 179MW committed. Megawatts committed represents the aggregate megawatt rated capacity of solar power plants pursuant to customer power purchase agreements, or PPAs, signed or allotted but not yet commissioned and operational as of the reporting date. We have been awarded 151MW at auction, for which PPAs are pending. We are targeting having 520MW operating by December 31, 2016. Our longer term goals are to achieve 1GW committed or operating by December 31, 2017 and 5GW by December 31, 2020. Our ability to achieve these goals will depend on, among other things, our ability to acquire the required land for the new capacity (on lease or direct purchase), raising adequate project financing and working capital, the growth of the Indian power market in line with current government targets, our ability to maintain our market share of Indias installed capacity as competition increases, the need to further strengthen our operations team to execute the increased capacity, and the need to further strengthen our systems and processes to manage the ensuing growth opportunities, as well as the other risks and challenges discussed under the caption Risk Factors.
Utility scale solar projects are typically awarded through government auctions. We believe we have secured more megawatts of capacity in these auctions in the last six years than any other company in India. We believe the strong demand for our solar power is a result of the following:
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Low levelized cost of energy . Our in-house engineering, procurement and construction, or EPC, expertise, purely solar focus, advanced in-house operations and maintenance, or O&M, capability and efficient financial strategy allow us to offer low-cost solar power solutions. |
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Strong value proposition for our customers . We manage the entire development and operation process, providing customers with long term fixed price PPAs in addition to high levels of availability and service. This helps us win repeat business. |
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Our integrated profile supports growth . Our integrated profile affords us greater control over project development, construction and operation, which provides us with greater insight and certainty on our construction costs and timeline. |
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Strong community partnerships . Our ability to build long term community relationships allows us to improve our time of completion, further reducing project development risk. |
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We take a leading role in policy initiatives . We provided input to the government to help it design an auction process supporting multiple winners at differentiated price points and implementing a transparent bidding process open to all participants. For example, we suggested that the government include compulsorily convertible debentures in the calculation of a bidders net worth for the purposes of tender qualification, which was ultimately adopted by the government. |
We generate revenue from a mix of leading government utilities and commercial entities. Because we have our own EPC and O&M capabilities, we retain the profit margins associated with those services that other project developers may need to pay to third-party providers.
Market Opportunity
Indias economic growth is intrinsically linked to the increasing consumption of energy and natural resources. Energy demand has outpaced capacity additions in recent years, which has resulted in persistent peak power deficits in the country. Solar is an attractive option to help address this energy gap driven by regional fundamentals and regulatory support by the Indian government. The Indian government increased its 2022 target for solar capacity from 20GW to 100GW.
The following trends have made solar a large, rapidly growing market opportunity:
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Peak power deficits and rising power prices . India continues to be plagued by a persistent demand/supply mismatch with a five-year average energy deficit of approximately 8% according to the Ministry of Power, which has resulted in upward pressure in power prices. |
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Strong regulatory support . In order to reduce dependence on energy imports and curtail the current trade deficit and the resulting impact on the rupee, the Indian government has taken a number of steps to incentivize the use of renewable sources of energy. These include establishing state-level renewable power purchase obligations and providing capital subsidies (known as viability gap funding) to solar project developers to make solar tariffs competitive in the country. To provide further impetus to solar growth, the Indian government launched the Jawaharlal Nehru National Solar Mission, or the NSM, in 2010. |
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Solar positioned to win among alternatives . India ranks among the highest irradiation-receiving countries in the world with more than 300 days of sunshine per year in much of the country. Solar power generation is viable across most of India, unlike wind and hydro resources which are concentrated in specific regions. In addition, as solar plants can be built near the point of consumption, power produced generally does not incur expensive transmission charges or require infrastructure or transmission investments. Further, unlike nuclear and hydropower, solar power has fewer legal liabilities and environmental constraints. |
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Solar approaching parity . State utilities have seen power costs rise as domestic coal shortages have caused thermal generators to increasingly rely on more expensive imported fuels. An analysis of current tariffs in India indicates that solar power is now competitive with wind, new thermal capacity fueled by imported coal and grid power tariffs for commercial users. Further, diesel power, the most common replacement power source for commercial and off-grid users in the country, is far more expensive than solar power. Additionally, solar panel prices are expected to fall further, which in turn is expected to drive further reductions in solar tariffs. |
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Transparent solar auction process . Indian solar auctions are conducted in a transparent manner that ensures bids meet minimum technical and financial criteria. Bidders must meet requirements on project development and execution history in India or the regional market, including bidder experience in the development of similar utility scale power projects. Auctions are not winner-take-all; instead, they are constructed to ensure multiple high-quality developers are allotted portions of the total capacity block. |
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These factors have increased the solar installation to approximately 4.3GW as of September 30, 2015, of which 3.3GW is operating under various state policies and the NSM. An additional, approximately 4.0GW of tenders have been announced under various state policies.
Our Approach
We sell energy to government utilities and independent industrial and commercial customers at predictable fixed prices. Since our energy generation does not rely on fossil fuels, our electricity prices are insulated from the volatility of commodity pricing. We also guarantee the electricity production of our solar power plants to our customers.
The typical project plan timeline for our projects is approximately one year. The major stages of project sourcing, development and operation are bidding, land acquisition, financing, material delivery and installation, and monitoring and maintenance. Once a bid is won, a letter of intent is issued and all of our departments initiate their activities. After that, the PPA is signed, which reflects the commercial operation date before which a plant should be commissioned. Generally once the letter of intent is received, we obtain the relevant land permits depending on whether the land is government-owned or private. We generally finance our projects with 75:25 debt-to-equity ratio. Once land is obtained, our EPC team works very closely to construct and deliver the plant in the most efficient manner. Once commissioned, our O&M team monitors performance of all the projects near real time.
We utilize our integrated project development, EPC, financing and O&M services without involving multiple third-party services. This approach has allowed us to generate efficiencies of scale that further drive down system costs. A low cost structure allows us to bid for auctions strategically, which supports our high auction win rate and helps preserve our market leading position, which further reduces costs.
As the first developer and operator of utility scale solar assets in India, we believe that we are a well-established brand that has grown alongside the burgeoning Indian solar market since 2009. We have proven to be a reliable developer that successfully and expediently executes on our development pipeline and wins repeat business. Our reputation and track record give us an advantage in the auction evaluation process, improving our win rate. As a result, we believe we have become one of the largest purely solar operators in the space, which affords us greater negotiating power with original equipment manufacturers and project finance lenders. This in turn improves our cost and capital structure, which benefits our bid win rate.
We lower the levelized cost of energy through our three-pronged approach as follows:
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Value engineering . Our in-house EPC allows us to enhance our system design expertise with each successive project, be flexible with our choice of technology and source from top-tier suppliers that optimizes both the system cost and power yield of the total solar block. |
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Operational performance monitoring . We operate a National Operating Control Center, or NOCC, that allows us to monitor project performance in real-time and allows us to respond rapidly to potential generation anomalies. Feedback from our operating projects also serves to further enhance our project designs, resulting in enhancements for current and new plants. |
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Financial strategy . We are able to offset project equity requirements through economic benefits generated by our EPC and O&M businesses. Coupled with our asset financing strategy we are able to optimize the overall cost of capital leading to enhanced economics for our customers and shareholders. |
Our Competitive Strengths
We believe we differentiate ourselves from the competition in a number of key ways.
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Market leadership . We have a first mover advantage from the construction of Indias first private utility scale solar photovoltaic power plant in 2009 as well as the implementation of the first megawatt scale rooftop smart city initiative in 2013. Additionally, our strong track record in policy and project development across utility scale, commercial rooftop and micro-grids projects has helped us gain a leading market share in India and a market leading auction win rate of 68% for bids we participated in from 2010 to 2015. |
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Scale and brand-name recognition . We have proven to be a reliable developer with successful and expedient execution of our development pipeline, which has helped us win repeat business. Our reputation and track record provide us an advantage in the auction evaluation process, thereby improving our win rate. As a result, we believe we have become one of the largest solar developers and operators in India. |
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In-house EPC and O&M expertise enable cost efficiencies . Our in-house EPC capabilities enhance our ability to be flexible with our choice of technology, which allows us to choose high quality equipment while optimizing the combination of total solar project cost and yield. Our in-house O&M capabilities maximize project yield and performance through proprietary system monitoring and adjustments. We have demonstrated a 66% decrease in total solar project cost since inception in part through continual innovation in our EPC and O&M capabilities. |
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Superior technical and execution capabilities . We have developed proprietary systems that significantly reduce the time it takes to design, finance, commission, operate and maintain projects. Our lean and efficient execution expertise facilitates completion of our plants ahead of contracted completion dates, enables us to easily scale our operations without significant increases to headcount, and allows us to construct several projects in parallel without compromising on efficiency. |
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Long term, stable cash generation . We typically enter into 25-year, fixed price PPAs with government agencies and independent commercial businesses. As a result of generally reliable solar irradiation in India, our energy production under these PPAs has historically had little volatility, which, coupled with our low operating expenses, makes for predictable cash flows from these agreements. |
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Long term community support . We hire from local communities and generally lease land that has few alternative uses, providing local communities with a stream of discretionary cash flow without displacing alternative businesses. As a result we are able to build long term community relationships, which allows us to improve our time of completion, further reducing project development risk. |
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Strong management . Our senior leadership team and board of directors include widely recognized experts in solar energy, energy finance and public policy, with track records of building successful businesses. |
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Our Business Strategy
Key elements of our business strategy include the following.
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Continue to drive project cost reductions. We will continue to reduce costs by leveraging our in-house EPC and O&M capabilities and by improving our negotiating power with technology providers and project lenders. We expect to further innovate our financing solutions to reduce the cost of energy for our customers and achieve grid parity with local alternatives in the utility market in the next few years. |
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Rapidly grow our project portfolio to achieve scale benefits. We intend to rapidly grow our project portfolio, which will enable us to achieve further economies of scale. We plan to significantly expand our presence in commercial and micro-grid applications. In order to continue this growth, we plan to reinvest our operating cash flow into new project development and construction. |
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Maintain position as a top Indian solar company. We are the longest tenured solar power producer in India and we believe we have the largest portfolio of operating projects under the NSM and one of the largest portfolios of operating projects in India. We have developed critical operational expertise and regional knowledge that improves project performance and expedites project execution, all of which should help us preserve our market leading position. |
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Leverage track record and management relationships to shape policy. We have petitioned governments at the local, state and central levels for substantial changes to solar policy that are essential to the advancement of the solar industry. We plan to leverage our track record, together with our managements long-running relationships with policy-makers, to influence policy at all governmental levels. |
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Expand into new locations. We participate in both national and state level renewable energy auctions. We intend to continue to expand our presence into other states in India and other emerging markets with underserved electricity markets. |
Recent Developments
In June 2015, we entered into a subscription agreement with International Finance Corporation and its affiliated entity for the sale of 133,285 shares of Series H compulsorily convertible preferred shares for US$60 million, which we amended in July 2015. In July 2015, we entered into a subscription agreement with Société de Promotion et de Participation pour la Coopération Économique, or PROPARCO, for the sale of 18,882 shares of Series G compulsorily convertible preferred shares for US$8.5 million.
Upon the completion of this offering and immediately prior to listing of the equity shares pursuant to the offering, Series G compulsorily convertible preferred shares will automatically convert into such number of equity shares so as to provide the holder with a fixed return. Assuming the midpoint of the estimated range of the initial public offering price as set forth on the cover page of this prospectus, these shares will convert into equity shares of Azure Power Global Limited. A US$1.00 increase in the assumed initial public offering price would increase the number of equity shares by shares and a US$1.00 decrease in the assumed initial public offering price would decrease the number of equity shares by shares. Series H compulsorily convertible preferred shares will automatically convert into equity shares of Azure Power Global Limited upon completion of this offering and immediately prior to listing of the equity shares pursuant to the offering.
Risk Factors
Our business and the successful execution of our strategies are subject to certain risks and uncertainties related to our business and our industry, regulation of our business and our corporate structure, doing business in India and ownership of our equity shares, our trading market and this offering. The risks and uncertainties related to our business and our industry include, but are not limited to:
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we have never been profitable, and believe we will continue to incur net losses for the foreseeable future; |
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the reduction, modification or elimination of central and state government subsidies and economic incentives in India may reduce the economic benefits of our existing solar projects and our opportunities to develop or acquire suitable new solar projects; |
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our long term growth depends in part on the Indian governments ability to meet its announced targeted capacity; |
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our operations are subject to extensive governmental, health and safety and environmental regulations, which require us to obtain and comply with the terms of various approvals, licenses and permits. Any failure to obtain, renew or comply with the terms of such approvals, licenses and permits in a timely manner or at all may have a material adverse effect on our results of operations, cash flows and financial condition; |
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our limited operating history, especially with large-scale solar projects, may not serve as an adequate basis to judge our future prospects, results of operations and cash flows; |
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our operating results may fluctuate from quarter to quarter, which could make our future performance difficult to predict and could cause our operating results for a particular period to fall below expectations, resulting in a severe decline in the price of our equity shares; |
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our substantial indebtedness could adversely affect our business, financial condition, results of operations and cash flows; |
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our growth prospects and future profitability depend to a significant extent on global liquidity and the availability of additional funding options with acceptable terms; |
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if we fail to comply with financial and other covenants under our loan agreements, our financial condition, results of operations, cash flows and business prospects may be materially and adversely affected; and |
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we and our independent registered public accounting firm have identified a material weakness in our internal control over financial reporting, which could make it difficult to maintain an effective system of internal control over financial reporting, reduce the reliability of our financial reporting, harm investor confidence in our company and affect the value of our equity shares. |
See Risk Factors and Forward-Looking Statements for a more detailed discussion of these and other risks and uncertainties that we may face.
Corporate Structure
Azure Power Global Limited is a recently incorporated company in Mauritius and currently has no business operations of its own. All of our operations at present and following the completion of this offering will be conducted through AZI and its subsidiaries. For details of the current shareholders of Azure Power Global Limited, see Principal and Selling Shareholders.
On July 25, 2015, Azure Power Global Limited purchased from the non-founder investors in AZI (i.e., International Finance Corporation, Helion Venture Partners II, LLC, Helion Venture Partners India II, LLC, FC VI India Venture (Mauritius) Ltd., DEG Deutsche Investitions Und Entwicklungsgesellschaft mbH and Société de Promotion et de Participation Pour la Coopération Économique) the equity shares and convertible securities held by them in AZI and issued an equivalent number of equity shares and convertible securities of Azure Power Global Limited to such non-founder investors. Immediately prior to the consummation of this offering and the listing of the equity shares pursuant to the offering, the convertible securities of Azure Power Global Limited issued to the non-founder investors will be converted into equity shares of Azure Power Global Limited in an amount that depends, among other factors, on the initial public offering price in the offering. Assuming an initial public offering price of US$ per equity share, which is the midpoint of the estimated range of the initial public offering price as set forth on the cover page of this prospectus, a total of equity shares of Azure Power Global Limited will be issued to the non-founder investors upon the conversion of such convertible securities and there will be a total of equity shares of Azure Power Global Limited issued and
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outstanding as of such time, which includes the equity shares issuable upon exercise of outstanding stock options under our employee stock option plan. A US$1.00 increase or decrease in the assumed initial public offering price of US$ would decrease or increase the number of equity shares to be issued to the non-founder investors, and the total number of equity shares of Azure Power Global Limited issued and outstanding as of the consummation of this offering by shares and shares, respectively.
Assuming an initial public offering price of US$ per equity share, which is the midpoint of the estimated range of the initial public offering price as set forth on the cover page of this prospectus, IW Green LLC (in which Mr. Inderpreet S. Wadhwa is the sole member), Azure Power Inc. and Mr. Satnam Sanghera will own % of the equity shares in Azure Power Global Limited and % will be owned by the public investors. The percentage of Azure Power Global Limited that is owned by such shareholders will vary if the initial public offering price changes. For example, a US$1.00 decrease in the assumed initial public offering price would decrease the aggregate percentage of Azure Power Global Limited that is owned by IW Green LLC, Azure Power Inc. and Mr. Satnam Sanghera to % and would increase the percentage of Azure Power Global Limited that is owned by the public investors to %, while a US$1.00 increase in the assumed initial public offering price would increase the aggregate percentage of Azure Power Global Limited that is owned by IW Green LLC, Azure Power Inc. and Mr. Satnam Sanghera to % and would decrease the percentage of Azure Power Global Limited that is owned by the public investors to %.
Azure Power Global Limited intends to utilize substantially all of the net proceeds of this offering (other than approximately US$5 million to be retained by Azure Power Global Limited to fund its future operating expenses, including rent, professional fees and other corporate overhead expenses) to purchase million equity shares of AZI at a price of US$ per equity share, assuming that the initial public offering is priced at US$ per equity share of Azure Power Global Limited, which is the midpoint of the estimated range of the initial public offering price as set forth on the cover page of this prospectus. Following the completion of this offering and the purchase of additional equity shares of AZI by Azure Power Global Limited, Azure Power Global Limited will own % of the equity shares of AZI. The percentage ownership of Azure Power Global Limited will vary if the offering size or the initial public offering price changes. For example, a US$1.00 decrease in the assumed equity share price would decrease Azure Power Global Limiteds ownership of AZI by %. Alternatively, a decrease of US$10 million in the net offering proceeds would decrease Azure Power Global Limiteds ownership of AZI by %. The remaining % of the equity shares of AZI will be held by Mr. Inderpreet S. Wadhwa, Mr. Harkanwal S. Wadhwa, Azure Power Inc. and Mr. Satnam Sanghera, collectively referred to as the Founders. For details of the intended use of proceeds by AZI upon investment by Azure Power Global Limited into AZI, see Use of Proceeds.
The existing AZI employee stock option plan and all options granted to employees under such plan will be terminated. Employees who were previously granted options under the AZI employee stock option plan have been granted options under the new Azure Power Global Limited employee stock option plan, which will become effective on the date of this prospectus. Upon the closing of the offering, and without assuming any stock-split, there will be equity shares issuable upon exercise of outstanding stock options at a weighted average exercise price of Rs. (US$ ) per share under our employee stock option plan.
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The diagram below illustrates our corporate structure upon the completion of this offering assuming an offering price of US$ per equity share, which is the midpoint of the estimated range of the initial public offering price as set forth on the cover page of this prospectus, and subsequent subscription of shares of AZI from the proceeds of this offering as described above.
(1) | The sole member of IW Green LLC is Mr. Inderpreet S. Wadhwa. |
(2) | Refers to Mr. Inderpreet S. Wadhwa and Mr. Harkanwal Singh Wadhwa. |
Corporate Information
We are a public company limited by shares incorporated in Mauritius on January 30, 2015. Our registered office is located at c/o AAA Global Services Ltd., 1st Floor, The Exchange 18 Cybercity, Ebene, Mauritius. Our principal executive offices are located at 8 Local Shopping Complex, Pushp Vihar, Madangir, New Delhi 110062, India, and our telephone number at this location is (91-11) 49409800. Our principal website address is www.azurepower.com. The information contained on our website does not form part of this prospectus. Our agent for service of process in the United States is CT Corporation System, located at 111 Eighth Avenue, 13th Floor, New York, NY 10011.
Dividends
As we are a holding company, we will have to rely on dividends paid to us by our subsidiaries (in particular, our subsidiary in India, AZI) for our cash requirements, including funds to pay dividends and other cash distributions to our shareholders, service any debt we may incur and pay our operating expenses. As of the date of this prospectus, AZI has not paid any cash dividends on its equity shares and does not intend to pay
8
dividends to its equity shareholders, including Azure Power Global Limited, in the foreseeable future. See Dividends and Dividend Policy for more information.
Enforcement of Civil Liabilities
There is uncertainty as to whether the courts in Mauritius would enforce judgments obtained in the United States against us or our directors or executive officers, as well as the experts named herein, based on the civil liability provisions of the securities laws of the United States or allow actions in Mauritius against us or our directors or executive officers based only upon the securities laws of the United States. Further, foreign judgments may not be given effect by a Mauritius court where it would be contrary to any principle affecting public policy in Mauritius or to the extent that they constitute the payment of an amount which is in the nature of a penalty and not in the nature of liquidated damages.
In addition to and irrespective of jurisdictional issues, neither Mauritian nor Indian courts will enforce a provision of the U.S. federal securities laws that is either penal in nature or contrary to public policy. Specified remedies available under the laws of U.S. jurisdictions, including specified remedies under U.S. federal securities laws, would not be available under Mauritian or Indian law or enforceable in a Mauritian or Indian court, if they are considered to be contrary to Mauritian or Indian public policy. An award of punitive damages under a United States court judgment based upon United States federal securities laws is likely to be construed by Mauritian and Indian courts to be penal in nature and therefore unenforceable in both Mauritius and India. Further, no claim may be brought in Mauritius or India against us or our directors and officers, as well as the experts named herein, in the first instance for a violation of U.S. federal securities laws because these laws have no extraterritorial application under Mauritian or Indian law and do not have force of law in Mauritius or India.
Implications of Being an Emerging Growth Company
As a company with less than US$1.0 billion in revenue during our last fiscal year, we qualify as an emerging growth company pursuant to the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. An emerging growth company may take advantage of specified reduced reporting and other burdens that are otherwise applicable generally to public companies. These provisions include exemption from the auditor attestation requirement in the assessment of the emerging growth companys internal control over financial reporting. The JOBS Act also provides that an emerging growth company need not comply with any new or revised financial accounting standard until such date that a non-reporting company is required to comply with such new or revised accounting standard. We have in this prospectus utilized, and we plan in future filings with the Securities and Exchange Commission, or the SEC, to continue to utilize, the modified disclosure requirements available to emerging growth companies. Furthermore, we are not required to present selected financial information or any managements discussion herein for any period prior to the earliest audited period presented in connection with this prospectus.
We will remain an emerging growth company until the earliest of (a) the last day of our fiscal year during which we have total annual gross revenues of at least US$1.0 billion; (b) the last day of our fiscal year following the fifth anniversary of the completion of this offering; (c) the date on which we have, during the previous 3-year period, issued more than US$1.0 billion in non-convertible debt; or (d) the date on which we are deemed to be a large accelerated filer under the Securities Exchange Act of 1934, or the Exchange Act. When we are no longer deemed to be an emerging growth company, we will not be entitled to the exemptions provided in the JOBS Act discussed above. If we choose to take advantage of any of these reduced reporting burdens, the information that we provide shareholders may be different than you might get from other public companies.
Even if we no longer qualify as an emerging growth company, as a foreign private issuer, we are exempt from certain rules under the Exchange Act that impose disclosure requirements as well as procedural
9
requirements for proxy solicitations under Section 14 of the Exchange Act. In addition, our officers, directors and principal shareholders are exempt from the reporting and short-swing profit recovery provisions of Section 16 of the Exchange Act. Moreover, we are not required to file periodic reports and financial statements with the SEC as frequently or as promptly as a company that files as a domestic issuer whose securities are registered under the Exchange Act, nor are we generally required to comply with the SECs Regulation FD, which restricts the selective disclosure of material non-public information. We intend to take advantage of these exemptions as a foreign private issuer.
10
Equity shares offered by us |
equity shares ( equity shares if the underwriters exercise in full their option to purchase additional equity shares). |
Equity shares offered by the selling shareholder |
equity shares. |
Option to purchase additional equity shares |
We have granted the underwriters an option, which is exercisable within 30 days from the date of this prospectus, to purchase up to additional equity shares from us at the public offering price less the underwriting discount. |
Equity shares to be outstanding before this offering |
equity shares. |
Equity shares to be outstanding immediately after this offering |
equity shares ( equity shares if the underwriters exercise in full their option to purchase additional equity shares). |
Use of Proceeds |
We anticipate that we will receive net proceeds from this offering of approximately US$ million, or approximately US$ million if the underwriters exercise their option to purchase additional equity shares in full. These estimates are based upon an assumed initial public offering price of US$ per equity share, the midpoint of the estimated range of the initial public offering price as set forth on the cover page of this prospectus, after deducting the estimated underwriting discounts, commissions and estimated aggregate offering expenses payable by us. |
We intend to use US$ million to fund the purchase by Azure Power Global Limited of equity shares of AZI, which will occur contemporaneously with the completion of this offering. Net proceeds to be received by AZI as a result of such purchase are intended to be used for project development, working capital needs and other general corporate purposes. We intend to retain US$5.0 million to fund future operating expenses of Azure Power Global Limited. To the extent the underwriters exercise their option to purchase additional equity shares, the net proceeds from the sale of the additional equity shares will be used to purchase additional equity shares of AZI. See Use of Proceeds. |
We will not receive any of the proceeds from the sale of equity shares by the selling shareholder. |
Directed Share Program |
At our request, the underwriters have reserved % of the equity shares offered by this prospectus for sale, at the initial public offering price, to our directors, officers, employees, business associates and related persons. If these persons purchase equity shares, this will reduce the number of shares available for sale to the public. |
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Risk Factors |
See Risk Factors and other information included in this prospectus for a discussion of factors you should carefully consider before deciding to invest in the equity shares. |
Dividend Policy |
We currently intend to retain our earnings, if any, to finance the development and growth of our business and operations as well as expand our business and do not currently anticipate paying dividends on our equity shares in the near future. See Dividends and Dividend Policy. |
Listing |
We have applied to list our equity shares on the New York Stock Exchange. |
Proposed Trading Symbol |
AZRE. |
Certain Assumptions
The number of our equity shares to be outstanding after this offering, the combined voting power that identified shareholders will hold after this offering and the economic interest in our business that identified shareholders will hold after this offering are based on the following assumptions:
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the conversion of compulsorily convertible preferred shares and compulsorily convertible debentures into equity shares; |
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the effectiveness of a -for- stock split; and |
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our and the selling shareholders sale of equity shares in this offering. |
The number of our equity shares to be outstanding after this offering, the combined voting power that identified shareholders will hold after this offering and the economic interest in our business that identified shareholders will hold after this offering excludes the following:
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equity shares which may be issued upon the exercise of the underwriters option to purchase additional shares of our equity shares; and |
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equity shares issuable upon exercise of outstanding stock options at a weighted-average exercise price of Rs. (US$ ) per share under our new employee stock option plan. |
Except as otherwise indicated, all information in this prospectus assumes that the underwriters do not exercise their option to purchase additional equity shares.
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SUMMARY CONSOLIDATED AND PRO FORMA FINANCIAL DATA
Azure Power Global Limited is a newly incorporated company in Mauritius and currently has no business operations of its own. All of its operations are conducted currently through AZI and its subsidiaries. The proceeds of this offering will be used towards a share subscription of AZI by Azure Power Global Limited and will occur contemporaneously with the completion of the offering. Following the consummation of this offering and the use of proceeds therefrom, we will own % of AZI, assuming an offering price of US$ per equity share, which is the midpoint of the estimated range of the initial public offering price as set forth on the cover page of this prospectus, and AZI will consolidate its financial results into ours. As a result, following the consummation of this offering, the remaining approximately % of AZI that will not be directly owned by Azure Power Global Limited will be reflected in our consolidated financial statements as a non-controlling interest and accordingly, the profit after tax attributable to equity shareholders of Azure Power Global Limited will be reduced by a corresponding percentage.
The following table shows summary consolidated and pro forma financial data as of the dates and for the periods indicated. The consolidated statements of operations data as of and for the years ended March 31, 2014 and 2015 and the three months ended June 30, 2014 and 2015 and the consolidated balance sheet data as of June 30, 2015 are derived from our predecessor, AZIs audited consolidated financial statements included elsewhere in this prospectus. The unaudited information was prepared on a basis consistent with that used to prepare our audited consolidated financial statements and includes all adjustments, consisting of normal and recurring items, that we consider necessary for a fair presentation of our financial condition and results of operations with respect to the relevant periods.
The summary unaudited pro forma balance sheet data as of June 30, 2015 gives effect to (i) the purchase from the non-founder investors in AZI of the equity shares and convertible securities held by them in AZI and the issuance of an equivalent number of equity shares and convertible securities of Azure Power Global Limited to the foregoing investors on July 25, 2015 as described in Prospectus Summary Corporate Structure, (ii) the conversion of compulsorily convertible preferred shares and compulsorily convertible debentures into equity shares and (iii) the effectiveness of a -for- stock split of our equity shares. The pro forma as adjusted balance sheet data reflects the abovementioned transactions, the issuance and sale of equity shares in this offering and the use of proceeds therefrom as set forth in Use of Proceeds, based on an assumed offering price of US$ per equity share, which is the midpoint of the estimated range of the initial public offering price as set forth on the cover page of this prospectus, after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us.
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The following table should be read together with, and is qualified in its entirety by reference to, the consolidated financial statements and the accompanying notes appearing elsewhere in this prospectus. Among other things, the consolidated financial statements include more detailed information regarding the basis of presentation for the information in the following table. The historical results are not necessarily indicative of the results that may be expected in any future period, and the interim results are not necessarily indicative of the results to be expected for the full fiscal year. The table should also be read together with Managements Discussion and Analysis of Financial Condition and Results of Operations.
Fiscal Year Ended March 31, | Three Months Ended June 30, | |||||||||||||||||||||||
2014 | 2015 | 2014 | 2015 | |||||||||||||||||||||
Rs. | Rs. | US$(1) | Rs. | Rs. | US$(1) | |||||||||||||||||||
(In thousands) |
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Consolidated Statement of Operations Data: |
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Operating revenue: |
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Sale of power |
881,345 | 1,124,138 | 17,678 | 264,365 | 570,194 | 8,967 | ||||||||||||||||||
Operating costs and expenses: |
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Cost of operations (exclusive of depreciation and amortization shown separately below) |
52,491 | 79,816 | 1,255 | 18,643 | 34,703 | 546 | ||||||||||||||||||
General and administrative expenses |
235,300 | 425,713 | 6,695 | 60,611 | 144,880 | 2,278 | ||||||||||||||||||
Depreciation and amortization |
252,352 | 322,430 | 5,070 | 63,556 | 140,059 | 2,203 | ||||||||||||||||||
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Total operating cost and expenses |
540,143 | 827,959 | 13,020 | 142,810 | 319,642 | 5,027 | ||||||||||||||||||
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Operating income |
341,202 | 296,179 | 4,658 | 121,555 | 250,552 | 3,940 | ||||||||||||||||||
Other expense: |
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Interest expense, net(2) |
520,219 | 831,789 | 13,081 | 163,823 | 403,324 | 6,343 | ||||||||||||||||||
Loss on foreign currency exchange(3) |
580,566 | 299,628 | 4,712 | 26,877 | 107,130 | 1,685 | ||||||||||||||||||
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Total other expenses |
1,100,785 | 1,131,417 | 17,793 | 190,700 | 510,454 | 8,028 | ||||||||||||||||||
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Loss before income taxes |
(759,583 | ) | (835,238 | ) | (13,135 | ) | (69,145 | ) | (259,902 | ) | (4,088 | ) | ||||||||||||
Income tax (expense)/benefit |
(15,847 | ) | (253,112 | ) | (3,980 | ) | (20,954 | ) | 18,412 | 290 | ||||||||||||||
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Net loss |
(775,430 | ) | (1,088,350 | ) | (17,115 | ) | (90,099 | ) | (241,490 | ) | (3,798 | ) | ||||||||||||
Net (loss) /gain attributable to non-controlling interest(4) |
(26,935 | ) | (5,595 | ) | (88 | ) | 3,343 | (1,322 | ) | (21 | ) | |||||||||||||
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Net loss attributable to AZI |
(748,495 | ) | (1,082,755 | ) | (17,027 | ) | (93,442 | ) | (240,168 | ) | (3,777 | ) | ||||||||||||
Accretion on Mezzanine CCPS(5) |
(366,552 | ) | (755,207 | ) | (11,876 | ) | (104,121 | ) | (259,282 | ) | (4,077 | ) | ||||||||||||
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Net loss attributable to AZI equity shareholders(6) |
(1,115,047 | ) | (1,837,962 | ) | (28,903 | ) | (197,563 | ) | (499,450 | ) | (7,854 | ) | ||||||||||||
Net loss per share attributable to equity shareholders |
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Basic and diluted |
(10,241 | ) | (16,727 | ) | (263 | ) | (1,798 | ) | (4,545 | ) | (71 | ) | ||||||||||||
Shares used in computing basic and diluted per share amounts(7) |
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Equity share |
108,882 | 109,880 | | 109,880 | 109,880 | |||||||||||||||||||
Supplemental information (unaudited): |
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Adjusted EBITDA(8) |
593,554 | 618,609 | 9,728 | 185,111 | 390,611 | 6,143 | ||||||||||||||||||
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(1) | AZIs functional and reporting currency is the Indian rupee. Solely for the convenience of the reader, we have translated the financial information as of and for the fiscal year ended March 31, 2015 and the three months ended June 30, 2015 into U.S. dollars. The rate used for this translation is Rs. 63.59 to US$1.00, which is the noon buying rate in New York City for cable transfer in non-U.S. currencies as certified for customs purposes by the Federal Reserve Bank of New York as of June 30, 2015, which is the date of our last reported financial statements. |
(2) | Interest expense, net consists of: |
Fiscal Year Ended March 31, | Three Months Ended June 30, | |||||||||||||||||||||||
2014 | 2015 | 2014 | 2015 | |||||||||||||||||||||
Rs. | Rs. | US$(a) | Rs. | Rs. | US$ | |||||||||||||||||||
Interest expense: |
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Compulsorily convertible debentures |
217,751 | 248,831 | 3,913 | 71,514 | 82,277 | 1,294 | ||||||||||||||||||
Series E compulsorily convertible preferred shares |
74,700 | 96,500 | 1,518 | 22,800 | 27,000 | 425 | ||||||||||||||||||
Term loans |
316,519 | 598,845 | 9,417 | 96,338 | 304,627 | 4,790 | ||||||||||||||||||
Bank charges and other |
36,151 | 55,454 | 872 | 13,583 | 23,282 | 366 | ||||||||||||||||||
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645,121 | 999,630 | 15,720 | 204,235 | 437,186 | 6,875 | |||||||||||||||||||
Interest income: |
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Term deposits |
111,842 | 151,861 | 2,388 | 38,746 | 29,430 | 462 | ||||||||||||||||||
Interest income from related parties |
| 2,031 | 32 | | | | ||||||||||||||||||
Gain on sale of short term investments |
13,060 | 13,949 | 219 | 1,666 | 4,432 | 70 | ||||||||||||||||||
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Interest expense, net |
520,219 | 831,789 | 13,081 | 163,823 | 403,324 | 6,343 | ||||||||||||||||||
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(a) | Refer to note (1) above. |
(3) | Loss on foreign currency exchange consists of: |
Fiscal Year Ended March 31, | Three Months Ended June 30, | |||||||||||||||||||||||
2014 | 2015 | 2014 | 2015 | |||||||||||||||||||||
Rs. | Rs. | US$(a) | Rs. | Rs. | US$ | |||||||||||||||||||
Unrealized (gain)/loss on foreign currency loans |
578,571 | 240,656 | 3,785 | (512 | ) | 111,796 | 1,758 | |||||||||||||||||
Realized (gain)/loss on foreign currency loans |
39,989 | (42,280 | ) | (665 | ) | (4,749 | ) | (8,423 | ) | (132 | ) | |||||||||||||
Unrealized (gain)/loss on derivative instruments |
(16,384 | ) | 7,342 | 115 | 903 | 2,026 | 32 | |||||||||||||||||
Realized (gain)/loss on derivative instruments |
(21,610 | ) | 93,910 | 1,477 | 31,235 | 1,731 | 27 | |||||||||||||||||
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580,566 | 299,628 | 4,712 | 26,877 | 107,130 | 1,685 | |||||||||||||||||||
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(a) | Refer to note (1) above. |
The unrealized and realized foreign exchange loss represents the foreign currency fluctuations on our non-Indian rupee denominated borrowings.
(4) | Represents a non-controlling interest of 20% in a subsidiary. |
(5) | Our Series A, Series B, Series C, Series D and Series F compulsorily convertible preferred shares, or collectively the Mezzanine CCPS, are being accreted to their redemption value through February 25, 2016, the earliest redemption date, to earn the mandatory redemption amount on such date. |
(6) | Basic and diluted net loss per share attributable to AZI equity shareholders is computed by dividing the net loss attributable to AZI equity shareholders by the weighted average number of equity shares outstanding for the period. The potentially dilutive compulsorily convertible preferred shares, compulsorily convertible debentures and share options were excluded from the calculation of dilutive loss per share in those periods where inclusion would be anti-dilutive. |
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(7) | Pro forma net loss per share attributable to AZI equity shareholders as of and for the fiscal year ended March 31, 2015 and the three months ended June 30, 2015 is calculated as if the compulsorily convertible preferred shares and the compulsorily convertible debentures had been converted into equity shares at the beginning of the respective period presented or when compulsorily convertible preferred shares and compulsorily convertible debentures were issued, if later. Compulsorily convertible preferred shares and compulsorily convertible debentures upon the completion of this offering convert into (i) equity shares as of March 31, 2015 and (ii) equity shares as of June 30, 2015 based upon the midpoint of the estimated range of the initial public offering price as set forth on the cover page of this prospectus. |
(8) | Adjusted EBITDA is a non-GAAP financial measure. We present Adjusted EBITDA as a supplement measure of our performance. This measurement is not recognized in accordance with GAAP and should not be viewed as an alternative to GAAP measures of performance. The presentation of Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items. |
We define Adjusted EBITDA as net loss (income) plus (a) income tax expense, (b) interest expense, net, (c) depreciation and amortization, and (d) loss (income) on foreign currency exchange. We believe Adjusted EBITDA is useful to investors in evaluating our operating performance because:
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securities analysts and other interested parties use such calculations as a measure of financial performance and debt service capabilities; and |
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it is used by our management for internal reporting and planning purposes, including aspects of our consolidated operating budget and capital expenditures. |
Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP. Some of these limitations include:
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it does not reflect our cash expenditures or future requirements for capital expenditures or contractual commitments or foreign exchange gain/loss; |
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it does not reflect changes in, or cash requirements for, working capital; |
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it does not reflect significant interest expense or the cash requirements necessary to service interest or principal payments on our outstanding debt; |
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it does not reflect payments made or future requirements for income taxes; and |
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although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced or paid in the future and Adjusted EBITDA does not reflect cash requirements for such replacements or payments. |
Investors are encouraged to evaluate each adjustment and the reasons we consider it appropriate for supplemental analysis.
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The following table presents a reconciliation of net loss to Adjusted EBITDA:
Fiscal Year Ended March 31, | Three Months Ended June 30, | |||||||||||||||||||||||
2014 | 2015 | 2014 | 2015 | |||||||||||||||||||||
Rs. | Rs. | US$(a) | Rs. | Rs. | US$ | |||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||
Net loss |
(775,430 | ) | (1,088,350 | ) | (17,115 | ) | (90,099 | ) | (241,490 | ) | (3,798 | ) | ||||||||||||
Income tax expense/(benefit) |
15,847 | 253,112 | 3,980 | 20,954 | (18,412 | ) | (290 | ) | ||||||||||||||||
Interest expense, net |
520,219 | 831,789 | 13,081 | 163,823 | 403,324 | 6,343 | ||||||||||||||||||
Depreciation and amortization |
252,352 | 322,430 | 5,070 | 63,556 | 140,059 | 2,203 | ||||||||||||||||||
Loss on foreign currency exchange |
580,566 | 299,628 | 4,712 | 26,877 | 107,130 | 1,685 | ||||||||||||||||||
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Adjusted EBITDA |
593,554 | 618,609 | 9,728 | 185,111 | 390,611 | 6,143 | ||||||||||||||||||
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(a) | Refer to note (1) above. |
As of June 30, | As of June 30, | |||||||||||||||
2015 |
2015
(Pro forma)(5) |
2015
(Pro forma as adjusted)(5) |
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Rs. | US$(1) | Rs. | US$(1) | Rs. | US$(1) | |||||||||||
Balance Sheet Data |
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Cash and cash equivalents |
1,423,736 | 22,389 | ||||||||||||||
Property, plant and equipment, net |
16,379,971 | 257,587 | ||||||||||||||
Total assets |
20,640,577 | 324,587 | ||||||||||||||
Compulsorily convertible debentures and Series E preferred shares(2) |
2,556,041 | 40,196 | ||||||||||||||
Project level and other debt(3) |
16,341,723 | 256,985 | ||||||||||||||
Mezzanine CCPS shares(4) |
4,949,224 | 77,830 | ||||||||||||||
Total AZI shareholders deficit |
(4,942,302 | ) | (77,722 | ) |
(1) | AZIs functional and reporting currency is the Indian rupee. Solely for the convenience of the reader, we have translated the financial information as of and for the fiscal year ended March 31, 2015 and the three months ended June 30, 2015 into U.S. dollars. The rate used for this translation is Rs. 63.59 to US$1.00, which is the noon buying rate in New York City for cable transfer in non-U.S. currencies as certified for customs purposes by the Federal Reserve Bank of New York as of June 30, 2015, which is the date of our last reported financial statements. |
(2) | The Series E compulsorily convertible preferred shares are classified as a liability in the consolidated balance sheet because the preference shareholders have a right to convert their shares into variable number of equity shares to give them their required returns. |
(3) | This balance represents the short term and long term portion of project level secured term loans and other secured bank loans. |
(4) | Compulsorily convertible preferred shares include the Mezzanine CCPS and are classified as temporary equity in the consolidated balance sheet. |
(5) | The pro forma and pro forma as adjusted columns in the balance sheet data reflects the transactions described in the last paragraph of page 13. |
The pro forma as adjusted information set forth in the table above is for illustrative purposes only and will be adjusted based on the actual initial public offering price and other terms of this offering as determined at pricing.
A US$1.00 increase or decrease in the assumed public offering price of US$ would increase or decrease each of pro forma as adjusted cash and cash equivalents, total assets, and total deficit by Rs. thousands (US$ ), assuming the number of shares offered by us, as set forth on the cover page of the prospectus, remains the same, after deducting estimated underwriting discounts, commissions and estimated offering expenses payable by us.
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You should carefully consider the risks described below and all other information contained in this prospectus before making an investment decision. If any of the following risks actually occur, our business, financial condition, results of operations and cash flows could be materially and adversely affected. In that event, the trading price of our equity shares could decline, and you may lose part or all of your investment. This prospectus also contains forward-looking information that involves risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of many factors, including the risks described below and elsewhere in this prospectus.
Risks Related to Our Business and Our Industry
We have never been profitable, and believe we will continue to incur net losses for the foreseeable future.
We have incurred losses since our inception, including a net loss of US$3.8 million for the three months ended June 30, 2015 and US$17.1 million for fiscal year 2015. We believe that we will continue to incur net losses as we expect to make continued significant investment in our solar projects. As of September 30, 2015, we operated 17 utility scale projects and several commercial rooftop projects with a combined rated capacity of 242MW. As of such date, we were also constructing eleven projects with a combined rated capacity of 244MW and had an additional 179MW of projects committed. A significant number of power projects are presently committed and under construction, and we can only monetize them, if at all, after each project is completed, which is subject to several factors, including receiving regulatory approvals, obtaining project funding, entering into transmission arrangements with the central or state transmission utilities, and acquiring land for projects. In addition, even after a project is operational, the monetization process may be quite long term with contracts running up to 25 years. Moreover, we may not succeed in addressing certain risks, including our ability to successfully develop or supervise the commissioning, operations and maintenance of our projects or maintain adequate control of our costs and expenses. Also, we may find that our growth plans are more costly than we anticipate and that they do not ultimately result in commensurate increases in revenue, which would further increase our losses. Additionally, we have not, and likely will not in the foreseeable future, generate sufficient cash flow required for our growth plans. We expect we will continue to experience losses, some of which could be significant. Results of operations will depend upon numerous factors, some of which are beyond our control, including the availability of preferential feed-in tariffs for solar power and other subsidies, global liquidity and competition.
The reduction, modification or elimination of central and state government subsidies and economic incentives in India may reduce the economic benefits of our existing solar projects and our opportunities to develop or acquire suitable new solar projects.
The development and profitability of renewable energy projects in the locations in which we operate are dependent on policy and regulatory frameworks that support such developments. The cost of generating electricity from solar energy in India currently exceeds, and very likely will continue to exceed for the foreseeable future, the cost of generating electricity from conventional energy sources such as domestic coal. These subsidies and incentives have been primarily in the form of preferential tariffs, project cost subsidies, tax incentives, tax holidays, and other incentives to end users, distributors, system integrators and manufacturers of solar energy products. For instance, the National Tariff Policy 2006 requires State Electricity Regulatory Commissions, or SERCs, to set Renewable Purchase Obligations, or RPOs, on their distribution companies of solar energy, and provides that procurement of electricity by such distribution companies must be done at preferential tariffs, which is determined by the relevant SERC from time to time. Further, the Indian Ministry of New and Renewable Energy, or the MNRE, has introduced the generation based incentive scheme to support small grid solar projects, pursuant to which the MNRE will pay incentives to the state utilities when they directly purchase solar power from project developers. Further, Indias Income Tax Act, 1961 as amended, provides for certain tax benefits, including 100% tax deductions of the profits derived from generation of power for 10 consecutive years. In addition, certain state policies also provide subsidies and economic incentives. For instance, the state policy in Punjab provides certain tax exemptions, including in relation to supply of capital goods used for setting up projects.
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The availability and size of such subsidies and incentives depend, to a large extent, on political and policy developments relating to environmental concerns in India and are typically available only for a specified time duration. Generally, the amount of government subsidy for solar projects has been decreasing as the cost of producing energy has approached grid parity. Changes in central and state policies could lead to a significant reduction in or a discontinuation of the support for renewable energies. Reductions in government subsidies and economic incentives that apply to future solar projects could diminish the availability of our opportunities to continue to develop or acquire suitable newly developed solar projects. Such reductions may also apply retroactively to existing solar projects, which could significantly reduce the economic benefits we receive from our existing solar projects. Moreover, some of the solar program subsidies and incentives expire or decline over time, are limited in total funding, require renewal from regulatory authorities or require us to meet certain investment or performance criteria. In addition, although various SERCs have specified RPOs for their distribution companies, the implementation of RPO schemes has not been uniform across Indian states. Although states are beginning to enforce RPOs under the guidance from the central government, RPOs have historically been breached without consequences.
Additionally, we may not continue to qualify for such subsidies and incentives. We could also choose to implement other solar power projects, such as rooftop projects, that are outside the scope of such subsidies and incentives.
Further, increased emphasis on reducing greenhouse gas emissions and the possibility of trading carbon dioxide emission quotas has led to extra duties being levied on sources of energy, primarily fossil fuels, which cause carbon dioxide pollution. The imposition of these duties has indirectly supported the expansion of power generated from renewable energy and, in turn, solar projects in general. If such direct and indirect government support for renewable energy were terminated or reduced, it would make producing electricity from solar projects less competitive and reduce demand for new solar projects.
A significant reduction in the scope or discontinuation of government incentive programs in our markets could have a material adverse effect on our business, financial condition, results of operations, cash flows and prospects.
Our long term growth depends in part on the Indian governments ability to meet its announced targeted capacity.
The Indian government increased its 2022 target for solar capacity from 20GW to 100GW. However, new capacity additions have historically been lower than the governments announced targeted capacity. For example, actual capacity additions represented only 70% of the targeted capacity of 78.7GW in the Eleventh Five-Year Plan. This shortfall in capacity additions was due to issues in timely commissioning of conventional power plants, which included delays in land acquisition, obtaining regulatory permits and difficulties in securing reliable and cost efficient fuel supplies. Under the prior Five Year Plans before the Eleventh Five-Year Plan, solar capacity targets were not included. As such, there is a short track record of meeting solar capacity targets. As for reaching target capacity for other renewable energy sources, in certain Five Year Plans those targets were met while others have fallen short. Any failure to meet the governments targeted solar capacity may result in a slowdown in our growth opportunities and adversely affect our ability to achieve our long term business objectives, targets and goals.
Our operations are subject to extensive governmental, health and safety and environmental regulations, which require us to obtain and comply with the terms of various approvals, licenses and permits. Any failure to obtain, renew or comply with the terms of such approvals, licenses and permits in a timely manner or at all may have a material adverse effect on our results of operations, cash flows and financial condition.
The power generation business in India is subject to a broad range of environmental, safety and other laws and regulations. These laws and regulations require us to obtain and maintain a number of approvals, licenses, registrations and permits for developing and operating power projects. Additionally, we may need to apply for more approvals in the future, including renewal of approvals that may expire from time to time. For example, we
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require various approvals during construction of our solar projects and prior to the commissioning certificate is issued, including capacity allocation and capacity transfer approvals, approvals from the local pollution control boards, evacuation and grid connectivity approvals and approval from the chief electrical inspector for installation and energization of electrical installations at the solar project sites. In addition, we are required to comply with state-specific requirements. Certain approvals may not be obtained in a timely manner. Certain approvals may also be granted on a provisional basis or for a limited duration and require renewal. If the conditions specified therein are not satisfied at a later date, we may not be able to evacuate power from these projects.
In addition, we could be affected by the adoption or implementation of new safety, health and environmental laws and regulations, new interpretations of existing laws, increased governmental enforcement of environmental laws or other similar developments in the future. For instance, we currently fall under an exemption granted to solar photovoltaic projects that exempts us from complying with the Environment Impact Assessment Notification, 2006, issued under the Environment (Protection) Act, 1986. While we are required to obtain consents to establish and operate in certain Indian states under the Water (Prevention and Control of Pollution) Act, 1974, Air (Prevention and Control of Pollution) Act, 1981 and the Hazardous Waste (Management, Handling and Transboundary Movement) Rules, 2008, certain state policies in relation to solar projects exempt us from obtaining such consents or have reduced or simplified procedural requirements for obtaining such consents. However, there can be no assurance that we will not be subject to any such consent requirements in the future, and that we will be able to obtain and maintain such consents or clearances in a timely manner, or at all, or that we will not become subject to any regulatory action on account of not having obtained or renewed such clearances in any past periods. Furthermore, our government approvals and licenses are subject to numerous conditions, some of which are onerous and require us to make substantial expenditure. We may incur substantial costs, including clean up or remediation costs, fines and civil or criminal sanctions, and third-party property damage or personal injury claims, as a result of any violations of or liabilities under environmental or health and safety laws or noncompliance with permits and approvals, which, as a result, may have an adverse effect on our business and financial condition. For instance, we are currently involved, along with the Government of Rajasthan, in a public interest litigation in relation to our 5MW project in Rajasthan. Members of the local community have alleged that the operation of this project has resulted in a water shortage for the local community and that the plant has been established on pasture land. The matter is currently pending adjudication before the High Court of Rajasthan.
We cannot assure you that we will be able to apply for or renew any approvals, licenses, registrations or permits in a timely manner, or at all, and that the relevant authorities will issue any of such approvals, licenses, registrations or permits in the time frames anticipated by us. Further, we cannot assure you that the approvals, licenses, registrations and permits issued to us would not be subject to suspension or revocation for non-compliance or alleged non-compliance with any terms or conditions thereof, or pursuant to any regulatory action. Any failure to apply for, renew and obtain the required approvals, licenses, registrations or permits, or any suspension or revocation of any of the approvals, licenses, registrations and permits that have been or may be issued to us, or any onerous conditions made applicable to us in terms of such approvals, licenses, registrations or permits may impede the successful commissioning and operations of our power projects, which may adversely affect our business, results of operations and cash flows.
Our limited operating history, especially with large-scale solar projects, may not serve as an adequate basis to judge our future prospects, results of operations and cash flows.
We began our business in 2008 and have a limited operating history. We established our first utility scale solar plant in India in 2009. As of September 30, 2015, we operated 17 utility scale projects and several commercial rooftop projects with a combined rated capacity of 242MW. As of such date, we were also constructing eleven projects with a combined rated capacity of 244MW and had an additional 179MW of projects committed. Accordingly, our relatively limited operating history may not be an adequate basis for evaluating our business prospects and financial performance, and makes it difficult to predict the future results of
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our operations. Period-to-period comparisons of our operating results and our results of operations for any period should not be relied upon as an indication of our performance for any future period. In particular, our results of operations, financial condition, cash flows and future success depend, to a significant extent, on our ability to continue to identify suitable sites, acquire land for solar projects, obtain required regulatory approvals, arrange financing from various sources, construct solar projects in a cost-effective and timely manner, expand our project pipeline and manage and operate solar projects that we develop. If we cannot do so, we may not be able to expand our business at a profit or at all, maintain our competitive position, satisfy our contractual obligations, or sustain growth and profitability.
Our operating results may fluctuate from quarter to quarter, which could make our future performance difficult to predict and could cause our operating results for a particular period to fall below expectations, resulting in a severe decline in the price of our equity shares.
Our quarterly operating results are difficult to predict and may fluctuate significantly in the future. We have experienced seasonal and quarterly fluctuations in the past, especially in the winter months. However, given that we are an early-stage company operating in a rapidly growing industry, those fluctuations may be masked by our recent growth rates and thus may not be readily apparent from our historical operating results. As such, our past quarterly operating results may not be good indicators of future performance.
In addition to the other risks described in this Risk Factors section, the following factors could cause our operating results to fluctuate:
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the expiration or initiation of any central or state subsidies or incentives; |
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our ability to complete installations in a timely manner due to market conditions or due to inconsistently available financing; |
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our ability to continue to expand our operations, and the amount and timing of expenditures related to such expansions; |
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announcements by us or our competitors of significant acquisitions, strategic partnerships, joint ventures or capital-raising activities or commitments; |
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changes in auction rules; |
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changes in feed-in tariff rates for solar power, viability gap funding, or VGF, our pricing policies or terms or those of our competitors; |
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actual or anticipated developments in our competitors businesses or the competitive landscape; and |
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an occurrence of low global horizontal irradiation that affects our generation of solar power. |
For these or other reasons, the results of any prior quarterly or annual periods should not be relied upon as indications of our future performance. In addition, our actual revenue, key operating and financial metrics and other operating results in future quarters may fall short of the expectations of investors and financial analysts, which could have a severe adverse effect on the trading price of our equity shares.
Our substantial indebtedness could adversely affect our business, financial condition, results of operations and cash flows.
As of June 30, 2015, we had US$18.0 million in current liabilities, excluding the current portion of long-term debt, and US$297.2 million in outstanding long-term borrowings, including the current portion of long-term debt. Long term borrowings as of June 30, 2015, after giving effect to the conversion of our convertible securities in connection with this offering, will be US$ million. Generally these borrowings relate to the financing for our projects and are secured by the project assets.
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Our debt could have significant consequences on our operations, including:
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reducing the availability of our cash flow to fund working capital, capital expenditures, acquisitions and other general corporate purposes as a result of our debt service obligations; |
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limiting our ability to obtain additional financing; |
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limiting our flexibility in planning for, or reacting to, changes in our business, the industry in which we operate and the general economy; |
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potentially increasing the cost of any additional financing; and |
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limiting the ability of our project operating subsidiaries to pay dividends to us for working capital or return on our investment. |
In addition, our borrowings under certain project-specific financing arrangement have floating rates of interest. Therefore, an increase or decrease in interest rates will increase or decrease our interest expense associated with such borrowing. A significant increase in interest expense could have an adverse effect on our business, financial condition, results of operations and cash flows impacting our ability to meet our payment obligations under our debt.
Any of these factors and other consequences that may result from our substantial indebtedness could have an adverse effect on our business, financial condition, results of operations and cash flows impacting our ability to meet our payment obligations under our debt. Our ability to meet our payment obligations under our outstanding debt depends on our ability to generate significant cash flow in the future. This, to some extent, is subject to general economic, financial, competitive, legislative and regulatory factors as well as other factors that are beyond our control.
Our growth prospects and future profitability depend to a significant extent on global liquidity and the availability of additional funding options with acceptable terms.
We require a significant amount of cash to fund the installation and construction of our projects and other aspects of our operations, and expect to incur additional borrowings in the future, as our business and operations grow. We may also require additional cash due to changing business conditions or other future developments, including any investments or acquisitions we may decide to pursue in order to remain competitive.
Historically, we have used loans, equity contributions, and government subsidies to fund our project development. We expect to expand our business with proceeds from this initial public offering and third-party financing options, including any bank loans, equity partners, financial leases and securitization. However, we cannot guarantee that we will be successful in locating additional suitable sources of financing in the time periods required or at all, or on terms or at costs that we find attractive or acceptable, which may render it impossible for us to fully execute our growth plan. In addition, rising interest rates could adversely impact our ability to secure financing on favorable terms.
Installing and constructing solar projects requires significant upfront capital expenditure and there may be a significant delay before we can recoup our investments through the long-term recurring revenue of our solar projects. Our ability to obtain external financing is subject to a number of uncertainties, including:
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our future financial condition, results of operations and cash flows; |
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the general condition of global equity and debt capital markets; |
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our credit ratings and past credit history; |
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decline of the Indian rupee compared to U.S. dollar; |
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regulatory and government support in the form of tax incentives, preferential tariffs, project cost subsidies and other incentives; |
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the continued confidence of banks and other financial institutions in our company and the solar power industry; |
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economic, political and other conditions in the jurisdictions where we operate; and |
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our ability to comply with any financial covenants under the debt financing. |
Any additional equity financing may be dilutive to our shareholders and any debt financing may contain restrictive covenants that limit our flexibility going forward. Furthermore, our credit ratings may be downgraded, which would adversely affect our ability to refinance debt and increase our cost of borrowing. Failure to manage discretionary spending and raise additional capital or debt financing as required may adversely impact our ability to achieve our intended business objectives.
If we fail to comply with financial and other covenants under our loan agreements, our financial condition, results of operations, cash flows and business prospects may be materially and adversely affected.
We expect to continue to finance a significant portion of our project development and construction costs with project financing. The agreements with respect to our existing project-level indebtedness contain financial and other covenants that require us to maintain certain financial ratios or impose certain restrictions on disposition of our assets or the conduct of our business. We have not been in compliance with all financial and other covenants and we may not be able to comply with some of those financial and other covenants from time to time. For example, as of September 30, 2014 we were not in compliance with three financial covenants, the cash flow to debt service ratio, the current asset to current liability ratio and the indebtedness to tangible net worth ratio, for our Punjab 1 project and one financial covenant, the indebtedness to tangible net worth ratio, for our Gujarat 1 project. We have obtained waivers from the lender to cure the non-compliances. In addition, we typically pledge over our solar project assets or account or trade receivables, and in certain cases, shares of the special purpose vehicles, to raise debt financing, and we are restricted from creating additional security over our assets. Such account or trade receivables will include all income generated from the sale of electricity in the solar projects.
Our financing agreements also include certain restrictive covenants whereby we may be required to obtain approval from our lenders to, among other things, incur additional debt, undertake guarantee obligations, enter into any scheme of merger, amalgamation, compromise, demerger or reconstruction, change our capital structure and controlling interest, dispose of or sell assets, transfer shares held by major shareholders to third parties, invest by way of share capital, lend and advance funds, declare dividends in the event of any default in repayment of debts or failure to maintain financial ratios, place deposits and change our management structure. Most of our lenders also impose significant restrictions in relation to our solar projects, under the terms of the relevant project loans taken by our respective subsidiaries. For example, we are required to obtain lenders consent to make any changes to, or terminate, project documents, waive any material claims or defaults under the project documents, make any changes to financing plans relating to our projects, and replace suppliers or other material project participants. There can be no assurance that such consent will be granted in a timely manner, or at all. In the event that such lender consents are granted, they may impose certain additional conditions on us, which may limit our operational flexibility or subject us to increased scrutiny by the relevant lenders. The time required to secure consents may hinder us from taking advantage of a dynamic market environment. These agreements also grant certain lenders the right to appoint nominee directors on the board of directors of AZI or its subsidiaries and require us to maintain certain ratings or other levels of credit worthiness. If we breach any financial or other covenants contained in any of our financing arrangements, we may be required to immediately repay our borrowings either in whole or in part, together with any related costs.
Our failure to comply with financial or restrictive covenants or periodic reporting requirements or to obtain our lenders consent to take restricted actions in a timely manner or at all may result in the declaration of an event of default by one or more of our lenders, which may accelerate repayment of the relevant loans or trigger cross defaults under other financing agreements. We cannot assure you that, in the event of any such acceleration, we will have sufficient resources to repay these borrowings. Failure to meet our obligations under
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the debt financing agreements could have an adverse effect on our cash flows, business and results of operations. Furthermore, a breach of those financial and other covenants or a failure to meet certain financial ratios under these financing agreements will also restrict our ability to pay dividends.
Any default or failure by us to repay our loans in a timely manner or at all could impact the ability of two of our directors who have personally guaranteed a portion of our loans to further guarantee our indebtedness and cause an adverse effect on our business and results of operation.
Mr. Inderpreet Singh Wadhwa and Mr. Harkanwal Singh Wadhwa have personally guaranteed the repayment of a number of AZIs loans. In connection with the working capital facility provided by the Central Bank of India, Mr. Inderpreet Singh Wadhwa and Mr. Harkanwal Singh Wadhwa have each guaranteed Rs. 543.3 million and Rs. 69.7 million, respectively, in favor of the lender.
In addition, Mr. Inderpreet Singh Wadhwa and Mr. Harkanwal Singh Wadhwa have provided personal guarantees in favor of the Central Bank of India for the repayment of loans of three of our project subsidiaries in the amounts of Rs. 314 million, Rs. 639 million and Rs. 1,305 million in addition to the payment of any interest and other monies payable to the lender. Mr. Inderpreet Singh Wadhwa and Mr. Harkanwal Singh Wadhwa have each also personally guaranteed a loan from Reliance Capital Limited in the amount of Rs. 1 billion and a loan from IFCI Limited in the amount of Rs. 1 billion.
Any default or failure by us to repay these loans in a timely manner, or at all, could trigger repayment obligations on the part of Mr. Inderpreet Singh Wadhwa and Mr. Harkanwal Singh Wadhwa, which could impact their ability to guarantee our indebtedness and could cause them to forfeit the stock pledged in relation to such loans, thereby having an adverse effect on our business, results of operation and cash flows.
The delay between making significant upfront investments in our solar projects and receiving revenue could materially and adversely affect our liquidity, business, results of operations and cash flows.
There are generally many months or even years between our initial bid in renewable energy auctions to build solar projects and the date on which we begin to recognize revenue from the sale of electricity generated by such solar projects. Our initial investments include, without limitation, legal, accounting and other third-party fees, costs associated with project analysis and feasibility study, payments for land rights, payments for interconnection and grid connectivity arrangements, government permits, engineering and procurement of solar panels, balance of system costs or other payments, which may be non-refundable. As such, projects may not be fully monetized for 25 years given the average length of our PPAs, but we bear the costs of our initial investment upfront. Furthermore, we have historically relied on our own equity contribution and bank loans to pay for costs and expenses incurred during project development. Solar projects typically generate revenue only after becoming commercially operational and starting to sell electricity to the power grid through offtakers. There may be long delays from the initial bid to projects becoming shovel-ready, due to the timing of auctions, permitting and grid connectivity process. Between our initial investment in the development of permits for solar projects and their connection to the transmission grid, there may be adverse developments, such as unfavorable environmental or geological conditions, labor strikes, panel shortages or monsoon weather. Furthermore, we may not be able to obtain all of the permits as anticipated, permits that were obtained may expire or become ineffective and we may not be able to obtain project level debt financing as anticipated. In addition, the timing gap between our upfront investments and actual generation of revenue, or any added delay in between due to unforeseen events, could put strains on our liquidity and resources, and materially and adversely affect our profitability, results of operations and cash flows.
Solar project development is challenging and our growth strategy may ultimately not be successful, which can have a material adverse effect on our business, financial condition, results of operations and cash flows.
The development and construction of solar projects involve numerous risks and uncertainties and require extensive research, planning and due diligence. We may be required to incur significant capital expenditures for
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land and interconnection rights, regulatory approvals, preliminary engineering, permits, and legal and other expenses before we can determine whether a solar project is economically, technologically or otherwise feasible.
We intend to expand our business significantly with a number of new projects in both new and existing jurisdictions in the future. As we grow, we expect to encounter additional challenges to our internal processes, external construction management, capital commitment process, project funding infrastructure and financing capabilities. Our existing operations, personnel, systems and internal control may not be adequate to support our growth and expansion and may require us to make additional unanticipated investments in our infrastructure. To manage the future growth of our operations, we will be required to improve our administrative, operational and financial systems, procedures and controls, and maintain, expand, train and manage our growing employee base. We will need to hire and train project development personnel to expand and manage our project development efforts. If we are unable to manage our growth effectively, we may not be able to take advantage of market opportunities, execute our business strategies successfully or respond to competitive pressures. As a result, our business, prospects, financial condition, results of operations and cash flows could be materially and adversely affected.
Success in executing our growth strategy is contingent upon, among others:
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accurately prioritizing geographic markets for entry, including estimates on addressable market demand; |
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managing local operational, capital investment or components sourcing in compliance with regulatory requirements; |
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negotiating favorable payment terms with suppliers; |
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collecting economic incentives as expected; and |
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signing PPAs or other arrangements that are commercially acceptable, including adequate financing. |
We may not be able to find suitable sites for the development of solar projects.
Solar projects require solar and geological conditions that are not available in all areas. Further, large, utility scale solar projects must be interconnected to the power grid in order to deliver electricity, which requires us to find suitable sites with capacity on the power grid available. We may encounter difficulties registering certain leasehold interest in such sites. Even when we have identified a desirable site for a solar project, our ability to obtain site control with respect to the site is subject to our ability to finance the transaction and growing competition from other solar power producers that may have better access to local government support or financial or other resources. If we are unable to find or obtain site control for suitable sites on commercially acceptable terms, our ability to develop new solar projects on a timely basis or at all might be harmed, which could have a material adverse effect on our business, financial condition and results of operations. Moreover, our land leases for projects are typically for 30 to 35 years, but our PPAs are generally for a term of 25 years. If we are not able to sell the power produced by our systems after the initial PPA has expired, our liquidity and financial condition may be harmed.
We face uncertainties in our ability to acquire the rights to develop and generate power from new solar projects due to highly competitive PPA auctions and possible changes in the auction process.
We acquire the rights to develop and generate power from new solar projects through a competitive bidding process, in which we compete for project awards based on, among other things, pricing, technical and engineering expertise, financial conditions, including specified minimum net worth criteria, availability of land, financing capabilities and track record. The bidding and selection process is also affected by a number of factors, including factors which may be beyond our control, such as market conditions or government incentive programs. If we misjudge our competitiveness when submitting our bids or if we fail to lower our costs to submit competitive bids, we may not acquire the rights on new solar projects. Furthermore, we have expected prices for system components to decline as part of our bidding process, and if that does not occur, our project economics may be harmed and we may need greater subsidies to remain economically viable.
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In addition, rules of the auction process may change. Each state in India has its own regulatory framework and several states have their own renewable energy policy. The rules governing the various regional power markets may change from time to time, in some cases, in a way that is contrary to our interests and adverse to our financial returns. For example, most national auctions currently use the reverse auction structure, in which several winners take part in the same project. There can be no assurance that the central and state governments will continue to allow us to utilize such bidding structures and any shift away from the current structures, such as to a Dutch auction, could increase the competition and adversely affect our business, results of operations and cash flows.
We face significant competition from traditional and renewable energy companies.
We face significant competition in the markets in which we operate. Our primary competitors are local and international developers and operators of solar projects and other renewable energy sources and including SunEdison, Inc., First Solar, Inc. and ACME Cleantech Solutions Private Limited. We also compete with utilities generating power from conventional fossil fuels. Recent deregulation of the Indian power sector and increased private sector investment have intensified the competition we face. The Electricity Act, 2003, or the Electricity Act, removed certain licensing requirements for power generation companies, provided for open access to transmission and distribution networks and also facilitated additional capacity generation through captive power projects. These reforms provide opportunities for increased private sector participation in power generation. Specifically, the open access reform enables private power generators to sell power directly to distribution companies and, ultimately, to the end consumers, enhancing the financial viability of private investment in power generation. Competitive bidding for power procurement further increases competition among power generators. We cannot assure you that we will be able to compete effectively, and our failure to do so could result in an adverse effect on our business, results of operations and cash flows.
Furthermore, our competitors may have greater operational, financial, technical, management or other resources than we do and may be able to achieve better economies of scale and lower cost of capital, allowing them to bid in the same auction at more competitive rates. Our competitors may also have a more effective or established localized business presence or a greater willingness or ability to operate with little or no operating margins for sustained periods of time. Our market position depends on our financing, development and operation capabilities, reputation and track record. Any increase in competition during the bidding process or reduction in our competitive capabilities could have a significant adverse impact on our market share and on the margins we generate from our solar projects.
Our competitors may also enter into strategic alliances or form affiliates with other competitors to our detriment. As our competitors grow in scale, they may establish in-house engineering, procurement and construction, or EPC, and operations and maintenance, or O&M, capabilities, which may offset a current advantage we may have over them. Moreover, suppliers or contractors may merge with our competitors which may limit our choices of suppliers or contractors and hence the flexibility of our overall project execution capabilities. For example, some of our competitors may have their own internal solar panel manufacturing capabilities. As the solar energy industry grows and evolves, we will also face new competitors who are not currently in the market. There can be no assurance that our current or potential competitors will not win bids for solar projects or offer services comparable or superior to those that we offer at the same or lower prices or adapt to market demand more quickly than we do. Increased competition may result in price reductions, reduced profit margins and loss of market share.
In addition, we face competition from developers of other renewable energy facilities, including wind, biomass, nuclear and hydropower. If these non-solar renewable sources become more financially viable, our business, financial condition and results of operations could be adversely affected. Competition from such producers may increase if the technology used to generate electricity from these other renewable energy sources becomes more sophisticated, or if the Indian government elects to further strengthen its support of such renewable energy sources relative to solar energy. As we also compete with utilities generating power from conventional fossil fuels, a reduction in the price of coal or diesel would make the development of solar energy less economically attractive and we would be at a competitive disadvantage.
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Any constraints in the availability of the electricity grid, including our inability to obtain access to transmission lines in a timely and cost-efficient manner, could adversely affect our business, results of operations and cash flows.
Distributing power to a purchaser is our responsibility. We generally rely on transmission lines and other transmission and distribution facilities that are owned and operated by the respective state governments or public entities. Where we do not have access to available transmission and distribution networks, we may engage contractors to build transmission lines and other related infrastructure. In such a case, we will be exposed to additional costs and risks associated with developing transmission lines and other related infrastructure, such as the ability to obtain right of way from land owners for the construction of our transmission lines, which may delay and increase the costs of our projects. We may not be able to secure access to the available transmission and distribution networks at reasonable prices, in a timely manner or at all.
Further, some of our projects may have limited access to transmission and distribution networks. Indias physical infrastructure, including its electricity grid, is less developed than that of many developed countries. As a result of grid constraints, such as grid congestion and restrictions on transmission capacity of the grid, the transmission and dispatch of the full output of our projects may be curtailed, particularly because we are required to distribute power to customers across long distances from our project sites. We may have to stop producing electricity during the period when electricity cannot be transmitted. Such events could reduce the net power generation of our projects. If construction of renewable energy projects outpaces transmission capacity of electricity grids, we may be dependent on the construction and upgrade of grid infrastructure by the government or public entities. We cannot assure you that the relevant government or public entities will do so in a timely manner, or at all. The curtailment of our power projects output levels will reduce our electricity output and limit operational efficiencies, which in turn could have an adverse effect on our business, results of operations and cash flows.
There are a limited number of purchasers of utility scale quantities of electricity, which exposes us and our utility scale projects to risk.
In fiscal year 2014 and 2015 and in the three months ended June 30, 2015, we derived 99.9%, 97.2% and 90.9%, respectively, of our revenue from our top five customers, respectively. Since the transmission and distribution of electricity are either monopolized or highly concentrated in most jurisdictions, there are a limited number of possible purchasers for utility scale quantities of electricity in a given geographic location, including transmission grid operators and central and state run utilities. For instance, for projects established pursuant to the Jawaharlal Nehru National Solar Mission, or NSM, solar project developers are required to enter into PPAs with specified implementation agencies. As a result, there is a concentrated pool of potential buyers for electricity generated by our plants and projects, which may restrict our ability to negotiate favorable terms under new PPAs and could impact our ability to find new customers for the electricity generated by our generation facilities should this become necessary.
Furthermore, if the financial condition of these utilities and/or power purchasers deteriorate or the NSM or other solar policy to which they are currently subject and that compel them to source renewable energy supplies change, demand for electricity produced by our plants could be negatively impacted.
Counterparties to our PPAs may not fulfill their obligations, which could result in a material adverse impact on our business, financial condition, results of operations and cash flows.
We generate electricity income primarily pursuant to PPAs entered into with central and state government-run utilities. Some of the customers may become subject to insolvency or liquidation proceedings during the term of the relevant contracts, and the credit support received from such customers may not be sufficient to cover our losses in the event of a failure to perform. There may also be delays associated with collection of receivables from government owned or controlled entities on account of the financial condition of these entities that deteriorated significantly in the past. Where we are selling power to non-governmental entities, we take into account the credit ratings assigned by rating agencies and our ability in the past to collect when assessing the counterparties
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creditworthiness. Governmental entities to which we sell power do not have credit ratings, so there are no credit ratings to consider. For illustrative purposes, Moodys Investor Services Inc. and Standard and Poors Financial Services LLC have rated the Government of India Baa3 and BBB-, respectively. As a result, many of the state governments in India, if rated, would likely rate lower than the Government of India. Although the central and state governments in India have taken steps to improve the liquidity, financial condition and viability of state electricity distribution utility companies, there can be no assurance that the utility companies that are currently our customers will have the resources to pay on time or at all.
In addition, our PPA customers may, for any reason, become unable or unwilling to fulfill their related contractual obligations, refuse to accept delivery of power delivered thereunder or otherwise terminate such agreements prior to the expiration thereof. If such events occur, our assets, liabilities, business, financial condition, results of operations and cash flows could be materially and adversely affected. For instance, Gujarat Urja Vikas Nigam Limited had filed a petition with the Gujarat Electricity Regulatory Commission, seeking recalculation on the basis of actual cash flow required for development of solar projects and consequent revision of the tariff payable by it, in relation to certain solar power projects including our 10MW Gujarat 1 project. While the Gujarat Electricity Regulatory Commission and the Appellate Tribunal for Electricity dismissed the claims made by Gujarat Urja Vikas Nigam Limited, an appeal is pending with the Supreme Court of India.
Furthermore, to the extent any of our customers are, or are controlled by, governmental entities, bringing actions against them to enforce their contractual obligations is often difficult. Also, our facilities may be subject to legislative or other political action that may impair their contractual performance.
Our PPAs may expose us to certain risks that may affect our future results of operations and cash flows.
Our profitability is largely a function of our ability to manage our costs during the terms of our PPAs and operate our power projects at optimal levels. If we are unable to manage our costs effectively or operate our power projects at optimal levels, our business and results of operations may be adversely affected. In the event we default in fulfilling our obligations under the PPAs, such as supplying the minimum amount of power specified in some of the PPAs or failing to obtain regulatory approvals, licenses and clearances with respect to our solar projects, we may be liable for penalties and in certain specified events, customers may also terminate such PPAs. Further, any failure to supply power from the scheduled commercial operation date may result in encashment of bank guarantees provided by us under the terms of certain PPAs. The termination of any of our projects by our customers would adversely affect our reputation, business, results of operations and cash flows.
Under a long-term PPA, we typically sell power generated from a power plant to state distribution companies at pre-determined tariffs. Our PPAs are generally not subject to downward revisions unless we elect to utilize accelerated rate of depreciation or if there is a delay in commissioning our projects, although we have entered into contracts that provide for downward adjustments in the past and may do so in the future. Accordingly, if there is an industry-wide increase in tariffs or if we are seeking an extension of the term of the PPA, we will not be able to renegotiate the terms of the PPA to take advantage of the increased tariffs. In addition, in the event of increased operational costs, we will not have the ability to reflect a corresponding increase in our tariffs. Further, any delay in commissioning projects or supplying electricity during the term of the PPA may result in reduction in tariffs, based on the terms of the PPA. Therefore, the prices at which we supply power may have little or no relationship with the costs incurred in generating power, which may lead to fluctuations in our margins. The above factors all limit our business flexibility, expose us to an increased risk of unforeseen business and industry changes and could have an adverse effect on our business, results of operations and cash flows.
The term of some of our PPAs are also less than the life of the power projects they are tied to. We will need to enter into other offtake agreements, or seek renewals or extensions of the existing PPAs, for the balance of the life of those power projects. Moreover, there are often other restrictions on our ability to, among other things, sell power to third parties and undertake expansion initiatives with other consumers. Failure to enter into or renew offtake
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arrangements in a timely manner and on terms that are acceptable to us could adversely affect our business, results of operations and cash flows. There could also be negative accounting consequences if we are unable to extend or replace expiring PPAs, including writing down the carrying value of assets at such power project sites.
Additionally, under the PPAs, our remedies in case of delays in payment by our customers may also be limited. For example, certain PPAs only permit us to terminate the PPA on account of non-payment of dues upon 90 days of our inability to recover such dues. Such risks limit our business flexibility, expose us to an increased risk of unforeseen business and industry changes and could have an adverse effect on our business, results of operations and cash flows.
In addition, most of the government agencies we enter into PPAs with under the NSM or the relevant state policies require us to agree to their standard form contracts, and we cannot negotiate for commercial terms or other terms of funding that are more favorable to us.
Land title in India can be uncertain and we may not be able to identify or correct defects or irregularities in title to the land which we own, lease or intend to acquire in connection with the development or acquisition of our power projects. Additionally, certain land on which our power projects are located may be subject to onerous conditions which may adversely affect its use.
There is no central title registry for real property in India and the documentation of land records in India has not been fully computerized. Property records in India are generally maintained at the state and district level and in local languages, and are updated manually through physical records. Therefore, property records may not be available online for inspection or updated in a timely manner, may be illegible, untraceable, incomplete or inaccurate in certain respects, or may have been kept in poor condition, which may impede title investigations or our ability to rely on such property records. In addition, there may be a discrepancy between the duration of the principal lease under different orders issued by state governments in respect of a particular parcel of revenue land. Furthermore, title to land in India is often fragmented, and in many cases, land may have multiple owners. Title may also suffer from irregularities, such as non-execution or non-registration of conveyance deeds and inadequate stamping, and may be subjected to encumbrances that we are unaware of. Any defects in, or irregularities of, title may result in a loss of development or operating rights over the land, which may prejudice the success of our power projects and require us to write off substantial expenditures in respect of our power projects. For instance, a portion of land leased from the Government of Rajasthan for our projects in Nagaur, Rajasthan, is presently disputed as third parties have sought establishment of mining rights through the Mining Department of the State of Rajasthan. We have filed a petition with the High Court of Rajasthan to disallow such renewal. Presently, the High Court of Rajasthan has issued an injunction over the alleged claims on this land for mining.
Further, improperly executed, unregistered or insufficiently stamped conveyance instruments in a propertys chain of title, unregistered encumbrances in favor of third parties, rights of adverse possessors, ownership claims of family members of prior owners or third parties, or other defects that a purchaser may not be aware of can affect title to a property. As a result, potential disputes or claims over title to the land on which our power projects are or will be constructed, may arise. However, an adverse decision from a court or the absence of an agreement with such third-parties may result in additional costs and delays in the construction and operating phases of any solar projects situated on such land. Also, such disputes, whether resolved in our favor or not, may divert managements attention, harm our reputation or otherwise disrupt our business.
In addition, some properties used for our solar projects are subject to other third-party rights such as right of passage and right to place cables and other equipment on the properties, which may result in certain interferences with our use of the properties. Our rights to the properties used for our solar projects may be challenged by property owners and other third parties for various other reasons as well. For example, we do not always have the exclusive right to use a given site. Any such challenge, if successful, could impair the development or operations of our solar projects on such properties.
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Additionally, the power projects that we may develop or acquire in the future may be located on land that may be subject to onerous conditions under the lease agreements through which we acquire rights to use such land and rights of way. Furthermore, the government may exercise its rights of eminent domain, or compulsory acquisition in respect of land on which our projects are or will be located. Any of this may adversely affect our business, results of operations and cash flows in the future.
A certain portion of the land on which our solar projects are or will be located, are not owned by us. In the event we are unable to purchase the land, or enter into or renew lease agreements, our business, results of operations, cash flows and financial condition could be adversely affected.
Some of our solar projects are located, or will be located, on revenue land that is owned by the state governments or on land acquired or to be acquired from private parties. The timeline for transfer of title in the land is dependent on the type of land on which the power projects are, or will be, located, and the policies of the relevant state government in which such land is located. In the case of land acquired from private parties, which is agricultural land, the transfer of such land from agriculturalists to non-agriculturalists such as us and the use of such land for non-agricultural purposes may require an order from the relevant state land or revenue authority allowing such transfer or use. For revenue land, we obtain a lease from the relevant government authority.
We cannot assure you that the outstanding approvals would be received, or that lease or sub-lease deeds would be executed in a timely manner, such that the operation of our solar projects will continue unaffected. In certain cases, any delay in the construction or commissioning of a solar project may result in termination of the lease. Further, the terms of lease and sub-lease agreements may also not be co-terminus with the lifetime of the power projects, taken together with the period of time required for construction and commissioning of the project. Accordingly, we will have to obtain extensions of the terms of such leases and sub-leases for the remainder of the terms of the corresponding PPAs. In the event that the relevant state authorities do not wish to renew the lease or sub-lease agreements, we may be forced to remove our equipment at the end of the lease and our business, results of operations, cash flows and financial condition could be adversely affected.
If sufficient demand for solar projects does not develop or takes longer to develop than we anticipate, our business, financial condition, results of operations, cash flows and prospects could be materially and adversely affected.
The solar power market is at a relatively early stage of development in many of the markets that we have entered or intend to enter. This is especially true in the rooftop and micro-grid solar markets. The solar energy industry continues to experience improved efficiency and higher electricity output. However, trends in the solar energy industry are based only on limited data and may not be reliable. Many factors may affect the demand for solar projects in India, including:
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fluctuations in economic and market conditions that affect the viability of conventional and non-solar renewable energy sources; |
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the cost and reliability of solar projects compared to conventional and other renewable energy sources; |
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the availability of grid capacity to dispatch power generated from solar projects; |
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public perceptions of the direct and indirect benefits of adopting renewable energy technology; and |
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regulations and policies governing the electric utility industry that may present technical, regulatory and economic barriers to the purchase and use of solar energy. |
If market demand for solar projects fails to develop sufficiently, our business, financial condition, results of operations, cash flows and prospects could be materially and adversely affected.
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If we are unsuccessful in our efforts to establish and/or maintain our compliance with the local content requirements in certain states, our financial results could be adversely affected.
In some cases, we are required by the central government in national auctions to procure solar panels solely from Indian manufacturers. Certain states or others may, in the future, require us to procure a defined portion of our solar system components from their designated geographical locales. Such requirements are commonly referred to as local content requirements. In order to satisfy these local content requirements, we may need to undertake localization initiatives in such geographical locale. Some of our competitors with more significant capital resources may implement or expedite their own localization efforts in these geographical locale, and those efforts may result in competitive advantages for them. We may be faced with shortages or quality issues if projects we bid on impose local content requirements. Our costs may also be higher as a result of these requirements. Our failure to successfully implement appropriate localization initiatives, or otherwise acquire and maintain the capability to satisfy applicable local content requirements, could result in our losing business to our competitors and/or our breaching the terms of agreements, potentially resulting in damages, including monetary penalties. Depending on the value to us of lost business or the amounts of any contractual penalties, these consequences could have a material adverse effect on our results of operations and cash flows.
We may incur unexpected expenses if the suppliers of components in our solar projects default in their warranty obligations.
The solar panels, inverters, modules and other system components utilized in our solar projects are generally covered by manufacturers warranties, which are typically for five to 25 years. In the event any such components fail to operate as required, we may be able to make a claim against the applicable warranty to cover all or a portion of the expense or losses associated with the faulty component. However, the warranties may not be sufficient to cover all of our expense and losses. In addition, these suppliers could cease operations and no longer honor the warranties, which would leave us to cover the expense and losses associated with the faulty component. Our business, financial condition, results of operations and cash flows could be materially and adversely affected if we cannot recover the expense and losses associated with the faulty component from these warranty providers.
Our construction activities may be subject to cost overruns or delays.
Construction of our solar projects may be adversely affected by circumstances outside of our control, including inclement weather, adverse geological and environmental conditions, a failure to receive regulatory approvals on schedule or third-party delays in providing supplies and other materials. Changes in project plans or designs, or defective or late execution may increase our costs from our initial estimates and cause delays. Increases in the prices of our materials may increase procurement costs. Labor shortages, work stoppages or labor disputes could significantly delay a project, increase our costs or cause us to breach our performance guarantees under our PPAs, particularly because strikes are not considered a force majeure event under many of our PPAs. Moreover, local political changes and delays, for instance, caused by state and local elections, as well as demonstrations or protests by local communities and special interest groups could result in, or contribute to, project time and cost overruns for us.
In addition, we sometimes utilize and rely on third-party sub-contractors to construct and install portions of our solar projects. If our sub-contractors do not satisfy their obligations or do not perform work that meets our quality standards or if there is a shortage of third-party sub-contractors or if there are labor strikes that interfere with the ability of our employees or contractors to complete their work on time or within budget, we could experience significant delays or cost overruns.
We may not be able to recover any of these losses in connection with construction cost overruns or delays. Certain PPAs require that we connect to the transmission grid by a certain date. If the solar project is significantly delayed, such PPAs may be terminated. In addition, if we are unable to meet our performance guarantees, most of our PPAs require us to pay liquidated damages to the offtaker in proportion to the amount of
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power not supplied, and also grant the offtaker a right to draw on bank guarantees posted by us, including up to 100% of certain bank guarantees. Also, certain PPAs provide that we are liable for government fines and penalties if we fail to deliver electricity required by the offtakers to meet their RPO requirements. Furthermore, in the case of projects with VGF, which is paid out typically over two to five years, if the project fails to generate power for a long period of time, the government agency can suspend the VGF and demand repayment of previously paid sums.
Any of the contingencies discussed above could lead us to fail to generate our expected return from our solar projects and result in unanticipated and significant revenue and earnings losses.
Operation of power generation facilities involves significant risks and hazards that could have a material adverse effect on our business, financial condition, results of operations and cash flows. We may not have adequate insurance to cover these risks and hazards.
Power generation involves hazardous activities, including delivering electricity to transmission and distribution systems. In addition to natural risks such as earthquake, flood, lightning, hurricane and wind, other hazards, such as fire, structural collapse and machinery failure are inherent risks in our operations. These and other hazards can cause significant personal injury or loss of life, severe damage to and destruction of property, plant and equipment and contamination of, or damage to, the environment and suspension of operations. The occurrence of any one of these events may result in our being named as a defendant in lawsuits asserting claims for substantial damages, including for environmental cleanup costs, personal injury and property damage and fines and/or penalties. We maintain an amount of insurance protection that we consider adequate but we cannot provide any assurance that our insurance will be sufficient or effective under all circumstances and against all hazards or liabilities to which we may be subject. Furthermore, our insurance coverage is subject to deductibles, caps, exclusions and other limitations. A loss for which we are not fully insured could have a material adverse effect on our business, financial condition, results of operations or cash flows. Further, due to rising insurance costs and changes in the insurance markets, we cannot provide any assurance that our insurance coverage will continue to be available at all or at rates or on terms similar to those presently available. Any losses not covered by insurance could have a material adverse effect on our business, financial condition, results of operations and cash flows.
Maintenance and expansion of power generation facilities involve significant risks that could result in reduced power generation and financial output.
Our facilities may require periodic upgrading and improvement. Any unexpected operational or mechanical failure, including failure associated with breakdowns and forced outages, and any decreased operational or management performance, could reduce our facilities generating capacity below expected levels and reduce our revenues as a result of generating and selling less power. Degradation of the performance of our solar facilities above levels provided for in the related PPAs may also reduce our revenues. Unanticipated capital expenditures associated with maintaining, upgrading or repairing our facilities may also reduce profitability, especially because our costs are fixed in the PPAs and we may not pass through any unexpected costs in relation to the projects to our customers. Furthermore, we are not able to mitigate such project risks by shifting some or all of the risk to a third-party EPC or O&M contractor since we provide these services in-house.
Changes in technology may require us to make additional capital expenditures to upgrade our facilities. The development and implementation of such technology entails technical and business risks and significant costs of employee implementation.
The loss of one or more members of our senior management or key employees may adversely affect our ability to implement our strategy.
Our future success depends on the continued services and performances of the members of our management in our business for project implementations, management and running of our daily operations and the planning
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and execution of our business strategy. We depend on our experienced management team, and the loss of one or more key executives could have a negative impact on our business. In particular, we are dependent on the services of Mr. Inderpreet Singh Wadhwa and Mr. Harkanwal Singh Wadhwa, and the loss of either, including the loss of Mr. Harkanwal Singh Wadhwa as a result of an adverse outcome of the pending litigation against him described in Management could adversely impact our business. We also depend on our ability to retain and motivate key employees and attract qualified new employees. Neither our executive officers nor our key employees are bound by employment agreements for any specific term, and we may be unable to replace key members of our management team and key employees in the event we lose their services. There is intense competition for experienced management personnel with technical and industry expertise in the renewable energy business and if we lose the services of any of these individuals and are unable to find suitable replacements in a timely manner, our ability to realize our strategic objectives could be impaired. Integrating new employees into our management team could prove disruptive to our operations, require substantial resources and management attention and ultimately prove unsuccessful. An inability to attract and retain sufficient managerial personnel who have critical industry experience and relationships could limit or delay our strategic efforts, which could have a material adverse effect on our business, financial condition, results of operations and cash flows.
The generation of electricity from solar sources depends heavily on suitable meteorological conditions. If solar conditions are unfavorable, our electricity generation, and therefore revenue from our solar projects, may be substantially below our expectations.
The electricity produced and revenues generated by our solar projects are highly dependent on suitable solar conditions and associated weather conditions, which are beyond our control. Furthermore, components of our systems, such as solar panels and inverters, could be damaged by severe weather, such as hailstorms, tornadoes or lightning strikes. We generally will be obligated to bear the expense of repairing the damaged solar energy systems that we own, and replacement and spare parts for key components may be difficult or costly to acquire or may be unavailable. Unfavorable weather and atmospheric conditions could impair the effectiveness of our assets or reduce their output beneath their rated capacity or require shutdown of key equipment, impeding operation of our solar assets and our ability to achieve certain performance guarantees pursuant to our PPAs, forecasted revenues and cash flows. Sustained unfavorable weather could also unexpectedly delay the installation of solar energy systems, which could result in a delay in us acquiring new projects or increase the cost of such projects. We guarantee the performance of our solar power plants and could suffer monetary consequences if our plants do not produce to our contracted levels.
We base our investment decisions with respect to each solar project on the findings of related solar studies conducted on-site prior to construction. However, actual climatic conditions at a project site may not conform to the findings of these studies and therefore, our facilities may not meet anticipated production levels or the rated capacity of our generation assets, which could adversely affect our business, financial condition, results of operations and cash flows.
Fluctuations in foreign currency exchange rates may negatively affect our revenue, cost of sales and gross margins and could result in exchange losses.
As the functional currency of our Indian subsidiaries is the Indian rupee, our operating expenses are denominated primarily in Indian rupees. However, some of our capital expenditures, and particularly those for equipment imported from international suppliers, such as solar panels, are denominated in foreign currencies. To the extent that we are unable to match revenue received in our functional currency with costs paid in foreign currencies, exchange rate fluctuations in any such currency could have an adverse effect on our profitability. Substantially all of our cash flows are generated in Indian rupees and, therefore, significant changes in the value of the Indian rupee relative to the other foreign currencies could have a material adverse effect on our financial condition and our ability to meet interest and principal payments on debts. In addition to currency translation risks, we incur currency transaction risks whenever we or one of our projects enter into a purchase or sales transaction using a currency other than the Indian rupee. We expect our future capital expenditures in connection with our proposed expansion plans to include significant expenditures in foreign currencies for imported equipment and machinery.
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A significant fluctuation in the Indian rupee and U.S. dollar and other foreign currency exchange rates could therefore have a significant impact on our other results of operations. The exchange rate between the Indian rupee and these currencies, primarily the U.S. dollar, has fluctuated in the past and any appreciation or depreciation of the Indian rupee against these currencies can impact our profitability and results of operations. Our results of operations have been impacted by such fluctuations in the past and may be impacted by such fluctuations in the future. For example, the Indian rupee has depreciated against the U.S. dollar over the past year, which may impact our results of operations in future periods. Such depreciation impacts the value of your investment. Furthermore, we have borrowings denominated in U.S. dollars and, as such, an annual decline in the rupee against the U.S. dollar effectively adds to the functional interest rate of our borrowings. Any amounts we spend in order to hedge the risks to our business due to fluctuations in currencies may not adequately hedge against any losses we incur due to such fluctuations.
The accounting treatment for many aspects of our solar projects is complex and any changes to the accounting interpretations or accounting rules governing our solar projects could have a material adverse effect on our GAAP reported results of operations and financial condition.
The accounting treatment for many aspects of our solar projects is complex, and our future results could be adversely affected by changes in the accounting treatment applicable to our solar projects. In particular, any changes to the accounting rules regarding the following matters may require us to change the manner in which we operate and finance our solar projects:
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foreign loans accounting; |
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derivative contracts; |
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asset retirement obligations; |
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share based compensation; |
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revenue recognition and related timing; |
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accounting for convertible debt and equity instruments; |
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income taxes; |
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foreign holding company tax treatment; and |
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regulated operations. |
Our international corporate structure and operations require us to comply with anti-corruption laws and regulations of the United States government and various non-U.S. jurisdictions. The implementation of compliance procedures and related controls may be time consuming and expensive, and if we are not in compliance with applicable legal requirements, we may be subject to civil or criminal penalties and other remedial measures.
Following this offering, we will be subject to the U.S. Foreign Corrupt Practices Act, or the FCPA, which prohibits, in relevant part, U.S. nationals, companies that have securities registered in the U.S. and any officer, director, employee, or agent of such issuer or any shareholder thereof acting on behalf of such issuer from bribing foreign officials for the purpose of obtaining or keeping business or otherwise obtaining favorable treatment and imposes obligations to keep accurate books and records and maintain appropriate internal controls. We have been and will continue to be subject to anti-corruption, anti-bribery and anti-facilitation payment legislation in other jurisdictions, which in certain circumstances go beyond the scope of the FCPA rules and regulations, including in India.
The current and future jurisdictions in which we operate our business may have experienced governmental corruption to some degree, and, in certain circumstances, strict compliance with anti-bribery and anti-facilitation payment laws may conflict with local customs and practices, which is likely to negatively impact our results of
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operations. We are currently in the process of developing and implementing formal controls and procedures to ensure that we are in compliance with the FCPA and similar U.S. laws and regulations as well as similar anti-corruption, anti-bribery and anti-facilitation payment laws and regulations in non-U.S. jurisdictions. Compliance with these new controls and procedures could make it more difficult for us to obtain timely permits or otherwise complete our projects on schedule in jurisdictions where strict compliance with anti-corruption and anti-bribery laws may conflict with local customs and practices.
Any historic or future violations of these laws, regulations and procedures by our employees, independent contractors, subcontractors and agents could be costly and time-consuming to investigate and expose us to administrative, civil or criminal penalties or fines (including under U.S. and Indian laws and regulations as well as foreign laws). If we were to be investigated for, charged with, or convicted of, violating these laws and regulations, our reputation could be harmed and it could cause some of our investors to sell their interests in our company to be consistent with their internal investment policies or to avoid reputational damage, and some investors might forego the purchase of our equity shares, all of which may negatively impact the trading prices of our equity shares. In addition, any administrative, civil or criminal penalties or fines could have a material adverse effect on our business results of operations and cash flows.
We may become involved in costly and time-consuming litigation and other regulatory proceedings, which require significant attention from our management.
We are not involved in any material litigation, administrative or arbitral proceedings. However, we may, in the ordinary course of our business, become involved in such proceedings. For example, we are, and may become subject to additional demands from Indian governmental or tax authorities, including, but not limited to, on account of differing interpretations of central and state tax statutes in India, which are extensive and subject to change from time to time. Changes in regulations or tax policies, or adoption of differing interpretations of existing provisions, and enforcement thereof by governmental, taxation or judicial authorities in India may become the subject of legal proceedings involving us from time to time.
Additionally, claims may be brought against or by us from time to time regarding, for example, defective or incomplete work, defective products, personal injuries or deaths, damage to or destruction of property, breach of warranty, late completion of work, delayed payments, intellectual property rights or regulatory compliance, and may subject us to litigation, arbitration and other legal proceedings, which may be expensive, lengthy, disruptive to normal business operations and require significant attention from our management.
If we were found to be liable on any of the claims against us, we would incur a charge against earnings to the extent a reserve had not been established for coverage. If amounts ultimately realized from the claims by us were materially lower than the balances included in our financial statements, we would incur a charge against earnings to the extent profit had already been accrued. Charges and write-downs associated with such legal proceedings could have a material adverse effect on our financial condition, results of operations and cash flow. Moreover, legal proceedings, particularly those resulting in judgments or findings against us, may harm our reputation and competitiveness in the market.
Employee shortages and rising employee costs may harm our business and increase our operation costs.
As of September 30, 2015, we employed 276 persons to perform a variety of functions in our daily operations. The low cost workforce in India provides us with a cost advantage. However, we have observed an overall tightening of the employee market and an emerging trend of shortage of skilled labor. Failure to obtain stable and dedicated employee support may cause disruption to our business that harms our operations. Furthermore, employee costs have increased in India in recent years and may continue to increase in the near future. To remain competitive, we may need to increase the salaries of our employees to attract and retain them. Our employee payroll and related costs amounted to US$2.1 million, and US$2.5 million in fiscal years 2014 and 2015, respectively. Any increase in employee costs may harm our operating results, cash flows and financial condition.
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Risks Related to Operations in India
Substantially all of our business and operations are located in India and we are subject to regulatory, economic, social and political uncertainties in India.
Substantially all of our business and employees are located in India, and we intend to continue to develop and expand our business in India. Consequently, our financial performance and the market price of our equity shares will be affected by changes in exchange rates and controls, interest rates, changes in government policies, including taxation policies, social and civil unrest and other political, social and economic developments in or affecting India.
An election or a new administration could result in uncertainty in the solar market, which could harm our operations. For example, we saw a slowdown in the solar market in fiscal year 2014 as a result of it leading up to an election year with uncertainty about the level of government support for solar initiatives going forward.
The Indian government has exercised and continues to exercise significant influence over many aspects of the Indian economy. Since 1991, successive Indian governments have generally pursued policies of economic liberalization and financial sector reforms, including by significantly relaxing restrictions on the private sector. Nevertheless, the role of the Indian central and state governments in the Indian economy as producers, consumers and regulators has remained significant and we cannot assure you that such liberalization policies will continue. The rate of economic liberalization could change, and specific laws and policies affecting solar power producers, foreign investments, currency exchange rates and other matters affecting investments in India could change as well, including exposure to possible expropriation, nationalization or other governmental actions.
Further, protests against privatizations and government corruption scandals, which have occurred in the past, could slow the pace of liberalization and deregulation. A significant change in Indias policy of economic liberalization and deregulation or any social or political uncertainties could significantly harm business and economic conditions in India generally and our business and prospects.
The extent and reliability of Indian infrastructure could significantly harm our results of operations, cash flows and financial conditions.
Indias physical infrastructure is less developed than that of many developed nations. Any congestion or disruption with respect to communication systems or any public facility, including transportation infrastructure, could disrupt our normal business activity. Any deterioration of Indias physical infrastructure would harm the national economy, disrupt the transportation of people, goods and supplies, and add costs to doing business in India. These disruptions could interrupt our business operations and significantly harm our results of operations, cash flows and financial condition. For the risk of congestion or disruption with respect to Indias electricity grid and transmission lines, see Risks Related to Our Business and Our Industry Any constraints in the availability of the electricity grid, including our inability to obtain access to transmission lines in a timely and cost-efficient manner, could adversely affect our business, results of operations and cash flows.
A slowdown in economic growth in India could cause our business to suffer.
Since inception, all of our revenue has been derived directly from sales by AZI and its various other subsidiaries in India. In addition, the CIA World Factbook estimates that consumer inflation in India was approximately 10% in 2013 and approximately 8% in 2014. The performance and growth of our business are necessarily dependent on economic conditions prevalent in India, which may be significantly harmed by political instability or regional conflicts, a general rise in interest rates, inflation and economic slowdown elsewhere in the world or otherwise. The Indian economy also remains largely driven by the performance of the agriculture sector which depends on the quality of monsoon, which is difficult to predict. Although the Indian economy has continued to grow in the past few years, any future slowdown in the Indian economy or a further increase in inflation could have a material adverse effect on the demand for power and, as a result, on our financial condition, results of operations and cash flows.
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Indias trade relationships with other countries and its trade deficit may significantly harm Indian economic conditions. If trade deficits increase or are no longer manageable because of an unexpected rise in global crude oil prices or otherwise, the Indian economy, and therefore our business, our financial performance and the price of our equity shares could be significantly harmed.
India also faces major challenges in sustaining its growth, which include the need for substantial infrastructure development and improving access to healthcare and education. If Indias economic growth cannot be sustained or otherwise slows down significantly, our business and prospects could be significantly harmed.
Stringent labor laws may harm our ability to have flexible human resource policies and labor union problems could negatively affect our processing capacity, construction schedules, cash flows and overall profitability.
India has stringent labor legislation that protects the interests of workers, including legislation that sets forth detailed procedures for dispute resolution and employee removal, imposes financial obligations on employers upon employee layoffs and regulates contract labor. These laws may restrict our ability to have human resource policies that would allow us to react swiftly to the needs of our business, discharge employees or downsize. We may also experience labor unrest in the future, which may delay our construction schedules or disrupt our operations. If such delays or disruptions occur or continue for a prolonged period of time, our processing capacity and overall profitability could be negatively affected. We also depend on third party contract labor. It is possible under Indian law that we may be held responsible for wage payments to these laborers if their contractors default on payment. We may be held liable for any non-payment by contractors and any such order or direction from a court or any other regulatory authority may harm our business, results of our operations and cash flows.
Foreign investment laws in India includes certain restrictions, which may affect our future acquisitions or investments in India.
India regulates ownership of Indian companies by non-residents, although some restrictions on foreign investment have been relaxed in recent years. Under current Indian regulations, transfers of shares between non-residents and residents are permitted (subject to certain exceptions) if they comply with, among other things, the guidelines specified by the Reserve Bank of India in relation to pricing and valuation of such shares and certain reporting requirements for such transactions specified by the Reserve Bank of India. If the transfer of shares is not in compliance with such pricing guidelines or reporting requirements, or falls under any of the exceptions specified by the Reserve Bank of India, the prior approval of the Reserve Bank of India will be required before any such transfer may be consummated. We may not be able to obtain any required approval from the Reserve Bank of India or any other Indian regulatory authority on any particular terms or at all.
For example, under its consolidated foreign direct investment policy, the Indian government has set out additional requirements for foreign investments in India, including requirements with respect to downstream investments by Indian companies owned or controlled by non-resident entities and the transfer of ownership or control, from resident Indian persons or entities to non-residents, of Indian companies in sectors with limits on foreign investment. As substantially all of AZIs equity shares will continue to be directly held by Azure Power Global Limited, it would be considered an entity owned and controlled by non-residents under applicable Indian laws. Accordingly, any downstream investment by Azure Power Global Limited into another Indian company will have to be in compliance with conditions applicable to such Indian entity, in accordance with the consolidated foreign direct investment policy. There are guidelines in relation to pricing and valuation of shares and restrictions on sources of funding for such investments. While these guidelines currently do not materially limit our planned investments in our Indian subsidiaries, to the extent they become more restrictive, they may restrict our ability to make further equity investments in India, including through Azure Power Global Limited.
Further, Indias Foreign Exchange Management Act, 1999, as amended, and the rules and regulations promulgated thereunder prohibit us from borrowing from our Indian subsidiaries. We are permitted to lend to our Indian subsidiaries subject to compliance with Indias policy on external commercial borrowings as notified by
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the Reserve Bank of India from time to time, which specifies certain conditions, including in relation to eligible lenders and borrowers, permitted end use and limits on the all-in-cost.
Changing laws, rules and regulations and legal uncertainties, including adverse application of corporate and tax laws, may adversely affect our business, financial condition, results of operations, cash flows and prospects.
The regulatory and policy environment in which we operate is evolving and subject to change. Such changes, including the instances mentioned below, may adversely affect our business, financial condition, results of operations, cash flows and prospects, to the extent that we are unable to suitably respond to and comply with any such changes in applicable law and policy.
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The notified provisions of the Companies Act, 2013, together with the rules thereunder, or the Companies Act, contain significant changes to Indian company law, including in relation to the issue of capital by companies, related party transactions, corporate governance, audit matters, shareholder class actions and restrictions on the number of layers of subsidiaries. The Companies Act has also introduced certain additional requirements, including the introduction of a provision allowing the initiation of class action suits in India against companies by shareholders or depositors, a restriction on investment by an Indian company through more than two layers of subsidiary investment companies (subject to certain permitted exceptions), and prohibitions on advances to directors. Moreover, effective April 1, 2014, companies exceeding certain net worth, revenue or profit thresholds are required to spend at least 2% of average net profits from the immediately preceding three fiscal years on corporate social responsibility projects, failing which an explanation is required to be provided in such companies annual reports. Further, the Companies Act imposes greater monetary and other liability on Indian companies, their directors and officers for any non-compliance of its requirements. We may incur increased costs and other burdens to interpret and ensure our compliance with these new requirements, which may also require significant management time and other resources. Any failure to comply may also adversely affect our business and results of operations. |
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The Companies Act also requires auditors to report on the adequacy and operating effectiveness of the internal financial controls over financial reporting as of March 31, 2016. The implementation of an internal financial control framework and related controls may be time consuming and expensive, and if a deficiency in our controls is identified, we may report material weakness in our internal control over financial reporting which may reduce the reliability of our financial reporting, harm investor confidence in our company and affect the value of our equity shares. |
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The Indian government has proposed a comprehensive national goods and services tax that will combine taxes and levies by the central and state governments into a unified rate structure. The Finance Minister of India in his budget speech for the fiscal year 2015-2016 has given an indication that a goods and services tax will be introduced and take effect beginning in April 1, 2016, although it remains subject to approval by the Indian Parliament. While the central and state governments have announced that all committed incentives will be protected following the implementation of the goods and services tax, given the limited availability of information in the public domain concerning the goods and services tax, we are unable to provide any assurance as to this or any other aspect of the tax regime following implementation of the goods and services tax. These amendments may affect the overall tax efficiency of companies operating in India and may result in significant additional taxes becoming payable. |
We have not determined the impact of these recent and proposed legislations on our business. Uncertainty in the applicability, interpretation or implementation of any amendment to, or change in, governing law, regulation or policy in the jurisdictions in which we operate, including by reason of an absence, or a limited body, of administrative or judicial precedent may be time consuming as well as costly for us to resolve and may impact the viability of our current business or restrict our ability to grow our business in the future.
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Natural calamities could have a negative impact on the Indian economy and adversely affect our business and project operations.
India has experienced natural calamities such as earthquakes, tsunamis, floods and drought in the past few years. In December 2004, Southeast Asia, including both the eastern and western coasts of India, experienced a massive tsunami, and in October 2005, the State of Jammu and Kashmir experienced an earthquake, both of which events caused significant loss of life and property damage. In June 2013, the state of Uttarakhand in northern India experienced widespread floods and landslides. The extent and severity of these natural disasters determines their impact on the Indian economy. If climatic conditions or natural disasters occur in areas where our solar projects and project teams are located, project development, connectivity to the power grid and the provision of O&M services may be adversely affected. In particular, materials may not be delivered as scheduled and labor may not be available. Substantially all of our operations and employees are located in India and there can be no assurance that we will not be adversely affected by natural disasters in the future.
In recent years, certain regions of the world, including India, have experienced outbreaks of swine flu caused by the H1N1 virus. Any future outbreak of swine flu or other health epidemics, such as the outbreak of the Ebola virus, may restrict the level of business activity in affected areas which could adversely affect our business.
Terrorist acts and other acts of violence involving India or other neighboring countries could significantly harm our operations directly, or may result in a more general loss of customer confidence and reduced investment in these countries that causes significant harm to our business, results of operations, cash flows and financial condition.
Terrorist attacks and other acts of violence or war involving India or other neighboring countries may significantly harm the Indian markets and the worldwide financial markets. The occurrence of any of these events may result in a loss of business confidence, which could potentially lead to economic recession and generally cause significant harm to our business, results of operations, cash flows and financial condition. In addition, any deterioration in international relations may result in investor concern regarding regional stability, which could decrease the price of our equity shares.
South Asia has also experienced instances of civil unrest and hostilities among neighboring countries from time to time. There have also been incidents in and near India such as terrorist attacks in Mumbai, Delhi and on the Indian Parliament, troop mobilizations along the India and Pakistan border and an aggravated geopolitical situation in the region. Such military activity or terrorist attacks in the future could significantly harm the Indian economy by disrupting communications and making travel more difficult. Resulting political tensions could create a greater perception that investments in Indian companies involve a high degree of risk. Furthermore, if India were to become engaged in armed hostilities, particularly hostilities that were protracted or involved the threat or use of nuclear weapons, we might not be able to continue our operations. Our insurance policies for a certain part of our business do not cover terrorist attacks or business interruptions from terrorist attacks or for other reasons.
Risks Related to Investments in Mauritian Companies
As our shareholder, you may have greater difficulties in protecting your interests than as a shareholder of a United States corporation.
We are incorporated under the laws of Mauritius. The laws generally applicable to United States corporations and their shareholders may provide shareholders of United States corporations with rights and protection for which there may be no corresponding or similar provisions under the Companies Act 2001 of Mauritius, as amended, or the Mauritius Companies Act. As such, if you invest in our equity shares, you may or may not be accorded the same level of shareholder rights and protection that a shareholder of a United States corporation may be accorded under the laws generally applicable to United States corporations and their shareholders. Taken together with the provisions of our constitution, which we expect to adopt with effect upon completion of this offering, or Constitution, some of these differences may result in your having greater difficulties in protecting your interests as
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our shareholder than you would have as a shareholder of a United States corporation. This affects, among other things, the circumstances under which transactions involving an interested director are voidable, whether an interested director can be held accountable for any benefit realized in a transaction with us, what rights you may have as a shareholder to enforce specified provisions of the Mauritius Companies Act or our Constitution, and the circumstances under which we may indemnify our directors and officers.
We may become subject to unanticipated tax liabilities that may have a material adverse effect on our results of operations.
We are a Mauritius Category 1 Global Business Company, or GBC1, and are tax resident in Mauritius. The Income Tax Act 1995 of Mauritius imposes a tax in Mauritius on the chargeable income of our company at the rate of 15%. However, under the Income Tax (Foreign Tax Credit) Regulations 1996 of Mauritius, subject to the Income Tax Act 1995 and the regulations under the Income Tax (Foreign Tax Credit) Regulations 1996, credit is allowed for foreign tax on the foreign source income of a resident of Mauritius against Mauritius tax computed by reference to the same income, and where credit is allowed against Mauritius tax chargeable in respect of any income, the amount of Mauritius tax so chargeable shall be reduced by the amount of the credit. Under the Income Tax (Foreign Tax Credit) Regulations 1996, foreign source income means income which is not derived from Mauritius and includes in the case of a corporation holding a GBC1 license, under the Financial Services Act 2007 of Mauritius, income derived in the course of a global business. Subject to the provisions of the Income Tax (Foreign Tax Credit) Regulations 1996, no credit is allowed in respect of foreign tax unless written evidence is presented to the Mauritius Revenue Authority showing the amount of foreign tax which has been charged and for this purpose, written evidence includes a receipt of the relevant authorities of the foreign country for the foreign tax or any other evidence that the foreign tax has been deducted or paid to the relevant authorities of that country. However, pursuant to regulation 8 of the Income Tax (Foreign Tax Credit) Regulations 1996, if written evidence is not presented to the Mauritius Revenue Authority showing the amount of foreign tax charged on our companys foreign source income, the amount of foreign tax shall nevertheless be conclusively presumed to be equal to 80% of the Mauritius tax chargeable with respect to that income and in such circumstance, the effective tax rate in Mauritius on our companys chargeable income would be 3%.
Following amendments to the Financial Services Act 2007 of Mauritius pursuant to the Finance (Miscellaneous Provisions) Act 2010 in December 2010, Mauritius companies holding a GBC1 issued by the Financial Services Commission in Mauritius are permitted to conduct business both in and outside Mauritius (instead of outside Mauritius only). The operations of a GBC1 company in Mauritius will be subject to tax on chargeable income at the rate of 15% in Mauritius.
We hold tax residence certificates issued by the Mauritius Revenue Authority. We believe that a significant portion of the income derived from our operations will not be subject to tax in countries in which we conduct activities or in which our customers are located, other than Mauritius and India. However, this belief is based on the anticipated nature and conduct of our business, which may change. It is also based on our understanding of our position under the tax laws of the countries in which we have assets or conduct activities. This position is subject to review and possible challenge by taxing authorities and to possible changes in law that may have retroactive effect. Our results of operations and cash flows could be materially and adversely affected if we become subject to a significant amount of unanticipated tax liabilities.
Anti-takeover provisions in our constitutional documents and under Mauritius law could make an acquisition of us, which may be beneficial to our shareholders, more difficult and may prevent attempts by our shareholders to replace or remove our current management and limit the market price of our equity shares.
Provisions in our Constitution may have the effect of delaying or preventing a change in control or changes in our management. Our Constitution includes the following provisions which may be regarded as defensive measures:
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a staggered board of directors; |
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the ability to issue additional equity shares (including blank check preferred stock); |
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granting directors the absolute discretion to decline to register a transfer of any shares; |
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requiring that amendments to our Constitution be approved by a special resolution of the shareholders of our company; and |
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limiting the liability of, and providing indemnification to, our directors and officers. |
These provisions may restrict or prevent any attempts by our shareholders to replace or remove our current management by making it more difficult for shareholders to replace members of our board of directors, which is responsible for appointing the members of our management team. The provisions could also deprive our shareholders of the opportunity to sell their shares at a premium over the prevailing market price by discouraging third parties from seeking to obtain control of our company in a tender offer or similar transactions.
Risks Related to Our Equity Shares and This Offering
In connection with the preparation of our consolidated financial statements for the fiscal years ended March 31, 2014 and 2015, we and our independent registered public accounting firm have identified a material weakness in our internal control over financial reporting. Although we expect to make every effort to address this material weakness, we may find that we are unable to improve our internal control over financial reporting sufficient to remediate this material weakness and, consequently, to maintain an effective system of internal control over financial reporting, which may reduce the reliability of our financial reporting, harm investor confidence in our company and affect the value of our equity shares.
We will be required, pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, to furnish a report by management on, among other things, the effectiveness of our internal control over financial reporting in the second annual report we file with the SEC. This assessment will need to include disclosure of any material weaknesses identified by our management in our internal control over financial reporting. However, our auditors will not be required to attest to and report on the effectiveness of our internal control over financial reporting pursuant to Section 404 until we are no longer an emerging growth company as defined in the Jumpstart Our Business Startups Act of 2012, or JOBS Act, if we take advantage of the exemptions available to us through the JOBS Act. We are in the very early stages of the costly and challenging process of compiling the documentation necessary to perform the evaluation needed to comply with Section 404.
In connection with the preparation of our consolidated financial statements for the fiscal years ended March 31, 2014 and 2015, we and our independent registered public accounting firm have identified a material weakness in our internal control over financial reporting. The material weakness relates to our financial statement close process and the lack of sufficient financial accounting and reporting expertise commensurate with our financial reporting requirements. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is reasonable possibility that a material misstatement of a companys annual or interim financial statements will not be prevented or detected on a timely basis.
We are currently in the process of remediating the material weakness and are taking numerous steps that we believe will address the underlying causes of the material weakness, primarily through the hiring of additional accounting and finance personnel with technical accounting and financial reporting experience, and strengthening controls around our financial statement close process. If we fail to effectively remediate deficiencies in our control environment or are unable to implement and maintain effective internal control over financial reporting and disclosure controls to meet the demands that will be placed upon us as a public company, including the requirements of Section 404 of the Sarbanes-Oxley Act, we may be unable to accurately report our financial results, or report them within the timeframes required by the U.S. Securities and Exchange Commission, or the SEC.
Even if we are able to report our financial statements accurately and in a timely manner, if we do not make all necessary improvements to address the material weakness, continued disclosure of a material weakness will be required in future filings with the SEC, which could cause our reputation to be harmed and our stock price to decline.
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You may have difficulty enforcing judgments against us, our directors and management.
We are incorporated under the laws of Mauritius. Further, we conduct substantially all of our operations in India through our key operating subsidiary in India. The majority of our directors and officers, and some of the experts named in this prospectus, reside outside the United States, and a majority of our assets and some or all of the assets of such persons are located outside the United States. As a result, it may be difficult or impossible to effect service of process within the United States upon us or those persons, or to recover against us or them on judgments of United States courts, including judgments predicated upon the civil liability provisions of the United States federal securities laws. An award of punitive damages under a United States court judgment based upon United States federal securities laws is likely to be construed by Mauritian and Indian courts to be penal in nature and therefore unenforceable in both Mauritius and India. Further, no claim may be brought in Mauritius or India against us or our directors and officers in the first instance for violation of United States federal securities laws because these laws have no extraterritorial application under Mauritian or Indian law and do not have force of law in Mauritius or India. However, a Mauritian or Indian court may impose civil liability, including the possibility of monetary damages, on us or our directors and officers if the facts alleged in a complaint constitute or give rise to a cause of action under Mauritian or Indian law. Moreover, it is unlikely that a court in Mauritius or India would award damages on the same basis as a foreign court if an action were brought in Mauritius or India or that a Mauritian or Indian court would enforce foreign judgments if it viewed the amount of damages as excessive or inconsistent with Mauritius or Indian practice or public policy.
The courts of Mauritius or India would not automatically enforce judgments of United States courts obtained in actions against us or our directors and officers, or some of the experts named herein, predicated upon the civil liability provisions of the United States federal securities laws, or entertain actions brought in Mauritius or India against us or such persons predicated solely upon United States federal securities laws. Further, there is no treaty in effect between the United States and Mauritius providing for the enforcement of judgments of United States courts in civil and commercial matters and the United States has not been declared by the Indian government to be a reciprocating territory for the purposes of enforcement of foreign judgments, and there are grounds upon which Mauritian or Indian courts may decline to enforce the judgments of United States courts. Some remedies available under the laws of United States jurisdictions, including remedies available under the United States federal securities laws, may not be allowed in Mauritian or Indian courts if contrary to public policy in Mauritius or India. Because judgments of United States courts are not automatically enforceable in Mauritius or India, it may be difficult for you to recover against us or our directors and officers or some experts named in this prospectus based upon such judgments. In India, prior approval of the Reserve Bank of India is required in order to repatriate any amount recovered pursuant to such judgments. See Enforceability of Civil Liabilities.
We do not expect to pay any cash dividends on our equity shares.
We have not paid dividends on any of our equity shares to date and we currently intend to retain our future earnings, if any, to fund the development and growth of our business. As a result, capital appreciation, if any, of our equity shares are likely to be your sole source of gain for the foreseeable future. Consequently, in the foreseeable future, you will likely only experience a gain from your investment in our equity shares if the price of our equity shares increases.
In addition, our ability and decisions whether to pay dividends in the future will depend on our earnings, financial condition and capital requirements. Dividends to U.S. holders may be negatively affected by foreign currency fluctuations. We may not generate sufficient income to cover our operating expenses and pay dividends to our shareholders, or at all. Our ability to pay dividends also could be restricted under financing arrangements that we may enter into in the future and we may be required to obtain the approval of lenders in the event we are in default of our repayment obligations. We may be unable to pay dividends in the near or medium term, and our future dividend policy will depend on our capital requirements, financing arrangements, results of operations and financial condition. Dividends distributed by us will attract dividend distribution tax at rates applicable from time to time. See Dividends and Dividend Policy for further information.
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Our holding company will have to rely principally on dividends and other distributions on equity paid by our operating subsidiaries and limitations on their ability to pay dividends to us could adversely impact your ability to receive dividends on our equity shares.
Since we cannot borrow from our Indian subsidiaries, dividends and other distributions on equity paid by our operating subsidiaries will be our principal source for cash in order for us to fund our operations including corporate expenses. While we will retain $5.0 million from the proceeds of this offering for general corporate purposes, this may not be sufficient to fund our operations. Accordingly, we may need to issue additional equity or borrow funds, either of which may be unavailable on attractive terms, if at all.
If our operating subsidiaries incur debt on their own behalf in the future, the instruments governing the debt may restrict their ability to pay dividends or make other distributions to our holding company. As our key operating subsidiary is established in India, it is also subject to certain limitations with respect to dividend payments. As of the date of this prospectus, AZI has not paid any cash dividends on its equity shares and does not intend to pay dividends to its equity shareholders, including Azure Power Global Limited, in the foreseeable future. Moreover, upon completion of this offering, we will not own 100% of AZI and therefore any dividend payment made by AZI to us will also involve a payment to the other shareholders of AZI, including the Founders.
As a foreign private issuer, we are permitted to, and we will, follow certain home country corporate governance practices in lieu of certain requirements applicable to U.S. issuers. This may afford less protection to holders of our equity shares.
As a foreign private issuer who has applied for listing of our equity shares on the New York Stock Exchange, or NYSE, we are permitted to follow certain home country corporate governance practices in lieu of certain NYSE requirements. A foreign private issuer must disclose in its annual reports filed with the SEC, each NYSE requirement with which it does not comply followed by a description of its applicable home country practice. As a company incorporated in Mauritius and which expects to be listed on the NYSE, we may follow our home country practice with respect to the composition of our board of directors and nominations committee and executive sessions. Unlike the requirements of the NYSE, the corporate governance practice and requirements in Mauritius do not require us as a GBC1 to have the majority of our board of directors be independent; do not require us as a GBC1 to establish a nominations committee; and do not require us to hold regular executive sessions where only independent directors shall be present. Such Mauritian home country practices may afford less protection to holders of our equity shares than would be available to the shareholders of a U.S. corporation.
If we cease to qualify as a foreign private issuer, we would be required to comply fully with the reporting requirements of the Exchange Act applicable to U.S. domestic issuers, and we would incur significant additional legal, accounting and other expenses that we would not incur as a foreign private issuer.
We expect to qualify as a foreign private issuer upon the closing of this offering. As a foreign private issuer, we will be exempt from a number of rules and regulations under the Securities Exchange Act of 1934, or the Exchange Act, applicable to U.S. domestic issuers, including the furnishing and content of proxy statements, compliance with the reporting and short-swing profit recovery provisions contained in Section 16 of the Exchange Act applicable to executive officers, directors and principal shareholders. We will not be required under the Exchange Act to file periodic reports and financial statements with the SEC as frequently or as promptly as U.S. domestic issuers, and we will not be required to disclose in our periodic reports all of the information that U.S. domestic issuers are required to disclose. While we currently expect to qualify as a foreign private issuer immediately following the closing of this offering, we may cease to qualify as a foreign private issuer in the future. If we do not qualify as a foreign private issuer, we will be required to comply fully with the reporting requirements of the Exchange Act applicable to U.S. domestic issuers, and we will incur significant additional legal, accounting and other expenses that we would not incur as a foreign private issuer.
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For as long as we are an emerging growth company, we will not be required to comply with certain reporting requirements that apply to other public companies.
We are an emerging growth company, as defined in the JOBS Act, enacted on April 5, 2012. For as long as we continue to be an emerging growth company, we may choose to take advantage of certain exemptions from reporting requirements applicable to other public companies that are not emerging growth companies. These include: (1) not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, (2) not being required to comply with any new requirements adopted by the Public Company Accounting Oversight Board, or the PCAOB, requiring mandatory audit firm rotation or a supplement to the auditors report in which the auditor would be required to provide additional information about the audit and the financial statements of the issuer, (3) not being required to comply with any new audit rules adopted by the PCAOB after April 5, 2012 unless the SEC determines otherwise, and (4) not being required to provide certain disclosure regarding executive compensation required of larger public companies. We could be an emerging growth company for up to five years from the end of our current fiscal year, although, if the market value of our equity shares that is held by non-affiliates exceeds US$700 million as of any September 30 before the end of that five-year period, we would cease to be an emerging growth company as of the following April 1. We cannot predict if investors will find our equity shares less attractive if we choose to rely on these exemptions. If some investors find our equity shares less attractive as a result of any choices to reduce future disclosure, there may be a less active trading market for our equity shares and our share price may be more volatile. Further, as a result of these scaled regulatory requirements, our disclosure may be more limited than that of other public companies and you may not have the same protections afforded to shareholders of such companies.
You may be subject to Indian taxes on income arising through the sale of our equity shares.
Pursuant to recent amendments to the Indian Income Tax Act, 1961, as amended, income arising directly or indirectly through the sale of a capital asset, including any share or interest in a company or entity registered or incorporated outside of India, will be liable to tax in India, if such share or interest derives, directly or indirectly, its value substantially from assets (whether tangible or intangible) located in India and whether or not the seller of such share or interest has a residence, place of business, business connection, or any other presence in India. The share or interest of the company or entity registered or incorporated outside of India is deemed to derive its value substantially from the assets located in India if the value of such Indian assets exceeds Rs. 100 million and represents at least 50% of the value of all the assets owned by the company or entity registered or incorporated outside of India. Substantially all of our assets are located in India.
However, if the transferor of share or interest in a company or entity registered or incorporated outside of India (along with its associated enterprises), neither holds the right of management or control in the company or entity registered or incorporated outside of India nor holds voting power or share capital or interest exceeding 5% of the total voting power or total share capital or interest in the company or entity registered or incorporated outside of India, at any time during the twelve months preceding the date of transfer, such small shareholders are exempt from the indirect transfer provisions mentioned above. The amendments also do not deal with the interplay between the amendments to the Indian Income Tax Act, 1961, as amended, and the existing Double Taxation Avoidance Agreements that India has entered into with countries such as the United States in case of an indirect transfer. Accordingly, the implications of the recent amendments are presently unclear. If it is determined that these amendments apply to a holder of our equity shares, such holder could be liable to pay taxes in India on such income.
An active trading market for our equity shares may not develop and the trading price of our equity shares may fluctuate significantly.
Before this initial public offering, there was no public market for our equity shares. If an active public market for our equity shares does not develop after this offering, the market price and liquidity of our equity shares may be adversely affected. We cannot guarantee that a liquid public market for our equity shares will develop or be sustained after this offering.
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The initial public offering price of our equity shares will be determined by negotiations between us and the underwriters and may not be indicative of prices that will prevail in the trading market following this offering. You may not be able to resell your equity shares at a price that is attractive to you. In addition, the market price of our equity shares could fluctuate significantly after this offering. In recent years, the stock market has experienced significant volatility. These and other factors may cause the market price and demand for our equity shares to fluctuate significantly, which may limit or prevent investors from readily selling their equity shares and may otherwise negatively affect the liquidity of our equity shares. In addition, in the past, when the market price of a stock has been volatile, holders of that stock have instituted securities class action litigation against the company that issued the stock. If any of our shareholders brought a lawsuit against us, we could incur substantial costs defending the lawsuit. Such a lawsuit could also divert the time and attention of our management from other business concerns.
Because the public offering price is substantially higher than our book value per equity share, you will incur immediate and substantial dilution.
The initial public offering price per equity share is substantially higher than the net tangible book value per equity share prior to this offering. Accordingly, if you purchase our equity shares in this offering, you will incur immediate dilution of approximately in the net tangible book value per equity share from the price you pay for our equity shares, representing the difference between (1) the assumed initial public offering price of US$ per equity share (the midpoint of the estimated offering price range set forth in the front cover of this prospectus) and (2) the pro forma net tangible book value per equity share of US$ on June 30, 2015 after giving effect to this offering. For more information, see Dilution.
The sale or availability for sale of substantial amounts of our equity shares could adversely affect their market price.
Sales of substantial amounts of our equity shares in the public market after the completion of this offering, or the perception that such sales could occur, could adversely affect the market price of our equity shares and could materially impair our future ability to raise capital through offerings of our equity shares.
We will have equity shares outstanding immediately after this offering or equity shares if the underwriters exercise their option to purchase additional equity shares in full. Further, although certain of our share option holders are subject to restrictions on selling shares acquired upon the exercise of options, the majority of the options granted under our equity option plan will continue to be exercisable following the completion of this offering. All of the equity shares sold in this offering will be freely tradable without restriction or further registration under the U.S. Securities Act of 1933, or the Securities Act, unless held by our affiliates as that term is defined in Rule 144 under the Securities Act. Subject to the 180-day lock-up restrictions described below and other applicable restrictions and limitations under Rule 144 of the Securities Act, all of our shares outstanding prior to this offering will be eligible for sale in the public market. If these shares are sold, or if it is perceived that they will be sold, in the public market, the trading price of our equity shares could decline.
In connection with this offering, we have agreed, subject to some exceptions, not to sell any equity shares for 180 days after the date of this prospectus without the written consent of the underwriters. However, the underwriters may release these equity shares from these lock-up restrictions at any time. We cannot predict what effect, if any, market sales of equity shares held by our significant shareholders or any other shareholder or the availability of these equity shares for future sale will have on the market price of our equity shares.
If securities or industry analysts do not publish or cease publishing research or reports about us, our business or our market, or if they change their recommendations regarding our equity shares adversely, our stock price and trading volume could decline.
The trading market for our equity shares is influenced by the research and reports that industry or securities analysts publish about us, our business, our market or our competitors. If any of the analysts who cover us or may
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cover us in the future change their recommendation regarding our stock adversely, or provide more favorable relative recommendations about our competitors, our stock price would likely decline. If any analyst who covers us or may cover us in the future were to cease coverage of our company or fail to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could cause our stock price or trading volume to decline.
Future issuances of any equity securities may cause a dilution in your shareholding, decrease the trading price of our equity shares, and restrictions agreed to as part of debt financing arrangements may place restrictions on our operations.
Any issuance of equity securities after this offering could dilute the interests of our shareholders and could substantially decrease the trading price of our equity shares. We may issue equity or equity-linked securities in the future for a number of reasons, including to finance our operations and business strategy (including in connection with acquisitions and other transactions), to adjust our ratio of debt to equity, to satisfy our obligations upon the exercise of then-outstanding options or other equity-linked securities, if any, or for other reasons. Issuance of such additional securities may significantly dilute the equity interests of investors in this offering who will not have pre-emptive rights with respect to such an issuance, subordinate the rights of holders of equity shares if preferred shares are issued with rights senior to those afforded to our equity shares, or harm prevailing market prices for our equity shares.
Management will have considerable discretion as to the use of the net proceeds to be received by us from this offering.
Our allocation of the net proceeds to be received by AZI after the share subscription is based on current plans and business conditions. The amounts and timing of any expenditure will vary depending on the amount of cash generated by our operations and our success in future auctions. Accordingly, our management will have considerable discretion in the application of the net proceeds received by us. You will not have the opportunity, as part of your investment decision, to assess whether proceeds are being used appropriately. You must rely on the judgment of our management regarding the application of the net proceeds of this offering. The net proceeds may be used for corporate purposes that do not improve our results of operations or increase our share price. The net proceeds from this offering, pending investment in operating assets or solar projects, may be placed in investments that do not produce income or that lose value, which will cause the price of our equity shares to decline.
We may be classified as a passive foreign investment company, which could result in adverse U.S. federal income tax consequences to certain U.S. investors of our equity shares.
A non-U.S. corporation will be a passive foreign investment company, or PFIC, for any taxable year if either (1) at least 75% of its gross income for such year is passive income or (2) at least 50% of the value of its assets (based on an average of the quarterly values of the assets) during such year is attributable to assets that produce passive income or are held for the production of passive income. We do not expect to be a PFIC for U.S. federal income tax purposes for our current taxable year or future taxable years. However, our PFIC status is a factual determination made after the close of each taxable year that will depend, in part, on the composition of our income and assets, and thus, there can be no assurance that we will not be treated as a PFIC in our current taxable year or future taxable years. See Taxation U.S. Federal Income Taxation Passive Foreign Investment Company.
46
This prospectus contains forward looking statements about our current expectations and views of future events. All statements, other than statements of historical facts, contained in this prospectus, including statements about our strategy, future operations, future financial position, future revenues, projected costs, prospects, plans and future megawatt goals of management, are forward looking statements. These statements relate to events that involve known and unknown risks, uncertainties and other factors, including those listed under Risk Factors, which may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward looking statements. In some cases, these forward looking statements can be identified by words or phrases such as may, will, expect, anticipate, aim, estimate, intend, plan, believe, potential, continue, is/are likely to or other similar expressions.
These forward looking statements are subject to risks, uncertainties and assumptions, some of which are beyond our control. In addition, these forward looking statements reflect our current views about future events and are not a guarantee of future performance. Actual outcomes may differ materially from the information contained in the forward looking statements because of a number of factors, including, without limitation, the risk factors set forth in Risk Factors and the following:
|
the pace of government sponsored auctions; |
|
changes in auction rules; |
|
the governments willingness to enforce Renewable Purchase Obligations, or RPOs; |
|
permitting, development and construction of our project pipeline according to schedule; |
|
solar radiation in the regions in which we operate; |
|
developments in, or changes to, laws, regulations, governmental policies, incentives and taxation affecting our operations; |
|
adverse changes or developments in the industry in which we operate; |
|
our ability to maintain and enhance our market position; |
|
our ability to successfully implement any of our business strategies; |
|
our ability to enter into power purchasing agreements, or PPAs, on acceptable terms, the occurrence of any event that may expose us to certain risks under our PPAs and the willingness and ability of counterparties to our PPAs to fulfill their obligations; |
|
our ability to borrow additional funds and access capital markets, as well as our substantial indebtedness and the possibility that we may incur additional indebtedness going forward; |
|
our ability to establish and operate new solar projects; |
|
our ability to compete against traditional and renewable energy companies; |
|
political and economic conditions in India; |
|
material changes in the costs of solar panels and other equipment required for our operations; |
|
fluctuations in inflation, interest rates and exchange rates; and |
|
other risks and uncertainties, including those listed under the caption Risk Factors. |
The forward looking statements made in this prospectus relate only to events or information as of the date on which the statements are made in this prospectus. Except as required by law, we undertake no obligation to update or revise publicly any forward looking statements, whether as a result of new information, future events
47
or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events. You should read this prospectus and the documents that we reference in this prospectus and have filed as exhibits with the SEC, of which this prospectus is a part, completely and with the understanding that our actual future results or performance may be materially different from what we expect.
This prospectus also contains statistical data and estimates, including those relating to the solar industry and our competition from market research, analyst reports and other publicly available sources. These publications include forward looking statements being made by the authors of such reports. These forward looking statements are subject to a number of risks, uncertainties and assumptions. Actual results could differ materially and adversely from those anticipated or implied in the forward looking statements.
48
We estimate that we will receive net proceeds from this offering of approximately US$ million. These estimates are based upon an assumed initial offering price of US$ per equity share, the midpoint of the estimated range of the initial public offering price as set forth on the cover page of this prospectus, after deducting the estimated underwriting discounts, commissions and aggregate offering expenses payable by us and assuming no exercise of the underwriters option to purchase additional equity shares and no other change to the number of equity shares offered by us as set forth on the cover page of this prospectus. A US$1.00 increase (decrease) in the assumed initial public offering price of US$ per equity share would increase (decrease) the net proceeds to us from this offering by US$ million. We will not receive any of the proceeds from the sale of equity shares by the selling shareholder.
We intend to use US$ million to fund the purchase by Azure Power Global Limited of equity shares of AZI, which will occur contemporaneously with the completion of this offering. Approximately US$5.0 million will be retained by Azure Power Global Limited to fund its future operating expenses. To the extent the underwriters exercise their option to purchase additional equity shares, the net proceeds from the sale of the additional equity shares will be used to purchase additional equity shares of AZI. See Prospectus Summary Corporate Structure. Net proceeds of US$ to be received by AZI pursuant to such purchase are intended to be used for project development, working capital needs and other general corporate purposes.
The foregoing use of our net proceeds from this offering represents our current intentions based upon our present plans and business condition. The amounts and timing of any expenditure will vary depending on the amount of cash generated by our operations and our success at solar auctions. Accordingly, our management will have significant discretion in the allocation of the net proceeds we will receive from this offering. Depending on future events and other changes in the business climate, we may determine at a later time to use the net proceeds for different purposes.
Pending the use of the net proceeds, AZI intends to hold the proceeds from the purchase of its equity shares by Azure Power Global Limited in short-term, interest-bearing debt instruments or demand deposits.
49
The consolidated financial statements and other financial data included in this prospectus of AZI, our predecessor, are presented in Indian rupees. AZIs functional currency is Indian rupees. The functional currencies of AZIs subsidiaries are their respective local country currencies. The translation from the applicable foreign currencies of AZIs subsidiaries into Indian rupees is performed for balance sheet accounts using the exchange rate in effect as of the balance sheet date except for shareholders equity and preferred shares, which are translated at the historical rates in effect at the dates of the underlying transactions. Revenue, expense and cash flow items are translated using average exchange rates for the respective period.
U.S. dollar balances have been translated from Indian rupee amounts solely for the convenience of the readers. The following table sets forth, for each of the periods indicated, the low, average, high and period-end noon buying rates in The City of New York for cable transfers, in Indian rupees per U.S. dollar, as certified for customs purposes by the Federal Reserve Bank of New York. These rates are provided solely for your convenience and are not necessarily the exchange rates that we used in preparation of our consolidated financial statements or elsewhere in this prospectus or will use in the preparation of our periodic reports or any other information to be provided to you. We make no representation that any Indian rupee or U.S. dollar amounts referred to in this prospectus could have been or could be converted into U.S. dollars or Indian rupees, as the case may be, at any particular rate or at all.
Indian Rupees per
U.S. Dollar Noon Buying Rate |
||||||||||||||||
Period |
Period End | Average(1) | Low | High | ||||||||||||
2010 |
44.80 | 45.58 | 43.90 | 47.49 | ||||||||||||
2011 |
53.01 | 46.86 | 44.00 | 53.71 | ||||||||||||
2012 |
54.86 | 53.41 | 48.65 | 57.13 | ||||||||||||
2013 |
61.92 | 58.91 | 52.99 | 68.80 | ||||||||||||
2014 |
63.04 | 61.21 | 58.30 | 63.67 | ||||||||||||
2015: |
||||||||||||||||
June |
63.59 | 63.78 | 63.43 | 64.21 | ||||||||||||
July |
63.87 | 63.60 | 63.24 | 64.24 | ||||||||||||
August |
66.39 | 65.10 | 63.67 | 66.80 | ||||||||||||
September |
65.50 | 66.17 | 65.50 | 66.70 | ||||||||||||
October |
65.40 | 65.03 | 64.70 | 65.57 | ||||||||||||
November |
66.43 | 66.10 | 65.46 | 66.86 | ||||||||||||
December (through December 4, 2015) |
66.65 | 66.62 | 66.46 | 66.82 |
(1) | Averages for a period other than one month are calculated by using the average of the noon buying rate at the end of each month during the period. Monthly averages are calculated by using the average of the daily noon buying rates during the relevant month. |
Source: Federal Reserve Statistical Release.
50
Since our incorporation, no dividends have been declared or paid on our equity shares. We currently intend to retain our earnings, if any, to finance the development and growth of our business and operations as well as expand our business and do not currently anticipate paying dividends on our equity shares in the near future.
Under Mauritius law, we may only pay dividends out of retained earnings, after having made good any accumulated losses at the beginning of the relevant accounting period and no distribution (which includes dividends) may be made unless our board of directors is satisfied that upon the distribution being made, our company is able to pay its debts as they become due in the normal course of business and the value of our companys assets is greater than the sum of the value of its liabilities and our companys stated capital (which refers to the total of all amounts received by our company or due and payable to our company in respect of the nominal paid-up value of our issued shares and share premiums paid to our company in relation to such shares). Subject to the Mauritius Companies Act and our constitution, which we expect to adopt with effect upon completion of this offering, the declaration and payment of any dividend has to be authorized by our board of directors and is subject to the approval of our shareholders. Even if our board of directors decides to pay dividends, the form, frequency and amount will depend upon our future operations and earnings, cash flows, capital requirements, general financial condition, contractual restrictions and other factors which our directors may deem relevant. We expect that cash dividends, if any, will be paid to U.S. holders in U.S. dollars. Other distributions, if any, will be made to our shareholders by any means which our directors deem fair, legal and practicable. Any dividend or distribution out of retained earnings unclaimed for a period of six years from the date of declaration of such dividend or distribution shall be forfeited and shall revert to us and the payment by our board of directors of any unclaimed dividend, distribution, interest or other sum payable on or in respect of the share into a separate account shall not constitute us a trustee in respect thereof.
As we are a holding company, we will have to rely on dividends paid to us by our subsidiaries (in particular, our key operating subsidiary in India, AZI) for our cash requirements, including funds to pay dividends and other cash distributions to our shareholders, service any debt we may incur and pay our operating expenses. Our ability to pay dividends to our shareholders will depend on, among other things, the availability of dividends from AZI.
As of the date of this prospectus, AZI has not paid any cash dividends on its equity shares and does not intend to pay dividends to its equity shareholders, including Azure Power Global Limited, in the foreseeable future. Even if we decide it should, since we will not own all of AZI following the consummation of this offering and the use of the proceeds therefrom, we will not receive all of the dividends paid by AZI. Rather, we will receive a dividend in proportion to our ownership interest in AZI, which will be approximately % following consummation of this offering, assuming an offer price of the midpoint of the estimated price range listed on the cover page of this prospectus. The Founders will receive the balance of any dividend paid by AZI.
Dividends other than in cash are not permitted under Indian law. The declaration and payment of any dividends in the future will be recommended by the board of directors of AZI and approved by the shareholders of AZI at their discretion and would depend on a number of factors, including its financial condition, results of operations, capital requirements and surplus, profits, contractual obligations, applicable Indian legal restrictions, the provisions of its articles of association, restrictive covenants under the terms of its credit facilities and other financing arrangements at the time a dividend is considered, and other factors considered relevant by the board of directors. AZI would be required to pay dividend distribution tax in India at 17.30% on the total amount distributed as a dividend as grossed up by the amount of such dividend distribution tax.
51
In accordance with the Companies Act, and the rules framed thereunder, an Indian company is permitted to declare or pay dividends in any year only in cash and out of profits for that year after providing for depreciation, in the manner prescribed. In the event of inadequacy or absence of profits in a particular year, dividends may be paid out of the accumulated profits of the company (after providing for depreciation) which remain undistributed and transferred to the companys free reserves, subject to the following conditions:
|
the rate of dividend declared does not exceed the average of the rates at which declared by the company in the preceding three years (except where no dividends have been declared in each of the preceding three years); |
|
the total amount drawn up from the accumulated profits does not exceed 1/10 th of the sum of the companys paid-up share capital and free reserves, as indicated in its latest audited financial statements; |
|
the amount drawn up from the accumulated profits is first utilized to set-off the losses incurred in the fiscal year in which the dividend is proposed to be declared; |
|
the balance of reserves after such withdrawal does not fall below 15% of the companys paid-up share capital, as indicated in its latest audited financial statements; and |
|
the carried over previous losses and depreciation not provided in the previous year or years are set off against the profit of the company in the current year. |
52
The following table sets forth our capitalization on a consolidated basis as of June 30, 2015 on:
|
an actual basis (reflecting the capitalization of AZI, our predecessor), which excludes equity shares issuable upon exercise of outstanding stock options at a weighted average price of Rs. 2,671 (US$42.00) per share under our employee stock option plan; |
|
a pro forma basis to reflect the following: |
|
The purchase from the non-founder investors in AZI of the equity shares and convertible securities held by them in AZI and the issuance of an equivalent number of equity shares and convertible securities of Azure Power Global Limited to the foregoing investors in July 2015 as described in Prospectus SummaryCorporate Structure; |
|
the conversion of compulsorily convertible preferred shares and compulsorily convertible debentures into an aggregate of equity shares based on an initial public offering price of US$ per equity share, which is the midpoint of the estimated range of the initial public offering price as set forth on the cover page of this prospectus, and |
|
the effectiveness of a -for- stock split of our equity shares. |
|
a pro forma as adjusted basis to further reflect the following transactions that will occur substantially contemporaneously with the completion of this offering: |
|
our sale of equity shares by us in this offering and our receipt of the estimated net proceeds from such issuance and sale in this offering, each based on an assumed initial public offering price of US$ per equity share, the midpoint of the price range set forth on the cover page of this prospectus, after deducting underwriting discounts and commissions and estimated offering expenses payable by us, as if such transactions had occurred on June 30, 2015; and |
|
the share subscription by Azure Power Global Limited with substantially all of the net proceeds of US$ million of this offering (other than approximately US$5.0 million to be retained by Azure Power Global Limited to fund its future operating expenses). |
53
You should read this table in conjunction with our consolidated financial statements and the related notes thereto included elsewhere in this prospectus and the information under Use of Proceeds, Selected Consolidated Financial Data, Managements Discussion and Analysis of Financial Condition and Results of Operations and our consolidated financial statements and related statements.
As of June 30, 2015 | ||||||||||||||||||||
Actual | Actual | Pro Forma(1) | Pro Forma(1) |
Pro
Forma Adjusted(1) |
Pro
Forma Adjusted(1) |
|||||||||||||||
Rs. | U.S.$ | Rs. | U.S.$ | Rs. | U.S.$ | |||||||||||||||
(in thousands, except per share data) | ||||||||||||||||||||
Cash and Cash equivalents |
1,423,736 | 22,389 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total Debt |
18,897,763 | 297,181 | ||||||||||||||||||
Compulsory convertible preferred shares, Rs. 10 (US$ 0.16) par value (86,666,667 shares authorized and 672,177 issued and outstanding, actual; 0 shares issued and outstanding, pro forma; and 0 shares issued and outstanding, pro forma as adjusted) |
4,949,224 | 77,830 | | | ||||||||||||||||
Stockholders Equity |
||||||||||||||||||||
Common Stock INR 10, US$ 0.16 par value: 43,333,333 shares authorized and 109,880 issued and outstanding, actual; shares issued and outstanding, pro forma; and 0 shares issued and outstanding, pro forma as adjusted)(2) |
1,099 | 17 | ||||||||||||||||||
Additional paid in capital |
(1,900,376 | ) | (29,885 | ) | ||||||||||||||||
Accumulated deficit |
(3,068,229 | ) | (48,250 | ) | ||||||||||||||||
Accumulated other comprehensive income |
25,204 | 396 | ||||||||||||||||||
Non-controlling interest |
3,253 | 51 | ||||||||||||||||||
Less: Non-controlling interest of AZI(3) |
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total stockholders (deficit) equity |
(4,942,302 | ) | (77,722 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total Capitalization |
18,890,243 | 297,061 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
(1) | Each US$1.00 increase or decrease in the assumed initial public offering price of US$ per share, the mid-point of the price range on the cover page of this prospectus, would increase or decrease, respectively, the amount of cash, additional paid-in capital and total capitalization by approximately US$ , assuming the number of shares we offer, as stated on the cover page of this prospectus, remains the same, after deducting the estimated underwriting discounts and commission and estimated offering expenses payable by us. |
(2) | As of June 30, 2015, Azure Power Global Limited had 109,880 shares issued and outstanding, actual; shares issued and outstanding, pro forma; and shares issued and outstanding, pro forma as adjusted). |
(3) | Reflects ownership interest of the founders in AZI post closing of this offering. |
54
As of June 30, 2015, our pro forma net tangible book value was Rs. (or US$ ) per equity share. Pro forma net tangible book value per equity share represents the amount of our total tangible assets less the amount of our total liabilities, divided by the number of equity shares outstanding, after giving retroactive effect to the corporate formation transactions described under Prospectus Summary Corporate Structure, that will take place immediately prior to the closing of this offering and assuming a total of equity shares will be issued to the non-founder investors upon the conversion of convertible securities, based on an initial public offering price of US$ per equity share, which is the midpoint of the estimated range of the initial public offering price as set forth on the cover page of this prospectus.
Dilution is determined by subtracting pro forma net tangible book value per equity share from the assumed public offering price per equity share.
Without taking into account any other changes in pro forma net tangible book value after June 30, 2015, other than giving effect to our sale of equity shares in the offering at an assumed initial public offering price of US$ per equity share (the midpoint of the price range set forth on the cover page of this prospectus) and after deducting underwriting discounts and commissions and estimated expenses of the offering payable by us, the pro forma net tangible book value per equity share would increase to US$ per equity share, or US$ per equity share if the underwriters over-allotment option is exercised in full. This represents an immediate increase in pro forma net tangible book value of US$ per equity share to our existing shareholders (or US$ per equity share if the underwriters over-allotment option is exercised in full), and an immediate dilution of US$ per equity share to purchasers of shares in the offering (or US$ per equity share if the underwriters over-allotment option is exercised in full).
The following table illustrates this dilution on a per equity share basis:
Assumed initial public offering price per equity share |
$ | |||
Pro forma net tangible book value per equity share as of June 30, 2015 before this offering |
$ | |||
Increase in pro forma net tangible book value per equity share attributable to the price paid by new investors |
$ | |||
Pro forma net tangible book value per equity share after this offering |
$ | |||
|
|
|||
Dilution per equity share to new investors in the offering |
$ | |||
|
|
A US$1.00 increase (decrease) in the assumed public offering price of US$ per equity share would increase (decrease) our pro forma net tangible book value after giving effect to the offering by US$ per equity share and the dilution in pro forma net tangible book value per equity share to new investors in this offering by US$ per equity share, assuming no change to the number of equity shares offered by us as set forth on the cover page of this prospectus, and after deducting underwriting discounts and commissions.
The following table summarizes, on a pro forma basis as of June 30, 2015, the differences between our existing shareholders as of such date and the new investors with respect to the number of equity shares purchased from us, the total consideration paid and the average price per equity share paid at an assumed initial public offering price of US$ per equity share (the midpoint of the price range set forth on the cover page of this prospectus) before deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.
55
A US$1.00 increase (decrease) in the assumed initial public offering price of US$ per equity share would increase (decrease) total consideration paid by new investors, total consideration paid by all shareholders and the average price per equity share paid by all shareholders by US$ million, US$ million and US$ , respectively, assuming no change in the number of equity shares sold by us as set forth on the cover page of this prospectus and without deducting underwriting discounts and commissions.
The discussion and tables above assume no exercise of any outstanding share options. As of the date of this prospectus, there were equity shares issuable upon exercise of outstanding stock options at a weighted-average exercise price of Rs. (US$ ) per share under our employee stock option plan, and there were equity shares available for future issuance upon the exercise of future grants under our employee stock option plan. To the extent that any of these options is exercised, there will be further dilution to new investors.
56
SELECTED CONSOLIDATED AND PRO FORMA FINANCIAL DATA
The selected consolidated and pro forma financial data below should be read in conjunction with Managements Discussion and Analysis of Financial Condition and Results of Operations and the consolidated financial statements, related notes and other financial information included elsewhere in this prospectus. The selected consolidated financial data in this section are not intended to replace the consolidated and pro forma financial statements and are qualified in their entirety by the consolidated financial statements and related notes included elsewhere in this prospectus.
Azure Power Global Limited is a recently incorporated company in Mauritius and currently has no business operations of its own. All of our operations are conducted currently through AZI and its subsidiaries. The proceeds of this offering will be used towards a share subscription of AZI by Azure Power Global Limited, which will occur contemporaneously with the completion of the offering. Following the consummation of this offering and the use of proceeds therefrom, we will own % of AZI assuming an offering price of US$ per equity share, which is the midpoint of the estimated range of the initial public offering price as set forth on the cover page of this prospectus, and AZI will consolidate its financial results into ours. As a result, following the consummation of this offering, the remaining approximately % of AZI that will not be directly owned by Azure Power Global Limited will be reflected in our consolidated financial statements as a non-controlling interest and accordingly, the profit after tax attributable to equity shareholders of Azure Power Global Limited will be reduced by a corresponding percentage.
The financial information in this section has been derived from the audited consolidated financial statements as of and for the years ended March 31, 2014 and 2015 included elsewhere in this prospectus, which reflect the financial data of AZI, our predecessor.
The unaudited information for the three months ended June 30, 2014 and 2015 was prepared on a basis consistent with that used to prepare our audited consolidated financial statements and includes all adjustments, consisting of normal and recurring items, that we consider necessary for a fair presentation of our financial condition and results of operations with respect to the relevant periods.
The summary unaudited pro forma balance sheet data as of June 30, 2015 gives effect to (i) the purchase from the non-founder investors in AZI of the equity shares and convertible securities held by them in AZI and the issuance of an equivalent number of equity shares and convertible securities of Azure Power Global Limited to the foregoing investors in July 2015 as described in Prospectus SummaryCorporate Structure, (ii) the conversion of compulsorily convertible preferred shares and compulsorily convertible debentures into equity shares and (iii) the effectiveness of a -for- stock split of our equity shares. The pro forma as adjusted balance sheet data as of June 30, 2015 reflect the abovementioned transactions, the issuance and sale of equity shares in this offering and the use of proceeds therefrom, based on an assumed offering price of US$ per equity share, which is the midpoint of the estimated range of the initial public offering price as set forth on the cover page of this prospectus, after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us.
Our historical results are not necessarily indicative of the results that may be expected in any future period, and our interim results are not necessarily indicative of the results to be expected for the full fiscal year.
57
Fiscal Year Ended March 31, | Three Months Ended June 30, | |||||||||||||||||||||||
2014 | 2015 | 2014 | 2015 | |||||||||||||||||||||
Rs. | Rs. | US$(1) | Rs. | Rs. | US$ | |||||||||||||||||||
(in thousands) |
||||||||||||||||||||||||
Consolidated Statement of Operations Data: |
||||||||||||||||||||||||
Operating revenue: |
||||||||||||||||||||||||
Sale of power |
881,345 | 1,124,138 | 17,678 | 264,365 | 570,194 | 8,967 | ||||||||||||||||||
Operating costs and expenses: |
||||||||||||||||||||||||
Cost of operations (exclusive of depreciation and amortization shown separately below) |
52,491 | 79,816 | 1,255 | 18,643 | 34,703 | 546 | ||||||||||||||||||
General and administrative expenses |
235,300 | 425,713 | 6,695 | 60,611 | 144,880 | 2,278 | ||||||||||||||||||
Depreciation and amortization |
252,352 | 322,430 | 5,070 | 63,556 | 140,059 | 2,203 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total operating cost and expenses |
540,143 | 827,959 | 13,020 | 142,810 | 319,642 | 5,027 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Operating income |
341,202 | 296,179 | 4,658 | 121,555 | 250,552 | 3,940 | ||||||||||||||||||
Other expense: |
||||||||||||||||||||||||
Interest expense, net(2) |
|
520,219
|
|
|
831,789
|
|
|
13,081
|
|
|
163,823
|
|
|
403,324
|
|
|
6,343
|
|
||||||
Loss on foreign currency exchange(3) |
580,566 | 299,628 | 4,712 | 26,877 | 107,130 | 1,685 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total other expenses |
1,100,785 | 1,131,417 | 17,793 | 190,700 | 510,454 | 8,028 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Loss before income taxes |
(759,583 | ) | (835,238 | ) | (13,135 | ) | (69,145 | ) | (259,902 | ) | (4,088 | ) | ||||||||||||
Income tax (expense)/benefit |
(15,847 | ) | (253,112 | ) | (3,980 | ) | (20,954 | ) | 18,412 | 290 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net loss |
(775,430 | ) | (1,088,350 | ) | (17,115 | ) | (90,099 | ) | (241,490 | ) | (3,798 | ) | ||||||||||||
Net (loss)/gain attributable to non-controlling interest(4) |
(26,935 | ) | (5,595 | ) | (88 | ) | 3,343 | (1,322 | ) | (21 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net loss attributable to AZI |
(748,495 | ) | (1,082,755 | ) | (17,027 | ) | (93,442 | ) | (240,168 | ) | (3,777 | ) | ||||||||||||
Accretion on Mezzanine CCPS(5) |
(366,552 | ) | (755,207 | ) | (11,876 | ) | (104,121 | ) | (259,282 | ) | (4,077 | ) | ||||||||||||
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|||||||||||||
Net loss attributable to AZI equity shareholders(6) |
(1,115,047 | ) | (1,837,962 | ) | (28,903 | ) | (197,563 | ) | (499,450 | ) | (7,834 | ) | ||||||||||||
Basic and diluted |
(10,241 | ) | (16,727 | ) | (263 | ) | (1,798 | ) | (4,545 | ) | (71 | ) | ||||||||||||
Shares used in computing basic and diluted per share amounts: |
||||||||||||||||||||||||
Pro forma shares used in computing basic and diluted per share amounts |
||||||||||||||||||||||||
Equity share |
108,882 | 109,880 | 109,880 | 109,880 | ||||||||||||||||||||
Pro forma net loss per share attributable to AZI equity shareholders(7) |
| |||||||||||||||||||||||
Supplemental information (unaudited): |
||||||||||||||||||||||||
Adjusted EBITDA(8) |
593,554 | 618,609 | 9,728 | 185,111 | 390,611 | 6,143 | ||||||||||||||||||
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(1) | AZIs functional and reporting currency is the Indian rupee. Solely for the convenience of the reader, we have translated the financial information as of and for the fiscal year ended March 31, 2015 and the three months ended June 30, 2015 into U.S. dollars. The rate used for this translation is Rs. 63.59 to US$1.00, which is the noon buying rate in New York City for cable transfer in non-U.S. currencies as certified for customs purposes by the Federal Reserve Bank of New York as of June 30, 2015, which is the date of our last reported financial statements. |
58
(2) | Interest expense, net consists of: |
Fiscal Year Ended March 31, | Three Months Ended June 30, | |||||||||||||||||||||||
2014 | 2015 | 2014 | 2015 | |||||||||||||||||||||
Rs. | Rs. | US$(a) | Rs. | Rs. | US$ | |||||||||||||||||||
Interest expense: |
||||||||||||||||||||||||
Compulsorily convertible debentures |
217,751 | 248,831 | 3,913 | 71,514 | 82,277 | 1,294 | ||||||||||||||||||
Series E compulsorily convertible preferred shares |
74,700 | 96,500 | 1,518 |
|
22,800 |
|
|
27,000 |
|
|
425 |
|
||||||||||||
Term loans |
316,519 | 598,845 | 9,417 | 96,338 | 304,627 | 4,790 | ||||||||||||||||||
Bank charges and other |
36,151 | 55,454 | 872 | 13,582 | 23,282 | 366 | ||||||||||||||||||
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|||||||||||||
645,121 | 999,630 | 15,720 | 204,234 | 437,186 | 6,875 | |||||||||||||||||||
Interest income: |
||||||||||||||||||||||||
Term deposits |
111,842 | 151,861 | 2,388 | 38,746 | 29,430 | 463 | ||||||||||||||||||
Interest income from related parties |
| 2,031 | 32 | | | | ||||||||||||||||||
Gain on sale of short term investments |
13,060 | 13,949 | 219 | 1,666 | 4,432 | 70 | ||||||||||||||||||
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Interest expense, net |
520,219 | 831,789 | 13,081 | 163,822 | 403,324 | 6,342 | ||||||||||||||||||
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(a) | Refer to note (1) above. |
(3) | Loss on foreign currency exchange consists of: |
Fiscal Year Ended March 31, | Three Months Ended June 30, | |||||||||||||||||||||||
2014 | 2015 | 2014 | 2015 | |||||||||||||||||||||
Rs. | Rs. | US$(a) | Rs. | Rs. | US$ | |||||||||||||||||||
Unrealized loss on foreign currency loans |
578,571 | 240,656 | 3,785 | (512 | ) | 111,796 | 1,758 | |||||||||||||||||
Realized loss on foreign currency loans |
39,989 | (42,280 | ) | (665 | ) | (4,749 | ) | (8,425 | ) | (132 | ) | |||||||||||||
Unrealized loss on derivative instruments |
(16,384 | ) | 7,342 | 115 | 903 | 2,026 | 32 | |||||||||||||||||
Realized loss on derivative instruments |
(21,610 | ) | 93,910 | 1,477 | 31,235 | 1,731 | 27 | |||||||||||||||||
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580,566 | 299,628 | 4,712 | 26,877 | 107,130 | 1,685 | |||||||||||||||||||
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(a) | Refer to note (1) above. |
The unrealized and realized foreign exchange loss represents the foreign currency fluctuations on our non-Indian rupee denominated borrowings.
(4) | Represents a non-controlling interest of 20% in a subsidiary not held by AZI. |
(5) | Our Mezzanine CCPS are being accreted to their redemption value through February 25, 2016, the earliest redemption date, to ensure the redemption amount as of such date. |
(6) | Basic and diluted net loss per share attributable to AZI equity shareholders is computed by dividing the net loss attributable to AZI equity shareholders by the weighted average number of equity shares outstanding for the period. The potentially dilutive compulsorily convertible preferred shares, compulsorily convertible debentures and share options were excluded from the calculation of dilutive loss per share in those periods where inclusion would be anti-dilutive. |
(7) | Pro forma net loss per share attributable to AZI equity shareholders as of and for the fiscal year ended March 31, 2015 and the three months ended June 30, 2015 is calculated as if the compulsorily convertible preferred shares and the compulsorily convertible debentures had been converted into equity shares at the beginning of the respective period presented or when compulsorily convertible preferred shares and compulsorily convertible debentures were issued, if later. Compulsorily convertible preferred shares and compulsorily convertible debentures upon the completion of this offering convert into (i) equity shares as of March 31, 2015 and (ii) equity shares as of June 30, 2015 based upon the midpoint of the estimated range of the initial public offering price as set forth on the cover page of this prospectus. |
(8) | Adjusted EBITDA is a non-GAAP financial measure. We present Adjusted EBITDA as a supplement measure of our performance. This measurement is not recognized in accordance with GAAP and should not be viewed as an alternative to GAAP measures of performance. The presentation of Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items. |
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The following table presents a reconciliation of net loss to Adjusted EBITDA:
Fiscal Year Ended March 31, | Three Months Ended June 30, | |||||||||||||||||||||||
2014 | 2015 | 2014 | 2015 | |||||||||||||||||||||
Rs. | Rs. | US$ | Rs. | Rs. | US$ | |||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||
Net Loss |
(775,430 | ) | (1,088,350 | ) | (17,115 | ) | (90,099 | ) | (241,490 | ) | (3,798 | ) | ||||||||||||
Income tax expense |
15,847 | 253,112 | 3,980 | 20,954 | (18,412 | ) | (290 | ) | ||||||||||||||||
Interest expense, net |
520,219 | 831,789 | 13,081 | 163,823 | 403,324 | 6,343 | ||||||||||||||||||
Depreciation and amortization |
252,352 | 322,430 | 5,070 | 63,556 | 140,059 | 2,203 | ||||||||||||||||||
Loss on foreign currency exchange |
580,566 | 299,628 | 4,712 | 26,877 | 107,130 | 1,685 | ||||||||||||||||||
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|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Adjusted EBITDA |
593,554 | 618,609 | 9,728 | 185,111 | 390,611 | 6,143 | ||||||||||||||||||
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|
As of June 30, | As of June 30, | |||||||||||||||
2015 |
2015
(Pro forma)(5) |
2015 (Pro forma
as adjusted)(5) |
||||||||||||||
Rs. | US$(1) | Rs. | US$(1) | Rs. | US$(1) | |||||||||||
Balance Sheet Data |
||||||||||||||||
Cash and cash equivalents |
1,423,736 | 22,389 | ||||||||||||||
Property, plant and equipment, net |
16,379,971 | 257,587 | ||||||||||||||
Total assets |
20,640,577 | 324,587 | ||||||||||||||
Compulsorily convertible debentures and Series E preferred shares(2) |
2,556,041 | 40,092 | ||||||||||||||
Project level and other debt(3) |
16,341,723 | 256,985 | ||||||||||||||
Mezzanine CCPS shares(4) |
4,949,224 | 77,830 | ||||||||||||||
Total AZI shareholders deficit |
(4,942,302 | ) | (77,722 | ) |
(1) | AZIs functional and reporting currency is the Indian rupee. Solely for the convenience of the reader, we have translated the financial information as of and for the fiscal year ended March 31, 2015 and the three months ended June 30, 2015 into U.S. dollars. The rate used for this translation is Rs. 63.59 to US$1.00, which is the noon buying rate in New York City for cable transfer in non-U.S. currencies as certified for customs purposes by the Federal Reserve Bank of New York as of June 30, 2015, which is the date of our last reported financial statements. |
(2) | The Series E compulsorily convertible preferred shares are classified as a liability in the consolidated balance sheet because the preference shareholders have a right to convert their shares into a variable number of equity shares to give them their required returns. |
(3) | This balance represents the short term and long-term portion of project level secured term loans and other secured bank loans. |
(4) | Compulsorily convertible preferred shares include the Mezzanine CCPS and are classified as temporary equity in the consolidated balance sheet. |
(5) | The pro forma and pro forma as adjusted columns in the balance sheet data reflects the transactions described in the last paragraph of page 13. |
The pro forma as adjusted information set forth in the table above is for illustrative purposes only and will be adjusted based on the actual initial public offering price and other terms of this offering as determined at pricing.
A US$1.00 increase or decrease in the assumed public offering price of US$ would increase or decrease each of pro forma as adjusted cash and cash equivalents, total assets, and total deficit by Rs. thousands (US$ ), assuming the number of shares offered by us, as set forth on the cover page of the prospectus, remains the same, after deducting estimated underwriting discounts and commissions that we expect to pay.
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MANAGEMENTS DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our predecessors consolidated financial statements, the related notes to those statements and selected consolidated financial data included elsewhere in this prospectus. In addition to historical financial information, the following discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results and timing of selected events may differ materially from those anticipated in these forward-looking statements as a result of many factors, including those discussed under Risk Factors and elsewhere in this prospectus. All forward looking statements in this document are based on information available to us as of the date hereof, and we assume no obligation to update any such forward looking statements. Unless otherwise indicated, the consolidated financial statements and related notes as of and for the fiscal years ended March 31, 2014 and 2015 and for the three months ended June 30, 2014 and 2015, included elsewhere in this prospectus have been prepared in accordance with GAAP. References to a particular fiscal year are to our fiscal year ended March 31 of that year.
Overview
Our mission is to be the lowest-cost power producer in the world. We sell solar power in India on long term fixed price contracts to our customers, at prices which in many cases are at or below prevailing alternatives for our customers. We are also developing micro-grid applications for the highly fragmented and underserved electricity market in India.
We generate revenue from a mix of leading government utilities such as NTPC Vidyut Vyapar Nigam Limited, a subsidiary of the NTPC Limited, and the Solar Energy Corporation of India as well as commercial entities such as Torrent Power Limited and DLF Limited. We typically enter into 25-year power purchase agreements, or PPAs, with these customers who pay a fixed rate for electricity generated by our solar power plants. Our financial strategy is to build our solar assets with efficient cost of capital. Because we have our own engineering, procurement and construction, or EPC, as well as operations and maintenance, or O&M, capabilities, we retain the profit margins associated with those services that other project developers normally pay to third party providers. Through value engineering, operational performance monitoring and efficient financial strategy, we are able to deliver cost-effective energy to our customers.
We recognize revenue from solar energy sold to our customers on a per kilowatt hour basis based on the energy actually supplied by our solar power plant. The procurement of solar power by the utilities in the market is primarily driven by the renewable energy purchase obligation imposed on them by the Indian government. Most Indian state and central government electricity regulators establish the rate that utilities pay to buy power in their respective jurisdictions, which we call the benchmark tariff. As a result, the price a customer pays to buy solar energy from us varies depending on the jurisdiction in which the customer is located. The price at which we sell solar energy also depends on our bidding strategy, as most auctions award bids starting from the lowest bidder until the total capacity is awarded. For our commercial PPAs we sell solar energy at mutually negotiated rates that are lower than the commercial electricity rates charged by the utilities in the markets we serve, which is consistent with our strategy to price our energy slightly lower than the commercial rates. As a result, the price that a commercial customer pays to buy solar energy from us depends on the state in which such customer is located and the prevailing local commercial tariff.
We recognize revenue on a monthly basis from the solar energy kilowatt hours sold to our customers post the installation of the system and approval of the energy grid interconnect connections. The energy output performance of our plants is dependent in part on the amount of sunlight. As a result, our revenue in the past has been impacted by shorter daylight hours in winters. Typically, our revenue from operational solar power plants is lowest in the third quarter and highest in the first quarter of any given fiscal year which ends on March 31.
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A significant portion of the cost of our solar power plants consists of solar photovoltaic panels, inverters and balance of plant equipment. Other less significant costs of our solar power plants include land or leasehold land costs, capitalizable financing costs and installation costs. Our cost of operations primarily consists of expenses pertaining to operations and maintenance of our solar power plants. These expenses include payroll and related costs for plant maintenance staff, plant maintenance, insurance and, if applicable, lease costs.
Under GAAP, we depreciate the capital cost of solar power plants over the estimated useful life of 25 years.
We typically fund our projects through a mix of project finance and sponsor equity. We generally raise long term debt financing of approximately 75% of project costs. The remaining 25% of project costs required is met through a mix of cash flow generated from our business and equity proceeds. Our project financing agreements typically restrict the ability of our project subsidiaries to distribute funds to us unless specific financial thresholds are met on specified dates. Some of our project finance borrowings are denominated in U.S. dollars and therefore foreign currency exchange rate fluctuations can adversely impact our profitability. Some of our borrowings have variable interest rates and changes in such rates may lead to an adverse effect on our overall cost of capital.
From time to time we have raised funds through issuance of compulsorily convertible debentures and Series A through H compulsorily convertible preferred shares. We classify our outstanding compulsorily convertible debentures and Series E compulsorily convertible preferred shares as a liability on our consolidated balance sheet. Series A to D and Series F compulsorily convertible preferred shares are classified as temporary equity on the consolidated balance sheet. Prior to the closing of this offering, the compulsorily convertible debentures and compulsorily convertible preferred shares will convert into equity shares. As a result of these conversions, we will record a material non-cash adjustment to equity shares and additional paid-in-capital on our consolidated balance sheet.
Convenience Translation
AZIs functional and reporting currency is the Indian rupee. Solely for the convenience of the reader, we have translated the financial information as of and for the fiscal year ended March 31, 2015 and the three months ended June 30, 2015 into U.S. dollars. The exchange rate used for this translation is Rs. 63.59 to US$1.00, which is the noon buying rate in New York City for cable transfer in non-U.S. dollar currencies as certified for customs purposes by the Federal Reserve Bank of New York as of June 30, 2015, which is the date of our last reported financial statements.
62
Power Purchase Agreements
The material terms of the PPAs we have entered into as of June 30, 2015 are summarized in the following table. Since June 30, 2015, we have entered into additional PPAs, details of which are set forth under Business Customers.
Project Names |
Commercial Operation Date(1) |
Capacity (MW) |
Tariff (Rs./kWh) |
Offtaker |
Duration of PPA in Years |
|||||||||||||
Utility |
||||||||||||||||||
Operational as of June 30, 2015 |
|
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Punjab 1 |
Q4 2009 | 2 | 17.91 | NTPC Vidyut Vyapar Nigam Limited | 25 | |||||||||||||
Punjab 2.1 |
Q3 2014 | 15 | 7.67 | Punjab State Power Corporation Limited | 25 | |||||||||||||
Punjab 2.2 |
Q4 2014 | 15 | 7.97 | Punjab State Power Corporation Limited | 25 | |||||||||||||
Punjab 2.3 |
Q4 2014 | 4 | 8.28 | Punjab State Power Corporation Limited | 25 | |||||||||||||
Karnataka 1 |
Q1 2015 | 10 | 7.47 | Bangalore Electricity Supply Company Limited | 25 | |||||||||||||
Uttar Pradesh 1 |
Q1 2015 | 10 | 8.99 | Uttar Pradesh Power Corporation Limited | 12 | |||||||||||||
Gujarat 1.1 |
Q2 2011 | 5 | 15.00(2) | Gujarat Urja Vikas Nigam Limited | 25 | |||||||||||||
Gujarat 1.2 |
Q4 2011 | 5 | 15.00(2) | Gujarat Urja Vikas Nigam Limited | 25 | |||||||||||||
Rajasthan 1 |
Q4 2011 | 5 | 11.94 | NTPC Vidyut Vyapar Nigam Limited | 25 | |||||||||||||
Rajasthan 2.1 |
Q1 2013 | 20 | 8.21 | NTPC Vidyut Vyapar Nigam Limited | 25 | |||||||||||||
Rajasthan 2.2 |
Q1 2013 | 15 | 8.21 | NTPC Vidyut Vyapar Nigam Limited | 25 | |||||||||||||
Rajasthan 3.1 |
Q2 2015 | 20 | 5.45 | Solar Energy Corporation of India | 25 | |||||||||||||
Rajasthan 3.2 |
Q2 2015 | 40 | 5.45 | Solar Energy Corporation of India | 25 | |||||||||||||
Rajasthan 3.3 |
Q2 2015 | 40 | 5.45 | Solar Energy Corporation of India | 25 | |||||||||||||
Chhattisgarh 1.1 |
Q2 2015 | 10 | 6.44 | Chhattisgarh State Power Distribution Company Limited | 25 | |||||||||||||
Chhattisgarh 1.2 |
Q2 2015 | 10 | 6.45 | Chhattisgarh State Power Distribution Company Limited | 25 | |||||||||||||
Total Capacity |
226 | |||||||||||||||||
Under Construction as of June 30, 2015 |
|
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Chhattisgarh 1.3 |
Q3 2015 | 10 | 6.46 | Chhattisgarh State Power Distribution Company Limited | 25 | |||||||||||||
Total Capacity |
10 | |||||||||||||||||
Committed as of June 30, 2015 |
|
|||||||||||||||||
Karnataka 2 |
Q1 2016 | 10 | 6.66 | Bangalore Electricity Supply Company Limited | 25 | |||||||||||||
Karnataka 3.1 |
Q3 2016 | 50 | 6.89 | Chamundeshwari Electricity Supply Company Limited | 25 |
63
Notes:
(1) | Refers to the applicable quarter of the calendar year. There can be no assurance that our projects under construction and our committed projects will be completed on time or at all. See Risk Factors Our construction activities may be subject to cost overruns or delays. |
(2) | Current tariff, subject to escalation as disclosed under BusinessPortfolio of Solar Energy ProjectsOperational Projects. |
(3) | 1.421MW of the project has commenced operations. |
64
Our PPAs typically require certain conditions precedent, including, among others, that we have obtained all necessary consents and permits, financing arrangements have been made and an agreement has been entered into to provide for the transmission of power. Furthermore, the PPAs contain customary termination provisions and negative and affirmative covenants, including the provision of performance bank guarantees and minimum guarantees of power to be sold and restrictions on changing the controlling shareholder of the project subsidiaries.
Corporate Reorganization
Azure Power Global Limited is a recently incorporated company in Mauritius and currently has no business operation of its own and has nominal assets and liabilities, and no contingent liabilities or commitments. All of our operations are conducted currently through AZI and its subsidiaries. The proceeds of this offering will be used towards share subscription of AZI by Azure Power Global Limited, which will occur contemporaneously with the completion of the offering. Following the consummation of this offering and the use of proceeds therefrom, we will own % of AZI assuming the estimated midpoint of the price range set forth on the cover page of this prospectus.
The financial information in this section has been derived from the audited consolidated financial statements and the unaudited condensed consolidated financial statements included elsewhere in this prospectus, which reflect the financial data of AZI, our predecessor.
Dividends
As we are a holding company, we will have to rely on dividends paid to us by our subsidiaries (in particular, our key operating subsidiary in India, AZI) for our cash requirements, including funds to pay dividends and other cash distributions to our shareholders, service any debt we may incur and pay our operating expenses. As of the date of this prospectus, AZI has not paid any cash dividends on its equity shares and does not intend to pay dividends to its equity shareholders, including Azure Power Global Limited, in the foreseeable future. See Dividends and Dividend Policy for more information.
Key Metrics
We regularly review a number of specific metrics, including the following key operating and financial metrics, to evaluate our business performance, identify trends affecting our business and make strategic decisions.
Unit of measurement | FY 2014 | FY 2015 |
Three months
ended June 30, 2014 |
Three months
ended June 30, 2015 |
||||||||||||||
Electricity generation(1) |
kWh in millions | 96.9 | 128.4 | 28.9 | 72.7 | |||||||||||||
Plant load factor |
% | 20.6 | 18.7 | 22.5 | 18.7 | |||||||||||||
Revenue(2) |
Rs. in millions | 881.3 | 1,124.1 | 264.4 | 570.2 | |||||||||||||
Cost per MW operating |
Rs. in millions | 78.2 | 70.8 | 77.0 | 72.5 | |||||||||||||
MW operating |
MW | 55.2 | 110.2 | 55.2 | 231.1 | |||||||||||||
MW committed |
MW | 154.5 | 374.2 | 154.5 | 254.0 | |||||||||||||
MW operating and committed |
MW | 209.7 | 484.4 | 209.7 | 485.1 |
(1) | Electricity generation represents the actual amount of power generated by our solar power plants over the reporting period and is the product of plant load factor during the reporting period and the average megawatts operating. |
(2) | Revenue consists of revenue from the sale of power. |
Factors that most significantly directly or indirectly affect our overall growth and results of operations, or that cause our historical financial information not to be indicative of future operating results or financial
65
condition, include the Indian governments targets for solar capacity addition and the more gradual decline in solar module prices. The Indian government recently increased its target for solar capacity from 20GW by 2022 to 100GW by 2022. While this trend may lead to us winning more megawatts per year than in prior years, it will also require us to raise additional funding sources if we are to grow in line with these trends.
As for the cost of our system components, we witnessed a steep decline of solar module prices of approximately 63% from 2010 to 2014. Although the pace of this decline has been slowing recently, we expect this general trend of slowly declining solar module prices to continue through fiscal year 2016.
Operating Metrics
Megawatts Operating and Megawatts Committed
We measure the rated capacity of our plants in megawatts. Rated capacity is the expected maximum output that a solar power plant can produce without exceeding its design limits. We believe that tracking the growth in aggregate megawatt rated capacity is a measure of the growth rate of our business.
Megawatts Operating represents the aggregate cumulative megawatt rated capacity of solar power plants that are commissioned and operational as of the reporting date.
Megawatts Committed represents the aggregate megawatt rated capacity of solar power plants pursuant to customer PPAs signed or allotted but not commissioned and operational as of the reporting date.
The following table represents the megawatts operating and megawatts committed as of the end of the respective periods presented:
As of March 31, | As of June 30, | |||||||||||||||
2014 | 2015 | 2014 | 2015 | |||||||||||||
Megawatts Operating |
55.2 | 110.2 | 55.2 | 231.1 | ||||||||||||
Megawatts Committed |
154.5 | 374.2 | 154.5 | 254.0 | ||||||||||||
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|
|
|
|
|
|
|||||||||
Megawatts Operating and Committed |
209.7 | 484.4 | 209.7 | 485.1 | ||||||||||||
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|
|
|
|
|
We are targeting having 520MW operating by December 31, 2016. Our longer term goals are to achieve 1GW committed or operating by December 31, 2017 and 5GW by December 31, 2020. Our ability to achieve these goals will depend on, among other things, our ability to acquire the required land for the new capacity (on lease or direct purchase), raising adequate project financing and working capital, the growth of the Indian power market in line with current government targets, our ability to maintain our market share of Indias installed capacity as competition increases, the need to further strengthen our operations team to execute the increased capacity, and the need to further strengthen our systems and processes to manage the ensuing growth opportunities, as well as the other risks and challenges discussed under the caption Risk Factors.
Plant Load Factor
The plant load factor is the ratio of the actual output of all our solar power plants over the reporting period to its potential output if it were possible for it to operate indefinitely at full rated capacity. The plant load factor is not the same as the availability factor. Our solar power plants have high availability, that is, when the sun is shining our plants are almost always able to produce electricity. The variability in our plant load factor is a result of seasonality, cloud covers, the daily rotation of the earth, equipment efficiency losses, breakdown of our transmission system and grid availability.
We track plant load factor as a measure of the performance of our power plants. It indicates effective utilization of resources and also validates our value engineering and operation research. Higher plant load factor
66
at a plant indicates increased electricity generation. Monitoring plant load factor on real time allows us to respond rapidly to potential generation anomalies. Generally, under the terms of our PPAs, we guarantee a plant load factor of 12%. Plant load factor was 18.7% for fiscal year 2015 compared with 20.6% for fiscal year 2014, primarily due to the commencement of operations of certain projects in the northern part of India, for which plant load factors tend to be seasonal, with relatively low plant load factors during the winter months.
Fiscal Year Ended
March 31, |
Three Months Ended
June 30, |
|||||||||||||||
2014 | 2015 | 2014 | 2015 | |||||||||||||
Plant Load Factor (in %) |
20.6 | 18.7 | 22.5 | 18.7 |
Electricity Generation
Electricity generation represents the actual amount of power generated by our solar power plants over the reporting period and is the product of reporting period plant load factor and the average megawatts operating. This is a measure of the periodic performance of our solar power plants.
Fiscal Year Ended
March 31, |
Three Months Ended
June 30, |
|||||||||||||||
2014 | 2015 | 2014 | 2015 | |||||||||||||
Electricity Generation (kilowatt hours in millions) |
97 | 128 | 29 | 73 |
Financial Metrics
Adjusted EBITDA
Adjusted EBITDA is a non-GAAP financial measure. We present Adjusted EBITDA as a supplement measure of our performance. This measurement is not recognized in accordance with GAAP and should not be viewed as an alternative to GAAP measures of performance. The presentation of Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items.
We define Adjusted EBITDA as net loss (income) plus (a) income tax expense, (b) interest expense, net, (c) depreciation and amortization and (d) loss (income) on foreign currency exchange. We believe Adjusted EBITDA is useful to investors in evaluating our operating performance because:
|
securities analysts and other interested parties use such calculations as a measure of financial performance and debt service capabilities; and |
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it is used by our management for internal reporting and planning purposes, including aspects of our consolidated operating budget and capital expenditures. |
Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP. Some of these limitations include:
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it does not reflect our cash expenditures or future requirements for capital expenditures or contractual commitments or foreign exchange gain/loss; |
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it does not reflect changes in, or cash requirements for, working capital; |
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it does not reflect significant interest expense or the cash requirements necessary to service interest or principal payments on our outstanding debt; |
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it does not reflect payments made or future requirements for income taxes; and |
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although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced or paid in the future and Adjusted EBITDA does not reflect cash requirements for such replacements or payments. |
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Investors are encouraged to evaluate each adjustment and the reasons we consider it appropriate for supplemental analysis.
The following table presents a reconciliation of net loss to Adjusted EBITDA:
Fiscal Year Ended March 31, | Three Months Ended June 30, | |||||||||||||||||||||||
2014 | 2015 | 2014 | 2015 | |||||||||||||||||||||
Rs. | Rs. | US$ | Rs. | Rs. | US$ | |||||||||||||||||||
(in thousands) |
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Net loss |
(775,430 | ) | (1,088,350 | ) | (17,115 | ) | (90,099 | ) | (241,490 | ) | (3,798 | ) | ||||||||||||
Income tax expense/(benefit) |
15,847 | 253,112 | 3,980 | 20,954 | (18,412 | ) | (290 | ) | ||||||||||||||||
Interest expense, net |
520,219 | 831,789 | 13,081 | 163,823 | 403,324 | 6,343 | ||||||||||||||||||
Depreciation and amortization |
252,352 | 322,430 | 5,070 | 63,556 | 140,059 | 2,203 | ||||||||||||||||||
Loss on foreign currency exchange |
580,566 | 299,628 | 4,712 | 26,877 | 107,130 | 1,685 | ||||||||||||||||||
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Adjusted EBITDA |
593,554 | 618,609 | 9,728 | 185,111 | 390,611 | 6,143 | ||||||||||||||||||
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Project Cost per Megawatt Operating
Project cost per megawatt operating consists of solar photovoltaic panels, inverters, balance of plant equipment, land or leasehold land, capitalizable financing, and installation costs incurred for operating one megawatt of new solar power plant capacity during the reporting period. It is an indicator of our strong engineering, procurement and construction capabilities, market cost of material and our ability to procure such material at competitive prices. A reduction in project cost per megawatt helps reduce the cost of power and thereby improves our ability to win new projects. The project cost per megawatt operating for the fiscal years ended March 31, 2014 and 2015 and the three months ended June 30, 2014 and 2015 was Rs. 78.2 million and Rs. 60.5 million (US$0.95 million) and Rs. 77.0 million and Rs. 60.4 million (US$0.95 million) respectively. Project cost per megawatt operating has declined in line with declining solar module prices. While we expect this trend to continue during fiscal year 2016, we expect that the decline in solar module pricing will be significantly less than in prior periods.
Nominal Contracted Payments
Our PPAs create long-term recurring customer payments. Nominal contracted payments equal the sum of the estimated payments that the customer is likely to make, subject to discounts or rebates, over the remaining term of the PPAs. When calculating nominal contracted payments, we include those PPAs for projects that are operating or committed. To calculate the nominal contracted payments, we multiply the contract price per kilowatt hour as per the respective PPA by the estimated annual energy output for the balance life of the PPA period. In estimating the nominal contracted payments, we multiply the PPA contract price per kilowatt hour by the estimated annual energy output for all solar projects committed and operating as of the reporting date. The estimated annual energy output of a project is calculated using its current operating plant load factor (for operating projects) or budgeted plant load factor (for committed projects only), rated capacity of the project and the annual estimated decrease in rated capability of the solar panels, which is based on the technology used for the project.
If we were to receive government grants under any PPA, such grants would be included as nominal contracted payments in the period when received. We account for the viability gap funding, or VGF, as income-type government grant. The proceeds received from VGF grants upon fulfilment of certain conditions are initially recorded as deferred revenue. This deferred VGF revenue is recognized as sale of power in proportion to (x) the actual sale of solar energy kilowatts during the period to (y) the total estimated sale of solar energy kilowatts during the tenure of the applicable power purchase agreement (as described in Note 2(r) to our consolidated financial statements) pursuant to our recognition policy.
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Nominal contracted payments is a forward-looking number, and we use judgment in developing the assumptions used to calculate it. Those assumptions may not prove to be accurate over time. Underperformance of the solar power plants, payment defaults by our customers or other factors described under the heading Risk Factors could cause our actual results to differ materially from our calculation of nominal contracted payments.
The following table sets forth, with respect to our PPAs, the aggregate nominal contracted payments as of the reporting dates. These nominal contracted payments have not been discounted to arrive at the present value.
Nominal contracted payments decreased from March 31, 2015 to June 30, 2015 as a result of revenue recognized in the three months ended June 30, 2015 and entering into additional PPAs partially offset by a decline in benchmark tariff for solar power procurement. Over time, we have seen a trend towards a decline in the Central Electricity Regulatory Commission, or CERC, benchmark tariff for solar power procurement. For fiscal year 2011, the CERC benchmark tariff for solar power procurement was Rs. 17.91 per kilowatt hour. It was reduced to Rs. 10.39 per kilowatt hour for fiscal year 2013, which was further reduced to Rs. 7.72 per kilowatt hour for fiscal year 2015. The overall trend of solar power tariffs is that the tariffs are declining in line with the solar module prices.
Components of Results of Operations
Operating Revenue
Operating revenue consists of solar energy sold to customers under long term PPAs, which generally have a term of 25 years. We have one customer for each solar power plant. Our customers are power distribution companies and to a lesser extent commercial enterprises.
We recognize revenue on a monthly basis based on the solar energy kilowatts actually supplied to our customers multiplied by the rate per kilowatt hour agreed to in the respective PPA. The solar energy kilowatts hours supplied during a month are validated by the customer prior to our billing and recognition of revenue.
Where PPAs include scheduled price changes, revenue is recognized by applying the average rate to the energy output estimated over the term of the PPA. We estimate the total kilowatt hour units expected to be generated annually during the tenure of PPA using budgeted plant load factors, rated capacity of the project and annual estimated decrease in rated capability of solar panels. The contractual rates are applied to this annual estimate to determine the total estimated revenue over the term of the PPA. We then use the total estimated revenue and the total estimated kilowatt hours to compute the average rate used to record revenue on the actual energy output supplied. We compare the actual energy supplied to the estimate of the energy expected to be generated over the remaining term of the PPA on a periodic basis, but at least annually. Based on this evaluation, we reassess the energy output estimated over the remaining term of the PPA and adjust the revenue recognized and deferred to date. Through June 30, 2015, the adjustments have not been significant. Difference between the actual billing and revenue recognized is recorded as deferred revenue.
We recognize revenue when persuasive evidence of an arrangement exists, the fee is fixed or determinable, the electricity is delivered and collectability is reasonably assured. Revenue from sale of power is recorded net of discounts which to date have not been significant.
Cost of Operations (Exclusive of Depreciation and Amortization)
Our cost of operations primarily consists of expenses pertaining to operations and maintenance of our solar power plants. These expenses include payroll and related costs for maintenance staff, plant maintenance, insurance, and, if applicable, lease costs.
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General and Administrative Expenses
Our general and administrative expenses include payroll and related costs for corporate, finance and other support staff, including bonus and share based compensation expense, professional fees and other corporate expenses. We anticipate that we will incur additional general and administrative costs, including headcount and expansion related costs, to support the growth in our business as well as additional costs of being a public reporting company.
Depreciation and Amortization
Depreciation and amortization expense is recognized using the straight-line method over the estimated useful life of our solar power plants and other assets. Leasehold improvements related to solar power plants are amortized over the shorter of the lease term or the underlying period of the PPA for that particular solar power plant. Leasehold improvements related to office facilities are amortized over the shorter of the lease period or the estimated useful life. Freehold land is not depreciated. Construction in progress is not depreciated until it is placed into service.
Interest Expense, Net
Interest expense, net consists of interest incurred on term loans for projects under our fixed and variable rate financing arrangements and compulsorily convertible debentures. It also includes the deemed interest expense which is payable in the form of a guaranteed return on the compulsorily convertible debentures and the Series E compulsorily convertible preferred shares, which is classified as a liability. Interest expense also includes bank fees and other borrowing costs, which are typically amortized over the life of the loan using the effective interest rate method. Interest expense is presented net of capitalized financing costs and interest income earned from bank deposits. Interest incurred in connection with a project that has been commissioned is expensed, while interest incurred prior to commissioning is capitalized.
Loss on Foreign Currency Exchange
We are exposed to movements in currency exchange rates, particularly to changes in exchange rates between U.S. dollars and Indian rupees. Our functional currency is the Indian rupees and a portion of our borrowings from financial institutions are denominated in U.S. dollars. Foreign exchange loss includes the unrealized and realized loss from foreign currency fluctuations on our non-functional currency denominated borrowings.
We also enter into foreign currency option contracts to mitigate and manage the risk of changes in foreign exchange rates on our borrowings denominated in currencies other than our functional currency. These hedges do not qualify as cash flow hedges under Accounting Standards Codification, or ASC, Topic 815, Derivatives and Hedging. Changes in the fair value of these option contracts are recognized in the consolidated statements of operations and are included in loss on foreign currency exchange.
Income Tax Expense
Our income tax expense consists of current and deferred income tax as per applicable jurisdictions in Mauritius, India and the United States. Income tax for our current and prior periods is measured at the amount expected to be recovered from or paid to taxation authorities based on our taxable income or loss for that period.
Deferred income taxes and changes in related valuation allowance, if any, reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.
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Internal Control over Financial Reporting
As a company with less than US$1.0 billion in revenue for our last fiscal year, we qualify as an emerging growth company pursuant to the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. An emerging growth company may take advantage of specified reduced reporting and other requirements that are otherwise applicable generally to public companies. These provisions include exemption from the auditor attestation requirement under Section 404 of the Sarbanes-Oxley Act of 2002 in the assessment of the emerging growth companys internal control over financial reporting. The JOBS Act also provides that an emerging growth company does not need to comply with any new or revised financial accounting standards until such date that a private company is otherwise required to comply with such new or revised accounting standards. We may adopt new or revised accounting standards on the relevant dates on which adoption of such standard is required. However, we are choosing to opt in to such extended transition period election under Section 107(b) of the JOBS Act. As a result of such election, our financial statements may not be comparable to the financial statements of other public companies.
Prior to this offering, we have been a private company preparing our financial statements in accordance with Indian accounting standards and are reporting under GAAP for the first time. We have limited accounting personnel, other resources and tools with adequate GAAP and SEC reporting knowledge with which to address our internal controls and procedures over financial reporting. In the course of the preparation of our consolidated financial statements as of and for each of the two years ended March 31, we and our independent registered public accounting firm identified a material weakness in our internal control over financial reporting. As defined in the Commission Guidance Regarding Managements Report on Internal Control Over Financial Reporting under Section 13(a) or 15(d) of the Securities Exchange Act of 1934, Release Nos. 33-8810; 34-55929; FR 77, 6/27/2007, a material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our companys annual or interim financial statements will not be prevented or detected on a timely basis.
The material weakness identified is a deficiency in our financial statement closing process resulting from the lack of sufficient financial reporting and accounting personnel with appropriate knowledge of GAAP and SEC reporting requirements to properly address complex GAAP accounting issues and to prepare and review our consolidated financial statements and related disclosures to fulfill GAAP and SEC financial reporting requirements.
To address the material weakness identified, we have taken and are planning to take a number of measures, including (i) hiring additional accounting personnel with experience in GAAP and SEC reporting requirements; (ii) providing regular training on an ongoing basis to our accounting personnel that covers a broad range of accounting and financial reporting topics; (iii) developing and applying a comprehensive manual with detailed guidance on accounting policies and procedures as well as procedures for maintenance and retention of accounting and financial records; and (iv) forming an independent audit committee which consists of independent directors, one of them being a financial expert to review our GAAP financial statements and key accounting positions taken until we have sufficient knowledgeable personnel on staff. We have already appointed an independent director who is a financial expert with extensive experience in GAAP and SEC reporting matters. However, the implementation of these measures may not fully remediate the material weakness in our internal control over financial reporting. We are not able to estimate with reasonable certainty the costs that we will need to incur to implement these and other measures designed to improve our internal control over financial reporting. See Risk Factors Risks Related to Our Business and Industry In the course of preparing our consolidated financial statements, we have identified a material weakness and other control deficiencies in our internal control over financial reporting, which, as of the date of this prospectus, have not been remediated. If we fail to achieve an effective system of internal control over financial reporting, we may be unable to accurately report our financial results and investor confidence in our company and the market price of the equity shares may be adversely affected.
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Critical Accounting Policies and Estimates
Our consolidated financial statements are prepared in accordance with GAAP. We have identified certain accounting policies that we believe are the most critical to the presentation of our consolidated financial information over a period of time. These accounting policies may require our management to take decisions on subjective and/or complex matters relating to reported amounts of assets, liabilities, revenue, costs, expenses and related disclosures. These would further lead us to estimate the effect of matters that may inherently be uncertain.
The judgment on such estimates and underlying assumptions is based on our experience, historical trends, understanding of the business, industry and various other factors that we believe are reasonable under the circumstances. These form the basis of our judgment on matters that may not be apparent from other available sources of information. In many instances changes in the accounting estimates are likely to occur from period-to-period. Actual results may differ from the estimates. The future financial statement presentation, financial condition, results of operations and cash flows may be affected to the extent that the actual results differ materially from our estimates.
Our significant accounting policies are summarized in Note 2 Summary of Significant Accounting Policies to our consolidated financial statements included elsewhere in this prospectus. Our various critical accounting policies and estimates are discussed in the following paragraphs.
Income Taxes
Income tax expense consists of (i) current income tax expense arising from income from operations (ii) deferred income tax expense/(benefit) arising from temporary differences and (iii) income tax expense/benefits as a result of certain intercompany transactions.
We use the asset and liability method in accounting for income taxes. Under this method, deferred income tax assets and liabilities are determined based on the difference between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse.
The tax rates on reversal of temporary differences might be different from the tax rates used for creation of the respective deferred tax assets/liabilities.
As of March 31, 2014 and 2015, we had gross deferred tax assets of Rs. 69.3 million and Rs. 26.9 million (US$0.4 million), respectively, and gross deferred tax liabilities of Rs. 100.0 million and Rs. 118.7 million (US$1.9 million), respectively. As of June 30, 2015, we had gross deferred tax assets of Rs. 86.1 million (US$1.4 million), and gross deferred tax liabilities of Rs. 143.0 million (US$2.2 million).
We apply a two-step approach to recognize and measure uncertainty in income taxes in accordance with the Financial Accounting Standards Board, or FASB, Interpretation No. 48 (FIN 48), Accounting for Uncertainty in Income Taxes an interpretation of ASC Topic 740. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount, which is more than 50% likely of being realized upon ultimate settlement. We re-evaluate these uncertain tax positions on an annual basis. This evaluation is based on factors including changes in facts or circumstances, changes in tax law and effectively settled issues under tax-audit. Such a change in recognition or measurement could result in the recognition of a tax benefit or an additional charge to the tax provision in the relevant period. As of March 31, 2014 and 2015 and as of June 30, 2015, we did not have any material uncertain tax positions.
We establish valuation allowances against our deferred tax assets when it is more likely than not that all or a portion of a deferred tax asset will not be realized.
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A portion of our Indian operations qualifies for tax holiday related to their operating income attributable to undertakings, as defined, in operating solar power plants under section 80-IA of the Indian Income Tax Act, 1961. This holiday is available for a period of ten consecutive years out of fifteen years beginning from the year in which the undertaking first generates power (referred to as the Tax Holiday period). We assess the election of the Tax Holiday period on an annual basis for each of our undertakings. We believe these undertakings will generate higher taxable profits due to lower interest cost as debt balances are paid down in the later years of operations and therefore we plan to defer the Tax Holiday election to later years in order to maximize the benefits. As of June 30, 2015, we have not started claiming any tax holiday benefits for any of our undertakings. Deferred tax assets are recognized to the extent probable of realization outside the anticipated Tax Holiday period. For example, if we choose years six through 15 as the tax holiday period, we recognize deferred tax assets only to the extent that they will be realized either in years one through five or from year 16 onwards. As a result, all temporary differences do not result in creation of a deferred tax asset or liability.
AZI and a subsidiary provide EPC services to other group subsidiaries and as a result incur income taxes on profits from the services provided. The services provided to the group subsidiaries are in the nature of capitalizable costs and are therefore capitalized as part of property, plant and equipment in the standalone financial statements of such subsidiaries. However, these capitalized costs are eliminated for the purposes of the consolidated financial statements. The costs capitalized in the standalone financial statements are however eligible for income tax deductions in the tax records of the respective group subsidiaries. We recognize a portion of income taxes incurred by AZI and the subsidiary providing such services as prepaid income taxes to the extent we will be able to realize the benefit derived from tax deductions availed by the other subsidiaries. We assess that the probability of realizing the benefit on an annual basis and its recognition is limited to the extent probable of realization outside of the anticipated Tax Holiday period. Our estimate is that such benefit is limited to approximately 30% to 55% of the tax expense incurred by AZI and the subsidiary. Prepaid income taxes are expensed in the statement of operations in the period the benefit is actually realized by the other group subsidiaries. As a result, while all the profits on inter-company transactions are eliminated during consolidation, it does not result in complete reversal of tax expense on such inter-company transactions. Accordingly, while we have never been profitable, we report income tax expenses that fluctuate over the period.
Share Based Compensation
We account for share options granted to our employees in accordance with ASC Topic 718 Stock Compensation . Under the fair value recognition provision of such guidance, compensation for share options granted is measured at the grant date, based on the fair value of the options, and is recognized as expense over the vesting period of the option.
Share based compensation expense is recorded net of estimated forfeitures in our consolidated statement of operations under general and administrative expenses and is recorded for only those share options that we expect to vest. These share options have been granted to the employees who are in the corporate or finance department and to other support staffs. We estimate the forfeiture rate based on historical forfeitures of share options and adjust the rate to reflect changes in facts and circumstances. We revise our estimated forfeiture rate if actual forfeitures differ from our initial estimates.
Determining the fair value of share options requires significant judgment. We estimated the fair value of our share options using the Black-Scholes valuation model for awards with service vesting conditions and the Lattice valuation model for awards vesting based on achievement of market conditions. These models require inputs such as the fair value of our equity shares, risk-free interest rate, expected dividend yield, expected term and expected volatility and we have applied these inputs in determining the fair value of the share options as follows:
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Fair value of our equity shares as our equity shares are not publicly traded, we have valued our business on the date of each option grant. |
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Risk free interest rate the risk free interest rate is based on the yield on a treasury bond issued by the Indian government on the grant date with the tenor matching the remaining term of the share options. |
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Expected dividend yield we have never declared or paid any cash dividends on our equity shares and do not presently plan to pay cash dividends in the foreseeable future. Consequently, we used an expected dividend yield of zero. |
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Expected term the expected term was estimated based on the average between the vesting period and the plan term. Our share option plan expires on September 30, 2018. |
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Expected volatility as we do not have a trading history for our equity shares, the expected volatility for our equity shares was estimated by taking the average historical price volatility for companies with similar lines of business based on the price fluctuations of their shares over a period equivalent to the expected term of the share options granted. Companies with similar lines of business consist of several public companies similar in size, which are engaged in similar business sectors in India and worldwide. We have considered a three year average to be a reasonable estimate of volatility for the purpose of valuation. The volatility is unlevered and then re-levered to adjust for our capital structure. We intend to continue to consistently apply this process using the same or similar public companies until a sufficient amount of historical information regarding the volatility of our own equity share price becomes available, or unless circumstances change such that the identified companies are no longer similar to us, in which case, more suitable companies whose share prices are publicly available would be utilized in the calculation. |
The following table presents the assumptions used to estimate the fair value of options granted during the periods presented:
Fiscal Year Ended March 31, | Three Months Ended June 30, | |||||||||||
2014 | 2015 | 2014 | 2015 | |||||||||
Expected term (in years) |
2.61-4.70 | 2.09-3.84 | 2.61-4.70 | 2.09-3.84 | ||||||||
Expected volatility |
43.9%-45.6% | 31.2%-42.3% | 43.9%-45.6% | 31.2%-42.3% | ||||||||
Risk-free interest rate |
7.51%-7.68% | 7.69%-8.34% | 7.51%-7.68% | 7.69%-8.34% |
Share based compensation included in general and administrative expenses totaled Rs. 4.4 million and Rs. 7.4 million (US$0.1 million) and Rs. 1.3 million and Rs. 2.1 million (US$0.03 million) for the fiscal years ended March 31, 2014 and 2015 and the three months ended June 30, 2014 and 2015 respectively. As of June 30, 2015, we had Rs. 2.4 million (US$0.04 million) of unrecognized compensation expense which will be recognized over the remaining vesting period of four years.
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Results of Operations
AZIs functional and reporting currency is the Indian rupees. Solely for the convenience of the reader, we have translated the financial information for the fiscal year ended March 31, 2015 and the three months ended June 30, 2015 into U.S. dollars. The rate used for this translation is Rs. 63.59 to US$1.00, which is the noon buying rate in New York City for cable transfer in non-U.S. dollar currencies as certified for customs purposes by the Federal Reserve Bank of New York as of June 30, 2015, which is the date of our last reported financial statements. No representation is made that the Indian rupee amounts could have been, or could be, converted, realized or settled into U.S. dollars at that rate.
Fiscal Year Ended March 31, | Three Months Ended June 30, | |||||||||||||||||||||||
2014 | 2015 | 2014 | 2015 | |||||||||||||||||||||
Rs. | Rs. | US$ | Rs. | Rs. | US$ | |||||||||||||||||||
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Consolidated Statement of Operations Data: |
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Operating revenue: |
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Sale of power |
881,345 | 1,124,138 | 17,678 | 264,365 | 570,194 | 8,967 | ||||||||||||||||||
Operating costs and expenses: |
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Cost of operations (exclusive of depreciation and amortization shown separately below) |
52,491 | 79,816 | 1,255 | 18,643 | 34,703 | 546 | ||||||||||||||||||
General and administrative expenses |
235,300 | 425,713 | 6,695 | 60,611 | 144,880 | 2,278 | ||||||||||||||||||
Depreciation and amortization |
252,352 | 322,430 | 5,070 | 63,556 | 140,059 | 2,203 | ||||||||||||||||||
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Total operating cost and expenses |
540,143 | 827,959 | 13,020 | 142,810 | 319,642 | 5,027 | ||||||||||||||||||
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Operating income |
341,202 | 296,179 | 4,658 | 121,555 | 250,552 | 3,940 | ||||||||||||||||||
Other expense: |
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Interest expense, net |
520,219 | 831,789 | 13,081 | 163,823 | 403,324 | 6,343 | ||||||||||||||||||
Loss on foreign currency exchange |
580,566 | 299,628 | 4,712 | 26,877 | 107,130 | 1,685 | ||||||||||||||||||
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Total other expenses |
1,100,785 | 1,131,417 | 17,793 | 190,700 | 510,454 | 8,028 | ||||||||||||||||||
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Loss before income taxes |
(759,583 | ) | (835,238 | ) | (13,135 | ) | (69,145 | ) | (259,902 | ) | (4,088 | ) | ||||||||||||
Income tax (expense)/benefit |
(15,847 | ) | (253,112 | ) | (3,980 | ) | (20,954 | ) | 18,412 | 290 | ||||||||||||||
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Net loss |
(775,430 | ) | (1,088,350 | ) | (17,115 | ) | (90,099 | ) | (241,490 | ) | (3,798 | ) | ||||||||||||
Net (loss)/gain attributable to non-controlling interest |
(26,935 | ) | (5,595 | ) | (88 | ) | 3,343 | (1,322 | ) | (21 | ) | |||||||||||||
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Net loss attributable to AZI |
(748,495 | ) | (1,082,755 | ) | (17,027 | ) | (93,442 | ) | (240,168 | ) | (3,777 | ) | ||||||||||||
Accretion on Mezzanine CCPS |
(366,552 | ) | (755,207 | ) | (11,876 | ) | (104,121 | ) | (259,282 | ) | (4,077 | ) | ||||||||||||
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Net loss attributable to AZI equity shareholders |
(1,115,047 | ) | (1,837,962 | ) | (28,903 | ) | (197,563 | ) | (499,450 | ) | (7,854 | ) | ||||||||||||
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Three Months Ended June 2015 Compared to Three Months Ended June 2014
Operating Revenues
Operating revenues during the three months ended June 30, 2015 increased by Rs. 305.8 million, or 116%, to Rs. 570.2 million (US$9.0 million) compared to the same period in 2014. The principal reason for the increase in revenue during the three months ended June 30, 2015 was the operation of the Uttar Pradesh 1, Punjab 2 and Karnataka 1 solar power projects, which commenced operations in the fourth quarter of fiscal year 2015 and contributed operating revenue of Rs. 35.0 million, Rs. 113.0 million and Rs. 28.6 million, and the operation of the Rajasthan 3.1, 3.2 and 3.3 solar power projects, which commenced operations in the first quarter of fiscal year 2016 and contributed operating revenue of Rs. 24.0 million, Rs. 55.1 million and Rs. 61.8 million, respectively.
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Cost of Operations (Exclusive of Depreciation and Amortization)
Cost of operations during the three months ended June 30, 2015 increased by Rs. 16.1 million, or 86%, to Rs. 34.7 million (US$0.5 million) compared to the same period in 2014. This increase was primarily due to increase in plant maintenance cost by Rs. 13.0 million and an increase in leasehold rent of Rs. 2.8 million primarily resulting from increased leased land in connection with our projects during the three months ended June 30, 2015.
General and Administrative Expenses
General and administrative expenses during the three months ended June 30, 2015 increased by Rs. 102.0 million, or 139%, to Rs. 144.8 million (US$2.3 million) compared to the same period in 2014. This increase was primarily due to increase in professional expenses of Rs. 48.1 million primarily relating to professional fees paid for raising capital and expenses in connection with this offering, which have not been deferred, business development expenses for new solar projects of Rs. 13.4 million, and payroll cost of Rs. 20.2 million primarily resulting from new hiring as the scale of our business had expanded.
Depreciation and Amortization
Depreciation and amortization expenses during the three months ended June 30, 2015 increased by Rs. 76.5 million, or 131%, to Rs. 140.1 million (US$2.2 million) compared to the same period in 2014. The principal reason for the increase in depreciation was the capitalization of the Punjab 2.1, 2.2 and 2.3 projects, which commenced operation in phases from September 2014 through October 2014 and accounted for depreciation of Rs. 19.7 million and the Rajasthan 3.1, 3.2 and 3.3 solar power projects, which commenced operation in phases from April 2015 through May 2015 and accounted for depreciation of Rs. 40.0 million.
Interest Expense, Net
Net interest expense during the three months ended June 30, 2015 increased by Rs. 239.5 million, or 146%, to Rs. 403.3 million (US$6.3 million) compared to the same period in 2014.
Interest expense during the three months ended June 30, 2015 increased by Rs. 233.0 million, or 114%, to Rs. 437.2 million (US$6.9 million). Interest expense increased primarily as a result of Rs. 208.3 million on borrowings for Punjab 2 solar power project operating during the three months ended June 30, 2015 and the Rajasthan 3 solar power project operating in phases starting from April 2015 and Rs. 15.0 million due to the change in the fair value of compulsorily convertible instruments.
Interest income during the three months ended June 30, 2015 decreased by Rs. 6.5 million, or 16%, to Rs. 33.9 million (US$0.5 million) compared to the same period in 2014 primarily as a result of a decrease in income on term deposits placed during the period of Rs. 9.3 million offset by increase in gain on sale of short term investments by Rs. 2.8 million.
Loss on Foreign Currency Exchange
Foreign exchange loss during the three months ended June 30, 2015 increased by Rs. 80.3 million to Rs. 107.1 million (US$1.7 million) compared to the same period in 2014.
The closing exchange rate of Indian rupees as of June 30, 2014 and 2015 depreciated against the U.S. dollar by Rs. 0.6 to US$1.00 and Rs. 1.3 to US$1.00 over the closing exchange rate as of March 31, 2014 and 2015, respectively. This depreciation of the Indian rupee resulted in an increase in realized and unrealized foreign exchange losses of Rs. 3.7 million and 112.3 million on our foreign denominated debt. These foreign exchange losses were partially offset by an increase in realized and unrealized losses of Rs. 3.4 million and Rs. 29.5 million, respectively on our foreign currency option contracts.
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Income Tax Expense
Income tax expense decreased during the three months ended June 30, 2015 by Rs. 39.37 million to a benefit of Rs. 18.4 million (US$0.27 million). Our effective income tax rate for the three months ended June 30, 2015 was 6.63% as compared to 30.30% for the same period in 2014 and compared to the year-end tax rate of March 31, 2015. The decrease in income tax expense and the effective tax rate in the three months ended June 30, 2015 was a result of lower taxable profits generated by AZI in the current period, which provides certain engineering, procurement and construction services to our Indian subsidiaries. We pay taxes on taxable profits at the individual entity level, in accordance with the tax rates in the relevant jurisdictions. While at the consolidated level, we have never been profitable, AZI and certain Indian and non-Indian subsidiaries at the individual entity level have generated taxable profits. These taxable profits result from services provided by these entities to other subsidiaries and are taxed at the applicable tax rates in the jurisdiction of the entity providing the services. These inter-company transactions and profits are eliminated during consolidation, while the related income tax expense is not eliminated. Furthermore, a portion of our Indian operations qualifies for a tax holiday related to their operating income attributable to undertakings, as defined, in operating solar power plants under section 80-IA of the Indian Income Tax Act, 1961. This holiday is available for a period of ten consecutive years out of 15 years beginning from the year in which the undertaking first generates power (referred to as the tax holiday period). We anticipate that we will claim the aforesaid deduction in the last ten years out of 15 years beginning with the year in which we generate power and when we have taxable income. Accordingly, our current operations are taxable at the normally applicable tax rates. Due to the tax holiday period, a substantial portion of the temporary differences between the book and tax basis of our assets and liabilities do not have any tax consequences as they are expected to reverse within the tax holiday period.
The change in our income tax expense was largely attributable to a decrease in our domestic deferred tax expense on account of lower taxable profits generated by AZI. During the three months ended June 30, 2015, we recorded a domestic deferred tax benefit of Rs. 18.42 million, whereas as for the three months ended June 30, 2014, we recorded a domestic deferred tax expense of Rs. 20.95 million. The primary reason for the change in the level of domestic deferred tax benefit was due to decrease in prepaid taxes on inter-company transactions due to lower taxable profits generated by AZI in the current period, which provides certain engineering, procurement and construction services to our Indian subsidiaries.
Year Ended March 31, 2015 Compared to Year Ended March 31, 2014
Operating Revenue
Operating revenue during the year ended March 31, 2015 increased by Rs. 242.8 million, or 28%, to Rs. 1,124.1 million (US$17.7 million) compared to the same period in 2014. The principal reasons for the increase in operating revenue were the operation of the Punjab 2.1, 2.2 and 2.3 solar power projects, which commenced operations in phases from September 2014 through October 2014 and contributed operating revenue of Rs. 168.1 million in fiscal year 2015; the operation of the Uttar Pradesh 1 and Karnataka 1 solar power projects, which commenced operations in the fourth quarter of fiscal year 2015 and contributed operating revenue of Rs. 22.9 million and Rs. 30.7 million, respectively, in fiscal year 2015; and a Rs. 13.1 million increase in revenue from the Gujarat rooftop solar power project primarily resulting from a full period of operations. We expect revenue will increase in fiscal year 2016 as projects under construction become operational.
Cost of Operations (Exclusive of Depreciation and Amortization)
Cost of operations during the year ended March 31, 2015 increased by Rs. 27.3 million, or 52%, to Rs. 79.8 million (US$1.3 million) compared to the same period in 2014. The increase was primarily due to an increase in leasehold rent of Rs. 19.4 million, which resulted from increased leased land in connection with our projects and increased plant maintenance costs of Rs. 7.4 million resulting from new plants that commenced operations during fiscal years 2014 and 2015 and increased maintenance costs at existing plants.
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General and Administrative Expenses
General and administrative expenses during the year ended March 31, 2015 increased by Rs. 190.4 million, or 81%, to Rs. 425.7 million (US$6.7 million) compared to the same period in 2014. This was primarily due to increased professional expenses of Rs. 71.1 million, which primarily related to professional fees paid for raising capital and expenses in connection with this offering, which have not been deferred, business development expenses for new solar power projects of Rs. 57.0 million and payroll cost of Rs. 28.8 million, which primarily resulted from new hiring as the scale of our business has expanded.
Depreciation and Amortization
Depreciation and amortization expenses during the year ended March 31, 2015 increased by Rs. 70.1 million, or 28%, to Rs. 322.4 million (US$5.1 million) compared to the same period in 2014. The principal reason for the increase in depreciation was the capitalization of the Punjab 2.1, 2.2 and 2.3 projects, which commenced operations in phases from September 2014 through October 2014 and accounted for depreciation of Rs. 39.1 million in fiscal year 2015; the Karnataka 1 project, which commenced operations in the first quarter of fiscal year 2015 and accounted for depreciation of Rs.5.5 million in fiscal year 2015; and the Uttar Pradesh 1 project, which commenced operations in the first quarter of fiscal year 2015 and accounted for depreciation of Rs. 4.5 million for fiscal year 2015. In addition, depreciation attributable to the Rajasthan 2 project increased Rs. 13.3 million compared to fiscal year 2014 and depreciation attributable to new commercial rooftop solar power projects increased Rs. 8.7 million compared to fiscal year 2014 due to a full period of operations.
Interest Expense, Net
Net interest expense during the year ended March 31, 2015 increased by Rs. 311.6 million, or 60%, to Rs. 831.8 million (US$13.0 million) compared to the same period in 2014.
Interest expense increased by Rs. 354.5 million, or 55%, to Rs. 999.6 million (US$15.7 million) compared to the same period in 2014. Interest expense increased primarily as a result of an increase of Rs. 282.3 million on project term loans principally for borrowings related to the Punjab 2.1, 2.2 and 2.3 projects, which commenced operations in phases from September 2014 through October 2014, the Uttar Pradesh 1 and Karnataka 1 projects, which commenced operations in the fourth quarter of fiscal year 2015, the Gujarat rooftop project, which commenced operations in the last quarter of fiscal year 2014, and other commercial rooftop solar power projects that were commissioned during fiscal 2015. In addition, interest expense increased as a result of an Rs. 19.3 million increase in bank charges primarily in connection with new borrowings and an Rs. 52.9 million increase in the fair value of compulsorily convertible instruments.
Interest income increased by Rs. 42.9 million, or 34%, to Rs. 167.8 million (US$2.6 million) for fiscal year 2015, compared to fiscal year 2014. The principal reason for the increase was interest earned on surplus funds invested in money market investments as our funds on deposit increased, in addition to gains from the sale of short term investments.
Loss on Foreign Currency Exchange
Foreign exchange loss for fiscal year 2015 decreased by Rs. 280.9 million, or 48%, to Rs. 299.6 million (US$4.7 million) compared to the same period in 2014. The Indian rupee depreciated against the U.S. dollar from Rs. 60.1 to US$1.00 as of March 31, 2014 to Rs. 62.6 to US$1.00 as of March 31, 2015. This depreciation of the Indian rupee resulted in an increase in realized and unrealized foreign exchange losses of Rs. 42.3 million and Rs. 240.7 million, respectively, on our foreign currency denominated debt. These foreign exchange losses were partially offset by an increase in realized and unrealized losses of Rs. 93.9 million and Rs. 7.3 million, respectively, on our foreign currency option contracts.
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Income Tax Expense
Income tax expense increased during the year ended March 31, 2015 by Rs. 237.3 million, to Rs. 253.1 million (US$4.0 million), compared to the same period in 2014.
Our effective income tax rate for the year ended March 31, 2015 was 30.3% as compared to 2% for the same period in 2014. The increase in income tax expense and the effective tax rate in fiscal year 2015 was a result of higher taxable profits generated by AZI, which provides certain engineering, procurement and construction services to our Indian subsidiaries. During the year ended March 31, 2015, AZI generated taxable profits of Rs. 976.4 million and reported tax expenses of Rs. 334.9 million (an effective tax rate of 34%), whereas in the previous year, AZI had taxable losses of Rs. 260.6 million and had not reported any tax expense. The increase in taxable profits generated by AZI reflected the higher amount of services provided by them to our Indian subsidiaries in the year ended March 31, 2015, which was reflective of the different level of solar power plant construction in each of the years.
We pay taxes on taxable profits at the individual entity level, in accordance with the tax rates in the relevant jurisdictions. While at the consolidated level, we have never been profitable, AZI and certain Indian and non-Indian subsidiaries at the individual entity level have generated taxable profits. These taxable profits result from services provided by these entities to other subsidiaries and are taxed at the applicable tax rates in the jurisdiction of the entity providing the services. These inter-company transactions and profits are eliminated during consolidation, while the related income tax expense is not eliminated. Furthermore, a portion of our Indian operations qualifies for a tax holiday related to their operating income attributable to undertakings, as defined, in operating solar power plants under section 80-IA of the Indian Income Tax Act, 1961. This holiday is available for a period of ten consecutive years out of 15 years beginning from the year in which the undertaking first generates power (referred to as the Tax Holiday period). We anticipate that we will claim the aforesaid deduction in the last ten years out of 15 years beginning with the year in which we generate power and when we have taxable income. Accordingly, our current operations are taxable at the normally applicable tax rates. Due to the Tax Holiday period, a substantial portion of the temporary differences between the book and tax basis of our assets and liabilities do not have any tax consequences as they are expected to reverse within the Tax Holiday period.
The income tax expense and the effective tax rate for the non-Indian subsidiaries decreased for the year ended March 31, 2015 which was a result of the substantially lower level of taxable profits generated by our non-Indian subsidiaries, which provide certain engineering and procurement services to our Indian subsidiaries. During the year ended March 31, 2015, these non-Indian subsidiaries generated taxable loss of Rs. 12 million and nil tax expense, whereas in the previous year, the non-Indian subsidiaries had taxable profits of Rs. 4.4 million and reported tax expenses of Rs. 1.5 million (an effective tax rate of 33%).
The remaining change in our income tax expense was largely attributable to a decrease in our domestic deferred tax expense. During the year ended March 31, 2015, we recorded a domestic deferred tax expense of Rs. 61.1 million, whereas for year ended March 31, 2014 we recorded a domestic deferred tax benefit of Rs. 19 million. The primary reason for the change in the level of domestic deferred tax benefit was due to an increase in prepaid taxes on inter-company transactions and the reversal of the valuation allowance on brought forward losses. During the year ended March 31, 2015, AZI was awarded EPC contracts by certain subsidiaries, and these carry forward losses were utilized. Accordingly, as of March 31, 2015, we did not have any carry forward losses requiring a valuation allowance.
Our domestic and foreign tax expenses are further described in Note 11 Income Taxes to our consolidated financial statements included elsewhere in this prospectus.
Liquidity and Capital Resources
Azure Power Global Limited does not generate cash from operations in order to fund its expenses. Restrictions on the ability of our predecessor and its subsidiaries to pay us cash dividends as a result of certain
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regulatory and contractual restrictions may make it impracticable to use such dividends as a means of funding the expenses of Azure Power Global Limited. For a further discussion on our ability to issue and receive dividends, see Dividend Policy.
Our principal liquidity requirements are to finance current operations, service our debt and support our growth. We will continue to use capital in the future to finance the construction of solar power plants. Historically, our predecessors operations largely relied on project-level long term borrowings, proceeds from issuance of compulsorily convertible preferred shares and compulsorily convertible debentures, and internally generated cash flows to meet capital expenditure requirements. As a normal part of our business and depending on market conditions, we will from time to time consider opportunities to repay, redeem, repurchase or refinance our indebtedness. Changes in our operating plans, lower than anticipated electricity sales, increased expenses or other events may cause us to seek additional debt or financing in future periods. There can be no guarantee that financing will be available on acceptable terms or at all. Debt financing, if available, could impose additional cash payment obligations, additional covenants and operating restrictions. Future financings could result in the dilution of our existing shareholding. In addition, any of the items discussed in detail under Risk Factors elsewhere in this prospectus may also significantly impact our liquidity.
Liquidity Position
We believe that, following the completion of this offering, we will have sufficient liquidity available which will include cash and cash equivalents, borrowings arrangements, and cash flows from operations to meet our anticipated required capital expenditures, debt service obligations, working capital requirements, and contingencies for at least the next twelve months.
As of June 30, 2015, our liquid assets totaled Rs. 2,534.9 million (US$39.9 million), which was comprised of cash, current and non-current restricted cash and short term investments. As of June 30, 2015, we carried cash and short term investments of Rs. 84.5 million held by our non-Indian subsidiaries, which are not readily available to AZI.
We also have commitments from financial institutions that we can draw upon in the future upon the achievement of specific funding criteria. As of June 30, 2015, we have such commitments amounting Rs. 1,680 million (US$26 million) under project level financing arrangements. These commitments represent the term loan agreements we entered into with Indian Renewable Energy Development Agency, or IREDA, Central Bank of India, International Finance Corporation, or IFC, and India Infrastructure Finance Company Limited (IIFCL) for the construction of the Rajasthan 3.1, 3.2 and 3.3 projects between September, 2014 and March, 2015, term loan agreement we entered into with Central Bank of India for our commercial rooftop projects in March 2014 and the term loan agreement we entered into with Yes Bank, for Chhattisgarh 1.1, 1.2 and 1.3 projects in December 2014.
We have term loans from IREDA for the Rajasthan 3.1, 3.2 and 3.3 projects, for aggregate principal amounts of Rs. 2,465.8 million, of which Rs. 123.2 million was undrawn as of June 30, 2015. Each of these loans bears interest at 13.65% during the construction period and at 12.65% thereafter. Each of these loans is secured by movable and immovable assets of the projects. The term of each loan is 13 years. Cash distributions from the projects can be made after meeting the project expenses and debt service requirements.
The loan agreements entered into by AZIs project subsidiaries also contain covenants that among other things restrict payment of dividends of the project.
We have term loans from IFC and IIFCL for the Rajasthan 3.3 project, for an aggregate principal amount of Rs. 1,175 million (US$18.5 million), of which Rs. 101.9 million (US$1.6 million) was undrawn as of June 30, 2015. The interest on the loans is between 11.76% and 13.65% during the construction period and 11.76% and 12.65% thereafter. These loans are secured by movable and immovable assets of the projects. The term of the loans is between 13 and 15 years. Cash distributions from the project can be made after meeting the project expenses and debt service requirements.
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We have a term loan from Yes Bank for the Chhattisgarh 1 project, for an aggregate principal amount of Rs. 1,601.0 million (US$25.2 million), of which Rs. 49.0 million (US$0.8 million) was undrawn as of June 30, 2015. The Yes Bank loan bears interest at 12%. The Yes Bank loan is secured by movable and immovable assets of the projects. The term of the Yes Bank loan is 14 years. Cash distributions from the project can be made after meeting the project expenses and debt service requirements.
We have a term loan from Central Bank of India for the DLF rooftop projects, or the CBI loan, for an aggregate principal amount of Rs. 314.5 million (US$4.9 million), of which Rs. 131.1 million (US$2.1 million) was undrawn as of June 30, 2015. The CBI loan bears interest at 12.50%. The CBI loan is secured by movable and immovable assets of the projects. The term of the CBI loan is 14.5 years. Cash distributions from the project can be made after meeting the project expenses and debt service requirements.
Generally, under the terms of the loan agreements entered into by the Companys project subsidiaries, the project subsidiaries are restricted from paying dividends to AZI if they default in payment of their principal, interest and other amounts due to the lenders under their respective loan agreements. Certain of AZIs project subsidiaries also may not pay dividends to AZI out of restricted cash.
We are subject to business and operational risks that could adversely affect our cash flows. A material decrease in our cash flows would likely produce a corresponding adverse effect on our borrowing capacity.
Sources of Liquidity
Our ability to meet our debt service obligations and other capital requirements will depend on our future operating performance which, in turn, will be subject to general economic, financial, business, competitive, legislative, regulatory and other conditions, many of which are beyond our control. Our financing arrangements as of June 30, 2015 consisted of compulsorily convertible preferred shares, compulsorily convertible debentures, project-level financing arrangements and other borrowings.
Compulsorily Convertible Preferred Shares
Through June 30, 2015 we have raised funds totaling Rs. 2,995 million (US$47.1 million), net of related costs, through the issuance of Series A to Series F compulsorily convertible preferred shares. Series A to Series D and Series F compulsorily convertible preferred shares have been classified in temporary equity in our consolidated balance sheet because these preference shareholders have a right to convert their shares into fixed number of equity shares. Series E compulsorily convertible preferred shares have been classified as a liability because Series E preference shareholders have a right to convert their shares into variable number of equity shares to give them their required returns.
All series of the compulsorily convertible preferred shares are convertible into equity shares either on the respective maturity date or on the occurrence of specific events based on the terms of respective agreements. In addition, the Series A to D and the Series F compulsorily convertible preference shareholders have a right to convert into equity shares at any point from the date of the respective issuance. Upon the completion of this offering, the Series A to D and Series F compulsorily convertible preference shareholders will be issued a fixed number of equity shares and the Series E compulsorily convertible preference shareholders will be issued such number of equity shares so as to provide them a required return. The compulsorily convertible preference shareholders have the right to require us to buy-back these compulsorily convertible preferred shares on non-occurrence of certain contingent events.
Pursuant to our shareholders agreement, if we do not undertake a Qualified IPO, as defined by the agreement, on or before February 25, 2016, at any time after that date, the Series A, B, C, D and F compulsorily convertible preference shareholders have an option at their discretion to require us to buy back the shares held by them. Series A to Series D and Series F compulsorily convertible preferred shares are collectively referred to as Mezzanine compulsorily convertible preferred shares. The buy-back right of these shareholders will be extinguished prior to the initial public offering upon the conversion of these compulsorily convertible preferred shares into equity shares. Indian rules and regulations place limitations on the amount of the compulsorily convertible preferred shares we can
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buy back within 12 months of the balance sheet. Among other things, we are restricted from buying back an amount of shares in excess of 25% of our statutory paid up share capital and free reserves in a year. As of June 30, 2015, we have estimated that the compulsorily convertible preferred shares will not be eligible for buyback by February 25, 2016 and therefore have continued to classify the compulsorily convertible preferred shares as a non-current liability.
The Mezzanine compulsorily convertible preferred shares are being accreted to their buy-back value through February 25, 2016, the earliest buy-back date, on a straight line basis, so that the carrying amount will equal the mandatory redemption at each date.
Unless converted, the term of the Series A compulsorily convertible preferred shares shall be maximum of 19 years from the date of issue, whereas the terms of the Series B, Series C, Series D and Series F compulsorily convertible preferred shares shall be a maximum of 10 years from the date of issue. Each of the Series A, Series B, Series D and Series F compulsorily convertible preferred shares shall be convertible into equity shares at the option of the preference shareholders at a conversion ratio of 1:1. The Series C compulsorily convertible preferred shares shall be convertible into equity shares at the option of the preference shareholders at a conversion ratio of 1:0.3423.
At June 30, 2015, the Company has continued to treat its compulsorily convertible preferred shares as a non-current liability due to certain limitations in the amount that can be bought back within twelve months of the balance sheet date under Indian rules and regulations, which restrict the Company from buying back an amount of shares in excess of 25% of its statutory paid up share capital and free reserves in a year or a maximum aggregate amount of approximately Rs. 986,048 as of June 30, 2015.
In July 2015, we entered into a subscription agreement with International Finance Corporation and its affiliated entity for the sale of 133,285 shares of Series H compulsorily convertible preferred shares for US$60 million, which we amended in July 2015. In July 2015, we entered into a subscription agreement with Société de Promotion et de Participation pour la Coopération Économique, or PROPARCO, for the sale of 18,882 shares of Series G compulsorily convertible preferred shares for US$8.5 million.
Upon the completion of this offering and immediately prior to listing of the equity shares pursuant to the offering, Series G compulsorily convertible preferred shares will automatically convert into such number of equity shares so as to provide the holder with a fixed return. Assuming the midpoint of the estimated range of the initial public offering price as set forth on the cover page of this prospectus, these shares will convert into equity shares of Azure Power Global Limited. A US$1.00 increase in the assumed initial public offering price would increase the number of equity shares by shares and a US$1.00 decrease in the assumed initial public offering price would decrease the number of equity shares by shares. Series H compulsorily convertible preferred shares will automatically convert into equity shares of Azure Power Global Limited upon completion of this offering and immediately prior to listing of the equity shares pursuant to the offering.
Compulsorily Convertible Debentures
Through June 30, 2015 we have raised funds totaling Rs. 1,182.0 million (US$18.6 million), through the issuance of compulsorily convertible debentures at coupon rates ranging from 0% to 10% and maturing on various dates from December 2020 to June 2024. Upon the completion of this offering, the debenture-holders will be issued such number of equity shares so as to provide them a required return. The compulsorily convertible debenture-holders have the right to require us to buy-back after converting the compulsorily convertible debentures to equity shares on non-occurrence of certain contingent events.
The compulsorily convertible debenture-holders have the right to require us to buy back on:
|
expiry of the qualified initial public offering due date (i.e., February 25, 2016); or |
|
breach of the funding covenants of the compulsorily convertible debenture-holders. |
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At June 30, 2015, the Company has continued to treat its compulsorily convertible debentures as a non-current liability due to certain limitations in the amount that can be bought back within twelve months of the balance sheet date under Indian rules and regulations, which restrict the Company from buying back an amount of shares in excess of 25% of its statutory paid up share capital and free reserves in a year or a maximum aggregate amount of approximately Rs. 986,048 as of June 30, 2015.
Project-level Financing Arrangements
Our borrowings include project-specific financing arrangements collateralized by the underlying solar power plants. At June 30, 2015, these borrowings had annual interest rates ranging from 4.07% to 6.43% for foreign currency loans and from 12.16% to 13.65% for Indian rupee loans. The table below summarizes certain terms of our project-level financing arrangements as of June 30, 2015:
Outstanding Principal
Amount |
Type of
Interest |
Currency |
Maturity
Date(1) |
|||||||||||
Name of Project |
Rs. | US$ | ||||||||||||
(In thousands) | ||||||||||||||
Punjab 1 |
239,971 | 3,774 | Fixed | US$ | 2022 | |||||||||
Punjab 2 |
1,880,000 | 29,564 | Floating | Rs. | 2021 | |||||||||
Gujarat 1 |
1,330,693 | 20,926 | Fixed | US$ | 2025 | |||||||||
Gujarat rooftop |
128,503 | 2,021 | Floating | Rs. | 2028 | |||||||||
Rajasthan 1 |
861,101 | 13,541 | Fixed | US$ | 2028 | |||||||||
Rajasthan 2 |
3,675,068 | 57,793 | Fixed | US$ | 2031 | |||||||||
Uttar Pradesh 1 |
550,000 | 8,649 | Floating | Rs. | 2026 | |||||||||
DLF rooftop |
178,214 | 2,803 | Floating | Rs. | 2028 | |||||||||
Karnataka 1 |
585,000 | 9,200 | Floating | Rs. | 2030 | |||||||||
Rajasthan 3 |
5,361,054 | 84,307 | Floating | Rs. | 2030 | |||||||||
Chhattisgarh 1 |
1,552,000 | 24,406 | Floating | Rs. | 2029 | |||||||||
|
|
|
|
|||||||||||
Total |
16,341,604 | 256,984 | ||||||||||||
|
|
|
|
(1) | This represents the last repayment period. These loans are repayable on a quarterly or semi-annual basis. For repayment by period of the above-mentioned loans, refer contractual obligation and commercial commitments. |
Our outstanding project level borrowings have been secured by certain movable and immovable properties, including property, plant and equipment, and in some cases supported by personal guarantees issued by Mr. Inderpreet Singh Wadhwa (our director and chief executive officer) and Mr. Harkanwal Singh Wadhwa (our director and chief operating officer) as well as a pledge of the shares of the project level SPVs.
We have project level commitments from financial institutions that we can draw upon in the future upon the achievement of specific funding criteria. As of June 30, 2015, we have such commitments amounting Rs. 1,680 million (US$26 million) under project level financing arrangements. These are expected to be utilized within the next 12 to 18 months.
The financing agreements governing our project-level borrowings contain financial and other restrictive covenants that limit our project subsidiaries ability to make distributions to us unless certain specific conditions are met, including the satisfaction of certain financial ratios.
Uses of Liquidity
Our principal requirements for liquidity and capital resources can be categorized into investment for developing solar power plants and debt service obligations. Generally, once operational, our solar power generation assets do not require significant capital expenditures to maintain their operating performance. For principal and interest payments on our debt outstanding as of June 30, 2015, refer to Contractual Obligations and Commercial Commitments included elsewhere in this prospectus.
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Capital Expenditures
As of September 30, 2015, we operated 17 utility scale projects and several commercial rooftop projects with a combined rated capacity of 242MW. As of such date, we were also constructing eleven projects with a combined rated capacity of 244MW, and had an additional 179MW of projects committed.
Our capital expenditure requirements consist of:
(i) | Expansion capital expenditures for new projects; and |
(ii) | Working capital spent for building a pipeline for coming year(s). |
Expansion capital expenditures also include interest expense associated with borrowings used to fund expansion during construction phase of the projects. We intend to build/ acquire new projects post the completion of this offering.
Our capital expenditure amounted to Rs. 1,375 million (US$21.6 million) for the three months ended June 30, 2015.
Cash Flow Discussion
We use traditional measures of cash flow, including net cash provided by operating activities, net cash used in investing activities and net cash provided by financing activities, as well as cash available for distribution to evaluate our periodic cash flow results.
Cash and cash equivalents include cash on hand, demand deposits with banks, term deposits and all other highly liquid investments purchased with an original maturity of three months or less at the date of acquisition and that are readily convertible to cash. It does not include restricted cash which consists of cash balances restricted as to withdrawal or usage and relate to cash us ed to collateralize bank letters of credit supporting the purchase of equipment for solar power plants, bank guarantees issued in relation to the construction of the solar power plants within the timelines stipulated in PPAs and for certain debt service reserves required under our loan agreements.
Three Months Ended June 30, 2015 Compared to Three Months Ended June 30, 2014
The following table reflects the changes in cash flows for the comparative periods:
For Three Months Ended June 30, | Change | |||||||||||||||
2014 | 2015 | |||||||||||||||
Rs. | Rs. | US$ | Rs. | |||||||||||||
(In thousands) | ||||||||||||||||
Cash flow data |
||||||||||||||||
Net cash provided by (used in) operating activities |
220,089 | (389,232 | ) | (6,121 | ) | (1,286,537 | ) | |||||||||
Net cash used in investing activities |
(1,250,052 | ) | (1,181,120 | ) | (18,581 | ) | 744,774 | |||||||||
Net cash provided by financing activities |
453,901 | 948,505 | 14,916 | 495,509 |
Operating Activities
During the three months ended June 30, 2015, we utilized Rs. 389.2 million (US$6.12 million) of cash in operating activities. This cash outflow primarily resulted from a net loss during the three months ended June 30, 2015 of Rs. 241.4 million reduced by non-cash items including change in fair value of CCDs and Series E CCPS of Rs. 109.3 million, depreciation and amortization of Rs. 140.06 million and realized and unrealized foreign exchange loss, net of Rs. 107.1 million resulting from depreciation of the Rupee, in addition to changes in operating assets and liabilities including a Rs. 349.2 million decrease in other liabilities and account payables
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primarily in connection with obligations to suppliers and contractors, a Rs. 88 million increase in other assets primarily in connection with advances paid to suppliers and contractors and a Rs. 159.6 million increase in Accounts receivable and prepaid expenses and other current assets primarily resulting from options premium paid in connection with our hedging activities, prepaid income taxes and debt financing cost and interest receivable on term deposits.
During the three months ended June 30, 2014, we generated Rs. 220 million of cash in operating activities. This cash inflow primarily resulted from a net loss during the three months ended June 30, 2014 of Rs. 90.1 million reduced by non-cash items including Rs. 5.1 million increase in Deferred income taxes, change in fair value of CCDs and Series E CCPS of Rs. 79.3 million, depreciation and amortization of Rs. 63.6 million and realized and unrealized foreign exchange loss, net of Rs. 26.9 million resulting from depreciation of the Rupee, in addition to changes in operating assets and liabilities including a Rs. 112 million increase in other liabilities and account payables primarily in connection with obligations to supplier and contractors, a Rs. 44.8 million decrease in other assets primarily in connection with advances paid to suppliers and contractors and Rs. 28.1 million increase in Accounts receivable and prepaid expenses and other current assets primarily resulting from options premium paid in connection with our hedging activities, prepaid income taxes and debt financing cost and interest receivable on term deposits.
Investing Activities
During the three months ended June 30, 2015, we used Rs. 1,181.1 million (US$18.6 million) in our investing activities. This cash outflow was primarily due to Rs. 1,375 million incurred to purchase property, plant and equipment primarily related to the construction of our Rajasthan 3.1, 3.2 and 3.3 solar power projects and our Chhattisgarh l.l and 1.2 solar power projects offset by redemption of Rs. 192.0 million of investments in terms deposits with banks, and a net decrease in our available for sale investments of Rs. 4.4 million.
During the three months ended June 30, 2014, we utilized Rs. 1,250.5 in investing activities. This cash outflow was primarily due to Rs. 381 million incurred to purchase property, plant and equipment primarily related to the construction of our Punjab 2.1, 2.2 and 2.3 solar power projects, purchase of Rs. 743.8 million of investments in terms deposits with banks, and a net increase in our available for sale investments of Rs. 120.5 million.
Financing Activities
During the three months ended June 30, 2015, we generated Rs. 948.5 million (US$14.9 million) from financing activities. This cash inflow was primarily due to new loan proceeds of Rs. 2,015.2 million consisting of Rs. 380.0 million and Rs. 1,552.0 million in the form of term loans from banks for our Rajasthan 3 and Chhattisgarh 1 solar power plants. These inflows were offset in part by Rs. 1,066.7 million in repayment of loans.
During the three months ended June 30, 2014, we generated Rs. 453.0 million from financing activities. This cash inflow was primarily due to Rs. 180.2 million in proceeds from the issuance of compulsorily convertible debentures and new loan proceeds of Rs. 350.0 million. These inflows were offset in part by Rs. 77.3 million in repayment of loans.
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Year Ended March 31, 2015 Compared to Year Ended March 31, 2014
The following table reflects the changes in cash flows for the comparative periods:
Fiscal Year Ended March 31, | ||||||||||||||||
2014 | 2015 | Change | ||||||||||||||
Rs. | Rs. | US$ | Rs. | |||||||||||||
(in thousands) | ||||||||||||||||
Cash flow data |
||||||||||||||||
Net cash provided by operating activities |
(23,401 | ) | (176,863 | ) | (2,781 | ) | 1,534,629 | |||||||||
Net cash used in investing activities |
(14,426 | ) | (9,050,993 | ) | (142,334 | ) | (9,036,567 | ) | ||||||||
Net cash provided by financing activities |
1,059,305 | 9,672,042 | 152,100 | 8,612,737 |
Net Cash Used In Operating Activities
Operating Activities
During the fiscal year ended March 31, 2015, we utilized Rs. 176.8 million (US$2.8 million) of cash in our operating activities. This cash outflow primarily resulted from a net loss during the year ended March 31, 2015 of Rs. 1,088.3 million, reduced by non-cash items including change in fair value of CCDs and Series E CCPS of Rs. 286.3 million, depreciation and amortization of Rs. 322.4 million and realized and unrealized foreign exchange loss, net of Rs. 299.6 million resulting from a depreciation of the Rupee, in addition to changes in operating assets and liabilities including a Rs. 333.8 million increase in other liabilities primarily in connection with obligations to suppliers and contractors, a Rs. 241.1 million increase in other assets primarily in connection with advances paid to suppliers and contractors and a Rs. 118.0 million increase in prepaid expenses and other current assets primarily resulting from options premiums paid in connection with our hedging activities, prepaid income taxes and debt financing cost and interest receivable on term deposits.
During the fiscal year ended March 31, 2014, we utilized Rs. 23.4 million of cash in our operating activities. This cash outflow primarily resulted from a net loss during the year ended March 31, 2014 of Rs. 775.4 million, reduced by non-cash items such as such as depreciation and amortization, deferred income taxes, amortization of debt financing costs and deferred rent totaling Rs. 248.5 million, change in fair value of compulsorily convertible debentures and Series E compulsorily convertible preferred shares of Rs. 190.3 million, share based compensation expenses of Rs. 4.4 million, and realized and unrealized foreign exchange loss of Rs. 580.6 million and an increase in deferred revenue of Rs. 86.3 million. This was offset in part by an increase in accounts receivable of Rs. 36.0 million, other assets of Rs. 177.9 million, a decline in other liabilities of Rs. 110.6 million and a decline in accounts payable of Rs. 29.1 million.
Investing Activities
During the fiscal year ended March 31, 2015, we used Rs. 9,051.0 million (US$142.3 million) of cash in our investing activities. This cash outflow was primarily due to Rs. 8,426.0 million incurred to purchase property, plant and equipment principally related to plant and machinery for the Punjab 2.1, 2.2 and 2.3, Uttar Pradesh 1 and Karnataka 1 solar power projects offset in part by Rs. 927.9 million of proceeds from sale of available for sale investments.
During the fiscal year ended March 31, 2014, we used Rs. 14.4 million of cash in our investing activities. This cash outflow was primarily due to Rs. 372 million incurred to purchase property, plant and equipment principally related to plant and machinery for the Gujarat rooftop solar power project and the DLF rooftop solar power project offset in part by Rs. 350.3 million of proceeds from maturity of term deposits with banks.
Financing Activities
During the fiscal year ended March 31, 2015, we generated Rs. 9,672 million (US$152.1 million) of cash from our financing activities. This cash inflow was primarily due to new loans with proceeds of
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Rs. 8,340.4 million in the form of term loans from banks for our Punjab 2, Uttar Pradesh 1 and Karnataka 1 solar power projects, proceeds of Rs. 1,549.0 million through the issue of 138,133 shares of Series F compulsorily convertible preferred shares and Rs. 238.6 million from the issuance of compulsorily convertible debentures. These inflows were offset in part by Rs. 452.9 million in repayment of loans during the year.
During the fiscal year ended March 31, 2014, we generated Rs. 1,059.3 million of cash from our financing activities. This cash inflow was primarily due to loan proceeds of Rs. 977.3 million in the form of term loans from banks for our Punjab 2 solar power project, our Gujarat rooftop solar power project and our DLF rooftop solar power project and proceeds of Rs. 491.4 million through the issue of 140,000 shares of Series E compulsorily convertible preference shares. These inflows were offset in part by Rs. 409.4 million in repayment of loans during the year.
Contractual Obligations and Commercial Commitments
We have contractual obligations and other commercial commitments that represent prospective cash requirements. The following table summarizes our outstanding contractual obligations and commercial commitments as of June 30, 2015.
Payment due by Period | ||||||||||||||||||||
Under 1
year |
1-3
Years |
3-5
Years |
Over 5
years |
Total | ||||||||||||||||
(Rs. in thousands) | ||||||||||||||||||||
Contractual cash obligations(1) |
||||||||||||||||||||
Long-term debt (principal)(2) |
1,441,354 | 2,097,654 | 2,256,216 | 10,546,499 | 16,341,723 | |||||||||||||||
Long-term debt (interest)(3) |
1,546,437 | 2,520,074 | 2,152,078 | 4,818,147 | 11,036,736 | |||||||||||||||
Operating lease obligations |
16,061 | 44,068 | 44,091 | 1,073,552 | 1,177,772 | |||||||||||||||
Purchase obligations(4) |
373,796 | | | | 373,796 | |||||||||||||||
Asset retirement obligations |
| | | 87,945 | 87,945 | |||||||||||||||
Total contractual obligations (Rs.) |
3,377,648 | 4,661,796 | 4,452,385 | 16,526,143 | 29,017,972 | |||||||||||||||
Total contractual obligations (US$) |
53,116 | 73,310 | 70,016 | 259,886 | 456,329 |
Notes:
(1) | Excludes CCDs and Series E compulsorily convertible preferred shares as they are convertible into equity shares and not repayable. |
(2) | The long-term debt includes project level secured term loans, other secured bank loans. The long-term debt (principal) obligations for foreign currency denominated project level borrowings have been converted to Indian rupees using the closing exchange rate as of June 30, 2015 as per Reserve Bank of India. |
(3) | Interest on long-term debt is calculated based on the outstanding balance of the debt at the prevailing interest rate for the corresponding periods. |
(4) | Consists of asset purchase commitment for construction of solar power plants. |
Off-Balance Sheet Arrangements
The terms of our PPAs provide for the annual delivery of a minimum amount of electricity at fixed prices. Under the terms of the PPAs, we have issued irrevocable performance bank guarantees totaling Rs. 963.3 million (US$15.1 million) as of June 30, 2015. We have also given guarantees as a part of the bidding process for setting up of solar power plants amounting to Rs. 275.0 million (US$4.3 million) as of June 30, 2015. We are not party to any other off-balance sheet arrangements.
Recent Accounting Pronouncements
In August 2014, the FASB issued ASU No. 2014-15 Presentation of Financial Statements Going Concern which requires an entitys management to evaluate whether there are conditions or events, considered
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in the aggregate, that raise substantial doubt about the entitys ability to continue as a going concern within one year after the date that the financial statements are issued or available to be issued. The ASU defines and clarifies that substantial doubt exists when conditions and events indicate that it is probable that the entity will be unable to meet its obligations as they become due within one year after the date financial statements are issued or available to be issued. The ASU requires management to perform the assessment every interim and annual period. The ASU applies to all entities and is effective for the annual period ending after December 15, 2016. Early application is permitted. The ASU does not presently have an impact on the consolidated financial statements.
In January 2015, the FASB issued ASU No. 2015-01 Income Statement Extraordinary and Unusual Items which simplifies the income statement presentation requirements in Subtopic 225-20 by eliminating the concept of extraordinary items. Extraordinary items are events and transactions that are distinguished by their unusual nature and by the infrequency of their occurrence. The ASU applies to all entities and is effective for the annual period beginning on or after December 15, 2015. The ASU does not presently have an impact on the consolidated financial statements.
In February 2015, the FASB issued Accounting Standards Update No. 2015-03InterestImputation of Interest (Subtopic 835-30) requires the discount or premium and debt issuance costs to be reported in the balance sheet as a direct deduction from the face amount. Further amortization of such costs shall be reported as interest expense. The amendments in this Update are effective for financial statements issued for fiscal years beginning after December 15, 2015. The presentation change per the ASU shall be disclosed in financial statements as of March 31, 2017.
In June 2014 the FASB issued ASU No. 2014-10 Developments stage entities (Topic 915). The amendments in this Update remove the definition of a development stage entity from Topic 915, thereby removing the distinction between development stage entities and other reporting entities from U.S. GAAP. The disclosure requirements for an entity that has not commenced planned principal operations shall not be applicable for annual reporting periods beginning after December 15, 2014 and interim periods for public business entities. The ASU does not have any impact over the consolidated financial statements.
In February 2015, the FASB issued ASU No. 2015-02 Consolidation Amendments to the Consolidation Analysis which modifies the existing consolidation guidance related to (i) limited partnerships and similar legal entities, (ii) the evaluation of variable interests for fees paid to decision makers or service providers, (iii) the effect of fee arrangements and related parties on the primary beneficiary determination, and (iv) certain investment funds The ASU is effective for fiscal years and interim periods within those years beginning after December 15, 2015. The ASU does not presently have an impact on the consolidated financial statements.
In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606) . ASU 2014-09 supersedes the revenue recognition requirements in ASC Topic 605, Revenue Recognition , and most industry-specific guidance. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve that core principle, an entity is required to follow five steps which comprises of (a) identifying the contract(s) with a customer; (b) identifying the performance obligations in the contract; (c) determining the transaction price; (d) allocating the transaction price to the performance obligations in the contract and (e) recognizing revenue when (or as) the entity satisfies a performance obligation. In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606) , deferring the implementation of ASU 2014-09. The effective date for the guidance is deferred from annual reporting periods beginning after December 15, 2016, to annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period, under either retrospective or retrospective with cumulative effect adoption. Early application is permitted from annual reporting periods beginning after December 15, 2016. The Company is currently assessing the potential effects of these changes to its consolidated financial statements.
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In June 2014, the FASB issued ASU No. 2014-12 Stock Compensation Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved After the Requisite Service Period which requires that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. The ASU clarifies the proper method of accounting for share-based payments when the terms of an award provide that a performance target could be achieved after the requisite service period. The guidance is effective for annual and interim periods for fiscal years beginning on or after December 15, 2015. Entities can apply the amendment either (a) prospectively to all awards granted or modified after the effective date or (b) retrospectively to all awards with performance targets that are outstanding as of the beginning of the earliest annual period presented in the financial statements and to all new or modified awards thereafter. The Company is currently assessing the potential effects of these changes to its consolidated financial statements.
In November 2015, the FASB issued ASU No. 2015-17 Balance Sheet Classification of Deferred Taxes which simplifies the balance sheet presentation of deferred taxes under Topic ASC 740. Deferred tax liabilities and assets are classified as current or noncurrent based on the classification of the related asset or liability for financial reporting and deferred taxes that are not related to an asset or liability for financial reporting are classified according to the expected reversal date of the temporary difference. To simplify the presentation of deferred income taxes, the ASU require that deferred income tax liabilities and assets be classified as noncurrent in a statement of financial position, effective for all entities from the annual period beginning on or after December 15, 2016 and early adoption is permitted for interim and annual reporting periods. The Company is currently assessing the potential effects of these changes to its consolidated financial statements.
Seasonality
The energy output performance of our plants is dependent in part on the amount of sunlight. As a result, our revenue in the past has been impacted by shorter daylight hours in winters. Typically, our revenue is the lowest in the third quarter and highest in the first quarter of any given fiscal year, which for us ends on March 31.
Inflation
In general, our existing PPAs do not contain inflation-based price increase provisions. Our operations are primarily conducted in India, where in the past high inflation has been experienced. To the extent that our business experiences high rates of inflation, thereby increasing our operating costs, we may not be able to generate sufficient revenues to offset the effects of inflation, which could materially and adversely affect our business, financial condition, results of operations and cash flows.
Quantitative and Qualitative Disclosures about Market Risk
We are exposed to several market risks in our normal business activities. Market risk is the potential loss that may result from market changes associated with our business or with an existing or forecasted financial or commodity transaction. The types of market risks we are exposed to are interest rate risk and foreign currency risk.
Interest Rate Risk
As of June 30, 2015 our long-term debt was at both fixed and variable interest rates. Exposure to interest rate fluctuations will depend on the amount of debt that bears interest at variable rates, the time at which the interest rate is adjusted and the quantum of fluctuation in the interest rate.
Our results of operations are subject to interest rate fluctuations on our variable rate borrowings. The sensitivity analyses below have been determined based on the exposure to interest rates for non-derivative financial instruments at the balance sheet date. For floating rate liabilities, the analysis is prepared assuming the amount of liability outstanding at the balance sheet date was outstanding for the whole period.
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A hypothetical increase or decrease in our variable interest rates by 1% would not have had a significant effect on our loss for the three months ended June 30, 2015.
We intend to use hedging strategies to mitigate our exposure to interest rate fluctuations, we may not hedge all of our interest rate risk and, to the extent we enter into interest rate hedges, our hedges may not necessarily have the same duration as the associated indebtedness. Our exposure to interest rate fluctuations will depend on the amount of indebtedness that bears interest at variable rates, the time at which the interest rate is adjusted, the amount of the adjustment, our ability to prepay or refinance variable rate indebtedness when fixed rate debt matures and needs to be refinanced and hedging strategies we may use to reduce the impact of any increases in rates.
Foreign Currency Risk
For the reporting periods, our functional currency is Indian rupees. We have long term debts denominated in U.S. dollars and Indian rupees. Fluctuations in the exchange rates between U.S. dollars and Indian rupees may result in higher fair value adjustments on our outstanding foreign currency loans, thereby adversely impacting our earnings.
We also have two international subsidiaries and major purchases of material are transacted in U.S. dollars. Consequently, we are exposed to foreign exchange risk on purchases from overseas suppliers. The exchange rate between Indian rupees and U.S. dollars has fluctuated significantly in recent years and may continue to fluctuate in the future. Depreciation of the Indian rupee against the U.S. dollar can adversely affect our results of operations.
We have partially hedged against debts denominated in U.S. dollars in order to minimize an adverse impact of a large currency movement. These hedges are for a period of up to three years. We have taken foreign currency loans for our Punjab 1, Gujarat 1, Rajasthan 1 and Rajasthan 2 projects.
As of June 30, 2015, we have outstanding option contracts with notional value of US$21.1 million for hedging the foreign currency risk on borrowings denominated in U.S. dollars. The remaining term of these contracts as of June 30, 2015 ranges from one month to 36 months. These option contracts have a fair value on each reporting date. The changes in the fair value of these option contracts are recognized in the consolidated statements of operations and are included in foreign exchange loss.
We continue to monitor our risks and will consider hedging significant foreign currency exposures on an ongoing basis.
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Overview of the Indian Power Sector
Growing Indian Economy to Drive Demand for Power
The Reserve Bank of India estimates the Gross Domestic Product, or GDP, of India to be US$1.7 trillion in fiscal year 2015, which places the country as one of the top ten largest economies by GDP in the world. In addition, Indias economy is among the fastest growing economies, with real GDP growth averaging 7.6% over the decade ended fiscal year 2014 according to the Reserve Bank of India. The growth rate, as revised to reflect the Indian Ministry of Statistics and Program Implementations recent amendment to its GDP calculation methodology, was 6.9% for fiscal year 2014, was 7.3% in fiscal year 2015 and is expected to be 7.4% in fiscal year 2016 according to the Reserve Bank of India.
Indian economic planning was governed by the Planning Commission of India, which published its Five-Year Plans to monitor and encourage growth since 1951. As economic growth is dependent in part on infrastructure development, economic policy formation in India is focused on infrastructure investment. The current, or Twelfth Five-Year Plan calls for a total investment of US$0.9 trillion in infrastructure spending that represents a 130% increase relative to the Eleventh Five-Year Plan. The planning commission of India has been replaced by the National Institution for Transforming India, or NITI Aayog, by the new government.
Historically, there has been a correlation between real GDP growth and energy demand, and we believe that the Indian economy will continue to experience a rise in energy demand. Indias overall GDP and energy demand have increased significantly over the past several years primarily due to population growth, rapid industrialization and rising standards of living. Energy supply, however, has been unable to keep pace with this growing demand, which has resulted in a persistent demand/supply mismatch and an average energy deficit of 8.3% in the last decade.
Strong GDP Growth Driving Energy Demand |
Sources: Indian Ministry of Power 2013 2014 Annual Report; Handbook of Statistics on the Indian Economy by Reserve Bank of India; Load Generation Balance Report, 2015 16 by Central Electricity Authority
* | Data for these years has been revised to reflect the Indian Ministry Of Statistics And Program Implementations recent amendment to its GDP calculation methodology. |
Conventional Energy Growth to Face Challenges
Indias new capacity additions have historically been lower than the targeted capacity in its Five-Year Plans. For example, in the Eleventh Five-Year Plan, actual capacity additions represented only 70% of the targeted
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capacity of 78.7GW. This shortfall in capacity additions was due to issues in timely commissioning of conventional power plants, which included delays in land acquisition, obtaining regulatory permits and difficulties in securing reliable and cost efficient fuel supplies. Under the prior Five Year Plans before the Eleventh Five-Year Plan, solar capacity targets were not included. As such, there is a short track record of meeting solar capacity targets. As for reaching target capacity for other renewable energy sources, in certain Five Year Plans those targets were met while others have fallen short.
The Indian power sector has been traditionally dependent on thermal power with 70% of the installed power capacity generated from conventional sources of energy (coal, oil and natural gas) as of fiscal year 2015. Projections under the Twelfth Five-Year Plan indicate a high dependence on imported energy sources and a shift in focus to domestic renewable energy sources. Per the Twelfth Five-Year Plan projections, total domestic energy production will reach 669.5 million tons of oil equivalent, or mtoe, by fiscal year 2017 and 844.2 mtoe by fiscal year 2022. This will meet around 71% and 69% of expected energy consumption, respectively, with the balance met from imports of crude oil, gas and coal, which is projected to be about 267.8 mtoe by fiscal year 2017 and further increase to 375.6 mtoe by fiscal year 2022. Import dependence on coal, the dominant fuel source in India, is also projected to increase from 18.8% in fiscal year 2012 to 22.4% by 2017. This strong dependence on imports and issues in procuring imports at economically viable levels has led to slowed growth in generation from coal, lignite and gas-fired power plants and a decline in the overall plant load factors to 65% during fiscal year 2015 from 66% during fiscal year 2014.
Nuclear energy in the country has been traditionally developed by the federal government. Until recently, efforts to fast track development after the IndiaUnited States Civil Nuclear Agreement through import of nuclear reactors have not been successful primarily due to no fault liability requirements levied on operators. During President Obamas trip to India in January 2015, the Indian government indicated that it would work with state-backed insurers to create an insurance pool for accident victims while indemnifying suppliers against liability. However, clarity around the mechanism is yet to be crystallized. Indias indigenous nuclear program has also seen limited progress. Moreover, there is public opposition in the country to nuclear power expansion based on safety and environmental grounds. These factors coupled with construction periods of up to ten years are likely to result in limited expansion of nuclear power in the country.
India also has rich potential for hydro capacity. However, a large portion of such capacity has already been harnessed in most areas where electricity transportation infrastructure is not a constraint and where geological challenges are limited. Untapped areas represent significant challenges in engineering and electricity transportation infrastructure for large hydro plants.
Overview of the Indian Renewables Sector
Renewable energy sources such as solar and wind are expected to continue to become significant contributors to Indias overall capacity growth. In the past five years, renewable capacity growth has outpaced other sources of generation.
Source: MNRE, Central Electricity Authority, March 2015 Installed Capacity Report.
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The significant expansion in renewable installed capacity has been driven by a number of country-specific factors including a persistent energy deficit, limited access to fossil fuels, renewable generation pricing approaching grid parity and a progressive regulatory framework. We believe renewable energy not only supports the national agenda of a sustainable and inclusive growth, but is an integral solution to meeting Indias energy needs and achieving energy security in the future.
Further, according to the Indian Ministry of New and Renewable Energy, or MNRE, approximately 55% of the 167.8 million rural households in India have access to electricity, with the others largely dependent on traditional fuel like firewood, crop residue and dung cake. Some of these households are located in areas that represent economic and technical challenges to building distribution lines. Hence, decentralized distributable renewable energy based initiatives, such as micro-grids, are likely to be contributors to capacity additions going forward.
Solar and Wind to be Key Renewable Fuels With Solar Growing Relatively Faster |
Source: MNRE, Central Electricity Authority March 2015 Installed Capacity Report.
Renewable capacity installations in India as of March 2015 represent only 13% of all installed capacity in the country, a small percentage of the actual potential in India. According to estimates by the Indian Ministry of Power, 139GW of incremental renewable capacity addition is expected by fiscal year 2022, representing a compound annual growth rate, or CAGR, from 2015 to 2022 of approximately 26%. Solar power capacity is expected to reach 100GW by 2022, which represents 69% of total renewable capacity additions implying an approximately 60% CAGR, making solar one of the fastest growing sources of energy in India. MNRE estimates 749GW of domestic solar potential, which is approximately 84% of 897GW of renewable potential. As a result, technologies for both conversion of solar radiation into heat and electricity, namely, solar thermal and solar photovoltaics, can effectively be harnessed providing huge scalability for solar in India. India has in the past opportunistically exploited wind and hydro potential in the country in most areas where evacuation was not a constraint. Wind power in the country is more mature but has faced issues such as limited availability of good sites and difficulties with securing reliable evacuation. Biomass is facing supply level constraints, as long term availability of firm feedstock at pre-determined pricing is unavailable.
Overview of the Indian Solar Power Generation Sector
Considering the current developments and targeted achievements, we believe that solar installed capacity will grow faster than other renewable energy sources. This robust growth is expected to be driven by a relatively small installed base of solar capacity, favorable geographic conditions and a supportive policy framework.
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Solar capacity development was catalyzed in 2010 by the announcement of the Jawaharlal Nehru National Solar Mission, or NSM, and consistent efforts by the government since then. The NSM is being accomplished by the Indian government in several phases. In Phase I, the India solar sector achieved 1,684MW of solar capacity addition between 2010 and 2013, significantly higher than the targeted capacity addition of 1,100MW. Indian solar installations reached 3.7GW at the end of fiscal year 2015 with capacity spanning more than 15 states and union territories in the country given favorable irradiation in much of the country. The growth in the past few years has been due to a confluence of changing market dynamics, falling equipment costs, increased reliability as well as a strong regulatory and policy support to provide impetus to the growth of solar capacity installations.
The Indian government recently increased its target for solar capacity to 100GW by 2022. The central government, in collaboration with the state governments, is planning to facilitate the development of 25 solar power parks of 500MW to 1,000MW each to boost the solar capacity in high solar irradiation states. The state governments will identify land for the proposed solar parks, provide permits and related infrastructure such as grid interconnect systems while a government sponsored entity will commit to buy power produced from these parks.
To foster the development of 100GW of solar power in the country, India is engaging with international investors. Multilateral agencies such as Asian Development Bank, KfW and International Finance Corporation are already active in the country and have made investments in Indian solar companies. Most recently, it has been reported that several U.S. agencies committed approximately $4 billion to Indian solar companies $2 billion from the U.S. Trade and Development Agency, $1 billion from the U.S. Overseas Private Investment Corporation and $1 billion from the Export-Import Bank of the United States.
Renewable Power Generation Costs Have Begun to Approach Grid Parity
The increasing dependence on imported fossil fuels, which dominate Indias power generation, and associated volatility in prices have resulted in increases in conventional generation costs. State utilities, which are the largest offtakers of power in the country, have seen power purchase costs rise primarily due to the high cost of generation from use of imported coal and project delays and associated cost escalations due to delays in securing land and permits in a timely manner. While India generates less than 5% of its electricity using oil according to the World Bank, Indian industrial and commercial consumers, who cross-subsidize agricultural and retail consumers and typically run diesel-powered generators when grid power is unavailable, have also experienced significant increases in power costs.
While the cost of conventional power generation has trended upwards, the cost of solar energy in the country has trended down as independent solar power producers reduced generation costs primarily driven by a mix of persistent decline in global solar panel prices per watt and adoption of innovative business practices. The effect of Indian rupees depreciating was offset by prices of solar panel prices per watt falling faster and an increase in panel and operational efficiencies. More importantly, solar panel prices per watt are expected to fall further, which in turn is expected to further drive solar tariffs lower.
The Indian government has also included renewable energy projects in the priority sector lending norms for commercial banks operating in India, and the Indian government has approved the issuance of tax-free infrastructure bonds for funding renewable energy projects during fiscal year 2016.
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An analysis of current tariffs in India indicates that solar power is now competitive with wind, new thermal capacity fueled by imported coal and grid power tariffs for commercial users.
Solar Power Tariffs are Competitive vis-à-vis the Other Sources |
(1) | This does not include any subsidies. |
(2) | Benchmark tariff for solar for the year fiscal year 2015 as provided by Central Electricity Regulatory Commission. |
(3) | Based on the highest clearing price submitted to the Uttar Pradesh Power Corporation in December 2012, which we believe to be the last known power plant auction for domestic coal. The tariff linked to these bids were computed accounting for coal that was to be sourced largely from domestic sources but also with a minor component being sourced from imported coal. |
(4) | Based on the tariff for imported Carmichael Coal assuming a 3% rate of inflation, which is expected to come online in 2018. Source: Institute for Energy Economics and Financial Analysis |
(5) | Wind power tariff announced by Rajasthan State for fiscal year 2015 plus Rs. 0.5/kWh of generation based incentive assumed to be the representative tariff. |
(6) | Diesel and gas prices based on the average of the range as per Lazard Levelized Cost of Energy Analysis, September 2014. |
Further, an analysis of tariffs for commercial users in India indicates that solar tariffs in some states are already at grid parity for commercial users.
Solar Power Tariffs Are Competitive Vis-À-Vis The Commercial Tariffs Across India |
Note: | Commercial tariff for 50 kW (7500 units / month). |
Source: Central Electricity Authority.
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As it approaches grid parity, we believe solar power is likely to be seen more as a viable energy source, not just as an alternative to other renewable sources, and also rival significant proportions of conventional grid power.
Indias Tremendous Solar Potential
India ranks among the highest irradiation receiving countries in the world due to its location between the Tropic of Cancer and the Equator. On average, India receives 250 to more than 300 days of sunshine per year in much of the country with most areas receiving 4 to 7 kilowatt hour per square meter per day. This allows for solar capacity to be built across the country, unlike wind capacity that tends to be concentrated along the coast.
Indias Average Solar Irradiation Amongst the Highest in the World |
Source: | Bridge to India Report, June 2014. |
Solar Policy Framework
India implemented renewable purchase obligations, or RPOs, in 2010 towards its goal of meeting an ambitious target of supplying 15% of the energy demand in the national grid by renewable sources by 2020. Since then RPOs have been a key driving force of renewable capacity in the country. The obligated entities are public power distribution companies, the captive power consumers and industrial consumers who are supplied dedicated power through high voltage distribution systems. Such obligated entities can fulfill their requirement by buying power from a renewable source or they can buy renewable energy certificates in the market. RPOs are of two types in India solar RPOs, which can be met only through solar power, and non-solar RPOs, which can be met through wind, biomass and other types of recognized renewable sources.
The NSM includes RPOs as being a key driver for promoting solar power. Further, the National Tariff Policy was amended in 2011 to prescribe that solar RPO be increased from a minimum of 0.25% in 2012 to 3% in 2022. In May 2015, the Supreme Court of India upheld a regulation that made it compulsory for captive power plants and open access consumers to purchase electricity to fulfill their RPOs. This landmark judgment is expected to boost the demand for renewable energy by captive players and also improve the marketability of renewable energy certificates in India. Auctions held by the central government under the NSM focus on lowering solar power costs by either bundling solar power with coal power or by subsidizing project costs. Some other incentives offered to solar developers by the central government include:
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income tax holidays: 10-year tax holidays for projects during which only a minimum alternate tax of approximately 21.34% is charged instead of the normal corporate tax rate of 34.61%; |
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accelerated depreciation provision that allows for developers to depreciate up to 100% of the project cost in the first year of installation; |
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environmental compliance exemptions; and |
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entry, custom and excise duty exemptions. |
State governments have independent solar policies that foster development of solar capacity by typically offering relatively higher offtake tariffs than conventional power. There is significant divergence in the tariffs
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and incentives provided to developers by states as these are largely driven by location of projects, land prices, scale of existing projects and competitive intensity in the respective states. After focusing largely on utility scale solar projects, state policies have recently released state-specific net-metering policies that are expected to encourage development of rooftop projects.
Renewable Auction Process
The auction process for solar projects is typically through published guidelines by the relevant central and state governments. For instance, bids under the NSM are evaluated in a two-stage process that ensures bids meet the financial and technical criteria, with remaining qualified bidders judged based on the tariff requested. Bids are opened and evaluated in the presence of all auction participants.
Financial Criteria
In the first round of bidding, each bidder must submit their historical audited financial statements and calculate net worth as defined by the auction guidelines. Each auction will require a minimum net worth per megawatt of bid capacity and bidders must meet or exceed this hurdle. For example, auctions under Phase I Batch II of the NSM required approximately Rs. 20 million per megawatt bid. Further, participants are required to post earnest money in the form of bank guarantees at the time of bidding and performance bank guarantees at the time of signing the offtake agreement. For example, auctions under Phase I Batch II of the NSM required Rs. 1 million per megawatt as earnest money deposit and Rs. 2 million per megawatt at the time of signing the offtake agreement. Auction participants that successfully meet the required financial criteria progress to the second round of the auction process.
The auction decision process is a reverse bidding process, in which participating developers bid for solar projects by quoting their required tariffs per kilowatt hour, or in other cases, their required viability gap funding, or VGF, amount provided by the Solar Energy Corporation of India, which refers to the subsidy on capital expenditure per megawatt. After the financial bids are opened, the quoted tariffs or VGF amounts from all the qualified bidders are sorted in ascending order, and projects are allocated to the bidders starting from the lowest bidder, until the total auctioned capacity is reached. Bids are accepted at their quoted tariff or VGF levels rather than all winning bidders receiving the lowest tariff or VGF. Auction participants that successfully meet the required criteria progress to the second round of the technical process.
Technical Criteria
Bids are generally evaluated based on the selected module technology as well as each bidders development and execution history. Some of the factors that may be considered include:
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preliminary project analysis and feasibility study on site location and inter-connection details; |
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only commercially established and operating technologies will be considered; |
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bidder ability to execute on development plans (and corresponding capital expenditures) that successfully achieved commissioning; and |
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additional criteria sometimes include local content requirements, such as requirements to use Indian photovoltaic module manufacturers, and the bidders total operational megawatts. |
NSM Targets and Achievements
The NSM had previously set a target of putting into operation 20GW of grid-connected solar power by 2022 through long-term policy, large-scale operation goals, aggressive research and development and development of a comprehensive domestic solar ecosystem. The government increased this goal from 20GW to 100GW in December
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2014 which was approved by the Cabinet in June 2015. The 100GW target capacity will be comprised of 40GW rooftop and 60GW of large and medium scale grid connected solar power projects, as described in the tables below.
Targets under NSM | ||||||||||
Category I |
Proposed
Capacity (MW) |
Category II |
Proposed
Capacity (MW) |
|||||||
Rooftop Solar |
40,000 | Scheme for Decentralized Generation of Solar Energy Projects by Unemployed Youths & Farmers | 10,000 | |||||||
PSUs | 10,000 | |||||||||
Large Private Sector/IPPs | 5,000 | |||||||||
SECI | 5,000 | |||||||||
Under State Policies | 20,000 | |||||||||
Ongoing programmes incl. past achievements | 10,000 | |||||||||
Total |
40,000 | 60,000 |
Source: India Ministry of New and Renewable Energy
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Results of NSM Auctions | ||||||||||
Phase I Batch I | Phase I Batch II | Phase II Batch I | Phase II Batch II | Phase II Batch III | ||||||
Date |
August 2010 | August 2011 | December 2013 |
Expected to be
allocated over multiple tranches |
Expected to be
allocated over multiple tranches |
|||||
Offtaker |
NTPC Vidyut
Vyapar Nigam Limited |
NTPC Vidyut
Vyapar Nigam Limited |
Solar Energy
Corporation of India Limited |
NTPC Vidyut
Vyapar Nigam Limited |
Solar Energy
Corporation of India Limited |
|||||
Capacity Allotted (MW) |
150(1) | 350(1) | 750 | 15,000 | 2,000 | |||||
Capacity Commissioned (MW) |
140 | 310 | NA | NA | NA | |||||
Allocation Mechanism |
Reverse Tariff
Bidding |
Reverse Tariff
Bidding |
VGF |
Reverse Tariff
Bidding |
VGF | |||||
Reference Tariff ( Rs. / kWh ) |
17.9kWh | 15.4kWh | 5.45kWh | NA | 5.79kWh | |||||
Tariff Bid / VGF Requested (applicable for Ph ase II Batch I only) |
Rs. 12.16kWh | Rs. 8.77kWh | Rs. 15mn/MW | NA | NA | |||||
Number of Winning Bidders |
30 | 26 | 47 | NA | NA |
Note: | (1) Allotted capacity for which PPAs have been signed. |
VGF was set up by the Indian government to incentivize the development of a large number of solar power projects in India, whereby the ongoing monthly fixed tariff to be paid by the distribution companies purchasing the power would be minimized. Under the VGF scheme in Phase II Batch I, the tariff paid to solar power project developers is fixed at Rs. 5.45 per kilowatt hour during the 25-year PPA period. In return for the fixed tariff, the developer is provided VGF based on its bid for the VGF amount, with the upper limit being the lower of 30% of the project cost or Rs. 25 million per megawatt. The developer is entitled to 50% of the VGF upon the commissioning of the project and the balance is paid in five equal installments at the end of each year after the initial commissioning date.
So far, 1,250MW of the targeted solar power have been auctioned in three rounds of auctions. These auctions have been highly successful and have resulted in a gradual decline in tariffs. Through successive batches, the government has set the standards and has encouraged development of solar power generation in the country. In addition, the central government has recently released draft guidelines for the next few batches of Phase II bidding with NTPC Vidyut Vyapar Nigam Limited, or NVVN, and Solar Energy Corporation of India, both of which are expected to be the offtakers. These guidelines envision auctioning 3GW of capacity under tranche I of Phase II Batch II across the country by NVVN through March 2017. Through September 2015, the government has released tenders for tranche I of Batch II Phase II for an aggregate of 2,350MW through NVVN. The next two batches of 5GW and 7GW through NVVN are expected to be released between fiscal year 2016 to 2018 and fiscal year 2017 to 2019, respectively. Solar Energy Corporation of India, which is developing grid connected solar power capacity through VGF in the country, is expected to add further a total solar PV capacity of 2,000MW under the Phase II Batch III of the NSM in various tranches. At the end of September 2015 Solar Energy Corporation of India announced three tranches of bidding 500MW of solar capacity in Maharashtra, 250MW of solar capacity in Gujarat and 440MW of solar capacity in Uttar Pradesh.
Apart from the auctions promoted by the central government, the state governments are also independently inviting bids for solar power tenders. In 2015, tenders have been released for more than 3.5GW of solar capacity by state governments. In April 2015, Telangana released a tender for 2GW of solar capacity and in February 2015, the Punjab government invited bids for 250MW of solar capacity. Additionally, by November 2015, Madhya Pradesh completed bidding for 300MW of solar capacity, Uttar Pradesh bids for 215MW of solar capacity, Haryana for 150MW of solar capacity, Punjab for 500MW of solar capacity, and Uttarakhand for 170MW of solar capacity.
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Overview
Our mission is to be the lowest-cost power producer in the world. We sell solar power in India on long term fixed price contracts to our customers, at prices which in many cases are at or below prevailing alternatives for these customers. We are also developing micro-grid applications for the highly fragmented and underserved electricity market in India. Since inception, we have achieved a 66% reduction in total solar project cost, which includes a significant decrease in balance of systems costs due in part to our value engineering, design and procurement efforts.
Indian solar capacity installed reached 3.7GW at the end of March 2015 with a target to achieve 100GW of installed solar capacity by 2022. Solar power is a cleaner, faster-to-build and cost-effective alternative energy solution to coal and diesel based power, the economic and climate costs of which continue to increase every year.
We developed Indias first utility scale solar project in 2009. As of September 30, 2015, we operated 17 utility scale projects and several commercial rooftop projects with a combined rated capacity of 242MW which represents a compound annual growth rate, or CAGR, of 135% from May 2012. As of such date we were also constructing eleven projects with a combined rated capacity of 244MW and had an additional 179MW committed. Megawatts committed represents the aggregate megawatt rated capacity of solar power plants pursuant to customer power purchase agreements, or PPAs, signed or allotted but not yet commissioned and operational as of the reporting date. We have been awarded 151MW at auction, for which PPAs are pending. We are targeting having 520MW operating by December 31, 2016. Our longer term goals are to achieve 1GW committed or operating by December 31, 2017 and 5GW by December 31, 2020. Our ability to achieve these goals will depend on, among other things, our ability to acquire the required land for the new capacity (on lease or direct purchase), raising adequate project financing and working capital, the growth of the Indian power market in line with current government targets, our ability to maintain our market share of Indias installed capacity as competition increases, the need to further strengthen our operations team to execute the increased capacity, and the need to further strengthen our systems and processes to manage the ensuing growth opportunities, as well as the other risks and challenges discussed under the caption Risk Factors.
Utility scale solar projects are typically awarded through government auctions. We believe we have secured more megawatts of capacity in these auctions in the last six years than any other company in India. We believe the strong demand for our solar power is a result of the following:
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Low levelized cost of energy . We have lowered our levelized cost of energy, which is a measure of comparing the cost of energy generated by different power generation technologies, through value engineering, operational performance monitoring and efficient financial strategy. This allows us to deliver cost-effective energy for our customers. From 2009 to 2015, the price at which we sell power to utilities fell by 69%. On a rooftop, we believe we are consistently below the cost of our customers alternative sources of power. Our in-house engineering, procurement and construction, or EPC, expertise lowers system costs through proprietary designs and a global equipment procurement process. Our purely solar focus coupled with our pan-India presence allows us to optimize our system designs for the Indian market. Our advanced in-house operations and maintenance, or O&M, capability allows us to increase power yields and monitor project performance near real-time. Coupled with our efficient financial strategy, we believe that we are able to offer low-cost solar power solutions at high efficiency yields. As we continue to grow, we expect to achieve further efficiencies of scale, allowing us to compete with conventional power sources on a levelized cost of energy basis. |
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Strong value proposition for our customers . We manage the entire development and operation process, providing customers with long term fixed price PPAs, as a result of solar not being subject to variable commodity prices. Our in-house focus on high engineering standards and asset quality ensures high levels of availability and service to our customers. We believe our pan-India presence and existing relationships with leading solar power purchasers help us win repeat business on long-term contracts. |
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Our integrated profile supports growth . As opposed to relying on third-party providers, our integrated profile affords us greater control over project development, construction and operation, which provides us with greater insight and certainty on our construction costs and timeline. Coupled with our low cost profile, our greater insight supports competitive new project bids at prevailing market prices, not at our direct costs. This facilitates a steady organic growth pipeline that allows us to earn enhanced project returns. |
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Strong community partnerships . We hire from local communities and generally lease land with few alternative uses, providing local communities with a stream of discretionary cash flow without displacing alternative businesses. As a result we are able to build long-term community relationships, which allows us to improve our time of completion, further reducing project development risk. |
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We take a leading role in policy initiatives . Our strong policy advocacy practice supports a sustainable and open market, contributing to success for all stakeholders including manufacturers, investors and customers. For example, we filed suggestions with government offtakers to set new auction guidelines and tariff orders. In addition, under the NSM, we have advocated the use of novel financing instruments, including bankable PPAs and compulsorily convertible debentures. Furthermore, we provided input to the government to help it design an auction process supporting multiple winners at differentiated price points and implementing a transparent bidding process open to participants regardless of their jurisdiction of incorporation, ownership of land or choice of technology. For example, we suggested that the government include compulsorily convertible debentures in the calculation of a bidders net worth for the purposes of tender qualification, which was ultimately adopted by the government. |
We operate in a large, rapidly growing market that suffered from a five-year average peak power deficit of approximately 8% from March 2010 through March 2015, according to the Ministry of Power. Coal-fired generation, Indias main power source, is increasingly reliant on expensive imports as the countrys demand outstrips domestic coal supply, leading to upward pressure on power prices. In contrast, Indian solar power offtake costs are near grid parity due to Indias leading solar irradiation and declining production costs. In 2010, the Indian government created the Jawaharlal Nehru National Solar Mission, or the NSM, to promote solar development and targeted 10GW of solar capacity by 2017. The recently elected Prime Minister Modi-led government is also committed to spurring growth in the solar market and increased the government-sponsored solar procurement target to 100GW by 2022. Our goal is to grow in line with the broader Indian solar market by continuing to leverage our strengths.
We generate revenue from a mix of leading government utilities such as NTPC Vidyut Vyapar Nigam Limited, a subsidiary of NTPC Limited, and the Solar Energy Corporation of India as well as commercial entities such as Torrent Power Limited and DLF Limited. All our PPA customers pay a rate based on energy produced by our solar power plants. Some customers pay upfront capital to keep long term power cost lower than the market price of power. Because we have our own EPC and O&M capabilities, we retain the profit margins associated with those services that other project developers may need to pay to third-party providers. Through value engineering, operational performance monitoring and efficient financial strategy, we are able to deliver cost-effective energy for our customers. We intend to expand our footprint into states within India and internationally into developing electricity markets.
We are able to capture additional returns vis-à-vis EPC contractors and operators due to our local Indian development expertise and global access to capital. Additionally our integrated approach allows us to capture the full benefits of the project value chain, as opposed to transferring part of the value to a sponsor or project developer. Unlike in many jurisdictions, the bulk of the development capital in India is spent after the project has been awarded at auction and offtake arrangements and economic terms are known. To date, we have raised over US$525 million in various forms of equity and debt financings with established financial institutions such as the International Finance Corporation, the private investment arm of the World Bank Group, the Export-Import Bank of the United States, DEG Deutsche Investitionsund Entwicklungsgesellschaft mbH, or DEG, Société de Promotion et de Participation pour la Coopération Économique, or PROPARCO, Overseas Private Investment Corporation, Reliance Capital Limited, India Infrastructure Finance Company Limited and the Central Bank of India. Approximately US$102 million of the amount raised remains available for deployment.
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The cumulative effect of the cost savings and production improvements achieved is to accelerate grid parity between our projects and new build alternatives. While renewable subsidies exist, our low cost profile has allowed us to bid in auctions with greater certainty and enjoy higher project returns. When renewable subsidies end, we expect that our low cost profile will support our continued growth.
Market Opportunity
Indias economic growth is intrinsically linked to the increasing consumption of energy and natural resources. Energy demand has outpaced capacity additions in recent years, which has resulted in persistent peak power deficits in the country. Solar is an attractive option to help address this energy gap driven by regional fundamentals and regulatory support by the Indian government.
The following trends have made solar a large, rapidly growing market opportunity:
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Peak power deficits and rising power prices . Despite adding 112GW of power in the past five years, India continues to be plagued by a persistent demand/supply mismatch with a five-year average energy deficit of approximately 7% and a five-year average peak deficit of approximately 8% according to the Ministry of Power. As the country has outstripped its domestic supply of conventional fuels, India has also suffered from upward pressure in power prices. |
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Strong regulatory support . In order to reduce dependence on energy imports and curtail the current trade deficit and resulting impact on the rupee, the Indian government has taken a number of steps to incentivize the use of renewable sources of energy. These include establishing state-level renewable power purchase obligations and providing viability gap funding, or VGF, to solar project developers to make solar tariffs competitive in the country. To provide further impetus to solar growth, the Indian government launched the NSM in 2010. |
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Solar positioned to win among alternatives . Solar generation is viable across most of India, unlike wind and hydro resources which are concentrated in specific regions. In addition, as solar plants can be built near the point of consumption, power produced generally does not incur expensive transmission charges or require infrastructure or transmission investments. Further, unlike nuclear and hydropower, solar power has fewer legal liabilities and environmental constraints. |
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Leading global solar resource . India ranks among the highest irradiation-receiving countries in the world with more than 300 days of sunshine per year in much of the country and the resource is widely available throughout the country. |
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Solar approaching parity . State utilities have seen power costs rise as domestic coal shortages have caused thermal generators to increasingly rely on more expensive imported fuels. An analysis of current tariffs in India indicates that solar power is now competitive with wind, new thermal capacity fueled by imported coal and grid power tariffs for commercial users. Further, diesel power, the most common replacement power source for commercial and off-grid users in the country, is far more expensive than solar power. Additionally, solar panel prices are expected to fall further, which in turn is expected to drive further reductions in solar tariffs. |
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Transparent solar auction process . Indian solar auctions are conducted in a transparent manner that ensures bids meet minimum technical and financial criteria. Bidders must meet requirements on project development and execution history in India or the regional market, including bidder experience in the development of similar utility scale power projects. Auctions are not winner-take-all; instead, they are constructed to ensure multiple high-quality developers are allotted portions of the total capacity block. |
These factors have increased the solar installation to approximately 4.3GW as of September 30, 2015, of which 3.3GW is operating under various state policies and the NSM. An additional, approximately 4.0GW of tenders have been announced under various state policies. In addition, auctions allocating 5GW of projects are
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expected to be announced or completed under the NSM by the end of fiscal year 2016. The Indian government plans to accelerate the operation of renewable energy targeting 100GW of solar energy by 2022.
Our Approach
We lower the levelized cost of energy through value engineering, operational performance monitoring and efficient financial strategy to deliver cost-effective energy for our customers. We sell energy to government utilities and independent industrial and commercial customers at predictable fixed prices. Since our energy generation does not rely on fossil fuels, our electricity prices are insulated from the volatility of commodity pricing. We also guarantee the electricity production of our solar power plants to our customers.
We offer integrated project development, EPC, financing, O&M services without involving multiple third-party services. This approach has allowed us to generate efficiencies of scale that further drive down system costs. A low cost structure allows us to bid for auctions strategically, which supports our high auction win rate and helps preserve our market leading position, which further reduces costs. As of February 2014, in the NSM auctions in which we have chosen to participate, we have won 13.4% of the projects allocated, which is the largest allocation of projects.
Moreover, we believe that our brand recognition and procurement scale improves negotiating power with suppliers and lenders. As the first developer and operator of utility scale solar assets in India, we believe that we are a well-established brand that has grown alongside the burgeoning Indian solar market since 2009. We have proven to be a reliable developer that successfully and expediently executes on our development pipeline and wins repeat business. Our reputation and track record give us an advantage in the auction evaluation process, improving our win rate. As a result, we believe we have become one of the largest purely solar operators in the space, which affords us greater negotiating power with original equipment manufacturers and project finance lenders. This in turn improves our cost and capital structure, which benefits our bid win rate.
The key elements of our three-pronged approach are as follows:
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Value engineering . Our in-house EPC allows us to enhance our system design expertise with each successive project, be flexible with our choice of technology and source from top-tier suppliers that optimizes both the system cost and power yield of the total solar block. We are able to further negotiate pricing as we have built a well-recognized brand, strong supplier relationships and significant economies of scale. As a result of our value engineering, we have seen a significant reduction in balance of system costs. |
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Operational performance monitoring . As the operator of the first utility scale solar plant in India, we have been able to develop and improve on our operational expertise with each successive project to enhance output per watt. We have a patent pending for a tracking system that allows us to manually track the suns seasonality by adjusting module angles multiple times per year specific to the location, thus increasing the power yield at lower costs. Further, we operate a National Operating Control Center, or NOCC, that allows us to monitor project performance in real-time and allows us to respond rapidly to |
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potential generation anomalies. Feedback from our operating projects also serves to further enhance our project designs, resulting in enhancements for current and new plants and further reductions to our levelized cost of energy. |
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Financial strategy . Our integrated business model also increases capital efficiency. We are able to offset project equity requirements through economic benefits generated by our EPC and O&M businesses. Coupled with our asset financing strategy we are able to optimize the overall cost of capital leading to enhanced economics for our customers and shareholders. To enable rapid operation of our projects, we use short term credit facilities that are refinanced with long term project finance facilities. Our strong track record and relationships with local banks offer us significant advantages over international bidders when it comes to posting capital for bids. On account of our strong track record and local banking relationships, we are able to post bid bond guarantees with a capital outlay from 10% to 20%, as opposed to 100% cash funded. |
Our Competitive Strengths
We believe we differentiate ourselves from the competition in a number of key ways.
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Market leadership . We have several market-leading advantages in the solar power industry in India. We have a first mover advantage from the construction of Indias first private utility scale solar photovoltaic power plant in 2009 as well as the implementation of the first megawatt scale rooftop smart city initiative in 2013. Additionally, our strong track record in policy and project development across utility scale, commercial rooftop and micro-grids projects enables us to have a market leading auction win rate of 68% for bids we participated in from 2010 to 2015, and has helped us gain a leading market share in India. |
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Scale and brand-name recognition . As the first developer and operator of utility scale solar assets in India, we believe that we are a well-established brand that has grown alongside the rapidly growing Indian solar market since 2009. We have proven to be a reliable developer with successful and expedient execution of our development pipeline, which has helped us win repeat business. Our reputation and track record provide us an advantage in the auction evaluation process, thereby improving our win rate. As a result, we believe we have become one of the largest solar developers and operators in India, which affords us greater negotiating power with our suppliers and project finance lenders. This in turn improves our overall cost and capital structure, which again benefits our win rate in the auction process. |
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In-house EPC and O&M expertise enable cost efficiencies . Our in-house EPC capabilities enhance our ability to be flexible with our choice of technology, which allows us to choose high quality equipment while optimizing the combination of total solar project cost and yield. Our in-house O&M capabilities maximize project yield and performance through proprietary system monitoring and adjustments. We have demonstrated a 66% decrease in total solar project costs since inception in part through continual innovation in our EPC and O&M capabilities. Coupled with improved efficiency of solar panels, we are able to offer cost-efficient solutions to all our customers, which allows us to bid more efficiently in renewable energy auctions and thereby improve our project returns. |
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Superior technical and execution capabilities . We continually seek to innovate our systems and processes in order to lower our levelized cost of energy. For example, we have developed proprietary systems that significantly reduce the time it takes to design, finance and commission projects. We have also improved our operational processes. For instance, we operate a NOCC system to provide high level of service to all our customers at minimal operating costs. We have developed a streamlined approach to construction that relies on small and efficient teams. Our lean and efficient execution expertise facilitates completion of our plants ahead of contracted completion dates, enables us to easily scale our operations without significant increases to headcount, and allows us to construct several projects in parallel without compromising on efficiency. |
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Long term, stable cash generation . We typically enter into 25-year, fixed price PPAs with government agencies and independent commercial businesses. As a result of generally reliable solar irradiation in India, our energy production under these PPAs has historically had little volatility, which, coupled with our low operating expenses, makes for predictable cash flows from these agreements. |
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Long term community support . We partner with local communities when we embark on a new project. We hire from local communities and generally lease land that has few alternative uses, providing local communities with a stream of discretionary cash flow without displacing alternative businesses. As a result we are able to build long term community relationships, which allows us to improve our time of completion, further reducing project development risk. Economic development also drives local power demand. |
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Strong management . Our strong management team has proven execution capabilities globally. Our senior leadership team consists of our founders, Inderpreet S. Wadhwa and Harkanwal S. Wadhwa, who are widely recognized experts in the Indian solar energy sector with track records of building successful businesses. Our board of directors also includes Robert Kelly and Diane Farrell, who are well-respected global authorities in energy finance and public policy. |
Our Business Strategy
Key elements of our business strategy include the following.
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Continue to drive project cost reductions. Our mission is to be the lowest cost power producer in the world. Since inception, we have achieved a 66% reduction in total solar project cost, which includes a significant decrease in balance of systems costs due to our value engineering, design and procurement efforts. We will continue to reduce costs by leveraging our in-house EPC and O&M capabilities and by improving our negotiating power with technology providers and project lenders. We expect to further innovate our financing solutions to reduce the cost of energy for our customers and achieve grid parity with local alternatives in the utility market in the next few years. |
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Rapidly grow our project portfolio to achieve scale benefits. Since we built Indias first utility scale solar project in 2009, we have built and have committed to build 665MW of solar energy across 13 states and union territories in India as of September 30, 2015. We intend to rapidly grow our project portfolio, which will enable us to achieve further economies of scale. We have submitted bids for projects totaling an additional 929MW. We are targeting having 520MW operating by December 31, 2016. Our longer term goals are to achieve 1GW committed or operating by December 31, 2017 and 5GW by December 31, 2020. Our ability to achieve these goals will depend on, among other things, our ability to acquire the required land for the new capacity (on lease or direct purchase), raising adequate project financing and working capital, the growth of the Indian power market in line with current government targets, our ability to maintain our market share of Indias installed capacity as competition increases, the need to further strengthen our operations team to execute the increased capacity, and the need to further strengthen our systems and processes to manage the ensuing growth opportunities, as well as the other risks and challenges discussed under the caption Risk Factors. We plan to continue to expand our presence in new states in India and expand our business with existing customers to meet their clean energy needs through community-supported growth. We also plan to significantly expand our presence in commercial and micro-grid applications. In order to continue this growth, we plan to reinvest our operating cash flow into new project development and construction. |
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Maintain position as a top Indian solar company. We are the longest tenured solar power producer in India and we believe we have the largest portfolio of operating projects under the NSM and one of the largest portfolios of operating projects in India. By entering the market first and growing in line with the broader Indian solar opportunity, we have been able to develop a track record that is unmatched by competitors. As a result, we have developed critical operational expertise and regional knowledge that improves project performance and expedites project execution. Additionally, our purely solar model and pan-India presence should help us preserve our market leading position. |
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Leverage track record and management relationships to shape policy. We have petitioned governments at the local, state and central levels for substantial changes to solar policy that are essential to the advancement of the solar industry. For example, we filed suggestions with the Central Electricity Regulatory Commission to set new guidelines and tariff orders for the sale and purchase of solar energy. In addition, under the NSM, we have advocated the use of financing instruments and transactions considered novel in the Indian solar sector, including bankable PPAs and compulsorily convertible debentures. This strategy is unique in the industry and will be critical both to our continued growth and to the development of the solar energy industry within India. We plan to leverage our track record, together with our managements long-running relationships with policy-makers, to influence policy at all governmental levels. |
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Expand into new locations. As of September 30, 2015, we had a presence in 13 of 36 states and union territories in India. Given the strength of the solar resource throughout India and our distribution model, we intend to operate in every state that has structural power needs. We participate in both national and state level renewable energy auctions. We intend to continue to expand our presence into other states in India and other emerging markets with underserved electricity markets. |
Research and Development
Our intellectual property is an essential element of our business, and our success depends, at least in part, on our ability to protect our core technology and intellectual property. To accomplish this, we rely on a combination of patent, trade secret, trademark and other intellectual property laws, confidentiality agreements and license agreements to establish and protect our intellectual property rights. As of September 30, 2015, we had three pending patent applications. These applications include our real time and pre-paid solar power module, which enables automated services such as solar energy generation and provisioning, maintenance and billing and our manual solar tracking system, which allows us to control remotely our solar panels to follow the movement of the sun.
Customers
The following chart shows the commercial operation date, capacity, tariff, offtaker and duration of PPAs for our projects as of September 30, 2015.
Operational | ||||||||||||||
Project Names |
Commercial
Operation Date(1) |
Capacity (MW) |
Tariff
(Rs/kWh) |
Offtaker |
Duration
of PPA in Years |
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Punjab 1 |
Q4 2009 | 2 | 17.91 | NTPC Vidyut Vyapar Nigam | 25 | |||||||||
Punjab 2.1 |
Q3 2014 | 15 | 7.67 | Punjab State Power Corporation Limited | 25 | |||||||||
Punjab 2.2 |
Q4 2014 | 15 | 7.97 | Punjab State Power Corporation Limited | 25 | |||||||||
Punjab 2.3 |
Q4 2014 | 4 | 8.28 | Punjab State Power Corporation Limited | 25 | |||||||||
Gujarat 1.1 |
Q2 2011 | 5 | 15.00(3) | Gujarat Urja Vikas Nigam Limited | 25 | |||||||||
Gujarat 1.2 |
Q4 2011 | 5 | 15.00(3) | Gujarat Urja Vikas Nigam Limited | 25 | |||||||||
Rajasthan 1 |
Q4 2011 | 5 | 11.94 | NTPC Vidyut Vyapar Nigam Limited | 25 | |||||||||
Rajasthan 2.1 |
Q1 2013 | 20 | 8.21 | NTPC Vidyut Vyapar Nigam Limited | 25 | |||||||||
Rajasthan 2.2 |
Q1 2013 | 15 | 8.21 | NTPC Vidyut Vyapar Nigam Limited | 25 | |||||||||
Rajasthan 3.1 |
Q2 2015 | 20 | 5.45 |
Solar Energy Corporation of India |
25 | |||||||||
Rajasthan 3.2 |
Q2 2015 | 40 | 5.45 |
Solar Energy Corporation of India |
25 | |||||||||
Rajasthan 3.3 |
Q2 2015 | 40 | 5.45 |
Solar Energy Corporation of India |
25 | |||||||||
Karnataka 1 |
Q1 2015 | 10 | 7.47 |
Bangalore Electricity Supply Company Limited |
25 |
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Project Names |
Commercial
Operation Date(1) |
Capacity (MW) |
Tariff
(Rs/kWh) |
Offtaker |
Duration
of PPA in Years |
|||||||||
Uttar Pradesh 1 |
Q1 2015 | 10 | 8.99 |
Uttar Pradesh Power Corporation Limited |
12 | |||||||||
Chhattisgarh 1.1 |
Q2 2015 | 10 | 6.44 |
Chhattisgarh State Power Distribution Company Limited |
25 | |||||||||
Chhattisgarh 1.2 |
Q2 2015 | 10 | 6.45 |
Chhattisgarh State Power Distribution Company Limited |
25 | |||||||||
Chhattisgarh 1.3 |
Q3 2015 | 10 | 6.46 |
Chhattisgarh State Power Distribution Company Limited |
25 | |||||||||
|
|
|||||||||||||
Total Capacity |
236 | |||||||||||||
Under Construction | ||||||||||||||
Karnataka 2 |
Q1 2015 | 10 | 6.66 | Bangalore Electricity Supply Company Limited | 25 | |||||||||
Karnataka 3.1 |
Q3 2016 | 50 | 6.89 | Chamundeshwari Electricity Supply Corporation Limited | 25 | |||||||||
Karnataka 3.2 |
Q3 2016 | 40 | 6.93 | Hubli Electricity Supply Corporation Limited | 25 | |||||||||
Karnataka 3.3 |
Q3 2016 | 40 | 6.96 | Gulbarga Electricity Supply Corporation Limited | 25 | |||||||||
Andhra Pradesh 1(2) |
Q1 2016 | 50 | 5.89(3) | Southern Power Distribution Company of Andhra Pradesh Limited | 25 | |||||||||
Rajasthan 4 |
Q4 2015 | 5 | 5.45 | Solar Energy Corporation of India | 25 | |||||||||
Bihar 1 |
Q3 2016 | 10 | 8.39 | North Bihar Power Distribution Company Limited and South Bihar Power Distribution Company Limited | 25 | |||||||||
Punjab 3.1 |
Q1 2016 | 24 | 7.19 | Punjab State Power Corporation Limited | 25 | |||||||||
Punjab 3.2 |
Q1 2016 | 4 | 7.33 | Punjab State Power Corporation Limited | 25 | |||||||||
|
|
|||||||||||||
Total Capacity |
233 | |||||||||||||
Committed | ||||||||||||||
Madhya Pradesh 1 |
Q3 2017 | 25 | 6.59 | BSES Rajdhani Power Limited and BSES Yamuna Power Limited | 25 | |||||||||
Delhi 1 |
Q4 2015 | 3 | 5.43 | Solar Energy Corporation of India | 25 | |||||||||
Punjab 4.1 |
Q4 2016 | 50 | 5.62 | Punjab State Power Corporation Limited | 25 | |||||||||
Punjab 4.2 |
Q4 2016 | 50 | 5.63 | Punjab State Power Corporation Limited | 25 | |||||||||
Punjab 4.3 |
Q4 2016 | 50 | 5.64 | Punjab State Power Corporation Limited | 25 | |||||||||
|
|
|||||||||||||
Total Capacity |
178 | |||||||||||||
Commercial Rooftop |
||||||||||||||
Commissioned | ||||||||||||||
Gujarat Rooftops |
2013 | 2.5 | Torrent Power Limited | 25 | ||||||||||
DLF (total) |
2013-2015 | 1.844(4) | DLF Limited | 25 | ||||||||||
Indosolar |
Q1 2015 | 0.555 | Indosolar Limited | 25 | ||||||||||
Gymkhana |
Q2 2015 | 0.056 | Delhi Gymkhana Club Limited | 25 | ||||||||||
Taj Sats |
Q2 2015 | 0.178 | Taj Sats Air Catering Limited | 20 | ||||||||||
Punjab Rooftop 1 |
Q3 2015 | 1 | JCBL Limited | 25 | ||||||||||
|
|
|||||||||||||
Total Capacity |
6.133 |
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Notes:
(1) | Refers to the applicable quarter of the calendar year. There can be no assurance that our projects under construction and our committed projects will be completed on time or at all. See Risk Factors Our construction activities may be subject to cost overruns or delays. |
(2) | Hanwha Q Cells Korea holds a minority interest against its investment of Rs. 316.9 million. |
(3) | Current tariff, subject to escalation, as disclosed under BusinessPortfolio of Solar Energy ProjectsOperational Projects. |
(4) | 1.421MW of the project has commenced operations. |
We have signed long term PPAs with central and state-run utilities, government-backed corporations and commercial users. As of September 30, 2015, our offtakers included:
Government
|
NTPC Vidyut Vyapar Nigam Limited a government company that is a 100% owned subsidiary of NTPC Limited, the leader in power generation in India. NTPC Vidyut Vyapar Nigam Limited was designated under the NSM to be the agency responsible for procuring solar power by entering into PPAs with project developers |
|
Gujarat Urja Vikas Nigam Limited a state-run utility |
|
Punjab State Power Corporation Limited a state-run utility |
|
Uttar Pradesh Power Corporation Limited a state-run utility |
|
Bangalore Electricity Supply Company Limited a state-run utility |
|
Solar Energy Corporation of India a not-for-profit company established under the administrative control of the Indian Ministry of New and Renewable Energy, or the MNRE, and an agency responsible for facilitating implementation of the NSM |
|
Chamundeshwari Electricity Supply Corporation Limited a state-run utility |
|
Hubli Electricity Supply Corporation Limited a state-run utility |
|
Gulbarga Electricity Supply Corporation Limited a state-run utility |
|
Southern Power Distribution Company of Andhra Pradesh Limited a state-run utility |
|
North Bihar Power Distribution Company Limited and South Bihar Power Distribution Company Limited state-run utilities |
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|
Chhattisgarh State Power Distribution Company Limited a state-run utility |
|
Indraprastha Power Generation Company Limited a state-run utility |
Commercial
|
Torrent Power Limited a large Indian power generator and distributor |
|
DLF Limited one of the largest residential, commercial and retail property developers in India |
|
BSES Rajdhani Power Limited and BSES Yamuna Power Limited a large Indian power distributor |
|
Delhi Gymkhana Club Limited one of Indias oldest clubs |
|
Taj Sats Air Catering Limited a joint venture of Indian Hotels Company, which is an affiliate of the Tata Group, a global enterprise headquartered in India, and SATS Limited |
|
Indosolar Limited leading Indian manufacturer of solar photovoltaic cells |
|
The Oberoi Group a global premium chains of hotels, headquartered in Delhi |
|
JCBL Limited a conglomerate with diversified solutions in automobile, pharmaceutical, design, information technology, hand tools, automobile parts and international business |
Illustrative Projects
Punjab 1 Project
The Punjab 1 project was a 2MW plant in Awan Village, Amritsar district, that became operational in 2009. This was Indias first private megawatt capacity solar power project. We entered into a 25-year PPA with NTPC Vidyut Vyapar Nigam Limited with a tariff of Rs. 17.91 per kilowatt hour. NTPC Vidyut Vyapar Nigam Limited was mandated under the NSM to procure solar power to help distribution companies meet their solar renewable purchase obligations competitively. NTPC Vidyut Vyapar Nigam Limited bundles solar power with coal power to reduce the cost to the distribution companies. Consistent with our inclusive growth model, this project was built on community leased land.
Rajasthan Projects
The first Rajasthan project for 5MW was signed with NTPC Vidyut Vyapar Nigam Limited at a tariff of Rs. 11.94 per kilowatt hour for 25 years. The project was financed with a loan of US$15.78 million for a tenure of approximately 16.5 years.
The second Rajasthan portfolio, comprised of two projects for a total of 35MW, was signed at a tariff of Rs. 8.21 per kilowatt hour for 25 years.
The abovementioned Rajasthan projects were built on a barren government desert in the western state of Rajasthan, land that has few alternative uses. These are a part of three projects totaling 40MW with over 400,000 solar panels. The lease rentals from the project create a revenue source for the government while meeting its clean energy mandate.
The third Rajasthan portfolio is comprised of three projects with a total capacity of 100MW. Each project PPA was won under NSM auctions with a VGF component. We were able to secure a total VGF of Rs. 1,860 million for these projects, which was the highest allotment of total available VGF. The PPA offtaker is the Solar Energy Corporation of India at a tariff of Rs. 5.45 per kilowatt hour. The projects were constructed for a total gross project cost of Rs. 7,301 million. Spread across over 717 acres of land in Jodhpur, these projects commenced operations in May 2015, making Azure the largest owner and operator of NSM projects totalling 142MW.
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Modules for a total of 60MW have been completely manufactured in India, which is a significant milestone in supporting the Indian governments Make in India initiative in the solar power sector.
Chhattisgarh Projects
Chhattisgarh 1 is a 30MW project representing a portfolio of three projects of 10MW each under the Chhattisgarh Solar Policy, 2012-2017. Each of the three PPAs for the project were signed with Chhattisgarh State Power Distribution Company Limited for a tenure of 25 years. The projects commenced operations between May 2015 and August 2015. The development and construction of the project was financed with a loan of Rs. 1,601 million for a tenure of 14 years. Debt comprised 75% of the project cost.
Gandhinagar Smart City Rooftop Project
We operate Indias largest and first distributed rooftop solar city program in the western capital city of Gandhinagar, Gujarat. A 25-year PPA for 2.5MW was entered into with the citys private distribution company, Torrent Power Limited. We signed up 161 residential and 31 government buildings on long term leases, putting up 2.5MW total capacity of solar in the city.
We provide solar powered electricity directly to the consumers and the building owners receive a revenue share from the energy generated on their roofs. This business model allows seamless collaboration between various stakeholders: policy makers, regulators, individual rooftop owners and utilities, who are able to meet their renewable purchase obligations by procuring solar power. World Bank recognized the project as one of the Top 10 public-private partnerships of 2013 in the Asia Pacific region. We believe that with strong policy support and decreasing solar power tariff, this model can help increase the reach of solar power to consumers and convert cities into power generation hubs. In the long term, this helps remove the need for capital subsidies and reduces long term electricity cost.
This project was financed with a loan of Rs. 143.74 million for a tenure of 15 years. Debt comprised 69% of the project cost.
Micro-Grids in Bihar and Uttar Pradesh
We are working on building microgrid projects in several unelectrified clusters in several states. We plan to take part in state and federal tendered bids. These bids are typically for 100 to 200kW central generating stations with storage and basic household lighting packages for providing electricity 10 to 12 hours per day at a fixed monthly rate per household.
Competition
We believe our primary competitors are other solar developers such as SunEdison, Inc., First Solar, Inc. and ACME Cleantech Solutions Private Limited. Competition to acquire new projects occurs at the development stage as we bid for long term PPAs in central and state solar power auctions. We compete with other solar developers based on a number of factors, including the sourcing of solar projects, reputation and track record, relationship with government authorities, access to capital and control over quality, access to project land, efficiency and reliability in project development. Based on these factors, we believe that we compete favorably with our competitors in the regions we service.
We also compete with utilities generating power from conventional fossil fuels. Utilities generating conventional energy face rising costs as the constraints on domestic fuel supply continue and these energy sources do not benefit from various governmental incentives available to renewable energy producers. As we reduce our levelized cost and achieve parity with conventional energy suppliers, we expect to compete favorably with these suppliers on the basis of cost and reliability.
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However, we cannot guarantee that some of our competitors do not or will not have advantages over us in terms of larger size, internal access to solar panels and greater operational, financial, technical, management, lower cost of capital or other resources. See Risk Factors Risks Related to Our Business and Industry We face significant competition from traditional and renewable energy companies.
Employees
As of September 30, 2015, we had 276 full time employees. We consider our relations with our employees to be amicable. The following table sets forth the number of our employees for each of the major functions as of September 30, 2015:
Number of
Employees |
||||
Project Development |
23 | |||
EPC |
99 | |||
O&M |
49 | |||
Management and Administrative |
91 | |||
Rooftop |
14 | |||
|
|
|||
Total |
276 | |||
|
|
Facilities
Our principal executive offices are located at 8, 17, 18 and 19 Local Shopping Complex, Pushp Vihar, Madangir, New Delhi 110062, India, which occupies approximately 13,992 square feet of space. Our power projects are located primarily on land leased from the state governments and third parties and freehold land purchased by us from private individuals and entities.
The following table sets forth the details of our tangible fixed assets associated with our utility scale power projects as of September 30, 2015.
Projects |
Productive
Capacity (MW) |
Size
(Acres) |
Ownership(1) | Location | ||||||||||||
Punjab 1 |
2 | 12 | Leasehold | Punjab | ||||||||||||
Gujarat 1 |
10 | 59.7 | Freehold | Gujarat | ||||||||||||
Rajasthan 1 |
5 | 43 | Leasehold | Rajasthan | ||||||||||||
Rajasthan 2 |
35 | 302 | Leasehold | Rajasthan | ||||||||||||
Punjab 2 |
34 | 181 | Leasehold | Punjab | ||||||||||||
Uttar Pradesh 1 |
10 | 56 | Freehold | Uttar Pradesh | ||||||||||||
Karnataka 1 |
10 | 45 | Freehold | Karnataka | ||||||||||||
Rajasthan 3 |
100 | 717 | Leasehold | Rajasthan | ||||||||||||
Chhattisgarh 1 |
30 | 150.05 | Freehold | Chhattisgarh | ||||||||||||
Karnataka 2 |
10 | 50.05 | Freehold | Karnataka | ||||||||||||
Punjab 3 |
28 | 147.3 | Leasehold | Punjab | ||||||||||||
Rajasthan 4 |
5 | 25 | Leasehold | Rajasthan | ||||||||||||
Karnataka 3 |
130 | 668.2 | Freehold | Karnataka | ||||||||||||
Andhra Pradesh 1 |
50 | 211.34 | Freehold | Andhra Pradesh | ||||||||||||
Bihar 1 |
10 | 56.3 | Freehold | Bihar |
(1) | Our leasehold land is typically leased for 30 to 35 years, but our PPAs are generally for a term of 25 years. |
We believe that our facilities are in good condition and generally suitable and adequate for our needs in the foreseeable future. However, we will continue to seek additional space as needed to satisfy our growth.
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Project Development
We participate in central- and state-level renewable energy auctions to build our utility scale portfolio. Our track record and size ensure we are able to participate in all auctions. Our in-house EPC and O&M capabilities and our pan-India presence provide us with greater visibility into competitive metrics, which allows us to bid strategically to maintain a high win rate while preserving good project economics.
The major stages of project sourcing, development and operation:
|
Bidding. We have a well-organized process to effectively track all the policies and bid updates in the market. Once a tender is tracked, relevant information sourced from the request for proposal document is discussed with the finance and technical teams and approved by the relevant committees before a strategic decision is made to participate in the bid. We also have an in-house project development information database which help us predict and bid the most effective tariff in the market. Once the bid is won, a letter of intent is issued and all the departments initiate their activities. Afterwards, the PPA is signed, which reflects the commercial operation date before which a plant should be commissioned. |
|
Land acquisition. Generally once the letter of intent is received, we obtain the relevant land permits depending on whether the land is government-owned or private. When the land is privately owned, we identify the appropriate parcels of land and due diligence is conducted by a local legal counsel. We also undertake certain compliance measures, including technical diligence, soil testing, local advertisement, stakeholder consultation and land registration after which acquisition is complete. When the land is government-owned, we identify the suitable parcels of land from the responsible agency and obtain approval from the relevant authority. |
|
Financing. The projects are generally financed with 75:25 debt-to-equity ratio. To enable rapid operation of our projects, we use short term credit facilities that are refinanced with long term project finance facilities. We invest equity from internal accruals and new financings to help growth and lower financing costs. |
|
Material Delivery and Installation. Our procurement and construction teams work very closely to construct and deliver the plant in the most efficient manner. A detailed project plan is made and the progress tracker on the delivery and construction is reviewed very closely. Accordingly, we have consistently commissioned our projects before the commercial operation date. |
|
Monitoring and Maintenance. Our operations team monitors performance of all the projects near real time from the NOCC, which allow us to respond rapidly to potential generation anomalies. They also perform scheduled preventive maintenance tasks on daily, weekly, monthly, and annual intervals to ensure our plants run smoothly and at high efficiency. |
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Suppliers and Service Providers
We purchase major components such as solar panels and inverters directly from multiple manufacturers. There are several suppliers in the market and we select our suppliers based on expected cost, reliability, warranty coverage, ease of installation and other ancillary costs. As of the date of this prospectus, our primary solar panel suppliers were First Solar FE Holdings PTE Ltd. and Waaree Energies Pvt. Ltd., and our primary inverter suppliers were SMA Solar Technology AG, Schneider Electric India Pvt. Ltd., and Bonfiglioli Renewable Power Conversion India Pvt Ltd. We also source copper cables from General Cable Corporation and solar mounting structures from Unirac, Inc. We typically enter into master contractual arrangements with our major suppliers that define the general terms and conditions of our purchases, including warranties, product specifications, indemnities, delivery and other customary terms. We normally purchase solar panels and the balance of system components on an as-needed basis from our suppliers at then-prevailing prices pursuant to purchase orders issued under our master contractual arrangements. We generally do not have any supplier arrangements that contain long-term pricing or volume commitments, although at times in the past we have made limited purchase commitments to ensure sufficient supply of components. The prices of components for our solar power plants have declined over time as the manufacturers have lowered their cost of production, although the pace of this decline has been slowing recently.
In addition, in April 2010, we entered into an agreement with SunEdison Energy India Private Limited, or SunEdison, whereby upon the satisfaction of certain conditions, SunEdison would provide monitoring technologies and hardware at cost to 25MW of our utility scale projects in India. The Company has entered into a strategic agreement in which Hanwha Q Cells Korea Corporation has invested INR 316.9 million in Andhra Pradesh 1 project. We have entered into a master supply agreement with First Solar FE Holdings Pte. Limited for 190 MW offering preferential payments terms and supply credit for up to two years from supply date. Furthermore, we source lender technical due diligence and supplier third party certification from Lahmeyer International (India) Private Limited.
Portfolio of Solar Energy Projects
We have strategically focused on developing a pan-India portfolio of solar assets contracted under 12 to 25 year PPAs. As of September 30, 2015, we operated 17 utility scale projects and several commercial rooftop projects with a combined rated capacity of 242MW. As of such date, we were also constructing eleven projects with a combined rated capacity of 244MW and had an additional 179MW of projects committed. We have been awarded 151MW at auction, for which PPAs are pending. Under our PPAs, we set up our solar energy plants either at our customer premises or in close proximity to the grid interconnection point. Generally the distance from our power plant to the grid interconnection point ranges from five to 20 kilometers.
Operational Projects
State of Punjab
Punjab 1 is a 2MW project that was constructed over a period of nine months. Punjab 1 was commissioned in 2009 and was migrated under Phase I Batch II of the NSM. The offtaker for the project is NTPC Vidyut Vyapar Nigam Limited, with a tariff of Rs. 17.91 per kilowatt hour for a period of 25 years, effective as of the execution of the PPA in October 2010. This was also the first utility scale solar project built in India, making us the longest operating solar company in India.
Punjab 2 represents a portfolio of three projects. Punjab 2.1 is a 15MW project that commenced commercial operations in September 2014. The PPA was signed in December 2013 with Punjab State Power Corporation Limited at a tariff rate of Rs. 7.67 per kilowatt hour for 25 years. The PPAs for Punjab 2.2 for 15MW and Punjab 2.3 for 4MW were signed in December 2013 with Punjab State Power Corporation Limited at tariff rates of Rs.7.97 (15MW) and Rs. 8.28 (4MW) per kilowatt hour, respectively, for 25 years. Both of the projects commenced operations in October 2014.
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State of Gujarat
Gujarat 1 is a 10MW project under the Gujarat Solar Policy 2009. We entered into a PPA with Gujarat Urja Vikas Nigam Limited in April 2010 for a period of 25 years at a tariff rate of Rs. 15 per kilowatt hour for the first 12 years and Rs. 5 per kilowatt hour for the remainder of the term of the contract. The project was constructed in two phases.
Gujarat 1.1 was constructed over a period of nine months and is a 5MW project that commenced commercial operations in June 2011. Gujarat 1.2 was constructed over a period of 13 months and is a 5MW project that commenced operations in November 2011. On commissioning, this was the largest solar power plant in the country and is spread across Khadoda and Sinhol villages in the Sabarkatha District.
State of Rajasthan
Under the NSM, we have entered into multiple 25-year PPAs with NTPC Vidyut Vyapar Nigam Limited.
Rajasthan 1 is a 5MW project that was constructed over a period of nine months. The project was commissioned in December 2011. The PPA was signed in January 2011 with NTPC Vidyut Vyapar Nigam Limited with a tariff of Rs. 11.94 per kilowatt hour for a period of 25 years.
Rajasthan 2 represents a portfolio of two projects that was constructed over 11 months. The two PPAs for Rajasthan 2.1 and Rajasthan 2.2 were signed in January 2012 with NTPC Vidyut Vyapar Nigam Limited, each with a tariff of Rs. 8.21 per kilowatt hour for a period of 25 years. Rajasthan 2.1 is a 20MW project that commenced commercial operations in the first quarter of 2013. Rajasthan 2.2 is a 15MW project that commenced operations in the first quarter of 2013.
Rajasthan 3 represents a portfolio of three projects with a total of 100MW under Phase II Batch I of the NSM. It is comprised of Rajasthan 3.1 of 20MW, Rajasthan 3.2 of 40MW and Rajasthan 3.3 of 40MW. PPAs for each of the three projects were signed with the Solar Energy Corporation of India in March 2014 for a period of 25 years at a tariff of Rs. 5.45 per kilowatt hour with VGF. This was one of the largest portfolios won under the policy with a total VGF amount of Rs. 1,860 million, which is the highest allotment of the total available VGF. Spread across over 717 acres of land in Jodhpur, these projects commenced operations in May 2015, making Azure the largest owner and operator of NSM projects totalling 142MW.
Modules for a total of 60MW have been completely manufactured in India, which is a significant milestone in supporting the Indian governments Make in India initiative in the solar power sector.
State of Karnataka
Karnataka 1 is a 10MW project, for which the PPA was signed with Bangalore Electricity Supply Company Limited in January 2014 with a tariff of Rs. 7.47 per kilowatt hour for 25 years. The project commenced operations in January 2015.
State of Uttar Pradesh
Uttar Pradesh 1 is a 10MW project, for which the PPA was signed in December 2013 with Uttar Pradesh Power Corporation Limited with a tariff rate of Rs. 8.99 per kilowatt hour for 12 years. The project commenced operations in January 2015.
State of Chhattisgarh
Chhattisgarh 1 is a 30MW project representing a portfolio of three projects of 10MW each under the Chhattisgarh Solar Policy, 2012-2017. Each of the three PPAs for the project were signed with Chhattisgarh State
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Power Distribution Company Limited for a tenure of 25 years at tariff rates of Rs. 6.44, Rs. 6.45 and Rs. 6.46 per kilowatt hour, respectively, for a period 25 years. The projects commenced operations between May 2015 and August 2015.
Committed Projects
State of Karnataka
Karnataka 2 is a 10MW project under the Karnataka Solar Policy, 2014-2021. The PPA was signed with Bangalore Electricity Supply Company Ltd. in September 2014 at a tariff of Rs. 6.66 per kilowatt hour for 25 years. This project is expected to commence operations by the first quarter of 2016.
Karnataka 3 is a 130MW project, under the Karnataka Solar Policy, 2014-2021. This project represented a 26% win of the auction for a total of 500MW. The project is divided in three sub-projects.
Karnataka 3.1 is a 50MW project. The PPA for the project was signed in January 2015 with Chamundeshwari Electricity Supply Corporation Limited at a tariff rate of Rs. 6.89 per kilowatt hour for 25 years. This project is expected to commence operations by the third quarter of 2016.
Karnataka 3.2 is a 40MW project. The PPA for this project was signed with Hubli Electricity Supply Company Limited in January 2015 at a tariff rate of Rs. 6.93 per kilowatt hour for 25 years. This project is expected to commence operations by the third quarter of 2016.
Karnataka 3.3 is a 40MW project. The PPA for this project was signed by Gulbarga Electricity Supply Company Limited in January 2015 at a tariff rate of Rs. 6.96 per kilowatt hour for 25 years. This project is expected to commence operations by the third quarter of 2016.
State of Rajasthan
Rajasthan 4 is a 5MW project, for which the PPA was signed with Solar Energy Corporation of India, or SECI, in February 2015. The PPA was signed with SECI for a tenure of 25 years with a tariff of Rs. 5.45 per kilowatt hour with VGF of Rs. 64.5 million for the total capacity of 5MW. The project is expected to commence operations by the fourth quarter of 2015.
State of Bihar
Bihar 1 is a 10MW project, for which the PPA was signed with North Bihar State Power Distribution Company Limited, or NBPDCL, and South Bihar Power Distribution Company Limited, or SBPDCL, in January 2015 at a tariff of Rs. 8.39 per kilowatt hour for 25 years. Per the terms of the PPA, the PPA and relevant project documents are to be assigned to either NBPDCL or SBPDCL at a later date depending on the final location of the project. The project is expected to commence operations by the third quarter of 2016.
State of Punjab
Punjab 3 represents a portfolio of two projects. It comprises Punjab 3.1 of 24MW and Punjab 3.2 of 4MW. PPAs for both projects were signed with Punjab State Power Corporation Limited in March 2015 with a tariff of Rs. 7.19 per kilowatt hour for Punjab 3.1 and Rs. 7.33 per kilowatt hour for Punjab 3.2. The term of each PPA is 25 years and the project is expected to commence operations by the first quarter of 2016.
State of Andhra Pradesh
Andhra Pradesh 1 is a 50MW project. The PPA was signed with Southern Power Distribution Company of Andhra Pradesh Limited in December 2014 with a tariff of Rs. 5.89 per kilowatt hour for one year, increasing by
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3% per annum from years two to ten and thereafter at the same tariff as that in year ten for the remainder of the 25-year term. This project is expected to commence operations by the first quarter of 2016.
Committed Projects
State of Madhya Pradesh
Madhya Pradesh 1 represents a 25MW project, for which the letter of intent was received from BSES Rajdhani Power Limited in June 2015 for a period of 25 years. The project is expected to commence operations within 24 months after the signing of the PPA.
State of Delhi
Delhi 1 is a 3MW project for which the letter of intent was received from project from Solar Energy Corporation of India with a tariff of Rs. 5.43 per kilowatt hour with VGF of Rs. 13.5 million, for a period 25 years. The project is expected to operations by the first quarter 2016.
State of Punjab
Punjab 4 represents a 150MW project, representing a portfolio of three projects of 50MW each, for which PPA will be signed with Punjab State Power Corporation Limited at a weighted average tariff of Rs 5.63 per kilowatt hour. The project is expected to commence operations within 13 months after the signing of the PPA.
Portfolio of Rooftop Projects
As of September 30, 2015 we had a total of 18.312MW of distributed rooftop solar capacity across nine states at various stages of operation. The business model is similar to the ground-mount projects, where we enter into PPAs with various power distributer agencies or private, government or commercial users directly for 12 to 25 years at an agreed tariff for the period. The tariff rate ranges from Rs. 6.00 to Rs. 11.21 per kilowatt hour.
Operational
Gujarat Rooftop Project
The Gujarat project is a 2.5MW rooftop project that commenced operations in April 2013. We were the first and largest distributed solar rooftop project operational in the country. The PPA was signed with Torrent Power Limited, a leading brand in the Indian power sector for a period of 25 years. The project was recognized by the World Bank as one of the Top 10 public-private partnerships of 2013 in the Asia Pacific region.
DLF Rooftop Project
The DLF project is a 1.844MW rooftop project distributed on the rooftops across five states: Tamil Nadu (0.467MW), Telengana (0.519MW), West Bengal (two sites of 0.035MW and 0.121MW, respectively, of which 0.149MW is operational), Uttar Pradesh (0.368MW, of which 0.040MW is operational) and Haryana (0.334MW, of which 0.246MW is operational). DLF Utilities Limited is a residential, commercial and retail property developer. A master agreement and five PPAs were signed with DLF Utilities Limited in between June and March 2015 for 25 years.
Indosolar Rooftop Project
The Indosolar rooftop project is a 0.555MW project in the state of Uttar Pradesh. The PPA was signed with Indosolar Limited, an Indian manufacturer of solar photovoltaic cells, in July 2014 for a period of 25 years. The project commenced operations in March 2015.
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Gymkhana Rooftop Project
The Gymkhana rooftop project is a 0.056MW project in Delhi. The PPA was signed in December 2014 with Delhi Gymkhana Club Limited, one of Indias oldest clubs, for a period of 25 years. The project commenced operations in April 2015.
Punjab Rooftop Project
Punjab Rooftop 1 is a 1MW project in the industrial city of Ludhiana. The PPA for this project was signed in May 2015 with JCBL Ltd. for a period of 25 years. The project commenced operations in July 2015.
Taj Sats Rooftop Project
The Taj Sats rooftop project is a 0.178MW project in Delhi. The PPA was signed with Taj Sats Air Catering Limited in April 2014 for a period of 20 years. Taj Sats Air Catering Limited is a joint venture of Indian Hotels Company, which is an affiliate of the Tata Group, a global enterprise headquartered in India, and SATS Limited, an entity formerly known as Singapore Airport Terminal Services. The project commenced operations in June 2015.
Under Construction
Punjab Rooftop Project
Punjab Rooftop 2 is a 10MW project. The PPA was signed with Punjab State Power Corporation Limited. in March 2015 for a period of 25 years. The project is expected to commence operations by the first quarter of 2016.
Oberoi Rooftop Project
The Oberoi rooftop project is a portfolio of five rooftop projects with a total of 1.030MW, spread across three states: Haryana (0.636MW), Uttar Pradesh (0.161MW) and Rajasthan (0.259MW). The PPA for each project was signed in May 2015 for a period of 15 years with the affiliated entities of Oberoi Hotels and Resorts, a part of the Oberoi Group. The Oberoi Group also manages hotels under the brand Trident.
Committed
Indraprastha Rooftop
Indraprastha Rooftop is a portfolio of several rooftop projects with a total capacity of 1MW in Delhi. The tender was called by Indraprastha Power Generation Co. Ltd. (IPGCL) and the letter of intent for the project indicates a project period of 25 years.
Legal Proceedings
We are currently involved in and may from time to time, become involved in legal proceedings or be subject to claims arising in the ordinary course of our business. We are not presently party to any legal proceedings that, in the opinion of our management, would reasonably be expected to have a material adverse effect on our business, financial condition, operating results or cash flows if determined adversely to us. Regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors.
Government Regulations
The Electricity Act, 2003
The Electricity Act, 2003, or Electricity Act, regulates and governs the generation, transmission, distribution, trading and use of electricity in India. Under the Electricity Act, the transmission, distribution and
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trade of electricity are regulated activities that require licenses from the relevant electricity regulatory commission (Central Electricity Regulatory Commission), State Electricity Regulatory Commissions, or SERCs, or the joint commission (constituted by an agreement entered into by two or more state governments or the central government in relation to one or more state governments, as the case may be).
In terms of the Electricity Act, any generating company may establish, operate and maintain generating stations without obtaining a license if it complies with prescribed technical standards relating to grid connectivity. The generating company is required to establish, operate and maintain generating stations, tie-lines, sub-stations and dedicated transmission lines.
Further, the generating company may supply electricity to any licensee or even directly to consumers, subject to availing open access to the transmission and distribution systems and payment of transmission charges, including wheeling charges and open access charges, as may be determined by the relevant electricity regulatory commission. In terms of the Electricity Act, open access means the non-discriminatory provision for the use of transmission lines or distribution system or associated facilities with such lines or system, by any licensee or consumer or a person engaged in generation in accordance with the regulations specified by the relevant electricity regulatory commission.
The relevant electricity regulatory commission is empowered to, among other things, determine or adopt the tariff for supply of electricity from the generating company to a distribution licensee (such as the distribution utility companies), for transmission of electricity, wheeling of electricity and retail sale of electricity. However, the relevant electricity regulatory commission may, in case of shortage of supply of electricity, fix the minimum and maximum tariffs for sale or purchase of electricity under agreements between a generating company and a licensee or between licensees, for a period not exceeding one year, to ensure reasonable prices of electricity. While determining the tariff, commissions are required to be guided by, among others, the promotion of co-generation and generation of electricity from renewable sources of energy.
Under the Electricity Act, certain offences including the theft of electricity, electric lines and materials, interference with meters or works of a licensee, the negligent waste of electricity and non-compliance of orders or directions attract monetary penalties ranging from Rs. 0.01 million to Rs. 0.1 million and imprisonment for periods ranging from three months to three years. Additionally, non-compliance with orders of the Regional Load Dispatch Centre and State Load Dispatch Centre may result in penalties of up to Rs. 15 million.
Further, the Electricity Rules, 2005, or the Electricity Rules, also prescribe a regulatory framework for developing captive generating plants. Pursuant to the Electricity Rules, a power plant shall qualify as a captive power plant only if not less than 26% of the ownership is held by captive users and not less than 51% of the aggregate electricity generated in such plant, determined on an annual basis, is consumed for captive use. Further, in case of association of persons, the captive users are required to hold not less than 26% of the ownership of the plant in aggregate and consume not less than 51% of the electricity generated, determined on an annual basis, in proportion to their share ownership in the power plant within a variation not exceeding 10%.
In case of a generating station owned by a company formed as a special purpose vehicle, the electricity required to be consumed by captive users is to be determined with reference to such unit or units identified for captive use and not with reference to the generating station as a whole and equity shares to be held by the captive users must not be less than 26% of the proportionate equity interest of the company related to the generating unit or units identified as the captive generating plant.
The Electricity (Amendment) Bill, 2014 was introduced in the lower house of the Indian Parliament to amend certain provisions of the Electricity Act. Among others, the amendment empowers the Indian government to establish and review a national renewable energy policy, tariff policy and electricity policy. Further, the Indian government may, in consultation with the state governments, notify policies and adopt measures for promotion of renewable energy generation including through tax rebates, generation linked incentive, creation of national renewable energy fund, development of renewable industry and for effective implementation and enforcement of such measures.
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The generating company is also required to ensure compliance with certain other regulations, including the Central Electricity Authority (Safety Requirements for Construction, Operation and Maintenance of Electrical Plants and Electric Lines) Regulations, 2011.
The National Electricity Policy, 2005
The Indian government approved the National Electricity Policy on February 12, 2005, in accordance with the provisions of the Electricity Act. The National Electricity Policy, 2005 has material effects on our business since it provides the policy framework to the central and state Electricity Regulatory Commission in developing the power sector, supplying electricity and protecting interests of consumers and other stakeholders, while keeping in view the availability of energy resources, technology available to exploit such resources, economics of generation using different resources and energy security issues. The National Electricity Policy emphasizes the need to promote generation of electricity based on non-conventional sources of energy.
The National Electricity Policy provides that the SERCs should specify appropriate tariffs in order to promote renewable energy, until renewable energy power producers relying on non-conventional technologies can compete with conventional sources of energy. The SERCs are required to ensure progressive increase in the share of generation of electricity from renewable energy sources and provide suitable measures for connectivity with grid and sale of electricity to any person. Further, the SERCs are required to specify, for the purchase of electricity from renewable energy sources, a percentage of the total consumption of electricity in the area of a distribution licensee. Furthermore, the National Electricity Policy provides that such purchase of electricity by distribution companies should be through a competitive bidding process. The National Electricity Policy permits the SERCs to determine appropriate differential prices for the purchase of electricity from renewable energy power producers, in order to promote renewable sources of energy.
The National Tariff Policy, 2006
The Indian government approved the National Tariff Policy on January 6, 2006, in accordance with the provisions of the Electricity Act. The National Tariff Policy, 2006 indirectly impacts our business because it provides the policy framework to the Electricity Regulation Commissions as described below. The National Tariff Policy requires all the SERCs to specify minimum percentages for electricity to be purchased from renewable energy sources. While deciding such percentage, the SERCs must take into account the availability of such resources in the region and its impact on retail tariffs. The National Tariff Policy further provides that procurement of electricity by distribution companies from renewable energy power producers must be done at preferential tariffs determined by the SERCs. Such procurement of electricity by distribution companies for future requirements is to be done, as far as possible, through a competitive bidding process in accordance with the provisions of the Electricity Act among suppliers offering energy from same type of non-conventional sources.
Central Electricity Regulatory Commission (Terms and Conditions for Tariff Determination from Renewable Energy Sources) Regulations, 2012
The Central Electricity Regulatory Commission has announced the Central Electricity Regulatory Commission (Terms and Conditions for Tariff Determination from Renewable Energy Sources) Regulations, 2012, or Tariff Regulations, which prescribes the criteria that may be taken into consideration by the SERCs while determining the tariff for the sale of electricity generated from renewable energy sources which include, among others, return on equity, interest on loan capital and depreciation. Accordingly, such tariff cannot be determined independently by renewable energy power producers such as our company. Pursuant to the National Tariff Policy, the Central Electricity Regulatory Commission is required to determine the rate of return on equity which may be adopted by the SERCs to determine the generic tariff, keeping in view the overall risk and prevalent cost of capital, which factors are also to be taken into consideration by SERCs while determining the tariff rate. The Tariff Regulations prescribe that the normative return on equity shall be 20% per annum for the first 10 years and 24% per annum from the 11th year onwards.
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The Tariff Regulations also provide the mechanism for sharing of carbon credits from approved clean development mechanism projects between renewable energy power producers and the concerned beneficiaries. Under the Tariff Regulations, the project developer is entitled to retain 100% of the gross proceeds on account of clean development mechanism project benefit in the first year after the date of commercial operation of the generating station. Subsequently, in the second year, the share of the beneficiaries is increased to 10% and then progressively increased by 10% every year until it reaches 50% after which the clean development mechanism project proceeds are to be shared equally between the generating company and the beneficiaries.
Jawaharlal Nehru National Solar Mission
The NSM was approved by the Indian government on November 19, 2009 and launched on January 11, 2010. The NSM has set a target of 20,000MW of solar power in India by 2022 and seeks to implement and achieve the target in three phases (Phase I from 2012 to 2013, Phase II from 2013 to 2017 and Phase III from 2017 to 2022). NSM aims at creating conditions for rapid scale up of capacity and technological innovation to drive down costs towards grid parity.
Under the Guidelines for Selection of New Grid Connected Solar PV Power Projects Batch II, or the NSM Guidelines, issued in August 2011, which are applicable to solar power projects commissioned in Batch II of Phase I of the NSM, solar power projects are selected through a reverse bidding mechanism. In this process, solar power projects offering the maximum discount in Rs/kWh on the applicable tariff as approved by the Central Electricity Regulatory Commission are selected first. The project developer is then required to provide certain performance and other bank guarantees to the NTPC Vidyut Vyapar Nigam Limited, which are valid for a period of 16 months from the date of signing the PPA, for the solar photovoltaic projects. NTPC Vidyut Vyapar Nigam Limited subsequently enters into a PPA with project developers in respect of solar photovoltaic projects connected to the grid above 33kW and commissioned before March 2013. After execution of the PPA, the controlling shareholding by the promoter (i.e., more than 50% of the voting rights) in the company developing the project is required to be maintained for a period of one year after commencement of supply of power. Thereafter, any change can be undertaken upon informing the NTPC Vidyut Vyapar Nigam Limited.
Pursuant to the payment security scheme sanctioned by the MNRE for grid connected solar power projects under Phase I of the NSM, the power purchaser is required to open a letter of credit in favor of the project developer to ensure timely payments to the project developer, and in case of any default in payment by the relevant power purchaser, such letter of credit may be encashed and NTPC Vidyut Vyapar Nigam Limited shall also have the right to divert and sell the bundled power in the spot or short term market. The NSM Guidelines also prescribe certain technical requirements for photovoltaic modules that are to be used in grid solar power plants.
While no specific penalty provisions are specified under the NSM Guidelines, PPAs between project developers and offtakers may carry contractual penalties for breach of terms of the agreement.
On October 25, 2013, the MNRE issued guidelines for implementation of a plan for setting up 750MW grid-connected solar power projects under Batch I of Phase II, pursuant to which the MNRE authorized the Solar Energy Corporation of India to implement Phase II of the NSM. The selection process was completed in March 2014. In October 2014, the MNRE issued draft guidelines for selection of 3,000MW grid solar power projects under Tranche I, Batch II of Phase II. These guidelines prescribe financial and other qualification criteria, procedure for selection and other conditions relating to solar power projects. The MNRE has not yet issued final guidelines in this regard.
Renewable Purchase Obligations
The Electricity Act promotes the development of renewable sources of energy by requiring the SERCs to ensure grid connectivity and the sale of electricity generated from renewable sources. In addition, it requires the SERCs to specify, for the purchase of electricity from renewable sources, a percentage of the total consumption
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of electricity within the area of a distribution licensee, which are known as RPOs. Pursuant to this mandate, most of the SERCs have specified solar and non-solar RPOs in their respective states. In terms of the RPO regulations, RPOs are required to be met by obligated entities (that is, distribution licensees, captive power plants and open access consumers) by purchasing renewable energy, either by entering into PPAs with renewable energy power producers or by purchasing renewable energy certificates. The RPO regulations require the obligated entities to purchase power from renewable energy power producers such as our company. In the event of default by an obligated entity in any fiscal year, the SERCs may direct the obligated entity to deposit an amount determined by the relevant SERC, into a fund to be utilized for, among others, the purchase of renewable energy certificates. Additionally, pursuant to the Electricity Act, a defaulting obligated entity may also be liable to pay penalty as determined by the SERCs.
In May 2015, the Supreme Court of India upheld a regulation that made it compulsory for captive power plants and open access consumers to purchase electricity to fulfill their RPOs. This landmark judgment is expected to boost the demand for renewable energy by captive players and also improve the marketability of renewable energy certificates in India.
Safety and Environmental Laws
We are governed by certain safety and environmental legislations, including the Water (Prevention and Control of Pollution) Act, 1974, the Air (Prevention and Control of Pollution) Act, 1981, and the Hazardous Waste (Management, Handling and Transboundary Movement) Rules, 2008.
Under the Water (Prevention and Control of Pollution) Act, 1974 and the Air (Prevention and Control of Pollution) Act, 1981, failure to comply with the orders and restrictions passed by the State Pollution Control Boards may result in imprisonment of a minimum term of one and a half years. Additionally, certain acts including the destruction of property of the State Pollution Control Boards, failure to intimate the emission of pollutants or failure to furnish information to the State Pollution Control Boards may attract monetary penalties of up to Rs. 0.01 million and imprisonment of up to three months.
The failure to comply with the Hazardous Waste (Management, Handling and Transboundary Movement) Rules, 2008 may attract monetary penalties of Rs. 0.1 million and imprisonment of up to five years.
Labor Laws
We are required to comply with certain labor and industrial laws, which includes the Factories Act, 1948, the Industrial Disputes Act, 1947, the Employees State Insurance Act, 1948, the Employees Provident Funds and Miscellaneous Provisions Act, 1952, the Minimum Wages Act, 1948, the Payment of Bonus Act, 1965, the Workmen Compensation Act, 1923, the Payment of Gratuity Act, 1972, the Contract Labour (Regulation and Abolition) Act, 1970 and the Payment of Wages Act, 1936.
Each of these legislations carry a penalty provision for non-compliance, which prescribe monetary penalties ranging from Rs. 0.001 million to Rs. 0.005 million and imprisonment for periods ranging from one month to three years.
State Regulations
Various states in India have from time to time, announced administrative policies and regulations in relation to solar power projects and related matters. These state-specific policies and regulations have material effects on our business because PPAs between project developers and state offtakers are entered into in accordance with the relevant state policies and regulations. Accordingly, these PPAs are standard form contracts and the project developers have no flexibility in negotiating the terms of the PPAs. The majority of our solar power plant generation occurs in Rajasthan, Punjab and Karnataka.
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For instance, for our projects in the states of Rajasthan, Punjab and Karnataka, our projects are subject to certain state policies as discussed below.
Rajasthan
The Rajasthan Renewable Energy Limited is the agency responsible for promoting and developing renewable energy in the state of Rajasthan. The government of Rajasthan has formulated the Rajasthan Solar Energy Policy, 2014, or Rajasthan Policy, which has come into effect on October 8, 2014 and will remain in force until superseded or modified by another policy. The Rajasthan Policy aims to create an enabling environment for installation of 25,000MW of solar power. Generation of electricity from solar power plants under the Rajasthan Policy will be treated as an eligible industry under the scheme administered by the Industries Department, Government of Rajasthan and incentives available to industrial units under the Rajasthan Investment Promotion Scheme will be available to solar power projects. In accordance with the Rajasthan Policy, a solar power project with a capacity of 500MW or more, established by a single developer at a single location with single or multiple metering requirements but having a common pooling sub-station will be considered as a mega solar power project. Mega solar power projects are entitled to an expedited project approval process.
Punjab
The Punjab Energy and Development Agency is the agency responsible for promotion and development of renewable energy development projects and energy conservation schemes in the state of Punjab. The government of Punjab has formulated the New and Renewable Sources of Energy Policy- 2012, or Punjab Policy, on December 26, 2012. The Punjab Policy aims to harness 1000MW of solar power generation capacity by 2022. All solar power projects developed under the Punjab Policy are treated as an industry in terms of industrial policy of Punjab and all the industrial incentives available to new industrial units will be applicable to solar power plants subject to the approval of Department of Industries and Commerce, Government of Punjab. Additionally, solar power projects are exempt from obtaining any consent in accordance with the pollution control laws from the Punjab Pollution Control Board. The Punjab State Power Corporation Limited reserves the right of first refusal on the power generated from renewable energy certificate based solar power projects and in case of refusal, the developer is permitted to sell the power under open access.
Karnataka
The Karnataka Renewable Energy Development Limited is the agency responsible for promoting and developing renewable energy in the state of Karnataka. The government of Karnataka has formulated the Karnataka Solar Policy 2014-2021, or Karnataka Policy, which will remain in effect until 2021 or until modified by another policy. The Karnataka Policy aims to harness a minimum of 2,000MW by 2021 in multiple phases. Generation of solar power under the Karnataka Policy is attractive to project developers because the policy provides incentives such as tax concessions under the Karnataka Industrial Policy and central excise duty and customs duty exemptions. Solar projects are further exempt from obtaining consent from the Karnataka Pollution Control Board as required under the pollution control laws.
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Directors and Senior Management
The following discussion sets forth information regarding our directors and senior management as of the date of this prospectus. Our board of directors is authorized to appoint officers as it deems appropriate. Provided below is a brief description of our directors and officers business experience during the past five years.
Mr. Sanjeev Aggarwal was nominated as a director by Helion Venture Partners and Mr. William B. Elmore was nominated as a director by Foundation Capital.
None of our officers and directors are related, except Mr. Harkanwal S. Wadhwa and Mr. Inderpreet S. Wadhwa. Mr. Harkanwal S. Wadhwa is the father of Mr. Inderpreet S. Wadhwa.
Mr. Eric Ng Yim On and Mr. Muhammad Khalid Peyrye are executives of AAA Global Services Ltd., which provides incorporation, corporate secretarial and governance services to us.
Name |
Age |
Position |
||||
Directors: |
||||||
Inderpreet Singh Wadhwa |
43 | Director and Chief Executive Officer | ||||
Harkanwal Singh Wadhwa |
71 | Director and Chief Operating Officer | ||||
Robert Kelly |
58 | Director | ||||
Diane Farrell |
60 | Director | ||||
William B. Elmore |
62 | Director | ||||
Sanjeev Aggarwal |
55 | Director | ||||
Eric Ng Yim On |
47 | Director | ||||
Muhammad Khalid Peyrye |
37 | Director | ||||
Senior Management: |
||||||
Surendra Kumar Gupta |
62 | Chief Financial Officer | ||||
Preet Sandhu |
47 | Senior Vice President Construction | ||||
Sandeep Chopra |
42 | Strategy and Supply Chain Management Head | ||||
Mohor Sen |
65 | Senior Vice President Human Resources | ||||
Glen Minyard |
60 | Senior Vice President Research & Development |
Directors
Inderpreet Singh Wadhwa , one of our founders, has been our chief executive officer and a member of our board of directors since February 2015 and has been the chief executive officer and director of AZI since November 2008. He has over 20 years of experience in technology and infrastructure businesses. Prior to founding AZI, Mr. Wadhwa previously served as a vice president of Loyalty Lab and a senior director of Oracle Corporation. Mr. Wadhwa received his Bachelors degree in Electronics Engineering in 1994 from Guru Nanak Dev University (Punjab). He also graduated from Haas School of Business at University of California Berkeley in 2002.
We believe Mr. Wadhwa is qualified to serve as a member of our board of directors because of his extensive experience in infrastructure projects and prior board service as a director of AZI.
Harkanwal Singh Wadhwa has been a member of our board of directors since August 2015 and has been a director and chief operating officer of AZI since November 2008. He focuses on government relationships and internal operations of the company. Prior to joining AZI, Mr. Wadhwa served as chief managing director of National Insurance Limited, Indias largest public insurance organization. He has over 40 years of experience in the financial services industry in India. He has served on the boards of General Insurance Corporation of India, India International Insurance Private Limited and Loss Prevention Association of India Limited. Mr. Wadhwa received his Bachelors of Arts degree from Punjab University in 1963.
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In 2011, the Central Bureau of Investigation of India filed criminal charges in the Court of Sessions for Greater Bombay, India against 11 defendants, including Mr. Harkanwal S. Wadhwa, in connection with his previous services as chief managing director of National Insurance Limited. The charges allege that Mr. Harkanwal S. Wadhwa was part of a criminal conspiracy to cause undue favor and wrongful pecuniary gain to Reliance Industries Limited (a company listed on the Bombay Stock Exchange which is also named as a defendant) in connection with a series of insurance policies written by National Insurance Limited for a subsidiary of Reliance in 2002 and 2003. The Central Bureau of Investigation has alleged that claims paid out on such policies resulted in losses for National Insurance Limited and as a result unjustly enriched Reliance. While the policies were signed by other individuals, the complaint alleges that they were entered into with the tacit approval of Mr. Harkanwal S. Wadhwa. Mr. Harkanwal S. Wadhwa denies the accusations and, in October 2013, filed a motion for the charges against him to be dismissed. That motion is now pending before the court. The relevant transactions predated Mr. Harkanwal S. Wadhwas tenure as an AZI director and executive officer, and the criminal charges are not directed at, and do not concern, the company or any other member of the board of directors or officer of AZI.
We believe Mr. Wadhwa is qualified to serve as a member of our board of directors because of his extensive experience in the financial services industry in India and prior board service as a director of AZI.
Robert Kelly has been a member of our board of directors since September 2015 and has been a director of AZI since December 2014. From October 2011 to August 2014, he served as the chief financial officer of SolarCity Corporation in San Mateo, California. From August 2009 to October 2011, he served as chief financial officer of Calera Corporation, a clean technology company. Prior to that, he served as an independent consultant providing financial advice to retail energy providers and power developers and also served in various senior leadership roles at Westinghouse Credit Corporation, Lloyds Bank and The Bank of Nova Scotia. Mr. Kelly served as chief financial officer and executive vice president of Calpine Corporation, an independent power producer, from March 2002 to November 2005, as president of Calpine Finance Company from March 2001 to November 2005, and held various financial management roles with Calpine from 1991 to 2001. In December 2005, Calpine filed a petition for voluntary reorganization under Chapter 11 of the U.S. Bankruptcy Code and emerged from reorganization under Chapter 11 in January 2008. Mr. Kelly is also a member of the board of directors of Solar Mosaic Inc., a U.S. residential solar lending platform, and Solix Biosystems, Inc., a specialty algae products company. He holds a Bachelors degree in Commerce from Memorial University of Newfoundland and an MBA from Dalhousie University, Canada.
We believe Mr. Kelly is qualified to serve as a member of our board of directors because of his extensive business experience, relationships with financial institutions and solar companies and prior board service.
Diane Farrell has been a member of our board of directors since December 2015 and has been a director of AZI since January 2015. Since July 2011, Ms. Farrell has served as executive vice president for the U.S.-India Business Council. Prior to joining the U.S.-India Business Council, Ms. Farrell served on the board of directors at the Export Import Bank of the United States. As a presidential appointee, confirmed by the U.S. Senate, she was responsible for voting on transactions in excess of $10 million as well as on significant policy matters. Her portfolio responsibilities included small businesses, India, Southeast Asia region, and portions of Latin America. In addition, she was named a member of the White House Business Council. Before serving at the Export Import Bank of the United States, Ms. Farrell was elected as the First Selectwoman in Westport, Connecticut and oversaw the construction of schools, a municipal waste water treatment plant, affordable housing, and other necessary facilities. Ms. Farrell received her Bachelors degree in American Government from Wheaton College in 1977.
We believe Ms. Farrell is qualified to serve as a member of our board of directors because of her extensive business experience in the financial services industry and prior board service.
William B. Elmore has been a member of our board of directors since August 2015 and has been a director of AZI since November 2013. Mr. Elmore co-founded Foundation Capital in 1995. He is a former director and
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past president of the Western Association for Venture Capitalists, and a past director of the National Venture Capital Association. Mr. Elmore has served on the Advisory Council at Stanford Graduate School of Business and is a board member of the Eastside College Preparatory School and Purdue Research Foundation. Mr. Elmore holds a Bachelor of Science in Electrical Engineering and a Master of Science in Electrical Engineering from Purdue University and an MBA from the Stanford Graduate School of Business.
We believe Mr. Elmore is qualified to serve as a member of our board of directors because of his extensive business experience in the financial services industry and prior board service as a director of AZI.
Sanjeev Aggarwal has been a member of our board of directors since September 2015 and has been a director of AZI since November 2008. Mr. Aggarwal is a co-founder of Helion Venture Partners and has served on the boards of Amba Research, MakeMyTrip Limited and UnitedLex Corporation. He is currently on the boards of IndiaHomes, Eye-Q Vision Private Limited, Clues Networks Inc. and Big Basket. Prior to Helion Venture Partners, Mr. Aggarwal was the founder and chief executive officer of Daksh. Earlier, he worked for 15 years with leading technology companies serving the domestic Indian market. Mr. Aggarwal led the strategic initiatives at Motorola India and has worked with Digital Equipment Corporation in delivering technology solutions. He has also served as the chief executive officer of 3COM India.
We believe Mr. Aggarwal is qualified to serve as a member of our board of directors because of his extensive business experience in the financial industry, relationships with investment firms and prior board service as a director of AZI.
Eric Ng Yim On was appointed to our board of directors in January 2015 and is one of our resident directors in Mauritius. Mr. Ng has been the chief executive officer of AAA Global Services Ltd. since 2006. Prior to founding AAA Global Services Ltd., Mr. Ng worked for several years with a leading public company listed on the Stock Exchange of Mauritius and served on the board of the holding company as well as its subsidiary companies. Mr. Ng completed his secondary education at the Royal College Curepipe in Mauritius and holds various professional qualifications and memberships, including being a member of the Institute of Chartered Accountants of England and Wales, a member of the International Fiscal Association (Mauritius Branch) and a member of the Mauritius Institute of Professional Accountants.
We believe Mr. Ng is qualified to serve as a member of our board of directors because of his extensive experience with public companies and because he is a resident of Mauritius, and two of the members of our board of directors are required to be residents of Mauritius under the terms of our constitution, which we expect to adopt with effect upon completion of this offering, or the Constitution.
Muhammad Khalid Peyrye was appointed to our board of directors in January 2015 and is one of our resident directors in Mauritius. Mr. Peyrye is an executive of AAA Global Services Ltd., having joined the organization in 2007. Prior to joining AAA Global Services Ltd., Mr. Peyrye worked for several years with a leading financial services company and accountancy firm. Mr. Peyrye received his Bachelors degree in Law and Management from the University of Mauritius. He has been involved extensively on company formations, company administration, cross-border investment activities and corporate organizational transactions such as mergers and acquisitions and winding-up of companies. In addition to serving as director on the board of several companies in Mauritius, Mr. Peyrye has, in his career, been involved as money laundering reporting officer and compliance officer of various companies involved in the financial services sector.
We believe Mr. Peyrye is qualified to serve as a member of our board of directors because of his extensive experience with companies having public accountability and because he is a resident of Mauritius, and two of the members of our board of directors are required to be residents of Mauritius under the terms of our Constitution.
Senior Management
Surendra Kumar Gupta has been the chief financial officer of AZI since May 2011. Mr. Gupta has over 37 years of international and domestic experience covering strategic business planning, managing business
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operations and corporate finance. Prior to joining AZI, Mr. Gupta served as the group chief financial officer for Al-Suwaidi Holding Company Limited, a company involved in providing engineering, procurement, construction and maintenance services to Saudi Arabias predominant oil and gas industry, from 2007 to 2010. Mr. Gupta received his Bachelors degree in Commerce in 1972 from Delhi University. He is a chartered accountant and has been a member of the Institute of Chartered Accountants of India since January 1977.
Preet Sandhu has been the senior vice president of construction of AZI since February 2010, and is one of our founders. Mr. Sandhu has over 19 years of experience in civil construction and project development in regulated sectors in India with expertise in transportation, energy and land development. Mr. Sandhu manages construction, administration agency liaison, clearances, contracts, power purchase agreements, and power evacuation and contractor qualification for AZIs projects.
Sandeep Chopra has been the head of strategy and supply chain management of AZI since May 2013. Mr. Chopra has 15 years of global experience ranging from process re-engineering, project management and finance. From 2005 to 2013, Mr. Chopra worked with HSBC performing different roles in change management for the finance function, ranging from managing large-scale change projects and service delivery teams and setting up a finance offshoring center in India. Prior to HSBC, Mr. Chopra worked at Arthur Andersen, S.R. Batliboi and PricewaterhouseCoopers in their assurance practices. Mr. Chopra completed his general management program from Harvard Business School in 2012. He is a chartered accountant and a member of the Institute of Chartered Accountant of India.
Mohor Sen has been the senior vice president of human resources of AZI since February 2014. Mr. Sen has over 40 years of experience working and consulting for corporations in areas including project management, human resources, organizational development and strategic communications. Prior to joining AZI, Mr. Sen provided consulting services to AZI from January 2013 to January 2014. Prior to that, from 2008 to 2013, he provided consulting services to other companies in India, including Reinforced Earth Company and Geopetro International Holding Inc. Mr. Sen received his Bachelors degree in Technology from the Indian Institute of Technology Delhi and a Masters of Science from the University of Manchester in the United Kingdom.
Glen Minyard has been the senior vice president of Research & Development for Azure Power US Inc., a subsidiary of AZI, since September 2010. From 2001 to 2014, Mr. Minyard was also the president of Minyard Solar Electric Inc. From 1992 to 2001, Mr. Minyard was the engineering and production manager at National Renewable Energy Laboratory. Mr. Minyard has 35 years of experience in the solar industry and has participated in the design and construction of over 5,000 solar power plants globally. In addition, he has worked on the design, supply, project management and installation of residential and large-scale commercial photovoltaic, wind, and hybrid electrical power systems. Mr. Minyard received his associate degree in Electronic Technology from College of the Redwoods, California, in 1985 and is a Certified CA Electrical Contractor.
Board of Directors
Our holding company is managed and controlled by our board of directors from Mauritius. Our board of directors consists of eight directors. Our board of directors does not have a majority of independent directors. As a foreign private issuer, we are permitted to follow home country corporate governance practices under Section 303A.00 of the Manual. Our home country practice differs from Section 303A.01 of the Manual, because our company is not required under Mauritian law to have a majority of independent directors. A director is not required to hold any shares in our company by way of qualification.
Terms of Directors and Executive Officers
In accordance with our Constitution, one-third of our directors (or, if their number is not a multiple of three, the number nearest to but not less than one-third) shall be up for re-election by rotation at each annual meeting of our company. A director shall be eligible for re-election every three years. The directors up for re-election in each year shall be those who have been in office longest since their last re-election or appointment and as between persons who became or were last re-elected directors on the same day, those up for re-election shall
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(unless they otherwise agree among themselves) be determined by lot. Any director may be removed by either an ordinary resolution of our shareholders or by the majority vote of the board of directors in the following circumstances: for cause, which refers to willful misconduct, fraud, conviction of a felony, gross negligence or breach of a written policy of the company; or if the director becomes mentally unsound or bankrupt or becomes disqualified from being a director under Mauritius law.
Under Mauritius law, the office of a director of our company is required to become vacant at the conclusion of the annual meeting of our company commencing next after the director attains the age of 70 years. However, a person of or over the age of 70 years may, by ordinary resolution of which no shorter notice is given than that required to be given for the holding of a meeting of shareholders, be appointed or re-appointed or authorized to continue to hold office as a director until the next annual meeting at which such directors class is up for re-election.
A vacancy on the board of directors must be filled by a majority vote of our board of directors.
Executive officers are selected by and serve at the discretion of the board of directors.
Duties of Directors
Under Mauritius law, our directors have a duty to our company to exercise their powers honestly in good faith in the best interests of our company. Our directors also have a duty to our company to exercise the degree of care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances. Where a director of a public company also holds office as an executive, the director is required under Mauritius law to exercise that degree of care, diligence and skill which a reasonably prudent and competent executive in that position would exercise. In fulfilling their duty of care to our company, our directors must ensure compliance with the Mauritius Companies Act and our Constitution, as amended from time to time. A shareholder has the right to seek damages against our directors if a duty owed by our directors to him as a shareholder is breached.
The functions and powers of our board of directors include, among others:
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convening shareholders annual meetings and reporting its work to shareholders at such meetings; |
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authorizing dividends and distributions; |
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appointing officers and determining the term of office of officers; |
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exercising the borrowing powers of our company and mortgaging the property of our company, provided that shareholders approval shall be required if any transaction is a major transaction for our company under section 130 of the Mauritius Companies Act, which includes, among others, acquisitions and dispositions worth more than 75% of the value of our companys assets; and |
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approving the issuance and transfer of shares of our company, including the recording of such shares in our share register. |
Subject to the Mauritius Companies Act, our board of directors may delegate to a committee of directors, a director or employee of the company, or any other person, any one or more of its powers.
Committees
Prior to consummation of the offering we intend to establish two committees under our board of directors: an audit committee and a compensation committee. Each committees members and functions are described below.
Audit Committee
In accordance with the rules of the New York Stock Exchange, or NYSE, we will have at least three independent members on the audit committee within one year of listing and a fully independent committee within one year of the effective date of the registration statement. The initial members of our audit committee will
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consist of Mr. Robert Kelly and Mr. William B. Elmore. Each of these individuals satisfies the independence requirements set forth in the New York Stock Exchanges Listed Company Manual, or the Manual. They also satisfy the independence requirements of Rule 10A-3 under the Securities Exchange Act of 1934, or the Exchange Act. In reaching this determination, our board of directors considered the fact that Mr. Elmore has guaranteed a loan from a bank to Mr. Inderpreet Wadhwa and that any default on a separate loan from such bank to Mr. Elmore would result in a cross default under Mr. Inderpreet Wadhwas loan. Our board of directors also has determined that Mr. Kelly qualifies as an audit committee financial expert within the meaning of the SEC rules. Our audit committee oversees our accounting and financial reporting processes and the audits of the financial statements of our company. Our audit committee is responsible for, among other things:
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selecting our independent auditors and pre-approving all auditing and non-auditing services permitted to be performed by our independent auditors; |
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reviewing with the independent auditors any audit problems or difficulties and managements response; |
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regularly reviewing the independence of our independent auditors; |
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reviewing and approving all related party transactions on an ongoing basis; |
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discussing the annual audited financial statements with management and our independent auditors; |
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reviewing the adequacy and effectiveness of our accounting and internal control policies and procedures and any steps taken to monitor and control major financial risk exposures; |
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monitoring compliance with our code of business conduct and ethics, including reviewing the adequacy and effectiveness of our procedures to ensure proper compliance; |
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meeting separately and periodically with management and our internal and independent auditors; |
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reporting regularly to our full board of directors; and |
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such other matters that are specifically delegated to our audit committee by our board of directors from time to time. |
Compensation Committee
Our compensation committee will consist of Ms. Diane Farrell and Mr. Sanjeev Aggarwal. Each of these individuals satisfies the independence requirements set forth in the Manual. Our compensation committee assists our board of directors in reviewing and approving the compensation structure of our directors and executive officers, including all forms of compensation to be provided to our directors and executive officers. Members of the compensation committee are not prohibited from direct involvement in determining their own compensation. Our chief executive officer may not be present at any committee meeting during which his compensation is deliberated. The compensation committee is responsible for, among other things:
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reviewing and approving the compensation package for our executive officers; |
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reviewing the compensation of our executive officers and directors and making recommendations to the board with respect to the compensation; |
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reviewing and approving corporate goals and objectives relevant to the compensation of our chief executive officer, other executive officers and directors evaluating the performance of our chief executive officer, other executive officers and directors in light of those goals and objectives, and setting the compensation level of our chief executive officer, other executive officers and directors based on such evaluation; and |
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reviewing periodically and making recommendations to the board regarding any long term incentive compensation or equity plans, programs or similar arrangements, annual bonuses, employee pension and welfare benefit plans. |
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Nominations Committee
We currently do not have in place a nominations committee, and the actions ordinarily taken by such committee are resolved by a majority of the independent directors on our board. As a foreign private issuer, we are permitted to follow home country corporate governance practices under Section 303A.00 of the Manual. Our home country practice differs from Section 303A.04(a) and Section 303A.09 of the Manual regarding implementation of a nominations committee charter or board resolution and adoption and disclosure of corporate governance guidelines, respectively, because our company, as a holder of a GBC1 issued by the Financial Services Commission of Mauritius, is not required under Mauritian law to establish a nominations committee or adopt and disclose corporate governance guidelines.
Code of Business Conduct and Ethics
Our Code of Business Conduct and Ethics provides that our directors, officers and employees are expected to avoid any action, position or interest that conflicts with the interests of our company or gives the appearance of a conflict. Directors, officers and employees have an obligation under our Code of Business Conduct and Ethics to advance our companys interests when the opportunity to do so arises. The execution and compliance with the Code of Business Conduct and Ethics will be administered by our ethics committee, which will consist of and .
Director and Officer Compensation
Director Compensation
During fiscal year 2015, we paid cash compensation to Mr. Inderpreet S. Wadhwa and Mr. Harkanwal S. Wadhwa as described under Officer Compensation below. We also granted Mr. Inderpreet S. Wadhwa and Mr. Robert Kelly options to purchase equity shares under AZIs employees stock option plan. Stock compensation paid to our directors is disclosed separately in the table under Outstanding Options.
Officer Compensation
The following table sets forth all of the cash compensation paid by us or our subsidiaries in fiscal year 2015 to each of our executive officers for such persons service as an officer (including contingent or deferred compensation accrued during fiscal year 2015). These cash compensation amounts for fiscal year 2015 do not include stock compensation. Stock compensation to our executive officers is disclosed separately in the table under Outstanding Options.
(1) | The amounts in this column represent total performance-based bonuses earned for services rendered during fiscal year 2015. The amount of performance based bonuses are determined based on the performance of the company, the department the individual works for and the individual, and such bonuses are only paid if the individual is in employment at the time of disbursement. |
(2) | This includes any reimbursement, employer contribution to the provident fund, leave encashment provision and gratuity provision. See Employee Benefit Plans for a description of each plan. |
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Employee Benefit Plans
We maintain employee benefit plans in the form of certain statutory and incentive plans covering substantially all of our employees. For fiscal year 2015, the aggregate amount set aside or accrued by us to provide for pension or retirement benefits for executive officers was Rs. 3,511,310.
Provident Fund
In accordance with Indian law, all of our employees in India are entitled to receive benefits under the Employees Provident Fund Scheme, 1952, as amended, a retirement benefit scheme under which an equal amount of 12% of the base salary of an employee is contributed both by employer and employee in a fund with government/trust with company.
Gratuity
In accordance with Indian law, we pay gratuity to our eligible employees in India. Under our gratuity plan, an employee is entitled to receive a gratuity payment on his superannuation or on his retirement or on the termination of his or her employment if the employee has rendered continuous service to our company for not less than five years, or if the termination of employment is due to death or disability due to accident or disease. The amount of gratuity payable to an eligible employee is equal to 15 days salary based on the last drawn salary for every completed year of employment (or any portion of a year exceeding six months), and currently the aggregate amount of gratuity shall not exceed Rs. 1,000,000.
Leave Encashment Policy
Under AZIs leave encashment policy, an employee is entitled to receive a payment in exchange for any accrued leave of absence exceeding 45 days that is outstanding as of April 1 of each fiscal year. Such payment shall be made to the employee by April 30 of that year. In the event of resignation, termination of employment or retirement, an employee is entitled to a payment for the accrued leave of absence up to a maximum of 45 days if the employee has spent at least 240 working days at AZI. The amount of payment to be made for each day of such accrued leave of absence shall be calculated by dividing the last drawn monthly base salary by 30 days.
Employment Agreements
Most of our executive officers have entered into an employment agreement with AZI. Following the completion of this offering, we expect that such officers will continue under their employment agreements with AZI. Aside from the employee benefit plans, our employment agreements do not provide for any special termination benefits, nor do we have any other arrangements with our directors for special termination benefits.
Each executive officer has acknowledged that ownership of any intellectual property created by him for the company shall vest in the company. Additionally, Mr. Inderpreet Singh Wadhwa, Mr. Preet Sandhu and Mr. Glen Minyard have also agreed to transfer and assign to the company all rights, title and interest in and to all the trademarks, trade names, brand names, patents, designs, domain names and other intellectual property rights created by them for the company.
In addition, each executive officer has agreed to be bound by the non-competition and non-solicit restrictions set forth in his employment agreement. Specifically, each executive officer has agreed, while employed by us and for a period of one year after termination of his employment, not to:
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directly or indirectly, enter into the employment of, tender consulting or other services to, acquire any interest in, or otherwise participate in any business that competes, directly or indirectly, with any of the companies or entities in the same lines of business that the company is engaged in at the time the employment is terminated; nor |
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solicit, encourage, or induce or attempt to solicit, encourage, or induce any employee or customer, or prospective employees and customers with whom the company has had discussions or negotiations within the last six months of the termination of his employment not to establish a relationship with the company. |
The non-competition provision in Mr. Glen Minyards employment agreement is effective for six months after the termination of his employment, instead of for one year. In addition, the employment agreements for Mr. Sandeep Chopra and Mr. Surendra Kumar Gupta specify that they are not to be associated with any competitor of the company whatsoever for a period of at least 12 months after termination of their employment and that they will not solicit or entice any of the companys customers or any other employee working in the company during or at any time after the termination of their employment.
Other relevant information of each of the employment agreement is provided below.
Employment Agreement with Inderpreet Singh Wadhwa
AZI has entered into an employment agreement that provides for the appointment and employment of Mr. Inderpreet Singh Wadhwa as the Managing Director of AZI. Pursuant to the agreement, Mr. Wadhwa is entitled to a remuneration of Rs. 12,600,000 effective April 1, 2015. The company also granted Mr. Wadhwa an option to purchase 431 shares at Rs. 10 per share on July 1, 2015 pursuant to AZIs employees stock option plan. The employment agreement with Mr. Wadhwa does not have a fixed term of employment. The company may terminate Mr. Wadhwas employment without cause, but must provide two months prior notice or two months salary in lieu of the notice.
Employment Agreement with Surendra Kumar Gupta
AZI has entered into an employment agreement with Mr. Surendra Kumar Gupta, our chief financial officer. Effective April 1, 2015, he was entitled to a remuneration of Rs. 8,250,000, which includes Rs. 1,650,000 as a performance incentive. This performance incentive is linked to the performance of the company, his department, and himself. The performance incentive is only to be paid if the individual is in full-time employment with the company at the time of disbursement. Mr. Gupta has been granted 2,262 equity shares of AZI pursuant to AZIs employee stock option plan. In addition, Mr. Gupta is entitled to a company car.
We may terminate Mr. Guptas employment without cause, but must provide six months prior notice or six months salary in lieu of the notice.
Employment Agreement with Preet Sandhu
AZI has entered into an employment agreement with Mr. Preet Sandhu, our senior vice president of construction. Pursuant to the agreement, Mr. Sandhu was entitled to a remuneration of Rs. 6,793,200 per annum effective April 1, 2015. We may terminate Mr. Sandhus employment without cause, but must provide six months prior notice or six months salary in lieu of the notice.
Employment Agreement with Sandeep Chopra
AZI has entered into an employment agreement with Mr. Sandeep Chopra, our head of strategy and supply chain management. Effective April 1, 2015, Mr. Chopra was entitled to a remuneration of Rs. 9,491,812, which includes Rs. 1,944,610 as a performance incentive. In addition, Mr. Chopra has been granted 1,379 equity shares pursuant to AZIs employee stock option plan.
We may terminate Mr. Chopras employment without cause, but must provide six months prior notice or six months salary in lieu of the notice.
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Employment Agreement with Mohor Sen
AZI has entered into an employment agreement with Mr. Mohor Sen, our senior vice president of human resources. Effective April 1, 2015, Mr. Sen was entitled to a remuneration of Rs. 5,520,000 per annum.
We may terminate Mr. Sens employment without cause, but must provide six months prior notice or six months salary in lieu of the notice.
Employment Agreement with Glen Minyard
Aster Power Inc. has entered into an employment agreement with Mr. Glen Minyard, our senior vice president of Research & Development. Effective April 1, 2015, Mr. Minyard was entitled to a remuneration of US$190,704 per year. Also, under the agreement, the company has agreed to provide Mr. Minyard with the following benefits: (a) appropriate stipend for travels; (b) a travel health insurance policy with a reasonable coverage; (c) a cell phone with an international coverage; (d) leaves during the year; (e) a variable bonus of US$20,000 per annum based on his satisfactory performance during the year as evaluated and agreed by the chief executive officer; and (f) a business class travel for flights longer than five hours in one direction. In addition, Mr. Minyard has been granted options to purchase 1,500 equity shares of AZI.
We may terminate Mr. Minyards employment without cause, but must provide six months prior notice or six months salary in lieu of the notice.
Equity-Based Compensation Plans
Our employee stock option plan will become effective on the date of this prospectus and is a comprehensive incentive compensation plan under which we can grant equity-based and other incentive awards to our officers, employees and directors.
The objective of the employee stock option plan, is (i) to provide means to enable us to attract and retain high quality human resources in our employment; (ii) to make the compensations and rewards competitive in the market; and (iii) to achieve sustained growth and create shareholder value by aligning the interests of the employees with our long term interests.
Azure Power Global Limited has adopted an employee stock option plan on July 20, 2015. Employees who were previously granted options under the AZI employee stock option plan have been granted options under our employee stock option plan. As of September 30, 2015, Azure Power Global Limited had outstanding options exercisable into a total of 25,930 equity shares. The AZI employee stock option plan and all options granted to employees under such plan will be terminated. Post termination of said options, these employees will be entitled to a like number of options under our employee stock option plan, which will then be equitably adjusted for our stock split.
The following paragraphs further describe the principal terms of the employee stock option plan.
Administration
The employee stock option plan will be administered by the compensation committee of our board. Among other things, the compensation committee determines the terms and conditions of each option to be granted, including, but not limited to, the number of options, exercise price, vesting period, exercise period and any lock-in period.
Number of Shares Authorized for Grant
Under the terms of the employee stock option plan, which may be amended from time to time, the sum of all grants made under the employee stock option plan shall not exceed 10% of our total issued and subscribed equity capital.
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Eligibility
Our compensation committee may grant options to all eligible employees on the basis of the following criteria: position, role and performance of the employee, tenure in organization and such other factors as the compensation committee may decide from time to time.
Vesting Schedule
The grants made to any individual shall be vested in the following manner:
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25% on the expiry of 12 months from the date of grant; |
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25% on the expiry of 24 months from the date of grant; |
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25% on the expiry of 36 months from the date of grant; and |
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25% on the expiry of 48 months from the date of grant. |
Option Exercise
There shall be no lock-in period after the options have vested and the options must be exercised by the employees before the end of the tenure of the plan.
Amendment or Termination
Our board of directors may in its absolute discretion amend, alter or terminate the employee stock option plan from time to time, provided that no amendment, alteration or termination in any grant would impair or prejudice the rights of the employee without the consent of the employee, and provided further that the board of directors may not, without the approval of the shareholders, amend the employee stock option plan (1) to increase the aggregate number of shares which may be issued pursuant to the provisions of the employee stock option plan on exercise, surrender of options or upon grants; (2) to change the option exercise price; or (3) to extend the maximum period during which the grants may be made under the plan.
Outstanding Options for Directors and Senior Management
During fiscal year 2015, Mr. Inderpreet S. Wadhwa, Mr. Surendra Kumar Gupta and Mr. Robert Kelly were granted options to acquire 1,100 equity shares, 360 equity shares and 2,860 equity shares under AZIs employee stock option plan, respectively. As set forth in the following table, outstanding options as of June 30, 2015 under AZIs employee stock option plan were:
Name |
Equity shares
Underlying Outstanding Options |
Exercise Price
(Rs. per share) |
Date of Expiration |
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Directors: |
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Inderpreet Singh Wadhwa |
6,100 | 10.00 | September 30, 2018 | |||||||
Harkanwal Singh Wadhwa |
2,500 | 4,848.13 | September 30, 2018 | |||||||
Robert Kelly |
2,860 | 11,224.74 | September 30, 2018 | |||||||
Senior Management: |
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Surendra Kumar Gupta |
600 | 2,777.57 | September 30, 2018 | |||||||
1,200 | 4,848.13 | September 30, 2018 | ||||||||
360 | 10 | September 30, 2018 | ||||||||
Preet Sandhu |
648 | 1,805.00 | September 30, 2018 | |||||||
2,450 | 2,777.57 | September 30, 2018 | ||||||||
Sandeep Chopra |
1,300 | 4,848.13 | September 30, 2018 | |||||||
Glen Minyard |
1,500 | 2,777.57 | September 30, 2018 |
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Indemnification Agreements
We will enter into indemnification agreements with each of our directors to indemnify them against certain liabilities and expenses arising from their being a director.
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PRINCIPAL AND SELLING SHAREHOLDERS
The following table sets forth information regarding the pro forma beneficial ownership of our equity shares as of the date of this prospectus by:
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each of our directors and senior management; |
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each person known by us to own more than 5% of our equity shares; and |
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the selling shareholder. |
We have determined beneficial ownership in accordance with the rules of the SEC. The number of equity shares beneficially owned before the offering set forth below assumes the conversion of outstanding compulsorily convertible preferred shares and compulsorily convertible debentures into an aggregate of equity shares (assuming an initial public offering price of US$ per equity share, which is the midpoint of the estimated range of the initial public offering price as set forth on the cover page of this prospectus) and the effectiveness of a -for- stock split of our equity shares, both of which will take place immediately prior to the consummation of this offering. Except as indicated in the footnotes below, we believe, based on the information furnished to us, that the persons named in the following table have sole voting and investment power with respect to all equity shares that they beneficially own, subject to applicable community property laws.
The percentage ownership of each listed person before this offering is based upon equity shares outstanding prior to this offering, including an aggregate of equity shares to be issued upon the conversion of compulsorily convertible preferred shares and compulsorily convertible debentures immediately prior to the consummation of this offering, based on an initial public offering price of US$ per equity share, which is the midpoint of the estimated range of the initial public offering price as set forth on the cover page of this prospectus. The percentage ownership of each listed person after the offering is based upon equity shares outstanding immediately after the closing of this offering, including the equity shares identified in the immediately preceding sentence plus the equity shares to be sold by us in this offering.
In computing the number of equity shares beneficially owned by a person and the percentage ownership of that person, we deemed outstanding equity shares subject to options held by that person that are currently exercisable or exercisable within 60 days after the date of this prospectus. We did not deem these shares outstanding, however, for the purpose of computing the percentage ownership of any other person.
The underwriters have an option for a period of 30 days from the date of this prospectus to purchase up to an additional equity shares from us at the initial public offering price less the underwriting discounts and commissions.
None of our shareholders will have different voting rights from other shareholders after the completion of this offering. We are not aware of any arrangement that may, at a subsequent date, result in a change of control of our company.
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Unless otherwise indicated, the principal address of each of the shareholders below is c/o Azure Power India Private Limited, 8 Local Shopping Complex, Pushp Vihar, Madangir, New Delhi 110062, India.
Shares Beneficially Owned
Before Offering |
Shares Beneficially Owned
After Offering (Assuming No Exercise of The Over- Allotment Option) |
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Name |
Number | % | Number | % | ||||||
5% or Greater Shareholders: |
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IW Green LLC(1) |
% | |||||||||
International Finance Corporation(2) |
% | |||||||||
Helion Venture Partners II, LLC(3) |
% | |||||||||
Helion Venture Partners India II, LLC(4) |
% | |||||||||
FC VI India Ventures (Mauritius) Ltd.(5) |
% | |||||||||
IFC GIF Investment Company I(6) |
% | |||||||||
Directors and Officers: |
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Harkanwal Singh Wadhwa |
% | |||||||||
Preet Sandhu |
% | |||||||||
Surendra Kumar Gupta |
% | |||||||||
Sandeep Chopra |
% | |||||||||
Glen Minyard(7) |
% | |||||||||
Robert Kelly |
% | |||||||||
William B. Elmore(8) |
% | |||||||||
Diane Farrell(9) |
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Sanjeev Aggarwal(10) |
% | |||||||||
All Directors and Officers as a Group (9 persons) |
% | |||||||||
Selling Shareholder: |
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DEGDeutsche InvestitionsUnd Entwicklungsgesellschaft mbH(11) |
% |
* | Less than 1% of the outstanding equity shares. |
(1) | The sole member of IW Green LLC is Mr. Inderpreet S. Wadhwa. IW Green LLC was known as IW Green Inc. prior to its conversion to IW Green LLC in October 2015. |
(2) | International Finance Corporation is an international organization established by Articles of Agreement among its member countries. Its principal address is 2121 Pennsylvania Avenue, NW, Washington, District of Columbia 20433, United States. |
(3) | Helion Investment Management, LLC holds the voting power in Helion Venture Partners II, LLC. SA Holdings Global Ltd and Gupta Goyal Trust are the beneficial owners of Helion Investment Management, LLC. Mr. Sanjeev Aggarwal is the beneficial owner of SA Holdings Global Ltd and Mr. Ashish Gupta and Ms. Nita Goyal are the beneficial owners of Gupta Goyal Trust. Each of the beneficial owners disclaims beneficial ownership in the shares held by the aforementioned entities except to the extent of his or her pecuniary interest therein. The principal address of Helion Venture Partners II, LLC is Les Cascades Building, Edith Cavell Street, Port Louis, Mauritius. |
(4) | Helion Investment Management, LLC holds the voting power in Helion Venture Partners India II, LLC. SA Holdings Global Ltd and Gupta Goyal Trust are the beneficial owners of Helion Investment Management, LLC. Mr. Sanjeev Aggarwal is the beneficial owner of SA Holdings Global Ltd and Mr. Ashish Gupta and Ms. Nita Goyal are the beneficial owners of Gupta Goyal Trust. Each of the beneficial owners disclaims beneficial ownership in the shares held by the aforementioned entities except to the extent of his or her pecuniary interest therein. The principal address of Helion Venture Partners India II, LLC is Les Cascades Building, Edith Cavill Street, Port Louis, Mauritius. |
(5) |
FC VI India Holding (Mauritius) Ltd. is the beneficial owner of all equity interests of FC India Venture (Mauritius) Ltd. and exercises sole voting and investment power over the shares owned by FC India Venture (Mauritius) Ltd. Foundation Capital VI, L.P. and Foundation Capital VI Principals Fund, LLC are the |
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beneficial owners of FC VI India Holding (Mauritius) Ltd. The general partner of Foundation Capital VI, L.P. and Foundation Capital VI Principals Fund, LLC is Foundation Capital Management Co. VI, LLC. The managing members of Foundation Capital Management Co. VI, LLC are Mr. William B. Elmore, Mr. Paul Koontz, Mr. Michael Schuh, Mr. Paul Holland, Mr. Richard Redelfs, Mr. Steve Vassallo, Mr. Charles Moldow and Mr. Warren Weiss. Each of the managing members of Foundation Capital Management Co. VI, LLC disclaims beneficial ownership in the shares held by the aforementioned entities except to the extent of his or her pecuniary interest therein. The address of Foundation Capital Management Co. VI, LLC is 250 Middlefield Road, Menlo Park, CA 94025. |
(6) | IFC Global Infrastructure (GP) LLC and IFC Global Infrastructure (Alternate GP) LLP are beneficial owners of all equity interests of IFC GIF Investment Company I. The principal address of IFC GIF Investment Company I is c/o Cim Fund Services Ltd., 33 Edith Cavell Street, Port Louis, Mauritius. |
(7) | Mr. Minyards business address is 20700 Timber Ct., Willits, CA 95490, United States. |
(8) | Shares held by FC VI India Ventures (Mauritius) Ltd. do not include any equity shares directly held by Mr. Elmore. Mr. Elmore, a general partner of Foundation Capital, may be deemed to indirectly beneficially own such shares through the interest held by funds managed by Foundation Capital. Mr. Elmores business address is c/o Foundation Capital, 250 Middlefield Road, Menlo Park, CA 94025, United States. |
(9) | Ms. Farrells business address is U.S.-India Business Council, 1615 H Street, NW, Washington, District of Columbia 20062, United States. |
(10) | Does not include any equity shares of Mr. Aggarwal, a managing director of Helion Venture Partners, who may be deemed to beneficially own through interests held by funds managed by Helion Venture Partners. Mr. Aggarwals business address is Helion Advisors Private Limited, Tower B, 10th Floor, Vatika Towers, Sector 54, Gurgaon, 122 002, India |
(11) | DEG-Deutsche Investitions- und Entwicklungsgesellschaft mbH, or DEG, is owned by KfW. KfW is the beneficial owner of all the equity interests of DEG. The Federal Republic of Germany is the beneficial owner of KfW and exercises sole voting and investment power over the shares owned by KfW. The Federal Republic of Germany disclaims beneficial ownership in the shares held by KfW except to the extent of its pecuniary interests therein. DEGs principal address is Kämmergasse 22, 50676 Kôln, Germany. |
In addition, after the consummation of this offering and subscription of shares described under Prospectus Summary Corporate Structure, Mr. Inderpreet Singh Wadhwa, Mr. Harkanwal Singh Wadhwa, Azure Power Inc. and Mr. Satnam Sanghera will own %, % and % of the equity shares of AZI, assuming an offer price of US$ per equity share, which is the midpoint of the estimated range of the initial public offering price as set forth on the cover page of this prospectus.
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Our Related Party Transaction Policies
We believe that the terms of our related party transactions are comparable to the terms we could obtain from independent third parties. Subsequent to this offering, we expect that our related party transactions will continue to be conducted on the same basis. However, upon the completion of this offering, our related party transactions will be subject to the review and approval of the audit committee of our board of directors. Our audit committee will consider whether the transaction is to be conducted on an arms-length basis and whether the services can be procured from an independent third party. The charter of our audit committee as adopted by our board of directors provides that we may not enter into any related-party transaction unless and until it has been approved by the audit committee.
Lease Agreement
On November 28, 2011, AZI entered into a lease agreement, which became effective from December 1, 2011, for our registered office building with family members of Mr. Inderpreet Singh Wadhwa. The transaction was conducted in the normal course of operations, transacted at the market rate and was approved by a majority of the board of directors independently. AZI renewed the lease agreement on October 15, 2013 for a term of five years ending on April 30, 2018, cancellable after 12 months. During fiscal years 2013, 2014 and 2015 and for the three months ended June 30, 2015, we paid Rs. 12.6 million, Rs. 14.3 million, Rs. 14.5 million and Rs. 3.62 million in rent, respectively. Pursuant to the lease agreement, we have paid Rs. 6.3 million to the lessors as interest free retention money, which is to be returned to us upon the termination of the lease, provided that we hand over satisfactory possession of the leased premises to the lessors.
Private Placements
In September 2012, AZI issued 79,909 Series D compulsorily convertible preferred shares at a price of Rs. 5,631 per share to FC VI India Ventures (Mauritius) Ltd. and Helion Venture Partners II, LLC, each of which held a % interest in the voting power of AZI. The price per share was determined after the foregoing investors offered better pricing terms than the price per share offered in arms length negotiations by independent investors. The transaction was approved by the board of directors. In connection with the issuance of Series D compulsorily convertible preferred shares, AZI and our founders, Mr. Inderpreet Wadhwa and Mr. Harkanwal Wadhwa, entered into an Investment Agreement with the foregoing investors.
In June 2014, AZI issued 79,245 Series F compulsorily convertible preferred shares at a price of Rs. 11,224.75 per share to FC VI India Ventures (Mauritius) Ltd. and Helion Venture Partners II, LLC. The price per share was determined after the foregoing investors offered better pricing terms than the price per share offered in arms length negotiations by independent investors. The transaction was approved by the board of directors. In connection with the issuance of Series F compulsorily convertible preferred shares, AZI and Mr. Inderpreet Wadhwa entered into an Investment Agreement with the foregoing investors. In December 2014, AZI issued an additional 38,581 Series F compulsorily convertible preferred shares at a price of Rs. 11,224.75 per share to FC VI India Ventures (Mauritius) Ltd. and Helion Venture Partners II, LLC.
In June 2014, AZI issued 36,000 compulsorily convertible debentures to International Finance Corporation, which held a % interest in the voting power of AZI, at a price of Rs. 5,000 per share. The price per share was determined after the foregoing investor offered better pricing terms than the price per share offered in arms length negotiations by independent investors. The transaction was approved by the board of directors. In February 2015, AZI issued 20,307 additional Series F compulsorily convertible preferred shares at a price of Rs. 11,224.75 per share to International Finance Corporation.
In June 2015, we entered into a subscription agreement with International Finance Corporation and its affiliated entity for the sale of 133,285 shares of Series H compulsorily convertible preferred shares for
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US$60 million, which we amended in July 2015. In July 2015, we entered into a subscription agreement with Société de Promotion et de Participation pour la Coopération Économique, or PROPARCO, for the sale of 18,882 shares of Series G compulsorily convertible preferred shares for US$8.5 million.
Shareholders Agreement
On July 22, 2015, we, AZI and our founders, Mr. Inderpreet Wadhwa and Mr. Harkanwal Wadhwa, entered into an amended shareholders agreement (which superseded earlier shareholder agreements) that contained various rights such as board nomination rights and provided for matters which required special approval by certain of AZIs shareholders, including a prohibition on transfers of AZI equity securities by our founders without our consent.
In addition, on July 22, 2015, we entered into a separate shareholders agreement, or the APGL Shareholders Agreement, among us, IFC, Helion Venture Partners II, LLC, Helion Venture Partners India II, LLC, FC VI India Venture (Mauritius) Ltd., DEG, PROPARCO, IFC GIF Investment Company I, or GIF, and IW Green Inc. (which has since been converted to IW Green LLC) and our founders, Mr. Inderpreet Wadhwa and Mr. Harkanwal Wadhwa. The APGL Shareholders Agreement provides for certain preferential rights, including director nomination rights, rights of first offer, drag-along rights, rights of first refusal, co-sale rights, call options, information rights and consent rights on certain corporate matters. The APGL Shareholders Agreement will terminate upon the completion of this offering except for the following provisions: (A) a provision requiring, as long as IFC and GIF collectively own an aggregate of 5% of our equity share capital, shareholder approval by special resolution for (i) amendments to AZI and its subsidiaries articles of association or memorandum of association, except as such amendments may be required for certain financing matters, (ii) material sales or disposals of our assets or our incurrence of material liabilities, (iii) changes to our business or the business of our subsidiaries and (iv) amendments to our share option plan; (B) a provision requiring, as long as IFC and/or GIF hold any of our equity shares, shareholder approval by ordinary resolution to be obtained for equity issuances of more than 10% of our share capital and (C) provisions requiring our continued compliance with certain standard policies of IFC and PROPARCO on, among other things, environmental, social and anti-corruption issues, as long as IFC or PROPARCO, respectively, hold any of our equity securities. For more information on the voting requirements of ordinary and special resolutions. See Description of Share CapitalVoting Rights.
Registration Rights Agreement
We intend to enter into a registration rights agreement with IFC, IFC GIF Investment Company I, PROPARCO, FC VI India Venture (Mauritius) Ltd., Helion Venture Partners II, LLC, Helion Venture Partners India II, LLC and DEG, pursuant to which we will grant certain registration rights to certain holders of our equity shares, as described in greater detail in Description of Share Capital Registration Rights.
Loans to Senior Management
During fiscal year 2014, we made an unsecured, non-interest bearing loan to our Chief Executive Officer and Director, Mr. Inderpreet Wadhwa, amounting to Rs. 41.4 million ($668,605, based on the exchange rate as of the relevant balance sheet date). This loan was repaid in March 2015.
Personal Guarantees
Mr. Inderpreet Singh Wadhwa and Mr. Harkanwal Singh Wadhwa have personally guaranteed the repayment of a number of AZIs loans. Mr. Inderpreet Singh Wadhwa and Mr. Harkanwal Singh Wadhwa have each also personally guaranteed a loan from Reliance Capital Limited in the amount of Rs. 1 billion and a loan from IFCI Limited in the amount of Rs. 1 billion. As of September 30, 2015, we have yet to receive any disbursements under these two loans. In addition, in connection with a working capital facility provided by the
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Central Bank of India, Mr. Inderpreet Singh Wadhwa and Mr. Harkanwal Singh Wadhwa have each guaranteed Rs. 543.3 million and Rs. 69.7 million, respectively, in favor of the lender.
In addition, Mr. Inderpreet Singh Wadhwa and Mr. Harkanwal Singh Wadhwa have provided personal guarantees in favour of the Central Bank of India for the repayment of loans of three of our project subsidiaries in the amounts of Rs. 314 million, Rs. 639 million and Rs. 1,306 million, in addition to the payment of any interest and other monies payable to the lender.
Mr. Inderpreet Singh Wadhwa and Mr. Harkanwal Singh Wadhwa did not receive any separate remuneration from the company for providing the guarantees.
Indemnification Agreements
We will indemnify our directors and officers as permitted by our constitution, which we expect to adopt with effect upon completion of this offering, and pursuant to indemnification agreements entered into with such directors and officers, as described in Management Indemnification Agreements.
Employment Agreements
See Management Employment Agreements.
Equity-Based Compensation Plans
See Management Equity-Based Compensation Plans.
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Equity Shares
General
All of the equity shares are fully paid. The preparation, issue and delivery of certificates shall be governed by the Mauritius Companies Act.
Our constitution that will be in effect upon the completion of this offering, or the Constitution, authorizes the issuance of equity shares at $0.01 par value per share. As of the date of this prospectus, equity shares were issued. Immediately prior to the consummation of this offering, we will have a total of equity shares issued and outstanding after giving effect to the corporate formation transactions described under Prospectus Summary Corporate Structure, assuming a total of equity shares will be issued to the non-founder investors upon the conversion of convertible securities, based on an initial public offering price of US$ per equity share, which is the midpoint of the estimated range of the initial public offering price as set forth on the cover page of this prospectus. Upon the completion of this offering, we will have equity shares outstanding, based on an assumed initial public offering price of US$ per equity share, the midpoint of the price range set forth on the cover page of this prospectus, and assuming the underwriters do not exercise their over-allotment for additional shares.
Dividends
To the extent permitted by the Mauritius Companies Act and our Constitution, dividends may only be paid out of retained earnings (after having made good any accumulated losses of ours at the beginning of any relevant accounting period), to the shareholders according to their rights and interests, and no distribution (which term includes dividend) may be made unless our board of directors is satisfied that, upon the distribution being made (1) we are able to pay our debts as they become due in the normal course of business and (2) the value of our assets is greater than the sum of (a) the value of our liabilities and (b) our stated capital. Subject to the Mauritius Companies Act and our Constitution, the declaration and payment of any dividend has to be authorized by the board of directors.
Any distribution or part thereof payable in cash, or any other sum payable in cash to the holder of shares may be paid by wire transfer to the account designated by the Shareholder or by cheque, postal, or money order sent through the post or by courier addressed to the holder at his address in our register of shareholders or, in the case of joint holders, addressed to the holder whose name stands first in our register of shareholders in respect of the shares at his registered address as appearing in the said register or addressed to such person at such address as the holder or joint holders may in writing direct. Every such cheque, postal, money order or wire transfer shall, unless the holder or joint holders otherwise direct, be made payable to the order of the holder or, in the case of joint holders, to the order of the holder whose name stands first in our register of shareholders in respect of such shares, and shall be sent at his or their risk and payment of the cheque, postal, money order or wire transfer by the bank on which it is drawn shall constitute a good discharge to us. Any one of two or more joint holders may give effectual receipts for any dividends, distributions or other monies payable or property distributable in respect of the shares held by such joint holders.
Any dividend or distribution out of retained earnings unclaimed for a period of six years from the date of declaration of such dividend or distribution shall be forfeited and shall revert to us and the payment by our board of directors of any unclaimed dividend, distribution, interest or other sum payable on or in respect of the share into a separate account shall not constitute us a trustee in respect thereof.
Voting Rights
Subject to any rights or restrictions as to voting for the time being attached to any class of shares and our Constitution, each holder of the equity shares who is present in person or by proxy at a meeting of shareholders
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shall have one vote for every equity share which he holds or represents. Voting at any meeting of shareholders is by person or by proxy. A poll may be demanded by: (1) the chairman of such meeting, (2) not less than five shareholders having the right to vote at the meeting, (3) a shareholder or shareholders representing not less than 10% of the total voting rights of all shareholders having the right to vote at the meeting, or (4) by a shareholder or shareholders holding shares in us that confer a right to vote at the meeting and on which the aggregate amount paid up is not less than 10% of the total amount paid up on all shares that confer that right.
An ordinary resolution to be passed by the shareholders requires the affirmative vote of a simple majority of votes of those shareholders entitled to vote and voting on the matter which is the subject matter of the resolution, while a special resolution is a resolution approved by a majority of 75% of the votes of those shareholders entitled to vote and voting on the question. A special resolution will be required for matters such as amending our Constitution.
Certain Voting Requirements
Our Constitution provides that:
(a) | The following actions by our company will require a special resolution of shareholders, so long as International Finance Corporation and IFC GIF Investment Company I, together, hold at least 5% of the share capital of our company: |
(i) | amendment to the articles of association or memorandum of association of AZI and its subsidiaries, except in connection with certain Board-approved financing activities, in certain circumstances; |
(ii) | disposal or sale of more than 50% of the companys assets, or incurring obligations or liabilities worth more than 50% of our companys assets; |
(iii) | a change in the business of the company or its subsidiaries from the generation and production of solar energy; and |
(iv) | any material amendment to the ESOP plan. |
(b) | Any issuance of more than 10% of the share capital of the company, in a single transaction, must be approved by an ordinary resolution of shareholders, so long as International Finance Corporation or IFC GIF Investment Company I hold any ordinary shares of our company. |
Transfer of Equity Shares
Subject to the Mauritius Companies Act and to such restrictions contained in our Constitution as may be applicable, any shareholder may transfer all or any of his equity shares by an instrument of transfer in the usual or common or in a form prescribed by the Designated Stock Exchange (as defined in our Constitution) or in any other form which our board of directors may approve. No such instrument shall be required on the redemption of an equity share or on the purchase by us of an equity share.
Subject to the provisions of the Mauritius Companies Act, we must, on the written request of the transferor or transferee of a registered equity share in us, enter in our register of shareholders the name of the transferee of the equity share save that the registration of transfers may be suspended and the share register closed at such times and for such periods as we may from time to time by resolution of directors determine provided always that such registration shall not be suspended and the share register closed for more than thirty days in any period of twelve months.
If our board of directors declines to register a transfer it shall, within twenty eight (28) days after the date on which the instrument of transfer was lodged, send to the transferee notice of such refusal.
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Liquidation
Subject the laws of Mauritius and our Constitution, upon the winding up of us, the whole or any part of our assets shall be divided amongst the shareholders on a pro rata basis.
Redemption of Shares
Subject to the provisions of the Mauritius Companies Act and other applicable law, we may issue shares on terms that are subject to redemption, on the happening of a specified event or on a given date and/or at our option and/or at the option of the holders, on such terms and in such manner as may be determined by our board of directors.
Variation of Rights of Shares
All or any of the special rights for the time being attached to any class of shares for the time being issued may from time to time (whether or not we are being wound up) be altered or abrogated with the consent in writing of the holders of not less than 75% of the issued shares of that class or with the sanction of a special resolution passed at a separate meeting of the holders of such shares voting in person or by proxy. The necessary quorum shall be one or more persons holding or representing by proxy any of the shares of the relevant class, that every holder of shares of the relevant class shall be entitled on a poll to one vote for every such share held by him and that any holder of shares of the relevant class present in person or by proxy may demand a poll.
The special rights conferred upon the holders of any shares or class of shares shall not, unless otherwise expressly provided in the rights attaching to or the terms of issue of such shares, be deemed to be altered by the creation or issue of further shares ranking pari passu therewith.
Meetings of Shareholders
Subject to the Mauritius Companies Act, an annual shareholders meeting shall be convened by our board of directors not more than once in each year and not later than six months after our balance sheet date and not later than 15 months after the previous annual meeting. Special meetings of shareholders may be convened by our board of directors or on the written request of shareholders holding shares carrying together not less than 5% of the voting rights entitled to be exercised on the issue.
Subject to our Constitution, meeting of shareholders shall be called by not less than fourteen (14) nor more than sixty (60) business days notice in writing.
For a special meeting called on the written request of the shareholders, the shareholders must provide notice to our secretary which must be delivered to or mailed and received at our principal executive offices not less than ninety days nor more than one hundred twenty days prior to such special meeting.
A quorum for a meeting of shareholders shall be present where the shareholders or their proxies are present or have cast postal votes, who are between them able to exercise not less than 33.3% of the votes to be cast on the business to be transacted by the meeting.
A shareholder may exercise the right to vote either by being present in person or by proxy. A proxy for a shareholder may attend and be heard at a meeting of shareholders as if the proxy were the shareholder. A proxy shall be appointed by notice in writing signed by the shareholder, and the notice shall state whether the appointment is for a particular meeting or a specified term.
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Inspection of Books and Records
Under the Mauritius Companies Act, we are required to keep available our certificate of incorporation, Constitution, share register, the full names and residential addresses of our directors, our registered office and address for service, copies of the instruments creating or evidencing charges which are required to be registered under section 127 of the Mauritius Companies Act, minutes of all meetings and resolutions of shareholders, copies of written communications to all shareholders or to all holders of a class of shares during the preceding seven years (including financial statements, and group financial statements), certificates given by directors under the Mauritius Companies Act and our interests register (if any) for inspection by any shareholder of ours or by a person authorized in writing by a shareholder for the purpose, between the hours of 9:00 a.m. and 5:00 p.m. on each working day during the inspection period at the place at which our records are kept in Mauritius. A shareholder who wishes to inspect such records must serve written notice on us of his intention to inspect the records.
The term inspection period is defined in the Mauritius Companies Act to mean the period commencing on the third working day after the day on which notice of intention to inspect is served on us by the person.
Changes in Capital
Subject to the Mauritius Companies Act, we may, from time to time, by ordinary resolution:
(a) | divide our shares into several classes and attach thereto respectively any preferential, deferred, qualified or special rights, privileges or conditions; |
(b) | consolidate and divide all or any of our share capital into shares of larger par value than our existing shares; and |
(c) | engage in a forward stock split. |
Subject to the Mauritius Companies Act and our Constitution and any confirmation or consent required by law or under our Constitution, we may from time to time by special resolution authorize the reduction of our stated capital (including any amount in any share premium account) or change the currency denomination of our share capital as we think fit.
Purchase by Our Company of our Own Shares
We may, pursuant to a special resolution, purchase or acquire and hold our own shares as treasury shares upon such terms as our board of directors may, in our discretion, determine, provided always that such purchase or acquisition is effected in accordance with the provisions of the Mauritius Companies Act, which generally requires solvency of the company after giving effect to such purchase or acquisition.
Interested Directors
Subject to the Mauritius Companies Act and our Constitution, a director shall, forthwith after becoming aware of the fact that he is interested in a transaction or a proposed transaction with us, cause to be entered in our interests register and disclose to our board of directors the nature and monetary value of that interest, or where the monetary value of the directors interest cannot be quantified, the nature and extent of that interest. A general notice entered in the interests register or disclosed to our board of directors to the effect that a director is a shareholder, director, officer or trustee of another named company or other person and is to be regarded as interested in any transaction which may, after the date of the entry or disclosure, be entered into with that company or person, is a sufficient disclosure of interest in relation to that transaction.
To the extent that our company is a reporting issuer, as defined in section 86 of the Mauritius Securities Act 2005, the relevant disclosure requirements under the Mauritius Securities Act 2005 may also be applicable. We have applied to the Mauritius Financial Services Commission for an exemption from the disclosure requirements applying to reporting issuers under the Mauritius Securities Act 2005.
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Arbitration
Our Constitution provides that any proceeding, dispute or difference, however characterized, relating to or arising between our shareholders shall be referred to and finally resolved by arbitration in Mauritius in accordance with the LCIA-MIAC Arbitration Rules.
Notification of Shareholdings by Directors and Substantial Shareholders
Our Constitution provides that (a) each of our directors shall, upon his appointment to our board of directors, give an undertaking to our company that, for so long as he remains a director of our company, he shall forthwith notify our company secretary of the particulars of our equity shares beneficially owned by him at the time of his appointment and of any change in such particulars (including the circumstances of any such change), and (b) each member of our company shall, upon becoming a substantial shareholder of our company, give an undertaking to our company that, for so long as he remains as a substantial shareholder of our company, he shall notify our company secretary of the particulars of our equity shares in which he has an interest at the time of his becoming a substantial shareholder or of any change in such particulars (including the circumstances of any such change) within 48 hours of such time or change (as the case may be), provided that he shall only be required to give notice of a change in the percentage level of his interests in the shares where there is a change of 1% or more in the percentage level of his shareholding interest in the relevant class of shares in our company. For this purpose, a substantial shareholder means a person who holds by himself or his nominee a share or an interest in a share in the capital of our company which entitles him to exercise not less than 5% of the aggregate voting power exercisable at a meeting of our shareholders.
Category 1 Global Business Company
We are licensed by the Financial Services Commission as a Mauritius Category 1 Global Business Company, or GBC1.
Before the coming into force of the Mauritius Finance Act 2010, Mauritius companies holding a GBC1 were only allowed to conduct business outside Mauritius. However, with the implementation of the Mauritius Finance Act 2010, Mauritius companies holding a GBC1 may (i) carry on business in Mauritius, (ii) deal with persons resident in Mauritius, and (iii) hold shares or other interests in a corporation which is resident in Mauritius.
A Mauritius company holding a GBC1 may conduct any business activity to the extent that it is not unlawful or contrary to public interest and to the extent that it does not cause or is likely to cause serious prejudice to the good repute of Mauritius as a center for financial services.
A Mauritius company holding a GBC1 should be administered at all times by a Management Company and should be controlled and managed in Mauritius.
The following indicative list of criteria has to be complied with:
(a) | The company must have at least 2 directors, resident in Mauritius, of sufficient caliber to exercise independence of mind and judgment. |
(b) | The company will maintain at all times its principal bank account in Mauritius. |
(c) | The company will keep and maintain at all times its accounting records at its registered office in Mauritius. |
(d) | The company will prepare its statutory financial statements and cause the same to be audited in Mauritius. |
(e) | The company will provide for meetings of directors to include at least 2 directors from Mauritius. |
(f) | whether a corporation meets at least one of the following criteria: |
(i) | the corporation has or shall have office premises in Mauritius; |
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(ii) | the corporation employs or shall employ on a full time basis at administrative/technical level, at least one person who shall be resident in Mauritius; |
(iii) | the corporations constitution contains a clause whereby all disputes arising out of the constitution shall be resolved by way of arbitration in Mauritius; |
(iv) | the corporation holds or is expected to hold within the next 12 months, assets (excluding cash held in bank account or shares/interests in another corporation holding a Global Business License) which are worth at least US$100,000 in Mauritius; |
(v) | the corporations shares are listed on a securities exchange licensed by the Commission; or |
(vi) | it has or is expected to have a yearly expenditure in Mauritius which can be reasonably expected from any similar corporation which is controlled and managed from Mauritius. |
A Mauritius company holding a GBC1 is tax resident in Mauritius and can therefore benefit from the network of Double Taxation Avoidance Agreements which Mauritius has in place with a number of countries.
Differences in Corporate Law
The Mauritius Companies Act differs from laws applicable to United States corporations and their shareholders. Set forth below is a summary of the significant differences between the provisions of the Mauritius Companies Act applicable to us and the laws applicable to companies incorporated in the United States and their shareholders.
Pursuant to the Mauritius Companies Act, subject to certain exceptions prescribed in the Mauritius Companies Act, a Mauritius company shall not enter into the following transactions unless the transaction is approved by special resolution or contingent on approval by special resolution of the shareholders of the company:
(a) | the acquisition of, or an agreement to acquire, whether contingent or not, assets the value of which is more than 75% of the value of the companys assets before the acquisition; |
(b) | the disposition of, or an agreement to dispose of, whether contingent or not, assets of the company the value of which is more than 75% of the value of the companys assets before the disposition; or |
(c) | a transaction that has or is likely to have the effect of the company acquiring rights or interests or incurring obligations or liabilities the value of which is more than 75% of the value of the companys assets before the transaction (provided that this will not apply by reason only of the company giving, or entering into an agreement to give, a charge secured over assets of the company, the value of which is more than 75% of the value of the companys assets for the purpose of securing the repayment of money or the performance of an obligation). |
Under the Mauritius Companies Act, a special resolution is a resolution that is approved by a majority of 75% of the votes of those shareholders entitled to vote and voting on the question.
Where a transaction involves the acquisition or disposition or the acquiring of rights, interests or incurring obligations of, in any case, more than half the value of the Mauritius companys assets, subject to certain exceptions prescribed in the Mauritius Companies Act, the transaction has to be approved by ordinary resolution or contingent on approval by ordinary resolution, and a Mauritius company shall not enter into the following transactions unless the transaction is approved by ordinary resolution or contingent on approval by ordinary resolution of the shareholders of the company:
(a) | the acquisition of, or an agreement to acquire, whether contingent or not, assets the value of which is more than 50% of the value of the companys assets before the acquisition; |
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(b) | the disposition of, or an agreement to dispose of, whether contingent or not, assets of the company the value of which is more than 50% of the value of the companys assets before the disposition; or |
(c) | a transaction that has or is likely to have the effect of the company acquiring rights or interests or incurring obligations or liabilities the value of which is more than 50% of the value of the companys assets before the transaction (provided that this will not apply by reason only of the company giving, or entering into an agreement to give, a charge secured over assets of the company, the value of which is more than 50% of the value of the companys assets for the purpose of securing the repayment of money or the performance of an obligation). |
Under the Mauritius Companies Act, an ordinary resolution is a resolution that is approved by a simple majority of the votes of those shareholders entitled to vote and voting on the matter which is the subject of the resolution.
Under Delaware law, a corporation may sell, lease or exchange all or substantially all of its property and assets upon approval by the board and resolutions adopted by holders of a majority of the outstanding shares of the corporation entitled to vote.
Mergers and Similar Arrangements
A merger of two or more constituent companies under Mauritius law requires an amalgamation proposal to be approved by the directors of each constituent company and by special resolution of the shareholders of each constituent company.
A merger between a Mauritius parent company and its Mauritius subsidiary or subsidiaries does not require approval by a resolution of shareholders. For this purpose a subsidiary has the meaning assigned to it by the Mauritius Companies Act.
Save in certain circumstances, a dissentient shareholder of a Mauritius constituent company is entitled to payment of the fair and reasonable price for his shares upon dissenting to a merger or consolidation. The exercise of appraisal rights will normally preclude the exercise of any other rights save for the right to seek relief on the grounds that the merger or consolidation is void or unlawful.
In addition, there are statutory provisions that facilitate the reconstruction and amalgamation of companies where the Supreme Court of Mauritius, on the application of the company or, with leave of the court, any shareholder or creditor of the company, may order that an arrangement or amalgamation or compromise shall be binding on the company and on such other persons or classes of persons as the court may specify and any such order may be made on such terms and conditions as the court thinks fit.
Under the Delaware General Corporations Law, a merger of two Delaware corporations requires approval by the board and, except in certain circumstances, shareholders of each corporation. A merger between a Delaware parent company and its Delaware subsidiary or subsidiaries does not generally require shareholder approval.
Shareholders Suits
In principle, we will normally be the proper plaintiff, but under the Mauritius Companies Act, the Mauritius courts may grant leave to a shareholder (including a minority shareholder) to bring a derivative action.
In Delaware, in any derivative suit instituted by a shareholder of a corporation, it shall be averred in the complaint that the plaintiff was a shareholder of the corporation at the time of the transaction of which he complains or that such stockholders stock thereafter devolved upon such stockholder by operation of law. The complaint shall set forth with particularity the efforts of the plaintiff to obtain the action by the board or the reasons for not making
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such effort. Such action shall not be dismissed or compromised without the approval of the Chancery Court. Moreover, if we were a Delaware corporation, a shareholder whose shares were canceled in connection with our dissolution, would not be able to bring a derivative action against us after the equity shares have been cancelled.
Indemnification of Directors and Executive Officers and Limitation of Liability
Under the Mauritius Companies Act, a company may indemnify a director or employee of the company or a related company for any costs incurred by him or the company in respect of any proceedings (a) that relates to liability for any act or omission in his capacity as a director or employee and (b) in which judgment is given in his favor, in which he is acquitted, which is discontinued, in which he is granted relief under section 350 of the Mauritius Companies Act or where proceedings are threatened and such threatened action is abandoned or not pursued. The Mauritius Companies Act further provides that a company may indemnify a director or employee of the company or a related company in respect of (a) liability to any person, other than the company or a related company, for any act or omission in his capacity as a director or employee or (b) costs incurred by that director or employee in defending or settling any claim or proceedings relating to any such liability, save in respect of any criminal liability or liability in respect of a breach (in the case of a director) of the duty to exercise his powers honestly in good faith in the best interests of the company. Our post-offering Constitution will provide for indemnification, to the extent permitted by Mauritius law, of our directors and officers for costs, charges, losses, expenses and liabilities incurred or sustained by them in the execution and discharge of their duties in their respective offices or in relation thereto, except in respect of their own fraud or dishonesty.
Under Delaware law, a corporation has the flexibility to indemnify a director, officer, employee or agent if the person acted in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of the corporation and, with respect to any criminal action, had no reasonable cause to believe the persons conduct was unlawful.
Directors Fiduciary Duties
Under Delaware corporate law, a director of a Delaware corporation has a fiduciary duty to the corporation and its shareholders. This duty has two components: the duty of care and the duty of loyalty. The duty of care requires that a director act in good faith, with the care that an ordinarily prudent person would exercise under similar circumstances. Under this duty, a director must inform himself of, and disclose to shareholders, all material information reasonably available regarding a significant transaction. The duty of loyalty requires that a director act in a manner he or she reasonably believes to be in the best interests of the corporation. He or she must not use his or her corporate position for personal gain or advantage. This duty prohibits self-dealing by a director and mandates that the best interest of the corporation and its shareholders take precedence over any interest possessed by a director, officer or controlling shareholder and not shared by the shareholders generally. In general, actions of a director are presumed to have been made on an informed basis, in good faith and in the honest belief that the action taken was in the best interests of the corporation. However, this presumption may be rebutted by evidence of a breach of one of the fiduciary duties. Should such evidence be presented concerning a transaction by a director, a director must prove the procedural fairness of the transaction, and that the transaction was of fair value to the corporation.
As a matter of Mauritius law, a director of a Mauritius company is in the position of a fiduciary with respect to the company and therefore it is considered that he owes duties to the company that include a duty to act bona fide in the best interests of the company, a duty not to make a profit based on his or her position as director (unless the company permits him to do so) and a duty not to put himself in a position where the interests of the company conflict with his or her personal interest or his or her duty to a third party. Under the Mauritius Companies Act, our directors have a duty to our company to exercise their powers honestly, in good faith and in the best interests of our company. Our directors also have a duty to our company to exercise the degree of care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances. Where a director of a public company also holds office as an executive, the director is required under Mauritius law to exercise that degree of care, diligence and skill which a reasonably prudent and competent executive in that
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position would exercise. In fulfilling their duty of care to our company, our directors must ensure compliance with the Mauritius Companies Act and our Constitution, as amended from time to time.
Neither Mauritian law nor our Constitution requires the majority of our directors to be independent.
Shareholder Action by Written Consent
Under the Delaware General Corporation Law, a corporation may eliminate the right of shareholders to act by written consent by amendment to its certificate of incorporation. Mauritius law provides that, save for the annual meeting of a company, shareholders may approve corporate matters by way of a unanimous written resolution signed by or on behalf of each shareholder who would have been entitled to vote on such matter at a general meeting without a meeting being held or by resolution in writing signed by not less than 75% or such other percentage as the constitution of the company may require for passing a special resolution, whichever is the greater, of the shareholders who would be entitled to vote on that resolution at a meeting of shareholders who together hold not less than 75% (or, if a higher percentage is required by the constitution, that higher percentage) of the votes entitled to be cast on that resolution.
Shareholder Meetings
Shareholders of a Delaware corporation generally do not have the right to call meetings of shareholders unless that right is granted in the certificate of incorporation or bylaws. However, if a corporation fails to hold its annual general meeting within a period of 30 days after the date designated for the annual meeting, or if no date has been designated for a period of 13 months after its last annual general meeting, the Delaware Court of Chancery may order a meeting to be held upon the application of a shareholder.
Mauritius law and our Constitution allow our shareholders to requisition a shareholders meeting. We are obliged by law to call a shareholders annual meeting once every year.
Cumulative Voting
Under the Delaware General Corporation Law, cumulative voting for elections of directors is not permitted unless the corporations certificate of incorporation specifically provides for it. Cumulative voting potentially facilitates the representation of minority shareholders on a board of directors since it permits the minority shareholder to cast all the votes to which the shareholder is entitled on a single director, which increases the shareholders voting power with respect to electing such director. As permitted under Mauritius law, our Constitution does not provide for cumulative voting. As a result, our shareholders are not afforded any less protections or rights on this issue than shareholders of a Delaware corporation.
Removal of Directors
Under the Delaware General Corporation Law, a director of a corporation with a classified board may be removed only for cause with the approval of a majority of the outstanding shares entitled to vote, unless the certificate of incorporation provides otherwise. Under our Constitution, directors may be removed by ordinary resolution of our shareholders.
Transactions with Interested Shareholders
The Delaware General Corporation Law contains business combination provision applicable to Delaware corporations whereby, unless the corporation has specifically elected not to be governed by such statute by amendment to its certificate of incorporation, it is prohibited from engaging in certain business combinations with an interested shareholder for three years following the date that such person becomes an interested shareholder. Subject to specified exceptions, an interested shareholder is a person or a group that owns 15% or more of the corporations outstanding voting stock (including any rights to acquire stock pursuant to an option,
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warrant, agreement, arrangement or understanding, or upon the exercise of conversion or exchange rights, and stock with respect to which the person has voting rights only), or is an affiliate or associate of the corporation and was the owner of 15% of more of the corporations outstanding voting stock at any time within the previous three years. This has the effect of limiting the ability of a potential acquirer to make a two-tiered bid for the target in which all shareholders would not be treated equally. The statute does not apply if, among other things, prior to the date on which such shareholder becomes an interested shareholder, the board of directors approves either the business combination or the transaction which resulted in the person becoming an interested shareholder. This encourages any potential acquirer of a Delaware corporation to negotiate the terms of any acquisition transaction with the targets board of directors.
There is no such statutory provision under Mauritius law restricting transactions between a company and its significant shareholders.
Dissolution; Winding Up
Under the Delaware General Corporation Law, unless the board of directors approves the proposal to dissolve, dissolution must be approved by all shareholders entitled to vote thereon. Only if the dissolution is initiated by the board of directors may it be approved by a simple majority of the corporations outstanding shares. Delaware law allows a Delaware corporation to include in its certificate of incorporation a supermajority voting requirement in connection with dissolutions initiated by the board.
Under Mauritius law, a company may be wound up by either an order of the courts of Mauritius or by a special resolution of its members or, if the company is unable to pay its debts, by a special resolution of its members with leave of the court. The court has authority to order winding up in a number of specified circumstances including where it is, in the opinion of the court, just and equitable to do so.
Under the Insolvency Act 2009 of Mauritius, our company may be dissolved, liquidated or wound up by special resolution of our shareholders.
Variation of Rights of Shares
Under the Delaware General Corporation Law, a corporation may vary the rights of a class of shares with the approval of a majority of the outstanding shares of such class, unless the certificate of incorporation provides otherwise. Under Mauritius law and our Constitution, if our share capital is divided into more than one class of shares, we may vary the rights attached to any class only with the sanction of a special resolution passed at a general meeting of the holders of the shares of that class.
Amendment of Governing Documents
Under the Delaware General Corporation Law, a corporations governing documents may be amended with the approval of a majority of the outstanding shares entitled to vote, unless the certificate of incorporation provides otherwise. As permitted by Mauritius law, our Constitution may only be amended by special resolution of our shareholders.
Rights of Non-Resident or Foreign Shareholders
There are no limitations imposed by our Constitution on the rights of non-resident or foreign shareholders to hold or exercise voting rights on our shares.
Such limitations are not required under the Delaware General Corporation Law.
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Issuance of Preferred Shares
Our Constitution allows for our company to issue preferred shares. Our Constitution provides that, except for issuances of more than 10% of the share capital of the Company in a single transaction, which must be approved by an ordinary resolution of shareholders for so long as International Finance Corporation or IFC GIF Investment Company I hold any ordinary shares of the Company, the directors of our company may offer, issue, grant options over or otherwise dispose of shares of our company to such persons, at such times and for such consideration and upon such terms and conditions as the board of directors of our company may in its absolute discretion determine (save that no shares shall be issued below the par value of the share) and that any share in our company may be issued with or have attached thereto such rights or restrictions whether in regard to dividend, voting, return of capital or otherwise as our company may determine or, if there has not been any such determination or so far as the same does not make specific provision, as the board of directors of our company may determine.
Under the Delaware General Corporation Law, a corporation may issue preferred shares without shareholder approval.
Compulsory Acquisition
The Financial Services Commission in Mauritius has recently issued the Securities (Takeover) Rules 2010, or the Rules, under the Financial Services Act 2007 of Mauritius and the Mauritius Securities Act which may apply to takeover offers where the offeree is a reporting issuer in Mauritius and to a corporation holding a global business license which is listed on a relevant securities exchange. The Rules include provisions, inter alia , for the making of a mandatory offer and compulsory acquisition of shares. The Rules came into operation on May 1, 2011.
Anti-takeover provisions
Mauritius law does not prevent Mauritius companies from adopting a wide range of defensive measures, such as staggered boards, issue of preferred shares, adoption of poison pill shareholder rights plans and provisions that restrict the rights of shareholders to call meetings. Our Constitution includes the following provisions which may be regarded as defensive measures: (i) a staggered board of directors, (ii) the ability to issue preferred shares, (iii) granting directors the absolute discretion to decline to register a transfer of any shares (other than a fully paid share), and (iv) requiring that amendments to our Constitution be approved by a special resolution of the shareholders of our company.
Delaware law also does not prevent Delaware corporations from adopting defensive measures such as staggered boards, issue of preferred shares, adoption of poison pill shareholder rights plans and requirements for advance notification of shareholder nominations and proposals. In addition, Section 203 of the Delaware General Corporation Law prohibits a publicly held Delaware corporation from engaging, under certain circumstances, in a business combination with an interested stockholder for a period of three years following the date the person became an interested stockholder unless certain conditions are met. Generally, a business combination includes a merger, asset or stock sale or other transaction resulting in a financial benefit to the interested stockholder. An interested stockholder is a person who, together with affiliates and associates, owns or, within three years prior to the determination of interested stockholder status, did own 15% or more of a corporations outstanding voting stock.
Registration Rights
We intend to enter into a registration rights agreement by and among Azure Power Global Limited, IFC, IFC GIF Investment Company I, PROPARCO, FC VI India Venture (Mauritius) Ltd., Helion Venture Partners II, LLC, Helion Venture Partners India II, LLC and DEG (collectively referred to as the Holders), pursuant to which we will grant certain registration rights to certain holders of our Registrable Securities, as described below.
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Subject to the terms of the registration rights agreement and lock-up agreements described in this prospectus, at any time or from time to time, one or more of the Holders may request that the Company effect a registration under the Securities Act of all or any part of the Registrable Securities (as will be defined in the registration rights agreement) owned by the Holders (each such registration is referred to as a Demand Registration), provided that the Registrable Securities to be so registered (i) have an aggregate value of at least $ , based on the closing trading price of the equity shares on the date demand to file such Demand Registration Statement is made, and (ii) include all Registrable Securities of the Holder or Holders requesting the Demand Registration which remain outstanding at such time.
At any time after the Company becomes eligible to file a shelf registration statement under the Securities Act, the registration statement to be filed by the Company pursuant to any Demand Registration may be required by the Holder requesting such Demand Registration to be in the form of a shelf registration statement (or any similar or successor form for which the Company then qualifies).
Each Holder is entitled to not more than Demand Registrations pursuant to the registration rights agreement. All Holders are entitled to no more than Demand Registrations pursuant to the registration rights agreement per year.
Whenever the Company proposes to file a registration statement including, but not limited to, registration statements relating to secondary offerings of securities of the Company (but excluding registration statements relating to the paragraphs above and relating to employee benefit plans or with respect to corporate reorganizations) at any time and from time to time, the Company will, at least 20 days prior to such filing, give written notice to all Holders of its intention to do so and, upon the written request of any Holder(s) given within 10 days after the Company provides such notice, the Company will use its reasonable efforts to cause all Registrable Securities that the Company has been requested by such Holder(s) to register or to be registered under the Securities Act to the extent necessary to permit their sale or other disposition in accordance with the intended methods of distribution specified in the request of such Holder(s), provided that the Company shall have the right to postpone or withdraw any such registration effected without obligation to any Holder.
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SHARES ELIGIBLE FOR FUTURE SALE
Following the consummation of this offering, we will have a total of equity shares issued and outstanding after giving effect to the corporate formation transactions described under Prospectus Summary Corporate Structure, assuming a total of equity shares will be issued to the non-founder investors upon the conversion of convertible securities, based on an initial public offering price of US$ per equity share, which is the midpoint of the estimated range of the initial public offering price as set forth on the cover page of this prospectus, and assuming the underwriters do not exercise their over-allotment option to purchase additional shares. All of the equity shares sold in this offering will be freely transferable by persons other than our affiliates without restriction or further registration under the Securities Act. Sales of substantial amounts of our equity shares in the public market could have a material adverse effect on the prevailing market prices of our equity shares.
While application has been made for the equity shares to be listed on the New York Stock Exchange, or NYSE, we cannot assure you that an active trading market for our equity shares will develop.
Lock-Up Agreements
All of our directors and executive officers, the selling shareholder and substantially all of our shareholders have signed lock-up agreements prior to this offering under which they have agreed not to sell, transfer or dispose of, directly or indirectly, any equity shares or any securities convertible into or exercisable or exchangeable for equity shares without the prior written consent of Barclays Capital Inc. for a period of 180 days, subject to certain exceptions and possible extension under certain circumstances, after the date of this prospectus. These agreements are described below under Underwriting.
Rule 144
In general, under Rule 144 as currently in effect, beginning 90 days after the date of this prospectus a person who has beneficially owned our restricted securities within the meaning of Rule 144 for at least six months is entitled to sell the restricted securities without registration under the Securities Act, subject to certain restrictions. Persons who are our affiliates may sell within any three-month period a number of restricted securities that does not exceed the greater of the following:
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1% of the number of our equity shares then outstanding, which will equal approximately shares immediately after this offering, or approximately shares if the underwriters exercise their option to purchase additional equity shares in full; and |
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The average weekly trading volume of our equity shares on the during the four calendar weeks preceding the date on which notice of the sale is filed with the SEC. |
Sales under Rule 144 by persons who are deemed our affiliates are subject to manner-of-sale provisions, notice requirements and the availability of current public information about us. Persons who are not our affiliates and have beneficially owned our restricted securities for more than six months but not more than one year may sell the restricted securities without registration under the Securities Act, subject to the availability of current public information about us. Persons who are not our affiliates and have beneficially owned our restricted securities for more than one year may freely sell the restricted securities without registration under the Securities Act.
In addition, in each case, these shares would remain subject to lock-up arrangements and would only become eligible for sale when the lock-up period expires.
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Rule 701
Beginning 90 days after the date of the prospectus, persons other than our affiliates who purchased equity shares under a written compensatory plan or contract may be entitled to sell such shares in the United States in reliance on Rule 701. Rule 701 permits affiliates to sell their Rule 701 shares under Rule 144 without complying with the holding period requirements of Rule 144. Rule 701 further provides that non-affiliates may sell these shares in reliance on Rule 144 subject only to its manner-of-sale requirements.
Share Options
Shortly after the completion of this offering, we intend to file a registration statement on Form F-8 under the Securities Act to register all equity shares issuable under our equity-based compensation plan. See Management Equity-Based Compensation Plans for a description of such plan.
This Form F-8 registration statement is expected to become effective immediately upon filing, and equity shares covered by that registration statement will then be eligible for sale in the public markets, subject to:
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The Rule 144 limitations applicable to affiliates; |
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The expiration of the lock-up period; and |
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Vesting restrictions imposed by us. |
Upon consummation of the offering, there will be employee stock option plan shares outstanding to purchase fully paid equity shares.
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The following discussion summarizes the material Mauritius, Indian and United States federal income tax consequences of an investment in our equity shares is based upon laws and relevant interpretations thereof in effect as of the date of this prospectus, all of which are subject to change. This discussion does not deal with all possible tax consequences relating to an investment in our equity shares, such as the tax consequences under state, local, non-U.S., non-Indian and non- Mauritian tax laws.
Mauritius Taxation
We are a company holding a Mauritius Category 1 Global Business Company, or GBC1, issued by the Financial Services Commission and is a tax resident in Mauritius. The Income Tax Act 1995 of Mauritius imposes a tax in Mauritius on our chargeable income at the rate of 15%. However, under the Income Tax (Foreign Tax Credit) Regulations 1996 of Mauritius, subject to the Income Tax Act 1995 and the regulations under the Income Tax (Foreign Tax Credit) Regulations 1996, credit is allowed for foreign tax on the foreign source income of a resident of Mauritius against Mauritius tax computed by reference to the same income, and where credit is allowed against Mauritius tax chargeable in respect of any income, the amount of Mauritius tax so chargeable shall be reduced by the amount of the credit.
Under the Income Tax (Foreign Tax Credit) Regulations 1996, foreign source income means income which is not derived from Mauritius and includes in the case of a corporation holding a GBC1 under the Financial Services Act 2007 of Mauritius, income derived in the course of a global business. Subject to the provisions of the Income Tax (Foreign Tax Credit) Regulations 1996, no credit is allowed in respect of foreign tax unless written evidence is presented to the Mauritius Revenue Authority showing the amount of foreign tax which has been charged and for this purpose, written evidence includes a receipt of the relevant authorities of the foreign country for the foreign tax or any other evidence that the foreign tax has been deducted or paid to the relevant authorities of that country. However, pursuant to regulation 8 of the Income Tax (Foreign Tax Credit) Regulations 1996, if written evidence is not presented to the Mauritius Revenue Authority showing the amount of foreign tax charged on our companys foreign source income, the amount of foreign tax shall nevertheless be conclusively presumed to be equal to 80% of the Mauritius tax chargeable with respect to that income and in such circumstance, the effective tax rate in Mauritius on our chargeable income would be 3%.
Following amendments to the Financial Services Act 2007 of Mauritius pursuant to the Finance (Miscellaneous Provisions) Act 2010 in December 2010, Mauritius companies holding a GBC1 issued by the Financial Services Commission in Mauritius are permitted to conduct business both in and outside Mauritius (instead of outside Mauritius only). The operations of a GBC1 company in Mauritius will be subject to tax on chargeable income at the rate of 15% in Mauritius.
We hold tax residence certificates issued by the Mauritius Revenue Authority. These certificates are required for the avoidance of double taxation under the Agreements for the Avoidance of Double Taxation signed between Mauritius and other jurisdictions, including India.
Mauritius has no capital gains tax and has no withholding tax on the payment of dividends.
Prospective investors are urged to consult their own tax advisers in order to fully understand the tax consequences of an investment in the equity shares.
U.S. Federal Income Taxation
The following discussion is a summary of U.S. federal income tax considerations generally applicable to U.S. Holders (as defined below) of the ownership and disposition of our equity shares. This summary applies only to U.S. Holders that hold the equity share as capital assets (generally, property held for investment) and that
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have the U.S. dollar as their functional currency. This summary is based on U.S. tax laws in effect as of the date of this prospectus, on U.S. Treasury regulations in effect or, in some cases, proposed as of the date of this prospectus, and judicial and administrative interpretations thereof available on or before such date. All of the foregoing authorities are subject to change, which could apply retroactively and could affect the tax consequences described below. Moreover, this summary does not address the U.S. federal estate, gift, Medicare, and alternative minimum tax considerations, or any state, local, and non-U.S. tax considerations, relating to the ownership and disposition of our equity shares. The following summary does not address all aspects of U.S. federal income taxation that may be important to particular investors in light of their individual circumstances or to persons in special tax situations such as:
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banks and other financial institutions; |
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insurance companies; |
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pension plans; |
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cooperatives; |
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regulated investment companies; |
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real estate investment trusts; |
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broker-dealers; |
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traders that elect to use a mark-to-market method of accounting; |
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certain former U.S. citizens or long term residents; |
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tax-exempt entities (including private foundations); |
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persons liable for alternative minimum tax; |
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persons holding equity share as part of a straddle, hedging, conversion or integrated transaction; |
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persons that actually or constructively own 10% or more of the total combined voting power of all classes of our voting stock; |
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persons who acquired equity share pursuant to the exercise of any employee share option or otherwise as compensation; or |
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entities taxable as partnerships for U.S. federal income tax purposes, or persons holding equity share through such entities. |
PROSPECTIVE INVESTORS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS REGARDING THE APPLICATION OF THE U.S. FEDERAL TAX RULES TO THEIR PARTICULAR CIRCUMSTANCES AS WELL AS THE STATE, LOCAL, NON-U.S. AND OTHER TAX CONSEQUENCES TO THEM OF THE OWNERSHIP AND DISPOSITION OF OUR EQUITY SHARES.
For purposes of this summary, a U.S. Holder is a beneficial owner of our equity shares that is, for U.S. federal income tax purposes:
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an individual who is a citizen or resident of the United States; |
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a corporation (or other entity taxable as a corporation for U.S. federal income tax purposes) created or organized in the United States or under the laws of the United States, any state thereof or the District of Columbia; |
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an estate, the income of which is subject to U.S. federal income taxation regardless of its source; or |
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a trust that (1) is subject to the primary supervision of a court within the U.S. and the control of one or more United States persons for all substantial decisions or (2) has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person. |
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The tax treatment of a partner in any entity taxable as a partnership for U.S. federal income tax purposes that holds our equity share will depend on the status of such partner and the activities of such partnership. If you are a partner in such partnership, you should consult your tax advisors.
Dividends and Other Distributions
Subject to the passive foreign investment company, or PFIC, rules discussed below, the gross amount (in U.S. dollars) of any distribution we make to you on our equity shares (including the amount of any taxes withheld therefrom) will generally be includible in your gross income as dividend income on the date of receipt, but only to the extent that such distribution is paid out of our current or accumulated earnings and profits (as determined under U.S. federal income tax principles). Amounts not treated as dividend income for U.S. federal income tax purposes will constitute a return of capital and will first be applied against and reduce your tax basis in your equity share, but not below zero. Distributions in excess of our current and accumulated earnings and profits and your tax basis in your equity share will be treated as capital gain realized on the sale or other disposition of the equity share. However, we do not intend to calculate our earnings and profits under U.S. federal income tax principles. Therefore, you should expect that any distribution we make to you will be reported as a dividend even if such distribution would otherwise be treated as a non-taxable return of capital or as capital gain under the rules described above. Any dividends we pay will not be eligible for the dividends-received deduction allowed to corporations for dividends received from other U.S. corporations.
Under current law, certain non-corporate U.S. Holders, including individual U.S. Holders, dividends will be taxed at the lower capital gains rate applicable to qualified dividend income, provided that (1) our equity shares are readily tradable on an established securities market in the United States including the NYSE, (2) we are neither a PFIC nor treated as such with respect to you for the taxable year in which the dividend is paid and the preceding taxable year and (3) certain holding period requirements are met. You should consult your tax advisors regarding the availability of the lower tax rate applicable to qualified dividend income for any dividends we pay on our equity shares, as well as the effect of any change in applicable law after the date of this prospectus.
Dividends will generally be treated as income from foreign sources for United States foreign tax credit purposes. A U.S. Holder may be eligible, subject to complex limitations, to claim a foreign tax credit with respect to any foreign withholding taxes imposed on dividends received on our equity share. The rules relating to the determination of the foreign tax credit are complex, and you should consult your tax advisors regarding the availability of a foreign tax credit in your particular circumstances.
Dispositions
Subject to the PFIC rules discussed below, you will generally recognize taxable capital gain or loss on any sale, exchange or other taxable disposition of an equity share equal to the difference between the amount realized (in U.S. dollars) for the equity share and your adjusted tax basis (in U.S. dollars) in the equity share. If you are a non-corporate U.S. Holder, including an individual U.S. Holder, that has held the equity share for more than one year, you may be eligible for reduced tax rates. The deductibility of capital losses is subject to limitations. Any capital gain or loss will generally be treated as U.S.-source gain or loss for U.S. foreign tax credit purposes. U.S. Holders are urged to consult their tax advisors regarding the tax consequences if a foreign tax is imposed on a disposition of our equity shares, including the availability of the foreign tax credit under their particular circumstances.
Passive Foreign Investment Company
A non-U.S. corporation will be classified as a PFIC for U.S. federal income tax purposes for any taxable year if either:
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at least 75% of its gross income for such year is passive income; or |
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at least 50% of the value of its assets (based on an average of the quarterly values of the assets) during such year produce passive income or are held for the production of passive income. |
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For this purpose, we will be treated as owning our proportionate share of the assets and earning our proportionate share of the income of any other corporation in which we own, directly or indirectly, at least 25% (by value) of the stock.
Although we are engaged in an active business and we do not generate substantial passive income relative to the revenue from our active business, the PFIC rules are complex. The determination of whether we will be or become a PFIC will depend, in part, on the composition of our income and assets. Fluctuations in the market price of our equity shares may cause us to become a PFIC for the current or subsequent taxable years because the value of assets for the purpose of the asset test may be determined by reference to the market price of our equity shares. The composition of our income and assets may also be affected by how, and how quickly, we use our liquid assets and the cash raised in this offering. Although, based on our current income and assets, we presently do not expect to be classified as a PFIC for the current taxable year and do not anticipate becoming a PFIC in future taxable years, there can be no assurance in this regard.
If we are determined to be a PFIC for any taxable year (or portion thereof) that is included in the holding period of a U.S. Holder of our equity shares and such U.S. Holder did not make a mark-to-market election as described below, such holder generally will be subject to special rules with respect to:
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any gain recognized by the U.S. Holder on the sale or other disposition of our equity shares; and |
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any excess distribution made to the U.S. Holder (generally, any distributions to such U.S. Holder during a taxable year of the U.S. Holder that are greater than 125% of the average annual distributions received by such U.S. Holder in respect of our equity shares during the three preceding taxable years of such U.S. Holder or, if shorter, such U.S. Holders holding period for the equity shares). |
Under these rules,
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the U.S. Holders gain or excess distribution will be allocated ratably over the U.S. Holders holding period for the equity share; |
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the amount allocated to the U.S. Holders taxable year in which the U.S. Holder recognized the gain or received the excess distribution, or to the period in the U.S. Holders holding period before the first day of our first taxable year in which we qualified as a PFIC, will be taxed as ordinary income; |
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the amount allocated to other taxable years (or portions thereof) of the U.S. Holder and included in its holding period will be taxed at the highest tax rate in effect for that year and applicable to the U.S. Holder; and |
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additional tax equal to the interest charge generally applicable to underpayments of tax will be imposed in respect of the tax attributable to each such other taxable year of the U.S. Holder. |
If we are treated as a PFIC with respect to you for any taxable year, if any of our subsidiaries are also PFICs or if we make direct or indirect equity investments in other entities that are PFICs, you will be deemed to own shares in such lower-tier PFICs that are directly or indirectly owned by us in that proportion that the value of the equity share you own bears to the value of all of our equity shares, and you may be subject to the rules described in the preceding two paragraphs for the shares of such lower-tier PFICs that you would be deemed to own. You should consult your tax advisors regarding how the PFIC rules apply to any of our subsidiaries or direct or indirect equity investments.
If a U.S. Holder, at the close of its taxable year, owns stock in a PFIC that are treated as marketable stock for United States federal income tax purposes, the U.S. Holder may make a mark-to-market election with respect to such stock for such taxable year. If the U.S. Holder makes a valid mark-to-market election for the first taxable year of the U.S. Holder in which the U.S. Holder holds (or is deemed to hold) our equity shares and for which we are determined to be a PFIC, such holder generally will not be subject to the PFIC rules described above with respect to its equity shares. Instead, in general, the U.S. Holder will include as ordinary income each year the
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excess, if any, of the fair market value of its equity shares at the end of its taxable year over the adjusted tax basis in its equity shares. The U.S. Holder also will be allowed to take an ordinary loss in respect of the excess, if any, of the adjusted tax basis of its equity shares over the fair market value of its equity shares at the end of its taxable year (but only to the extent of the net amount of previously included income as a result of the mark-to-market election). The U.S. Holders adjusted tax basis in its equity shares will be adjusted to reflect any such income or loss amounts, and any further gain recognized on a sale or other taxable disposition of the equity shares will be treated as ordinary income.
The mark-to-market election is available only for stock that are regularly traded on a national securities exchange that is registered with the SEC, including the NYSE, or on a foreign exchange or market that the Internal Revenue Service determines has rules sufficient to ensure that the market price represents a legitimate and sound fair market value. Although we expect our equity shares to be listed on the NYSE, we cannot guarantee that once our equity shares are listed, they will continue to be listed and traded on the NYSE. In addition, the mark-to-market election may not be available with respect to any lower-tier PFICs unless shares of such lower-tier PFICs are themselves marketable stock. U.S. Holders should consult their own tax advisors regarding the availability and tax consequences of a mark-to-market election in respect to our equity share under their particular circumstances.
Alternatively, a U.S. person that owns stock of a PFIC generally may make a qualified electing fund election regarding such corporation to elect out of the PFIC rules described above regarding excess distributions and recognized gains. We currently do not intend to prepare or provide the information that would enable you to make a qualified electing fund election.
A U.S. Holder that owns, or is deemed to own, equity shares in a PFIC during any taxable year of the U.S. Holder may have to file Internal Revenue Service Form 8621 with such U.S. Holders U.S. federal income tax return.
You should consult your tax advisors regarding how the PFIC rules apply to your investment in our equity shares and the elections and reporting requirements discussed above.
Information Reporting with Respect to Foreign Financial Assets
A U.S. Holder that owns specified foreign financial assets, including securities issued by a non-U.S. corporation, with an aggregate value in excess of US$50,000 at the end of the year (or a higher dollar amount prescribed by the Internal Revenue Service) may be required to file an information report with respect to such assets with such U.S. Holders U.S. federal income tax return, subject to certain exceptions. These rules also impose penalties if a U.S. Holder is required to submit such information to the Internal Revenue Service and fails to do so. U.S. Holders are urged to consult their tax advisors regarding the application of this legislation to their ownership of the equity shares.
Transfer Reporting Requirements
A U.S. Holder (including a U.S. tax-exempt entity) that transfers cash in exchange for equity of a newly created non-U.S. corporation may be required to file a Form 926 or a similar form with the Internal Revenue Service if (i) such person owned, directly or by attribution, immediately after the transfer at least 10% by vote or value of the corporation or (ii) if the transferred cash, when aggregated with all transfers made by such person (or any related person) within the preceding 12 month period, exceeds US$100,000. U.S. Holders should consult their tax advisors regarding the applicability of this requirement to their acquisition of equity shares.
Indian Taxation
The discussion contained herein is based on the applicable tax laws of India as in effect on the date hereof and is subject to possible changes in Indian law that may come into effect after such date. Prospective investors
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should consult their own tax advisers as to the consequences of purchasing the equity shares, including, without limitation, the consequences of the receipt of dividend and the sale, transfer or disposition of the equity shares.
Dividend payments to Azure Power Global Limited by our subsidiary, AZI, are subject to dividend distribution tax in India payable by AZI at a rate of 17.30% on the total amount distributed as a dividend as grossed up by the amount of such dividend distribution tax. Any dividend income in respect of our equity shares will not be subject to any withholding or deduction in respect of Indian income tax laws so long as our holding company is deemed to be tax resident in Mauritius.
Pursuant to amendments to the Indian Income Tax Act, 1961, as amended, income arising directly or indirectly through the transfer of a capital asset, including any share or interest in a company or entity registered or incorporated outside India, will be liable to tax in India, if such share or interest derives, directly or indirectly, its value substantially from assets (whether tangible or intangible) located in India and whether or not the seller of such share or interest has a residence, place of business, business connection, or any other presence in India. The share or interest of the company or entity registered or incorporated outside of India, shall be deemed to derive its value substantially from the assets located in India, if the value of such Indian assets exceeds Rs. 100 million, and represents at least 50% of the value of all the assets owned by the company or entity registered or incorporated outside of India. Substantially all of our assets are located in India. However, if the transferor of share or interest in a company or entity registered or incorporated outside of India (along with its associated enterprises), neither holds the right of management or control in the company or entity registered or incorporated outside of India nor holds voting power or share capital or interest exceeding 5% of the total voting power or total share capital or interest in the company or entity registered or incorporated outside of India, at any time during the twelve months preceding the date of transfer, such small shareholders are exempt from the indirect transfer provisions mentioned above.
The amendments also do not deal with the interplay between the Indian Income Tax Act, 1961, as amended, and the double taxation avoidance agreements that India has entered into with countries such as the United States, in case of an indirect transfer. Accordingly, the implications of these amendments are presently unclear. If it is determined that these amendments apply to a holder of our equity shares, such holder could be liable to pay tax in India on such income.
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ENFORCEABILITY OF CIVIL LIABILITIES
We are incorporated in Mauritius and our primary operating subsidiary, AZI, is incorporated in India. The majority of our directors and executive officers are not residents of the United States and substantially all of our assets and the assets of such persons are located outside the United States. As a result, it may not be possible for you to effect service of process within the United States upon such persons or us. In addition, you may be unable to enforce judgments obtained in courts of the United States against such persons outside the jurisdiction of their residence, including judgments predicated solely upon U.S. securities laws.
There is uncertainty as to whether the courts in Mauritius would enforce judgments obtained in the United States against us or our directors or executive officers, as well as the experts named herein, based on the civil liability provisions of the securities laws of the United States or allow actions in Mauritius against us or our directors or executive officers based only upon the securities laws of the United States. Further, foreign judgments may not be given effect to by a Mauritius court where it would be contrary to any principle affecting public policy in Mauritius or to the extent that they constitute the payment of an amount which is in the nature of a penalty and not in the nature of liquidated damages.
In addition to and irrespective of jurisdictional issues, neither Mauritian nor Indian courts will enforce a provision of the U.S. federal securities laws that is either penal in nature or contrary to public policy. An action brought pursuant to a public or penal law, the purpose of which is the enforcement of a sanction, power or right at the instance of the state in its sovereign capacity, is unlikely to be entertained by Mauritian or Indian courts. Specified remedies available under the laws of U.S. jurisdictions, including specified remedies under U.S. federal securities laws, would not be available under Mauritian or Indian law or enforceable in a Mauritian or Indian court, if they are considered to be contrary to Mauritian or Indian public policy. An award of punitive damages under a United States court judgment based upon United States federal securities laws is likely to be construed by Mauritian and Indian courts to be penal in nature and therefore unenforceable in both Mauritius and India. Further, no claim may be brought in Mauritius or India against us or our directors and officers, as well as the experts named herein, in the first instance for a violation of U.S. federal securities laws because these laws have no extraterritorial application under Mauritian or Indian law and do not have force of law in Mauritius or India.
Section 44A of the Indian Code of Civil Procedure, 1908, as amended, or the Civil Procedure Code, provides that where a foreign judgment has been rendered by a superior court in any country or territory outside of India which the Indian government has by notification declared to be a reciprocating territory, such foreign judgment may be enforced in India by proceedings in execution as if the judgment had been rendered by an appropriate court in India. However, the enforceability of such judgments is subject to the exceptions set forth in Section 13 of the Civil Procedure Code. This section, which is the statutory basis for the recognition of foreign judgments, states that a foreign judgment is conclusive as to any matter directly adjudicated upon except:
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where the judgment has not been pronounced by a court of competent jurisdiction; |
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where the judgment has not been given on the merits of the case; |
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where the judgment appears on the face of the proceedings to be founded on an incorrect view of international law or a refusal to recognize the law of India in cases where such law is applicable; |
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where the proceedings in which the judgment was obtained were opposed to natural justice; |
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where the judgment has been obtained by fraud; or |
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where the judgment sustains a claim founded on a breach of any law in force in India. |
Section 44A of the Civil Procedure Code is applicable only to decrees or judgments under which a sum of money is payable not being in the nature of amounts payable in respect of taxes or other charges of a similar nature or in respect of fines or other penalties and does not include arbitration awards. It is unlikely that a court in
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India would award damages on the same basis as a foreign court if an action were brought in India. Furthermore, it is unlikely that an Indian court would enforce a foreign judgment if it viewed the amount of damages awarded as excessive or inconsistent with public policy or practice in India.
If a judgment of a foreign court is not enforceable under Section 44A of the Civil Procedure Code as described above, it may be enforced in India only by a suit filed upon the judgment, subject to Section 13 of the Civil Procedure Code, and not by proceedings in execution. The United States has not been declared by the Indian government to be a reciprocating territory for the purposes of Section 44A of the Civil Procedure Code. Accordingly, a judgment of a court in the United States may be enforced only by filing a fresh suit on the basis of the judgment and not by proceedings in execution.
The suit must be brought in India within three years from the date of the judgment in the same manner as any other suit filed to enforce a civil liability in India. It is difficult to predict whether a suit brought in an Indian court will be disposed of in a timely manner or be subject to untimely delay.
A party seeking to enforce a foreign judgment in India is required to obtain prior approval from the Reserve Bank of India under the Foreign Exchange Management Act, 1999, as amended, to repatriate any amount recovered pursuant to such enforcement. Any judgment in a foreign currency would be converted into Indian rupees on the date of judgment and not on the date of payment.
A final and conclusive judgment in the superior courts of a foreign jurisdiction, or foreign courts, other than the courts of the United Kingdom, under which a sum of money is payable (other than a sum payable in respect of taxes, fines, penalties or similar charges) may be recognized by, and be enforceable in, the courts of Mauritius if (1) the judgment is still valid, final and is capable of execution in the jurisdiction in which it was delivered; (2) the judgment is not contrary to any principle affecting public policy in Mauritius; (3) the foreign courts had jurisdiction to hear the claim; and (4) our company had been regularly summoned to attend the proceedings before the foreign courts. Any judgment expressed in a foreign currency by a foreign court, may, when made executory in Mauritius, be expressed in that foreign currency. A valid and final judgment rendered by a court in the United States may not be enforced in Mauritius except by way of exequatur under the Mauritius Code on Civil Procedure. The exequatur may be sought in Mauritius so long as the valid and final judgment is capable of execution in the United States.
A final and conclusive judgment or order in the superior courts of the United Kingdom under which a sum of money is made payable (and including an award in proceedings on an arbitration if the award has, under the law in force in the place where it was made, become enforceable in the same manner as a judgment by a court in that place) would, on registration in accordance with the provisions of The Reciprocal Enforcement of Judgments Act 1923 be enforceable in the Supreme Court of Mauritius. Any judgment expressed in pounds sterling or other currency by a superior court of the United Kingdom, may, when made executory in Mauritius, be expressed in pounds sterling or any other currency at the rate of exchange prevailing at the date of judgment of the original court.
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Barclays Capital Inc. is acting as the sole book-running manager of this offering. Under the terms of an underwriting agreement, which will be filed as an exhibit to the registration statement, Barclays Capital Inc. has agreed to purchase from us and the selling shareholder all the equity shares.
The underwriting agreement provides that the underwriters obligation to purchase equity shares depends on the satisfaction of the conditions contained in the underwriting agreement including:
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the obligation to purchase all of the equity shares offered hereby (other than those equity shares covered by their option to purchase additional shares as described below), if any of the shares are purchased; |
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the representations and warranties made by us and the selling shareholder to the underwriter are true; |
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there is no material change in our business or the financial markets; and |
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we and the selling shareholder deliver customary closing documents to the underwriter. |
Commissions and Expenses
The following table summarizes the underwriting discounts and commissions we and the selling shareholder will pay to the underwriter. These amounts are shown assuming both no exercise and full exercise of the underwriters option to purchase additional shares. The underwriting fee is the difference between the initial price to the public and the amount the underwriter pays to us and the selling shareholder for the shares.
US | Selling Shareholder | |||||||||||||||
No Exercise | Full Exercise | No Exercise | Full Exercise | |||||||||||||
Per Share |
US$ | US$ | US$ | US$ | ||||||||||||
Total |
US$ | US$ | US$ | US$ |
The representative has advised us that the underwriter proposes to offer the equity shares directly to the public at the public offering price on the cover of this prospectus and to selected dealers at such offering price less a selling concession not in excess of US$ per share.
The expenses of the offering that are payable by us are estimated to be approximately US$ (excluding underwriting discounts and commissions). We have agreed to reimburse the underwriter for certain of its expenses, in an amount of up to US$ , as set forth in the underwriting agreement.
Option to Purchase Additional Shares
We have granted the underwriter an option exercisable for 30 days after the date of this prospectus to purchase, from time to time, in whole or in part, up to an aggregate of shares from us at the public offering price less underwriting discounts and commissions. To the extent that this option is exercised, the underwriter will be obligated, subject to certain conditions, to purchase additional shares.
Lock-Up Agreements
We, all of our directors and executive officers, the selling shareholder and substantially all of our shareholders, have agreed that, for a period of 180 days after the date of this prospectus subject to certain limited exceptions, we and they will not directly or indirectly, without the prior written consent of Barclays Capital Inc., (1) offer for sale, sell, pledge, or otherwise dispose of (or enter into any transaction or device that is designed to, or could be expected to, result in the disposition by any person at any time in the future of) any equity shares (including, without limitation, equity shares that may be deemed to be beneficially owned by us or them in accordance with the rules and regulations of the SEC and equity shares that may be issued upon exercise of any
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options or warrants) or securities convertible into or exercisable or exchangeable for equity shares (other than the stock and shares issued pursuant to employee benefit plans, qualified stock option plans, or other employee compensation plans existing on the date of this prospectus), or sell or grant options, rights or warrants with respect to any equity shares or securities convertible into or exchangeable for equity shares, (2) enter into any swap or other derivatives transaction that transfers to another, in whole or in part, any of the economic benefits or risks of ownership of equity shares, whether any such transaction described in clause (1) or (2) above is to be settled by delivery of equity shares or other securities, in cash or otherwise, (3) make any demand for or exercise any right or file or cause to be filed a registration statement, including any amendments thereto, with respect to the registration of any equity shares or securities convertible, exercisable or exchangeable into equity shares or any of our other securities, or (4) publicly disclose the intention to do any of the foregoing.
Barclays Capital Inc., in its sole discretion, may release the equity shares and other securities subject to the lock-up agreements described above in whole or in part at any time. When determining whether or not to release equity shares and other securities from lock-up agreements, Barclays Capital Inc. will consider, among other factors, the holders reasons for requesting the release, the number of equity shares and other securities for which the release is being requested and market conditions at the time. At least three business days before the effectiveness of any release or waiver of any of the restrictions described above with respect to an officer or director of the company, Barclays Capital Inc. will notify us of the impending release or waiver and we have agreed to announce the impending release or waiver by press release through a major news service at least two business days before the effective date of the release or waiver, except where the release or waiver is effected solely to permit a transfer of equity shares that is not for consideration and where the transferee has agreed in writing to be bound by the same terms as the lock-up agreements described above to the extent and for the duration that such terms remain in effect at the time of transfer.
Offering Price Determination
Prior to this offering, there has been no public market for our equity shares. The initial public offering price was negotiated among the representative, the selling shareholder and us. In determining the initial public offering price of our equity shares, the representative considered:
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the history and prospects for the industry in which we compete; |
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our financial information; |
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the ability of our management and our business potential and earning prospects; |
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the prevailing securities markets at the time of this offering; and |
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the recent market prices of, and the demand for, publicly traded shares of generally comparable companies. |
Indemnification
We and the selling shareholder have agreed to indemnify the underwriter against certain liabilities, including liabilities under the Securities Act, and to contribute to payments that the underwriter may be required to make for these liabilities.
Stabilization and Short Positions
The underwriter may engage in stabilizing transactions, short sales and purchases to cover positions created by short sales, and penalty bids or purchases for the purpose of pegging, fixing or maintaining the price of the equity shares, in accordance with Regulation M under the Exchange Act:
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Stabilizing transactions permit bids to purchase the underlying security so long as the stabilizing bids do not exceed a specified maximum. |
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A short position involves a sale by the underwriter of shares in excess of the number of shares the underwriter is obligated to purchase in the offering, which creates the syndicate short position. This short position may be either a covered short position or a naked short position. In a covered short position, the number of shares involved in the sales made by the underwriter in excess of the number of shares it is obligated to purchase is not greater than the number of shares that it may purchase by exercising its option to purchase additional shares. In a naked short position, the number of shares involved is greater than the number of shares in its option to purchase additional shares. The underwriter may close out any short position by either exercising its option to purchase additional shares and/or purchasing shares in the open market. In determining the source of shares to close out the short position, the underwriter will consider, among other things, the price of shares available for purchase in the open market as compared to the price at which it may purchase shares through its option to purchase additional shares. A naked short position is more likely to be created if the underwriter is concerned that there could be downward pressure on the price of the shares in the open market after pricing that could adversely affect investors who purchase in the offering. |
These stabilizing transactions may have the effect of raising or maintaining the market price of our equity shares or preventing or retarding a decline in the market price of the equity shares. As a result, the price of the equity shares may be higher than the price that might otherwise exist in the open market. These transactions may be effected on the or otherwise and, if commenced, may be discontinued at any time.
Neither we, the selling shareholder nor the underwriter make any representation or prediction as to the direction or magnitude of any effect that the transactions described above may have on the price of the equity shares.
Listing on the New York Stock Exchange
We have applied to list our equity shares on the New York Stock Exchange under the symbol AZRE.
Discretionary Sales
The underwriter has informed us that it does not expect to sell more than 5% of the equity shares in the aggregate to accounts over which it exercises discretionary authority.
Stamp Taxes
If you purchase equity shares offered in this prospectus, you may be required to pay stamp taxes and other charges under the laws and practices of the country of purchase, in addition to the offering price listed on the cover page of this prospectus.
Other Relationships
The underwriter and certain of its affiliates are full service financial institutions engaged in various activities, which may include securities trading, commercial and investment banking, financial advisory, investment management, investment research, principal investment, hedging, financing and brokerage activities. The underwriter and certain of its affiliates have, from time to time, performed, and may in the future perform, various commercial and investment banking and financial advisory services for the issuer and its affiliates, for which they received or may in the future receive customary fees and expenses.
In the ordinary course of their various business activities, the underwriter and certain of its affiliates may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (including bank loans) for their own account and for the accounts of their customers, and such investment and securities activities may involve securities and/or instruments of the issuer or its affiliates. If the underwriter or its affiliates have a lending relationship with us, certain of those underwriter or
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its affiliates routinely hedge, and certain other of those underwriters or their affiliates may hedge, their credit exposure to us consistent with their customary risk management policies. Typically, the underwriter and its affiliates would hedge such exposure by entering into transactions which consist of either the purchase of credit default swaps or the creation of short positions in our securities or the securities of our affiliates, including potentially the equity shares offered hereby. Any such credit default swaps or short positions could adversely affect future trading prices of the equity shares offered hereby. The underwriter and certain of its affiliates may also communicate independent investment recommendations, market color or trading ideas and/or publish or express independent research views in respect of such securities or instruments and may at any time hold, or recommend to clients that they acquire, long and/or short positions in such securities and instruments.
Directed Share Program
At our request, the underwriter has reserved % of the equity shares to be issued by us and offered by this prospectus for sale, at the initial public offering price, to our directors, officers, employees, business associates and related persons. If purchased by these persons, these equity shares will be subject to a 180-day lock-up restriction. The number of equity shares available for sale to the general public will be reduced to the extent these individuals purchase such reserved equity shares. Any reserved equity shares that are not so purchased will be offered by the underwriters to the general public on the same basis as the other equity shares offered by this prospectus.
Selling Restrictions
European Economic Area
In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive (each, a Relevant Member State) an offer to the public of any equity shares which are the subject of the offering contemplated herein may not be made in that Relevant Member State, except that an offer to the public in that Relevant Member State of any equity shares may be made at any time under the following exemptions under the Prospectus Directive, if they have been implemented in that Relevant Member State:
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to legal entities which are qualified investors as defined under the Prospectus Directive; |
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by the underwriters to fewer than 100, or, if the Relevant Member State has implemented the relevant provisions of the 2010 PD Amending Directive, 150, natural or legal persons (other than qualified investors as defined in the Prospectus Directive), as permitted under the Prospectus Directive, subject to obtaining the prior consent of the representatives of the underwriters for any such offer; or |
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in any other circumstances falling within Article 3(2) of the Prospectus Directive, |
provided that no such offer of equity shares shall result in a requirement for us, the selling shareholder or any underwriter to publish a prospectus pursuant to Article 3 of the Prospectus Directive or supplement a prospectus pursuant to Article 16 of the Prospectus Directive.
Each person in a Relevant Member State who receives any communication in respect of, or who acquires any equity shares under, the offers contemplated here in this prospectus will be deemed to have represented, warranted and agreed to and with each underwriter, the selling shareholder and us that:
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it is a qualified investor as defined under the Prospectus Directive; and |
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in the case of any equity shares acquired by it as a financial intermediary, as that term is used in Article 3(2) of the Prospectus Directive, (i) the equity shares acquired by it in the offering have not been acquired on behalf of, nor have they been acquired with a view to their offer or resale to, persons in any Relevant Member State other than qualified investors, as that term is defined in the Prospectus Directive, or in the circumstances in which the prior consent of the representatives of the underwriters has been given to the offer or resale or (ii) where equity shares have been acquired by it on behalf of |
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persons in any Relevant Member State other than qualified investors, the offer of such equity shares to it is not treated under the Prospectus Directive as having been made to such persons. |
For the purposes of this representation and the provision above, the expression an offer of equity shares to the public in relation to any equity shares in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and any equity shares to be offered so as to enable an investor to decide to purchase or subscribe for the equity shares, as the same may be varied in that Relevant Member State by any measure implementing the Prospectus Directive in that Relevant Member State, the expression Prospectus Directive means Directive 2003/71/EC (and amendments thereto, including the 2010 PD Amending Directive, to the extent implemented in the Relevant Member State), and includes any relevant implementing measure in each Relevant Member State and the expression 2010 PD Amending Directive means Directive 2010/73/EU.
United Kingdom
This prospectus has only been communicated or caused to have been communicated and will only be communicated or caused to be communicated as an invitation or inducement to engage in investment activity (within the meaning of Section 21 of the Financial Services and Markets Act of 2000, or the FSMA), as received in connection with the issue or sale of the equity shares in circumstances in which Section 21(1) of the FSMA does not apply to us. All applicable provisions of the FSMA will be complied with in respect to anything done in relation to the equity shares in, from or otherwise involving the United Kingdom.
Australia
No placement document, prospectus, product disclosure statement or other disclosure document has been lodged with the Australian Securities and Investments Commission, or ASIC, in relation to the offering. This prospectus does not constitute a prospectus, product disclosure statement or other disclosure document under the Corporations Act 2001, or the Corporations Act, and does not purport to include the information required for a prospectus, product disclosure statement or other disclosure document under the Corporations Act.
Any offer in Australia of the equity shares may only be made to persons, or the Exempt Investors, who are sophisticated investors (within the meaning of section 708(8) of the Corporations Act), professional investors (within the meaning of section 708(11) of the Corporations Act) or otherwise pursuant to one or more exemptions contained in section 708 of the Corporations Act so that it is lawful to offer the equity shares without disclosure to investors under Chapter 6D of the Corporations Act.
The equity shares applied for by Exempt Investors in Australia must not be offered for sale in Australia in the period of 12 months after the date of allotment under the offering, except in circumstances where disclosure to investors under Chapter 6D of the Corporations Act would not be required pursuant to an exemption under section 708 of the Corporations Act or otherwise or where the offer is pursuant to a disclosure document which complies with Chapter 6D of the Corporations Act. Any person acquiring equity shares must observe such Australian on-sale restrictions.
This prospectus contains general information only and does not take account of the investment objectives, financial situation or particular needs of any particular person. It does not contain any securities recommendations or financial product advice. Before making an investment decision, investors need to consider whether the information in this prospectus is appropriate to their needs, objectives and circumstances, and, if necessary, seek expert advice on those matters.
Dubai International Financial Centre
This prospectus relates to an Exempt Offer in accordance with the Offered Securities Rules of the Dubai Financial Services Authority, or DFSA. This prospectus is intended for distribution only to persons of a type specified in the Offered Securities Rules of the DFSA. It must not be delivered to, or relied on by, any other
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person. The DFSA has no responsibility for reviewing or verifying any documents in connection with Exempt Offers. The DFSA has not approved this prospectus nor taken steps to verify the information set forth herein and has no responsibility for the prospectus. The equity shares to which this prospectus relates may be illiquid and/or subject to restrictions on their resale. Prospective purchasers of the equity shares offered should conduct their own due diligence on the equity shares. If you do not understand the contents of this prospectus you should consult an authorized financial advisor.
Hong Kong
The equity shares have not been offered or sold and will not be offered or sold in Hong Kong, by means of any document, other than (a) to professional investors as defined in the Securities and Futures Ordinance (Cap. 571) of Hong Kong and any rules made under that Ordinance; or (b) in other circumstances which do not result in the document being a prospectus as defined in the Companies Ordinance (Cap. 32) of Hong Kong or which do not constitute an offer to the public within the meaning of that Ordinance. No advertisement, invitation or document relating to the equity shares has been or may be issued or has been or may be in the possession of any person for the purposes of issue, whether in Hong Kong or elsewhere, which is directed at, or the contents of which are likely to be accessed or read by, the public of Hong Kong (except if permitted to do so under the securities laws of Hong Kong) other than with respect to the equity shares which are or are intended to be disposed of only to persons outside Hong Kong or only to professional investors as defined in the Securities and Futures Ordinance and any rules made under that Ordinance.
India
This prospectus has not been and will not be registered as a prospectus with any registrar of companies in India. This prospectus has not been and will not be reviewed or approved by any regulatory authority in India, including the Securities and Exchange Board of India, any registrar of companies in India or any stock exchange in India. This prospectus and this offering of equity shares are not and should not be construed as an invitation, offer or sale of any securities to the public in India. Other than in compliance with the private placement exemptions under applicable laws and regulations in India, including the Companies Act, 2013, as amended, our equity shares have not been, and will not be, offered or sold to the public or any member of the public in India. This prospectus is strictly personal to the recipient and neither this prospectus nor the offering of our equity shares is calculated to result, directly or indirectly, in our equity shares becoming available for subscription or purchase by persons other than those receiving the invitation or offer. Each investor is deemed to have acknowledged, represented and agreed that it is eligible to invest in our company and our equity shares under applicable laws, rules and regulations in India, without the requirement to obtain any prior approval, and that it is not prohibited or prevented under any law, rule or regulation in India from acquiring, owning or selling our equity shares.
Japan
The equity shares have not been and will not be registered under the Financial Instruments and Exchange Law of Japan (Law No. 25 of 1948, as amended) and, accordingly, will not be offered or sold, directly or indirectly, in Japan, or for the benefit of any Japanese Person or to others for re-offering or resale, directly or indirectly, in Japan or to any Japanese Person, except in compliance with all applicable laws, regulations and ministerial guidelines promulgated by relevant Japanese governmental or regulatory authorities in effect at the relevant time. For the purposes of this paragraph, Japanese Person shall mean any person resident in Japan, including any corporation or other entity organized under the laws of Japan.
Singapore
This prospectus has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, this prospectus and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of our equity shares may not be circulated or distributed, nor may our
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shares be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than (1) to an institutional investor under Section 274 of the Securities and Futures Act, Chapter 289 of Singapore, or the SFA, (2) to a relevant person or any person pursuant to Section 275(1A), and in accordance with the conditions specified in Section 275 of the SFA, or (3) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA, in each case subject to compliance with conditions set forth in the SFA.
Where our equity shares are subscribed or purchased under Section 275 by a relevant person which is: (a) a corporation (which is not an accredited investor as defined in Section 4A of the SFA) the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; or (b) a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary of the trust is an individual who is an accredited investor; shares, debentures and units of shares and debentures of that corporation or the beneficiaries rights and interest (howsoever described) in that trust shall not transferred within six months after that corporation or that trust has acquired the shares under Section 275 of the SFA, except: (1) to an institutional investor (for corporations under Section 274 of the SFA) or to a relevant person defined in Section 275(2) of the SFA, or to any person pursuant to an offer that is made on terms that such shares, debentures and units of shares and debentures of that corporation or such rights and interest in that trust are acquired at a consideration of not less than S$200,000 (or its equivalent in a foreign currency) for each transaction, whether such amount is to be paid for in cash or by exchange of securities or other assets, and further for corporations, in accordance with the conditions, specified in Section 275 of the SFA; (2) where no consideration is or will be given for the transfer; or (3) where the transfer is by operation of law.
Switzerland
The equity shares may not be publicly offered in Switzerland and will not be listed on the SIX Swiss Exchange, or SIX, or on any other stock exchange or regulated trading facility in Switzerland. This document has been prepared without regard to the disclosure standards for issuance prospectuses under art. 652a or art. 1156 of the Swiss Code of Obligations or the disclosure standards for listing prospectuses under art. 27 ff. of the SIX Listing Rules or the listing rules of any other stock exchange or regulated trading facility in Switzerland. Neither this document nor any other offering or marketing material relating to the equity shares or the offering may be publicly distributed or otherwise made publicly available in Switzerland.
Neither this document nor any other offering or marketing material relating to the offering, the company, the equity shares have been or will be filed with or approved by any Swiss regulatory authority. In particular, this document will not be filed with, and the offer of equity shares will not be supervised by, the Swiss Financial Market Supervisory Authority FINMA and the offer of equity shares has not been and will not be authorized under the Swiss Federal Act on Collective Investment Schemes, or CISA. The investor protection afforded to acquirers of interests in collective investment schemes under the CISA does not extend to acquirers of equity shares.
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EXPENSES RELATING TO THIS OFFERING
The following table sets forth the estimated costs and expenses, other than the underwriting discounts and commissions, payable by us in connection with the offering (all amounts are estimated except the SEC registration fee and the FINRA filing fee):
SEC registration fee |
US$ | 11,620 | ||
FINRA filing fee |
US$ | 14,850 | ||
Listing fee |
* | |||
Printing expenses |
* | |||
Legal fees and expenses |
* | |||
Accounting fees and expenses |
* | |||
Miscellaneous |
* | |||
|
|
|||
Total |
* | |||
|
|
* | To be provided by amendment. |
170
Certain legal matters as to United States federal and New York law in connection with this offering will be passed upon for us by Skadden, Arps, Slate, Meagher & Flom LLP, Palo Alto, California. The validity of the equity shares offered in this offering and certain legal matters as to Mauritius law will be passed upon for us by Appleby, Port Louis, Mauritius. Certain legal matters as to Indian law will be passed upon for us by Shardul Amarchand Mangaldas & Co, New Delhi, India. Skadden, Arps, Slate, Meagher & Flom LLP may rely upon Appleby with respect to matters governed by Mauritius law and upon Shardul Amarchand Mangaldas & Co with respect to matters governed by Indian law. Certain legal matter will be passed on for the underwriters by Latham & Watkins LLP, New York, New York.
The consolidated financial statements of Azure Power India Private Limited at March 31, 2014 and 2015 appearing in this Prospectus and Registration Statement have been audited by Ernst & Young Associates LLP, an independent registered public accounting firm, as set forth in their report thereon appearing elsewhere herein, and are included in reliance upon such report given on the authority of such firm as experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the SEC a registration statement on Form F-1 under the Securities Act with respect to the equity shares to be sold in this offering. This prospectus, which forms a part of the registration statement, does not contain all of the information set forth in the registration statement and the exhibits and schedules thereto. You should refer to the registration statement for further information. Statements contained in this prospectus as to the content of any contract or other document that is filed as an exhibit to the registration statement are not necessarily complete, and each such statement is qualified in all respects by reference to the full text of such contract or document.
Upon declaration by the SEC of the effectiveness of the registration statement, we will become subject to the periodic reporting and other informational requirements of the Exchange Act applicable to a foreign private issuer. Under the Exchange Act, we will be required to file reports, including annual reports on Form 20-F, and other information with the SEC. All information filed with the SEC can be inspected and copied at the public reference facilities maintained by the SEC at Room 1580, 100 F Street, N.E., Washington, D.C. 20549. You can request copies of these documents, upon payment of a duplicating fee, by writing to the SEC. Please call the SEC at 1-800-SEC-0330 for further information on the operation of the public reference rooms. You may also obtain additional information over the Internet at the SECs website at www.sec.gov.
171
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page | ||||
Consolidated Financial Statements |
||||
F-2 | ||||
F-3 | ||||
Consolidated Statements of Operations for the years ended March 31, 2014 and 2015 |
F-4 | |||
Consolidated Statements of Comprehensive Loss for the years ended March 31, 2014 and 2015 |
F-5 | |||
F-6 | ||||
Consolidated Statements of Cash Flows for the years ended March 31, 2014 and 2015 |
F-8 | |||
F-9 | ||||
Condensed Consolidated Financial Statements |
||||
Condensed Consolidated Balance Sheets as of March 31, 2015 and June 30, 2015 (Unaudited) |
F-43 | |||
F-44 | ||||
F-45 | ||||
F-46 | ||||
F-47 | ||||
Notes to Condensed Consolidated Financial Statements (Unaudited) |
F-48 |
F-1
Report of Independent Registered Public Accounting Firm
The Board of Directors and Shareholders of Azure Power India Private Limited
We have audited the accompanying consolidated balance sheets of Azure Power India Private Limited as of March 31, 2014, and 2015, and the related consolidated statements of operations, comprehensive loss, preferred shares and shareholders deficit and cash flows for each of the two years in the period ended March 31, 2015. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Companys internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Companys internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Azure Power India Private Limited at March 31, 2014 and 2015, and the consolidated results of its operations and its cash flows for each of the two years in the period ended March 31, 2015, in conformity with U.S. generally accepted accounting principles.
/s/ Ernst & Young Associates LLP
Gurgaon, India
December 16, 2015
F-2
AZURE POWER INDIA PRIVATE LIMITED
(Predecessor to Azure Power Global Limited)
Rs. and US$ amounts in thousands, except share and par value data
As on March 31, | ||||||||||||
2014
(Rs.) |
2015
(Rs.) |
2015
(US$) |
||||||||||
(Note 2(d)) | ||||||||||||
Assets |
||||||||||||
Current assets: |
||||||||||||
Cash and cash equivalents |
1,599,067 | 2,044,046 | 32,144 | |||||||||
Restricted cash |
60,000 | 702,407 | 11,046 | |||||||||
Accounts receivable, net |
166,226 | 237,956 | 3,742 | |||||||||
Deferred income tax asset |
| 22,453 | 353 | |||||||||
Deferred IPO costs |
| 88,400 | 1,390 | |||||||||
Prepaid expenses and other current assets# |
122,398 | 240,425 | 3,781 | |||||||||
|
|
|
|
|
|
|||||||
Total current assets |
1,947,691 | 3,335,687 | 52,456 | |||||||||
Restricted cash |
618,674 | 600,794 | 9,448 | |||||||||
Property, plant and equipment, net |
6,033,617 | 15,145,674 | 238,177 | |||||||||
Software, net |
5,332 | 15,720 | 247 | |||||||||
Deferred income taxes |
69,394 | 4,460 | 70 | |||||||||
Other assets* # |
599,445 | 820,824 | 12,908 | |||||||||
|
|
|
|
|
|
|||||||
Total assets |
9,274,153 | 19,923,159 | 313,306 | |||||||||
|
|
|
|
|
|
|||||||
Liabilities, preferred shares and shareholders deficit |
||||||||||||
Current liabilities: |
||||||||||||
Accounts payable |
16,656 | 971,468 | 15,277 | |||||||||
Current portion of long-term debt |
1,909,456 | 2,254,344 | 35,451 | |||||||||
Income taxes payable |
11,296 | 115,945 | 1,823 | |||||||||
Deferred income taxes |
28,802 | 998 | 16 | |||||||||
Interest payable |
32,472 | 55,879 | 879 | |||||||||
Other liabilities |
44,596 | 273,540 | 4,302 | |||||||||
|
|
|
|
|
|
|||||||
Total current liabilities |
2,043,278 | 3,672,174 | 57,747 | |||||||||
Long-term debt |
7,111,393 | 15,478,509 | 243,412 | |||||||||
Deferred revenue |
232,403 | 317,702 | 4,996 | |||||||||
Deferred income taxes |
71,196 | 117,661 | 1,850 | |||||||||
Asset retirement obligations |
33,350 | 70,944 | 1,116 | |||||||||
Other liabilities |
6,266 | 18,630 | 293 | |||||||||
|
|
|
|
|
|
|||||||
Total liabilities |
9,497,886 | 19,675,620 | 309,414 | |||||||||
|
|
|
|
|
|
|||||||
Preferred shares, Rs. 10 par value; 86,666,667 shares authorized; 534,044 and 672,177 shares designated as compulsorily convertible preferred shares as of March 31, 2014 and 2015 respectively, (liquidation preference Rs 5,176,368 as of March 31, 2015) |
2,385,725 | 4,689,942 | 73,753 | |||||||||
Shareholders deficit |
||||||||||||
Equity shares, Rs. 10 par value; 43,333,333 shares authorized; 109,880 shares issued and outstanding |
1,099 | 1,099 | 17 | |||||||||
Additional paid-in capital |
(895,432 | ) | (1,643,212 | ) | (25,841 | ) | ||||||
Accumulated deficit |
(1,745,307 | ) | (2,828,062 | ) | (44,473 | ) | ||||||
Accumulated other comprehensive income |
20,012 | 23,197 | 365 | |||||||||
|
|
|
|
|
|
|||||||
Total AZI shareholders deficit |
(2,619,628 | ) | (4,446,978 | ) | (69,932 | ) | ||||||
Non-controlling interest |
10,170 | 4,575 | 72 | |||||||||
|
|
|
|
|
|
|||||||
Total shareholders deficit |
(2,609,458 | ) | (4,442,403 | ) | (69,860 | ) | ||||||
|
|
|
|
|
|
|||||||
Total liabilities, preferred shares and shareholders deficit |
9,274,153 | 19,923,159 | 313,306 | |||||||||
|
|
|
|
|
|
# |
Includes security deposit of Rs. 6,300 and Rs. 6,300 (US$99) to related parties as of March 31, 2014 and 2015, classified as current and non-current respectively, also see Note 18. |
* | Includes loan of Rs. 41,392 to a related party as of March 31, 2014, also see Note 18. |
See accompanying notes.
F-3
AZURE POWER INDIA PRIVATE LIMITED
(Predecessor to Azure Power Global Limited)
Consolidated Statements of Operations
Rs. and US$ amounts in thousands, except share and per share data
Year ended March 31, | ||||||||||||
2014
(Rs.) |
2015
(Rs.) |
2015
(US$) |
||||||||||
(Note 2(d)) | ||||||||||||
Operating revenues: |
||||||||||||
Sale of power |
881,345 | 1,124,138 | 17,678 | |||||||||
Operating costs and expenses: |
||||||||||||
Cost of operations (exclusive of depreciation and amortization shown separately below) |
52,491 | 79,816 | 1,255 | |||||||||
General and administrative expenses |
235,300 | 425,713 | 6,695 | |||||||||
Depreciation and amortization |
252,352 | 322,430 | 5,070 | |||||||||
|
|
|
|
|
|
|||||||
Total operating cost and expenses |
540,143 | 827,959 | 13,020 | |||||||||
|
|
|
|
|
|
|||||||
Operating income |
341,202 | 296,179 | 4,658 | |||||||||
Other expense: |
||||||||||||
Interest expense, net |
520,219 | 831,789 | 13,081 | |||||||||
Loss on foreign currency exchange, net |
580,566 | 299,628 | 4,712 | |||||||||
|
|
|
|
|
|
|||||||
Total other expenses |
1,100,785 | 1,131,417 | 17,793 | |||||||||
|
|
|
|
|
|
|||||||
Loss before income taxes |
(759,583 | ) | (835,238 | ) | (13,135 | ) | ||||||
Income tax expense |
(15,847 | ) | (253,112 | ) | (3,980 | ) | ||||||
|
|
|
|
|
|
|||||||
Net loss |
(775,430 | ) | (1,088,350 | ) | (17,115 | ) | ||||||
Net loss attributable to non-controlling interest |
(26,935 | ) | (5,595 | ) | (88 | ) | ||||||
|
|
|
|
|
|
|||||||
Net loss attributable to AZI |
(748,495 | ) | (1,082,755 | ) | (17,027 | ) | ||||||
Accretion on Mezzanine CCPS |
(366,552 | ) | (755,207 | ) | (11,876 | ) | ||||||
|
|
|
|
|
|
|||||||
Net loss attributable to AZI equity shareholders |
(1,115,047 | ) | (1,837,962 | ) | (28,903 | ) | ||||||
|
|
|
|
|
|
|||||||
Net loss per share attributable to AZI equity shareholders |
||||||||||||
Basic and diluted |
(10,241 | ) | (16,727 | ) | (263 | ) | ||||||
Shares used in computing basic and diluted per share amounts |
||||||||||||
Equity shares |
108,882 | 109,880 | | |||||||||
Pro forma (unaudited)(1): |
||||||||||||
Pro forma net loss |
||||||||||||
Pro forma net loss attributable to non-controlling interest |
||||||||||||
Pro forma net loss attributable to AZI equity shareholders |
||||||||||||
Pro forma basic and diluted loss per share |
||||||||||||
Pro forma shares used in computing basic and diluted per share amounts |
(1) |
The pro forma disclosures for the year ended March 31, 2015 reflect the conversion of all outstanding compulsorily convertible debentures (Note 10) and compulsorily convertible preferred shares (Notes 10 and 14) into equity shares before the Initial Public Offering. |
The pro forma disclosure will be completed once the equity shares upon conversion can be determined. For pro forma disclosure purposes, these conversions are assumed to have occurred as of the beginning of the fiscal year.
See accompanying notes.
F-4
AZURE POWER INDIA PRIVATE LIMITED
(Predecessor to Azure Power Global Limited)
Consolidated Statements of Comprehensive Loss
Rs. and US$ amounts in thousands
Year ended March 31, | ||||||||||||
2014
(Rs.) |
2015
(Rs.) |
2015
(US$) |
||||||||||
(Note 2(d)) | ||||||||||||
Net loss attributable to AZI equity shareholders |
(1,115,047 | ) | (1,837,962 | ) | (28,903 | ) | ||||||
Add: Non-controlling interest |
(26,935 | ) | (5,595 | ) | (88 | ) | ||||||
Other comprehensive loss: |
||||||||||||
Foreign currency translation |
13,844 | (3,185 | ) | (50 | ) | |||||||
|
|
|
|
|
|
|||||||
Total comprehensive loss attributable to AZI equity shareholders |
(1,128,138 | ) | (1,846,742 | ) | (29,041 | ) | ||||||
|
|
|
|
|
|
See accompanying notes.
F-5
AZURE POWER INDIA PRIVATE LIMITED
(Predecessor to Azure Power Global Limited)
Consolidated Statements of Preferred Shares and Shareholders Deficit
Rs. and US$ amounts in thousands
Preferred
shares |
Equity
shares |
Additional
paid in capital |
Accumulated
other comprehensive income |
Accumulated
deficit |
Total AZI
shareholders deficit |
Non-
controlling interests |
Total
shareholders deficit |
|||||||||||||||||||||||||
Balance as of March 31, 2013 |
2,019,173 | 1,089 | (533,333 | ) | 6,168 | (996,812 | ) | (1,522,888 | ) | 37,105 | (1,485,783 | ) | ||||||||||||||||||||
Issuance of equity shares |
| 10 | 34 | | | 44 | | 44 | ||||||||||||||||||||||||
Net loss |
| | | | (748,495 | ) | (748,495 | ) | (26,935 | ) | (775,430 | ) | ||||||||||||||||||||
Accretion on Mezzanine CCPS |
366,552 | | (366,552 | ) | | | (366,552 | ) | | (366,552 | ) | |||||||||||||||||||||
Other comprehensive loss |
| | | 13,844 | | 13,844 | | 13,844 | ||||||||||||||||||||||||
Share based compensation |
| | 4,419 | | | 4,419 | | 4,419 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Balance as of March 31, 2014 |
2,385,725 | 1,099 | (895,432 | ) | 20,012 | (1,745,307 | ) | (2,619,628 | ) | 10,170 | (2,609,458 | ) | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes.
F-6
AZURE POWER INDIA PRIVATE LIMITED
(Predecessor to Azure Power Global Limited)
Consolidated Statements of Preferred Shares and Shareholders Deficit
Rs. and US$ amounts in thousands
Preferred
shares |
Equity
shares |
Additional
paid in capital |
Accumulated
other comprehensive income |
Accumulated
deficit |
Total AZI
shareholders deficit |
Non-
controlling interests |
Total
shareholders deficit |
|||||||||||||||||||||||||
Balance as of March 31, 2014 |
2,385,725 | 1,099 | (895,432 | ) | 20,012 | (1,745,307 | ) | (2,619,628 | ) | 10,170 | (2,609,458 | ) | ||||||||||||||||||||
Issuance of Series F CCPS |
1,549,010 | | | | | | | | ||||||||||||||||||||||||
Net loss |
| | | | (1,082,755 | ) | (1,082,755 | ) | (5,595 | ) | (1,088,350 | ) | ||||||||||||||||||||
Accretion on Mezzanine CCPS |
755,207 | | (755,207 | ) | | | (755,207 | ) | | (755,207 | ) | |||||||||||||||||||||
Other comprehensive income |
| | | 3,185 | | 3,185 | | 3,185 | ||||||||||||||||||||||||
Share based compensation |
| | 7,427 | | | 7,427 | | 7,427 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Balance as of March 31, 2015 |
4,689,942 | 1,099 | (1,643,212 | ) | 23,197 | (2,828,062 | ) | (4,446,978 | ) | 4,575 | (4,442,403 | ) | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Balance as of March 31, 2015 (US$) |
73,753 | 17 | (25,841 | ) | 365 | (44,473 | ) | (69,932 | ) | 72 | (69,860 | ) | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes.
F-7
AZURE POWER INDIA PRIVATE LIMITED
(Predecessor to Azure Power Global Limited)
Consolidated Statements of Cash Flows
Rs. and US$ amounts in thousands
Year ended March 31, | ||||||||||||
2014
(Rs.) |
2015
(Rs.) |
2015
(US$) |
||||||||||
(Note 2(d)) | ||||||||||||
Cash flows from operating activities |
||||||||||||
Net loss |
(775,430 | ) | (1,088,350 | ) | (17,115 | ) | ||||||
Adjustments to reconcile net loss to net cash used in operating activities: |
||||||||||||
Deferred income taxes |
(19,528 | ) | 61,142 | 962 | ||||||||
Depreciation and amortization |
252,352 | 322,430 | 5,070 | |||||||||
Change in fair value of CCDs and Series E CCPS |
190,300 | 286,300 | 4,502 | |||||||||
Loss on disposal of property, plant and equipment |
5,869 | 5,415 | 85 | |||||||||
Share based compensation |
4,419 | 7,427 | 117 | |||||||||
Amortization of debt financing costs |
15,330 | 22,090 | 347 | |||||||||
Realized gain on short term investments |
(13,060 | ) | (13,949 | ) | (219 | ) | ||||||
Deferred rent |
365 | 12,170 | 191 | |||||||||
Allowance for doubtful accounts |
253 | 947 | 15 | |||||||||
Loss on foreign currency exchange, net |
580,566 | 299,628 | 4,712 | |||||||||
Changes in operating assets and liabilities |
||||||||||||
Accounts receivable |
(35,962 | ) | (72,677 | ) | (1,143 | ) | ||||||
Prepaid expenses and other current assets |
(2,047 | ) | (118,027 | ) | (1,856 | ) | ||||||
Other assets |
(177,866 | ) | (241,077 | ) | (3,791 | ) | ||||||
Accounts payable |
(29,133 | ) | (102,826 | ) | (1,617 | ) | ||||||
Interest payable |
4,431 | 23,407 | 368 | |||||||||
Deferred revenue |
86,297 | 85,299 | 1,341 | |||||||||
Other liabilities |
(110,557 | ) | 333,787 | 5,249 | ||||||||
|
|
|
|
|
|
|||||||
Net cash flows used in operating activities |
(23,401 | ) | (176,864 | ) | (2,782 | ) | ||||||
|
|
|
|
|
|
|||||||
Cash flows from investing activities |
||||||||||||
Purchase of property, plant and equipment |
(372,317 | ) | (8,426,008 | ) | (132,505 | ) | ||||||
Purchase of software |
(5,464 | ) | (14,407 | ) | (227 | ) | ||||||
Purchase of available for sale investments |
(1,076,837 | ) | (913,991 | ) | (14,373 | ) | ||||||
Sale of available for sale investments |
1,089,897 | 927,940 | 14,593 | |||||||||
Redemption/ maturity (purchase) of term deposits-restricted cash |
350,295 | (624,527 | ) | (9,821 | ) | |||||||
|
|
|
|
|
|
|||||||
Net cash flows used in investing activities |
(14,426 | ) | (9,050,993 | ) | (142,333 | ) | ||||||
|
|
|
|
|
|
|||||||
Cash flows from financing activities |
||||||||||||
Proceeds from issuance of Series F CCPS |
| 1,549,010 | 24,359 | |||||||||
Proceeds from issuance of equity shares |
34 | | | |||||||||
Proceeds from exercise of stock options |
10 | | | |||||||||
Repayments of term and other loan |
(409,417 | ) | (452,920 | ) | (7,123 | ) | ||||||
Proceeds from term and other loan |
977,278 | 8,398,998 | 132,080 | |||||||||
Proceeds from issuance of Series E CCPS |
491,400 | | | |||||||||
Proceeds from issuance of CCDs |
| 180,000 | 2,831 | |||||||||
IPO costs incurred |
| (3,045 | ) | (48 | ) | |||||||
|
|
|
|
|
|
|||||||
Net cash flows provided by financing activities |
1,059,305 | 9,672,043 | 152,099 | |||||||||
|
|
|
|
|
|
|||||||
Effect of exchange rate changes on cash and cash equivalents |
2,657 | 793 | 12 | |||||||||
Net increase in cash and cash equivalents |
1,024,135 | 444,979 | 6,996 | |||||||||
Cash and cash equivalents at beginning of the year |
574,932 | 1,599,067 | 25,147 | |||||||||
|
|
|
|
|
|
|||||||
Cash and cash equivalents at end of the year |
1,599,067 | 2,044,046 | 32,143 | |||||||||
|
|
|
|
|
|
|||||||
Supplemental disclosure of cash flow information |
||||||||||||
Cash paid during the year for interest |
406,921 | 844,586 | 13,282 | |||||||||
Cash paid during the year for income taxes |
131,831 | 230,383 | 3,623 |
See accompanying notes
F-8
AZURE POWER INDIA PRIVATE LIMITED
(Predecessor to Azure Power Global Limited)
Notes to Consolidated Financial Statements
Rs. and US$ amounts in thousands, except share and per share data
1. Organization
Azure Power India Private Limited (AZI or Azure) and its subsidiaries (collectively, the Company) are organized under the laws of India (except for two U.S. subsidiaries) and are engaged in the development, construction, ownership, operation, maintenance and management of solar power plants and generation of solar energy based on long-term contracts (power purchase agreements or PPA) with Indian government energy distribution companies, as well as other non-governmental energy distribution companies and commercial customers.
Formation and initial public offering (IPO)
The Company has restructured its business to create a holding company outside India. As part of the restructuring plan, Azure Power Global Limited (APGL) has been incorporated in Mauritius on January 30, 2015. APGL has filed a Registration Statement on Form F-1 with the Securities and Exchange Commission with respect to an IPO of its equity shares in the United States. APGL currently has no business operations. In July 2015, APGL purchased from the non-founder investors in AZI (i.e., International Finance Corporation, Helion Venture Partners II, LLC, Helion Venture Partners India II, LLC, FC VI India Venture (Mauritius) Ltd., DEG Deutsche Investitions Und Entwicklungsgesellschaft mbH and Sociétéde Promotion et de Participation Pour la Coopération Économique) the equity shares and convertible securities held by them in AZI and issued an equivalent number of equity shares and convertible securities of APGL to such non-founder investors. Accordingly, AZI is considered to be the predecessor to APGL, and AZIs consolidated financial statements are being included in the registration statement of APGL.
2. Summary of significant accounting policies
a) |
Basis of presentation |
The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (GAAP) and are presented in Indian rupees (Rs.), unless otherwise stated. The consolidated financial statements include the accounts of AZI and companies which are directly or indirectly controlled by AZI. All intercompany accounts and transactions have been eliminated upon consolidation.
b) | Use of estimates |
The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, costs, expenses and comprehensive loss that are reported and disclosed in the consolidated financial statements and accompanying notes. These estimates are based on managements best knowledge of current events, historical experience, actions the Company may undertake in the future and on various other assumptions that are believed to be prudent and reasonable under the circumstances. Significant estimates and assumptions are used for, but not limited to impairment of and useful lives of property, plant and equipment, determination of asset retirement obligations, valuation of derivative instruments, valuation of share based compensation, valuation of compulsorily convertible debentures and preferred shares, income taxes, revenue recognition and other contingencies and commitments. Although these estimates are based upon managements best knowledge of current events and actions, actual results could differ from these estimates, and such differences may be material to the consolidated financial statements.
F-9
AZURE POWER INDIA PRIVATE LIMITED
(Predecessor to Azure Power Global Limited)
Notes to Consolidated Financial Statements
Rs. and US$ amounts in thousands, except share and per share data
c) | Foreign currency translation and transactions |
The consolidated financial statements are reported in Rs. which is the functional currency of AZI. The functional currencies of AZIs subsidiaries are their respective local country currencies. The translation from the applicable functional currencies of AZIs subsidiaries into Rs. is performed for balance sheet accounts using the exchange rates in effect as of the balance sheet date, except for shareholders equity and preferred shares, which are translated at the historical rates in effect at the dates of the underlying transactions. Revenue, expense and cash flow items are translated using the average exchange rates for the respective year. The resulting gains and losses from such translation are excluded from the determination of earnings and are recognized instead in accumulated other comprehensive loss, which is a separate component of shareholders deficit.
Realized and unrealized foreign currency transaction gains and losses, arising from exchange rate fluctuations on balances denominated in currencies other than the functional currency of an entity, such as those resulting from the Companys US dollar (US$) denominated borrowings, are included in Loss on foreign currency exchange, net in the consolidated statements of operations.
d) | Convenience translation |
Translation of balances in the consolidated balance sheets and the consolidated statements of operations, comprehensive loss, preferred shares and shareholders deficit and cash flows from Rs. into US$, as of and for the year ended March 31, 2015 are solely for the convenience of the readers and were calculated at the rate of US$ 1 = Rs. 63.59, the noon buying rate in New York City for cable transfers in non U.S. currencies, as certified for customs purposes by the Federal Reserve Bank of New York on June 30, 2015. No representation is made that the Rs. amounts could have been, or could be, converted, realized or settled into US$ at that rate on June 30, 2015, or at any other rate.
e) | Cash and cash equivalents |
Cash and cash equivalents include cash on hand, demand deposits with banks, term deposits and all other highly liquid investments purchased with an original maturity of three months or less at the date of acquisition and that are readily convertible to cash. The Company has classified term deposits having original maturity of more than three months totaling Rs. 561,050 and Rs. 95,416 (US$ 1,500) as of March 31, 2014 and 2015 respectively as cash and cash equivalents , because the Company has the ability to redeem these deposits at any time subject to an immaterial interest rate forfeiture. All term deposits are readily convertible into known amount of cash with no more than one days notice.
f) | Restricted cash |
Restricted cash consists of cash balances restricted as to withdrawal or usage and relates to cash used to collateralize bank letters of credit supporting the purchase of equipment for solar power plants, bank guarantees issued in relation to the construction of the solar power plants within the timelines stipulated in PPAs and for certain debt service reserves required under the Companys loan agreements. Restricted cash is classified into current and non-current portions based on the term of the deposit and the expiration date of the underlying restriction.
g) | Investments |
Management determines the appropriate classification of investment securities at the time of purchase and re-evaluates such designation at each balance sheet date. The investment securities held by the Company during
F-10
AZURE POWER INDIA PRIVATE LIMITED
(Predecessor to Azure Power Global Limited)
Notes to Consolidated Financial Statements
Rs. and US$ amounts in thousands, except share and per share data
the periods presented in the accompanying consolidated financial statements are classified as available-for-sale (short-term investments) and consist of liquid mutual funds units.
The Company accounts for its investments in accordance with Financial Accounting Standards Board (FASB) ASC Topic 320, Accounting for Certain Investments in Debt and Equity Securities . These investments are considered available for sale and are recorded at fair value, with the unrealized gains or losses, net of tax, reported as a component of accumulated other comprehensive loss in the consolidated statement of shareholders deficit. As of March 31, 2014 and 2015, the Company did not have any short-term investments. Realized gains and proceeds from the sale of available-for-sale securities for the year ended March 31, 2014 were Rs. 13,060 and Rs. 1,089,897 and for the year ended March 31, 2015 were Rs. 13,949 (US$ 219) and Rs. 927,940 (US$ 14,593), respectively.
Realized gains and losses and decline in value judged to be other than temporary on available-for-sale securities are included in the consolidated statements of operations. The cost of securities sold or disposed is determined on First in First out, or FIFO method.
h) | Accounts receivable |
The Companys accounts receivables are generated by selling energy to customers and are reported net of any allowance for uncollectible accounts. The allowance for doubtful accounts is based on various factors, including the length of time receivables are past due, significant one-time events, the financial health of customers and historical experience. Accounts receivable serve as collateral for borrowings under the working capital facility, described in Note 10.
i) | Deferred IPO cost |
The Company incurred legal and printing costs relating to its planned IPO. The Company accounts for such costs under ASC 340-10-599-1 (SAB Topic 5A) Expenses of the Offering as incremental costs directly attributable to an offering of equity securities, and has capitalised such costs on its balance sheet as of March 31, 2015. These deferred costs will be charged to APGL and applied against the proceeds from the IPO, when received.
j) | Property, plant and equipment |
Property, plant and equipment represents the costs of completed and operational solar power plants, as well as the cost of furniture and fixtures, vehicles, office and computer equipment, leasehold improvements, freehold land and construction in progress. Construction in progress represents the accumulated cost of solar power plants that have not been placed into service at the date of the balance sheet. Construction in progress includes the cost of solar modules for which the Company has taken legal title, civil engineering, electrical and other related costs incurred during the construction of a solar power plant. Construction in progress is reclassified to property, plant and equipment when the project begins its commercial operations.
Property, plant and equipment are stated at cost, less accumulated depreciation and impairment losses. Depreciation is calculated using the straight-line method over the assets estimated useful lives as follows:
Plant and machinery (solar power plants) |
25 years | |||
Furniture and fixtures |
5 years | |||
Vehicles |
5 years | |||
Office equipment |
5 years | |||
Computers |
3 years |
F-11
AZURE POWER INDIA PRIVATE LIMITED
(Predecessor to Azure Power Global Limited)
Notes to Consolidated Financial Statements
Rs. and US$ amounts in thousands, except share and per share data
Leasehold improvements to office facilities are depreciated over the shorter of the lease period or the estimated useful life of the improvement. Leasehold improvements on the solar power plant sites are depreciated over the shorter of the lease term or the remaining period of the PPAs undertaken with the respective customer. Freehold land is not depreciated. Construction in progress is not depreciated until it is ready to be put to use.
Improvements to property, plant and equipment deemed to extend the useful economic life of an asset are capitalized. Maintenance and repairs that do not improve efficiency or extend the estimated economic life of an asset are expensed as incurred.
Capitalized interest
Interest incurred on funds borrowed to finance construction of solar power plants is capitalized until the plant is ready for its intended use. Capitalized interest during the year ended March 31, 2014 was not significant. Capitalized interest during the year ended March 31, 2015 was Rs. 155,012 (US$ 2,438).
k) | Accounting for impairment of long-lived assets |
The Company periodically evaluates whether events have occurred that would require revision of the remaining useful life of property, plant and equipment and improvements, or render their carrying value not recoverable. If such circumstances arise, the Company uses an estimate of the undiscounted value of expected future operating cash flows to determine whether the long-lived assets are impaired. If the aggregate undiscounted cash flows are less than the carrying amount of the assets, the resulting impairment charge to be recorded is calculated based on the excess of the carrying value of the assets over the fair value of such assets, with the fair value determined based on an estimate of discounted future cash flows, appraisals or other valuation techniques. There were no impairment charges related to long-lived assets recognized during the years ended March 31, 2014 and 2015.
l) | Leases and land use rights |
The Companys leases relate to leasehold land on which the solar power plants are constructed and for office facilities. Leases are reviewed for capital or operating classification at their inception under the guidance of ASC Topic 840 Leases . The expense for leases classified as operating leases is recorded as rent expense on a straight-line basis, over the lease term, beginning with the date the Company has access to the property.
Land use rights represent lease prepayments to the lessor. Land use rights are carried at cost less accumulated amortization. Amortization is provided to write off the cost of lease prepayments on a straight-line basis over the period of the lease or PPA, whichever is shorter.
The Company did not have any capital leases during any of the periods presented in the accompanying consolidated financial statements.
m) | Asset retirement obligations (ARO) |
Upon the expiration of a PPA or, if later, the expiration of the lease agreement for solar power plants located on leasehold land, the Company is required to remove the solar power plant and restore the land. The Company records the fair value of the liability for the legal obligation to retire the asset in the period in which the obligation is incurred, which is generally when the asset is constructed. When a new liability is recognized, the
F-12
AZURE POWER INDIA PRIVATE LIMITED
(Predecessor to Azure Power Global Limited)
Notes to Consolidated Financial Statements
Rs. and US$ amounts in thousands, except share and per share data
Company capitalizes it by increasing the carrying amount of the related long-lived asset, which resulting ARO asset is depreciated over the remaining useful life of the solar power plant. The liability is accreted and expensed to its present expected future value each period based on a credit adjusted risk free interest rate. Upon settlement of the obligation, the Company eliminates the liability and, based on the actual cost to retire, may incur a gain or loss. The Companys asset retirement obligations for the years ended March 31, 2014 and 2015 are as follows.
As of March 31, | ||||||||||||
2014
(Rs.) |
2015
(Rs.) |
2015
(US$) |
||||||||||
Beginning balance |
15,000 | 33,350 | 524 | |||||||||
Addition during the period |
17,000 | 35,000 | 550 | |||||||||
Liabilities settled during the period |
| | | |||||||||
Accretion during the period |
1,350 | 2,594 | 41 | |||||||||
|
|
|
|
|
|
|||||||
Ending balance |
33,350 | 70,944 | 1,115 | |||||||||
|
|
|
|
|
|
n) | Software |
The Company capitalizes certain internal software development costs under the provisions of ASC Topic 350-40 Internal-Use Software . As of March 31, 2014 and 2015, the amount capitalized as software includes the cost of software licenses, as well as related implementation costs, which primarily relate to third party consulting fees. Such license and implementation costs are capitalized and amortized over their estimated useful lives of three years using the straight-line method. On an ongoing basis, the Company assesses the recoverability of its capitalized software intangible assets. Capitalized software costs determined to be unrecoverable are expensed in the period in which the determination is made. As of March 31, 2014 and 2015, all capitalized software was considered fully recoverable.
o) | Debt financing costs |
Financing costs incurred in connection with obtaining construction and term financing loans are deferred and amortized over the term of the respective loan using the effective interest rate method. Amortization of debt financing costs is capitalized during construction and recorded as interest expense in the consolidated statements of operations following commencement of commercial operations of the respective solar power plants.
Amortization of debt financing costs for the years ended March 31, 2014 and 2015 was Rs. 15,330 and Rs. 22,090 (US$347), respectively.
p) | Income taxes |
Income taxes are recorded under the asset and liability method, as prescribed under ASC Topic 740 Income Taxes , whereby deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax base. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.
The Company establishes valuation allowances against its deferred tax assets when it is more likely than not that all or a portion of a deferred tax asset will not be realized.
F-13
AZURE POWER INDIA PRIVATE LIMITED
(Predecessor to Azure Power Global Limited)
Notes to Consolidated Financial Statements
Rs. and US$ amounts in thousands, except share and per share data
The Company applies a two-step approach to recognize and measure uncertainty in income taxes in accordance with FASB Interpretation No. 48 (FIN 48), Accounting for Uncertainty in Income Taxes an interpretation of ASC Topic 740 . The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount which is more than 50% likely of being realized upon ultimate settlement. Through March 31, 2015 the Company does not have any unrecognized tax benefits nor has it recognized any interest or penalties.
q) | Employee benefits |
Defined contribution plan
Eligible employees of the Company in India receive benefits from the Provident Fund, administered by the Government of India, which is a defined contribution plan. Both the employees and the Company make monthly contributions to the Provident Fund equal to a specified percentage of the eligible employees salary.
The Company has no further funding obligation under the Provident Fund, beyond the contributions elected or required to be made thereunder. Contributions to the Provident Fund by the Company are charged to expense in the period in which services are rendered by the covered employees and amounted to Rs. 3,015 and Rs. 5,693 (US$ 90) for the years ended March 31, 2014 and 2015, respectively
Defined benefit plan
Employees in India are entitled to benefits under the Gratuity Act, a defined benefit post-employment plan covering eligible employees of the Company. This plan provides for a lump-sum payment to eligible employees at retirement, death, and incapacitation or on termination of employment, of an amount based on the respective employees salary and tenure of employment. As of March 31, 2015, this plan is unfunded.
Current service costs for defined benefit plans are accrued in the period to which they relate. In accordance with ASC Topic 715, Compensation Retirement Benefit , the liability in respect of defined benefit plans is calculated annually by the Company using the projected unit credit method and amounted to Rs. 4,855 and Rs. 5,612 (US$ 88) as of March 31, 2014 and 2015, respectively. Prior service cost, if any, resulting from an amendment to a plan is recognized and amortized over the remaining period of service of the covered employees. Interest costs as of March 31, 2014 and 2015 was not significant.
The Company recognizes its liabilities for compensated absences in accordance with ASC Topic 710, Compensation General . The Company accrues the liability for its employee rights to compensated absence in the year in which it is earned.
r) | Revenue recognition |
Revenue from sale of power is recognized when persuasive evidence of an arrangement exists, the fee is fixed or determinable, solar energy kilowatts are supplied and collectability is reasonably assured. Revenue is based on the solar energy kilowatts actually supplied to customers multiplied by the rate per kilo-watt hour agreed to in the respective PPAs. The solar energy kilowatts supplied by the Company are validated by the customer prior to billing and recognition of revenue.
F-14
AZURE POWER INDIA PRIVATE LIMITED
(Predecessor to Azure Power Global Limited)
Notes to Consolidated Financial Statements
Rs. and US$ amounts in thousands, except share and per share data
The Company estimates the total kilowatt hour units expected to be generated over the entire 25 year-term using an estimated degradation factor. The total estimated revenue is calculated using the rate specified multiplied by the estimated output. Total estimated revenue is divided by units expected to be generated over the entire 25 year-term of PPA.
Where PPAs include scheduled price changes, revenue is recognized by applying the average rate to the energy output estimated over the term of the PPA. The Company estimates the total kilowatt hour units expected to be generated annually during the tenure of the PPA using budgeted plant land factors, rated capacity of the project and an annual estimated decrease in the rated capacity of solar panels. The contractual rates are applied to this annual estimate to determine the total estimated revenue over the term of the PPA. The Company then uses the total estimated revenue and the total estimated kilo-watt hours to compute the average rate used to record revenue on the actual energy output supplied. The Company compares the actual energy supplied to the estimate of the energy expected to be generated over the remaining term of the PPA on a periodic basis, but at least annually. Based on this evaluation, the Company reassesses the energy output estimated over the remaining term of the PPA and adjusts the revenue recognized and deferred to date. Through March 31, 2015, the adjustments have not been significant. Difference between actual billing and revenue recognized is recorded as deferred revenue.
For the years ended March 31, 2014 and 2015, the amount of revenue recognized under the PPAs with scheduled price changes is Rs. 165,461 and Rs. 175,492 (US$2,760) respectively.
Revenue from sale of power is recorded net of discounts. Through March 31, 2015, discounts have not been significant.
s) | Cost of operations (exclusive of depreciation and amortization) |
The Companys cost of operations consists of expenses pertaining to operations and maintenance of its solar power plants. These expenses include payroll and related costs for maintenance staff, plant maintenance, insurance, and lease costs.
Depreciation expense is not included in cost of operations but is included within Depreciation and amortization expense, shown separately in the consolidated statements of operations.
t) | General and administrative expenses |
General and administrative expenses include payroll and related costs for corporate, finance and other support staff, including bonus and share based compensation expense, professional fees and other corporate expenses.
u) | Share based compensation |
The Company follows guidance under ASC Topic 718, Compensation Stock Compensation , which requires compensation costs related to share-based transactions, including employee share options, to be recognized in the financial statements based on their fair value. The Company recognizes compensation expense for share options net of estimated forfeitures. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Share-based compensation is included in general and administrative expenses and recognized in the consolidated statements of operations for the years ended March 31, 2014 and 2015 based on awards ultimately expected to vest.
F-15
AZURE POWER INDIA PRIVATE LIMITED
(Predecessor to Azure Power Global Limited)
Notes to Consolidated Financial Statements
Rs. and US$ amounts in thousands, except share and per share data
The Company has elected to use the Black-Scholes-Merton valuation model to determine the fair value of share-based awards on the date of grant for employee share options with a fixed exercise price and fixed service-based vesting.
The Company has elected to use the Lattice valuation model to determine the fair value of share-based awards on the date of grant for employee share options with a market vesting condition.
v) | Contingencies |
Liabilities for loss contingencies arising from claims, tax assessments, litigation, fines and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount of the assessment and/or remediation can be reasonably estimated. Legal costs incurred with respect to these items are expensed as incurred.
w) |
Fair value of financial instruments |
ASC Topic 820, Fair Value Measurements and Disclosures , defines fair value as the price at which an asset could be exchanged or a liability transferred in an orderly transaction between knowledgeable, willing parties in the principal or most advantageous market for the asset or liability. Where available, fair value is based on observable market prices or derived from such prices. Where observable prices or inputs are not available, other inputs and valuation models are applied. These valuation techniques involve some level of management estimation and judgment, the degree of which is dependent on the price transparency for the instruments or market and the instruments complexity.
x) | Derivative instruments |
Derivative instruments are recorded on the consolidated balance sheets at fair value. The Company enters into foreign exchange currency contracts to mitigate and manage the risk of changes in foreign exchange rates. These foreign exchange derivative contracts were entered into to hedge the fluctuations in foreign exchange rates for recognized balance sheet items such as the Companys U.S. dollar denominated borrowings and are not designated as hedges for accounting purposes. Realized gains (losses) and changes in the fair value of these foreign exchange derivative contracts are recorded in foreign exchange gains (losses), net in the consolidated statements of operations along with the corresponding transaction gains and losses on the items being economically hedged. These derivatives are not held for speculative or trading purposes.
y) | Segment information |
Operating segments are defined as components of a company about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision making group, in deciding how to allocate resources and in assessing performance. The Companys chief executive officer is the chief operating decision maker. Based on the financial information presented to and reviewed by the chief operating decision maker in deciding how to allocate the resources and in assessing the performance of the Company, the Company has determined that it has a single operating and reporting segment: Sale of power. The Companys principal operations, revenue and decision-making functions are located in India.
z) | Non-controlling interest |
The non-controlling interest recorded in the financial statements relates to a 20% ownership in a subsidiary (10MW Gujarat Power Plant) not held by the Company. As of March 31, 2014, the Company recorded a non-controlling interest amounting to Rs. 10,170, including Rs. 26,935 of net loss for the year then ended. As of
F-16
AZURE POWER INDIA PRIVATE LIMITED
(Predecessor to Azure Power Global Limited)
Notes to Consolidated Financial Statements
Rs. and US$ amounts in thousands, except share and per share data
March 31, 2015, the Company recorded a non-controlling interest amounting to Rs. 4,575 (US$ 72), including Rs. 5,595 (US$ 88) of net loss for the year then ended.
aa) | Recent accounting pronouncements |
In August 2014, the FASB issued ASU No. 2014-15 Presentation of Financial Statements Going Concern which requires an entitys management to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entitys ability to continue as a going concern within one year after the date that the financial statements are issued or available to be issued. The ASU defines and clarifies that substantial doubt exists when conditions and events indicate that it is probable that the entity will be unable to meet its obligations as they become due within one year after the date financial statements are issued or available to be issued. The ASU requires management to perform the assessment every interim and annual period. The ASU applies to all entities and is effective for the annual period ending after December 15, 2016. Early application is permitted. The ASU does not presently have an impact on the consolidated financial statements.
In January 2015, the FASB issued ASU No. 2015-01 Income Statement Extraordinary and Unusual Items which simplifies the income statement presentation requirements in Subtopic 225-20 by eliminating the concept of extraordinary items. Extraordinary items are events and transactions that are distinguished by their unusual nature and by the infrequency of their occurrence. The ASU applies to all entities and is effective for the annual period beginning on or after December 15, 2015. The ASU does not presently have an impact on the consolidated financial statements.
In February 2015, the FASB issued Accounting Standards Update No. 2015-03 Interest Imputation of Interest (Subtopic 835-30) requires the discount or premium and debt issuance costs to be reported in the balance sheet as a direct deduction from the face amount. Further amortization of such costs shall be reported as interest expense. The amendments in this Update are effective for financial statements issued for fiscal years beginning after December 15, 2015. The presentation change per the ASU shall be disclosed in financial statements as of March 31, 2017.
In June 2014 the FASB issued ASU No. 2014-10 Developments stage entities (Topic 915). The amendments in this Update remove the definition of a development stage entity from Topic 915, thereby removing the distinction between development stage entities and other reporting entities from U.S. GAAP. The disclosure requirements for an entity that has not commenced planned principal operations shall not be applicable for annual reporting periods beginning after December 15, 2014 and interim periods for public business entities. The ASU does not have any impact over the consolidated financial statements.
In February 2015, the FASB issued ASU No. 2015-02 Consolidation Amendments to the Consolidation Analysis which modifies the existing consolidation guidance related to (i) limited partnerships and similar legal entities, (ii) the evaluation of variable interests for fees paid to decision makers or service providers, (iii) the effect of fee arrangements and related parties on the primary beneficiary determination, and (iv) certain investment funds The ASU is effective for fiscal years and interim periods within those years beginning after December 15, 2015. The ASU does not presently have an impact on the consolidated financial statements.
In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606) . ASU 2014-09 supersedes the revenue recognition requirements in ASC Topic 605, Revenue Recognition , and most industry-specific guidance. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to
F-17
AZURE POWER INDIA PRIVATE LIMITED
(Predecessor to Azure Power Global Limited)
Notes to Consolidated Financial Statements
Rs. and US$ amounts in thousands, except share and per share data
which the entity expects to be entitled in exchange for those goods or services. To achieve that core principle, an entity is required to follow five steps which comprises of (a) identifying the contract(s) with a customer; (b) identifying the performance obligations in the contract; (c) determining the transaction price; (d) allocating the transaction price to the performance obligations in the contract and (e) recognizing revenue when (or as) the entity satisfies a performance obligation. In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606) , deferring the implementation of ASU 2014-09. The effective date for the guidance is deferred from annual reporting periods beginning after December 15, 2016, to annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period, under either retrospective or retrospective with cumulative effect adoption. Early application is permitted from annual reporting periods beginning after December 15, 2016. The Company is currently assessing the potential effects of these changes to its consolidated financial statements.
In June 2014, the FASB issued ASU No. 2014-12 Stock Compensation Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved After the Requisite Service Period which requires that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. The ASU clarifies the proper method of accounting for share-based payments when the terms of an award provide that a performance target could be achieved after the requisite service period. The guidance is effective for annual and interim periods for fiscal years beginning on or after December 15, 2015. Entities can apply the amendment either (a) prospectively to all awards granted or modified after the effective date or (b) retrospectively to all awards with performance targets that are outstanding as of the beginning of the earliest annual period presented in the financial statements and to all new or modified awards thereafter. The Company is currently assessing the potential effects of these changes to its consolidated financial statements.
In November 2015, the FASB issued ASU No. 2015-17 Balance Sheet Classification of Deferred Taxes which simplifies the balance sheet presentation of deferred taxes under Topic ASC 740. Deferred tax liabilities and assets are classified as current or noncurrent based on the classification of the related asset or liability for financial reporting and deferred taxes that are not related to an asset or liability for financial reporting are classified according to the expected reversal date of the temporary difference. To simplify the presentation of deferred income taxes, the ASU require that deferred income tax liabilities and assets be classified as noncurrent in a statement of financial position, effective for all entities from the annual period beginning on or after December 15, 2016 and early adoption is permitted for interim and annual reporting periods. The Company is currently assessing the potential effects of these changes to its consolidated financial statements.
3. Cash and cash equivalents
Cash and cash equivalents consist of the following:
As of March 31, | ||||||||||||
2014
(Rs.) |
2015
(Rs.) |
2015
(US$) |
||||||||||
Bank demand deposits |
1,037,969 | 1,948,579 | 30,643 | |||||||||
Term deposits |
561,050 | 95,416 | 1,500 | |||||||||
Cash on hand |
48 | 51 | 1 | |||||||||
|
|
|
|
|
|
|||||||
Total |
1,599,067 | 2,044,046 | 32,144 | |||||||||
|
|
|
|
|
|
F-18
AZURE POWER INDIA PRIVATE LIMITED
(Predecessor to Azure Power Global Limited)
Notes to Consolidated Financial Statements
Rs. and US$ amounts in thousands, except share and per share data
4. Restricted cash
Restricted cash consists of the following:
As of March 31, | ||||||||||||
2014
(Rs.) |
2015
(Rs.) |
2015
(US$) |
||||||||||
Bank demand deposits |
378,220 | 542,484 | 8,531 | |||||||||
Term deposits |
300,454 | 760,717 | 11,963 | |||||||||
|
|
|
|
|
|
|||||||
678,674 | 1,303,201 | 20,494 | ||||||||||
Restricted cash current |
60,000 | 702,407 | 11,046 | |||||||||
|
|
|
|
|
|
|||||||
Restricted cash non-current balance |
618,674 | 600,794 | 9,448 | |||||||||
|
|
|
|
|
|
The increase in the restricted cash balance from March 31, 2014 to March 31, 2015 is primarily the result of increases in debt service reserve requirements, resulting from the increase in the level of the Companys borrowings during the period as well as cash used as collateral for letter of credit, resulting from increase in the level of solar power plant construction at March 31, 2015 compared to the prior period.
5. Accounts receivable
Accounts receivable, net consists of the following:
As of March 31, | ||||||||||||
2014
(Rs.) |
2015
(Rs.) |
2015
(US$) |
||||||||||
Accounts receivable |
175,279 | 247,956 | 3,899 | |||||||||
Less: Allowance for doubtful accounts |
(9,053 | ) | (10,000 | ) | (157 | ) | ||||||
|
|
|
|
|
|
|||||||
Total |
166,226 | 237,956 | 3,742 | |||||||||
|
|
|
|
|
|
Activity for the allowance for doubtful accounts receivable is as follows:
As of March 31, | ||||||||||||
2014
(Rs.) |
2015
(Rs.) |
2015
(US$) |
||||||||||
Balance at the beginning of the year |
8,800 | 9,053 | 142 | |||||||||
Provision for doubtful accounts |
253 | 947 | 15 | |||||||||
|
|
|
|
|
|
|||||||
Balance at the end of the year |
9,053 | 10,000 | 157 | |||||||||
|
|
|
|
|
|
F-19
AZURE POWER INDIA PRIVATE LIMITED
(Predecessor to Azure Power Global Limited)
Notes to Consolidated Financial Statements
Rs. and US$ amounts in thousands, except share and per share data
6. Prepaid expenses and other current assets
Prepaid expenses and other current assets consist of the following:
As of March 31, | ||||||||||||
2014
(Rs.) |
2015
(Rs.) |
2015
(US$) |
||||||||||
Prepaid income taxes |
29,346 | 69,207 | 1,088 | |||||||||
Security deposit to related party (Note 18) |
6,300 | | | |||||||||
Derivative instruments (Note 21) |
25,135 | 75,750 | 1,191 | |||||||||
Debt financing costs |
21,799 | 35,973 | 566 | |||||||||
Interest receivable on term deposits |
24,689 | 10,537 | 166 | |||||||||
Other |
15,129 | 48,958 | 770 | |||||||||
|
|
|
|
|
|
|||||||
Total |
122,398 | 240,425 | 3,781 | |||||||||
|
|
|
|
|
|
7. Property, plant and equipment, net
Property, plant and equipment, net consists of the following:
Estimated
useful life (in years) |
As of March 31, | |||||||||||||||
2014
(Rs.) |
2015
(Rs.) |
2015
(US$) |
||||||||||||||
Plant and machinery (solar power plants) |
25 | 5,901,781 | 8,793,975 | 138,292 | ||||||||||||
Furniture and fixtures |
5 | 4,442 | 4,791 | 75 | ||||||||||||
Vehicles |
5 | 9,632 | 10,274 | 162 | ||||||||||||
Office equipment |
5 | 2,847 | 5,083 | 80 | ||||||||||||
Computers |
3 | 5,762 | 12,595 | 198 | ||||||||||||
Leasehold improvements solar power plant |
25 | 361,386 | 639,765 | 10,061 | ||||||||||||
Leasehold improvements office |
1-3 | 3,572 | 11,739 | 185 | ||||||||||||
|
|
|
|
|
|
|||||||||||
6,289,422 | 9,478,222 | 149,053 | ||||||||||||||
Accumulated depreciation |
452,411 | 770,822 | 12,122 | |||||||||||||
|
|
|
|
|
|
|||||||||||
5,837,011 | 8,707,400 | 135,931 | ||||||||||||||
Freehold land |
39,260 | 199,173 | 3,132 | |||||||||||||
Construction in progress |
157,346 | 6,239,101 | 98,114 | |||||||||||||
|
|
|
|
|
|
|||||||||||
Total |
6,033,617 | 15,145,674 | 238,177 | |||||||||||||
|
|
|
|
|
|
Depreciation expense on property, plant and equipment was Rs. 252,065 and Rs. 318,411 (US$ 5,007) for the years ended March 31, 2014 and 2015, respectively.
The Company received a government grant for the construction of rooftop projects amounting to Rs. 11,700 (US$184) during the year ended March 31, 2015. The proceeds from this grant have been recorded as a reduction to the carrying value of the related rooftop projects.
F-20
AZURE POWER INDIA PRIVATE LIMITED
(Predecessor to Azure Power Global Limited)
Notes to Consolidated Financial Statements
Rs. and US$ amounts in thousands, except share and per share data
8. Software, net consists of the following:
Estimated
useful life (in years) |
As of March 31, | |||||||||||||||
2014
(Rs.) |
2015
(Rs.) |
2015
(US$) |
||||||||||||||
Software licenses and related implementation costs |
3 | 6,261 | 20,668 | 325 | ||||||||||||
Less: Accumulated amortization |
929 | 4,948 | 78 | |||||||||||||
|
|
|
|
|
|
|||||||||||
Total |
5,332 | 15,720 | 247 | |||||||||||||
|
|
|
|
|
|
Aggregate amortization expense for software was Rs. 287 and Rs. 4,019 (US$ 63) for the years ended March 31, 2014 and 2015, respectively.
Estimated amortization expense is: Rs. 6,488 in 2016, Rs. 6,488 in 2017 and Rs. 2,744 in 2018 .
9. Other assets
Other assets consist of the following:
As of March 31, | ||||||||||||
2014
(Rs.) |
2015
(Rs.) |
2015
(US$) |
||||||||||
Prepaid income taxes |
126,185 | 232,347 | 3,654 | |||||||||
Custom duty receivable |
30,742 | 30,742 | 483 | |||||||||
Loan to related party (Note 18) |
41,392 | | | |||||||||
Derivative instruments (Note 21) |
202,669 | 158,338 | 2,490 | |||||||||
Debt financing costs |
165,880 | 242,622 | 3,815 | |||||||||
Interest receivable on term deposits |
25,435 | 53,989 | 849 | |||||||||
Security deposit to related party (Refer Note 18) |
| 6,300 | 99 | |||||||||
Land use rights |
| 79,500 | 1,250 | |||||||||
Other |
7,142 | 16,986 | 268 | |||||||||
|
|
|
|
|
|
|||||||
Total |
599,445 | 820,824 | 12,908 | |||||||||
|
|
|
|
|
|
F-21
AZURE POWER INDIA PRIVATE LIMITED
(Predecessor to Azure Power Global Limited)
Notes to Consolidated Financial Statements
Rs. and US$ amounts in thousands, except share and per share data
10. Long term debt
Long term debt consists of the following:
As of March 31, | ||||||||||||
2014
(Rs.) |
2015
(Rs.) |
2015
(US$) |
||||||||||
Compulsorily convertible debentures 5.0 % DEG |
965,800 | 1,080,100 | 16,985 | |||||||||
Compulsorily convertible debentures 10.0 % IFC |
362,900 | 391,500 | 6,156 | |||||||||
Compulsorily convertible debentures 0% IFC II |
100,100 | 116,100 | 1,826 | |||||||||
Compulsorily convertible debentures 5% IFC III |
| 210,900 | 3,317 | |||||||||
Series E compulsorily convertible preferred shares (140,000 preferred shares) |
566,100 | 662,600 | 10,420 | |||||||||
|
|
|
|
|
|
|||||||
1,994,900 | 2,461,200 | 38,704 | ||||||||||
Project-level secured term loans: |
||||||||||||
Foreign currency loans |
6,186,577 | 6,046,900 | 95,092 | |||||||||
Indian rupee loans |
838,505 | 9,224,518 | 145,062 | |||||||||
|
|
|
|
|
|
|||||||
7,025,082 | 15,271,418 | 240,154 | ||||||||||
Other secured bank loans: |
||||||||||||
Vehicle loans |
867 | 235 | 4 | |||||||||
|
|
|
|
|
|
|||||||
9,020,849 | 17,732,853 | 278,862 | ||||||||||
Less current portion |
1,909,456 | 2,254,344 | 35,451 | |||||||||
|
|
|
|
|
|
|||||||
Long-term debt |
7,111,393 | 15,478,509 | 243,411 | |||||||||
|
|
|
|
|
|
Compulsory Convertible Debentures (CCDs)
The face value of the DEG, IFC , IFC II and IFC III CCDs is Rs. 680,390, Rs. 246,620, Rs. 75,000, and Rs. 180,000, respectively. The CCDs each contain the following key terms and conditions.
Voting
The holders of the CCDs are not entitled to voting rights other than for certain specific matters based on their proportionate voting right as defined and specified in the shareholder and CCD agreements.
Term
Unless converted, the DEG, IFC IFC II and IFC III CCDs mature 10 years from the date of the respective issuance being November 10, 2021, December 14, 2020, January 3, 2023 and June 5, 2024, respectively.
Interest
The DEG CCDs bear interest at a rate of 5.0% per annum through the date of their conversion into equity shares of the Company. The first interest payment is eighteen months from the issuance date followed by quarterly payments until the earlier of the date of conversion or maturity.
The IFC CCDs bear interest at a rate of 10.0% per annum through the date of their conversion into equity shares of the Company. The first interest payment is eighteen months from the issuance date followed by quarterly payments until the earlier of the date of conversion or maturity.
F-22
AZURE POWER INDIA PRIVATE LIMITED
(Predecessor to Azure Power Global Limited)
Notes to Consolidated Financial Statements
Rs. and US$ amounts in thousands, except share and per share data
The IFC II CCDs do not carry an annual interest rate. However, if any dividends are paid to equity shareholders or the holders of the Compulsorily Convertible Preferred Shares (CCPS), the IFC II holders are entitled to interest/dividends equal to the return provided to the equity shareholders or the CCPS shareholders, whichever is higher.
The IFC III CCDs bear interest at a rate of 5.0% per annum through the date of their conversion into equity shares of the Company. The first interest payment is eighteen months from the issuance date followed by quarterly payments until the earlier of the date of conversion or maturity.
The CCDs convert at a price such that the holder earns an internal rate of return ranging from 18.4% per annum to 20.0% per annum upon the filing of a draft red herring prospectus (DRHP), pursuant to the Indian Companies Act, 2013, as defined, in the event of liquidation events, as defined, or upon the voluntary sale of shares by all shareholders. Otherwise the guaranteed internal rate of return to the CCD holders ranges from 16.0% per annum to 18.0% per annum at maturity.
Buyback obligation
At any time after the expiry of the Qualified Initial Public Offering (QIPO) date of February 25, 2016, upon a breach of the funding requirements of the CCD holders or upon the occurrence of a liquidation event, as defined, the holders of the CCDs have an option, at their discretion, to require the Company to buyback the equity shares held by them after the conversion of their CCDs into equity shares so as to give them their required returns ranging from 18.4% per annum to 20.0% per annum.
Indian rules and regulations place limitations on the amount of the CCDs the Company can buy back within 12 months of the balance sheet. Among other things, the Company is restricted from buying back an amount of shares in excess of 25% of its statutory paid up share capital and free reserves in a year. As of March 31, 2015, the Company has estimated that a maximum aggregate amount totaling Rs. 988,000 of the CCDs are eligible for redemption by February 25, 2016 and has accordingly classified this amount as a current liability. Because of the limitations, the remaining balance of the CCDs totaling Rs. 810,600 continues to be classified as a non-current liability.
Conversion
The CCDs compulsorily convert to equity shares (a) upon filing of the DRHP, (b) in connection with an IPO as approved by the shareholders of the Company, or (c) at the maturity date of the respective CCDs. The CCDs are convertible into equity shares so as to give the holders their guaranteed returns ranging from 16.0% per annum to 18.0% per annum.
Accounting
In accordance with ASC Topic 480 Distinguishing liabilities from equity, the CCDs are recorded at their respective fair values at period end. The fair value has been determined based on a discounted cash flow analysis under the income approach. Changes in the fair value are recorded as interest expense in the statements of operations. The carrying amount of the CCDs includes the unrealized changes in the fair value of Rs. 426,790 and Rs. 616,590 (US$ 9,696) as of March 31, 2014 and 2015, respectively. Issuance costs on the CCDs are expensed as incurred. Interest expense, including changes to fair value, on the CCDs for the years ended March 31, 2014 and 2015 was Rs. 217,751 and Rs. 248,831 (US$ 3,913), respectively.
F-23
AZURE POWER INDIA PRIVATE LIMITED
(Predecessor to Azure Power Global Limited)
Notes to Consolidated Financial Statements
Rs. and US$ amounts in thousands, except share and per share data
Series E Compulsorily Convertible Preferred Shares (Series E CCPS)
Series E CCPS contain the following key terms and conditions.
Voting
The holders of the Series E CCPS are not entitled to voting rights other than for certain specific matters based on their proportionate voting right as defined and specified in the shareholder and the Series E CCPS agreements.
Term
Unless converted, the Series E CCPS are redeemable ten years from the date of their respective allotment or April 18, 2023.
Dividend
Each of the Series E CCPS holders are entitled to a 5.0% per annum per share non-cumulative dividend declared and paid in accordance with the Indian Companies Act of 2013. Should the equity or the Series A, B, C, D or F CCPS holder in any financial year receive a dividend payout higher than 5% per annum of the amount invested by such investors, the Series E CCPS holders are entitled to receive an additional dividend equal to the difference between the percentage return earned by the equity or the Series A, B, C, D or F CCPS holders and the rate of dividends received by the Series E CCPS holders. The Company has not declared or paid any dividends through March 31, 2015.
Buyback obligation
At any time after the expiry of the QIPO date of February 25, 2016, or if the funding covenants of the Series E CCPS are breached, the Series E CCPS holders have an option, at their discretion, to require the Company to buyback the equity shares held by them after conversion of the Series E CCPS into equity shares so as to give them a required return of 15.0% per annum.
Indian rules and regulations place limitations on the amount of the CCPS the Company can buy back within 12 months of the balance sheet. Among other things, the Company is restricted from buying back an amount of shares in excess of 25% of its statutory paid up share capital and free reserves in a year. As of March 31, 2015, the Company has estimated that the CCPS will not be eligible for buyback by February 25, 2016 and therefore continues to classify the CCPS as a current liability.
Conversion
The Series E CCPS compulsorily convert to equity shares (a) upon filing of the DRHP, (b) in connection with an IPO as approved by the shareholders of the Company, or (c) at their maturity date. The Series E CCPS are convertible into equity shares so as to give the holders their required return which is 15% per annum if converted at maturity or 17% per annum upon the filing of a DRHP or of a QIPO.
Liquidation
On the occurrence of a liquidation event, as defined in the term of the Series E CCPS agreement, the Series E CCPS holders have the right to receive an amount equal to their original investment plus a guaranteed internal rate of return of 17.0% per annum. At March 31, 2015, the Series E CCPS liquidation preference was Rs. 672,631 (US$10,578).
F-24
AZURE POWER INDIA PRIVATE LIMITED
(Predecessor to Azure Power Global Limited)
Notes to Consolidated Financial Statements
Rs. and US$ amounts in thousands, except share and per share data
Accounting
In accordance with ASC Topic 480 , the Series E CCPS are classified as a liability and recorded at their respective fair values at period end. The fair value has been determined based on a discounted cash flow analysis under the income approach. Changes in the fair value are recorded as interest expense in the statements of operations. The carrying amount of Series E CCPS includes the unrealized changes in the fair value of 74,700 and Rs. 171,200 (US$2,692) as of March 31, 2014 and March 31, 2015 respectively. Issuance costs on the CCPS are expensed as incurred.
Project level secured term loans
Foreign currency loans
From June 2009 through September 2009 the Company borrowed Rs. 309,631 (US$6,230) for the financing of a 2 MW solar power project, which loan carries a fixed interest rate. The loan is repayable in 48 equal quarterly installments which commenced on December 15, 2010. The borrowing is collateralized by the underlying solar power project assets with a net carrying value of Rs. 325,634 (US$5,121) as of March 31, 2015.
From February 2011 through June 2011, the Company borrowed Rs. 1,233,084 (US$26,835) for the financing of a 10 MW solar power project, which loan carries a fixed interest rate. The loan is repayable in 54 equal quarterly installments which commenced on September 15, 2012. The borrowing is collateralized by the underlying solar power project assets with a net carrying value of Rs. 1,190,739 (US$18,725) as of March 31, 2015.
From October 2011 through March 2012, the Company borrowed Rs. 782,793 (US$15,777) for the financing of a 5 MW solar power project, which loan carries a fixed interest rate. The loan is repayable in 66 quarterly installments which commenced on July 15, 2012. The borrowing is collateralized by the underlying solar power project assets with a net carrying value of Rs. 682,449 (US$10,732) as of March 31, 2015.
From October 2012 through June 2013, the Company borrowed Rs. 3,503,984 (US$63,709) for the financing of a 35 MW solar power project, which loan carries a fixed interest rate. The loan is repayable in 36 semi-annual installments which commenced on August 20, 2013. The borrowing is collateralized by underlying solar power project assets with a net carrying value of Rs. 3,188,626 (US$50,144) as of March 31, 2015.
During the year, the Company entered into an unsecured credit facility commitment for financing future solar power projects. The total amount of the facility is US$20,000. The interest rate for the facility is fixed at lenders base rate plus 2.25% per annum at the time of first disbursement. The tenure of the facility is 10 years from the date of first disbursement. During the year ended March 31, 2015, no amounts have been borrowed under this facility and the Company has incurred deferred financing cost of Rs. 7,186 (US$113) in relation to this facility.
The fixed interest foreign currency loans carry an interest rate ranging from 4.07% to 6.43% per annum.
The carrying value of the foreign currency loans includes unrealized foreign exchange losses of Rs. 878,803 and Rs. 1,161,739 (US$18,269) as of March 31, 2014 and 2015, respectively.
The Company is required to maintain principal and interest, both as defined in the respective agreements, as a form of collateral with banks specified by the respective lenders. Such amounts, totaling Rs. 397,884 (US$6,257) as of March 31, 2015, are classified as restricted cash on the consolidated balance sheets.
The foreign currency loans are subject to certain financial and non-financial covenants. Financial covenants include cash flow to debt service, indebtedness to net worth ratio, debt equity ratio and maintenance of debt
F-25
AZURE POWER INDIA PRIVATE LIMITED
(Predecessor to Azure Power Global Limited)
Notes to Consolidated Financial Statements
Rs. and US$ amounts in thousands, except share and per share data
service balances. As of March 31, 2014, the Company was not in compliance with certain of these covenants and accordingly the Company had classified the respective loans totaling Rs. 1,668,952 as a current liability. On April 14, 2015, the Company received a waiver from the lender regarding all past breaches of these loan covenants, as a result of which, the aforementioned loans have been classified as non-current as of March 31, 2015. Further, the lender has adjusted the thresholds for certain financial covenants through April 1, 2016. As of March 31, 2015, the Company is in compliance with all such covenants.
Indian rupee loans
In December 2013, the Company borrowed Rs. 143,740 for the financing of a 2.5 MW solar power project, which carries an interest rate of 12.16% per annum to be periodically revised by the lender. The interest rate as of March 31, 2015 was 12.16% per annum and the weighted average interest rate for the year ended March 31, 2015 was 12.16% per annum. The loan is repayable in 29 semi-annual installments which commenced on January 15, 2014. The borrowing is collateralized by the underlying solar power project assets with a net carrying value of Rs. 155,260 (US$ 2,442) as of March 31, 2015.
In March 2014, the Company borrowed Rs. 103,677 for financing of a 1.5 MW solar rooftop power project, which loan carries interest rate at a base rate, as defined, plus 2.25% per annum. The floating interest rate as of March 31, 2015 was 12.50% per annum and the weighted average interest rate for the year ended March 31, 2015 was 12.50% per annum. The loan is repayable in 54 quarterly installments commencing on March 28, 2015. The borrowing is collateralized by the underlying solar rooftop power project assets with a net carrying value of Rs. 108,127 (US$1,700) as of March 31, 2015.
From March 2014 through September 2014, the Company borrowed Rs. 1,880,000 for financing of a 34 MW solar power project, which borrowings carry a floating rate of interest at a base rate as defined plus 2.25% per annum. The floating interest rate as of March 31, 2015 was 12.65% per annum and the weighted average interest rate for the year ended March 31, 2015 was 12.62% per annum. The loan is repayable in 58 equal quarterly installments commencing July 1, 2015. The borrowing is collateralized by the underlying solar power project assets with a net carrying value of Rs. 1,942,482 (US$30,547) as of March 31, 2015.
In September 2014, the Company borrowed Rs. 550,000 for financing of a 10 MW solar power project, which borrowings carry a floating rate of interest at a base rate as defined plus 2.25% per annum. The floating interest rate as of March 31, 2015 was 12.75% per annum and the weighted average interest rate for the year ended March 31, 2015 was 12.75% per annum. The loan is repayable in 44 quarterly installments commencing January 27, 2016. The borrowing is collateralized by the underlying solar power project assets with a net carrying value of Rs. 583,226 (US$9,172) as of March 31, 2015.
From November 2014 through January 2015, the Company borrowed Rs. 585,000 for financing of a 10 MW solar power project, which borrowings carry a floating rate of interest to be periodically revised by the lender. The floating interest rate as of March 31, 2015 was 12.75% per annum and the weighted average interest rate for the year ended March 31, 2015 was 12.75% per annum. The loan is repayable in 58 quarterly installments commencing January 17, 2016. The borrowing is collateralized by the underlying solar power project assets with a net carrying value of Rs. 624,582 (US$9,822) as of March 31, 2015.
From January 2015 through March 2015, the Company borrowed Rs. 1,000,000 for financing of a 30 MW solar power project, which borrowings carry a floating rate of interest at a base rate plus 1.8% per annum. The interest rate as of March 31, 2015 was 14% per annum and the weighted average interest rate for the year ended March 31, 2015 was 14% per annum. The loan is repayable from other borrowings to be arranged by the
F-26
AZURE POWER INDIA PRIVATE LIMITED
(Predecessor to Azure Power Global Limited)
Notes to Consolidated Financial Statements
Rs. and US$ amounts in thousands, except share and per share data
Company from other lenders or at the end of 18 months from the date of disbursement, whichever is earlier. The borrowing is collateralized by the underlying solar power project assets under construction with a net carrying value of Rs. 771,759 (US$12,136) as of March 31, 2015.
From December 2014 through March 2015, the Company borrowed Rs. 1,794,200 for financing of a 40 MW solar power project, which borrowings carry a floating rate of interest which will reset after every 2 years from the date of commissioning. The interest rate as of March 31, 2015 from a consortium of lenders was in the range of 11.76% per annum to 12.65% per annum floating with additional 1% per annum interest during the construction period. The weighted average interest rate for the year ended March 31, 2015 was 12.19% per annum. The loan is repayable in 57 quarterly installments commencing October 15, 2015. The borrowing is collateralized by the underlying solar power project assets under construction with a net carrying value of Rs. 2,145,201 (US$33,735) as of March 31, 2015.
From December 2014 through March 2015, the Company borrowed Rs. 2,123,629 for financing of a 40 MW solar power project, which borrowings carry a floating rate of interest which will reset after every 2 years from the date of commissioning. The interest rate as of March 31, 2015 from a consortium of lenders was 12.65% per annum floating with additional 1% per annum interest during construction period. The weighted average interest rate for the year ended March 31, 2015 was 13.65% per annum. The loan is repayable in 48 quarterly installments commencing May 31, 2016. The borrowing is collateralized by the underlying solar power project assets under construction with a net carrying value of Rs. 1,858,109 (US$29,220) as of March 31, 2015.
From December 2014 through March 2015, the Company borrowed Rs. 1,063,400 for financing of a 20MW solar power project, which borrowings carry a floating rate of interest which will reset after every 2 years from the date of commissioning. The interest rate as of March 31, 2015 from a consortium of lenders was 12.65% per annum floating with additional 1% per annum interest during the construction period. The weighted average interest rate for the year ended March 31, 2015 was 13.65% per annum. The loan is repayable in 48 quarterly installments commencing May 31, 2016. The borrowing is collateralized by the underlying solar power project assets under construction with a net carrying value of Rs. 1,132,254 (US$17,806) as of March 31, 2015.
As of March 31, 2015, the Company has unused commitments for long-term financing arrangements amounting to Rs. 1,316,180 (US$20,698) for its Chhattisgarh projects (30MW), Rajasthan projects (100MW) and several of its rooftop projects (1.97 MW).
The Indian rupee loans are subject to certain financial and non-financial covenants. Financial covenants include cash flow to debt service ratio, indebtedness to net worth ratio, debt equity ratio, debt service coverage ratio, receivable to sales ratio and maintenance of debt service balances. As of March 31, 2015, the Company is in compliance with all such covenants.
From time to time, the Company in required to maintain principal and interest, both as defined in the respective agreements, as a form of collateral with banks specified by the respective lenders. Such amounts , totaling Rs. 144,600 (US$2,274) as of March 31, 2015, are classified as restricted cash on the consolidated balance sheets. Under the terms of the loan agreements entered into by the Companys project subsidiaries, the project subsidiaries are restricted from paying dividends to AZI if they default in payment of their principal, interest and other amounts due to the lenders under their respective loan agreements. Certain of AZIs project subsidiaries also may not pay dividends to AZI out of restricted cash.
For certain of the Indian rupee loans, two directors of the Company have provided personal guarantees in favor of the lenders and have also pledged part of their shareholding with these lenders .
F-27
AZURE POWER INDIA PRIVATE LIMITED
(Predecessor to Azure Power Global Limited)
Notes to Consolidated Financial Statements
Rs. and US$ amounts in thousands, except share and per share data
Working Capital Facility
In November 2014, AZI entered into a Rs. 500,000 credit facility with a non-banking finance company expiring in September 2015. This credit facility bears interest at a rate of 14.0% per annum which can be reset periodically by the lender. Borrowings under this credit facility are repayable within 12 months of the disbursement and are collateralized by the assets created from the respective disbursement. This credit facility contains non-financial covenants, including cross default breach provisions with the Companys foreign currency borrowings. At March 31, 2015, the Company was in compliance with all covenants under this facility. Two directors of the Company have given personal guarantees and have pledged a portion of their shareholding to the lender. As of March 31, 2014 and 2015, there were no borrowings or amounts outstanding under the working capital facility.
As of March 31, 2015, the aggregate maturities of long term debt (excluding CCDs and Series E CCPS) are as follows:
March 31, |
Annual maturities | |||
2016 |
1,266,344 | |||
2017 |
1,758,377 | |||
2018 |
917,482 | |||
2019 |
952,456 | |||
2020 |
996,639 | |||
Thereafter |
9,380,355 | |||
|
|
|||
Total |
15,271,653 | |||
|
|
11. Income taxes
The individual entities within the Company file individual tax returns as per the regulations existing in their respective jurisdictions.
The fiscal year under the Indian Income Tax Act ends on March 31. A portion of the Companys Indian operations qualify for deduction from taxable income because its profits are attributable to undertakings engaged in development of solar power projects under section 80-IA of the Indian Income Tax Act, 1961. This holiday is available for a period of ten consecutive years out of fifteen years beginning from the year in which the Company generates power (Tax Holiday Period). The Company anticipates that it will claim the aforesaid deduction in the last ten years out of fifteen years beginning with the year in which the Company generates power and when it has taxable income. Accordingly, its current operations are taxable at the normally applicable tax rates.
Due to the Tax Holiday Period, a substantial portion of the temporary differences between the book and tax basis of the Companys assets and liabilities do not have any tax consequences as they are expected to reverse within the Tax Holiday Period.
AZI and a subsidiary provide services to other group subsidiaries and incur income taxes on profits from these services. These services are capitalizable by the subsidiaries and are hence capitalized as part of property, plant and equipment in the standalone financial statements of such subsidiaries and deducted in their respective income tax return in the form of depreciation expense. However, these capitalized costs are eliminated in the Companys consolidated financial statements. AZI treats the income tax it incurs on the provision of such services to its subsidiaries as prepaid income taxes to the extent the amounts are expected to be deductible by the subsidiaries in their tax returns outside of the Tax Holiday Period.
F-28
AZURE POWER INDIA PRIVATE LIMITED
(Predecessor to Azure Power Global Limited)
Notes to Consolidated Financial Statements
Rs. and US$ amounts in thousands, except share and per share data
Income (loss) before income taxes is as follows:
Year ended March 31, | ||||||||||||
2014
(Rs.) |
2015
(Rs.) |
2015
(US$) |
||||||||||
Domestic operations |
(774,851 | ) | (816,969 | ) | (12,847 | ) | ||||||
Foreign operations |
15,268 | (18,269 | ) | (287 | ) | |||||||
|
|
|
|
|
|
|||||||
(759,583 | ) | (835,238 | ) | (13,134 | ) | |||||||
|
|
|
|
|
|
The provision (benefit) for income taxes consists of the following:
Current | Deferred | Total | ||||||||||
Year ended March 31, 2014 |
||||||||||||
Domestic |
30,758 | (19,528 | ) | 11,230 | ||||||||
Foreign |
4,617 | | 4,617 | |||||||||
|
|
|
|
|
|
|||||||
Total |
35,375 | (19,528 | ) | 15,847 | ||||||||
|
|
|
|
|
|
|||||||
Year ended March 31, 2015 |
||||||||||||
Domestic |
188,966 | 61,142 | 250,108 | |||||||||
Foreign |
3,004 | | 3,004 | |||||||||
|
|
|
|
|
|
|||||||
Total |
191,970 | 61,142 | 253,112 | |||||||||
|
|
|
|
|
|
|||||||
US$ |
3,019 | 962 | 3,980 | |||||||||
|
|
|
|
|
|
The foreign income tax provision represents current taxes on income in the United States earned by the Companys two U.S. subsidiaries.
The significant components of the net deferred income tax assets and liabilities exclusive of amounts that would not have any tax consequences because they will reverse within the Tax Holiday Period, are as follows:
As of March 31, | ||||||||||||
2014
(Rs.) |
2015
(Rs.) |
2015
(US$) |
||||||||||
Deferred tax assets: |
||||||||||||
Allowance for doubtful accounts |
86 | 408 | 6 | |||||||||
Other deductible temporary difference |
41,401 | 66,159 | 1,040 | |||||||||
Net operating loss |
99,316 | 11,184 | 176 | |||||||||
Total gross deferred tax assets |
140,803 | 77,751 | 1,222 | |||||||||
Valuation allowance |
(61,129 | ) | | | ||||||||
|
|
|
|
|
|
|||||||
Total net deferred tax assets |
79,674 | 77,751 | 1,222 | |||||||||
|
|
|
|
|
|
|||||||
Deferred tax liabilities: |
||||||||||||
Depreciation and amortization |
(71,991 | ) | (159,678 | ) | (2,511 | ) | ||||||
Gain on sale of non-controlling interest |
(8,612 | ) | (8,612 | ) | (135 | ) | ||||||
Other taxable temporary differences |
(29,675 | ) | (1,207 | ) | (19 | ) | ||||||
|
|
|
|
|
|
|||||||
Total gross deferred liabilities |
(110,278 | ) | (169,497 | ) | (2,665 | ) | ||||||
|
|
|
|
|
|
|||||||
Net deferred tax liability |
(30,604 | ) | (91,746 | ) | (1,443 | ) | ||||||
|
|
|
|
|
|
F-29
AZURE POWER INDIA PRIVATE LIMITED
(Predecessor to Azure Power Global Limited)
Notes to Consolidated Financial Statements
Rs. and US$ amounts in thousands, except share and per share data
Deferred income taxes have been shown on the consolidated balance sheets as follows:
As of March 31, | ||||||||||||
2014
(Rs.) |
2015
(Rs.) |
2015
(US$) |
||||||||||
Current assets |
| 22,453 | 353 | |||||||||
Non-current assets |
69,394 | 4,460 | 70 | |||||||||
Current liability |
28,802 | 998 | 16 | |||||||||
Non-current liability |
71,196 | 117,661 | 1,850 |
As of March 31, 2015, the Company performed an analysis of the deferred tax asset for its Indian and U.S. subsidiaries. Based on the analysis, the Company has concluded that a valuation allowance offsetting the deferred tax assets is not required as of March 31, 2015 as the Company has utilized its remaining net operating losses in the relevant tax jurisdiction during the period.
Change in the valuation allowance for deferred tax assets as of March 31, 2014 and 2015 is as follows:
As of March 31, | ||||||||||||
2014
(Rs.) |
2015
(Rs.) |
2015
(US$) |
||||||||||
Opening valuation allowance |
34,959 | 61,129 | 961 | |||||||||
Movement during the period |
26,170 | (61,129 | ) | (961 | ) | |||||||
|
|
|
|
|
|
|||||||
Closing valuation allowance |
61,129 | | | |||||||||
|
|
|
|
|
|
The effective income tax rate differs from the amount computed by applying the statutory income tax rate to loss before income taxes as follows:
Year ended 2014 | Year ended 2015 | |||||||||||||||
Tax | % | Tax | % | |||||||||||||
Statutory income tax benefit |
(258,182 | ) | (33.99 | )% | (283,897 | ) | (33.99 | %) | ||||||||
Temporary differences reversing in the Tax Holiday Period |
210,244 | 27.68 | % | 223,409 | 26.75 | % | ||||||||||
Taxes on intercompany transaction reversing in the Tax Holiday Period |
4,519 | 0.59 | % | 321,323 | 38.47 | % | ||||||||||
Valuation allowance on net operating losses |
26,170 | 3.45 | % | (61,129 | ) | (7.32 | )% | |||||||||
Other difference |
33,096 | 4.36 | % | 53,406 | 6.39 | % | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
15,847 | 2.09 | % | 253,112 | 30.30 | % | |||||||||||
|
|
|
|
|
|
|
|
As of March 31, 2014 and 2015, deferred income taxes have not been provided for the Companys share of undistributed net earnings of foreign operations due to managements intent to reinvest such amounts indefinitely. Those earnings totaled Rs. 351,845 and Rs. 321,482 (US$5,056) as of March 31, 2014 and 2015, respectively. The total unrecognized deferred tax liability as of March 31, 2014 and 2015 is Rs. 119,627 and Rs. 109,304 (US$ 1,719), respectively.
The Company has adopted the provisions of ASC Topic 740 as they relate to uncertain income tax positions. Tax exposures can involve complex issues and may require extended periods to resolve. The Company does not currently have any uncertain tax positions requiring to be reserved for. The Company reassesses its tax positions in light of changing facts and circumstances, such as the closing of a tax audit, refinement of an estimate, or
F-30
AZURE POWER INDIA PRIVATE LIMITED
(Predecessor to Azure Power Global Limited)
Notes to Consolidated Financial Statements
Rs. and US$ amounts in thousands, except share and per share data
changes in tax codes. To the extent that the final tax outcome of these matters differs from the amounts recorded, such differences will impact the provision for income taxes in the period in which such determination is made.
12. Interest expense, net
Interest expense, net consists of the following:
Year ended March 31, | ||||||||||||
2014
(Rs.) |
2015
(Rs.) |
2015
(US$) |
||||||||||
Interest expense: |
||||||||||||
CCDs |
217,751 | 248,831 | 3,913 | |||||||||
Series E CCPS |
74,700 | 96,500 | 1,518 | |||||||||
Term loans |
316,519 | 598,845 | 9,417 | |||||||||
Bank charges and other |
36,151 | 55,454 | 872 | |||||||||
|
|
|
|
|
|
|||||||
645,121 | 999,630 | 15,720 | ||||||||||
Interest income: |
||||||||||||
Term deposits |
111,842 | 151,861 | 2,388 | |||||||||
Interest income from related parties |
| 2,031 | 32 | |||||||||
Gain on sale of short term investments |
13,060 | 13,949 | 219 | |||||||||
|
|
|
|
|
|
|||||||
124,902 | 167,841 | 2,639 | ||||||||||
|
|
|
|
|
|
|||||||
Total |
520,219 | 831,789 | 13,081 | |||||||||
|
|
|
|
|
|
13. Loss on foreign currency exchange
Loss on foreign currency exchange consists of the following:
Year ended March 31, | ||||||||||||
2014
(Rs.) |
2015
(Rs.) |
2015
(US$) |
||||||||||
Unrealized loss on foreign currency loans |
578,571 | 240,656 | 3,785 | |||||||||
Realized (gain) loss on foreign currency loans |
39,989 | (42,280 | ) | 665 | ||||||||
Unrealized (gain) loss on derivative instruments |
(16,384 | ) | 7,342 | 115 | ||||||||
Realized (gain) loss on derivative instruments |
(21,610 | ) | 93,910 | 1,477 | ||||||||
|
|
|
|
|
|
|||||||
Total |
580,566 | 299,628 | 4,712 | |||||||||
|
|
|
|
|
|
14. Equity and preferred shares
Equity shares
Equity share have a par value of Rs. 10 per share. As of March 31, 2014 and 2015, there were 109,880 shares of equity issued and outstanding. Total authorized equity shares are 43,333,333.
F-31
AZURE POWER INDIA PRIVATE LIMITED
(Predecessor to Azure Power Global Limited)
Notes to Consolidated Financial Statements
Rs. and US$ amounts in thousands, except share and per share data
Compulsory convertibles preferred shares
As of March 31, 2015, the compulsory convertible preferred shares (CCPS) consists of the followings:
No of shares |
Total consideration
(Rs.) |
Price per share
(Rs.)* |
||||||||||
Series A |
38,770 | 92,492 | 2,386 | |||||||||
Series B |
181,046 | 503,994 | 2,787 | |||||||||
Series C |
229,880 | 381,600 | 1,660 | |||||||||
Series D |
84,348 | 474,964 | 5,631 | |||||||||
Series F |
138,133 | 1,550,508 | 11,225 | |||||||||
|
|
|
|
|||||||||
672,177 | 3,003,558 | |||||||||||
|
|
|
|
* | Not in thousands |
In November 2008, the Company issued 38,770 Series A CCPS for consideration of Rs. 91,617, (net of Rs. 875 share issue expenses). In February 2010, the Company issued 181,046 Series B CCPS for consideration of Rs. 500,749 (net of Rs. 3,263 share issue expenses). In September 2011, the Company issued 229,880 Series C CCPS for consideration of Rs. 377,562 (net of Rs. 4,038 share issue expenses). In September 2012, the Company issued 84,348 Series D CCPS for consideration of Rs. 474,964 (net of Rs. NIL share issue expenses) . From June 2014 to January 2015 the Company issued 138,133 series F CCPS for a total consideration of Rs. 1,549,010 (net of Rs. 1,498 share issue expenses). Unless converted, the term of the Series A CCPS is a maximum of the 19 years from the date issue, whereas the terms of Series B, Series C, Series D and Series F CCPS is a maximum of 10 years from the date of issue. Total authorized preferred shares are 86,666,667 of Rs.10 per share.
The rights, preferences and privileges of the Companys Series A, Series B, Series C, Series D and Series F CCPS (collectively, the Mezzanine CCPS) are as follows:
Voting
The Mezzanine CCPS rank pari passu with regards to voting rights. Holders of Mezzanine CCPS are entitled to vote on all matters and are entitled to the number of votes equal to the number of equity shares into which the Mezzanine CCPS shares are then convertible on the basis of the applicable conversion factor.
Dividend
Each of the holders of the Mezzanine CCPS are entitled to a 8.0% per annum per share non-cumulative dividend, declared and paid in accordance with the Indian Companies Act of 2013, and thereafter participate pro rata on an as converted basis with the equity shareholders on any distributions made to the equity shareholders. The Company has not declared or paid any dividends through March 31, 2015.
Conversion
Each of the Series A, Series B, Series D and Series F CCPS are convertible into equity shares of the Company at the option of the CCPS holders at any time at a conversion ratio of 1:1. The Series C CCPS are convertible into equity shares of the Company at the option of the CCPS holder at any time at a conversion ratio of 1:0.3423. Any Mezzanine CCPS which have not been converted into equity shares of the Company are
F-32
AZURE POWER INDIA PRIVATE LIMITED
(Predecessor to Azure Power Global Limited)
Notes to Consolidated Financial Statements
Rs. and US$ amounts in thousands, except share and per share data
compulsorily converted into equity shares of the Company, at the aforementioned ratios, upon the filing of a DRHP, execution of a QIPO or at their maturity date.
Buyback
Should a buyback obligation not occur by February 25, 2016 or the funding covenants of the CCPS holders are breached, the Mezzanine CCPS holders may request the Company to buyback the CCPS at the following rates:
|
Series A CCPS 140% of the cash paid for the Series A CCPS, plus accrued and unpaid dividends |
|
Series B, Series C and Series D CCPS 200% of the cash paid, plus accrued and unpaid dividends |
|
Series F CCPS 150% of the cash paid for the Series F CCPS, plus accrued and unpaid dividends |
Liquidation
On occurrence of a liquidation event, as defined in the terms of the Mezzanine CCPS agreements, the Series A holders are eligible to receive an amount equal to 140% of the cash paid for the Series A CCPS, plus accrued and unpaid dividends, and the Series B, Series C and Series D holders have the right to receive an amount equal to 200% of the cash paid, plus accrued and unpaid dividends, and the Series F holders have the right to receive an amount equal to 150% of the cash paid, plus accrued and unpaid dividends. Upon such a liquidation event, the holders of the CCDs and Series E CCPS are entitled to receive amounts in preference to the Series B, Series C, Series D and Series F CCPS, who in turn receive amounts in preference to the holders of the Series A CCPS. Series A CCPS holders receive amounts in preference to the Companys equity shareholders.
Liquidation preferences for each series of Mezzanine CCPS as of February 25, 2016 are as follows
Liquidation
Preference |
(Rs.) |
(US$) | ||||||||||
Series A |
140 | % | 129,488 | 2,036 | ||||||||
Series B |
200 | % | 1,007,988 | 15,851 | ||||||||
Series C |
200 | % | 763,202 | 12,002 | ||||||||
Series D |
200 | % | 949,927 | 14,938 | ||||||||
Series F |
150 | % | 2,325,763 | 36,574 | ||||||||
|
|
|
|
|||||||||
5,176,368 | 81,401 | |||||||||||
|
|
|
|
Accounting
The Company has evaluated its accounting for the Mezzanine CCPS pursuant to ASC Topic 480 and ASC Topic 815 Derivative and hedging. The Mezzanine CCPS do not satisfy the criteria for liability classification described in ASC Topic 480. In addition, the embedded features of the Mezzanine CCPS do not satisfy the criteria for separate accounting of the derivative from the host instrument pursuant to ASC Topic 815. However, because the Mezzanine CCPS contain certain redemption features that are not solely within the Companys control, the Mezzanine CCPS are classified as temporary equity in the consolidated balance sheets.
The Mezzanine CCPS are being accreted to their buyback value through February 25, 2016, the earliest buyback date on a straight line basis, so that the carrying amount will equal the mandatory redemption at such date.
F-33
AZURE POWER INDIA PRIVATE LIMITED
(Predecessor to Azure Power Global Limited)
Notes to Consolidated Financial Statements
Rs. and US$ amounts in thousands, except share and per share data
The Company incurred issuance costs amounting to Rs. 9,674 (US$ 152) which have been netted against the proceeds received from the issuance of the Mezzanine CCPS. The issuance costs are being accreted over the respective redemption periods on a straight line basis. The amount accreted totaled Rs. 1,573 and Rs. 1,899 (US$ 29.9) during the years ended March 31, 2014 and 2015, respectively. The remaining un-accreted amount of issuance cost as of March 31, 2015 totaled Rs. 2,600 (US$ 41).
15. Earnings per share
The Company calculates earnings per share in accordance with FASB ASC Topic 260 Earnings per Share and FASB ASC Topic 260-10-45 Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities . Basic and diluted earnings (loss) per equity share give effect to the change in the number of equity shares of the Company. The calculation of basic earnings per equity share is determined by dividing net loss attributable to AZI equity shareholders by the weighted average number of equity shares outstanding during the respective periods. The potentially dilutive shares, consisting of employee share options, compulsorily convertible debentures, and compulsorily convertible preferred shares are included in the computation of diluted net earnings per share and the weighted average shares outstanding, except where the result would be anti-dilutive.
The Mezzanine CCPS shareholders are entitled to participate, along with the equity shareholders, in the earnings of the Company. Under ASC Topic 260 Earnings per Share , such participative rights would require the two class method of reporting EPS. As the preferred shares do not participate in losses, the Company has excluded these shares, as including them would be antidilutive.
Loss per share is presented below:
Year ended March 31, | ||||||||
2014
(Rs.) |
2015
(Rs.) |
|||||||
Net loss attributable to AZI equity shareholders |
(748,495 | ) | (1,082,755 | ) | ||||
Add: Accretion on Mezzanine CCPS |
(366,552 | ) | (755,207 | ) | ||||
|
|
|
|
|||||
Total (A) |
(1,115,047 | ) | (1,837,962 | ) | ||||
|
|
|
|
|||||
Shares outstanding for allocation of undistributed income: |
||||||||
Equity shares |
109,880 | 109,880 | ||||||
Weighted average shares outstanding |
||||||||
Equity shares (B) |
108,882 | 109,880 | ||||||
Loss per share: |
||||||||
Equity shares (C=A/B) |
(10,241 | ) | (16,727 | ) |
The number of share options outstanding but not included in the computation of diluted earnings per equity share because their effect was antidilutive is 24,501 and 28,821 for the years ended March 31, 2014 and 2015, respectively.
The CCDs and the Series E CCPS have not been considered for the computation of diluted earnings per share because including these instruments would be anti-dilutive.
F-34
AZURE POWER INDIA PRIVATE LIMITED
(Predecessor to Azure Power Global Limited)
Notes to Consolidated Financial Statements
Rs. and US$ amounts in thousands, except share and per share data
16. Leases
The Company leases office facilities and land use rights under operating lease agreements. Minimum lease payments under operating leases are recognized on a straight line basis over the term of the lease. Rent expense for operating leases for the years ended March 31, 2014 and 2015 was Rs. 19,803 and Rs. 44,169 (US$ 695), respectively.
Future minimum lease payments under non-cancellable operating leases as of March 31, 2015 are:
Year ending March 31, |
Amount (Rs.) | US$ | ||||||
2016 |
13,326 | 210 | ||||||
2017 |
13,782 | 217 | ||||||
2018 |
13,522 | 213 | ||||||
2019 |
12,513 | 197 | ||||||
2020 |
13,105 | 207 | ||||||
Thereafter |
596,680 | 9,383 | ||||||
|
|
|
|
|||||
Total |
662,928 | 10,427 | ||||||
|
|
|
|
17. Commitments, guarantees and contingencies
Capital commitments
During the normal course of business, the Company purchases assets for the construction of solar power plants and estimates it will incur Rs. 1,688,983 (US$ 26,561) during the fiscal year ended March 31, 2016 in relation to such purchase commitments.
Guarantees
The Company issues irrevocable performance bank guarantees in relation to its obligations to construct the solar power plant when required to by the PPA. Such outstanding guarantees amounted to Rs. 588,850 and Rs. 1,083,300 (US$ 17,036) as of March 31, 2014 and March 31, 2015, respectively. The guarantees expire on the commissioning of the constructed solar power plant.
The Company has obtained guarantees from financial institutions as a part of the bidding process for establishing solar projects amounting to Rs. 189,370 and Rs. 259,000 (US$ 4,073) as of March 31, 2014 and March 31, 2015, respectively. The Company has given term deposits as collateral for the guarantees which are classified as restricted cash on the consolidated balance sheets.
The terms of the PPAs provide for the annual delivery of a minimum amount of electricity at fixed prices.
18. Related party disclosures
For the years ended March 31, 2014 and 2015, the Company incurred rent expense on office facilities totaling Rs. 14,352 and Rs. 14,490 (US$ 228), respectively, where the lessors are relatives of the Companys chief executive officer and another director of the Company. As of March 31, 2014 and 2015, the Company had security deposits with these lessors totaling Rs. 6,300 and Rs.6,300 classified as current and non-current asset on the consolidated balance sheets because the rental agreements were short-term and long term respectively, on those dates.
As of March 31, 2014, the Company had an unsecured loan receivable from the Companys chief executive officer totaling Rs. 41,392. The loan was repaid during the year ended March 31, 2015. During the years ended
F-35
AZURE POWER INDIA PRIVATE LIMITED
(Predecessor to Azure Power Global Limited)
Notes to Consolidated Financial Statements
Rs. and US$ amounts in thousands, except share and per share data
March 31, 2014 and 2015, the Company earned interest income of Rs. 131 and Rs. 2,031 (US$ 32), respectively on this loan.
19. Share based compensation plan
The Company has issued share options under the employees share option plan approved on October 1, 2008 and amended on April 18, 2013 to eligible employees of the Company. This share option plan expires on September 30, 2018. Under the share option plan, the sum of all grants made under this plan shall not exceed 36,543 equity shares of the Company.
Options are deemed to have been issued under this plan only to the extent actually issued and delivered pursuant to a grant. To the extent that a grant lapses or the rights of its grantee terminate, any equity shares subject to such grant are again available for new grants.
The option grant is at such price as may be determined by the Board of Directors and is specified in the option grant. The grant is in writing and specifies the number of options granted , the price payable for exercising the options, the date/s on which some or all of the options shall be eligible for vesting, fulfillment of the performance and other conditions, if any, subject to which vesting shall take place and other terms and conditions thereto. The option grant is not be transferable and can be exercised only by the employees of the Company.
Options granted under the plan are exercisable into equity shares of the Company, have a contractual life equal to the shorter of ten years or through September 30, 2018 and vest equitably over four years, unless specified otherwise in the applicable award agreement. The Company recognizes compensation cost, reduced by the estimated forfeiture rate, over the vesting period of the option. A summary of share option activity during the years ended March 31, 2014 and 2015 is set out below:
Number of shares |
Weighted average
exercise price in Rs. * |
|||||||
Balance As of March 31, 2013 |
23,856 | 2,564 | ||||||
Granted |
2,300 | 2,745 | ||||||
Exercised |
(1,000 | ) | 10 | |||||
Forfeitures |
(655 | ) | 4,753 | |||||
|
|
|
|
|||||
Outstanding As of March 31, 2014 |
24,501 | 2,678 | ||||||
Granted |
4,320 | 7,435 | ||||||
Exercised |
| | ||||||
Forfeitures |
| | ||||||
|
|
|
|
|||||
Outstanding As of March 31, 2015 |
28,821 | 3,391 | ||||||
|
|
|
|
|||||
Vested and exercisable as of March 31, 2015 |
20,850 | 2,621 | ||||||
|
|
|
|
|||||
Available for grant as of March 31, 2015 |
6,722 | | ||||||
|
|
|
|
* | Not in thousands |
The Black-Scholes option pricing model includes assumptions regarding dividend yields, expected volatility, expected option term, and risk-free interest rates. The Company estimates expected volatility based on
F-36
AZURE POWER INDIA PRIVATE LIMITED
(Predecessor to Azure Power Global Limited)
Notes to Consolidated Financial Statements
Rs. and US$ amounts in thousands, except share and per share data
the historical volatility of comparable publicly traded companies for a period that is equal to the expected term of the options. The risk-free interest rate is based on the treasury bonds issued by the Indian Government in effect at the time of grant for a period commensurate with the estimated expected life. The expected term of options granted is derived using the simplified method as allowed under the provisions of ASC Topic 718 due to insufficient historical exercise history data to provide a reasonable basis upon which to estimate expected term.
The fair value of each share option granted to employees is estimated on the date of grant using the Black- Scholes option-pricing model with the following weighted average assumptions:
Year ended March 31, | ||||
2014 | 2015 | |||
Dividend yield |
0.00% | 0.00% | ||
Expected term (in years) |
2.61-4.70 | 2.09-3.84 | ||
Expected volatility |
43.9%-45.6% | 31.2%-42.3% | ||
Risk free interest rate |
7.51%-7.68% | 7.69%-8.34% |
Outstanding options as of March 31, 2015 include 5,000 options issued during the year ended March 31, 2013 with a market vesting condition. The fair value of these options was determined using the Lattice valuation model with the following assumptions:
Volatility |
48.1 | % | ||
Risk- free interest rate |
8.18 | % |
The result of the Lattice valuation model concludes that the probability of achieving the market conditions to be 5.72%.
As of March 31, 2014 and March 31, 2015, the aggregate intrinsic value of all outstanding options was Rs. 10,551 and Rs. 26,531 (US$ 417), respectively.
The share based compensation expense related to share options is recorded as a component of general and administrative expenses in the Companys consolidated statements of operations and totaled Rs. 4,419 and Rs. 7,427 (US$ 117) for the years ended March 31, 2014 and 2015, respectively.
Unrecognized compensation cost for unvested options as of March 31, 2015 is Rs. 4,510 (US$ 71), which is expected to be expensed over a weighted average period of 1.39 years.
The intrinsic value of options exercised during the year ended March 31, 2015 was Rs. NIL.
The intrinsic value per option at the date of grant during the years ended March 31, 2014 and 2015 is as follows:
Date of grant |
No. of options
granted |
Deemed fair value
of equity shares |
Intrinsic value per
option |
Valuation used | ||||||||||||
May 6, 2013 |
1,300 | 3,651 | (1) | Retrospective | ||||||||||||
July 13, 2013 |
1,000 | 3,651 | 3,641 | Retrospective | ||||||||||||
July 28, 2014 |
1,460 | 5,266 | 5,256 | Retrospective | ||||||||||||
January 24, 2015 |
2,860 | 5,468 | (1) | Retrospective |
(1) | Fair value of the shares exceeds the exercise price. |
F-37
AZURE POWER INDIA PRIVATE LIMITED
(Predecessor to Azure Power Global Limited)
Notes to Consolidated Financial Statements
Rs. and US$ amounts in thousands, except share and per share data
20. Fair value
FASB ASC Topic 820 Fair Value Measurements and Disclosures defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly, hypothetical transaction between market participants at the measurement date. ASC Topic 820 establishes a three-tier value hierarchy of fair value measurement based upon the whether the inputs to that measurement are observable or unobservable. Observable inputs reflect data obtained from independent sources while unobservable inputs reflect the Companys market assumptions. ASC Topic 820 prioritizes the inputs used in the valuation methodologies in measuring fair value as follows:
Level 1 Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.
Level 2 Includes other inputs that are directly or indirectly observable in the marketplace. Observable inputs, other than Level 1 quoted prices for similar instruments in active markets; quoted prices for similar or identical instruments in markets that are not active; and valuations using models in which all significant inputs are observable in active markets.
Level 3 Unobservable inputs which are supported by little or no market activity.
The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.
In accordance with ASC Topic 820, assets and liabilities are to be measured based on the following valuation techniques:
Market approach Prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities.
Income approach converting the future amounts based on the market expectations to its present value using the discounting methodology.
Cost approach Replacement cost method.
The valuation techniques used by the Company to measure and report the fair value of certain financial assets and liabilities on a recurring basis are as follows;
Foreign exchange derivative contracts
The Company enters into foreign exchange derivative contracts to hedge fluctuations in foreign exchange rates for recognized balance sheet items such as foreign exchange term loans. The Company mitigates the credit risk of these foreign exchange derivative contracts by transacting with rated counterparties in India which are major banks. The Company used the super derivatives option pricing model based on the principles of the Black-Scholes model to determine the fair value of the foreign exchange derivative contracts. The inputs considered in this model include the theoretical value of a call option, the underlyings spot exchange rate as of the balance sheet date, the contracted price of the respective option contract, the term of the option contract, the implied volatility of the underlying foreign exchange rates and the risk free interest rate as of the balance sheet date. The
F-38
AZURE POWER INDIA PRIVATE LIMITED
(Predecessor to Azure Power Global Limited)
Notes to Consolidated Financial Statements
Rs. and US$ amounts in thousands, except share and per share data
techniques and models incorporate various inputs including the credit worthiness of counterparties, foreign exchange spot and forward rates, interest rate yield curves and forward rate yield curves of the underlying spot exchange rate. The Company classifies the fair value of these foreign exchange derivative contracts in Level 2 because the inputs used in the valuation model are observable in active markets over the term of the respective contracts.
Compulsorily convertible debentures and Series E compulsorily convertible preferred shares
The Company classifies the fair value of the CCDs and the Series E CCPS in level 3 because the fair values have been derived using valuation techniques in which one or more significant inputs are unobservable. The Company has used the discounted cash flow analysis under the income approach to determine the fair value of the CCDs and the Series E CCPs. This valuation model includes various inputs including issue price, liquidation amount, committed internal rate of return, discount rate and coupon rate.
Fair Value measurement at reporting date using | ||||||||||||||||
As of March 31,
2014 (Rs.) |
Quoted Prices in
Active Markets for Identical Assets (Level 1) (Rs.) |
Significant
Other Observable Inputs (Level 2) (Rs.) |
Significant
Unobservable Inputs (Level 3) (Rs.) |
|||||||||||||
Description |
||||||||||||||||
Assets |
||||||||||||||||
Current assets |
||||||||||||||||
Foreign exchange derivative contracts |
25,135 | | 25,135 | | ||||||||||||
Non-current assets |
||||||||||||||||
Foreign exchange derivative contracts |
202,669 | | 202,669 | | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total assets |
227,804 | | 227,804 | | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Liabilities |
||||||||||||||||
Noncurrent liabilities |
||||||||||||||||
Compulsorily convertible debentures |
1,428,800 | | | 1,428,800 | ||||||||||||
Series E compulsorily convertible preferred shares |
566,100 | | | 566,100 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total non-current liabilities |
1,994,900 | | | 1,994,900 | ||||||||||||
|
|
|
|
|
|
|
|
F-39
AZURE POWER INDIA PRIVATE LIMITED
(Predecessor to Azure Power Global Limited)
Notes to Consolidated Financial Statements
Rs. and US$ amounts in thousands, except share and per share data
Fair Value measurement at reporting date using | ||||||||||||||||
As of March 31,
2015 (Rs.) |
Quoted Prices in
Active Markets for Identical Assets (Level 1) (Rs.) |
Significant
Other Observable Inputs (Level 2) (Rs.) |
Significant
Unobservable Inputs (Level 3) (Rs.) |
|||||||||||||
Description |
||||||||||||||||
Assets |
||||||||||||||||
Current assets |
||||||||||||||||
Foreign exchange derivative contracts |
75,750 | | 75,750 | | ||||||||||||
Non-current assets |
||||||||||||||||
Foreign exchange derivative contracts |
158,338 | | 158,338 | | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total assets |
234,088 | | 234,088 | | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Liabilities |
||||||||||||||||
Current Liability |
||||||||||||||||
Compulsorily convertible debentures |
988,000 | | | 988,000 | ||||||||||||
Noncurrent liabilities |
||||||||||||||||
Compulsorily convertible debentures |
810,600 | | | 810,600 | ||||||||||||
Series E compulsorily convertible preferred shares |
662,600 | | | 662,600 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total liabilities |
2,461,200 | | | 2,461,200 | ||||||||||||
|
|
|
|
|
|
|
|
Changes in compulsorily convertible debentures are as follows:
Rs. | US$ | |||||||
Balance as of March 31, 2013 |
1,313,200 | 20,651 | ||||||
Increase in fair value |
115,600 | 1,818 | ||||||
|
|
|
|
|||||
Balance as of March 31, 2014 |
1,428,800 | 22,469 | ||||||
Issuance of CCDsIFC III |
180,000 | 2,830 | ||||||
Increase in fair value |
189,800 | 2,985 | ||||||
|
|
|
|
|||||
Balance as of March 31, 2015 |
1,798,600 | 28,284 | ||||||
|
|
|
|
Changes in Series E compulsorily convertible preferred shares are as follows:
Rs. | US$ | |||||||
Balance as of March 31, 2013 |
| | ||||||
Issuance of Series E CCPS |
491,400 | 7,728 | ||||||
Increase in fair value |
74,700 | 1,175 | ||||||
|
|
|
|
|||||
Balance as of March 31, 2014 |
566,100 | 8,903 | ||||||
Increase in fair value |
96,500 | 1,518 | ||||||
|
|
|
|
|||||
Balance as of March 31, 2015 |
662,600 | 10,421 | ||||||
|
|
|
|
The carrying amount of cash and cash equivalents, including restricted cash, accounts receivable, accounts payables, and other current financial assets and liabilities approximate their fair value largely due to the short-term maturities of these instruments.
F-40
AZURE POWER INDIA PRIVATE LIMITED
(Predecessor to Azure Power Global Limited)
Notes to Consolidated Financial Statements
Rs. and US$ amounts in thousands, except share and per share data
The carrying value and fair value of the Companys fixed rate project financing term loans is as follows:
As of March 31, | ||||||||||||||||||||
2014 | 2015 | |||||||||||||||||||
Carrying
Value Rs. |
Fair
Value Rs. (1) |
Carrying
Value Rs. |
Fair
Value Rs. (1) |
US$ | ||||||||||||||||
Fixed rate project financing loans: |
||||||||||||||||||||
Foreign currency loans |
6,186,577 | 6,429,000 | 6,046,900 | 6,754,000 | 106,212 |
(1) | Significant other observable inputs (Level 2). |
The Company uses the yield method to estimate the fair value of fixed rate loans using interest rate changes as an input.
21. Derivative instruments and hedging activities
The following table presents outstanding notional amount and balance sheet location information related to foreign exchange derivative contracts as of March 31, 2014 and 2015:
As of March 31, | ||||||||||||||||||||||||
2014 | 2015 | |||||||||||||||||||||||
Notional
Amount |
Prepaid Expenses
and Other Current Asset |
Other
Assets |
Notional
Amount |
Prepaid Expenses
and Other Current Asset |
Other
Assets |
|||||||||||||||||||
Foreign currency option contracts (Rs.) |
| 25,135 | 202,669 | | 75,750 | 158,338 | ||||||||||||||||||
Foreign currency option contracts (US$) |
23,448 | | | 21,514 | | |
The foreign exchange derivative contracts mature generally over a period of 12 to 36 months.
Gains (losses) on foreign exchange derivative contracts for the years ended March 31, 2014 and 2015 aggregated Rs. 37,994 and Rs. 101,252 (US$ 1592), respectively.
22. Concentrations of credit risk
Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash and cash equivalents, restricted cash, accounts receivables and derivative instruments. The Company mitigates the risk of credit losses from financial instruments, other than trade receivables, by selecting counterparties that are well known Indian or international banks.
The following customers account for more than 10% of the Companys accounts receivable and sale of power as of and during the years ended March 31, 2014 and 2015:
March 31, 2014 | March 31, 2015 | |||||||||||||||
Customer Name |
% of Accounts
Receivable |
% of Sale of
Power |
% of Accounts
Receivable |
% of Sale of
Power |
||||||||||||
NTPC Vidyut Vyapar Nigam Limited |
66.90 | % | 78.20 | % | 46.87 | % | 60.80 | % | ||||||||
Gujarat Urja Vikas Nigam Limited |
29.40 | % | 18.80 | % | 19.87 | % | 15.42 | % | ||||||||
Punjab State Power Corporation Limited |
| | 13.82 | % | 14.78 | % |
F-41
AZURE POWER INDIA PRIVATE LIMITED
(Predecessor to Azure Power Global Limited)
Notes to Consolidated Financial Statements
Rs. and US$ amounts in thousands, except share and per share data
23. Subsequent events
The Company has incurred additional borrowings under project level secured term loans amounting to Rs. 1,859,800 (US$29,247) subsequent to March 31, 2015.
Through April 2015 to August 2015, the Company commenced commercial operations of 1 MW rooftop and 130 MW solar power plants in the states of Punjab, Rajasthan and Chhattisgarh.
During July 2015, the Company had sold 59,239 shares, constituting 28.58% of the total outstanding shares for a consideration of Rs. 316,928 (US$4,984) in Azure Power Infra (50 MW project in Andhra Pradesh) to one of the vendors.
Pursuant to a restructuring plan to create a holding company, the Company has entered into a share subscription agreement with APGL on July 25, 2015 and has issued the shares to the existing investors of AZI under a share swap arrangement. Per the agreement, the existing investors in the Company have transferred the Equity / CCPs / CCD rights in favor of APGL and have a received similar number of outstanding shares / debentures of APGL with similar terms. Per the transaction, APGL has become a holding company for AZI. APGL has also adopted the ESOP plan of AZI with no significant modifications.
The Company issued 948,876 and 146,644 shares of Series H and Series G Compulsorily Convertible Preferred Shares during July and August, 2015, resulting in net proceeds of Rs. 3,520,330 (US$ 55,360) and Rs. 544,049 (US$ 8,556) respectively.
Azure Power Global Limited has adopted an employee stock option plan on July 20, 2015. Employees who were previously granted options under the AZI employee stock option plan have been granted options under the new employee stock option plan. The AZI employee stock option plan and all options granted to employees under such plan will be terminated.
The Company evaluated all events or transactions that occurred after March 31, 2015. Based on this evaluation, the Company is not aware of any event or transactions that would require recognition or disclosure in the financial statements as of March 31, 2015.
F-42
AZURE POWER INDIA PRIVATE LIMITED
(Predecessor to Azure Power Global Limited)
Condensed Consolidated Balance Sheets
Rs. and US$ amounts in thousands, except share and par value data
As of March 31,
2015 (Rs.) |
As of June 30,
(Unaudited) |
Proforma as of
June 30, (Unaudited) 1 |
||||||||||||||||||
2015
(Rs.) |
2015
(US$) |
2015
(Rs.) |
2015
(US$) |
|||||||||||||||||
(Note 2(d)) | (Note 2(d)) | |||||||||||||||||||
Assets |
||||||||||||||||||||
Current assets: |
||||||||||||||||||||
Cash and cash equivalents |
2,044,046 | 1,423,736 | 22,389 | 1,423,736 | 22,389 | |||||||||||||||
Restricted cash |
702,407 | 523,221 | 8,228 | 523,221 | 8,228 | |||||||||||||||
Accounts receivable, net |
237,956 | 397,518 | 6,251 | 397,518 | 6,250 | |||||||||||||||
Deferred income tax asset |
22,453 | 22,871 | 360 | 22,871 | 360 | |||||||||||||||
Deferred IPO cost |
88,400 | 125,427 | 1,972 | | | |||||||||||||||
Prepaid expenses and other current assets |
240,425 | 240,480 | 3,782 | 240,480 | 3,782 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total current assets |
3,335,687 | 2,733,253 | 42,982 | 2,607,826 | 41,009 | |||||||||||||||
Restricted cash |
600,794 | 587,968 | 9,246 | 587,968 | 9,246 | |||||||||||||||
Property, plant and equipment, net |
15,145,674 | 16,379,971 | 257,587 | 16,379,971 | 257,587 | |||||||||||||||
Software, net |
15,720 | 17,008 | 267 | 17,008 | 267 | |||||||||||||||
Deferred income taxes |
4,460 | 63,266 | 995 | 63,266 | 995 | |||||||||||||||
Other assets* |
820,824 | 859,111 | 13,511 | 859,111 | 13,511 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total assets |
19,923,159 | 20,640,577 | 324,588 | 20,515,150 | 322,615 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Liabilities, preferred shares and shareholders deficit |
||||||||||||||||||||
Current liabilities: |
||||||||||||||||||||
Accounts payable |
971,468 | 726,541 | 11,425 | 726,541 | 11,425 | |||||||||||||||
Current portion of long-term debt |
2,254,344 | 2,427,402 | 38,173 | 1,441,355 | 22,666 | |||||||||||||||
Income taxes payable |
115,945 | 125,789 | 1,978 | 125,789 | 1,978 | |||||||||||||||
Deferred income taxes |
998 | 984 | 15 | 984 | 15 | |||||||||||||||
Interest payable |
55,879 | 126,071 | 1,983 | 126,071 | 1,983 | |||||||||||||||
Other liabilities |
273,540 | 164,184 | 2,582 | 164,182 | 2,582 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total current liabilities |
3,672,174 | 3,570,971 | 56,156 | 2,584,922 | 40,650 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Long-term debt |
15,478,509 | 16,470,361 | 259,009 | 14,900,368 | 234,319 | |||||||||||||||
Deferred revenue |
317,702 | 340,904 | 5,361 | 340,904 | 5,361 | |||||||||||||||
Deferred income taxes |
117,661 | 141,991 | 2,233 | 141,991 | 2,233 | |||||||||||||||
Asset retirement obligations |
70,944 | 87,945 | 1,383 | 87,945 | 1,383 | |||||||||||||||
Other liabilities |
18,630 | 18,230 | 287 | 18,230 | 287 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total liabilities |
19,675,620 | 20,630,402 | 324,428 | 18,074,360 | 284,233 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Preferred shares, Rs. 10 par value; 86,666,667 shares authorized; 672,177 shares designated as compulsorily convertible preferred shares as of March 31, 2015 and June 30, 2015 (liquidation preference Rs. 5,176,368 as of June 30, 2015) |
4,689,942 | 4,949,224 | 77,830 | | | |||||||||||||||
Shareholders deficit |
||||||||||||||||||||
Equity shares, Rs. 10 par value; 43,333,333 shares authorized; 109,880 shares issued and outstanding |
1,099 | 1,099 | 17 | 1,099 | 17 | |||||||||||||||
Additional paid-in capital |
(1,643,212 | ) | (1,900,376 | ) | (29,885 | ) | 5,479,463 | 86,168 | ||||||||||||
Accumulated deficit |
(2,828,062 | ) | (3,068,229 | ) | (48,250 | ) | (3,068,229 | ) | (48,250 | ) | ||||||||||
Accumulated other comprehensive income |
23,197 | 25,204 | 396 | 25,204 | 396 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total AZI shareholders deficit |
(4,446,978 | ) | (4,942,302 | ) | (77,722 | ) | 2,437,537 | 38,331 | ||||||||||||
Non-controlling interest |
4,575 | 3,253 | 51 | 3,253 | 51 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total shareholders deficit |
(4,442,403 | ) | (4,939,049 | ) | (77,671 | ) | 2,440,790 | 38,382 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total liabilities, preferred share and shareholders deficit |
19,923,159 | 20,640,577 | 324,588 | 20,515,150 | 322,615 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
1. | In connection with the Companys proposed Initial Public Offering, the compulsorily convertible debentures (Note 9) and the compulsorily convertible preferred shares (Notes 9 and 13) will be converted to equity shares. The pro forma balance sheet data as of June 30, 2015 reflects the conversion of these securities into the Companys equity shares and application of deferred IPO costs of Rs. 125,427 (US$1,972) as of June 30, 2015 against additional paid-in capital. |
* | Includes Security deposit of Rs. 6,300 (US$ 99) to related parties as of 31 March, 2015 and 30 June 2015, also see Note 17. |
F-43
AZURE POWER INDIA PRIVATE LIMITED
(Predecessor to Azure Power Global Limited)
Condensed Consolidated Statements of Operations
Rs. and US$ amounts in thousands, except share and per share data
(Unaudited)
Three months ended June 30, | ||||||||||||
2014
(Rs.) |
2015
(Rs.) |
2015
(US$) |
||||||||||
(Note 2(d)) | ||||||||||||
Operating revenues: |
||||||||||||
Sale of power |
264,365 | 570,194 | 8,967 | |||||||||
Operating costs and expenses: |
||||||||||||
Cost of operations (exclusive of depreciation and amortization shown separately below) |
18,643 | 34,703 | 546 | |||||||||
General and administrative expenses |
60,611 | 144,880 | 2,278 | |||||||||
Depreciation and amortization |
63,556 | 140,059 | 2,203 | |||||||||
|
|
|
|
|
|
|||||||
Total operating cost and expenses |
142,810 | 319,642 | 5,027 | |||||||||
|
|
|
|
|
|
|||||||
Operating income |
121,555 | 250,552 | 3,940 | |||||||||
Other expense: |
||||||||||||
Interest expense, net |
163,824 | 403,324 | 6,343 | |||||||||
Loss on foreign currency exchange, net |
26,877 | 107,130 | 1,685 | |||||||||
|
|
|
|
|
|
|||||||
Total other expenses |
190,701 | 510,454 | 8,028 | |||||||||
|
|
|
|
|
|
|||||||
Loss before income taxes |
(69,145 | ) | (259,902 | ) | (4,088 | ) | ||||||
Income tax (expense)/benefit |
(20,954 | ) | 18,412 | 290 | ||||||||
|
|
|
|
|
|
|||||||
Net loss |
(90,099 | ) | (241,490 | ) | (3,798 | ) | ||||||
Net (gain)/loss attributable to non-controlling interest |
3,343 | (1,322 | ) | (21 | ) | |||||||
|
|
|
|
|
|
|||||||
Net loss attributable to AZI |
(93,442 | ) | (240,168 | ) | (3,777 | ) | ||||||
Accretion on Mezzanine CCPS |
(104,121 | ) | (259,282 | ) | (4,077 | ) | ||||||
|
|
|
|
|
|
|||||||
Net loss attributable to AZI equity shareholders |
(197,563 | ) | (499,450 | ) | (7,854 | ) | ||||||
|
|
|
|
|
|
|||||||
Net loss per share attributable to equity shareholders |
||||||||||||
Basic and diluted |
(1,798 | ) | (4,545 | ) | (71 | ) | ||||||
Shares used in computing basic and diluted per share amounts |
||||||||||||
Equity share |
109,880 | 109,880 | | |||||||||
Pro forma (unaudited)(1) |
||||||||||||
Pro forma net loss |
| | | |||||||||
Pro forma net loss attributable to non-controlling interest |
| | | |||||||||
Pro forma net loss attributable to AZI equity shareholders |
| | | |||||||||
Pro forma basic and diluted loss per share |
| | | |||||||||
Pro forma shares used in computing basic and diluted per share amounts |
| | |
(1) | Pro forma disclosures for the three months ended June 30, 2015 reflect the conversion of all outstanding compulsorily convertible debentures (Note 9) and compulsorily convertible preferred shares (Notes 9 and 13) into equity shares before the Initial Public Offering. |
The pro forma disclosures will be completed once the equity shares upon conversion can be determined. For pro forma purposes, these conversions are assumed to have occurred as of the beginning of the period. |
See accompanying notes.
F-44
AZURE POWER INDIA PRIVATE LIMITED
(Predecessor to Azure Power Global Limited)
Condensed Consolidated Statements of Comprehensive Loss
Rs. and US$ amounts in thousands
(Unaudited)
Three months ended June 30, | ||||||||||||
2014
(Rs.) |
2015
(Rs.) |
2015
(US$) |
||||||||||
(Note 2(d)) | ||||||||||||
Net loss attributable to AZI equity shareholders |
(197,563 | ) | (499,450 | ) | (7,854 | ) | ||||||
Add: Non-controlling interest |
3,343 | (1,322 | ) | (21 | ) | |||||||
Other comprehensive loss net of tax |
||||||||||||
Foreign currency translation |
56 | (2,007 | ) | (32 | ) | |||||||
|
|
|
|
|
|
|||||||
Total comprehensive loss |
(194,164 | ) | (502,779 | ) | (7,907 | ) | ||||||
Less: Total comprehensive loss attributable to non-controlling interest |
| | | |||||||||
|
|
|
|
|
|
|||||||
Total comprehensive loss attributable to AZI equity shareholders |
(194,164 | ) | (502,779 | ) | (7,907 | ) | ||||||
|
|
|
|
|
|
See accompanying notes.
F-45
AZURE POWER INDIA PRIVATE LIMITED
(Predecessor to Azure Power Global Limited)
Condensed Consolidated Statements of Preferred Shares and Shareholders Deficit
Rs. and US$ amounts in thousands
(Unaudited)
Preferred
shares |
Equity
shares |
Additional
paid in capital |
Accumulated
other comprehensive income |
Accumulated
deficit |
Total AZI
shareholders deficit |
Non-
controlling interests |
Total
shareholders deficit |
|||||||||||||||||||||||||
Balance as of March 31, 2015 |
4,689,942 | 1,099 | (1,643,212 | ) | 23,197 | (2,828,061 | ) | (4,446,977 | ) | 4,575 | (4,442,403 | ) | ||||||||||||||||||||
Net loss |
| | | | (240,168 | ) | (240,168 | ) | (1,322 | ) | (241,490 | ) | ||||||||||||||||||||
Accretion on Mezzanine CCPS |
259,282 | | (259,282 | ) | | | (259,282 | ) | | (259,282 | ) | |||||||||||||||||||||
Other comprehensive loss |
| | | 2,007 | | 2,007 | | 2,007 | ||||||||||||||||||||||||
Share based compensation |
| | 2,118 | | | 2,118 | | 2,118 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Balance as of June 30, 2015 |
4,949,224 | 1,099 | (1,900,376 | ) | 25,204 | (3,068,229 | ) | (4,942,302 | ) | 3,253 | (4,939,048 | ) | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes.
F-46
AZURE POWER INDIA PRIVATE LIMITED
(Predecessor to Azure Power Global Limited)
Condensed Consolidated Statements of Cash Flows
Rs. and US$ amounts in thousands
(Unaudited)
Three months ended June 30, | ||||||||||||
2014
(Rs.) |
2015
(Rs.) |
2015
(US$) |
||||||||||
(Note 2(d)) | ||||||||||||
Cash flows provided by / (used in) operating activities |
||||||||||||
Net loss |
(90,099 | ) | (241,490 | ) | (3,798 | ) | ||||||
Adjustments to reconcile net loss to net cash used in operating activities: |
||||||||||||
Deferred income taxes |
5,061 | (34,908 | ) | (549 | ) | |||||||
Depreciation and amortization |
63,556 | 140,059 | 2,203 | |||||||||
Change in fair value of CCDs and Series E CCPS |
79,296 | 109,277 | 1,718 | |||||||||
Loss on disposal of property plant and equipment |
| 19,390 | 305 | |||||||||
Share based compensation |
1,281 | 2,118 | 33 | |||||||||
Amortization of debt financing cost |
4,193 | 12,902 | 203 | |||||||||
Realized gain on sale of short term investments |
(1,666 | ) | (4,432 | ) | (70 | ) | ||||||
Deferred rent |
2,598 | 4,430 | 70 | |||||||||
Realized and unrealized foreign exchange loss, net |
26,877 | 107,130 | 1,685 | |||||||||
Changes in operating assets and liabilities |
||||||||||||
Accounts receivable |
40,329 | (159,562 | ) | (2,509 | ) | |||||||
Prepaid expenses and other current assets |
(68,481 | ) | (55 | ) | (1 | ) | ||||||
Other assets |
44,863 | (88,216 | ) | (1,387 | ) | |||||||
Accounts payable |
(488 | ) | (244,927 | ) | (3,852 | ) | ||||||
Interest payable |
40,101 | 70,193 | 1,105 | |||||||||
Deferred revenue |
22,153 | 23,202 | 365 | |||||||||
Other liabilities |
50,515 | (104,343 | ) | (1,641 | ) | |||||||
|
|
|
|
|
|
|||||||
Net cash flows provided by (used in) operating activities |
220,089 | (389,232 | ) | (6,120 | ) | |||||||
|
|
|
|
|
|
|||||||
Cash flows used in investing activities |
||||||||||||
Purchase of property, plant and equipment |
(381,703 | ) | (1,374,966 | ) | (21,650 | ) | ||||||
Purchase of software |
(4,042 | ) | (3,069 | ) | (20 | ) | ||||||
Purchase of available-for-sale investments |
(269,000 | ) | (468,599 | ) | (7,369 | ) | ||||||
Sale of available-for-sale investments |
148,490 | 473,031 | 7,439 | |||||||||
Redemption/ maturity (purchase) of term deposits restricted cash |
(743,797 | ) | 192,011 | 3,020 | ||||||||
|
|
|
|
|
|
|||||||
Net cash flows used in investing activities |
(1,250,052 | ) | (1,181,592 | ) | (18,580 | ) | ||||||
|
|
|
|
|
|
|||||||
Cash flows provided by financing activities |
||||||||||||
Repayments of term and other loan |
(76,350 | ) | (1,066,733 | ) | (16,775 | ) | ||||||
Proceeds from term and other loan |
350,000 | 2,015,238 | 31,691 | |||||||||
Proceeds from issuance of CCDs |
180,250 | | | |||||||||
|
|
|
|
|
|
|||||||
Net cash provided by financing activities |
453,900 | 948,505 | 14,916 | |||||||||
|
|
|
|
|
|
|||||||
Effect of exchange rate changes on cash and cash equivalents |
(56 | ) | 2,007 | 31 | ||||||||
Net decrease in cash and cash equivalents |
(576,119 | ) | (620,312 | ) | (9,755 | ) | ||||||
Cash and cash equivalents at beginning of the period |
1,599,067 | 2,044,046 | 32,144 | |||||||||
|
|
|
|
|
|
|||||||
Cash and cash equivalents at end of the period |
1,022,948 | 1,423,734 | 22,389 | |||||||||
|
|
|
|
|
|
See accompanying notes.
F-47
AZURE POWER INDIA PRIVATE LIMITED
(Predecessor to Azure Power Global Limited)
Notes to Condensed Consolidated Financial Statements (Unaudited)
Rs. and US$ amounts in thousands except share and per share data
1. Organization
Azure Power India Private Limited (AZI or Azure) and its subsidiaries (collectively, the Company) are organized under the laws of India (except for two U.S. subsidiaries) and are engaged in the development, construction, ownership, operation, maintenance and management of solar power plants and generation of solar energy based on long-term contracts (power purchase agreements or PPA) with Indian government energy distribution companies as well as other non-governmental energy distribution companies and commercial customers.
Formation and initial public offering (IPO)
The Company has restructured its business to create a holding company outside India. As part of the restructuring plan, Azure Power Global Limited, (APGL) has been incorporated in Mauritius on January 30, 2015. APGL has filed a Registration Statement on Form F-1 with the Securities and Exchange Commission with respect to an IPO of equity shares in the United States. Prior to this offering, APGL had no business operations. In July 2015, APGL purchased from the non-founder investors in AZI (i.e., International Finance Corporation, Helion Venture Partners II, LLC, Helion Venture Partners India II, LLC, FC VI India Venture (Mauritius) Ltd., DEG Deutsche Investitions Und Entwicklungsgesellschaft mbH and Société de Promotion et de Participation Pour la Coopération Économique) the equity shares and convertible securities held by them in AZI and issued an equivalent number of equity shares and convertible securities of APGL to such non-founder investors. Accordingly, AZI is considered to be the predecessor to APGL, and AZIs condensed consolidated financial statements are being included in the registration statement of APGL.
2. Summary of significant accounting policies
(a) | Basis of presentation |
The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (GAAP) for interim financial information and are presented in Indian Rupees (Rs.), unless otherwise stated. The condensed consolidated financial statements include the accounts of AZI and companies which are directly or indirectly controlled by AZI. All intercompany accounts and transactions have been eliminated upon consolidation.
Certain information and disclosures normally included in consolidated financial statements prepared in accordance with GAAP have been condensed or omitted. Accordingly, these condensed consolidated financial statements should be read in conjunction with the Companys historical consolidated financial statements and accompanying notes included in the Form F-1 Registration Statement. In the opinion of management, all adjustments, consisting of a normal recurring nature, considered for a fair presentation have been included in the condensed consolidated financial statements. The operating results for the three months ended June 30, 2015 are not necessarily indicative of the results expected for the full year ending March 31, 2016.
(b) | Use of estimates |
The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, costs, expenses and comprehensive loss that are reported and disclosed in the consolidated financial statements and accompanying notes. These estimates are based on managements best knowledge of current events, historical experience, actions the Company may undertake in the future and on various other assumptions that are
F-48
AZURE POWER INDIA PRIVATE LIMITED
(Predecessor to Azure Power Global Limited)
Notes to Condensed Consolidated Financial Statements (Unaudited)
Rs. and US$ amounts in thousands except share and per share data
believed to be prudent and reasonable under the circumstances. Significant estimates and assumptions are used for, but not limited to impairment of and useful lives of property, plant and equipment, determination of asset retirement obligations valuation of derivative instruments, valuation of share based compensation, valuation of compulsorily convertible debentures and preferred shares, income taxes, and other contingencies and commitments. Although these estimates are based upon managements best knowledge of current events and actions, actual results could differ from these estimates, and such differences may be material to the condensed consolidated financial statements.
(c) | Foreign currency translation and transactions |
The condensed consolidated financial statements are reported in Rs. which is the functional currency of AZI. The functional currencies of AZIs subsidiaries are their respective local country currencies. The translation from the applicable functional currencies of AZIs subsidiaries into Rs. is performed for balance sheet accounts using the exchange rates in effect as of the balance sheet date, except for shareholders equity and preferred shares, which are translated at the historical rates in effect at the dates of the underlying transactions. Revenue, expense and cash flow items are translated using the average exchange rates for the respective year. The resulting gains and losses from such translation are excluded from the determination of earnings and are recognized instead in accumulated other comprehensive loss, which is a separate component of shareholders deficit.
Realized and unrealized foreign currency transaction gains and losses, arising from exchange rate fluctuations on balances denominated in currencies other than the functional currency of an entity, such as those resulting from the Companys U.S. dollar (US$) denominated borrowings, are included in Loss on foreign currency exchange in the condensed consolidated statements of operations.
(d) | Convenience translation |
Translation of balances in the condensed consolidated balance sheets and the condensed consolidated statements of operations, comprehensive loss, shareholders deficit and cash flows from Rs. into US$, as of and for the three months period ended June 30, 2015 are solely for the convenience of the readers and were calculated at the rate of US$1.00 = Rs. 63.59, the noon buying rate in New York City for cable transfers in non U.S. currencies, as certified for customs purposes by the Federal Reserve Bank of New York on June 30, 2015. No representation is made that the Rs. amounts could have been, or could be, converted, realized or settled into US$ at that rate on June 30, 2015, or at any other rate.
(e) | Cash and cash equivalents |
Cash and cash equivalents include cash on hand, demand deposits with banks, term deposits and all other highly liquid investments purchased with an original maturity of three months or less at the date of acquisition and that are readily convertible to cash. The Company has classified term deposits totaling Rs. 95,416 and Rs. 104,075 (US$1,637) at March 31, 2015 and June 30, 2015, respectively as cash and cash equivalents, because the Company has the ability to redeem these deposits at any time subject to an immaterial interest rate forfeiture. All term deposits are readily convertible into known amount of cash with no more than one days notice.
(f) | Restricted cash |
Restricted cash consists of cash balances restricted as to withdrawal or usage and relates to cash used to collateralize bank letters of credit supporting the purchase of equipment for solar power plants, bank guarantees
F-49
AZURE POWER INDIA PRIVATE LIMITED
(Predecessor to Azure Power Global Limited)
Notes to Condensed Consolidated Financial Statements (Unaudited)
Rs. and US$ amounts in thousands except share and per share data
issued in relation to the construction of the solar power plants within the timelines stipulated in PPAs and for certain debt service reserves required under the Companys loan agreements. Restricted cash is classified into current and non-current portions based on the term of the deposit and the expiration date of the underlying restriction.
(g) | Investments |
Management determines the appropriate classification of investment securities at the time of purchase and re-evaluates such designation at each balance sheet date. The investment securities held by the Company during the periods presented in the accompanying condensed consolidated financial statements are classified as available-for-sale (short-term investments) and consist of liquid mutual funds units.
The Company accounts for its investments in accordance with Financial Accounting Standards Board (FASB) ASC Topic 320, Accounting for Certain Investments in Debt and Equity Securities. These investments are considered available for sale and are recorded at fair value, with the unrealized gains or losses, net of tax, reported as a component of accumulated other comprehensive loss in the consolidated statement of shareholders deficit. As of March 31, 2015 and June 30, 2015, the Company did not have any short-term investments. Realized gains and proceeds from the sale of available-for-sale securities during the three months ended June 30, 2014 were Rs. 1,666 and Rs. 148,490 and during the three months ended June 30, 2015 were Rs. 4,432 (US$70) and Rs. 473,031 (US$7,439), respectively.
Realized gains and losses, and decline in value judged to be other than temporary on available-for-sale securities are included in the condensed consolidated statements of operations. The cost of securities sold or disposed is determined on First in First out or FIFO method.
(h) | Accounts receivable |
The Companys accounts receivables are generated by selling energy to customers and are reported net of any allowance for uncollectible accounts. The allowance for doubtful accounts is based on various factors, including the length of time receivables are past due, significant one-time events, the financial health of customers and historical experience. The allowance for doubtful accounts at March 31, 2015 and June 30, 2015 was Rs. 10,000 (US$157). Accounts receivable serve as collateral for borrowings under the working capital facility, described in Note 9.
(i) | Deferred IPO cost |
The Company incurred legal and printing costs relating to its planned IPO of Rs. 88,400 and Rs. 125,427 (US$1,972) as of March 31, 2015 and June 30, 2015, respectively, relating to the IPO. The Company accounts for such costs under ASC 340-10-599-1 (SAB Topic 5A) Expenses of the Offering as incremental costs directly attributable to the offering of equity shares are capitalized. These costs will be charged to APGL and applied against the proceeds from the IPO, when received.
(j) | Property, plant and equipment |
Property, plant and equipment represents the costs of completed and operational solar power plants, as well as the cost of furniture and fixtures, vehicles, office and computer equipment, leasehold improvements, freehold
F-50
AZURE POWER INDIA PRIVATE LIMITED
(Predecessor to Azure Power Global Limited)
Notes to Condensed Consolidated Financial Statements (Unaudited)
Rs. and US$ amounts in thousands except share and per share data
land and construction in progress. Construction in progress represents the accumulated cost of solar power plants that have not been placed into service at the date of the balance sheet. Construction in progress includes the cost of solar modules for which the Company has taken legal title, civil engineering, electrical and other related costs incurred during the construction of a solar power plant. Construction in progress is reclassified to property, plant and equipment when the project begins its commercial operations.
Property, plant and equipment are stated at cost, less accumulated depreciation and impairment losses. Depreciation is calculated using the straight-line method over the assets estimated useful lives as follows:
Plant and machinery (solar power plants) |
25 years | |||
Furniture and fixtures |
5 years | |||
Vehicles |
5 years | |||
Office equipment |
5 years | |||
Computers |
3 years |
Leasehold improvements to office facilities are depreciated over the shorter of the lease period or the estimated useful life of the improvement. Lease hold improvements on the solar power plant sites are depreciated over the shorter of the lease term or the remaining period of the PPAs undertaken with the respective customer. Freehold land is not depreciated. Construction in progress is not depreciated until it is ready to be put to use.
Improvements to property, plant and equipment deemed to extend the useful economic life of an asset are capitalized. Maintenance and repairs that do not improve efficiency or extend the estimated economic life of an asset are expensed as incurred.
Capitalized interest
Interest incurred on funds borrowed to finance construction of solar power plants is capitalized until the plant is ready for its intended use.
The amount of interest capitalized during the three months ended June 30, 2014 and June 30, 2015 was Rs. 3,935 and Rs. 85,889 (US$1,351) respectively.
(k) | Accounting for impairment of long-lived assets |
The Company periodically evaluates whether events have occurred that would require revision of the remaining useful life of property, plant and equipment and improvements, or render their carrying value not recoverable. If such circumstances arise, the Company uses an estimate of the undiscounted value of expected future operating cash flows to determine whether the long-lived assets are impaired. If the aggregate undiscounted cash flows are less than the carrying amount of the assets, the resulting impairment charge to be recorded is calculated based on the excess of the carrying value of the assets over the fair value of such assets, with the fair value determined based on an estimate of discounted future cash flows, appraisals or other valuation techniques. There were no impairment charges related to long-lived assets recognized during the three months ended June 30, 2014 and 2015.
(l) | Leases and land use rights |
The Companys leases relate to leasehold land on which the solar power plants are constructed and for office facilities. Leases are reviewed for capital or operating classification at their inception under the guidance
F-51
AZURE POWER INDIA PRIVATE LIMITED
(Predecessor to Azure Power Global Limited)
Notes to Condensed Consolidated Financial Statements (Unaudited)
Rs. and US$ amounts in thousands except share and per share data
of ASC Topic 840 Leases . The expense for leases classified as operating leases is recorded as rent expense on a straight-line basis, over the lease term, beginning with the date the Company has access to the property.
Land use rights represent lease prepayments to the lessor. Land use rights are carried at cost less accumulated amortization. Amortization is provided to write-off the cost of these prepayments on a straight line basis over the period of the lease or the PPA, whichever is shorter.
The Company did not have any capital leases during any of the periods presented in the accompanying condensed consolidated financial statements.
(m) | Asset retirement obligations (ARO) |
Upon the expiration of a PPA or, if later, the expiration of the lease agreement for solar power plants located on leasehold land, the Company is required to remove the solar power plant and restore the land. The Company records the fair value of the liability for the legal obligation to retire the asset in the period in which the obligation is incurred, which is generally when the asset is constructed. When a new liability is recognized, the Company capitalizes it by increasing the carrying amount of the related long-lived asset, which resulting ARO asset is depreciated over the remaining useful life of the solar power plant. The liability is accreted and expensed to its present expected future value each period based on a credit adjusted risk free interest rate. Upon settlement of the obligation, the Company eliminates the liability and, based on the actual cost to retire, may incur a gain or loss.
The Companys asset retirement obligations were Rs. 70,944 and Rs. 87,945 (US$1,383) as of March 31, 2015 and June 30, 2015, respectively. The accretion expense incurred during the three months ended June 30, 2014 and June 30, 2015 were Rs. 454 and Rs. 1,251 (US$20), respectively. There was no settlement of prior liabilities or revisions to the Companys estimated cash flows as of June 30, 2015.
(n) | Software |
The Company capitalizes certain internal software development cost under the provision of ASC Topic 350-40 Internal-use Software . As of June 30, 2015, the amount capitalized as software includes the cost of software licenses, as well as related implementation costs, which primarily relate to third party consulting fees. Such license and implementation costs are capitalized and amortized over their estimated useful lives of three years using the straight-line method. On an ongoing basis, the Company assesses the recoverability of its capitalized software intangible assets. Capitalized software costs determined to be unrecoverable are expensed in the period in which the determination is made. As of June 30, 2015, all capitalized software was considered fully recoverable.
(o) | Debt financing costs |
Financing costs incurred in connection with obtaining construction and term financing loans are deferred and amortized over the term of the respective loan using the effective interest rate method. Amortization of debt financing costs is capitalized during construction and recorded as interest expense in the condensed consolidated statements of operations, following commencement of commercial operations of the respective solar power plants.
Amortization of debt financing costs for the three months ended June 30, 2014 and 2015 was Rs.4,193 and Rs. 12,902 (US$203), respectively.
F-52
AZURE POWER INDIA PRIVATE LIMITED
(Predecessor to Azure Power Global Limited)
Notes to Condensed Consolidated Financial Statements (Unaudited)
Rs. and US$ amounts in thousands except share and per share data
(p) | Income taxes |
Income taxes are recorded under the asset and liability method, as prescribed under ASC Topic 740 Income Taxes , whereby deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax base. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.
The Company establishes valuation allowances against its deferred tax assets when it is more likely than not that all or a portion of a deferred tax asset will not be realized.
The Company applies a two-step approach to recognize and measure uncertainty in income taxes in accordance with FASB Interpretation No. 48 (FIN 48), Accounting for Uncertainty in Income Taxes an interpretation of ASC Topic 740 . The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount which is more than 50% likely of being realized upon ultimate settlement through June 30, 2015, the Company does not have any unrecognized tax benefits nor has it recognized any interest or penalties.
(q) | Employee benefits |
Defined contribution plan
Eligible employees of the Company in India receive benefits from the Provident Fund, administered by the Government of India, which is a defined contribution plan. Both the employees and the Company make monthly contributions to the Provident Fund equal to a specified percentage of the eligible employees salary.
The Company has no further funding obligation under the Provident Fund, beyond the contributions elected or required to be made thereunder. Contributions to the Provident Fund by the Company are charged to expense in the period in which services are rendered by the covered employees and amounted to Rs. 924 and Rs. 2,452 (US$39) for the three months ended June 30, 2014 and 2015, respectively.
Defined benefit plan
Employees in India are entitled to benefits under the Gratuity Act, a defined benefit post-employment plan covering eligible employees of the Company. This plan provides for a lump-sum payment to eligible employees at retirement, death, and incapacitation or on termination of employment, of an amount based on the respective employees salary and tenure of employment. As of June 30, 2015, this plan is unfunded.
Current service costs for defined benefit plans are accrued in the period to which they relate. In accordance with ASC Topic 715, Compensation Retirement Benefit , the liability in respect of defined benefit plans is calculated annually by the Company using the projected unit credit method and amounted to Rs. 5,612 and Rs. 6,936 (US$109) as of March 31, 2015 and June 30, 2015, respectively. Prior service cost, if any, resulting from an amendment to a plan is recognized and amortized over the remaining period of service of the covered employees. Interest costs as of March 31, 2015 and June 30, 2015 were not significant.
The Company recognizes its liabilities for compensated absences in accordance with ASC Topic 710, Compensation-General . The Company accrues the liability for its employee rights to compensated absence in the year in which it is earned.
F-53
AZURE POWER INDIA PRIVATE LIMITED
(Predecessor to Azure Power Global Limited)
Notes to Condensed Consolidated Financial Statements (Unaudited)
Rs. and US$ amounts in thousands except share and per share data
(r) | Revenue recognition |
Revenue from sale of power is recognized when persuasive evidence of an arrangement exists, the fee is fixed or determinable, solar energy kilowatts are supplied and collectability is reasonably assured. Revenue is based on the solar energy kilowatts actually supplied to customers multiplied by the rate per kilo-watt hour agreed to in the respective PPAs. The solar energy kilowatts supplied by the Company are validated by the customer prior to billing and recognition of revenue.
The Company estimates the total kilowatt hour units expected to be generated over the entire 25 year-term using an estimated degradation factor. The total estimated revenue is calculated using the rate specified multiplied by the estimated output. Total estimated revenue is divided by units expected to be generated over the entire 25 year-term of PPA.
Where PPAs include scheduled price changes, revenue is recognized by applying the average rate to the energy output estimated over the term of the PPA. The Company estimates the total kilowatt hour units expected to be generated over the entire term of the PPA. The contractual rates are applied to this annual estimate to determine the total estimated revenue over the term of the PPA. The Company then uses the total estimated revenue and the total estimated kilo-watt hours to compute the average rate used to record revenue on the actual energy output supplied. The Company compares the actual energy supplied to the estimate of the energy expected to be generated over the remaining term of the PPA on a periodic basis, but at least annually. Based on this evaluation, the Company reassesses the energy output estimated over the remaining term of the PPA and adjusts the revenue recognized and deferred to date. Through June 30, 2015, the adjustments have not been significant. The difference between actual billing and revenue recognized is recorded as deferred revenue.
For the three months ended June 30, 2014 and 2015, the amount of revenue recognized under the PPAs with scheduled price changes is Rs.50,920 and Rs. 44,876 (US$706), respectively.
Revenue from sale of power is recorded net of discounts. Through June 30, 2015, discounts have not been significant.
The Company records the proceeds received from Viability Gap Funding (VGF) on fulfilment of the underlying conditions as deferred revenue. Such deferred VGF revenue is recognised as sale of power in proportion to the actual sale of solar energy kilowatts during the period to the total estimated sale of solar energy kilowatts during the tenure of the applicable power purchase agreement pursuant to revenue recognition policy.
(s) | Cost of operations (exclusive of depreciation and amortization) |
The Companys cost of operations consists of expenses pertaining to operations and maintenance of its solar power plants. These expenses include payroll and related costs for maintenance staff, plant maintenance, insurance, and if applicable, lease costs.
Depreciation expense is not included in cost of operations but is included within Depreciation and amortization expense, shown separately in the condensed consolidated statements of operations.
(t) | General and administrative expenses |
General and administrative expenses include payroll and related costs for corporate, finance and other support staff, including bonus and share based compensation expense, professional fees and other corporate expenses.
F-54
AZURE POWER INDIA PRIVATE LIMITED
(Predecessor to Azure Power Global Limited)
Notes to Condensed Consolidated Financial Statements (Unaudited)
Rs. and US$ amounts in thousands except share and per share data
(u) | Share based compensation |
The Company follows guidance under ASC Topic 718, Compensation Stock Compensation , which requires compensation costs related to share-based transactions, including employee share options, to be recognized in the financial statements based on their fair value. The Company recognizes compensation expense for equity share options net of estimated forfeitures. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Share-based compensation is included in general and administrative expenses and recognized in the condensed consolidated statements of operations for the three months ended June 30, 2014 and 2015 based on awards ultimately expected to vest.
The Company has elected to use the Black-Scholes-Merton valuation model to determine the fair value of share-based awards on the date of grant for employee share options with a fixed exercise price and fixed service-based vesting.
The Company has elected to use the Lattice valuation model to determine the fair value of share-based awards on the date of grant for employee share options with a market condition.
Share based compensation expense for the three months ended June 30, 2014 and 2015 amounted to Rs. 1,281 and Rs. 2,118 (US$ 33), respectively.
(v) | Contingencies |
Liabilities for loss contingencies arising from claims, tax assessments, litigation, fines and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount of the assessment and/or remediation can be reasonably estimated. Legal costs incurred with respect to these items are expensed as incurred.
(w) | Fair value of financial instruments |
ASC Topic 820, Fair Value Measurements and Disclosures , defines fair value as the price at which an asset could be exchanged or a liability transferred in an orderly transaction between knowledgeable, willing parties in the principal or most advantageous market for the asset or liability. Where available, fair value is based on observable market prices or derived from such prices. Where observable prices or inputs are not available, valuation models are applied. These valuation techniques involve some level of management estimation and judgment, the degree of which is dependent on the price transparency for the instruments or market and the instruments complexity.
(x) | Derivative instruments |
Derivative instruments are recorded on the consolidated balance sheets at fair value. Changes in fair value of derivatives not designated as accounting hedges are reported directly in earnings along with the corresponding transaction gains and losses on the items being hedged. The Company enters into foreign exchange currency contracts to mitigate and manage the risk of changes in foreign exchange rates. These foreign exchange derivative contracts were entered into to hedge the fluctuations in foreign exchange rates for recognized balance sheet items such as the Companys U.S. dollar denominated borrowings and are not designated as hedges for accounting purposes. Realized gains (losses) and changes in the fair value of these foreign exchange derivative contracts are recorded in foreign exchange gains (losses), net in the consolidated statements of operations. These derivatives are not held for speculative or trading purposes. The Company did not have any derivatives designated as accounting hedges during the three months ended June 30, 2014 and 2015.
F-55
AZURE POWER INDIA PRIVATE LIMITED
(Predecessor to Azure Power Global Limited)
Notes to Condensed Consolidated Financial Statements (Unaudited)
Rs. and US$ amounts in thousands except share and per share data
(y) | Segment information |
Operating segments are defined as components of a company about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision making group, in deciding how to allocate resources and in assessing performance. The Companys chief executive officer is the chief operating decision maker. Based on the financial information presented to and reviewed by the chief operating decision maker in deciding how to allocate the resources and in assessing the performance of the Company, the Company has determined that it has a single operating and reporting segment: Sale of power. The Companys principal operations, revenue and decision-making functions are located in India.
(z) | Non-controlling interest |
Non-controlling interest relates to 20% ownership in a subsidiary (10 MW Gujarat power plant) not held by the Company. As of March 31, 2015, the Company recorded non-controlling interest amounting to Rs. 4,575. As of June 30, 2015, the Company recorded non-controlling interest amounting to Rs. 3,253 (US$ 51) including Rs. 1,322 (US$ 21) of net loss for the three months then ended.
3. Cash and cash equivalents
Cash and cash equivalents consists of the following:
March 31, 2015
(Rs.) |
June 30, | |||||||||||
2015
(Rs.) |
2015
(US$) |
|||||||||||
Bank demand deposits |
1,948,579 | 1,319,583 | 20,751 | |||||||||
Term deposits |
95,416 | 104,075 | 1,637 | |||||||||
Cash on hand |
51 | 78 | 1 | |||||||||
|
|
|
|
|
|
|||||||
Total |
2,044,046 | 1,423,736 | 22,389 | |||||||||
|
|
|
|
|
|
4. Restricted cash
Restricted cash consists of the following:
March 31, 2015
(Rs.) |
June 30, | |||||||||||
2015
(Rs.) |
2015
(US$) |
|||||||||||
Bank demand deposits |
542,484 | 543,084 | 8,540 | |||||||||
Term deposits |
760,717 | 568,105 | 8,934 | |||||||||
|
|
|
|
|
|
|||||||
1,303,201 | 1,111,189 | 17,474 | ||||||||||
Restricted cash current |
702,407 | 523,221 | 8,228 | |||||||||
|
|
|
|
|
|
|||||||
Restricted cash non-current |
600,794 | 587,968 | 9,246 | |||||||||
|
|
|
|
|
|
The decrease in restricted cash from March 31, 2015 to June 30, 2015 is primarily on account of expiration of underlying restriction for projects completed during current period and is partly offset by new projects started during this period.
F-56
AZURE POWER INDIA PRIVATE LIMITED
(Predecessor to Azure Power Global Limited)
Notes to Condensed Consolidated Financial Statements (Unaudited)
Rs. and US$ amounts in thousands except share and per share data
5. Prepaid expenses and other current assets
Prepaid expenses and other current assets consists of the following:
March 31, 2015
(Rs.) |
June 30, | |||||||||||
2015
(Rs.) |
2015
(US$) |
|||||||||||
Prepaid income taxes |
69,207 | 69,070 | 1,087 | |||||||||
Derivative instruments (Note 19) |
75,750 | 80,661 | 1,269 | |||||||||
Debt financing costs |
35,973 | 31,953 | 502 | |||||||||
Interest receivable on term deposits |
10,537 | 5,037 | 79 | |||||||||
Other |
48,958 | 53,759 | 845 | |||||||||
|
|
|
|
|
|
|||||||
Total |
240,425 | 240,480 | 3,782 | |||||||||
|
|
|
|
|
|
6. Property, plant and equipment, net
Property, plant and equipment, net consist of the following:
Estimated
Useful Life (in years) |
March 31, 2015
(Rs.) |
June 30, | ||||||||||||||
2015
(Rs.) |
2015
(US$) |
|||||||||||||||
Plant and machinery (solar power plants) |
25 | 8,793,975 | 15,473,350 | 243,330 | ||||||||||||
Furniture and fixtures |
5 | 4,791 | 4,795 | 75 | ||||||||||||
Vehicles |
5 | 10,274 | 10,278 | 162 | ||||||||||||
Office equipment |
5 | 5,083 | 5,204 | 82 | ||||||||||||
Computers |
3 | 12,595 | 14,876 | 234 | ||||||||||||
Leasehold improvements solar power plant |
25 | 639,765 | 1,226,066 | 19,280 | ||||||||||||
Leasehold improvements office |
1-3 | 11,739 | 11,738 | 184 | ||||||||||||
|
|
|
|
|
|
|||||||||||
9,478,222 | 16,746,307 | 263,547 | ||||||||||||||
Less: Accumulated depreciation |
770,822 | 909,100 | 14,296 | |||||||||||||
|
|
|
|
|
|
|||||||||||
8,707,400 | 15,837,207 | 249,051 | ||||||||||||||
Freehold land |
199,173 | 199,522 | 3,138 | |||||||||||||
Construction in progress |
6,239,101 | 343,242 | 5,398 | |||||||||||||
|
|
|
|
|
|
|||||||||||
Total |
15,145,674 | 16,379,971 | 257,587 | |||||||||||||
|
|
|
|
|
|
Depreciation expense on property, plant and equipment was Rs. 63,082 and Rs. 138,278 (US$ 2,175) for the three months ended June 30, 2014 and 2015, respectively.
The Company has received a government grant for the construction of rooftop projects amounting to Rs. 11,700 (US$ 184) during the year ended March 31, 2015. The proceeds from this grant have been recorded as a reduction to the carrying value of the related rooftop projects.
F-57
AZURE POWER INDIA PRIVATE LIMITED
(Predecessor to Azure Power Global Limited)
Notes to Condensed Consolidated Financial Statements (Unaudited)
Rs. and US$ amounts in thousands except share and per share data
7. Software, net consists of the following:
Estimated
Useful Life (in years) |
March 31,
2015 (Rs.) |
June 30, | ||||||||||||||
2015
(Rs.) |
2015
(US$) |
|||||||||||||||
Software licenses and related implementation costs |
3 Years | 20,668 | 23,737 | 373 | ||||||||||||
Less: Accumulated amortization |
4,948 | 6,729 | 106 | |||||||||||||
|
|
|
|
|
|
|||||||||||
Total |
15,720 | 17,008 | 267 | |||||||||||||
|
|
|
|
|
|
Aggregate amortization expense for software was Rs. 475 and Rs. 1,781 (US$ 28) for the three months ended June 30, 2014 and 2015, respectively.
Estimated amortization expense for the nine months ending March 31, 2016 and years ending March 31, 2017, 2018 and 2019 is Rs. 5,907, Rs. 7,741, Rs. 3,340 and Rs.21 respectively.
8. Other assets
Other assets consist of the following:
March
31,
2015 (Rs.) |
June 30, | |||||||||||
2015
(Rs.) |
2015
(US$) |
|||||||||||
Prepaid income taxes |
232,347 | 231,970 | 3,648 | |||||||||
Custom duty receivable |
30,742 | 30,742 | 484 | |||||||||
Derivative instruments (Note 19) |
158,338 | 158,920 | 2,499 | |||||||||
Debt financing costs |
242,622 | 273,142 | 4,295 | |||||||||
Interest receivable on term deposits |
53,989 | 61,611 | 969 | |||||||||
Security deposit to related party (Note 17) |
6,300 | 6,300 | 99 | |||||||||
Land use rights |
79,500 | 80,207 | 1,261 | |||||||||
Other |
16,986 | 16,219 | 255 | |||||||||
|
|
|
|
|
|
|||||||
Total |
820,824 | 859,111 | 13,510 | |||||||||
|
|
|
|
|
|
F-58
AZURE POWER INDIA PRIVATE LIMITED
(Predecessor to Azure Power Global Limited)
Notes to Condensed Consolidated Financial Statements (Unaudited)
Rs. and US$ amounts in thousands except share and per share data
9. Long term debt
Long term debt consists of the following:
March 31,
2015 (Rs.) |
June 30, | |||||||||||
2015
(Rs.) |
2015
(US$) |
|||||||||||
Compulsorily convertible debentures 5.0% DEG |
1,080,100 | 1,120,817 | 17,626 | |||||||||
Compulsorily convertible debentures 10.0% IFC |
391,500 | 406,243 | 6,389 | |||||||||
Compulsorily convertible debentures 0% IFC II |
116,100 | 120,449 | 1,894 | |||||||||
Compulsorily convertible debentures 5% IFC III |
210,900 | 218,931 | 3,443 | |||||||||
Series E compulsorily convertible preferred shares (140,000 preferred shares) |
662,600 | 689,600 | 10,845 | |||||||||
|
|
|
|
|
|
|||||||
2,461,200 | 2,556,040 | 40,197 | ||||||||||
|
|
|
|
|
|
|||||||
Secured term loans: |
||||||||||||
Foreign currency loans |
6,046,900 | 6,106,833 | 96,034 | |||||||||
Indian rupee loans |
9,224,518 | 10,234,771 | 160,949 | |||||||||
|
|
|
|
|
|
|||||||
15,271,418 | 16,341,604 | 256,983 | ||||||||||
Other secured bank loans: |
||||||||||||
Vehicle loans |
235 | 119 | 2 | |||||||||
|
|
|
|
|
|
|||||||
17,732,853 | 18,897,763 | 297,181 | ||||||||||
Less current portion |
2,254,344 | 2,427,402 | 38,173 | |||||||||
|
|
|
|
|
|
|||||||
Long-term debt |
15,478,509 | 16,470,361 | 259,009 | |||||||||
|
|
|
|
|
|
Compulsorily convertible debentures (CCDs)
The face value of the DEG, IFC, IFC II and IFC III CCDs is Rs. 680,390, Rs. 246,620, Rs. 75,000, and Rs. 180,000, respectively. The CCDs each contain the following key terms and conditions.
Voting
The holders of the CCDs are not entitled to voting rights other than for certain specific matters based on their proportionate voting right as defined and specified in the shareholder and CCD agreement.
Term
Unless converted, the DEG, IFC, IFC II and IFC III CCDs mature 10 years from the date of the respective issuance being November 10, 2021, December 14, 2020, January 3, 2023 and June 5, 2024, respectively.
Interest
The DEG CCDs bear interest at a rate of 5.0% per annum through the date of their conversion into equity shares of the Company. The first interest payment is eighteen months from the issuance date followed by quarterly payments until the earlier of the date of conversion or maturity.
The IFC CCDs bear interest at a rate of 10.0% per annum through the date of their conversion into equity shares of the Company. The first interest payment is eighteen months from the issuance date followed by quarterly payments until the earlier of the date of conversion or maturity.
F-59
AZURE POWER INDIA PRIVATE LIMITED
(Predecessor to Azure Power Global Limited)
Notes to Condensed Consolidated Financial Statements (Unaudited)
Rs. and US$ amounts in thousands except share and per share data
The IFC II CCDs do not carry an annual interest rate. However, if any dividends are paid to equity shareholders or the holders of the Compulsorily Convertible Preferred Shares (CCPS), the IFC II holders are entitled to interest/dividends equal to the return provided to the equity shareholders or the CCPs shareholders, whichever is higher.
The IFC III CCDs bear interest at a rate of 5.0% per annum through the date of their conversion into equity shares of the Company. The first interest payment is eighteen months from the issuance date followed by quarterly payments until the earlier of the date of conversion or maturity.
The CCDs convert at a price such that the holder earns an internal rate of return ranging from 18.4% per annum to 20.0% per annum upon the filing of a draft red herring prospectus (DRHP), pursuant to the Indian Companies Act, 2013, as defined, in the event of liquidation events, as defined, or upon the voluntary sale of shares by all shareholders. Otherwise the guaranteed internal rate of return to the CCD holders ranges from 16.0% per annum to 18.0% per annum at maturity.
Buyback obligation
At any time after the expiry of the Qualified Initial Public Offering (QIPO) date of February 25, 2016, upon a breach of the funding requirements of the CCD holders or upon the occurrence of a liquidation event, as defined, the holders of the CCDs have an option, at their discretion, to require the Company to buyback the equity shares held by them after the conversion of their CCDs into equity shares so as to give them their required returns ranging from 18.4% per annum to 20.0% per annum.
Indian rules and regulations place limitations on the amount of the CCDs the Company can buy back within 12 months of the balance sheet. Among other things, the Company is restricted from buying back an amount of shares in excess of 25% of its statutory paid up share capital and free reserves in a year. As of June 30, 2015, the Company has estimated that a maximum aggregate amount totaling Rs. 986,048 of the CCDs are eligible for buyback by February 25, 2016 and has accordingly classified this amount as a current liability. Because of the limitations, the remaining balance of the CCDs totaling Rs. 880,394 continues to be classified as a non-current liability.
Conversion
The CCDs compulsorily convert to equity shares (a) upon filing of the DRHP, (b) in connection with an IPO as approved by the shareholders of the Company, or (c) at the maturity date of the respective CCDs. The CCDs are convertible into equity shares so as to give the holders their guaranteed returns ranging from 16.0% per annum to 18.0% per annum.
Accounting
In accordance with ASC Topic 480 Distinguishing Liabilities from Equity , the CCDs are recorded at their respective fair values at period end. The fair value has been determined based on a discounted cash flow analysis under the income approach. Changes in their fair value are recorded as interest expense in the statements of operations. The carrying amount of the CCDs includes the unrealized changes in the fair value of Rs. 616,590 and Rs. 684,432 (US$10,763) as of March 31, 2015 and June 30, 2015, respectively. Issuance costs on the CCDs are expensed as incurred.
Interest expense, including changes to fair value, on the CCDs for the three months ended June 30, 2014 and 2015 was Rs. 71,514 and Rs. 82,277 (US$1,294), respectively.
F-60
AZURE POWER INDIA PRIVATE LIMITED
(Predecessor to Azure Power Global Limited)
Notes to Condensed Consolidated Financial Statements (Unaudited)
Rs. and US$ amounts in thousands except share and per share data
Series E Compulsorily Convertible Preferred Shares (Series E CCPS)
Series E CCPS contain the following key terms and conditions.
Voting
The holders of the Series E CCPS are not entitled to voting rights other than for certain specific matters based on their proportionate voting right as defined and specified in the shareholder and the Series E CCPS agreements.
Term
Unless converted, the Series E CCPS are redeemable ten years from the date of their respective allotment or April 18, 2023.
Dividend
Each of the Series E CCPS holders are entitled to a 5.0% per share non cumulative dividend, declared and paid in accordance with the Indian Companies Act of 2013. Should the equity or the Series A, B, C, D or F CCPS holder in any financial year receive a dividend payout higher than 5% per annum of the amount invested by such investors, the Series E CCPS holders are entitled to receive an additional dividend equal to the difference between the percentage return earned by the equity or the Series A, B, C, D or F CCPS holders and the rate of dividends received by the Series E CCPS holders. The Company has not declared or paid any dividends through June 30, 2015.
Buyback obligation
At any time after the expiry of the QIPO date of February 25, 2016, or if the funding covenants of the Series E CCPS are breached, the Series E CCPS holders have an option, at their discretion, to require the Company to buyback the equity shares held by them after conversion of the Series E CCPS into equity shares so as to give them a required return of 15.0% per annum.
Indian rules and regulations place limitations on the amount of the CCPS the Company can buy back within 12 months of the balance sheet. Among other things, the Company is restricted from buying back an amount of shares in excess of 25% of its statutory paid up share capital and free reserves in a year. As of June 30, 2015, the Company has estimated that the CCPS will not be eligible for buyback by February 25, 2016 and therefore continues to classify the CCPS as non-current liability.
Conversion
The Series E CCPS compulsorily convert to equity shares (a) upon filing of the DRHP, (b) in connection with an IPO as approved by the shareholders of the Company, or (c) at their maturity date. The Series E CCPS are convertible into equity shares so as to give the holders their required return which is 15% per annum if converted at maturity or 17% per annum upon the filing of a DRHP or of a QIPO.
Liquidation
On the occurrence of a liquidation event, as defined in the term of the Series E CCPS agreement, the Series E CCPS holders have the right to receive an amount equal to their original investment plus a guaranteed internal rate of return of 17.0% per annum. At June 30, 2015, the Series E CCPS liquidation preference was Rs. 689,600 (US$10,844).
F-61
AZURE POWER INDIA PRIVATE LIMITED
(Predecessor to Azure Power Global Limited)
Notes to Condensed Consolidated Financial Statements (Unaudited)
Rs. and US$ amounts in thousands except share and per share data
Accounting
In accordance with ASC Topic 480, the Series E CCPS are classified as a liability and recorded at fair value at each period end. The fair value has been determined based on a discounted cash flow analysis under the income approach. Changes in their fair value are recorded as interest expense in the statements of operations. The carrying amount of series E CCPS includes the unrealized changes in their fair value of Rs. 171,200 and Rs. 198,200 (US$3,117) as of March 31, 2015 and June 30, 2015, respectively. Issuance costs on the CCPS are expensed as incurred.
Project level secured term loans
Foreign currency loans
From June 2009 through September 2009 the Company borrowed Rs. 309,631 (US$6,230) for the financing of a 2 MW solar power project, which loan carries a fixed interest rate. The loan is repayable in 48 equal quarterly installments which commenced on December 15, 2010. The borrowing is collateralized by the underlying solar power project assets with a net carrying value of Rs. 321,757 (US$ 5,060) as of June 30, 2015.
From February 2011 through June 2011, the Company borrowed Rs. 1,233,084 (US$26,835) for the financing of a 10 MW solar power project, which loan carries a fixed interest rate. The loan is repayable in 54 equal quarterly installments which commenced on September 15, 2012. The borrowing is collateralized by the underlying solar power project assets with a net carrying value of Rs. 1,176,800 (US$ 18,506) as of June 30, 2015.
From October 2011 through March 2012, the Company borrowed Rs. 782,793 (US$15,777) for the financing of a 5 MW solar power project, which loan carries a fixed interest rate. The loan is repayable in 66 quarterly installments commencing July 15, 2012. The borrowing is collateralized by the underlying solar power project assets with a net carrying value of Rs. 674,792 (US$ 10,612) as of June 30, 2015.
From October 2012 through June 2013, the Company borrowed Rs. 3,503,984 (US$63,709) for the financing of a 35 MW solar power project, which loan carries a fixed interest rate. The loan is repayable in 36 semi-annual installments which commenced on August 20, 2013. The borrowing is collateralized by underlying solar power project assets with a net carrying value of Rs. 3,154,200 (US$ 49,602) as of June 30, 2015.
During the year ended March 31, 2015, the Company entered into an unsecured credit facility commitment for financing future solar power projects. The total amount of the facility is US$20,000. The interest rate for the facility is fixed at lenders base rate plus 2.25% per annum at the time of first disbursement. The tenure of the facility is 10 years from the date of first disbursement. During the period ended June 30, 2015, no amounts have been borrowed under this facility and the Company has incurred deferred financing cost of Rs. 7,186 (US$113) in relation to this facility.
The fixed interest foreign currency loans carry an interest rate ranging from 4.07% to 6.43% per annum.
The carrying value of the foreign currency loans includes unrealized foreign exchange losses of Rs. 1,161,739 and Rs. 1,281,959 (US$ 20,160) as of March 31, 2015 and June 30, 2015, respectively.
The Company in required to maintain principal and interest, both as defined in the respective agreements, as a reserve with banks specified by the respective lenders. Such amounts, totaling Rs. 398,484 (US$ 6,266) at June 30, 2015, are classified as restricted cash on the condensed consolidated balance sheets.
F-62
AZURE POWER INDIA PRIVATE LIMITED
(Predecessor to Azure Power Global Limited)
Notes to Condensed Consolidated Financial Statements (Unaudited)
Rs. and US$ amounts in thousands except share and per share data
The foreign currency loans are subject to certain financial and non-financial covenants. Financial covenants include cash flow to debt service, indebtedness to net worth ratio, debt equity ratio and maintenance of debt service balances. As of March 31, 2014, the Company was not in compliance with certain of these covenants and accordingly the Company had classified the respective loans totaling Rs. 1,668,952 as current liability. On September 22, 2015, the Company received a waiver from the lender regarding all past breaches of these loan covenants, as a result of which, the aforementioned loans have been classified as current as of June 30, 2015. Further, the lender has adjusted the thresholds for certain financial covenants through June 30, 2016. As of June 30, 2015, the Company is in compliance with all such covenants.
Indian rupee loans
In December 2013, the Company borrowed Rs. 143,740 for the financing of a 2.5 MW solar power project, which loan carries an interest rate of 12.16% per annum to be periodically revised by the lender. The interest rate as of June 30, 2015 was 12.16% per annum and the weighted average interest rate for the three months ended June 30, 2015 was 12.16% per annum. The loan is repayable in 29 semi-annual installments which commenced on January 15, 2014. The borrowing is collateralized by the underlying solar power project assets with a net carrying value of Rs. 153,598 (US$ 2,415) as of June 30, 2015.
In March 2014, the Company borrowed Rs. 103,677 for financing of a 1.5 MW solar rooftop power project, which loan carries an interest rate at a base rate, as defined, plus 2.25% per annum. The interest rate as of June 30, 2015 was 12.50% per annum and the weighted average interest rate for the three months ended June 30, 2015 was 12.50% per annum. The loan is repayable in 54 quarterly installments commencing on March 28, 2015. The borrowing is collateralized by the underlying solar rooftop power project assets with a net carrying value of Rs. 167,918 (US$ 2,641) as of June 30, 2015.
From March 2014 through September 2014, the Company borrowed Rs. 1,880,000 for financing of a 34 MW solar power project, which borrowings carry a floating rate of interest at a base rate, as defined, plus 2.25% per annum. The floating interest rate as of June 30, 2015 was 12.65% per annum and the weighted average interest rate for the three months ended June 30, 2015 was 12.65 % per annum. The loan is repayable in 58 equal quarterly installments commencing July 1, 2015. The borrowing is collateralized by the underlying solar power project assets with a net carrying value of Rs. 1,922,539 (US$ 30,233) as of June 30, 2015.
In September 2014, the Company borrowed Rs. 550,000 for financing of a 10 MW solar power project, which borrowings carry a floating rate of interest at a base rate, as defined, plus 2.25% per annum. The floating interest rate as of June 30, 2015 was 12.75% per annum and the weighted average interest rate for the three months ended June 30, 2015 was 12.75% per annum. The loan is repayable in 44 quarterly installments commencing January 27, 2016. The borrowing is collateralized by the underlying solar power project assets with a net carrying value of Rs. Rs. 578,964 (US$ 9,105) as of June 30, 2015.
From November 2014 through January 2015, the Company borrowed Rs. 585,000 for financing of a 10 MW solar power project, which borrowings carry a floating rate of interest to be periodically revised by the lender. The floating interest rate as of June 30, 2015 was 12.75% per annum and the weighted average interest rate for the three months ended June 30, 2015 was 12.75% per annum. The loan is repayable in 58 quarterly installments commencing January 17, 2016. The borrowing is collateralized by the underlying solar power project assets with a net carrying value of Rs. 618,421 (US$ 9,725) as of June 30, 2015.
From May 2015 through June 2015, the Company borrowed Rs. 1,552,000 for financing of a 30 MW solar power project, which borrowings carry a floating rate of interest at a base rate plus 1.5% per annum. The floating
F-63
AZURE POWER INDIA PRIVATE LIMITED
(Predecessor to Azure Power Global Limited)
Notes to Condensed Consolidated Financial Statements (Unaudited)
Rs. and US$ amounts in thousands except share and per share data
interest rate as of June 30, 2015 was 12% per annum and the weighted average interest rate for the three months ended June 30, 2015 was 12.52% per annum. The loan is repayable in 57 quarterly installments commencing December 31, 2015. The borrowing is collateralized by the underlying solar power project assets with a net carrying value of Rs. 1,462,009 (US$ 22,991) as of June 30, 2015.
From December 2014 through April 2015, the Company borrowed Rs. 1,904,000 for financing of a 40 MW solar power project, which borrowings carry a floating rate of interest which will reset after every 2 years from the date of commissioning. The interest rate as of June 30, 2015 from a consortium of lenders was in the range of 11.76 % per annum to 12.65 % per annum floating with additional 1% per annum interest during the construction period. The weighted average interest rate for the three months ended June 30, 2015 was 12.19 % per annum. The loan is repayable in 57 quarterly installments commencing October 15, 2015. The borrowing is collateralized by the underlying solar power project assets with a net carrying value of Rs. 2,225,631 (US$ 35,000) as of June 30, 2015.
From December 2014 through June 2015, the Company borrowed Rs. 2,310,260 for financing of a 40 MW solar power project, which borrowings carry a floating rate of interest which will reset after every 2 years from the date of commissioning. The interest rate as of June 30, 2015 from a consortium of lenders was 12.65% per annum floating with additional 1% per annum interest during construction period. The weighted average interest rate for the three months ended June 30, 2015 was 13.65% per annum. The loan is repayable in 48 quarterly installments commencing May 31, 2016. The borrowing is collateralized by the underlying solar power project assets with a net carrying value of Rs. 2,572,257 (US$ 40,451) as of June 30, 2015.
From December 2014 through June 2015, the Company borrowed Rs. 1,146,795 for financing of a 20 MW solar power project, which borrowings carry a floating rate of interest which will reset after every 2 years from the date of commissioning. The interest rate as of June 30, 2015 from a consortium of lenders was 12.65% per annum floating with additional 1% per annum interest during the construction period. The weighted average interest rate for the three months ended June 30, 2015 was 13.65% per annum. The loan is repayable in 48 quarterly installments commencing May 31, 2016. The borrowing is collateralized by the underlying solar power project assets with a net carrying value of Rs. 1,284,644 (US$ 20,202) as of June 30, 2015.
As of June 30, 2015, the Company has unused commitments for long-term financing arrangements amounting to Rs. 1,680,726 (US$ 26,431) for solar power projects.
From time to time, the Company in required to maintain principal and interest, both as defined in the respective agreements, as a form of collateral with banks specified by the respective lenders. Such amounts, totaling Rs. 144,600 (US$2,274) as of June 30, 2015, are classified as restricted cash on the consolidated balance sheets. Generally, under the terms of the loan agreements entered into by the Companys project subsidiaries, the project subsidiaries are restricted from paying dividends to AZI if they default in payment of their principal, interest and other amounts due to the lenders under their respective loan agreements. Certain of AZIs project subsidiaries also may not pay dividends to AZI out of restricted cash.
The Indian rupee loans are subject to certain financial and non-financial covenants. Financial covenants include cash flow to debt service ratio, indebtedness to net worth ratio, debt equity ratio, debt service coverage ratio, receivable to sales ratio and maintenance of debt service balances. As of June 30, 2015, the Company is in compliance with all such covenants.
For certain of the Indian rupee loans, two of the directors of the Company have provided personal guarantees in favor of the lenders and have also pledged part of their shareholding with these lenders.
F-64
AZURE POWER INDIA PRIVATE LIMITED
(Predecessor to Azure Power Global Limited)
Notes to Condensed Consolidated Financial Statements (Unaudited)
Rs. and US$ amounts in thousands except share and per share data
As of June 30, 2015, the aggregate maturities of long term debt (excluding CCDs and Series E CCPS) are as follows:
Annual maturities | ||||
June 30, |
||||
2016 |
1,441,355 | |||
2017 |
1,022,835 | |||
2018 |
1,075,019 | |||
2019 |
1,112,013 | |||
2020 |
1,144,203 | |||
Thereafter |
10,546,498 | |||
|
|
|||
Total |
16,341,723 | |||
|
|
10. Income Taxes
The individual entities within the Company file individual tax returns as per the regulations existing in their respective jurisdictions.
The fiscal year under the Indian Income Tax Act ends on March 31. A portion of the Companys Indian operations qualify for deduction from taxable income because its profits are attributable to undertakings engaged in development of solar power projects under section 80-IA of the Indian Income Tax Act, 1961. This holiday is available for a period of ten consecutive years out of fifteen years beginning from the year in which the Company generates power (Tax Holiday Period). The Company anticipates that it will claim the aforesaid deduction in the last ten years out of fifteen years beginning with the year in which the Company generates power and when it has taxable income. Accordingly, its current operation are taxable at the normally applicable tax rates.
Due to the Tax Holiday Period, a substantial portion of the temporary differences between the book and tax basis of the companys assets and liabilities do not have any tax consequences as they are expected to reverse within the Tax Holiday Period.
AZI and a subsidiary provide services to other group subsidiaries and incur income taxes on profits from these services. These services are capitalizable by the subsidiaries and are hence capitalized as part of property, plant and equipment in the standalone financial statements of such subsidiaries and deducted in their respective income tax return in the form of depreciation expense. However, these capitalized costs are eliminated in the Companys consolidated financial statements. AZI treats the income tax it incurs on the provision of such services to its subsidiaries as prepaid income taxes to the extent the amounts are expected to be deductible by the subsidiaries in its tax returns outside of the Tax Holiday Period.
At March 31, 2015 and June 30, 2015, gross deferred tax assets were Rs. 77,751 and Rs. 302,006 (US$ 4,749), respectively, and gross deferred tax liabilities were Rs. 169,498 and Rs. 358,844 (US$ 5,643), respectively. Deferred income taxes been shown in the condensed consolidated balance sheet as follows:
March 31, 2015
(Rs.) |
June 30, | |||||||||||
2015
(Rs.) |
2015
(US$) |
|||||||||||
Current assets |
22,453 | 22,871 | 360 | |||||||||
Non-current assets |
4,460 | 63,266 | 995 | |||||||||
Current liability |
998 | 984 | 15 | |||||||||
Non-current liability |
117,661 | 141,991 | 2,233 |
F-65
AZURE POWER INDIA PRIVATE LIMITED
(Predecessor to Azure Power Global Limited)
Notes to Condensed Consolidated Financial Statements (Unaudited)
Rs. and US$ amounts in thousands except share and per share data
At June 30, 2015, the Company performed an analysis of the deferred tax asset valuation allowance for its Indian and US subsidiaries. Based on the analysis, the Company has concluded that a valuation allowance offsetting the deferred tax assets is not required.
At June 30, 2014 and 2015, deferred income taxes have not been provided for the Companys share of undistributed net earnings of foreign operations due to managements intent to reinvest such amounts indefinitely. Those earnings totaled Rs. (8,511) and Rs. (7,833) (US$ 123) for three months ended June 30, 2014 and 2015, respectively.
The Company had adopted the provisions of ASC Topic 740 as they relate to uncertain income tax positions. Tax exposures can involve complex issues and may require extended periods to resolve. The Company does not have any uncertain tax positions requiring to be reserved for. The Company reassesses its tax positions in light of changing facts and circumstances, such as the closing of a tax audit, refinement of an estimate, or changes in tax codes. To the extent that the final tax outcome of these matters differs from the amounts recorded, such differences will impact the provision for income taxes in the period in which such determination is made.
The effective income tax rate for the three months ended June 30, 2014 and 2015 is 30.30% and 6.63%, respectively. The effective income tax rate differs from the amount computed by applying the Indian Income tax rate of 34.61% to loss before income taxes principally due to temporary differences reversing in the tax holiday period for which an income tax benefit has not been recognized.
11. Interest expense, net
Interest expense, net consists of the following:
Three months ended June 30, | ||||||||||||
2014
(Rs.) |
2015
(Rs.) |
2015
(US$) |
||||||||||
Interest expense: |
||||||||||||
CCDs |
71,514 | 82,277 | 1,294 | |||||||||
Series E CCPS |
22,800 | 27,000 | 425 | |||||||||
Term loans |
96,338 | 304,627 | 4,790 | |||||||||
Bank charges and other |
13,583 | 23,282 | 366 | |||||||||
|
|
|
|
|
|
|||||||
204,235 | 437,186 | 6,875 | ||||||||||
Interest income: |
||||||||||||
Term and fixed deposits |
38,746 | 29,430 | 462 | |||||||||
Interest income from related parties |
| | | |||||||||
Gain on sale of short term investments |
1,666 | 4,432 | 70 | |||||||||
|
|
|
|
|
|
|||||||
40,412 | 33,862 | 532 | ||||||||||
|
|
|
|
|
|
|||||||
Total |
163,823 | 403,324 | 6,343 | |||||||||
|
|
|
|
|
|
F-66
AZURE POWER INDIA PRIVATE LIMITED
(Predecessor to Azure Power Global Limited)
Notes to Condensed Consolidated Financial Statements (Unaudited)
Rs. and US$ amounts in thousands except share and per share data
12. Loss on foreign currency exchange
Loss on foreign currency exchange consists of the following:
Three months ended June 30, | ||||||||||||
2014
(Rs.) |
2015
(Rs.) |
2015
(US$) |
||||||||||
Unrealized (gain) loss on foreign currency loans |
(512 | ) | 111,796 | 1,758 | ||||||||
Realized (gain) on foreign currency loans |
(4,749 | ) | (8,423 | ) | (132 | ) | ||||||
Unrealized loss on derivative instruments |
903 | 2,026 | 32 | |||||||||
Realized loss on derivative instruments |
31,235 | 1,731 | 27 | |||||||||
|
|
|
|
|
|
|||||||
26,877 | 107,130 | 1,685 | ||||||||||
|
|
|
|
|
|
13. Equity and preferred shares
Equity shares
Equity share have a par value of Rs. 10 per share. As of March 31, 2015 and June 30, 2015, there were 109,880 equity shares issued and outstanding. Total authorized equity shares are 43,333,333.
Compulsorily convertible preferred Share
As of June 30, 2015, the compulsorily convertible preferred shares (CCPS) consist of the following:
No of
Shares |
Total consideration
(Rs.) |
Price per share
(Rs.)* |
||||||||||
Series A |
38,770 | 92,492 | 2,386 | |||||||||
Series B |
181,046 | 503,994 | 2,787 | |||||||||
Series C |
229,880 | 381,600 | 1,660 | |||||||||
Series D |
84,348 | 474,964 | 5,631 | |||||||||
Series F |
138,133 | 1,550,508 | 11,225 | |||||||||
|
|
|
|
|||||||||
672,177 | 3,003,558 | |||||||||||
|
|
|
|
* | Not in thousands |
In November 2008, the Company issued 38,770 Series A CCPS for consideration of Rs. 91,617, (net of Rs. 875 share issue expenses). In February 2010, the Company issued 181,046 Series B CCPS for consideration of Rs. 500,749 (net of Rs. 3,263 share issue expenses). In September 2011, the Company issued 229,880 Series C CCPS for consideration of Rs. 377,562 (net of Rs. 4,038 share issue expenses). In September 2012, the Company issued 84,348 Series D CCPS for consideration of Rs. 474,964 (net of Rs. NIL share issue expenses). From June 2014 to January 2015 the Company issued 138,133 series F CCPS for a total consideration of Rs. 1,549,010 (net of Rs. 1,499 share issue expenses). Unless converted, the term of the Series A CCPS is a maximum of 19 years from the date of issue, whereas the terms of the Series B, Series C, Series D and Series F CCPS is a maximum of 10 years from the date of issue. Total authorized preferred shares are 86,666,667 of Rs.10 per share.
F-67
AZURE POWER INDIA PRIVATE LIMITED
(Predecessor to Azure Power Global Limited)
Notes to Condensed Consolidated Financial Statements (Unaudited)
Rs. and US$ amounts in thousands except share and per share data
The rights, preferences and privileges of the Companys Series A, Series B, Series C ,Series D and Series F CCPS (collectively, the Mezzanine CCPS) are as follows:
Voting
The Mezzanine CCPS rank pari passu with regards to voting rights. Holders of Mezzanine CCPS are entitled to vote on all matters and are entitled to the number of votes equal to the number of equity shares into which the Mezzanine CCPS shares are then convertible on the basis of the applicable conversion factor.
Dividend
Each of the holders of the Mezzanine CCPS are entitled to a 8.0% per annum per share non-cumulative dividend, declared and paid in accordance with the Indian Companies Act of 2013, and thereafter participate pro rata on an as converted basis with the equity shareholders on any distributions made to the equity shareholders. The Company has not declared or paid any dividends through June 30, 2015.
Conversion
Each of the Series A, Series B, Series D and Series F CCPS are convertible into equity shares of the Company at the option of the CCPS holders at any time at a conversion ratio of 1:1. The Series C CCPS is convertible into equity shares of the Company at the option of the CCPS holder at any time at a conversion ratio of 1:0.3423. Any Mezzanine CCPS which have not been converted into equity shares of the Company are compulsorily converted into equity shares of the Company, at the aforementioned ratios, upon the filing of a DRHP, execution of a QIPO or at their maturity date.
Buyback
Should a buyback obligation not occur by February 25, 2016 or the funding covenants of the CCPS holders are breached, the Mezzanine CCPS holders may request the Company to buyback the CCPS at the following rates:
|
Series A CCPS 140% of the cash paid for the Series A CCPS, plus accrued and unpaid dividends |
|
Series B, Series C, and Series D CCPS 200% of the cash paid, plus accrued and unpaid dividends |
|
Series F CCPS 150% of the cash paid, for the Series F CCPS, plus accrued and unpaid dividends |
Liquidation
On occurrence of a liquidation event, as defined in the terms of the Mezzanine CCPS agreements, the Series A holders are eligible to receive an amount equal to 140% of the cash paid for the Series A CCPS, plus accrued and unpaid dividends, and the Series B, Series C, and Series D holders have the right to receive an amount equal to 200% of the cash paid, plus accrued and unpaid dividends, and the Series F holders have the right to receive an amount equal to 150% of the cash paid, plus accrued and unpaid dividends. Upon such a liquidation event, the holders of the CCDs and Series E CCPS are entitled to receive amounts in preference to the Series B, Series C, Series D and Series F CCPS, who in turn receive amounts in preference to the holders of the Series A CCPS. Series A CCPS holders receive amounts in preference to the Companys equity shareholders.
F-68
AZURE POWER INDIA PRIVATE LIMITED
(Predecessor to Azure Power Global Limited)
Notes to Condensed Consolidated Financial Statements (Unaudited)
Rs. and US$ amounts in thousands except share and per share data
Liquidation preferences for each series of Mezzanine CCPS as of February 25, 2016 are as follows
Liquidation
Preference |
(Rs.) | (US$) | ||||||||||
Series A |
140 | % | 129,488 | 2,036 | ||||||||
Series B |
200 | % | 1,007,988 | 15,851 | ||||||||
Series C |
200 | % | 763,202 | 12,002 | ||||||||
Series D |
200 | % | 949,927 | 14,938 | ||||||||
Series F |
150 | % | 2,325,763 | 36,574 | ||||||||
|
|
|
|
|||||||||
5,176,368 | 81,401 | |||||||||||
|
|
|
|
Accounting
The Company has evaluated its accounting for the Mezzanine CCPS pursuant to ASC Topic 480 and ASC Topic 815 Derivative and Hedging. The Mezzanine CCPS do not satisfy the criteria for liability classification described in ASC Topic 480. In addition, the embedded features of the Mezzanine CCPS do not satisfy the criteria for separate accounting of the derivative from the host instrument pursuant to ASC Topic 815. However, because the Mezzanine CCPS contain certain redemption features that are not solely within the Companys control, the Mezzanine CCPS are classified as temporary equity in the condensed consolidated balance sheets.
The Mezzanine CCPS are being accreted to their buyback value through February 25, 2016, the earliest buyback date, so that the carrying amount will equal the mandatory redemption at such date.
The Company incurred issuance costs amounting to Rs.9,674 (US$ 152) which have been netted against the proceeds received from the issuance of the Mezzanine CCPS. The issuance costs are being accreted over the respective redemption periods on a straight line basis. The amount accreted totaled Rs. 399 and Rs. 715 (US 11) during the three months ended June 30, 2014 and 2015, respectively. The unaccreted amount of issuance cost as of June 30, 2015 totaled Rs. 1,889 (US$ 30).
14. Earnings per share
The Company calculates earnings per share in accordance with FASB ASC Topic 260 Earnings per Share and FASB ASC Topic 260-10-45 Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities . Basic and diluted earnings losses per equity share give effect to the change in the number of equity shares of the Company. The calculation of basic earnings per equity share is determined by dividing net loss attributable to AZI equity shareholders by the weighted average number of equity shares outstanding during the respective periods. The potentially dilutive shares, consisting of employee share options, compulsorily convertible debentures, and compulsorily convertible preferred shares have been included in the computation of diluted net earnings per share and the weighted average shares outstanding, except where the result would be anti-dilutive.
The Mezzanine CCPS shareholders are entitled to participate, along with the equity shareholders, in the earnings of the Company. Under ASC Topic 260 Earnings per Share , such participative rights would require the two class method of reporting EPS. As the preferred shares do not participate in losses, the Company has excluded these shares, as including them would be antidilutive.
F-69
AZURE POWER INDIA PRIVATE LIMITED
(Predecessor to Azure Power Global Limited)
Notes to Condensed Consolidated Financial Statements (Unaudited)
Rs. and US$ amounts in thousands except share and per share data
Loss per share is presented below:
Three months
ended June 30, |
||||||||
2014
(Rs.) |
2015
(Rs.) |
|||||||
Net loss attributable to AZI equity shareholders |
(93,442 | ) | (240,168 | ) | ||||
Add: Accretion on Mezzanine CCPS |
(104,121 | ) | (259,282 | ) | ||||
|
|
|
|
|||||
Total (A) |
(197,563 | ) | (499,450 | ) | ||||
|
|
|
|
|||||
Shares outstanding for allocation of undistributed income: |
||||||||
Equity shares |
109,880 | 109,880 | ||||||
Weighted average shares outstanding |
||||||||
Equity shares (B) |
109,880 | 109,880 | ||||||
Net loss per share basic and diluted |
||||||||
Equity shares (C=A/B) |
(1,798 | ) | (4,545 | ) | ||||
| |
The number of share options outstanding but not included in the computation of diluted earnings per equity share because their effect was antidilutive is 24,501 and 28,821 for three months ended June 30, 2014 and 2015, respectively.
The CCDs and the Series E CCPS have not been considered for the computation of diluted earnings per share because these are considered to be anti-dilutive.
15. Leases
The Company leases office facilities and land use rights under operating lease agreements. Minimum lease payments under operating leases are recognized on a straight line basis over the term of the lease. Rent expense for operating leases for the three months ended June 30, 2014 and 2015 was Rs. 7,256 and Rs. 13,646 (US$214), respectively.
Future minimum lease payments under non-cancellable operating leases as of June 30, 2015 are:
Three months ended June 30, |
Amount (Rs.) | US$ | ||||||
2016 - nine months |
16,061 | 252 | ||||||
Fiscal 2017 |
21,964 | 345 | ||||||
Fiscal 2018 |
22,104 | 348 | ||||||
Fiscal 2019 |
21,524 | 338 | ||||||
Fiscal 2020 |
22,567 | 355 | ||||||
Thereafter |
1,073,552 | 16,882 | ||||||
|
|
|
|
|||||
Total |
1,177,772 | 18,520 | ||||||
|
|
|
|
16. Commitments, guarantees and contingencies
Capital commitments
During the normal course of business, the Company purchases assets for the construction of solar power plants and estimates it will incur Rs. 373,796 (US$ 5,878) during the twelve months ended June 30, 2016 in relation to such purchase commitments.
F-70
AZURE POWER INDIA PRIVATE LIMITED
(Predecessor to Azure Power Global Limited)
Notes to Condensed Consolidated Financial Statements (Unaudited)
Rs. and US$ amounts in thousands except share and per share data
Guarantees
The Company issues irrevocable performance bank guarantees in relation to its obligation to construct solar power plants as required by the PPA. Such outstanding guarantees amounted to Rs. 1,083,300 and Rs. 963,300 (US$15,149) as of March 31, 2015 and June 30, 2015, respectively. The guarantees expire on the commissioning of the constructed solar power plant.
The Company has obtained guarantees from financial institutions as a part of the bidding process for establishing solar projects amounting to Rs. 259,000 and Rs. 275,000 (US$ 4,325) as of March 31, 2015 and June 30, 2015, respectively. The Company has given term deposits as collateral for those guarantees which are classified as restricted cash on the condensed consolidated balance sheet.
The terms of the PPAs provide for the annual delivery of a minimum amount of electricity at fixed prices.
17. Related Party Disclosures
For the three months ended June 30, 2014 and 2015, the Company incurred rent expense on office facilities totaling Rs. 3,623 and Rs. 3,623 (US$ 57), respectively, where the lessors are relatives of the Companys chief executive officer and another director of the Company. As of March 31, 2015 and June 30, 2015, the Company had security deposits with these lessors totaling Rs. 6,300 classified as a non-current asset on the condensed consolidated balance sheets because the rental agreements are long-term.
For the three months ended June 30, 2014, the Company earned interest income of Rs. 420, on an unsecured loan given to the Companys chief executive officer which was repaid during the year ended March 31, 2015.
18. Fair Value Measurements
FASB ASC Topic 820 Fair Value Measurements and Disclosures defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly, hypothetical transaction between market participants at the measurement date. ASC Topic 820 establishes a three-tier value hierarchy of fair value measurement based upon the whether the inputs to that measurement are observable or unobservable. Observable inputs reflect data obtained from independent sources while unobservable inputs reflect the Companys market assumptions. ASC Topic 820 prioritizes the inputs used in the valuation methodologies in measuring fair value as follows:
Level 1 Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.
Level 2 Includes other inputs that are directly or indirectly observable in the marketplace. Observable inputs, other than Level 1 quoted prices for similar instruments in active markets; quoted prices for similar or identical instruments in markets that are not active; and valuations using models in which all significant inputs are observable in active markets.
Level 3 Unobservable inputs which are supported by little or no market activity.
The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.
F-71
AZURE POWER INDIA PRIVATE LIMITED
(Predecessor to Azure Power Global Limited)
Notes to Condensed Consolidated Financial Statements (Unaudited)
Rs. and US$ amounts in thousands except share and per share data
In accordance with ASC Topic 820, assets and liabilities are to be measured based on the following valuation techniques:
Market approach Prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities.
Income approach Converting the future amounts based on the market expectations to its present value using the discounting methodology.
Cost approach Replacement cost method.
The valuation techniques used by the Company to measure and report the fair value of certain financial assets and liabilities on a recurring basis are as follows;
Foreign exchange derivative contracts
The Company enters into foreign exchange derivative contracts to hedge fluctuations in foreign exchange rates for recognized balance sheet items such as foreign exchange term loans. The Company mitigates the credit risk of these foreign exchange derivative contracts by transacting with highly rated counterparties in India which are major banks. The Company used the superderivatives option pricing model based on the principles of the Black-Scholes model to determine the fair value of the foreign exchange derivative contracts. The inputs considered in this model include the theoretical value of a call option, the underlyings spot exchange rate as of the balance sheet date, the contracted price of the respective option contract, the term of the option contract, the implied volatility of the underlying foreign exchange rates and the risk free interest rate as of the balance sheet date. The techniques and models incorporate various inputs including the credit worthiness of counterparties, foreign exchange spot and forward rates, interest rate yield curves, forward rate yield curves of the underlying. The Company classifies the fair value of these foreign exchange derivative contracts in Level 2 because the inputs used in the valuation model are observable in active markets over the term of the respective contracts.
F-72
AZURE POWER INDIA PRIVATE LIMITED
(Predecessor to Azure Power Global Limited)
Notes to Condensed Consolidated Financial Statements (Unaudited)
Rs. and US$ amounts in thousands except share and per share data
Compulsorily convertible debentures and Series E compulsorily convertible preferred shares
The Company classifies the fair value of the CCDs and the Series E CCPS in level 3 because the fair values have been derived using valuation techniques in which one or more significant inputs are unobservable. The Company has used a discounted cash flow analysis under the income approach, to determine the fair value of the CCDs and the Series E CCPs. This valuation model includes various inputs including issue price, liquidation amount, committed internal rate of return, discount rate and coupon rate.
Fair Value measurement at reporting date using | ||||||||||||||||
As of March 31,
2015 (Rs.) |
Quoted Prices in
Active Markets for Identical Assets (Level 1) (Rs.) |
Significant
Other Observable Inputs (Level 2) (Rs.) |
Significant
Unobservable Inputs (Level 3) (Rs.) |
|||||||||||||
Description |
||||||||||||||||
Assets |
||||||||||||||||
Current assets |
||||||||||||||||
Foreign exchange derivative contracts |
75,750 | | 75,750 | | ||||||||||||
Noncurrent assets |
||||||||||||||||
Foreign exchange derivative contracts |
158,338 | | 158,338 | | ||||||||||||
|
|
|
|
|||||||||||||
Total assets |
234,088 | | 234,088 | | ||||||||||||
|
|
|
|
|||||||||||||
Liabilities |
||||||||||||||||
Current liability |
||||||||||||||||
Compulsorily convertible debentures |
988,000 | 988,000 | ||||||||||||||
Noncurrent liabilities |
||||||||||||||||
Compulsorily convertible debentures |
810,600 | 810,600 | ||||||||||||||
Series E compulsorily convertible preferred shares |
662,600 | 662,600 | ||||||||||||||
|
|
|
|
|||||||||||||
Total liabilities |
2,461,200 | | | 2,461,200 | ||||||||||||
|
|
|
|
F-73
AZURE POWER INDIA PRIVATE LIMITED
(Predecessor to Azure Power Global Limited)
Notes to Condensed Consolidated Financial Statements (Unaudited)
Rs. and US$ amounts in thousands except share and per share data
Fair Value measurement at reporting date using | ||||||||||||||||
As of June 30,
2015 (Rs.) |
Quoted Prices in
Active Markets for Identical Assets (Level 1) (Rs.) |
Significant
Other Observable Inputs (Level 2) (Rs.) |
Significant
Unobservable Inputs (Level 3) (Rs.) |
|||||||||||||
Description |
||||||||||||||||
Assets |
||||||||||||||||
Current assets |
||||||||||||||||
Foreign exchange derivative contracts |
80,661 | | 80,661 | | ||||||||||||
Noncurrent assets |
||||||||||||||||
Foreign exchange derivative contracts |
158,920 | | 158,920 | | ||||||||||||
|
|
|
|
|||||||||||||
Total assets |
239,580 | | 239,580 | | ||||||||||||
|
|
|
|
|||||||||||||
Liabilities |
||||||||||||||||
Current liability |
||||||||||||||||
Compulsorily convertible debentures |
986,048 | | 986,048 | | ||||||||||||
Noncurrent liabilities |
||||||||||||||||
Compulsorily convertible debentures |
880,392 | | 880,392 | | ||||||||||||
Series E compulsorily convertible preferred shares |
689,600 | | 689,600 | | ||||||||||||
Total current liabilities |
2,556,040 | | 2,556,040 | | ||||||||||||
|
|
|
|
|
|
|
|
The carrying amount of cash and cash equivalents, including restricted cash, accounts receivable, accounts payables, and other current financial assets and liabilities approximate their fair value largely due to the short-term maturities of these instruments.
The carrying value and fair value of the Companys fixed rate project financing term loans is as follows:
As of June 30, | ||||||||||||
2015 | ||||||||||||
Carrying
Value Rs. |
Fair
Value Rs |
US$ | ||||||||||
Fixed rate project financing loans: |
||||||||||||
Foreign currency loans |
6,106,833 | 6,337,729 | 99,665 |
The Company uses the yield method to estimate the fair value of fixed rate loans using interest rate change as an input.
19. Derivative instruments and hedging activities
The following table presents outstanding notional amount and balance sheet location information related to foreign exchange derivative contracts as of March 31, 2015 and June 30, 2015:
March 31, 2015 | June 30, 2015 | |||||||||||||||||||||||
Notional
Amount |
Prepaid Expenses
and Other Current Asset |
Other
Assets |
Notional
Amount |
Prepaid Expenses
and Other Current Asset |
Other
Assets |
|||||||||||||||||||
Foreign currency option contracts (Rs.) |
| 75,750 | 158,338 | | 80,661 | 158,920 | ||||||||||||||||||
Foreign currency option contracts (US$) |
21,514 | | | 21,145 | | |
F-74
AZURE POWER INDIA PRIVATE LIMITED
(Predecessor to Azure Power Global Limited)
Notes to Condensed Consolidated Financial Statements (Unaudited)
Rs. and US$ amounts in thousands except share and per share data
The foreign exchange derivative contracts mature generally over a period of 12 to 36 months.
Gains (losses) on foreign exchange derivative contracts for the three months ended June 30, 2014 and 2015 aggregated Rs. 32,138 and Rs. 3,758 (US$59), respectively.
20. Concentrations of credit risk
Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash and cash equivalents, restricted cash, accounts receivables and derivative instruments. The Company mitigates the risk of credit losses from financing instruments, other than trade receivables, by selecting counter parties that are well known Indian or international banks.
The following customers account for more than 10% of the Companys accounts receivable and sale of power as of and for the three months ended June 30, 2014 and 2015:
June 30, 2014 | June 30, 2015 | |||||||||||||||
Customer Name |
% of Accounts
Receivable |
% of Sale
of Power |
% of Accounts
Receivable |
% of Sale
of Power |
||||||||||||
NTPC Vidyut Vyapar Nigam Limited |
55.72 | % | 70.22 | % | 34.26 | % | 32.01 | % | ||||||||
Punjab State Power Corporation Limited |
00.0 | % | 00.0 | % | 8.89 | % | 18.82 | % | ||||||||
Solar Energy Corporation of India |
00.0 | % | 00.0 | % | 33.07 | % | 22.40 | % | ||||||||
Gujarat Urja Vikas Nigam Limited |
38.68 | % | 25.38 | % | 11.14 | % | 11.62 | % |
21. Subsequent events
During July 2015 and August 2015, the Company commenced commercial operations of its 1 MW rooftop and 10 MW solar power plants in the state of Punjab and Chhattisgarh respectively.
The Company has incurred additional borrowings under project level secured term loans amounting to Rs. 1,569,100 (US$ 24,675) during July, 2015.
During July 2015, the Company had sold 59,239 shares, constituting 28.58% of the total outstanding shares for a consideration of Rs. 316,928 (US$ 4,984) in Azure Power Infra (50 MW project in Andra Pradesh) to one of the vendors.
Pursuant to the restructuring plan to create a holding Company, the Company has entered into a share subscription agreement with APGL on July 25, 2015 and has issued the shares to the existing investors of AZI under a share swap arrangement. Per the agreement, the existing investors in the Company have transferred the Equity / CCPs / CCD rights in favor APGL and have received similar number of outstanding shares / debentures of APGL with similar terms. Per the transaction APGL has become the holding company for AZI. APGL has also adopted the ESOP plan of AZI without any significant modifications to the plan.
The Company issued 948,876 and 146,644 shares of Series H and Series G Compulsorily Convertible Preferred Shares during July and August, 2015, resulting in net proceeds of Rs. 3,520,330 (US$ 55,360) and Rs. 544,049 (US$ 8,556) respectively.
Azure Power Global Limited has adopted an employee stock option plan on July 20, 2015. Employees who were previously granted options under the AZI employee stock option plan have been granted options under the
F-75
AZURE POWER INDIA PRIVATE LIMITED
(Predecessor to Azure Power Global Limited)
Notes to Condensed Consolidated Financial Statements (Unaudited)
Rs. and US$ amounts in thousands except share and per share data
new employee stock option plan. The AZI employee stock option plan and all options granted to employees under such plan will be terminated.
The Company evaluated all events or transactions that occurred after June 30, 2015. Based on this evaluation, the Company is not aware of any event or transactions that would require recognition or disclosure in the financial statements.
F-76
Equity Shares
Azure Power Global Limited
Prospectus
, 2015
Barclays
Until , 2015 (the 25th day after the date of this prospectus), all dealers that buy, sell or trade in our equity shares, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers obligation to deliver a prospectus when acting as an underwriter and with respect to their unsold allotments or subscriptions.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 6. | Indemnification of Directors and Officers |
Under the Mauritius Companies Act, a company may indemnify a director or employee of the company or a related company for any costs incurred by him or the company in respect of any proceedings (a) that relates to liability for any act or omission in his capacity as a director or employee and (b) in which judgment is given in his favor, in which he is acquitted, which is discontinued, in which he is granted relief under section 350 of the Mauritius Companies Act or where proceedings are threatened and such threatened action is abandoned or not pursued. The Mauritius Companies Act further provides that a company may indemnify a director or employee of the company or a related company in respect of (a) liability to any person, other than the company or a related company, for any act or omission in his capacity as a director or employee or (b) costs incurred by that director or employee in defending or settling any claim or proceedings relating to any such liability, save in respect of any criminal liability or liability in respect of a breach (in the case of a director) of the duty to exercise his powers honestly in good faith in the best interests of the company.
SEC Position. Insofar as indemnification for liabilities arising under the Securities Act of 1933, as amended, or the Securities Act, may be permitted to directors, officers or persons controlling us pursuant to the foregoing provisions, we have been informed that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.
Pursuant to the underwriting agreement for this offering, the form of which is filed as Exhibit 1.1 to this registration statement, the underwriters will agree to indemnify our directors and officers and persons controlling us, within the meaning of the Securities Act, against certain liabilities that might arise out of or are based upon certain information furnished to us by any such underwriter.
Item 7. | Recent sales of unregistered securities |
During the past three years, we have issued and sold the securities listed below without registering the securities under the Securities Act. None of these transactions involved any underwriting discounts or commissions or any public offering. All our Series A, B, C, D, E and F preferred shares were offered or sold through private placements either (i) outside the United States to foreign persons, or (ii) inside the United States to accredited investors or to a limited number of persons in transactions not involving any public offering. All our options to purchase equity shares and the equity shares issued upon the exercise of such options were issued to directors or employees and were in respect of equity shares not exceeding 15.0% of our issued equity share capital. Accordingly, we believe that each of the following issuances were exempt from registration under the Securities Act in reliance on Regulation S, Section 4(a)(2) or Rule 701 of the Securities Act.
Date of Issuance |
Number of
Securities Originally Issued |
Title of Securities |
Aggregate
Consideration (Rs., in millions) |
Purchaser |
||||||||
November 11, 2011 |
10 | Equity shares | 0.01 | One investor | ||||||||
May 13, 2013 |
10 | Equity shares | 0.03 | One investor | ||||||||
March 28, 2014 |
1,000 | Equity shares | 0.01 | One director | ||||||||
September 30, 2011 |
229,880 | Compulsorily convertible preferred shares | 381.6 | Two investors | ||||||||
September 11, 2012 |
79,909 | Compulsorily convertible preferred shares | 449.9 | Two investors | ||||||||
December 12, 2012 |
4,439 | Compulsorily convertible preferred shares | 25.0 | One investor | ||||||||
May 13, 2013 |
140,000 | Compulsorily convertible preferred shares | 491.4 | One investor |
II-1
Date of Issuance |
Number of
Securities Originally Issued |
Title of Securities |
Aggregate
Consideration (Rs., in millions) |
Purchaser |
||||||||
July 17, 2014 |
79,245 | Compulsorily convertible preferred shares | 889.5 | Two investors | ||||||||
December 24, 2014 |
38,581 | Compulsorily convertible preferred shares | 433.1 | Two investors | ||||||||
February 6, 2015 |
20,307 | Compulsorily convertible preferred shares | 227.9 | One investor | ||||||||
November 11, 2011 |
680,390 | Compulsorily convertible debentures | 680.4 | One investor | ||||||||
January 4, 2013 |
37,500 | Compulsorily convertible debentures | 75.0 | One investor | ||||||||
June 25, 2014 |
36,000 | Compulsorily convertible debentures | 180.0 | One investor | ||||||||
July 30, 2015 |
133,285 | Compulsorily convertible preferred shares | 3,815.4 | Two investors | ||||||||
August 5, 2015 |
16,882 | Compulsorily convertible preferred shares | 540.5 | One investor |
Item 8. | Exhibits and financial statement schedules |
(a) | Exhibits |
See exhibit index of this registration statement.
(b) | Financial statement schedules |
All schedules have been omitted because the information required to be presented in them is not applicable or is shown in the consolidated financial statements or related notes.
Item 9. | Undertakings |
The undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:
(i) | Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424; |
(ii) | Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant; |
(iii) | The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and |
(iv) | Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser. |
The undersigned registrant hereby undertakes to provide to the underwriter at the closing specified in the underwriting agreements certificates in such denominations and registered in such names as required by the underwriter to permit prompt delivery to each purchaser.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the provisions described in Item 6, or otherwise, the registrant has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer
II-2
or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
The undersigned registrant hereby undertakes that:
1. For purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.
2. For the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
II-3
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form F-1 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized in New Delhi, India on this 16th day of December, 2015.
Azure Power Global Limited | ||
By: |
/s/ Inderpreet Singh Wadhwa |
|
Name: | Inderpreet Singh Wadhwa | |
Title: | Principal Executive Officer |
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each individual whose signature appears below constitutes and appoints Inderpreet Singh Wadhwa and Surendra Kumar Gupta, and each of them, his or her true and lawful attorneys in fact and agents with full power of substitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any and all amendments (including post effective amendments) to this registration statement, and to sign any registration statement for the same offering covered by this registration statement that is to be effective on filing pursuant to Rule 462(b) promulgated under the Securities Act of 1933, as amended, and all post effective amendments thereto, and to file the same, with all exhibits thereto and all documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys in fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys in fact and agents or any of them, or his, her or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated:
Signature |
Title |
Date |
||
/s/ Inderpreet Singh Wadhwa Inderpreet Singh Wadhwa |
Chief Executive Officer and Director (Principal Executive Officer) | December 16, 2015 | ||
/s/ Surendra Kumar Gupta Surendra Kumar Gupta |
Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) | December 16, 2015 | ||
/s/ Eric Ng Yim On Eric Ng Yim On |
Director | December 16, 2015 | ||
/s/ Muhammad Khalid Peyrye Muhammad Khalid Peyrye |
Director | December 16, 2015 | ||
/s/ Robert Kelly Robert Kelly |
Director | December 16, 2015 | ||
/s/ William B. Elmore William B. Elmore |
Director | December 16, 2015 | ||
/s/ Harkanwal Singh Wadhwa Harkanwal Singh Wadhwa |
Director | December 16, 2015 |
SIGNATURE OF AUTHORIZED REPRESENTATIVE OF THE REGISTRANT
Pursuant to the Securities Act, the undersigned, the duly authorized representative in the United States of Azure Power Global Limited, has signed this registration statement or amendment thereto in California, United States of America on December 16, 2015.
By: |
/s/ Robert Kelly |
|
Name: |
Robert Kelly |
|
Title: |
Director |
EXHIBIT INDEX
Exhibit
|
Description |
|
1.1* |
Form of Underwriting Agreement |
|
3.1* | Constitution of Azure Power Global Limited | |
4.1 | Form of Equity Share Certificate of Azure Power Global Limited | |
5.1 | Opinion of Appleby | |
8.1 | India tax opinion by Shardul Amarchand Mangaldas & Co | |
8.2 | Mauritius tax opinion by Appleby (included in Exhibit 5.1). | |
10.1* | Employee Stock Option Plan, and form of option agreement thereunder | |
10.2* | Form of Shareholders Agreement by and among the shareholders named therein and the Registrant | |
10.3 | Shareholders Agreement, dated July 22, 2015, by and among the Registrant, AZI, Inderpreet Singh Wadhwa and Harkanwal Singh Wadhwa | |
10.4* | Form of Registration Rights Agreement by and among the shareholders named therein and the Registrant | |
10.5# | Employment Agreement, dated November 7, 2008, by and between AZI and Inderpreet Singh Wadhwa | |
10.6# | Employment Agreement, dated May 16, 2011, by and between AZI and Surendra Kumar Gupta | |
10.7# | Employment Agreement, dated May 1, 2013, by and between AZI and Sandeep Chopra | |
10.8# | Employment Agreement, dated November 1, 2009, by and between AZI and Preet Sandhu | |
10.9# | Employment Agreement, dated August 31, 2011, by and between AZI and Glen Minyard | |
10.10# | Employment Agreement, dated February 1, 2014, by and between AZI and Mohor Sen | |
10.11 | Indenture of Lease, dated October 15, 2013, by and between AZI and Sunbir Singh Wadhwa and Kulwinder Wadhwa | |
10.12* | Form of Indemnification Agreement, between the Registrant and each of the Officers and Directors of Azure Power Global | |
10.13 | Subscription Agreement, dated June 24, 2015, by and among AZI, Inderpreet Singh Wadhwa, Harkanwal Singh Wadhwa and IFC GIF Investment Company I | |
10.14 | Subscription Agreement, dated June 24, 2015, by and among AZI, Inderpreet Singh Wadhwa, Harkanwal Singh Wadhwa, IW Green Inc. (which has since been converted to IW Green LLC) and International Finance Corporation | |
10.15 | CCPS Subscription Agreement, dated July 22, 2015, among the Registrant, Sponsors and Société de Promotion et de Participation pour la Coopération Économique S.A. | |
10.16 | Letter Agreement, dated July 27, 2015, by and among the Registrant, International Finance Corporation, AZI, IW Green Inc. (which has since been converted to IW Green LLC), Inderpreet Singh Wadhwa and Harkanwal Singh Wadhwa | |
21.1 | List of Significant Subsidiaries of Azure Power Global Limited | |
23.1 | Consent of Ernst & Young Associates LLP | |
23.2 | Consent of Skadden, Arps, Slate, Meagher & Flom LLP | |
23.3 | Consent of Shardul Amarchand Mangaldas & Co (included in Exhibit 8.1) | |
23.4 | Consent of Appleby (included in Exhibit 5.1) | |
24.1 | Powers of Attorney (included in signature page to this Registration Statement) |
* | To be filed in a subsequent amendment |
# | Indicates management contract or compensatory plan. |
Exhibit 4.1
Azure Power Global Limited
C/o AAA Global Services Ltd
1st Floor, The Exchange, 18 Cybercity, Ebene, Mauritius
COMPANY NUMBER: 127946 C1/GBL
CERTIFICATE NUMBER |
NUMBER OF SHARES | |||||||||||||||||
INCORPORATED ON THE 30 TH JANUARY 2015 UNDER THE COMPANIES ACT 2001 OF MAURITIUS
This is to certify that .............................................................. of .................................................. is the registered proprietor of .............................................................................................., numbered as under, subject to the Companies Act 2001.
DISTINCTIVE NUMBERS | NUMBER OF | |||||||||||
FROM | TO | SHARES | This XX th MM YYYY | |||||||||
..................................... | ..................................... | |||||||||||
Director | Secretary |
Exhibit 5.1
[FORM OF OPINION TO BE RECEIVED FROM COUNSEL]
Azure Power Global Limited | Email mmoller@applebyglobal.com | |||||
1st Floor, The Exchange | mkoomar@applebyglobal.com | |||||
18 Cybercity | ||||||
Ebene | Direct Dial +230 203 4301 | |||||
Mauritius | ||||||
Tel +230 203 4300 | ||||||
Fax +230 210 8792 | ||||||
Your Ref | ||||||
Appleby Ref 429640.0001 | ||||||
[Date | ] | |||||
Dear Sirs |
Mauritius Office 9th Floor Medine Mews La Chaussée Street Port Louis Republic of Mauritius
Tel +230 203 4300
applebyglobal.com |
INTRODUCTION
This opinion as to Mauritius law is addressed to you in connection with the filing by Azure Power Global Limited, a public company limited by shares incorporated under the laws of Mauritius (the Company ), of the Companys registration statement on Form F-1, including all amendments and supplements thereto, filed with the U.S. Securities and Exchange Commission (the Registration Statement ), and the offering by the Company and its selling shareholder of equity shares of par value US$0.01 each in the capital of the Company of which certain shares are being offered by the Company and certain shares are being offered by the Companys selling shareholder (collectively, the Shares ).
OUR REVIEW |
|
For the purposes of giving this opinion we have examined and relied upon the documents listed in Part 1 of Schedule 1 (the Documents ). | ||
For the purposes of giving this opinion we also have carried out the Company Search described in Part 2 of Schedule 1. | ||
We have not made any other enquiries concerning the Company and in particular we have not investigated or verified any matter of fact or opinion (whether set out in any of the Documents or elsewhere) other than as expressly stated in this opinion. | ||
Unless otherwise defined herein, capitalised terms have the meanings assigned to them in Schedule 1. | ||
LIMITATIONS | ||
Our opinion is limited to, and should be construed in accordance with, the laws of Mauritius at the date of this opinion. We express no opinion on the laws of any other jurisdiction. |
Business Registration Number: P10018768 Appleby (JV) Ltd & Cie, trading under the name of Appleby, is a joint law venture firm registered under the Law Practitioners Act 1984. |
Bermuda ¡ British Virgin Islands ¡ Cayman Islands ¡ Guernsey ¡ Hong Kong ¡ Isle of Man ¡ Jersey ¡ London ¡ Mauritius ¡ Seychelles ¡ Shanghai ¡ Zurich |
This opinion is strictly limited to the matters stated in it and does not extend to, and is not to be extended by implication, to any other matters. We express no opinion on the commercial implications of the Documents or whether they give effect to the commercial intentions of the parties. | ||||
This opinion is issued solely for the purposes of filing the Registration Statement and the offering of the Shares by the Company and is not be relied upon in respect of any other matter. We consent to the filing of this opinion as an exhibit to the Registration Statement of the Company. | ||||
We also consent to the reference to our Firm under the captions Enforceability of Civil Liabilities, Taxation and Legal Matters in the Registration Statement. | ||||
ASSUMPTIONS AND RESERVATIONS | ||||
We give the following opinions on the basis of the assumptions set out in Schedule 2 ( Assumptions ), and subject to the reservations set out in Schedule 3 ( Reservations ). | ||||
OPINIONS | ||||
1. |
The Company is a Global Business Licence company incorporated with limited liability and validly existing under the laws of Mauritius and is a separate legal entity. The Company is in good standing as evidenced by the Certificate of Current Standing issued by the Registrar of Companies. | |||
2. |
The Company is a holder of a Category 1 Global Business Licence issued by the Financial Services Commission of Mauritius. | |||
3. |
Based solely on the Directors Certificate, when issued and paid for as contemplated by the Registration Statement, the Shares will be validly issued, fully paid and non-assessable (meaning that no further sums are required to be paid by the holders thereof in connection with the issue of such shares). | |||
4. |
The statements made in most recent Registration Statement and prospectus under the caption Taxation, insofar as they purport to constitute summaries of matters of Mauritius law and regulations or legal conclusions with respect thereto, constitute accurate summaries of the matters described therein. | |||
Yours faithfully | ||||
|
||||
Appleby |
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SCHEDULE 1
Part 1
The Documents
1. |
A copy the Registration Statement. | |||
2. |
A certified copy of the certificate of incorporation of the Company, dated 2 February 2015. | |||
3. |
A copy of the constitution of the Company, dated 20 July 2015. | |||
Items 1 -3 collectively referred to as the Constitutional Documents . | ||||
4. |
A certified copy of the Global Business Licence bearing the name of the Company, dated 2 February 2015. | |||
5. | A certified copy of the Certificate of Current Standing issued by the Registrar of Companies in respect of the Company. | |||
6. | A certified copy of the minutes of a meeting of the board of directors of the Company held on 26 February 2015 (the Resolutions ). | |||
7. | A certified copy of the Register of Directors dated 10 December 2015. | |||
8. | A certified copy of the Register of Members dated 3 December 2015. | |||
9. | A Certificate of Incumbency issued by the company secretary of the Company in respect of the Company dated 15 December 2015. | |||
10. | A certificate from a Director of the Company dated 16 June 2015 (the Directors Certificate ). | |||
11. | A copy of the results of the Company Search. |
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. |
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Part 2 | ||||
Searches | ||||
1. |
A search of the entries and filings shown in respect of the Company on the file of the Company maintained in the Register of Companies at the office of the Registrar of Companies in Port Louis, Mauritius as revealed by a search conducted on 15 December 2015 ( Company Search ). |
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SCHEDULE 2 | ||||
Assumptions | ||||
We have assumed: | ||||
that: | ||||
(i) the original documents of all documents examined in connection with this opinion are authentic and complete; |
||||
(ii) the authenticity, completeness and conformity to original documents of all documents submitted to us as copies; and |
||||
(iii) that each of the documents received by electronic means is complete, intact and in conformity with the transmission as sent; |
||||
2. |
that there has been no change to the information contained in the Constitutional Documents; | |||
3. |
that the signatures and seals on all documents and certificates submitted to us as originals or copies of executed originals are genuine and authentic, and the signatures on all documents executed by the Company are the signatures of the persons authorised to execute the documents by the Company; | |||
4. |
that where incomplete documents, drafts or signature pages only have been supplied to us for the purposes of issuing this opinion, that the original documents have been completed and correspond in all material respects with the last version of the relevant documents examined by us prior to giving our opinion; | |||
5. |
that the Documents do not differ in any material respects from any drafts of the same which we have examined and upon which this opinion is based; | |||
6. |
the due execution and delivery of the Documents by each of the parties thereto (other than the Company under Mauritius law); | |||
7. | that, insofar as any obligation under the Documents is to be performed in any jurisdiction outside of Mauritius, its performance will be legal and effective in accordance with the law of any jurisdiction to which they are subject or in which they are respectively constituted and established; | |||
8. | the truth, accuracy and completeness of all representations and warranties or statements of fact or law (other than as to the laws of Mauritius and those matters upon which we have expressly opined) made in the Documents and any correspondence submitted to us; |
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9. |
the accuracy, completeness and currency of the records and filing systems maintained at the public offices where we have searched or enquired or have caused searches or enquiries to be conducted, that such search and enquiry did not fail to disclose any information which had been filed with or delivered to the relevant body but had not been processed at the time when the search was conducted and the enquiries were made, and that the information disclosed by the Company Search is accurate and complete in all respect and such information has not been materially altered since the date and time thereof; | |||
10. |
that | |||
(i) the Documents are in the form of the documents approved in the Resolutions, |
||||
(ii) any meetings at which Resolutions were passed were duly convened and had a constituted quorum present and voting throughout and any unanimous resolutions passed in writing were adopted in accordance with the law and the Constitutional Documents, |
||||
(iii) all interests of the directors on the subject matter of the Resolutions, if any, were declared and disclosed in accordance with the law and Constitutional Documents, |
||||
(iv) the Resolutions and any Power of Attorney have not been revoked, amended or superseded, in whole or in part, and remain in full force and effect at the date of this opinion; and |
||||
(v) the Directors of the Company have concluded that the entry by the Company into the Documents and such other documents approved by the Resolutions and the transactions contemplated thereby are bone fide in the best interests of the Company. |
||||
11. |
that the Certificate of Incumbency accurately reflects the names of all Directors and Officers of the Company as at the date the Resolutions were passed or adopted, the date the Documents were executed and as at the date hereof; | |||
12. |
that there is no matter affecting the authority of the Directors to effect entry by the Company into the Documents including breach of duty, lack of good faith, not disclosed by the Constitutional Documents or the Resolutions, which would have any adverse implications in relation to the opinions expressed in this opinion; | |||
13. |
that the Company has entered into its obligations under the Documents in good faith for the purpose of carrying on its business and that, at the time it did so, there were reasonable grounds for believing that the transactions contemplated by the Documents would benefit the Company; |
6
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14. |
that no resolution to voluntarily wind up the Company has been adopted by the members and no event of a type which is specified in the Constitutional Documents as giving rise to the winding up of the Company (if any) has in fact occurred; and | |||
15. |
that there are no matters of fact or law (excluding matters of Mauritius law) affecting the enforceability of the Documents that have arisen since the execution of the Documents which would affect the opinions expressed herein. | |||
16. |
that there has been no changes to the statements made in the Directors Certificate as at the date of this opinion. |
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SCHEDULE 3 | ||
Reservations |
Our opinion is subject to the following: | ||||||
1. Enforcement: | there is a way of ensuring that each party performs an agreement or that there are remedies available for breach. Notwithstanding that the obligations established by the Documents are obligations which courts of Mauritius would generally enforce, they may not necessarily be capable of enforcement in all circumstances in accordance with their terms. In particular, but without limitation: | |||||
(i) | enforcement and priority may be limited by laws relating to bankruptcy, insolvency, reorganisation, liquidation, court schemes, schemes of arrangements, moratoriums or other laws of general application relating to, or affecting the rights of, creditors generally; | |||||
(ii) | enforcement may be limited by the principles of unjust enrichment or by general principles of equity (for example equitable remedies such as the grant of an injunction or an order for specific performance may not be available where liquidated damages are considered an adequate remedy); | |||||
(iii) | claims may become barred by prescription or may be or become subject to defences of set-off, counterclaim, estoppel and similar defences; | |||||
(iv) | obligations to be performed outside Mauritius may not be enforceable in Mauritius to the extent that performance would be illegal or contrary to public policy under the laws of that foreign jurisdiction; | |||||
(v) | enforcement may be limited to the extent that matters which we have expressly assumed in this opinion will be done, have not been done; | |||||
(vi) | the enforcement of the obligations of the parties to the Documents may be limited by the law applicable to obligations held to have been frustrated by events happening after their execution; | |||||
(vii) | enforcement of obligations may be invalidated by reason of fraud, duress, misrepresentation or undue influence; | |||||
(viii) | where the performance of payment obligations is contrary to the exchange control regulations of any country in whose currency such amounts are payable, such obligations may not be enforceable in Mauritius; |
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(ix) any agreement that the Company will not exercise the powers reserved for exercise by the shareholders of the Company may constitute an unlawful fetter on those reserved powers; |
||||
(x) matters of procedure on enforcement of the Documents and forum conveniens will be governed by and determined in accordance with the lex fori . |
||||
2. |
Waiver of provisions of law: We express no opinion as the enforceability of any present or future waiver of any provision of law (whether substantive or procedural) or of any right or remedy which might otherwise be available presently or in the future under the Documents. | |||
3. |
Penalties: Any provision as to the payment of additional money consequent on the breach of any provision of a Document by any person expressed to be a party to it, whether expressed by way of penalty, additional or default interest, liquidated damages or otherwise, may be unenforceable if it could be established that such additional payment constitutes a penalty rather than a compensatory amount. | |||
4. |
Severability: Severability provisions contained in the Documents may not be binding and the question of whether or not provisions may be severed would be determined by the Mauritius courts at their discretion, having regard to such matters as whether a particular severance would accord with public policy or involve the courts in making a new contract for the parties. | |||
5. |
Determination: Notwithstanding the provisions of the Documents, a determination, designation, calculation or certificate of any party to the Documents, as to any matter provided for in such Documents might, in certain circumstances, be held in the Mauritius courts not to be final, conclusive or binding (for example, if it could be shown to have been fraudulent or erroneous on its face, manifestly inaccurate, made on an unreasonable or arbitrary basis or not to have been reached in good faith) and the Documents will not necessarily escape judicial enquiry into the merit of any claim by any party in that respect. | |||
6. |
Discretion: Where a party to the Documents is vested with a discretion or may determine a matter in its opinion or is given the right to determine a conclusive calculation or determination, the Mauritius courts, if called upon to consider the question, may require that such discretion be exercised reasonably or that such opinion be based upon reasonable grounds or may determine that such right is not finally binding. |
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7. |
Modification of documents: We express no view on any provision in any of the Documents requiring written amendments and waivers of any of the provisions of such Documents insofar as it suggests that oral or other modification, amendments or waivers could not be effectively agreed upon or granted by or between the parties or implied by the course of conduct of the parties. | |||
8. |
Limitations on liability: The effectiveness of any terms releasing or limiting a party from a liability or duty owed is limited by law. | |||
9. |
Jurisdiction: Where a Document provides for the submission to the exclusive or non-exclusive jurisdiction of the Mauritius courts, the court may decline to accept jurisdiction in any matter where: | |||
(i) it determines that some other jurisdiction is a more appropriate or convenient forum; |
||||
(ii) another court of competent jurisdiction has made a determination in respect of the same matter; or |
||||
(iii) litigation is pending in respect of the same matter in another jurisdiction. |
||||
10. |
Concurrent proceedings: Proceedings may be stayed in Mauritius if concurrent proceedings in respect of the same matter are or have been commenced in another jurisdiction. Notwithstanding any provision in the Documents that all disputes arising under or in connection with the Documents should be brought before the competent court in the jurisdiction specified in the Documents, the Mauritius courts have discretion to refuse to stay proceedings in Mauritius if it is satisfied that it is just and equitable to do so and may grant leave to serve Mauritius proceedings outside of Mauritius. | |||
11. |
Foreign law: Relevant foreign law will not be applied by the Mauritius courts if it is not pleaded and proved, is not a bona fide and lawful choice of law, or it would be contrary to public policy for that law to be applied. | |||
12. |
Costs: A Mauritius court may refuse to give effect to any provisions of a Document in respect of costs of litigation brought before the Mauritius court. | |||
13. |
Preferences: A transaction by a debtor, including the grant of a charge over any property or undertaking of the debtor, may be set aside by the Supreme Court of Mauritius on the application of the Official Receiver or a liquidator where it is a voidable preference and was made within 2 years immediately before adjudication or commencement of the winding up. A charge may not be set aside where it secures money actually advanced or paid, or the actual price or value of property sold or supplied, or any other valuable consideration given in good faith, by the charge holder to the debtor at the time when, or at any time after, the charge was given. A |
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charge or security may not be set aside where it is a substitute for an existing charge that was given by the debtor more than 2 years before the date of adjudication or the commencement of the winding up, except to the extent that (a) the amount secured by the substituted charge is greater than the amount that was secured by the existing charge; or (b) the value of the property subject to the substituted charge at the date of substitution was greater than the value of the property subject to the existing charge at that date. | ||||
14. |
Presumption of insolvency: A transaction by a debtor, including the grant of a charge over any property or undertaking of the debtor, that is made within 6 months immediately before the debtors adjudication or the commencement of the winding up is presumed, unless the contrary is proved, to be made at a time when the debtor is unable to pay his due debts. | |||
15. |
Good standing: the Company has received a Certificate of Current Standing issued by the Registrar of Companies. | |||
16. |
Major transactions: Where the board of directors deems a transaction a major transaction within the meaning of section 130 of the Companies Act, shareholder approval by way of special resolution is required. Section 130 of the Companies Act defines a major transaction as | |||
(a) the acquisition of, or an agreement to acquire, whether contingent or not, assets the value of which is more than 75 per cent of the value of the companys assets before the acquisition; |
||||
(b) the disposition of, or an agreement to dispose of, whether contingent or not, assets of the company the value of which is more than 75 per cent of the value of the companys assets before the disposition; or |
||||
(c) a transaction that has or is likely to have the effect of the company acquiring rights or interests or incurring obligations or liabilities the value of which is more than 75 per cent of the value of the companys assets before the transaction. |
||||
17. |
Directors Certificate: With respect to this opinion, we have relied upon the statements and representations made to us in the Directors Certificate provided to us and issued by a Director of the Company for the purposes of this opinion. We have made no independent verification of the matters referred to in the Directors Certificate, and we qualify our opinion to the extent that the statements or representations made in the Directors Certificate are not accurate in any respect. |
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Exhibit 8.1
[FORM OF OPINION TO BE RECEIVED FROM COUNSEL]
[Date]
The Board of Directors
Azure Power Global Limited
8 Local Shopping Complex, Pushp Vihar
Madangir, New Delhi 110062, India
Re: | Registration Statement on Form F-1 of Azure Power Global Limited |
Dear Sirs/ Mesdames:
We have acted as counsel as to matters of Indian law to Azure Power Global Limited (APGL) and are giving this opinion in connection with its Registration Statement on Form F-1 (the Registration Statement) filed with the United States Securities and Exchange Commission (the Commission) under the U.S. Securities Act of 1933, as amended (the Securities Act), filed on December 15, 2015 (Registration Number 333- ), as amended through the date hereof.
Based upon such facts and subject to the limitations set forth in the Registration Statement, the statements of law or legal conclusions in the Registration Statement under the caption Taxation Indian Taxation constitute the opinion of Shardul Amarchand Mangaldas & Co.
In rendering this opinion, we have reviewed the Registration Statement and such laws of the Republic of India as we considered relevant and necessary and as have been published and made publicly available, all of which are subject to change either prospectively or retroactively. Any such change may affect the conclusions stated herein. We have made no investigation of the laws of any jurisdiction other than the Republic of India and do not express or imply any opinions as to the laws of any jurisdiction other than those of the Republic of India as applicable on the date of this opinion. This opinion is governed by and shall be construed in accordance with Indian law. We assume no obligation to update or supplement this opinion letter to reflect any facts or circumstances which may hereafter come to our attention with respect to the opinion expressed above, including any changes in applicable law which may hereafter occur. Our opinion is not binding on the Indian Income Tax Department or a court. The Indian Income Tax Department may disagree with one or more of our conclusions, and a court may sustain the Indian Income Tax Departments position.
We hereby consent to the filing of this opinion as an exhibit to the Registration Statement. We also consent to the reference to our firm under the caption Legal Matters in the Registration Statement. In giving this consent, we do not thereby admit that we are included within the category of persons whose consent is required under Section 7 of the Securities Act or the rules and regulations of the Commission promulgated thereunder or an expert for the purposes of any law or regulation.
Yours Truly,
Shardul Amarchand Mangaldas & Co
|
Exhibit 10.3
SHAREHOLDERS AGREEMENT
DATED: 22 JULY, 2015
BY AND AMONGST
AZURE POWER GLOBAL LIMITED
AND
AZURE POWER INDIA PRIVATE LIMITED
AND
MR. INDERPREET SINGH WADHWA
AND
MR. HARKANWAL SINGH WADHWA
TABLE OF CONTENTS
1. |
DEFINITIONS AND INTERPRETATION |
2 | ||||
2. |
EFFECTIVENESS AND SHARE CAPITAL OF THE COMPANY |
15 | ||||
3. |
REPRESENTATIONS AND WARRANTIES |
17 | ||||
4. |
RIGHTS OF APGL |
18 | ||||
5. |
NOT USED |
22 | ||||
6. |
TRANSFER OF SHARES |
23 | ||||
7. |
NOT USED |
27 | ||||
8. |
REINSTATEMENT OF RIGHTS |
27 | ||||
9. |
BUY-BACK OF EQUITY SECURITIES |
27 | ||||
10. |
NOT USED |
31 | ||||
11. |
MANAGEMENT OF THE COMPANY |
31 | ||||
12. |
SHAREHOLDERS MEETINGS |
34 | ||||
13. |
EXERCISE OF VOTING & OTHER RIGHTS BY PARTIES |
35 | ||||
14. |
NOT USED |
36 | ||||
15. |
NOT USED |
36 | ||||
16. |
FINANCIAL ACCOUNTING AND AUDITS |
36 | ||||
17. |
OTHER COVENANTS |
37 | ||||
18. |
NON-COMPETE AND NON-SOLICITATION |
37 | ||||
19. |
NOT USED |
39 | ||||
20. |
NOT USED |
39 | ||||
21. |
TERMINATION |
39 | ||||
22. |
CONFIDENTIALITY |
39 | ||||
23. |
GOVERNING LAW AND ARBITRATION |
40 | ||||
24. |
NOTICES |
40 | ||||
25. |
MISCELLANEOUS PROVISIONS |
41 | ||||
SCHEDULE A DEED OF ADHERENCE |
48 | |||||
SCHEDULE B PFIC ANNUAL INFORMATION STATEMENT |
49 | |||||
SCHEDULE C TERMS AND CONDITIONS OF SERIES A CCPS |
52 | |||||
SCHEDULE D TERMS AND CONDITIONS OF SERIES B CCPS |
56 | |||||
SCHEDULE E TERMS AND CONDITIONS OF IFC CCDS |
60 | |||||
SCHEDULE F TERMS AND CONDITIONS OF SERIES C CCPS |
66 | |||||
SCHEDULE G TERMS AND CONDITIONS OF SERIES D CCPS |
70 |
SCHEDULE H TERMS AND CONDITIONS OF DEG CCDS |
74 | |||||
SCHEDULE I TERMS AND CONDITIONS OF IFC II CCDS |
80 | |||||
SCHEDULE J TERMS AND CONDITIONS OF SERIES E CCPS |
86 | |||||
SCHEDULE K IFC POLICY COVENANTS |
92 | |||||
SCHEDULE L APGL CONSENT RIGHTS |
103 | |||||
SCHEDULE M APGL CONSENT RIGHTS |
105 | |||||
SCHEDULE N DEG EXCLUSION LIST |
106 | |||||
SCHEDULE O PROPARCO POLICY COVENANTS |
107 | |||||
SCHEDULE P TERMS AND CONDITIONS OF IFC III CCDS |
117 | |||||
SCHEDULE Q TERMS AND CONDITIONS OF SERIES F CCPS |
123 | |||||
SCHEDULE R TERMS AND CONDITIONS OF SERIES G CCPS |
133 | |||||
SCHEDULE S |
139 | |||||
SCHEDULE T TERMS AND CONDITIONS OF SERIES H CCPS |
140 |
SHAREHOLDERS AGREEMENT
This SHAREHOLDERS AGREEMENT is made on this 22nd day of July, 2015;
BY AND AMONG
1. | AZURE POWER GLOBAL LIMITED, a company, organized and existing under the laws of Mauritius ( APGL ), and having its registered office at c/o AAA Global Services Ltd, 1st Floor, The Exchange, 18 Cybercity, Ebene, Mauritius (hereinafter referred to as APGL which expression shall mean and include the said company, its executors, assigns and successors - in-interest), of the First Part; |
AND
2. | AZURE POWER INDIA PRIVATE LIMITED , a company incorporated under the provisions of the Companies Act, 1956 and having its registered office at 8, LSC, Madangir, Pushpvihar, New Delhi-110062, India (hereinafter referred to as the Company which expression shall mean and include the said company, its executors, assigns and successors- in- interest), of the Second Part; |
AND
3. | MR. INDERPREET SINGH WADHWA , son of Mr. Harkanwal Singh Wadhwa residing at [Address], and MR, HARKANWAL SINGH WADHWA , son of Late Mr. Manohar Singh Wadhwa, residing at [Address] (hereinafter collectively referred to as Sponsors , which expression shall mean and include their successors, legal heirs and permitted assigns), of the Third Part; |
(APGL, the Company and the Sponsors are individually referred as to Party and collectively referred to as the Parties ).
WHEREAS
(A) | The Company has been incorporated with the object of generation and production of solar energy and electricity and erection of solar power plants. |
(B) | The Investors had subscribed to the Equity Securities of the Company and executed the Second Consolidated and Amended Shareholders Agreement dated June 10, 2015 ( Existing SHA ) to govern their rights and obligations as the shareholders of the Company. Pursuant to certain understanding between the Investors and the Parties, all Investors intend to sell the Equity Securities they hold in the Company to APGL pursuant to the share purchase agreements mentioned below. |
(C) | IFC intends to sell and APGL intends to purchase the IFC Securities from IFC pursuant to the securities purchase agreement executed on or around the date of this Agreement between, inter alia , IFC and APGL. |
(D) | DEG intends to sell and APGL intends to purchase the DEG Securities from DEG pursuant to |
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the securities purchase agreement executed on or around the date of this Agreement between, inter alia , DEG and APGL. |
(E) | Proparco intends to sell and APGL intends to purchase the Proparco Securities from Proparco pursuant to the securities purchase agreement executed on or around the date of this Agreement between, inter alia , Proparco and APGL. |
(F) | Helion intends to sell and APGL intends to purchase the Helion Securities from Helion pursuant to the securities purchase agreement executed on or around the date of this Agreement between, inter alia , Helion and APGL. |
(G) | FC intends to sell and APGL intends to purchase the FC Securities from FC pursuant to the securities purchase agreement executed on or around the date of this Agreement between, inter alia , FC and APGL. |
(H) | On completion of the sale of the Equity Securities pursuant to the above mentioned securities purchase agreements, the Existing SHA is intended to be amended and replaced in its entirety by this Agreement to record APGL as the holder of the Equity Securities of the Company in place of the Investors. |
(I) | Pursuant to the above, Parties are entering into this shareholders agreement to incorporate rights and obligations of APGL, the Sponsors and the Company for regulating the management and control of the affairs of the Company and certain other rights and obligations inter se in accordance with the terms and conditions set out herein. |
NOW THEREFORE IT IS HEREBY AGREED BY AND BETWEEN THE PARTIES AND THIS AGREEMENT WITNESSETH AS UNDER:
1. | DEFINITIONS AND INTERPRETATION |
1.1 | In this Agreement the following terms, to the extent not inconsistent with the context, shall have the meanings assigned to them herein below: |
Accounts shall mean the books of account of the Company and also includes its balance sheet, profit and loss account and all other records, ledgers, accounting notations and pertinent documentation.
Act shall mean the Companies Act, 1956, as amended, modified or re-enacted by the Companies Act, 2013 and any other enactments from time to time including any rules or regulations framed thereunder.
Affiliate in relation to a Person,
(i) | being a corporate entity, shall mean any entity or Person, which Controls, is Controlled by, or is under the common Control of such Person; |
(ii) | being an individual, shall mean any Relative or any other entity or Person, which is Controlled by such Person or a Relative of such individual; and |
2
(iii) | in any other case shall mean a Person Controlled by a Party/ies to this Agreement; |
Agreement or SHA means this Shareholders Agreement and includes all recitals, schedules, annexes and exhibits that are annexed to it, and any amendments made to it by the Parties in writing.
Annual Business Plan and Budget shall mean the annual business plan and budget as adopted, approved or revised pursuant to the APGL SHA for the relevant Financial Year.
Anti-Competitive Practice means:
(i) | any common or implied action having as object and/or as effect to impede, restrict or distort fair competition in a market, in particular when it tends to: (1) restrict market access or the free exercise of competition by other companies; (2) prevent price fixing by the free play of markets by artificially favouring the increase or reduction of prices; (3) limit or control production, markets, investments or technical progress; or (4) share out markets or sources of supply; |
(ii) | any abuse by a company or a group of companies of a dominant position within an internal market or in a substantial part of it; or |
(iii) | any bid or predatory pricing having as object and/or as effect to eliminate from a market or to prevent a company or one of its product from accessing a market. |
APGL Buy Back Notice shall have the meaning as assigned to it under Clause 9.1.
APGL Buy Back Option shall have the meaning as assigned to it under Clause 9.1.
APGL Buy Back Period shall have the meaning as assigned to it under Clause 9.1.
APGL Buy Back Start Date shall have the meaning as assigned to it under Clause 9.1.
APGL Directors shall have the meaning as assigned to it under Clause 11.2.1.
APGL SHA means the shareholders agreement to be executed between APGL and its shareholders in relation to the rights and obligations of the parties thereto for regulating the management and control of the affairs of APGL and certain other rights and obligations inter se in relation to the APGL.
Applicable Liquidation Price means, as applicable, either the Senior Liquidation Price, the Series H Liquidation Price or the Series F Liquidation Price or the CCPS Liquidation Price or the Series A Liquidation Price.
As If Converted Basis means the number of Equity Shares of the Company, calculated as if the then issued and outstanding relevant Share Equivalents had been exercised in full. Provided that each of the CCDs and Proparco CCPS will not be taken into consideration in the calculation of As If Converted Basis, till such time that they have not been transferred to a third party (not being an Affiliate of IFC, DEG or Proparco, as the case may be) in accordance with the terms of this Agreement.
3
Authority means any national, supranational, regional or local government, or governmental, statutory, regulatory, administrative, fiscal, judicial, or government-owned body, department, commission, authority, tribunal, agency or entity, or central bank (or any Person whether or not government owned and howsoever constituted or called, that exercises the functions of the central bank).
Articles shall mean the articles of association of the Company, as may be amended from time to time.
Assets shall mean assets or properties of every kind, nature, character and description (whether immovable, movable, tangible, intangible, absolute, accrued, fixed or otherwise) as operated, hired, rented, owned or leased by a Person from time to time, including cash, cash equivalents, receivables, securities, accounts and note receivables, real estate, plant and machinery, equipment, patents, copyrights, domain names, trademarks, brands, rights in databases and other intellectual property, raw materials, inventory, furniture, fixtures and insurance.
Big Four Accounting Firms means the following accounting firms or their Affiliates: Deloitte Touche; PricewaterhouseCoopers; Ernst & Young; and KPMG.
Board shall mean the board of directors of the Company.
Buy Back Notice shall have the meaning as assigned to it under Clause 6.8.2.
Buy Back Option shall have the meaning as assigned to it under Clause 6.8.1.
Buy Back Start Date shall have the meaning assigned to it under Clause 6.8.2.
Business shall mean and include the activities that the Company has been authorized to carry out under the Main Objects clause of its Memorandum.
Business Day means a day (other than a Saturday or Sunday or an official public holiday) on which commercial banks are open for business in New Delhi, Mauritius and New York.
CEO shall mean the position of the chief executive officer and managing director of the Company.
CCDs shall collectively refer to IFC CCDs, IFC II CCDs, IFC III CCDs and DEG CCDs. CCPS Liquidation Price shall have the meaning assigned to it under Clause 4.1(d). Chairman shall have the meaning as set forth in Clause 11.7.8.
Control (including with correlative meaning, the terms Controlled by and under common Control with ) means the power to direct the management or policies of a Person, directly or indirectly, whether through the ownership of shares or Share Equivalents, by contract or otherwise; provided that, in any event, the direct or indirect ownership of more than 50% (fifty per cent) of the voting share capital of a Person is deemed to constitute Control of that Person.
4
Corrupt Practice means the following acts:
(i) | the promise, offering or giving, directly or indirectly, to a Public Official or to any person who directs or works, in any capacity, for a private sector entity, of an undue advantage of any nature, for the relevant person himself or herself or for another person or entity, in order that this person acts or refrains from acting in the exercise of his or her official duties or in breach of his or her legal, contractual or professional obligations having for effect to influence his or her own actions or the ones of another party or entity; |
(ii) | the solicitation or acceptance, directly or indirectly, by a Public Official or by any person who directs or works, in any capacity, for a private sector entity, of an undue advantage of any nature, for the relevant person himself or herself or for another person or entity, in order that this person acts or refrains from acting in the exercise of his or her official duties or in breach of his or her legal, contractual or professional obligations having for effect to influence his or her own actions or the ones of another party or entity. |
Debt shall mean at any time the aggregate of the following:
(i) | the outstanding principal amount or the nominal amount of any debenture, bond, note, loan stock or other similar security of the Company under which any indebtedness is incurred; and |
(ii) | any fixed or minimum premium payable on the repayment or redemption or conversion of any instrument. |
Deed of Adherence means a deed of adherence to this Agreement substantially in the form set forth in Schedule A , with applicable amendments which are in form and substance satisfactory to each of the Parties to this Agreement.
DEG shall mean DEG Deutsche Investitions -und Entwicklungsgesellschaft mbH, company established under the laws of Federal republic of Germany, having its office at Kammergasse 22, 50676-Cologne, Germany.
DEG CCDs shall mean 680,390 (six hundred and eighty thousand and three hundred and ninety) compulsorily convertible debentures, with a face value of INR 1,000 (Indian Rupees One Thousand) each, carrying interest at the rate of 5% (five per cent) per annum, and with such terms (including conversion) as set out in Schedule H .
DEG CCD Liquidation Price shall mean an amount equal to the DEG Investment Amount plus the DEG Required Return.
DEG Investment Amount shall mean the investment of INR 680,390,000 (Indian Rupees six hundred eighty million three hundred and ninety thousand) in the Company made by subscribing to the DEG CCDs.
DEG Required Return shall have the meaning as set forth in paragraph 4.2(a) of Schedule H.
5
DEG Securities means the DEG CCDs and 10 (ten) Equity Shares subscribed by DEG, and transferred to APGL as referred in Recital D.
Director shall mean a director duly appointed on the Board.
DRHP shall mean a draft red herring prospectus.
Effective Date shall have the meaning as set forth in Clause 2.1.
Embargo means any economic sanction aiming at prohibiting the import and/or export (sale, supply, transfer) of one specific or several goods, products or services to or from a country for a specified period as published and amended from time to time by the United Nations, European Union and France.
Encumbrance means any mortgage, charge (fixed or floating), pledge, lien, hypothecation, trust, right of set off or other third party right or interest (legal or equitable) including any right of pre-emption, assignment by way of security, reservation of title or any other security interest of any kind however created or arising or any other agreement or arrangement (including a sale and repurchase arrangement) having similar effect.
Employees shall mean individuals who are the confirmed/ permanent employees of the Company.
Equity Securities shall mean Equity Shares and Share Equivalents.
Equity Shares or Shares shall mean equity shares of the Company having the face value of INR 10 (Indian Rupees Ten) each and carrying 1 (one) vote per equity share.
FATF Recommendations shall mean the recommendations of the Financial Action Task Force (on money laundering).
FC shall mean FC VI India Venture (Mauritius) Ltd., a company established under the laws of Mauritius, having its principal office at IFS Court, Twenty Eight Cybercity, Ebene, Mauritius.
FC Securities shall mean 19,385 (Nineteen Thousand, Three Hundred and Eighty Five) Series A CCPS, 53,887 (Fifty Three Thousand, Eight Hundred and Eighty Seven) Series B CCPS, 114,940 (One Hundred and Fourteen Thousand, Nine Hundred and Forty) Series C CCPS, 53,272 (Fifty Three Thousand, Two Hundred and Seventy Two) Series D CCPS, 53,973 (Fifty Three Thousand, Nine Hundred and Seventy Three) Series F CCPS and 10 (Ten) Equity Shares subscribed by FC, and transferred to APGL as referred in Recital G.
Financial Year shall mean the financial year of the Company as determined by the Board.
Fraudulent Practice refers to any unfair practices (action or omission) intended to deliberately mislead a third party, intentionally conceal elements there from, or betray or vitiate his/her consent, contravening legal or regulatory obligations and/or breaching the Companys or a third partys internal rules for the purpose of obtaining an illegitimate benefit.
6
Fully Diluted Basis means the number of Equity Shares of the Company, calculated as if the then issued and outstanding relevant Share Equivalents (including CCDs and Proparco CCPS) had been exercised and converted in full. For the purpose of this definition, CCDs and Proparco CCPS shall be assumed to be converted in accordance with their respective terms, and in case their respective terms do not specify the manner of valuation of the Company for the provisions of this Agreement for which the Fully Diluted Basis is being ascertained, then the Company shall on a written request of any of the holders of CCDs or Proparco CCPS cause the valuation of the Company to be conducted by any one of the Big Four Accounting Firms and inform the valuation to such holder, which valuation shall be used to determine the conversion of CCDs and/or Proparco CCPS.
GIF shall mean IFC GIF Investment Company I, a company established under the laws of the Republic of Mauritius, having its principal office at C/o Cim Fund Services Ltd, 33 Edith Cavell Street, Port Louis, Mauritius.
Helion shall collectively refer to Helion Partners and Helion India.
Helion India shall mean Helion Venture Partners India II, LLC, a company established under the laws of Mauritius, having its principal office at International Management (Mauritius) Ltd, Les Cascades Building, Edith Cavell Street, Port Louis, Mauritius.
Helion Partners shall mean Helion Venture Partners II, LLC, a company established under the laws of Mauritius, having its principal office at International Management (Mauritius) Ltd, Les Cascades Building, Edith Cavell Street, Port Louis, Mauritius.
Helion Securities shall mean 19,385 (Nineteen Thousand, Three Hundred and Eighty Five) Series A CCPS, 53,887 (Fifty Three Thousand, Eight Hundred and Eighty Seven) Series B CCPS, 114,940 (One Hundred and Fourteen Thousand, Nine Hundred and Forty) Series C CCPS, 26,636 (Twenty Six Thousand, Six Hundred and Thirty Six) Series D CCPS, 63,853 (Sixty Three Thousand, Eight Hundred and Fifty Three) Series F CCPS and 10 Equity Shares subscribed by Helion, and transferred to APGL as referred in Recital F.
IFC shall mean International Finance Corporation, an international organization established by the Articles of Agreement among its member countries including the Republic of India.
IFC CCDs shall mean 1,100,000 (one million one hundred thousand) compulsorily convertible debentures, with a face value of INR 224.19 (Indian Rupees two hundred and twenty four point one nine) each and carrying interest at the rate of 10% (ten per cent) per annum, and with such terms (including conversion) as set out in Schedule E hereto.
IFC CCD Investment Amount shall mean the investment of INR 246,618,554,80 (Indian Rupees two hundred and forty six million six hundred and eighteen thousand and five hundred and fifty four point eighty) in the Company made by subscribing to the IFC CCDs.
IFC CCD Liquidation Price shall mean the IFC CCD Investment Amount plus the IFC Required Return.
IFC II CCDs shall mean 37,500 (thirty seven thousand and five hundred) compulsorily
7
convertible debentures of face value of INR 2,000 (Indian Rupees two thousand) each and with terms (including conversion) as set out in Schedule I hereto.
IFC II CCDs Investment Amount shall mean the investment of INR 75,000,000 (Indian Rupees Seventy Five Million) in the Company made by subscribing to the IFC II CCDs.
IFC II CCD Liquidation Price shall mean the IFC II CCDs Investment Amount plus the IFC II Required Return.
IFC III CCDs shall mean 36,000 (Thirty Six Thousand) compulsorily convertible debentures of face value of INR 5,000 (Indian Rupees Five Thousand) each and with terms (including conversion) as set out in Schedule P hereto.
IFC III CCDs Investment Amount shall mean the investment of INR 180,000,000 (Indian Rupees One Hundred and Eighty Million) in the Company made by subscribing to the IFC III CCDs.
IFC III CCD Liquidation Price shall mean the IFC III CCDs Investment Amount plus the IFC III Required Return.
IFC Required Return shall have the meaning as set forth in paragraph 4.2 (i) (a) of Schedule E .
IFC II Required Return shall have the meaning as set forth in paragraph 4.2 (i) (a) of Schedule I .
IFC III Required Return shall have the meaning as set forth in paragraph 4.2 (i) (a) of Schedule P.
IFC Securities shall mean the IFC CCDs, IFC II CCDs, IFC III CCDs, 73,272 (Seventy Three Thousand, Two Hundred and Seventy Two) Series B CCPS, 4,439 (Four Thousand, Four Hundred and Thirty Nine) Series D CCPS, 20,307 (Twenty Thousand, Three Hundred and Seven) Series F CCPS and 10 (Ten) Equity Shares subscribed by IFC, and transferred to APGL as referred in Recital C.
Illicit Origin means funds obtained through: (i) the commission of any predicate offence as designated in the FATF 40 Recommendations Glossary (http://www.fatf- gafi.org/pages/glossary/fatfrecommendations/d-i/), (ii) Corrupt Practice, and (iii) if or when applicable, through Fraud against the Financial Interests of the European Communities.
Investors shall mean Helion, FC, IFC, Proparco and DEG.
INR or Indian Rupees shall mean the lawful Indian currency.
IRR means internal rate of return determined by using the XIRR function in Microsoft Excel, based on the exact dates of receiving cash flows and exact dates of investing the cash flows.
IPO shall mean the initial public offering of the Equity Shares of the Company, or of equity shares of the Companys holding company.
IP Rights shall mean all rights in and in relation to any patent, patent application, know-how,
8
trade mark, trade mark application, trade name, design, copyright domain name or other similar intellectual, industrial or commercial right, and all registrations, extensions and renewals thereof in any part of the world, arising or created for the Company.
Key Managerial Personnel shall mean the CEO, all Employees directly reporting to the CEO, and such other persons as both the Sponsors and APGL may agree to designate as such from time to time.
Key Subsidiary or Key Subsidiaries means, at the relevant time, each Subsidiary or such Subsidiaries where, as of the end of the then most recently completed fiscal year of the Company:
(i) | the Assets of such Subsidiary or cumulative Assets of such Subsidiaries, as the case may be, account for more than 70% (seventy per cent) of the total consolidated Assets of the Company; or |
(ii) | such Subsidiary or such Subsidiaries cumulatively, have earnings before interest, tax, depreciation and amortization representing more than 70% (seventy per cent) of the Companys total consolidated earnings before interest, tax, depreciation and amortization. |
Law includes all applicable statutes, enactments, acts of legislature or Parliament, laws, ordinances, rules, bye-laws, regulations, notifications, guidelines, policies, directions, directives and orders of any Authority, tribunal, board, court or recognized stock exchange in force in India.
Liquidation Event A shall mean any of the following:
(i) | Compromise or arrangement with the creditors/debtors of the company or failure to pay Debts, under which the company may be wound up under the Act; |
(ii) | Appointment of a provisional or official liquidator by an appropriate court under any applicable Law; or |
(iii) | Commencement of any voluntary or involuntary liquidation, dissolution or winding up. |
Liquidation Event B shall mean any of the following:
(i) | A merger, acquisition, consolidation, or other transaction or series of transactions in which the shareholders of the company following such transaction or transactions will not retain a majority of the voting power of the surviving entity; or |
(ii) | Transfer of all or more than 70% (seventy per cent) in value of the companys Assets. |
Liquidation Preference shall mean the right given to the holders of Equity Securities to receive a return on their investment as provided in Clause 4.1 on the occurrence of Liquidation Event A or Liquidation Event B.
Listing Date shall mean February 25, 2016.
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Memorandum shall mean the memorandum of association of the Company.
OFAC shall mean the United States Office of Foreign Assets Control.
OPIC shall mean Overseas Private Investment Corporation.
Party or Parties shall mean any of the Sponsors, Company and APGL referred to individually or collectively, as the context so requires.
Person shall mean and include an individual, an association, a corporation, a partnership, a joint venture, a venture capital fund, a trust, an unincorporated organization, a joint stock company or other entity or organization, including a government or political subdivision, or an agency or instrumentality thereof and/or any other legal entity.
Proparco shall mean Société de Promotion et de Participation pour la Coopération Economique S.A., a société anonyme having a share capital of Euros 693.079.200 registered with the RCS of Paris under the number 310 792 205, which registered office is at 151 rue Saint Honoré, 75001-PARIS.
Proparco Closing Date-1 shall mean the date on which Series E CCPS and 10 (ten) Equity Shares were issued and allotted by the Company.
Proparco Closing Date-2 shall mean the date by which Series G CCPS will be issued and allotted by the Company.
Proparco CCPS shall mean (i) 140,000 (one hundred and forty thousand) Series E CCPS of the face value of INR 10 (Indian Rupees Ten) each having terms (including conversion) as set out in Schedule J hereto; and (ii) such number of Series G CCPS of the face value of INR 10 (Indian Rupees Ten) having terms (including conversion) as set out in Schedule R hereto as subscribed by APGL.
Proparco CCPS Liquidation Price shall mean an amount that is a sum of (i) the Proparco Investment Amount-1 plus the Proparco Required Return-1 with respect to Series E CCPS, and (ii) the Proparco Investment Amount-2 plus the Proparco Required Return-2, with respect to Series G CCPS, as and when such Series G CCPS are issued and allotted by the Company.
Proparco Investment Amount-1 shall mean the aggregate subscription price in INR paid to the Company by subscribing to the Series E CCPS.
Proparco Investment Amount-2 shall mean the aggregate subscription price in INR to be paid to the Company for subscribing to the Series G CCPS.
Proparco Required Return-1 shall have the meaning as set for in paragraph 4.2(i)(a) of Schedule J hereto.
Proparco Required Return-2 shall have the meaning as set out in paragraph 4.2(i)(a) of Schedule R hereto.
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Proparco Securities shall mean the 10 (Ten) Equity Shares subscribed by Proparco and Proparco CCPS.
Public Official means (i) any holder of legislative, executive, administrative or judicial office appointed or elected, serving on a permanent basis or otherwise, paid or unpaid, regardless of rank; (ii) any other person exercising a public function, including for a public agency or company, or providing a public service; and (iii) any other person defined as a public official under the domestic law of the Companys country.
Relative shall have the meaning ascribed to it under the Act.
Related Agreements shall have the meaning as set out in the APGL SHA.
Relevant Parties shall mean the Company, the Sponsors and each of the other Shareholders (other than APGL) that agree to become a party to this Agreement pursuant to a Deed of Adherence.
Required Return shall mean the IFC Required Return, IFC II Required Return, IFC III Required Return, DEG Required Return, Proparco Required Return-1 or Proparco Required Return-2, as the context may require.
SEBI shall mean the Securities and Exchange Board of India.
Senior Liquidation Price shall mean the IFC CCD Liquidation Price, IFC II CCD Liquidation Price, IFC III CCD Liquidation Price, DEG CCD Liquidation Price and Proparco CCPS Liquidation Price, as the context may require.
Series A CCPS shall mean fully paid up 38,770 (thirty eight thousand, seven hundred and seventy) compulsorily convertible preference shares of the Company having the rights, preferences and privileges as mentioned in Schedule C of this Agreement.
Series A CCPS Subscription Price means the amount of INR 2,375.65 (Indian Rupees Two Thousand Three Hundred and Seventy Five and Sixty Five Paisa only) representing the price per share paid for subscribing to the Series A CCPS.
Series A Investment Amount shall mean INR 92,491,701.05 (Indian Rupees Ninety Two Million Four Hundred and Ninety One Thousand and Seven Hundred One and Five Paisa) paid to the Company, in consideration for subscription of the Series A CCPS.
Series A Liquidation Price shall have the meaning assigned to it under Clause 4.1 (e).
Series B CCPS shall mean fully paid up 181,046 (One Hundred and Eighty One Thousand and Forty Six) compulsorily convertible preference shares of the Company having the rights, preferences and privileges as mentioned in Schedule D of this Agreement.
Series B Investment Amount shall mean the investment of INR 504,077,552 (Indian Rupees Five Hundred Four Million Seventy Seven thousand Five Hundred and Fifty Two) in the Company made by subscribing to 181,046 (One Hundred and Eighty One and Forty Six) and 10 (Ten) Equity Shares Series B CCPS.
11
Series C CCPS shall mean fully paid up 229,880 (Two Hundred Twenty Nine Thousand, Eight Hundred and Eighty) compulsorily convertible preference shares of the Company all having the rights, preferences and privileges as mentioned in Schedule F of this Agreement. The conversion ratio of the Series C CCPS is agreed at 1:0.3424 (i.e. 229,880 (Two Hundred Twenty Nine Thousand Eight Hundred and Eighty) Series C CCPS will convert to 78,710 (Seventy Eight Thousand Seven Hundred and Ten) Equity Shares (in aggregate) of the Company at the time of their conversion).
Series C Investment Amount shall mean the aggregate investment of up to INR 381,600,800 (Indian Rupees Three Hundred Eighty One Million Six Hundred Thousand and Eight Hundred) in the Company made by subscribing to 229,880 (Two Hundred Twenty Nine Thousand, Eight Hundred and Eighty) Series C CCPS.
Series D CCPS shall mean fully paid up 84,348 (Eighty Four Thousand Three Hundred and Forty Eight) compulsorily convertible preference shares of the Company having the rights, preferences and privileges as mentioned in Schedule G of this Agreement.
Series D Investment Amount shall mean the investment of INR 474,963,588 (Indian Rupees Four Hundred Seventy Four Million, Nine Hundred Sixty Three Thousand and Five Hundred and Eighty Eight) in the Company made by subscribing to 84,348 (Eighty Four Thousand Three Hundred and Forty Eight) Series D CCPS.
Series E CCPS shall mean 140,000 (One Hundred and Forty Thousand) fully paid up compulsorily convertible preference shares of the Company having the rights, preferences and privileges as mentioned in Schedule J of this Agreement.
Series F CCPS shall mean 138,133 (One Hundred Thirty Eight Thousand One Hundred and Thirty Three) fully paid compulsorily convertible preference shares of the Company having the rights, preferences and privileges as mentioned in Schedule Q of this Agreement.
Series F Investment Amount shall mean the investment of INR 1,550,508,391.75 (Rupees One Billion Five Hundred Fifty Million Five Hundred Eight Thousand Three Hundred Ninety One and Seventy Five Paisa) in the Company made by subscribing to 138,133 (One Hundred Thirty Eight Thousand One Hundred and Thirty Three) Series F CCPS.
Series F Liquidation Price shall have the meaning set forth under Clause 4.1 (c);
Series F Participation shall have the meaning set forth under Clause 4.2 (d);
Series G CCPS shall mean the fully paid compulsorily convertible preference shares of the Company having rights, preferences and privileges as mentioned in Schedule R hereto.
Series H CCPS shall mean the fully paid compulsorily convertible preference shares of the Company having rights, preference and privileges as mentioned in Schedule T hereto.
Series H Investment Amount shall mean the aggregate investment made in the Company by APGL for subscribing to the Series H CCPS in accordance with this Agreement.
12
Series H Liquidation Price shall have the meaning set forth in Clause 4.1 (b).
Share Equivalents means preference shares, bonds, debenture, loans, warrants, options or other similar instruments or securities which are convertible into or exercisable or exchangeable for, or which carry a right to subscribe for or purchase, Equity Shares of the Company or any instrument or certificate representing a beneficial ownership interest in the Equity Shares of the Company, including global depositary receipts or American depositary receipts and an instrument representing a Debt.
Shareholder or Shareholders shall mean any Person who holds Equity Securities.
Shareholder Securities shall have the meaning as assigned to it under Clause 9.1.
Sponsor Buy-Back Period shall have the meaning as assigned to it under Clause 6.8.3.
Sponsor Securities shall have all of the Equity Shares held by the Sponsors in the Company.
Sponsors Lock-in Agreement shall mean the agreement between, inter alia , GIF, IFC, Helion, Mr. Inderpreet Singh Wadhwa and IW Green Inc., with respect to the lock-in and distribution of proceeds from the sale of equity shares held by IW Green Inc. in APGL.
Subsidiary shall have the meaning assigned to it under the Act, and the term Subsidiaries shall be construed accordingly.
Tax shall mean a levy, charge, impost, deduction, withholding or duty of any nature (including stamp and transaction duty and goods and services, value added or similar tax) at any time:
(i) | imposed or levied by any Authority; or |
(ii) | required to be remitted to, or collected, withheld or assessed by any Authority; |
and any related interest, expense, fine, penalty or other charge on those amounts.
Third Party Interest shall mean any security interest, lease, license, option, voting arrangement, easement, covenant, notation, restriction, interest under any agreement, interest under any trust, or other right, equity, entitlement or other interest of any nature held by a third party.
Transaction Documents means:
(i) | this Agreement; |
(ii) | the APGL SHA; |
(iii) | Sponsors Lock-in Agreement; and |
(iv) | any other documents that may be entered into by the parties therein for the purpose of executing the transactions contemplated in the Transaction Documents. |
13
Transfer means to transfer, sell, convey, assign, pledge, hypothecate, create a security interest in or Encumbrance on, place in trust (voting or otherwise), transfer by operation of law or in any other way subject to any encumbrance or dispose of, whether or not voluntarily, and shall include reference to any action, which has the effect of creating any Third Party Interest in or over the Equity Securities. Transferable and Transferred shall have corresponding meanings.
USD or $ shall mean United States Dollars, currency of United States of America.
1.2 | Certain terms may be defined elsewhere in this Agreement and wherever, such terms are so defined, they shall have the meaning assigned to them. The terms referred to but not defined in this Agreement shall have the meaning as defined in the Transaction Documents and failing this shall, unless inconsistent with the context or meaning thereof, bear the same meaning as defined under the Act or other relevant applicable Law. |
1.3 | All references in this Agreement to statutory provisions shall be construed as meaning and including references to any statutory modification, consolidation or re-enactment (whether before or after the date of this Agreement) for the time being in force, and all statutory instruments or orders made pursuant to such statutory provisions. |
1.4 | Words denoting singular shall include the plural and words denoting any gender shall include all genders unless the context otherwise requires. |
1.5 | References to recitals, clauses or schedules are, unless the context otherwise requires, references to recitals or schedules to, or clauses of this Agreement. |
1.6 | Any reference to writing shall mean handwritten, printed, typed or electronic mail to reproduce words in permanent visible and legible form. |
1.7 | The terms include and including shall mean include without limitation. |
1.8 | The headings, subheadings, titles, subtitles to clauses, sub-clauses and paragraphs are for information only, shall not form part of the operative provisions of this Agreement or the schedules, and shall be ignored in construing the same. |
1.9 | Any reference to a decision of the Board shall, in the absence of an express statement to the contrary, refer to a simple majority decision of the Board. |
1.10 | If a period of time and dates from a given day or the day of an act or event is specified, it is to be calculated exclusive of that day. |
1.11 | Where the consent or approval of a Party to this Agreement is required hereunder to any act, deed, matter or thing, such requirement shall in the absence of any express stipulation to the contrary herein, mean the prior consent or approval (as the case may be) in writing. |
1.12 | The words directly or indirectly mean directly or indirectly through one or more intermediary persons or through contractual or other legal arrangements, and direct or indirect shall have the correlative meanings. |
14
2. | EFFECTIVENESS AND SHARE CAPITAL OF THE COMPANY |
2.1 | This Agreement shall become effective and binding on the Parties from the date of completion of transfer of all Equity Securities held by the Investors to APGL ( Effective Date ). On the Effective Date and henceforth, the terms of this Agreement shall supersede the provisions of the Existing SHA. |
2.2 | The present authorized share capital of the Company is INR 1,300,000,000 (One Thousand Three Hundred Million) divided into 43,333,333 (Forty Three Million Three Hundred and Thirty Three Thousand Three Hundred and Thirty Three) Equity Shares and 86,666,667 (Eighty Six Million Six Hundred and Sixty Six Thousand Six Hundred and Sixty Seven) preference shares. The Equity Securities issued and allotted by the Company as on the date of this Agreement are as indicated in the table below: |
Shareholder |
Equity Shares | CCPS | CCDs | |||||||||
Sponsors |
||||||||||||
Inderpreet S Wadhwa |
97,497 | Nil | Nil | |||||||||
Harkanwal S Wadhwa |
5,000 | Nil | Nil | |||||||||
Azure Power Inc. |
5,700 | Nil | Nil | |||||||||
Investors |
||||||||||||
Helion Venture Partner India II |
Nil |
|
16,810 Series A
CCPS |
|
Nil | |||||||
Helion Venture Partners II LLC |
10 |
|
2,575 Series A
CCPS |
|
Nil | |||||||
|
|
53,887 Series B
CCPS |
|
| ||||||||
|
|
114,940 Series C
CCPS |
|
| ||||||||
|
|
26,636 Series D
CCPS |
|
| ||||||||
|
|
63,853 Series F
CCPS |
|
|||||||||
FC VI India Venture (Mauritius) Ltd. |
10 |
|
19,385 Series A
CCPS |
|
Nil | |||||||
|
|
53,887 Series B
CCPS |
|
| ||||||||
|
|
114,940 Series C
CCPS |
|
| ||||||||
|
|
53,273 Series D
CCPS |
|
| ||||||||
|
|
53,973 Series F
CCPS |
|
| ||||||||
International Finance Corporation |
10 |
|
73,272 Series B
CCPS |
|
|
1,100,000 IFC
CCDs |
|
|||||
|
|
4,439 Series D
CCPS |
|
|
37,500 IFC II
CCDs |
|
||||||
Deutsche Investitions und Entwicklungsgesellschaft mbH |
|
|
20,307 Series F
CCPS |
|
|
36,000 IFC III
CCDs |
|
15
10 | Nil |
|
680,390 DEG
CCDs |
|
||||||||
Proparco |
10 |
|
140,000 Series E
CCPS |
|
Nil | |||||||
Other Shareholders |
||||||||||||
Satnam Sanghera |
1,633 | Nil | Nil | |||||||||
|
|
|
|
|
|
|||||||
TOTAL |
109,880 | 812,177 | 18,53,890 | |||||||||
|
|
|
|
|
|
2.3 | APGL shall have a right to subscribe to Series G CCPS at such price as agreed between the Company and APGL. APGL acknowledges that its intention is that any further investment received by APGL from Proparco against issue of Series G CCPS (as defined in APGL SHA) by APGL shall be invested by APGL in the Company by subscribing to Series G CCPS issued and allotted by the Company. |
2.4 | APGL shall have a right to subscribe to Series H CCPS at such price as agreed between the Company and APGL. Subject to Clause 2.5 below, APGL acknowledges that its intention is that any further investment received by APGL from IFC and GIF against the issue of Series H CCPS (as defined in APGL SHA), to the extent desired to be invested by APGL in AZI, shall be invested by APGL in the Company by subscribing to Series H CCPS issued and allotted by the Company. |
2.5 | APGL acknowledges that it may retain up to USD 5,000,000 (Dollar Five Million) from the investments received against the issue of Series G CCPS (as defined in APGL SHA) and Series H CCPS (as defined in APGL SHA) to meet its operational expenses and shall invest the remaining amounts in the Company as indicated in Clause 2.3 and Clause 2.4 respectively. On the completion of the investment by APGL in Series G CCPS and Series H CCPS issued by the Company, the Equity Securities issued and allotted by the Company shall be as indicated in the table below: |
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3. | REPRESENTATIONS AND WARRANTIES |
3.1 | The Sponsors hereby represent and warrant that: |
(a) | They have the power and authority to execute and deliver this Agreement and are not prohibited from entering into this Agreement; |
(b) | This Agreement, upon execution and delivery by the Sponsors, will be a legal, valid and binding obligation of each of them enforceable in accordance with its terms; and |
(c) | The execution and delivery of this Agreement by the Sponsors and the promises, agreements or undertakings of the Sponsors under this Agreement do not violate any Law, rule, regulation or order applicable to them or violate or contravene the provisions of or constitute a default under any documents, contracts, agreements or any other instruments which the Sponsors have executed or which are applicable to them. |
3.2 | The Company hereby represents and warrants that: |
(a) | It has the power and authority to execute and deliver this Agreement and is not prohibited from entering into this Agreement; |
(b) | This Agreement has been duly authorized by the Board and the Shareholders of the Company and upon execution and delivery by the Company, will be a legal, valid and binding obligation of the Company enforceable in accordance with its terms; and |
(c) | The execution and delivery of this Agreement by the Company, and the promises, agreements or undertakings of the Company under this Agreement do not violate any Law, rule, regulation or order applicable to it or violate or contravene the provisions of or constitute a default under any documents, contracts, agreements or any other instruments to which it is a party or which are applicable to it. |
3.3 | APGL hereby represents and warrants that: |
(a) | It has the power and authority to execute and deliver this Agreement and is not prohibited from entering into this Agreement; |
(b) | This Agreement has been duly authorized by it, and upon such execution and delivery, will be a legal, valid and binding obligation enforceable in accordance with its terms; and |
(c) | The execution and delivery of this Agreement by it and the promises, agreements or undertakings of it under this Agreement does not violate any Law, rule, regulation or order applicable to them or violate or contravene the provisions of or constitute a default under any documents, contracts, agreements or any other instruments which it has executed or which are applicable to it. |
17
4. | RIGHTS OF APGL |
4.1 | Liquidation Event A in the Company |
(a) | Subject to Clause 4.2 below, on occurrence of a Liquidation Event A in the Company, the holders of the IFC CCDs, IFC II CCDs, IFC III CCDs, DEG CCDs and Proparco CCPS will be entitled to receive in preference to the holders of any other Equity Securities, proceeds representing an amount equal to the IFC CCD Liquidation Price, IFC II CCD Liquidation Price, IFC III CCD Liquidation Price, DEG CCD Liquidation Price and Proparco CCPS Liquidation Price, respectively, pro rata the amounts due to them in this Clause 4.1(a). |
(b) | Subject to Clause 4.1 (a) above and Clause 4.2 below, on occurrence of a Liquidation Event A in the Company, the holders of Series H CCPS will be entitled to receive in preference to the holders of the Series F CCPS, Series B CCPS, Series C CCPS, Series D CCPS, Series A CCPS and other Equity Securities issued by the Company (other than the IFC CCDs, IFC II CCDs, IFC III CCDs, DEG CCDs and Proparco CCPS), for each of the Series H CCPS held by them, an amount equal to: |
Series H Investment Amount plus an amount that provides a return of 8% (eight percent) USD IRR on the issue price paid by the holders of Series H CCPS to the Company for subscription of the Series H CCPS ( Series H Liquidation Price ), pro rata the amounts due to them under this Clause 4.1 (b).
For the purpose of above, the calculation of the return to the holders of Series H CCPS shall be made in USD terms by taking the issue price paid by the holders of Series H CCPS in USD terms by applying the reference rate of the Reserve Bank of India for USD-INR conversion as on the date on which the issue price of Series H CCPS is received by the Company. However, at the time of payment of amounts to the holders of Series H CCPS, the USD entitled amounts shall be converted into INR amounts by applying the reference rate of the Reserve Bank of India for USD-INR conversion as on the date on which such payment is effected and payment shall thereupon be made in INR amounts.
Notwithstanding anything to the contrary contained herein, the rights of the holders of the Series H CCPS shall be subordinate to the rights of the holders of the CCDs, Proparco CCPS in relation to the Liquidation Preferences of the Company.
(c) | Subject to Clause 4.1(a), Clause 4.1 (b) above and Clause 4.2 below, on occurrence of a Liquidation Event A in the Company, the holders of the Series F CCPS will be entitled to receive in preference to the holders of the Series B CCPS, Series C CCPS, Series D CCPS, Series A CCPS and other Equity Securities issued by the Company (other than the IFC CCDs, IFC II CCDs, IFC III CCDs, DEG CCDs, Proparco CCPS and Series H CCPS), for each of the Series F CCPS held by them, an amount equal to: |
1.5 x (one decimal five times) the price paid by the holders of Series F CCPS to the Company for subscription of the Series F CCPS plus any accrued but unpaid dividends (the Series F Liquidation Price ), pro rata the amounts due to them in this Clause 4.1 (b).
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Notwithstanding anything to the contrary contained herein, the rights of the holders of the Series F CCPS shall be subordinate to the rights of the holders of the CCDs, Proparco CCPS and Series H CCPS in relation to the Liquidation Preferences of the Company.
(d) | Subject to Clause 4.1 (a), Clause 4.1 (b), Clause 4.1 (c) above and Clause 4.2 below, on occurrence of a Liquidation Event A in the Company, the holders of the Series B CCPS, Series C CCPS and Series D CCPS will be entitled to receive in preference to the holders of Series A CCPS and other Equity Securities issued by the Company (other than the IFC CCDs, IFC II CCDs, IFC III CCDs, DEG CCDs, Proparco CCPS. Series H CCPS and Series F CCPS), for each of the Series B CCPS, Series C CCPS and Series D CCPS held by them, an amount equal to: |
2 x (two times) the price paid by each of IFC, Helion and FC to the Company for subscription of the respective Series B CCPS, Series C CCPS and Series D CCPS plus any accrued but unpaid dividends (the Series B Liquidation Price , Series C Liquidation Price and Series D Liquidation Price , as the case may be; and collectively, the CCPS Liquidation Price ), pro rata the amounts due to them in this Clause 4.1(d).
Notwithstanding anything to the contrary contained herein, the rights of the holders of the Series B CCPS, Series C CCPS and Series D CCPS shall be subordinate to the rights of the holders of the CCDs, Proparco CCPS, Series H and Series F CCPS in relation to the Liquidation Preferences of the Company.
(e) | After the payment to the holders of the CCDs and Proparco CCPS in accordance with Clause 4.1(a) above, the holders of Series H CCPS in accordance with Clause 4.01 (b) above, the holders of the Series F CCPS in accordance with Clause 4.1 (c) above and the holders of the Series B CCPS, Series C CCPS and Series D CCPS in accordance with Clause 4.1(d) above, on occurrence of a Liquidation Event A and subject to Clause 4.2 below, the holders of the Series A CCPS will be entitled to receive in preference to the holders of Equity Securities (other than the holders of the CCDs, Proparco CCPS, Series H CCPS, Series F CCPS, Series B CCPS, Series C CCPS and Series D CCPS) an amount equal to, for each Series A CCPS held by Helion and FC, |
2 x (two times) the price paid by Helion and FC to the Company for subscription of the Series A CCPS plus any accrued but unpaid dividends ( Series A Liquidation Price ), pro rata the amounts due to them in this Clause 4.1(e).
4.2 | Other conditions |
(a) | Liquidation Preferences in Clause 4.1 above will be subject to applicable Law, including, if applicable, the rights of workmen and secured creditors under applicable Law. |
(b) |
To the extent that proceeds available for distribution on a Liquidation Event A are inadequate to pay the Applicable Liquidation Price in full in accordance with Clause 4.1 above, the total amount received and/or realised on such a Liquidation Event A, |
19
shall be used in same priority, first: to pay the Senior Liquidation Price to the holders of CCDs and Proparco CCPS ( pro rata the amounts due to them in Clause 4.1 (a)), then second: to pay the Series H Liquidation Price to the holders of Series H CCPS ( pro rata the amounts due to them in Clause 4.1(b)), then third: to pay the Series F Liquidation Price to the holders of the Series F CCPS ( pro rata the amounts due to them in Clause 4.1 (c)), then fourth: to pay the CCPS Liquidation Price to the holders of the Series B CCPS, Series C CCPS and Series D CCPS, respectively, ( pro rata the amounts due to them in Clause 4.1(d)), and fifth: to pay the Series A Liquidation Price to the holders of Series A CCPS ( pro rata the amounts due to them in Clause 4.1 (e)). For the avoidance of doubt, it is hereby clarified that Equity Shares of the Company held by APGL pursuant to the conversion of the Share Equivalents held by it shall be treated at par with the remaining Equity Shares of the Company for the purposes of this Clause 4.2(b) and such Equity Shares shall not be entitled to Liquidation Preference in Clause 4.1; save and except where the Share Equivalents are converted into Equity Shares of the Company on or immediately prior to and only in connection with APGL exercising its right upon the occurrence of a Liquidation Event A, in which case, notwithstanding anything to the contrary contained herein, the Equity Shares issued to the holder of the Share Equivalents will be entitled to priority in terms of payment in the like manner as the respective Share Equivalents which were converted into such Equity Shares, as set out in Clause 4.1 and this Clause 4.2(b). |
It is clarified that the Proparco CCPS shall have priority and preference over the Series A CCPS, Series B CCPS, Series C CCPS, Series D CCPS, Series F CCPS, Series H CCPS and Equity Shares issued by the Company, and the proceeds shall not be distributed to Series A CCPS, Series B CCPS, Series C CCPS, Series D CCPS, Series F CCPS, Series H CCPS and Equity Shares unless Proparco CCPS has received its applicable Senior Liquidation Price.
(c) | Subject to Clauses 4.2 (d) and (e) below: |
(i) | to the extent there are additional proceeds available for distribution after payment of the Applicable Liquidation Price to the holders of CCDs, Proparco CCPS and then Series H CCPS and then Series F CCPS and then the Series B CCPS, Series C CCPS and Series D CCPS and then Series A CCPS, the holders of Equity Shares will share pro rata in the distribution of such remaining proceeds; and |
(ii) | upon payment of the Applicable Liquidation Price as stated in Clause 4.1 above, the holders of CCDs, Proparco CCPS, Series H CCPS, Series B CCPS, Series C CCPS, Series D CCPS and Series A CCPS shall not be entitled to participate or claim a share in such additional proceeds available for distribution. |
(d) |
In case, (i) at least one of the Series A CCPS, Series B CCPS, Series C CCPS or Series D CCPS are converted into Equity Shares of the Company (other than for receiving respective Applicable Liquidation Price in the manner provided in Clause 4.1(d) and Clause 4.1(e) above, as applicable); and (ii) there are additional proceeds available for distribution after payment of the Applicable Liquidation Price to the holders of CCDs, Proparco CCPS, thereafter the Series H CCPS, thereafter the Series F CCPS, thereafter Series B CCPS, Series C CCPS and Series D CCPS and thereafter, Series A CCPS, |
20
then the holders of Series F CCPS and the holders of Equity Shares will share pro rata in the distribution of remaining proceeds. Notwithstanding the above, the holders of Series F CCPS shall not be entitled to more than half the price paid by each of their original holders to the Company for subscription of the Series F CCPS ( Series F Participation ) under this Clause 4.2(d). For the purpose of clarification in relation to this paragraph, upon payment of the Applicable Liquidation Price as stated in Clause 4.1, the holders of CCDs, Proparco CCPS, Series H CCPS, Series B CCPS, Series C CCPS, Series D CCPS and Series A CCPS shall not be entitled to participate or claim a share in such additional proceeds available for distribution. It is further clarified that in relation to this paragraph, the holders of Series F CCPS shall, in no event, be entitled to receive an amount in excess of the Series F Liquidation Price as stated in Clause 4.1 plus the Series F Participation. |
(e) | Upon occurrence of a Liquidation Event A: |
(i) | if all or some of the Series B CCPS or Series D CCPS are converted into Equity Shares of the Company (other than for receiving their respective Applicable Liquidation Price in the manner provided in Clause 4.1(d) above) on or immediately prior to the occurrence of a Liquidation Event A, they shall have a right to participate pro rata to their shareholding on an As If Converted Basis in the proceeds available pursuant to the occurrence of Liquidation Event A; and |
(ii) | if the holders of Series F CCPS have not converted their respective Series F CCPS into Equity Shares (or have converted their respective Series F CCPS into Equity Shares for receiving their respective Applicable Liquidation Price in the manner provided in Clause 4.1(c) above) and have exercised their right to the Series F Participation, pursuant to exercise of which, amounts to be received by APGL (with respect to Series B CCPS and Series D CCPS held by it that have been converted into Equity Shares, other than for receiving their respective Applicable Liquidation Price in the manner provided in Clause 4.1(d) above) from the proceeds of the Liquidation Event A is less than the amounts APGL would have otherwise received (with respect to Series B CCPS and Series D CCPS held by it that have been converted into Equity Shares other than for receiving their respective Applicable Liquidation Price in the manner provided in Clause 4.1(d) above) if the holders of Series F CCPS had not exercised the right of Series F Participation (the difference of such amount hereinafter referred to as the Liquidation Differential Amount ), |
then, the Sponsors shall through a suitable mechanism (as agreed upon with APGL) ensure that APGL receives the Liquidation Differential Amount simultaneously with the amounts received by the holders of Series F CCPS pursuant to the Series F Participation. It is clarified that:
(i) | the failure of the Sponsors to ensure that the Liquidation Differential Amount is received by APGL (simultaneously with the amounts received by the holders of Series F CCPS pursuant to Series F Participation) shall not affect the right of the holders of Series F CCPS to receive amounts pursuant to the Series F Participation; and |
(ii) |
unless the Sponsors ensure that the Liquidation Differential Amount is received by APGL simultaneously with the amounts received by the holders of Series F CCPS pursuant to the Series F Participation, the Sponsors shall not |
21
receive any amounts from the proceeds upon occurrence of Liquidation Event A. |
(f) | The Sponsors and the Company agree and undertake that they shall honour the Liquidation Preference of first, the holders of CCDs and Proparco CCPS, then second, the holders of the Series H CCPS, then third, the holders of the Series F CCPS, then fourth, the holders of the Series B CCPS, Series C CCPS and Series D CCPS and finally, the holders of Series A CCPS in distributing the proceeds of a Liquidation Event A in any manner legally permissible, including without limitation, re-distribution of proceeds that may be received by the Sponsors on a Liquidation Event A, to APGL. |
4.3 | Liquidation Event B in the Company |
The Parties agree that no Liquidation Event B can be completed by the Company unless such transaction has been approved by APGL in accordance with Clause 11.8 of this Agreement.
4.4 | Liquidation Event A or Liquidation Event B of a Subsidiary |
The Parties agree that no Liquidation Event B can be completed by a Subsidiary unless such transaction has been approved by APGL in accordance with Clause 11.8 of this Agreement.
Subject to applicable Law, including if applicable, the right of workmen and secured creditors under applicable Law and Clause 4.5, on the occurrence of a Liquidation Event A or a Liquidation Event B in respect of a Subsidiary of the Company, the Parties agree that all proceeds received / available for distribution in respect of such Subsidiary (in case of Azure Power Punjab Private Limited, after payment of proceeds by Azure Power Punjab Private Limited to OPIC in repayment of any loan that may have been taken from OPIC by Azure Power Punjab Private Limited) shall be immediately paid to the Company, along with the other shareholders of such Subsidiary, and the amounts paid to the Company shall not be less than its pro rata share based on its shareholding percentage in such Subsidiary.
4.5 | Liquidation Event A or Liquidation Event B of a Key Subsidiary or Key Subsidiaries |
In the event of a Liquidation Event A of a Key Subsidiary or Key Subsidiaries, the Parties agree that the Company and all the Subsidiaries of the Company will be wound up, and the proceeds of such winding up will be distributed amongst the Shareholders in the manner set out in Clause 4.1 and will be subject to the terms of Clause 4.2.
The Parties further agree that if on the occurrence of Liquidation Event B in relation to the Key Subsidiary or Key Subsidiaries, on receipt of notice from APGL, asking for the liquidation for the Company and its Subsidiaries, the Company and its Subsidiaries shall be wound up and the proceeds so realised shall be distributed in order of the preference set out in Clause 4.1 above and will be subject to the terms of Clause 4.2. The Parties agree to take all such steps as may be required to ensure compliance of the terms of this Clause 4.
5. | Not Used |
22
6. | TRANSFER OF SHARES |
6.1 | Restrictions on Transfer |
6.1.1 | Subject to compliance with this Clause 6.1 ( Restrictions on Transfer ), the Equity Securities (or any part thereof) held by APGL shall be freely transferable at all times and to any Person without the prior consent of any other Person, including the Company and the Sponsors. It is clarified that no such transfer by APGL to any Person shall be effective unless the transferee of such shares executes a Deed of Adherence as set out in Schedule A of this Agreement. |
6.1.2 | Notwithstanding anything contained in this Agreement, the Shareholders of the Company shall not Transfer any of the Equity Shares held by them to any Person (i) who is named on (a) lists promulgated by the United Nations Security Council or its committees pursuant to resolutions issued under Chapter VII of the United Nations Charier; or (b) the World Bank Listing of Ineligible Firms (see www.worldbank.org/debarr); or (c) Financial Sanctions List; or (d) the Specially Designated Nationals List administered by OFAC, or (ii) who do not comply with the FATF Recommendations against money laundering and the terrorism financing, or (iii) who has been found by a judicial or administrative process or who or which is under any administrative, supervisory or criminal inquiry to have committed or engaged in any act given rise to Corrupt Practices, Fraudulent Practices, Anti-Competitive Practices, money laundering or terrorism financing, or (iv) who finances, buys or provides, materials or sectors subject to United Nations, European Union or French Embargo and/or is engaged in any sectors under United Nations, European Union or French Embargo or (v) whose equity, quasi equity and or shareholders loans accounts or associates current accounts are of Illicit Origin; or (vi) who is the target of any economic sanctions administered by OFAC. |
6.1.3 | Any Transfer of Equity Securities attempted in violation of this Clause 6 ( Transfer of Shares ) shall be null and void, and shall not be binding upon the Company or the Board and the Company shall not, and each of the Parties shall exercise all rights and powers available to it to procure that the Company shall not, reflect on its books any Transfer of Equity Securities to any Person except a Transfer made in accordance with this Clause 6. |
6.1.4 | The Company shall record in its share registry the restrictions on the Transfer of the Equity Securities of the Company set forth in this Clause 6, and note such restrictions on the Transfer of the Equity Securities of the Company on the certificate(s) for Equity Securities issued by the Company. |
6.2 | Transfer by Sponsors |
6.2.1 | Notwithstanding anything contained in this Agreement, the Sponsors shall not directly or indirectly Transfer any Equity Shares held by them in any manner whatsoever to any Person (including to their Affiliates or other Sponsors) or create any Encumbrance with respect to any of the Equity Shares held by them (including pledge or creating any charge on the Equity Shares for any reason whatsoever) without the prior written consent of APGL. |
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6.2.2 | Subject to Clause 6.2.1 above, the Sponsors may transfer the Equity Shares held by them to any Person only in accordance with Clause 6.8 ( Buy Back of Sponsor Securities ) Clause 6.9 ( APGLs Call Option ) and Clause 6.10 ( Sponsors Put Option ). It is clarified that the Sponsors shall not Transfer any Equity Shares they hold in the Company other than pursuant to Clause 6.8 ( Buy Back of Sponsor Securities ) Clause 6.9 ( APGLs Call Option ) and Clause 6.10 ( Sponsors Put Option ). |
6.3 | Transfer by the Investors |
6.3.1 | Not used |
6.3.2 | Not used |
6.3.3 | Co-Sale Rights |
[DELETED]
6.3.4 | Transfer to Competitor |
[DELETED]
6.4 | Drag Right of the Investors |
[DELETED]
6.5 | Drag Right of IFC, DEG and Proparco |
[DELETED]
6.6 | IFC, DEG and Proparco Call Option |
[DELETED]
6.7 | Sponsors, Helion and FC Call Option |
[DELETED]
6.8 | Buy Back of Sponsor Securities |
6.8.1 | Subject to the provisions of the Act, APGL shall have the right, exercisable at its sole discretion, to require the Company to buy back all of the Sponsor Securities in accordance with this Clause 6.8 (the Buy Back Option ). |
6.8.2 | Upon APGL notifying the Company in writing (the Buy Back Notice ) of its decision to exercise the Buy Back Option, the Company shall initiate the process of buy back of the Sponsor Securities within a period of 15 (fifteen) Business Days of the receipt of the Buy Back Notice by the Company ( Buy Back Start Date ). |
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6.8.3 | The Company shall be obligated to buy back all of the Sponsor Securities in accordance with applicable Law within the Sponsor Buy-Back Period (as defined below), and if the Company is not permitted to buy back all of the Sponsor Securities under applicable Law within such Sponsor Buy-Back Period, then the Company shall buy back in every subsequent Financial Year such number of Sponsor Securities which are permissible to be bought back to the maximum extent till all Sponsor Securities have been bought back by the Company. |
Sponsor Buy-Back Period shall mean a period of 60 (sixty) days from the date of the Buy Back Start Date, and for buy back under any subsequent Financial Years, a period of 60 (sixty) days starting from August 1 of such Financial Year.
The Sponsors agree that the price for the buyback shall be the minimum price permissible under applicable Law for the buyback of Equity Shares by the Company from the Sponsors. The Sponsors hereby expressly waive all their rights available under Law in connection with being a minority shareholders of the Company. The Sponsors acknowledge that it is the intention of all Parties to eventually make the Company a wholly owned subsidiary of APGL, and the Sponsors shall not raise any claims or objections to resist the buyback of the Sponsor Securities by the Company.
6.9 | APGLs Call Option |
6.9.1 | APGL shall have the right exercisable at its sole discretion to require the Sponsors to sell to APGL or its nominee all or part of the Sponsor Securities ( Call Option ) in accordance with this Clause 6.9. It is clarified that APGL shall have the right to purchase the Sponsor Securities pursuant to the Call Option either by itself or nominate any other Person to purchase such Sponsor Securities ( Call Purchaser ). |
6.9.2 | APGL shall exercise the Call Option by delivering a written notice ( Call Option Notice ) to the Sponsors of its intention to exercise the Call Option. The Call Option Notice shall set out the number of Equity Shares to be sold by each Sponsor, the sale price for each such Equity Share ( Call Option Price ) and the date ( Call Settlement Date ) on which the Sponsors shall sell the Sponsor Securities to the Call Purchaser. The price for the sale of Sponsor Securities to the Call Purchaser shall be the minimum price permissible under applicable Law for such sale. For the purpose of valuation of the Sponsor Securities, the Company shall appoint a certified chartered accountant or a category I merchant banker as identified by APGL, whose valuation report shall be filed along with the required filings with the Reserve Bank of India, if applicable. |
6.9.3 | The issuance of the Call Option Notice shall constitute a valid and binding agreement between the APGL and the Sponsors for the purchase by the Call Purchaser of all of the Sponsor Securities. The Sponsors hereby irrevocably agree to transfer the Sponsor Securities at the Call Option Price as indicated in the Call Option Notice. On the Call Settlement Date, the Sponsors shall sell the Sponsor Securities to the Call Purchaser by delivery of the share certificates representing such Sponsor Securities (free and clear from all Encumbrances), together with duly endorsed forms of transfer in respect of such Sponsor Securities to the Call Purchaser; and the Call Purchaser shall pay in full the applicable Call Option Price as mentioned in the Call Option Notice to the Sponsors. |
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6.9.4 | The Company and the Shareholders undertake to provide all necessary assistance in obtaining and/or making all the required filings, certifications, consents and approvals for consummation of the Call Option. |
6.9.5 | Upon completion of the sale of the Sponsor Securities, the Sponsors shall relinquish, and shall no longer be entitled to any dividends, profits, retained earnings of the Company or similar rights that attach to the Sponsor Securities so transferred to the Call Purchaser pursuant to the Call Option. |
6.10 | Sponsors Put Option |
6.10.1 | After the completion of initial public offering of APGL, the Sponsors shall have the right to request APGL or its nominee to purchase all or part of the Sponsor Securities ( Purchase Option ) in accordance with this Clause 6.10. APGL shall have the right (not an obligation) to purchase the Sponsor Securities pursuant to the Purchase Option exercised by the Sponsors, which purchase can be made by APGL either by itself or nominate any other Person to purchase such Sponsor Securities ( Option Purchaser ). |
6.10.2 | Sponsors shall exercise the Purchase Option by delivering a written notice ( Option Notice ) to APGL intimating APGL of their intention to exercise the Purchase Option. The Option Notice shall set out the number of Equity Shares to be sold by each Sponsor, the sale price for each such Equity Share ( Option Price ) and the date ( Settlement Date ) on which the Sponsors shall sell the Sponsor Securities to the Option Purchaser, which date shall not be earlier than 6 (months) from the date of receipt of the Option Notice by APGL. The price for the sale of Sponsor Securities to the Option Purchaser shall be the minimum price permissible under applicable Law for such sale. For the purpose of valuation of the Sponsor Securities, the Company shall appoint a certified chartered accountant or a category I merchant banker as identified by Sponsors and approved by APGL, whose valuation report shall be filed along with the required filings with the Reserve Bank of India, if applicable. |
6.10.3 | If APGL intends to purchase the Sponsor Securities in accordance with the terms as set out in the Option Notice, it shall issue a written notice ( Acceptance Notice ) to the Sponsors confirming the terms of the Option Notice. The issuance of the Acceptance Notice shall constitute a valid and binding agreement between the APGL and the Sponsors for the purchase by the Option Purchaser of all of the Sponsor Securities so offered by the Sponsors. The Sponsors hereby irrevocably agree to transfer the Sponsor Securities at the Option Price as indicated in the Option Notice, subject to the issuance of Acceptance Notice by APGL. On the Settlement Date, the Sponsors shall sell the Sponsor Securities to the Option Purchaser by delivery of the share certificates representing such Sponsor Securities (free and clear from all Encumbrances other than Encumbrances as contained in the Articles), together with duly endorsed forms of transfer in respect of such Sponsor Securities to the Option Purchaser; and the Option Purchaser shall pay in full the applicable Option Price as mentioned in the Option Notice to the Sponsors. |
6.10.4 |
The Company and the Shareholders undertake to provide all necessary assistance in obtaining and/ or making all the required filings, certifications, consents and approvals |
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for consummation of the Purchase Option, subject to the delivery of Acceptance Notice by APGL. |
6.10.5 | Upon completion of the sale of the Sponsor Securities, the Sponsors shall relinquish, and shall no longer be entitled to any dividends, profits, retained earnings of the Company or similar rights that attach to the Sponsor Securities so transferred to the Option Purchaser pursuant to the Purchase Option. |
6.10.6 | Notwithstanding anything stated in this Clause 6.10, this Clause 6.10 shall cease to apply in case the initial public offering of APGL is not completed by 31 st December 2015. |
7. | NOT USED |
8. | REINSTATEMENT OF RIGHTS |
[DELETED]
9. | BUY-BACK OF EQUITY SECURITIES |
9.1 | APGL shall have a right exercisable at its sole discretion to require the Company to buy back all or part of the Equity Securities of the Company ( Shareholder Securities ) in accordance with this Clause 9 (the APGL Buy Back Option ), including on the occurrence of the following events: |
(i) | in the event of a breach of the terms of Proparcos policy covenants as specified under Schedule O of this Agreement; |
(ii) | in the event of a breach of the terms of IFC Policy Covenants as specified under Schedule K of this Agreement; and |
(iii) | in the event the Company or any of its Subsidiaries engage in any of the activities as set out in Schedule N of this Agreement. |
Upon APGL notifying the Company in writing (the APGL Buy Back Notice ) of its decision to exercise the APGL Buy Back Option in accordance with the preceding paragraph, which APGL Buy Back Notice shall also specify the number and kind of Shareholder Securities to be bought back by the Company, the Company shall initiate the process of buy back of the Shareholder Securities within a period of 30 (thirty) Business Days of the receipt of the APGL Buy Back Notice by the Company ( APGL Buy Back Start Date ).
The Company shall be obligated to buy back all of the Shareholder Securities in accordance with applicable Law within the APGL Buy-Back Period (as defined below), and if the Company is not permitted to buy back all of the Shareholder Securities under applicable Law within such APGL Buy Back Period, then the Company shall buy back in every subsequent Financial Year, such Shareholder Securities which are permissible to be bought back to the maximum extent till all the Shareholder Securities specified by APGL in the APGL Buy Back Notice have been bought back in accordance with this Clause 9.
APGL Buy Back Period shall mean a period of 60 (sixty) days from the date of the APGL
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Buy Back Start Date, and for buy back under any subsequent Financial Years, a period of 60 (sixty) days starting from August 1 of such Financial Year. It is clarified that, if the Company is not permitted to buy back within a period of 60 (sixty) days from the date of the APGL Buy Back Start Date due to Company having already undertaken buy back within the same Financial Year, then the Company shall undertake such buy back in the succeeding Financial Years as permitted by applicable Law, along with the buyback pursuant to APGL Buy Back Options exercised earlier by APGL that could not be fulfilled, if any.
9.2 | Notwithstanding anything contained in this Agreement, upon exercising of the APGL Buy- Back Option under this Agreement, APGL shall be required to convert the Equity Securities held by it into Equity Shares of the Company in accordance with Schedule C to Schedule J and Schedule P, Schedule Q and Schedule R (as the case may be) of this Agreement prior to the actual buy back, and the Company shall take all such steps to ensure such conversion. For the avoidance of doubt, it is hereby clarified that Equity Shares of the Company held by the holders of CCDs and and/or Proparco CCPS pursuant to the conversion of the CCDs and Proparco CCPS shall be treated at par with the remaining Equity Shares of the Company for the purposes of this Clause 9, save and except where the CCDs and Proparco CCPS are converted into Equity Shares of the Company on or immediately prior to and only in connection with the holders of IFC, DEG and/or Proparco exercising its APGL Buy-Back Option under this Agreement, in which case, notwithstanding anything to the contrary contained herein, the Equity Shares issued to the holder of the CCDs and Proparco CCPS will be entitled to priority in terms of payment in the like manner as the CCDs and Proparco CCPS, as set out in Clause 9.3. |
9.3 | The APGL Buy-Back Option shall be exercised in accordance with, and subject to, applicable Laws. In the event that all the Equity Shares (including those issued upon conversion of the Equity Securities) cannot be bought back by the Company due to operation of Law (including the Act), and if on the date of the APGL Buy Back Notice, the number of Equity Shares that may then be legally bought back by the Company is less than the number of Equity Shares held by APGL, the Company undertakes to effect a buy back in accordance with Clause 9.3.1. |
9.3.1 | In the event that the buyback is effected under this Clause 9.3, (a) the Parties agree that they shall honour the buyback preferences under Clause 9.4; and (b) the Sponsors undertake that they shall not tender their Equity Securities for buy back nor shall they raise any objection to the Company accepting the tender by APGL of the Equity Shares held by it under such APGL Buy-Back Option. |
9.4 | Buy-Back Preferences |
(a) | Buy back of CCDs and Proparco CCPS |
The Company shall first buy back all the CCDs and Proparco CCPS upon their conversion into Equity Shares of the Company, for an amount equal to their respective Senior Liquidation Price plus any accrued and unpaid interest, within the APGL Buy Back Period, in pro rata proportion to the amount due to them in this Clause 9.4 (a).
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(b) | Buy back of Series H CCPS |
After buying back all of CCDs and Proparco CCPS in accordance with Clause 9.4 (a) above, the Company will buy-back all Series H CCPS for an amount that provides the holders of the Series H CCPS an amount equal to Series H Liquidation Price plus any accrued and unpaid dividends thereon, within the APGL Buy Back Period, in pro rata proportion to the amounts due to the holders of the Series H CCPS under this Clause 9.4(b).
For the purpose of above, the calculation of the entitled amounts to the holders of Series H CCPS shall be made in USD terms by taking the issue price paid by the holders of Series H CCPS in USD terms by applying the reference rate of the Reserve Bank of India for USD-INR conversion as on the date on which the issue price of Series H CCPS is received by the Company. However, at the time of payment of amounts to the holders of Series H CCPS, the USD entitled amounts shall be converted into INR amounts by applying the reference rate of the Reserve Bank of India for USD-INR conversion as on the date on which such payment is effected and payment shall thereupon be made in INR amounts.
(c) | Buy back of Series F CCPS |
After buying back all the Equity Shares issued on the conversion of CCDs, Proparco CCPS and Series H CCPS in accordance with Clause 9.4 (a) and Clause 9.4 (b) above, the Company will buy back such number of Series F CCPS, which upon their conversion into Equity Shares, that provides the holders of the Series F CCPS an amount equal to 150% (one hundred and fifty percent) of the Series F Investment Amount, plus any accrued and unpaid dividends thereon, within the APGL Buy Back Period, in pro rata proportion to the amounts due to the holders of the Series F CCPS under this Clause 9.4 (c).
The number of Series F CCPS to be bought back under this Clause 9.4 (c) shall be such that after the buy back in accordance with this Clause 9.4 (c), the holders of the Series F CCPS are left with such number of Series F CCPS as will be required by them to receive amounts pursuant to Clause 9.4 (f).
(d) | Buy back of Series B CCPS/ Series C CCPS/ Series D CCPS |
After buying back all the Equity Shares issued on the conversion of (i) CCDs and Proparco CCPS in accordance with Clause 9.4 (a) above; and (ii) Series H CCPS in accordance with Clause 9.4 (b) above, and (iii) Series F CCPS in accordance with Clause 9.4 (c) above, the Company will buy back all the Series B CCPS, Series C CCPS and Series D CCPS upon their conversion into Equity Shares for an amount equal to 200 % (two hundred per cent) of the Series B Investment Amount, Series C Investment Amount and Series D Investment Amount, as applicable, plus any accrued and unpaid dividends, within the APGL Buy Back Period, in pro rata proportion to the amounts due to them in this Clause 9.4 (d).
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(e) | Buy back of Series A CCPS |
After buying back all the Equity Shares in accordance with Clause 9.4 (a), (b), (c) and (d) above, the Company will buy back all the Series A CCPS upon their conversion into Equity Shares for an amount equal to 140% (one hundred and forty percent) of the Series A Investment Amount plus any accrued and unpaid dividends, within the APGL Buy Back Period, in pro rata proportion to the amounts due to them in this Clause 9.4 (e).
(f) | Buy Back of remaining Shares |
After honouring the buyback preferences under Clauses 9.4 (a), (b), (c), (e) and (f), the Company may buy back Equity Shares of the Company, in a manner such that the holders of the outstanding Series F CCPS, upon their conversion into Equity Shares, are entitled to participate in the buyback pro rata along with the holders of other Equity Shares. Notwithstanding the foregoing, the holders of Series F CCPS shall be entitled to an amount not more than the Series F Participation pursuant to the buy back in this Clause 9.4 (f). It is clarified that the number of Equity Shares that the outstanding Series F CCPS shall be converted into for the purpose of this Clause 9.4 (f) shall be determined such that the holders of the outstanding Series F CCPS do not receive any amount in excess of Series F Participation. The Company shall not buy back Equity Share in this Clause 9.4 (f) from any holder of Equity Shares unless such buy back provides an opportunity to the holders of Series F CCPS to receive their Series F Participation as set out above.
Upon exercise of the APGL Buy-Back Option in accordance with Clause 9.3 above:
(i) | if all or some of the Series B CCPS or Series D CCPS are converted into Equity Shares of the Company (other than for receiving their respective entitlement in the manner provided in Clause 9.4) on or immediately prior to the exercise of the APGL Buy-Back Option under Clause 9.4; and |
(ii) | if the holders of Series F CCPS have not converted their respective Series F CCPS into Equity Shares (or have converted their respective Series F CCPS into Equity Shares for receiving their respective entitlement in the manner provided in Clause 9.4) and have exercised their right to the Series F Participation, pursuant to exercise of which, amounts to be received by IFC (with respect to Series B CCPS and Series D CCPS held by it that have been converted into Equity Shares, other than for receiving their respective entitlement in the manner provided in Clause 9.4) from the proceeds available from the exercise of the APGL Buy-Back Option is less than the amounts IFC would have otherwise received (with respect to Series B CCPS and Series D CCPS held by it that have been converted into Equity Shares other than for receiving their share in the proceeds available from the buyback of Equity Securities) if the holders of Series F CCPS had not exercised the right of Series F Participation (the difference of such amount hereinafter referred to as the Buy-Back Differential Amount ), |
then, the Sponsors shall through a suitable mechanism (as agreed upon with holders of Series B CCPS and Series D CCPS) ensure that holders of Series B CCPS and
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Series D CCPs receive the Buy-Back Differential Amount simultaneously with the amounts received by the holders of Series F CCPS pursuant to Series F Participation.
9.5 | The Sponsors agree and undertake that they shall honour the buyback obligations of the Company as set out in this Clause 9. |
10. | NOT USED |
11. | MANAGEMENT OF THE COMPANY |
11.1 | Directors |
The business and affairs of the Company shall be managed by the Board.
11.2 | Board Composition |
11.2.1 | APGL shall have the right to nominate 4 (four) Directors to the Board (the APGL Directors ). |
11.2.2 | The Sponsors shall have the right to nominate 2 (two) Directors to the Board ( Sponsor Directors ), provided such Sponsor Directors shall be Employees or shareholders or consultants of APGL or the Company. |
11.2.3 | The Shareholders holding more than 50% (fifty percent) of the share capital of the company on a Fully Diluted Basis shall have the right to nominate at least 1 (one) Director on the Board as an independent director ( Independent Director ). |
11.3 | Removal of a Director |
The Parties agree that with respect to the APGL Directors and Sponsor Directors, in pursuance of Clause 11.2, the power to appoint and remove a Director lies solely with the Party so entitled to nominate that Director. Each Party so entitled, may by notice in writing signed by them and left at or sent to the registered office of the Company, nominate their nominee Directors and by like notice remove any Director so appointed. The Party nominating a Director shall from time to time, by like notice, have the right to appoint any other person to be a Director in the place of the Director so removed or in the place of any Director vacating office as a result of being removed by that Party or in any other way. The remaining Directors, as then constituting the Board shall act to appoint or remove such person as the nominee Director.
11.4 | No Qualification Shares |
A Director does not need to hold any qualification shares.
11.5 | Not Used |
11.6 | Casual Vacancies |
If any Director resigns, vacates or is removed from office before his term expires, the resulting casual vacancy may be filled by a nominee of the Party who originally nominated the Director
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vacating office, but any Person so nominated, shall retain his office only so long as the vacating Director would have retained the same, if no vacancy had occurred. The Parties agree that in the case of any casual vacancy in the office of the Independent Director, the same shall be filled in accordance with the Act.
11.7 | Proceedings of the Board |
11.7.1 | Number of Board meetings and Venue |
The Board shall meet at least 4 (four) times in every calendar year and at least once in every calendar quarter. Meetings of the Board shall ordinarily be held at New Delhi/ Gurgaon, India. A Board meeting may also be held outside New Delhi/ Gurgaon at such other places (within India or outside) as may be agreed by a majority of the Directors, from time to time. Subject to the provisions of the Act, a Board meeting may also be held by teleconference or video conferencing and/ or the presence of a Director at a meeting may be recorded if he is present over telephone or video conferencing, if such meeting or presence, as the case may be, is not contrary to Law and shall be counted for the purpose of quorum under the Act.
11.7.2 | Convening meetings of the Board |
Any Director may, and the company secretary, if so appointed, shall on the requisition of a Director, summon a meeting of the Board, in accordance with the notice and other requirements set out in this Clause 11.7.
11.7.3 | Notice for Board Meetings |
At least 15 (fifteen) Business Days prior a written notice shall be given to each of the Directors of any meeting of the Board. A meeting of the Board may be held at shorter notice with the written consent (which may be signified by letter, facsimile or e-mail with receipt acknowledged) of at least 4 (four) Directors including the written consent of the APGL Directors and one Independent Director.
11.7.4 | Contents of Notice |
Every notice convening a meeting of the Board shall set forth in full and sufficient detail the business to be transacted thereat, and no item or business shall be transacted at such meeting unless the same has been stated in full and in sufficient detail in the notice convening the meeting, except as otherwise consented to by all the Directors, or their alternates, present at the meeting. The draft resolutions and other documents for all matters to be considered at the Board meeting must be furnished to all the Directors at least 7 (seven) Business Days prior to the date of the proposed Board meeting, except where such meeting is called on shorter notice. The secretary of the Company shall prepare the notice for the meetings. If the secretary is unavailable, unwilling or unable to do so, the Director that summoned the meeting shall prepare the notice.
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11.7.5 | Quorum for the Board Meetings |
(i) | The quorum for a Board meeting shall require the presence of all APGL Directors (who are nominated on the Board) and 1 (one) Sponsor Director. A meeting of the Board shall not be held or continued without meeting the requirement of this Clause 11.7.5, unless such Director has expressly waived the requirement for his presence either in writing or by facsimile transmission and in that case that Director shall not be required for quorum. |
(ii) | Notwithstanding anything contained in Clause 11.7.5 (i) above, in the event any of the APGL Directors, which are required to form quorum are unable to attend the scheduled Board meeting, such Director shall provide a written request to the Company, at least 5 (five) days prior to the date of the proposed Board meeting, to postpone the Board meeting (the Postponement Notice ), in which case such Board Meeting shall be postponed to such date which shall not be later than 7 (seven) days from the date of the scheduled Board meeting. In the event such an APGL Director fails to provide a valid Postponement Notice, the Board meeting shall convene as scheduled, subject to there being a valid quorum as per the provisions of the Act. In the event such an APGL Director provides the Postponement Notice and, thereafter is not present or has not nominated an alternate on his behalf, then the Board can proceed with the Board meeting and its agenda subject to there being a valid quorum as per the provisions of the Act. |
11.7.6 | Committees of the Board |
A committee of Directors or other Persons, to whom any powers of the Board are delegated, can be appointed only by the Board. APGL shall have the right to have its nominees as members of any such committee, the number of such nominees being subject to Board approval. The provisions pertaining to the Board in this Agreement shall also pertain to every committee of the Board.
11.7.7 | Circular Resolutions |
The Board may act by written resolution, or in any other legally permissible manner, on any matter, except matters, which by Law may only be acted upon at a meeting. Subject to any restrictions imposed by Law and the provisions of Clause 11.8 of this Agreement, no written resolution shall be deemed to have been duly adopted by the Board, unless such written resolution shall have been approved by the requisite majority of Directors, as provided in various clauses in this Agreement.
11.7.8 | Chairman |
The Chairman of the Board shall be selected by the members of the Board at every Board meeting. The Chairman shall not have a casting vote.
11.7.9 | Alternate Directors |
The Board shall, if requested by the original Director or the Party that nominated the
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original Director, appoint an alternate director to act as a Director during the absence of any Director from India, for the period prescribed under the Act. The original Director in whose place such alternate director is to be appointed, or failing him the Party that appointed the original Director, shall recommend the alternate Director to the Board. The alternate Director shall, ipso facto vacate office as and when the original Director returns to India.
11.8 | Restrictions on the Powers of the Board and the Shareholders |
Notwithstanding anything to the contrary contained in this Agreement, the decisions on items mentioned in Schedule L and Schedule M, shall not be taken and/or implemented by the Company and its Subsidiaries, at a meeting of its Board or at a meeting of its Shareholders, unless the prior written consent in favour of such decision has been obtained from APGL. In addition, no decisions on any matter shall be taken at a meeting of the Shareholders of the Company, unless the prior written consent in favour of such decision has been obtained from APGL.
11.9 | Liability of APGL Directors |
The Sponsors and the Company expressly agree and undertake that the APGL Directors shall not be in charge of, or responsible for the day to day management of the Company and shall not be liable for any default or failure of the Company in complying with the provisions of any applicable Laws, including but not limited to, defaults under the applicable Laws.
11.10 | Indemnification |
The Company agrees to indemnify all Directors to the maximum extent permitted by applicable Law. The Articles shall provide the broadest indemnification of directors permitted by Law. In addition to the above, the Company and the Sponsors agree to jointly and severally indemnify and keep APGL and its Affiliates, together with their respective officers, directors, employees, Affiliates, and agents (the Indemnified Parties ), indemnified, on demand, against each loss, liability and cost (including legal and other professional costs) suffered or incurred by the Indemnified Parties arising out of or in connection with the breach by the Sponsors and or the Company of the terms, conditions, representations, undertakings, warranties or other covenants or other provisions entered into or given by the Sponsors and/or the Company as contained in the Transaction Documents or in respect of, or in any manner related to, any act or omission of the Sponsors and/or the Company.
12. | SHAREHOLDERS MEETINGS |
12.1 | General Meetings |
An annual general meeting of the Shareholders of the Company shall be held in accordance with the Act. Subject to the foregoing, the Board may convene an extraordinary general meeting of the Shareholders whenever it deems appropriate.
12.2 | Notice for General Meetings |
At least 21 (twenty-one) days prior written notice of every general meeting of Shareholders
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shall be given to all Shareholders whose names appear on the Register of Members of the Company. A meeting of the Shareholders may be called by giving shorter notice with the written consent of APGL and the Sponsors.
12.3 | Contents of Notice |
The notice to Shareholders shall specify the place, date and time of the meeting. Every notice convening a meeting of the Shareholders shall set forth in full and sufficient detail the business to be transacted thereat, and no business shall be transacted at such meeting unless the same has been stated in the notice convening the meeting. The draft resolutions to be considered at the shareholders meetings must be furnished to all the Shareholders at least 10 (ten) days prior to the date of the proposed shareholders meeting.
12.4 | Chairman for General Meeting |
The Chairman of the immediately preceding Board meeting shall act as the Chairman of the general meeting, except (a) in the event such individual is not present for the general meeting, in which case the Shareholders may elect any other person as the Chairman, and (b) in the case of a meeting requisitioned by any Shareholders under Section 100 of the Act, in which case the Shareholders may elect any other person as the Chairman. The Chairman shall have no second or casting vote.
12.5 | Proxies |
Any Shareholder of the Company may appoint another Person as his proxy (and in case of a corporate Shareholder, an authorized representative) to attend a meeting and vote thereat on such Shareholders behalf, whether on poll or show of hands, provided that the power given to such proxy must be in writing.
12.6 | Quorum for General Meetings |
Subject to the provisions of the Act, the presence of the authorised representative of APGL shall be required to constitute quorum for a general body meeting.
12.7 | Adjournment of General Meetings for lack of Quorum |
If within half an hour from the time appointed for holding a general meeting of the Company, a quorum is not present, the meeting shall stand adjourned for a period determined by the Chairman, but not less than 7 (seven) days. Notice of the adjourned meeting shall be provided to all the Shareholders along with the draft resolutions to be considered at the meetings at least 5 (five) days prior to the date of the adjourned meeting. The quorum requirements set out at Clause 12.6 above shall, subject to the provisions of the Act, apply at such adjourned meeting.
13. | EXERCISE OF VOTING & OTHER RIGHTS BY PARTIES |
13.1 |
The Sponsors shall exercise the voting rights on the Sponsor Securities on the instructions and directions of APGL. If required by APGL, the Sponsors shall execute all documents and undertake all actions and deeds to give effect to the instructions and directions of APGL in this regard, including power of attorneys and/or proxies in favour of the person nominated by |
35
APGL, who shall act on the instructions and directions of APGL. In case no instructions or directions are provided by APGL, the Sponsors shall vote for its Sponsor Securities in the manner consistent and in agreement with the voting by APGL on its Equity Shares in the Company. |
Subject to the above, the Sponsors undertake to ensure that they shall at all times exercise their votes and through their respective appointed/ nominated Directors (or alternate directors) at Board meetings and otherwise, act in such manner so as to comply with, and to fully and effectually implement the spirit, intent and specific provisions of this Agreement.
13.2 | The Sponsors hereby expressly waive all their rights available under Law in connection with being a minority shareholders of the Company, and agrees to comply with the decisions made at the shareholders meeting and the Board of the Company. |
13.3 | If a resolution contrary to the terms of this Agreement is proposed at any meeting of Shareholders or at any meeting of the Board or any committee thereof, APGL and the Sponsors, their representatives (including proxies) and their respective nominated Directors (or alternate directors), shall vote against the same; provided, however, that if for any reason such a resolution is passed, the Shareholders shall, as necessary jointly convene or cause to be convened a meeting of the Board or any committee thereof or an extraordinary general meeting of the Shareholders for the purpose of implementing the terms and conditions of this Agreement and to give effect thereto, and to supersede such resolution. |
14. | Not Used |
15. | Not Used |
16. | FINANCIAL ACCOUNTING AND AUDITS |
16.1 | Financial and accounting records |
The Company shall maintain true and accurate financial and accounting records of all operations in accordance with Indian GAAP, and in accordance with all relevant Indian statutory and accounting standards and the policies from time to time adopted by the Board. The financial statements and Accounts of the Company shall be prepared in English and shall be audited on an annual basis.
16.2 | Statutory Auditors |
The Company in a general meeting shall appoint a reputed chartered accountancy firm registered in India that is recommended by APGL as the statutory auditors for the Company.
16.3 | Audit Committee and Compensation Committee |
The Board will establish and continue to have an audit committee (hereinafter referred to as the Audit Committee ) and a compensation committee, which will periodically review the salaries or other remuneration of all Key Managerial Persons including the CEO (the Compensation Committee ). APGL shall at all times be entitled to appoint its nominees on the Audit Committee and Compensation Committee.
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17. | OTHER COVENANTS |
17.1 | IFC and GIF Policy Covenants |
So long as APGL holds any Equity Securities in the Company, the Company shall comply and the Sponsors shall ensure that the Company complies with IFCs standard policies on environment, social, anti-corruption, anti-money laundering and insurance issues, as provided in Schedule K . The Company shall deliver to APGL, GIF and IFC, within 90 (ninety) days after the end of each Financial Year, an annual social and environmental performance report confirming compliance with the social and environmental action plan; and notify APGL, GIF and IFC, within 3 (three) days after the occurrence, of any social, labour, health and safety, security or environmental incident, accident or circumstance reasonably expected to have a material adverse social or environmental impact. In addition, IFC, GIF and the IFC compliance advisor ombudsman shall also have inspection and access rights.
17.2 | Other Covenants |
17.2.1 | The Company covenants to ensure the development, implementation and continuing operation of the S&E Management System. |
17.2.2 | Through its Employees, agents, contractors and subcontractors, the Company covenants to, ensure that the design, construction, operation, maintenance and monitoring of all its sites, plants, equipment and facilities are undertaken in compliance with: (i) the Performance Standards System; and (ii) the S&EA System. |
17.3 | Proparcos Policy Covenants |
So long as APGL holds any Equity Securities in the Company, the Company, Sponsors and APGL shall comply and the Sponsors shall ensure that the Company complies with Proparcos standard policies on environment, social, anti-corruption, anti-money laundering and insurance issues, as provided in Schedule O .
17.4 | DEG Prohibited Activities |
So long as APGL holds any Equity Securities in the Company, the Company and the Sponsors shall ensure that the Company or any of its Subsidiaries do not engage in any of the activities as set out in Schedule N of this Agreement.
18. | NON COMPETE AND NON-SOLICITATION |
18.1 |
The Sponsors hereby undertake that they shall not, and shall ensure that none of their Subsidiaries or Affiliates shall, singly or jointly, directly or indirectly, for their own account or as agent, employee, officer, director, consultant, or shareholder or equity owner of any other Person, engage or attempt to engage or assist any other Person to engage in the Business. The Sponsors further undertake that from the date of this Agreement, they shall give up, part with and/or cease and desist from carrying on in India any activity or business which is same as that of the Business of the Company. They undertake that any venture or investment, whether directly or indirectly, in the Business shall only be undertaken, carried on, implemented, or held |
37
through the Company or its Subsidiaries, unless APGL gives prior written consent to the Sponsors to do otherwise. |
18.2 | The Sponsors shall also not divulge or disclose to any Person any information (other than information available to the public or disclosed or divulged pursuant to an order of a court of competent jurisdiction) relating to the Business, including but not limited to the identity of clients, finance, contractual arrangements, business or methods. |
18.3 | The Sponsors covenant and agree that during the subsistence of this Agreement, they will not, directly or indirectly: |
(a) | attempt in any manner to solicit from any client/customer, except on behalf of the Company, business of the type carried on by the Company or to persuade any Person which is a client/customer of the Company to cease doing business or to reduce the amount of business which any such client/customer has customarily done or might propose doing with the Company whether or not the relationship between the Company and such client/customer was originally established in whole or in part through his or its efforts; or |
(b) | employ or attempt to employ or assist anyone else to employ any Person as an employee or a consultant (including the Key Managerial Personnel and the CEO) who is in the employment of the Company, or was in the employment of the Company at any time during the preceding 12 (twelve) months; or |
(c) | otherwise interfere in any manner with the contractual, employment or other relationship of any Person (including the Key Managerial Personnel and the CEO) who is in the employment of the Company, or was in the employment of the Company at any time during the preceding 12 (twelve) months. |
18.4 | The Sponsors acknowledge and agree that the above restrictions are considered reasonable for the legitimate protection of the business and the goodwill of APGL and the Company, but in the event that such restriction shall be found to be void, but would be valid if some part thereof was deleted or the scope, period or area of application were reduced, the above restriction shall apply with the deletion of such words or such reduction of scope, period or area of application as may be required to make the restrictions contained in this Clause valid and effective. Notwithstanding the limitation of this provision by any Law for the time being in force, the Sponsors undertake to, at all times, observe and be bound by the spirit of this Clause 18. |
18.5 | Provided however, that on the revocation, removal or diminution of the Law or provisions, as the case may be, by virtue of which the restrictions contained in this Clause were limited as provided hereinabove, the original restrictions would stand renewed and be effective to their original extent, as if they had not been limited by the Law or provisions revoked. |
18.6 |
The Sponsors acknowledge and agree that the covenants and obligations with respect to non-compete and non-solicitation as set forth above relate to special, unique and extraordinary matters, and that a violation of any of the terms of such covenants and obligations will cause APGL and the Company irreparable injury. Therefore, the Sponsors agree that APGL and/ or the Company shall be entitled to an interim injunction, restraining order or such other equitable relief as a court of competent jurisdiction may deem necessary or appropriate to restrain the |
38
Sponsors from committing any violation of the covenants and obligations contained in this Clause 18. These injunctive remedies are cumulative and are in addition to any other rights and remedies, APGL and/or the Company may have at Law or in equity. |
19. | NOT USED |
20. | NOT USED |
21. | TERMINATION |
21.1 | This Agreement and all corresponding rights of a Shareholder hereunder shall terminate to the extent and in the manner specified below: |
(a) | the obligations of the Sponsors under this Agreement shall terminate on the Sponsors no longer holding any Equity Shares in the Company; or |
(b) | on a written agreement between APGL and the Company to terminate this Agreement. |
21.2 | The rights and obligations of the Parties under this Agreement, which either expressly or by their nature survive the termination of this Agreement shall not be extinguished by termination of this Agreement. |
21.3 | The termination of this Agreement in any of the circumstances aforesaid shall not in any way affect or prejudice any right accrued to any Party against the other Parties, prior to such termination. |
22. | CONFIDENTIALITY |
22.1 | No Relevant Party shall: |
(i) | disclose any information either in writing or orally to any Person which is not a Party to this Agreement; or |
(ii) | make or issue a public announcement, communication or circular, |
about the investments made by APGL in the Company or the subject matter of, or the transactions referred to in, this Agreement or any other Transaction Document, including by way of press release, promotional and publicity materials, posting of information on websites, granting of interviews or other communications with the press, or otherwise, other than: (A) to such of its, officers, employees and advisers as reasonably require such information in connection with the execution of the transaction contemplated in this Agreement or to comply with the terms of this Agreement or any other Transaction Documents; (B) to the extent required by Law or regulation (including the rules of any stock exchange on which such Partys shares are listed); (C) to the extent required for it to enforce its rights under this Agreement; and (D) with the prior written consent of APGL. Before any information is disclosed or any public announcement, communication or circulation made or issued pursuant to this Clause, such Relevant Party must consult with APGL in advance about the timing, manner and content of the disclosure, announcement, communication or circulation (as the case may be).
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22.2 | Each Relevant Party shall expressly inform any Person to whom it discloses any information under this Clause 22 of the restrictions set out in Clause 22 with regards disclosure of such information and shall procure their compliance with the terms of this Clause 22 as if they each were a party to this Agreement as such Relevant Party and such Relevant Party shall be responsible for any breach by any such Person of the provisions of this Clause 22. |
23. | GOVERNING LAW AND ARBITRATION |
23.1 | This Agreement shall be governed by Indian law. |
23.2 | Any dispute arising out of or in connection with this Agreement, including any question regarding its existence, validity or termination (a Dispute ) shall be referred to and finally resolved by arbitration under the Rules of Arbitration of the Singapore International Arbitration Centre (the SIAC ) in force at that time (the SIAC Rules ), which SIAC Rules are deemed to be incorporated by reference into this Clause 23. |
23.3 | There shall be 1 (one) arbitrator, who shall be nominated by agreement of the parties within 30 (thirty) days of receipt of the request for arbitration by the respondent(s). If the sole arbitrator is not nominated within this time period, the SIAC shall make the appointment. |
23.4 | The place of arbitration shall be Singapore. |
23.5 | The language of arbitration shall be English. |
23.6 | If two or more arbitrations are commenced hereunder and/or under the Related Agreements, and even if this Agreement and the Related Agreements are governed by different laws, any party to any of these arbitrations may petition any arbitral tribunal appointed in these arbitrations for an order that the several arbitrations be consolidated in a single arbitration before that arbitral tribunal (a Consolidation Order ). In deciding whether to make such a Consolidation Order, the arbitral tribunal shall consider whether the several arbitrations raise common issues of law or facts and whether to consolidate the several arbitrations would serve the interests of justice and efficiency. If before a Consolidation Order is made by an arbitral tribunal with respect to another arbitration, the arbitrator has already been appointed in that other arbitration, their appointment terminates upon the making of such Consolidation Order and they are deemed to be functus officio without prejudice to the validity of any acts done or orders made by them prior to the termination. In the event of two or more conflicting Consolidation Orders, the Consolidation Order that was made first in time shall prevail. |
23.7 | The provisions of this Clause 23 shall survive the termination of this Agreement for any reason whatsoever. |
24. | NOTICES |
24.1 | Any notice and other communications provided for in this Agreement shall be in writing and shall be first transmitted by facsimile transmission and then confirmed by postage, prepaid registered post with acknowledgement due or by internationally recognized courier service, in the manner as elected by the Party giving such notice. |
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24.2 | All notices shall be deemed to have been validly given (i) immediately, upon receipt of the confirmation report, if transmitted by facsimile transmission, or (ii) 7 (seven) days after posting if sent by registered post, or (iii) 4 (four) days from the date of dispatch, if sent by courier. |
24.3 | Any Party may, from time to time, change its address, facsimile number or representative for receipt of notices provided for in this Agreement by giving to the other not less than 15 (fifteen) Business Days prior written notice. |
25. | MISCELLANEOUS PROVISIONS |
25.1 | Injunctive Relief |
In the event of a breach, the non-breaching Party shall be entitled to obtain an injunction restraining any further apprehended breach in accordance with the terms of this Agreement without the necessity of establishing any actual damage.
25.2 | Waiver |
No forbearance, indulgence or relaxation or inaction by any Party at any time to require performance of any of the provisions of this Agreement shall in any way affect, diminish or prejudice the right of such Party to require performance of that provision. Any waiver or acquiescence by any Party of any breach of any of the provisions of this Agreement shall not be construed as a waiver or acquiescence of any right under or arising out of this Agreement or of the subsequent breach, or acquiescence to or recognition of rights other than as expressly
41
stipulated in this Agreement.
25.3 | Cumulative Rights |
All remedies of either Party under this Agreement whether provided herein or conferred by statute, civil law, common law, custom, trade, or usage are cumulative and not alternative and may be enforced successively or concurrently.
25.4 | Partial Invalidity |
If any provision of this Agreement is held to be illegal, invalid or unenforceable under any law from time to time: (a) such provision will be fully severable; (b) this Agreement will be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a part hereof; and (c) the remaining provisions of this Agreement will remain in full force and effect and will not be affected by the illegal, invalid or unenforceable provision or by its severance herefrom.
25.5 | Amendments |
No modification or amendment to this Agreement and no waiver of any of the terms or conditions hereof shall be valid or binding unless made in writing and duly executed by the Parties to this Agreement.
If IFC, DEG and/or Proparco purchase any CCDs or Proparco CCPS from APGL, which were earlier held by IFC, DEG and/or Proparco (as the case may be), the Parties shall ensure that IFC, DEG and/or Proparco, who are purchasing such Equity Securities of the Company, are made parties to this Agreement, and this Agreement shall be amended to provide IFC, DEG and/or Proparco with similar rights and preference in this Agreement as were available to them as holders of such Equity Securities pursuant to the Existing SHA.
25.6 | Assignment |
This Agreement and all of the rights and obligations under it may be assigned or transferred by APGL, at its sole discretion, to any Person to whom it transfer Equity Securities held by it in accordance with the provisions of this Agreement. The rights and obligations of Sponsors and the Company under this Agreement are personal to them respectively and neither the Company nor the Sponsors may assign all or part of its respective rights or obligations under this Agreement without the prior written consent of APGL.
25.7 | Conflicts |
In the event of any conflict between the terms of this Agreement and those of the Articles, as amongst the Parties hereto, and the Company, to the extent permitted by Law, the terms of this Agreement shall prevail and the Parties shall take all such steps as are within their powers, to ensure that the terms and conditions of this Agreement are adhered to, and to the extent possible under the relevant Laws effect such amendments or alterations to the Articles to carry out the conditions of this Agreement in letter and in spirit.
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25.8 | Entirety |
This Agreement on its coming into effect shall constitute the entire agreement between the Parties with respect to the subject matter hereof, and with effect from the Effective Date shall supersede all other agreements (including the Existing SHA), arrangements, understandings and assurances, either written or oral, existing or proposed, between all or amongst any two or more Parties hereto or their Affiliates including with any third party relating to the subject matter hereof (other than as set out in the APGL SHA and Sponsors Lock-in Agreement).
The coming into effect of this Agreement shall not in any way affect or prejudice any right accrued to any party against the other parties under the Existing SHA prior to the Effective Date.
25.9 | Headings |
The paragraph headings contained in this Agreement are for the convenience of the Parties and shall not affect the meaning or interpretation of this Agreement.
25.10 | Relationship |
None of the provisions of this Agreement shall be deemed to constitute a partnership between the Parties hereto and no Party shall have any authority to bind or shall be deemed to be the agent of the other in any way.
25.11 | Costs |
Each of the Parties hereto shall pay their own costs and expenses relating to the negotiation, preparation, and execution of this Agreement and the transactions contemplated by this Agreement. The Company shall bear the stamp duty payable on this Agreement.
Notwithstanding anything stated above, the Company shall pay the fees and expenses of the Investors and GIFs legal counsel in India incurred in connection with the negotiation, preparation, and execution of this Agreement.
25.12 | Counterparts |
This Agreement may be executed in several counterparts, each of which is an original, but all of which constitute one and the same agreement.
25.13 | Immunity |
To the extent any Relevant Party may be entitled in any jurisdiction to claim for itself or its Assets immunity in respect of its obligations under this Agreement or any other Transaction Document from any suit, execution, attachment (whether provisional or final, in aid of execution, before judgment or otherwise) or other legal process or to the extent that in any jurisdiction that immunity (whether or not claimed) may be attributed to it or its Assets, such Relevant Party irrevocably agrees not to claim and irrevocably waives such immunity to the fullest extent permitted now or in the future by the laws of such jurisdiction.
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----XXX----
( Intentionally left blank )
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IN WITNESS WHEREOF , the below mentioned Parties have hereunto set their hands on the day month and year first hereinabove mentioned.
/s/ INDERPREET SINGH WADHWA |
SIGNED AND DELIVERED BY MR. INDERPREET SINGH WADHWA |
/s/ HARKANWAL SINGH WADHWA |
SIGNED AND DELIVERED BY MR. HARKANWAL SINGH WADHWA |
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IN WITNESS WHEREOF , the below mentioned Party has hereunto set its hand on the day month and year first hereinabove mentioned.
SIGNED AND DELIVERED BY AZURE POWER INDIA PRIVATE LIMITED BY THE HAND OF /s/ INDERPREET SINGH WADHWA (the Authorised Signatory) PURSUANT TO THE RESOLUTION PASSED BY THE BOARD OF DIRECTORS OF THE COMPANY ON OCTOBER 15, 2014 |
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IN WITNESS WHEREOF , the below mentioned Party has hereunto set its hand on the day month and year first hereinabove mentioned.
SIGNED AND DELIVERED BY AZURE POWER GLOBAL LIMITED BY THE HAND OF /s/ INDERPREET SINGH WADHWA (the Authorised Signatory) PURSUANT TO THE RESOLUTION PASSED BY THE BOARD OF DIRECTORS OF THE COMPANY ON FEBRUARY 26, 2015 |
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SCHEDULE A DEED OF ADHERENCE
THIS DEED OF ADHERENCE is made on [ ]
BY [ ] of [ ] (the Covenantor ) in favor of the persons whose names are set out in the Appendix to this Deed and is supplemental to the Shareholders Agreement, dated [●], between Azure Power India Private Limited, Azure Power Global Limited and Inderpreet Singh Wadhwa and Mr. Harkanlal Singh Wadhwa (the Shareholders Agreement ) and entered into pursuant to the terms thereof.
THIS DEED WITNESSES as follows:
(1) | The Covenantor confirms that it has been given and read a copy of the Shareholders Agreement and hereby agrees for the benefit of each person named in the Appendix to this Deed and each other person who, after the date, of this Deed, executes a deed of adherence to the Shareholders Agreement substantially in the form set out in Schedule A thereof that it shall have the rights and be subject to the obligations of Azure Power Global Limited under the terms of the Shareholders Agreement. |
(2) | The Covenantor, by execution of this Deed, makes the representations and warranties contained in Clause 3 of the Shareholders Agreement for the benefit of the other parties to the Shareholders Agreement, provided that such representations, warranties and acknowledgement shall be made as of the date of this Deed and not as of the date of the Shareholders Agreement. |
(3) | This Deed arising out of or in connection with it shall be governed by Indian law. |
IN WITNESS WHEREOF this Deed has been executed by the Covenantor and is intended to be and is hereby delivered on the date first above written.
Executed as a deed [●] | ||
Signature |
APPENDIX TO DEED OF ADHERENCE
[ Insert names of those persons who are party to the Shareholders Agreement on the date of this Deed of Adherence. ]
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SCHEDULE B PFIC ANNUAL INFORMATION STATEMENT
(1) | This questionnaire applies to the taxable year of Azure Power India Private Limited (the Company) beginning on January 1, 20 , and ending on December 31, 20 . |
(2) | PLEASE CHECK HERE IF 75% OR MORE OF THE COMPANYS GROSS INCOME CONSTITUTES PASSIVE INCOME. |
Passive income : For purposes of this test, passive income includes:
| Dividends, interests, royalties, rents and annuities, excluding, however, rents and royalties which are received from an unrelated party in connection with the active conduct of a trade or business. |
| Net gains from the sale or exchange of property |
| which gives rise to dividends, interest, rents or annuities (excluding, however, property used in the conduct of a banking, finance or similar business, or in the conduct of an insurance business); |
| which is an interest in a trust, partnership, or REMIC; or |
| which does not give rise to income. |
| Net gains from transactions in commodities. |
| Net foreign currency gains. |
| Any income equivalent to interest. |
Look-through rule : if the Company owns, directly or indirectly, 25% of the stock by value of another corporation, the Company must take into account its proportionate share of the income received by such other corporation.
(3) | PLEASE CHECK HERE IF THE AVERAGE FAIR MARKET VALUE DURING THE TAXABLE YEAR OF PASSIVE ASSETS HELD BY THE COMPANY EQUALS 50% OR MORE OF THE AVERAGE FAIR MARKET VALUE OF ALL OF THE COMPANYS ASSETS. |
Note : This test is applied on a gross basis; no liabilities are taken into account.
Passive Assets : For purposes of this test, passive assets are those assets which generate (or are reasonably expected to generate) passive income (as defined above). Assets which generate partly passive and partly non-passive income are considered passive assets to the extent of the relative proportion of passive income (compared to non-passive income) generated in a particular taxable year by such assets. Please note the following:
| A trade or service receivable is non-passive if it results from sales or services provided in the ordinary course of business. |
| Intangible assets that produce identifiable items of income, such as patents or licenses, are characterized in terms of the type of income produced. |
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| Goodwill and going concern value must be identified to a specific income producing activity and are characterized in accordance with the nature of that activity. |
| Cash and other assets easily convertible into cash are passive assets, even when used as working capital. |
| Stock and securities (including tax-exempt securities) are passive assets, unless held by a dealer as inventory. |
Average value : For purposes of this test, average fair market value equals the average quarterly fair market value of the assets for the relevant taxable year.
Look-through rule : if the Company owns, directly or indirectly, 25% of the stock by value of another corporation, the Company must take into account its proportionate share of the passive assets of such other corporation.
(4) | PLEASE CHECK HERE IF (A) MORE THAN 50% OF THE COMPANYS STOCK (BY VOTING POWER OR BY VALUE) IS OWNED BY FIVE OR FEWER U.S. PERSONS OR ENTITIES AND (B) THE AVERAGE AGGREGATE ADJUSTED TAX BASES (AS DETERMINED UNDER U.S. TAX PRINCIPLES) DURING THE TAXABLE YEAR OF THE PASSIVE ASSETS HELD BY THE COMPANY EQUALS 50% OR MORE OF THE AVERAGE AGGREGATE ADJUSTED TAX BASES OF ALL OF THE COMPANYS ASSETS. |
Average value : For purposes of this test, average aggregate adjusted tax bases equals the average quarterly aggregate adjusted tax bases of the assets for the relevant taxable year.
Look-through rule : if the Company owns, directly or indirectly, 25% of the stock by value of another corporation, the Company must take into account its proportionate share of the passive assets of such other corporation
(5) | INVESTOR HAS THE FOLLOWING PRO-RATA SHARE OF THE ORDINARY EARNINGS AND NET CAPITAL GAIN OF THE COMPANY AS DETERMINED UNDER U.S. INCOME TAX PRINCIPLES FOR THE TAXABLE YEAR OF THE COMPANY: |
Ordinary Earnings: (as determined under U.S. income tax principles)
Net Capital Gain: (as determined under U.S. income tax principles)
Pro Rata Share : For purposes of the foregoing, the shareholders pro rata share equals the amount that would have been distributed with respect to the shareholders stock if, on each day during the taxable year of the Company, the Company had distributed to each shareholder its pro rata share of that days ratable share (determined by allocating to each day of the year, an equal amount of the Companys aggregate ordinary earnings and aggregate net capital gain for such year) of the Companys ordinary earnings and net capital gain for such year. Determination of a shareholders pro rata share will require reference to the Companys charter, certificate of incorporation, articles of association or other comparable governing document.
(6) | The amount of cash and fair market value of other property distributed or deemed distributed by Company to Investor during the taxable year specified in paragraph 1. is as follows: |
Cash:
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Fair Market Value of Property:
(7) | Company will permit Investor to inspect and copy Companys permanent books of account, records, and such other documents as may be maintained by Company that are necessary to establish that PFIC ordinary earnings and net capital gain, as provided in Section 1293(e) of the U.S. Internal Revenue Code of 1986, as amended (or any successor provision thereto), are computed in accordance with U.S. income tax principles. |
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SCHEDULE C TERMS AND CONDITIONS OF SERIES A CCPS
All capitalized terms used herein but not defined shall have the meaning given to them under the SHA. Reference to a paragraph under this Schedule shall be a reference to the paragraph of this Schedule.
1. | Face Value |
The Series A CCPS shall have a face value of INR 10 (Indian Rupees Ten).
2. | Dividend |
Each of the holders of Series A CCPS shall be entitled to payment of 8% non-cumulative dividend per annum on each of the Series A CCPS (calculated on the sum of the face value and premium paid) by way of dividend from the Company in accordance with applicable Law as and when the board of the Company declares any dividend. The dividends payable on the Series A CCPS shall be senior to dividend payments to holders of other Equity Shares of the Company.
Subject to applicable Law, each of the holders of Series A CCPS shall be individually entitled, in addition and cumulative to the above, to participate in the distribution of the profits of the Company to the other shareholders of the Company in respect of the Series A CCPS (for the purpose of this paragraph all the Series A CCPS shall be assumed as if have been converted to Equity Shares at the applicable Conversion Factor).
3. | Term |
Unless converted in accordance with the terms of this Schedule C, the Articles of the Company and applicable Laws, the term of the Series A CCPS shall be a maximum of 19 (nineteen) years from the date of issue of Series A CCPS.
4. | Voting |
4.1 | From and after the issuance of the Series A CCPS, the voting rights of each of the holder of Series A CCPS on every resolution placed before the Company shall, to the extent permissible under Law, be in proportion to the Share Capital that the Equity Shares held by such holder represent, assuming the Series A CCPS have been converted into Equity Shares of the Company on the basis of the applicable Conversion Factor (as defined below). |
4.2 | From the date of conversion of the Series A CCPS, the voting percentage of their holders in the Company shall be in proportion to their shareholding in the Company. |
5. | Conversion |
5.1 | The Series A CCPS shall be convertible into Equity Shares of the Company at the option of the holders of the Series A CCPS in accordance with paragraph 5.2. Any Series A CCPS that have not been converted into Equity Shares of the Company shall compulsorily convert into the Equity Shares of the Company in accordance with paragraph 5.3 below, upon the earlier of: |
(i) |
Prior to the filing of the DRHP with the SEBI in connection with the QIPO of the Company as defined in the SHA, or prior to listing of equity shares of Companys |
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holding company in connection with an IPO as defined in the SHA; and |
(ii) | The date which is 19 (nineteen) years from the date of the issuance of the Series A CCPS (the Maturity Date ), |
in each case, in accordance with the SHA.
5.2 | Optional Conversion |
(i) | The holders of the Series A CCPS shall severally have the right, at any time and from time to time at their sole option after their issuance, to require the Company, by written notice (the Conversion Notice ), to convert their respective Series A CCPS into Equity Shares of the Company. In case the conversion occurs prior to the expiry of the Maturity Date, then the conversion shall be completed within a period of 21 (twenty one) days from the date of the Conversion Notice. The Series A CCPS will be convertible into Equity Shares of the Company at a conversion ratio of 1:1 (the Conversion Factor ), without being required to pay any amount for such conversion. However, if the holders of Series A CCPS are unable to receive amounts equal to their entitlements under Clause 4.1, Clause 6.4, Clause 6.5 or Clause 9 of the SHA (as applicable) on the basis of the Conversion Factor of 1:1 due to pricing restrictions under applicable Law, then each Series A CCPS shall be converted at such higher conversion ratio that will permit the holders of Series A CCPS to receive the amounts that they are entitled under Clause 4.1, Clause 6.4, Clause 6.5 or Clause 9 of the SHA, as applicable; in which event the term Conversion Factor shall be reckoned accordingly. For avoidance of doubts, the holders of Series A CCPS shall not be entitled to any proceeds over and above their entitlements under Clause 4.1, Clause 6.4, Clause 6.5 or Clause 9 of the SHA, irrespective of the Conversion Factor. |
(ii) | The Conversion Notice shall be dated and shall set forth: |
(a) | The number of Series A CCPS in respect of which the holders of the Series A CCPS are exercising their right to conversion in accordance with this paragraph 5.2; and |
(b) | The number of Equity Shares of the Company that the Series A CCPS shall convert into. |
(iii) | Upon receipt of the Conversion Notice, the Company shall effect the following: |
(a) | Convening of a meeting of the Board, in which meeting the Company shall approve the following: |
(A) | The conversion of the relevant Series A CCPS; |
(B) | The cancellation of the share certificates representing such number of the Series A CCPS; and |
(C) | The issuance and allotment of such number of Equity Shares of the Company that the Series A CCPS shall convert into, |
in each case, as are mentioned in the Conversion Notice;
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(b) | Issuance of duly stamped share certificates to the holders of the Series A CCPS to evidence such holders of the Series A CCPS as the owners of the shares issued upon conversion of their respective Series A CCPS as are mentioned in the Conversion Notice; |
(c) | Updating its register of members to reflect the holders of the Series A CCPS as the owners of the shares issued pursuant to the conversion of the relevant Series A CCPS as mentioned in the Conversion Notice; |
(d) | Filing with the jurisdictional Registrar of Companies Form PAS 3 of the Companies (Prospectus and Allotment of Securities) Rules, 2014 in respect of allotment of the shares to the holders of the Series A CCPS pursuant to such holders of the Series A CCPS exercising their rights in accordance with paragraph 5.1 and shall provide the holders of the Series A CCPS with certified true copies of Form PAS 3 duly filed with the jurisdictional Registrar of Companies along with the receipt in respect of Form PAS 3; and |
(e) | The Company and the Sponsors shall do all such acts and deeds as may be necessary to give effect to the provisions of this paragraph 5, including without limitation, convening a meeting of the Board to approve the splitting of the share certificates representing the Series A CCPS. |
5.3 | Automatic Conversion |
(i) | The Company shall forthwith convert all the Series A CCPS into shares, based on the Conversion Factor, if at any time after their issuance, the Company proposes to file a DRHP for a firmly underwritten issue of shares to the public if the shareholders of the Company have consented to the QIPO/IPO under the provisions of the SHA. The Series A CCPS shall convert into Equity Shares of the Company at the Conversion Factor, immediately prior to filing of the DRHP with the SEBI. |
(ii) | In the event that: |
(a) | The Company files a DRHP with the SEBI in respect of the QIPO/IPO which, prior to such filing, has necessitated the conversion of the Series A CCPS into Equity Shares of the Company; and |
(b) | Within the Listing Date, the QIPO/IPO does not complete such that the entire issued, paid-up and subscribed Share Capital is not admitted to trading on a Relevant Market as defined in the SHA by the expiry of the Listing Date, |
then the Company and the Sponsors shall comply with the provisions of Clause 8 of the SHA and shall undertake all necessary actions to ensure that the holders of the Series A CCPS are placed in the same position, and possess the same rights as set forth in this Schedule C, they had the benefit of immediately prior to the occurrence of the event set forth in (a) above.
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6. | Liquidation Preference |
Upon the occurrence of a Liquidation Event A or a Liquidation Event B with respect to the Company or its Subsidiaries in accordance with the terms of the SHA, or upon the exercise of the Drag Right of the Investors or Drag Right of IFC, DEG and Proparco in accordance with Clauses 6.4 and 6.5 of the SHA, the holders of the Series A CCPS shall receive the Liquidation Preference in accordance with the terms of the SHA and in the order of precedence set forth in the SHA.
Notwithstanding the above, the holders of the Series A CCPS will also be entitled to the buyback preferences in accordance with the terms of the SHA and in order of preference set forth in the SHA.
7. | Transferability |
Subject to the terms of the SHA, the Series A CCPS shall be freely transferable to any Person, and the holders of the Series A CCPS may assign all or any of the Series A CCPS and any rights attaching thereto under the SHA, without the prior consent of any Person.
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SCHEDULE D TERMS AND CONDITIONS OF SERIES B CCPS
All capitalized terms used herein but not defined shall have the meaning given to them under the SHA. Reference to a paragraph under this Schedule shall be a reference to the paragraph of this Schedule.
1. | Face Value |
The Series B CCPS shall have a face value of INR 10 (Indian Rupees Ten).
2. | Dividend |
Each of the holders of Series B CCPS shall be entitled to payment of 8% (eight per cent) non- cumulative dividend per annum (calculated on the sum of the face value and premium paid) on each of the Series B CCPS by way of dividend from the Company in accordance with applicable Law as and when the Board of the Company declares any dividend. The dividends payable on the Series B CCPS shall be senior to dividend payments to holders of Series A CCPS and other Equity Shares of the Company.
Subject to applicable Law, each of the holders of Series B CCPS shall be individually entitled, in addition and cumulative to the above, to participate in the distribution of the profits of the Company to the other shareholders of the Company (for the purpose of this paragraph all the Series B CCPS shall be assumed as if have been converted to Equity Shares at the Conversion Factor).
3. | Term |
Unless converted in accordance with the terms of this Schedule, the Articles of the Company and applicable Laws, the term of the Series B CCPS shall be a maximum of 10 (ten) years from the date of their issuance.
4. | Voting |
4.1 | From and after the issuance of the Series B CCPS, the voting rights of every holder of Series B CCPS on every resolution placed before the Company shall, to the extent permissible under applicable Law, be in proportion to the share capital that the Equity Shares held by such holder represent, assuming the Series B CCPS have been converted into Equity Shares of the Company on the basis of the Conversion Factor set out below. |
4.2 | From the date of conversion of the Series B CCPS, the voting percentage of their holders in the Company shall be in proportion to their shareholding in the Company. |
5. | Conversion |
5.1 | The Series B CCPS shall be convertible into Equity Shares of the Company at the option of the holders of the Series B CCPS in accordance with paragraph 5.2. Any Series B CCPS that have not been converted into Equity Shares of the Company shall compulsorily convert into the Equity Shares of the Company in accordance with paragraph 5.3 below, upon the earlier of: |
(i) | Prior to the filing of the DRHP with SEBI in connection with the QIPO, or prior to listing of equity shares of Companys holding company in connection with an IPO; and |
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(ii) | The date which is 10 (ten) years from the date of the issuance of the Series B CCPS (the Maturity Date ), |
in each case, in accordance with the terms of this Agreement.
5.2 | Optional Conversion |
(i) | The holders of the Series B CCPS shall severally have the right, at any time and from time to time at their sole option after their issuance, to require the Company, by written notice (the Conversion Notice ), to convert their respective Series B CCPS into Equity Shares of the Company. In case the conversion occurs prior to the expiry of the Maturity Date, then the conversion shall be completed within a period of 21 (twenty one) days from the date of the Conversion Notice. The Series B CCPS will be convertible into Equity Shares of the Company at a conversion ratio of 1:1 (the Conversion Factor ), without being required to pay any amount for such conversion. However, if the holders of Series B CCPS are unable to receive amounts equal to their entitlements under Clause 4.1, Clause 6.4, Clause 6.5 or Clause 9 of the SHA (as applicable) on the basis of the Conversion Factor of 1:1 due to pricing restrictions under applicable Law, then each Series B CCPS shall be converted at such higher conversion ratio that will permit the holders of Series B CCPS to receive the amounts that they are entitled under Clause 4.1, Clause 6.4, Clause 6.5 or Clause 9, of the SHA, as applicable; in which event the term Conversion Factor shall be reckoned accordingly. For avoidance of doubts, the holders of Series B CCPS shall not be entitled to any proceeds over and above their entitlements under Clause 4.1, Clause 6.4, Clause 6.5 or Clause 9 of the SHA, irrespective of the Conversion Factor. |
(ii) | The Conversion Notice shall be dated and shall set forth: |
(a) | The number of Series B CCPS in respect of which the holders of the Series B CCPS are exercising their right to conversion in accordance with this paragraph 5.2; and |
(b) | The number of Equity Shares of the Company that the Series B CCPS shall convert into. |
(iii) | Upon receipt of the Conversion Notice, the Company shall effect the following: |
(a) | Convening of a meeting of the Board, in which meeting the Company shall approve the following: |
(A) | The conversion of the relevant Series B CCPS; |
(B) | The cancellation of the share certificates representing such number of the Series B CCPS; and |
(C) | The issuance and allotment of such number of Equity Shares of the Company that the Series B CCPS shall convert into, |
in each case, as are mentioned in the Conversion Notice;
(b) |
Issuance of duly stamped share certificates to the holders of the Series B CCPS |
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to evidence such holders of the Series B CCPS as the owners of the shares issued upon conversion of their respective Series B CCPS as are mentioned in the Conversion Notice; |
(c) | Updating its register of members to reflect the holders of the Series B CCPS as the owners of the shares issued pursuant to the conversion of the relevant Series B CCPS as mentioned in the Conversion Notice; |
(d) | Filing with the jurisdictional Registrar of Companies, Form PAS 3 of the Companies (Prospectus and Allotment of Securities) Rules, 2014 in respect of allotment of the shares to the holders of the Series B CCPS pursuant to such holders of the Series B CCPS exercising their rights in accordance with paragraph 5.1 and shall provide the holders of the Series B CCPS with certified true copies of PAS 3 duly filed with the jurisdictional Registrar of Companies along with the receipt in respect of Form PAS 3; and |
(e) | The Company and the Sponsors shall do all such acts and deeds as may be necessary to give effect to the provisions of this paragraph 5, including without limitation, convening a meeting of the Board to approve the splitting of the share certificates representing the Series B CCPS. |
5.3 | Automatic Conversion |
(i) | The Company shall forthwith convert all the Series B CCPS into shares, based on the Conversion Factor, if at any time after their issuance, the Company proposes to file a DRHP for a firmly underwritten issue of shares to the public if the shareholders of the Company have consented to the QIPO/IPO under the provisions of this Agreement. The Series B CCPS shall convert into Equity Shares of the Company at the Conversion Factor, immediately prior to filing of the DRHP with the SEBI. |
(ii) | In the event that: |
(a) | The Company files a DRHP with the SEBI in respect of the QIPO/IPO which, prior to such filing, has necessitated the conversion of the Series B CCPS into Equity Shares of the Company; and |
(b) | Within the Listing Date, the QIPO/IPO does not complete such that the entire issued, paid-up and subscribed share capital is not admitted to trading on a Relevant Market by the expiry of the Listing Date, |
then the Company and the Sponsors shall comply with the provisions of Clause 8 ( Reinstatement of Rights ) of this Agreement and shall undertake all necessary actions to ensure that the holders of the Series B CCPS are placed in the same position, and possess the same rights as set forth in this Schedule, they had the benefit of immediately prior to the occurrence of the event set forth in (a) above.
6. | Liquidation Preference |
Upon the occurrence of a Liquidation Event A or Liquidation Event B with respect to the Company or its Subsidiaries and in accordance with the terms of this Agreement, the holders of the Series B CCPS shall receive the Liquidation Preference in accordance with the terms of
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this Agreement and in the order of precedence set forth in this Agreement.
Upon the exercise of the Drag Right of the Investors or Drag Right of IFC, DEG and Proparco in accordance with Clause 6.4 and 6.5 of this Agreement, the Series B CCPS shall be subject to the order of preference in terms of the sale of the Equity Securities and the returns on the Equity Securities as set out in this Agreement. Notwithstanding the above, the holders of the Series B CCPS will also be entitled to the buy-back preferences in accordance with the terms of this Agreement and in order of preference set forth in this Agreement.
7. | Transferability |
Subject to the terms of this Agreement, the Series B CCPS shall be freely transferable to any Person, and the holders of the Series B CCPS may assign all or any of the Series B CCPS and any rights attaching under the Transaction Documents, without the prior consent of any Person.
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SCHEDULE E TERMS AND CONDITIONS OF IFC CCDS
All capitalized terms used herein but not defined shall have the meaning given to them under the SHA. Reference to a paragraph under this Schedule shall be a reference to the paragraph of this Schedule.
1. | Form And Status of the IFC CCDs |
The IFC CCDs shall have a face value of INR 224.19 (Indian Rupees Two Hundred and Twenty Four and Nineteen paisa).
2. | Term |
Unless converted in accordance with the terms of this Schedule E, the Articles of the Company and applicable Laws, the term of the IFC CCDs shall be a maximum of 10 (ten) years from their issuance. The date on which the IFC CCDs were issued and allotted to IFC shall be referred as CCDs Closing Date .
The Company agrees to maintain a sufficient number of authorized and unissued shares till the conversion of the IFC CCDs to permit the full conversion of the IFC CCDs in accordance with this Schedule E.
3. | Interest |
3.1 | The IFC CCDs will bear interest at the rate of 10% (ten percent) per annum up to the date of this conversion into Equity Shares of the Company in accordance with the paragraph 4 below. |
3.2 | The interest will accrue for a period of 18 (eighteen) months from issuance of the IFC CCDs and will be paid at the end of this period, subject to applicable Law, followed by quarterly payments on the 15 th (fifteenth) day of the relevant month of such quarterly payment until the date of conversion and the interest payable in respect of each calendar year shall be calculated by dividing the annual interest due by 365 (three hundred and sixty five). In relation to such interest payments, IFC shall provide its account details no later than 1 (one) month before the payment is due. If full interest payment cannot be made during an applicable period, due to regulatory constraints, then the unpaid interest payment will accrue and be paid in subsequent periods, compounded for the period of delay in payment. |
3.3 | If the dividend payout in any given Financial Year to the Shareholders or to the holders of Series A CCPS or to the holders of Series B CCPS or to the holders of Series C CCPS of the Company, whichever is highest, is more than 10% (ten percent) of the amount invested for such securities by the holder of those securities, then the holders of the IFC CCDs will be entitled to an additional interest which shall be equal to the difference between (a) the percentage return (on the amount invested) received by the holders of such Equity Shares or the holders of Series A CCPS or the holders of Series B CCPS or to the holders of Series C CCPS; and (b) the rate of interest received by the holder of the IFC CCDs for that Financial Year, under the terms of paragraph 3.1. |
4. | Conversion |
4.1 |
The IFC CCDs shall be convertible into Equity Shares of the Company at the option of the holders of the IFC CCDs in accordance with paragraph 4.2. Any IFC CCDs that have not been |
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converted into Equity Shares of the Company shall compulsorily convert into the Equity Shares of the Company upon the earlier of: |
(i) | In accordance with paragraph 4.3, prior to the filing of the DRHP with SEBI in connection with the QIPO, or prior to listing of equity shares of Companys holding company in connection with an IPO; and |
(ii) | The date which is 10 (ten) years from the CCD Closing Date in relation to the IFC CCDs (the Maturity Date ). |
in each case, in accordance with the SHA. Upon occurrence of any of the event under paragraph 4.1(i) and (ii) above, the Company (and the Sponsors, where applicable) will immediately follow the procedure under paragraph 4.2(iv) below.
4.2 | Optional Conversion |
The holders of the IFC CCDs shall have the right, in the events set out in paragraph 4.2 (ii) of this Schedule after the CCD Closing Date, to require the Company, by a written notice (the Conversion Notice ), to convert all or some of the IFC CCDs into Equity Shares of the Company. A copy of the Conversion Notice shall also be sent to the Sponsors, DEG, Helion, FC and Proparco. In case the conversion occurs prior to the expiry of the Maturity Date, then the conversion shall be completed within a period of 21 (twenty one) days from the date of the Conversion Notice.
(i) | Conversion Ratio & Conversion Price |
(a) | The Conversion Ratio for the purposes of IFC CCDs shall be such that only IFC CCD will convert into such number of Equity Shares, at a price not being less than INR 100 (Indian Rupees One Hundred) per Equity Share, so as to give the IFC CCD holder the IFC Required Return (hereinafter defined), without IFC being required to pay any amount for such conversion. |
For purpose of this paragraph, with respect to the IFC CCDs, the term IFC Required Return shall mean (aa) 18% (eighteen percent) IRR; or (bb) 20% (twenty percent) IRR, in the event of conversion of the IFC CCDs into Equity Shares of the Company (a) in accordance with paragraph 4.1(i), or (b) upon Transfer of the Equity Securities in terms of Clause 6.3.4 of the SHA, or (c) upon a voluntary sale of any or all the Equity Securities held by all the Investors and the voluntary sale of Equity Securities held by the Sponsors to a third party, such that pursuant to the sale of the Equity Securities there is a change in Control on the Company, or (d) upon a Liquidation Event B other than upon Transfer of all or more than 70% (seventy per cent) in value of the Companys Assets.
Provided that, if the IFC CCD holder receives any interest from the Company prior to conversion, the value of the same will be deducted from the IFC Required Return.
(b) | A valuation of the Company to enable conversion of the IFC CCDs in accordance with (a) above shall be: |
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1) | for the events specified in paragraph 4.2 (ii) (a), (b) and (g) and paragraph 4.1(ii), the valuation as determined by one of the Big Four Accounting Firms selected in accordance with the procedure laid down in paragraph 4.2(i)(c) below; |
2) | for the events specified in paragraph 4.2(ii) (c), (d), (e) and (f), the valuation as offered by the third party purchaser; and |
3) | for the events specified in paragraph 4.3(i), the valuation as determined by the merchant banker managing the IPO/QIPO; |
(c) | IFC shall set out in the Conversion Notice, the names of 2 (two) of the Big Four Accounting Firms that are selected by IFC, for the purpose of this paragraph 4.2 (i)(c). Within 10 days of the date of the Conversion Notice, IFC, DEG, Helion, FC, Proparco, Company and Sponsors shall jointly agree to appoint 1 (one) of the 2 (two) Big Four Accounting Firms mentioned in the Conversion Notice to do the valuation of the Company, and shall jointly issue a notice to IFC in this respect. If IFC does not receive the aforesaid notice within the period of 10 (ten) days from the date of the Conversion Notice, then IFC shall have the right to select, in its sole discretion, 1 (one) of the 2 (two) Big Four Accounting Firms mentioned in the Conversion Notice to do the valuation of the Company. |
(ii) | The holders of the IFC CCDs will be entitled to exercise their conversion right in respect of the IFC CCDs just prior to or on the occurrence of the following events: |
(a) | Liquidation Event A or Liquidation Event B as defined in the SHA. |
(b) | Buy-back of the IFC CCDs in accordance with the terms of the SHA. |
(c) | In the event holder of the IFC CCDs wishes to exercise its Co-Sale Right under Clause 6.3.3 (Co-Sale Rights) of the SHA. |
(d) | The event holder of the IFC CCDs wishes to exercise its Co-Sale Right under Clause 6.3. 4 (Transfer to a Competitor) of the SHA. |
(e) | In the event holder of the IFC CCDs wishes to exercise its Drag Along Right under Clause 6.4 (Drag Right of the Investors) of the SHA. |
(f) | In the event holder of the IFC CCDs wishes to exercise its right under Clause 6.5(Drag Right of IFC, DEG and Proparco) of the SHA. |
(g) | In the event holder of the IFC CCDs wishes to exercise the Deficit Call Option under Clause 6.6 (IFC, DEG and Proparco Call Option) of the SHA. |
(iii) | The Conversion Notice shall be dated and shall set forth: |
(a) | The number of IFC CCDs in respect of which the holders of the IFC CCDs are exercising their right to conversion in accordance with this paragraph 4.2; |
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(b) | The number of Equity Shares of the Company that the IFC CCDs shall convert into; and |
(c) | The names of 2 (two) of the Big Four Accounting Firms that are selected by IFC for the purpose of paragraph 4.2 (i)(c), if applicable; and the reference valuation as offered by the third party purchaser, if applicable. |
(iv) | Upon receipt of the Conversion Notice, the Company shall effect the following: |
(a) | Convening of a meeting of the Board, in which meeting the Company shall approve the following: |
| The conversion of such number of the IFC CCDs; |
| The cancellation of the certificates representing such number of IFC CCDs that are converted; and |
| The issuance and allotment of such number of Equity Shares of the Company that the IFC CCDs shall convert into. |
in each case, as are mentioned in the Conversion Notice;
(b) | Issuance of duly stamped share certificates to the holders of the IFC CCDs to evidence such holders of the IFC CCDs as the owners of the Equity Shares issued upon conversion of such number of the IFC CCDs as are mentioned in the Conversion Notice; |
(c) | Updating its register of members to reflect the holders of the IFC CCDs as the owners of the Equity Shares issued pursuant to the conversion of such number of the IFC CCDs as are mentioned in the Conversion Notice; |
(d) | Filing with the jurisdictional Registrar of Companies, Form PAS 3 of the Companies (Prospectus and Allotment of Securities) Rules, 2014 in respect of allotment of the Equity Shares to the holders of the IFC CCDs pursuant to such holders of the IFC CCDs exercising their rights in accordance with this paragraph 4 and shall provide the holders of the IFC CCDs with certified true copies of Form PAS 3 duly filed with the jurisdictional Registrar of Companies along with the receipt in respect of Form PAS 3; and |
(e) | The Company and the Sponsors shall do all such acts and deeds as may be necessary to give effect to the provision of this paragraph 4, including without limitation, convening a meeting of the Board to approve the splitting of the share certificates representing the IFC CCDs. |
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4.3 | Automatic Conversion |
(i) | The Company shall forthwith convert all the IFC CCDs into Equity Shares based on the conversion price arrived in accordance with paragraph 4.2(i), if at any time after the CCDs Closing Date, the Company proposes to file a DRHP for a firmly underwritten issue of Equity Shares to the public and the shareholders of the Company have consented to the QIPO or an IPO under the provisions of the SHA. The IFC CCDs shall convert into Equity Shares of the Company immediately prior to filing of the DRHP with the SEBI. |
(ii) | In the event that: |
(A) | The Company files a DRHP with the SEBI in respect of the QIPO/IPO which, prior to such filing, has necessitated the conversion of the IFC CCDs into Equity Shares of the Company; and |
(B) | Within the Listing Date, the QIPO or the IPO does not complete such that the entire issued, paid-up and subscribed share capital is not admitted to trading on a Relevant Market by the expiry of the Listing Date. |
Then the Company and the Sponsors shall comply with the provisions of Clause 8 of the SHA (Reinstatement of Rights), and shall undertake all necessary actions to ensure that the holders of the IFC CCDs are placed in the same position, and possess the same rights as set forth in this Schedule E, they had the benefit of immediately prior to the occurrence of the event set forth in (a) above.
5 | Liquidation Preference |
Upon the occurrence of a Liquidation Event A or a Liquidation Event B with respect to the Company or its Subsidiaries and in terms of the SHA, the holders of the IFC CCDs shall receive the Liquidation Preference in accordance with the terms of the SHA and in the order of precedence set forth in the SHA.
Upon the exercise of the Drag Right of the Investors or Drag Right of IFC, DEG and Proparco in accordance with Clause 6.4 and 6.5 of the SHA, the IFC CCDs shall be subject to the order of preference in terms of the sale of the Equity Securities and the returns on the Equity Securities as set out in the SHA. Notwithstanding the above, the holders of the IFC CCDs will also be entitled to the buy-back preferences in accordance with the terms of the SHA and in order of preference set forth in the SHA.
For the avoidance of doubt, it is hereby clarified that Equity Shares of the Company held by IFC pursuant to the conversion of the IFC CCDs shall be treated at par with the remaining Equity Shares of the Company for the purposes of this paragraph 5, save and except where the IFC CCDs are converted into Equity Shares of the Company on or immediately prior to and only in connection with IFC exercising its right in the case of events set out in this paragraph 5, in which case, notwithstanding anything to the contrary contained herein, the Equity Shares issued to the holder of the IFC CCDs will be entitled to priority in terms of payment in the like manner as the IFC CCDs as set out in this paragraph 5.
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6 | Transferability |
Subject to the terms of the SHA, the IFC CCDs shall be freely transferable to any Person and holders of the IFC CCDs may assign all or any of the IFC CCDs and any rights attaching thereto under the SHA, without the prior consent of any Person.
7 | Voting Rights |
From and after the Transfer of the IFC CCDs in accordance with the terms of the SHA, the transferee of the IFC CCDs will be entitled to vote on every resolution placed before the Company, to the extent permissible under Law, in proportion to the Equity Shares held by such transferee in the share capital of the Company, assuming the transferred IFC CCDs have been converted into Equity Shares of the Company on the basis of the conversion price determined in paragraph 4.2(i) above.
From the date of conversion of the IFC CCDs, the voting percentage of all the shareholders in the Company shall be in proportion to their shareholding in the Company.
For the avoidance of doubt, it is hereby clarified, that IFC shall be entitled to exercise its voting rights as a debenture holder in the Company available to it under applicable Law.
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SCHEDULE F TERMS AND CONDITIONS OF SERIES C CCPS
All capitalized terms used herein but not defined shall have the meaning given to them under this Agreement. Reference to a paragraph under this Schedule shall be a reference to the paragraph of this Schedule.
1. | Face Value |
The Series C CCPS shall have a face value of INR 10 (Indian Rupees Ten).
2. | Dividend |
Each of the holders of Series C CCPS shall be entitled to payment of 8% (eight per cent) non- cumulative dividend per annum (calculated on the sum of the face value and premium paid) on each of the Series C CCPS by way of dividend from the Company in accordance with applicable Law as and when the Board of the Company declares any dividend. The dividends payable on the Series C CCPS shall be senior to dividend payments to holders of Series A CCPS and other Equity Shares of the Company.
Subject to applicable Law, each of the holders of Series C CCPS shall be individually entitled, in addition and cumulative to the above, to participate in the distribution of the profits of the Company to the other shareholders of the Company (for the purpose of this paragraph all the Series C CCPS shall be assumed as if have been converted to Equity Shares at the Conversion Factor).
3. | Term |
Unless converted in accordance with the terms of this Schedule, the Articles of the Company and applicable Laws, the term of the Series C CCPS shall be a maximum of 10 (ten) years from the date of their issuance.
4. | Voting |
4.1 | From and after the issuance of the Series C CCPS, the voting rights of every holder of Series C CCPS on every resolution placed before the Company shall, to the extent permissible under applicable Law, be in proportion to the share capital that the Equity Shares held by such holder represent, assuming the Series C CCPS have been converted into Equity Shares of the Company on the basis of the Conversion Factor set out below. |
4.2 | From the date of conversion of the Series C CCPS, the voting percentage of their holders in the Company shall be in proportion to their shareholding in the Company. |
5. | Conversion |
5.1 | The Series C CCPS shall be convertible into Equity Shares of the Company at the option of the holders of the Series C CCPS in accordance with paragraph 5.2. Any Series C CCPS that have not been converted into the Equity Shares of the Company shall compulsorily convert into the Equity Shares of the Company in accordance with paragraph 5.3 below, upon the earlier of: |
(i) | Prior to the filing of the DRHP with SEBI in connection with the QIPO, or prior to listing of equity shares of Companys holding company in connection with an IPO; and |
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(ii) | The date which is 10 (ten) years from the date of the issuance of the Series C CCPS (the Maturity Date ), |
in each case, in accordance with the terms of this Agreement.
5.2 | Optional Conversion |
(i) | The holders of the Series C CCPS shall severally have the right, at any time and from time to time at their sole option after their issuance, to require the Company, by written notice (the Conversion Notice ), to convert their respective Series C CCPS into Equity Shares of the Company. A copy of the Conversion Notice shall be sent to the Sponsors, Proparco, IFC, DEG, FC and Helion. In case the conversion occurs prior to the expiry of the Maturity Date, then the conversion shall be completed within a period of 21 (twenty one) days from the date of the Conversion Notice. The Series C CCPS will be convertible into Equity Shares of the Company at a conversion ratio of 1:0.3424 (the Conversion Factor ), without being required to pay any amount for such conversion. However, if the holders of Series C CCPS are unable to receive amounts equal to their entitlements under Clause 4.1, Clause 6.4, Clause 6.5 or Clause 9 of the SHA (as applicable) on the basis of the Conversion Factor of 1:0.3424 due to pricing restrictions under applicable Law, then each Series C CCPS shall be converted at such higher conversion ratio that will permit the holders of Series C CCPS to receive the amounts that they are entitled under Clause 4.1, Clause 6.4, Clause 6.5 or Clause 9, of the SHA, as applicable; in which event the term Conversion Factor shall be reckoned accordingly. For avoidance of doubts, the holders of Series C CCPS shall not be entitled to any proceeds over and above their entitlements under Clause 4.1, Clause 6.4, Clause 6.5 or Clause 9 of the SHA, irrespective of the Conversion Factor. |
(ii) | The Conversion Notice shall be dated and shall set forth: |
(a) | The number of Series C CCPS in respect of which the holders of the Series C CCPS are exercising their right to conversion in accordance with this paragraph 5.2; and |
(b) | The number of Equity Shares of the Company that the Series C CCPS shall convert into. |
(iii) | Upon receipt of the Conversion Notice, the Company shall effect the following: |
(a) | Convening of a meeting of the Board, in which meeting the Company shall approve the following: |
(A) | The conversion of the relevant Series C CCPS; |
(B) | The cancellation of the share certificates representing such number of the Series C CCPS; and |
(C) | The issuance and allotment of such number of Equity Shares of the Company that the Series C CCPS shall convert into, |
in each case, as are mentioned in the Conversion Notice;
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(b) | Issuance of duly stamped share certificates to the holders of the Series C CCPS to evidence such holders of the Series C CCPS as the owners of the shares issued upon conversion of their respective Series C CCPS as are mentioned in the Conversion Notice; |
(c) | Updating its register of members to reflect the holders of the Series C CCPS as the owners of the shares issued pursuant to the conversion of the relevant Series C CCPS as mentioned in the Conversion Notice; |
(d) | Filing with the jurisdictional Registrar of Companies, Form PAS 3 of the Companies (Prospectus and Allotment of Securities) Rules, 2014 in respect of allotment of the shares to the holders of the Series C CCPS pursuant to such holders of the Series C CCPS exercising their rights in accordance with paragraph 5.1 and shall provide the holders of the Series C CCPS with certified true copies of Form PAS 3 duly filed with the jurisdictional Registrar of Companies along with the receipt in respect of Form PAS 3; and |
(e) | The Company and the Sponsors shall do all such acts and deeds as may be necessary to give effect to the provisions of this paragraph 5, including without limitation, convening a meeting of the Board to approve the splitting of the share certificates representing the Series C CCPS. |
5.3 | Automatic Conversion |
(i) | The Company shall forthwith convert all the Series C CCPS into shares, based on the Conversion Factor, if at any time after their issuance, the Company proposes to file a DRHP for a firmly underwritten issue of shares to the public if the shareholders of the Company have consented to the QIPO/IPO under the provisions of this Agreement. The Series C CCPS shall convert into Equity Shares of the Company at the Conversion Factor, immediately prior to filing of the DRHP with the SEBI. |
(ii) | In the event that: |
(a) | The Company files a DRHP with the SEBI in respect of the QIPO/IPO which, prior to such filing, has necessitated the conversion of the Series C CCPS into Equity Shares of the Company; and |
(b) | Within the Listing Date, the QIPO/IPO does not complete such that the entire issued, paid-up and subscribed share capital is not admitted to trading on a Relevant Market by the expiry of the Listing Date, |
then the Company and the Sponsors shall comply with the provisions of Clause 8 ( Reinstatement of Rights ) of this Agreement and shall undertake all necessary actions to ensure that the holders of the Series C CCPS are placed in the same position, and possess the same rights as set forth in this Schedule F, they had the benefit of immediately prior to the occurrence of the event set forth in (a) above.
6. | Liquidation Preference |
Upon the occurrence of a Liquidation Event A or Liquidation Event B with respect to the Company or its Subsidiaries, the holders of the Series C CCPS shall receive the Liquidation
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Preference in accordance with the terms of this Agreement and in the order of precedence set forth in this Agreement.
Upon the exercise of the Drag Right of the Investors or Drag Right of IFC, DEG and Proparco in accordance with Clause 6.4 and 6.5 of this Agreement, the Series C CCPS shall be subject to the order of preference in terms of the sale of the Equity Securities and the returns on the Equity Securities as set out in this Agreement. Notwithstanding the above, the holders of the Series C CCPS will also be entitled to the buy-back preferences in accordance with the terms of this Agreement and in order of preference set forth in this Agreement.
7. | Transferability |
Subject to the terms of this Agreement, the Series C CCPS shall be freely transferable to any Person, and the holders of the Series C CCPS may assign all or any of the Series C CCPS and any rights attaching under this Agreement, without the prior consent of any Person.
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SCHEDULE G TERMS AND CONDITIONS OF SERIES D CCPS
All capitalized terms used herein but not defined shall have the meaning given to them under the Agreement. Reference to a paragraph under this Schedule shall be a reference to the paragraph of this Schedule.
1. | Face Value |
The Series D CCPS shall have a face value of INR 10 (Indian Rupees Ten).
2. | Dividend |
Each of the holders of Series D CCPS shall be entitled to payment of 8% (eight per cent) non- cumulative dividend per annum (calculated on the sum of the face value and premium paid) on each of the Series D CCPS by way of dividend from the Company in accordance with applicable Law as and when the Board of the Company declares any dividend. The dividends payable on the Series D CCPS shall be senior to dividend payments to holders of Series A CCPS and other Equity Shares of the Company.
Subject to applicable Law, each of the holders of Series D CCPS shall be individually entitled, in addition and cumulative to the above, to participate in the distribution of the profits of the Company to the other shareholders of the Company (for the purpose of this paragraph all the Series D CCPS shall be assumed as if have been converted to Equity Shares at the Conversion Factor).
3. | Term |
Unless converted in accordance with the terms of this Schedule, the Articles of the Company and applicable Laws, the term of the Series D CCPS shall be a maximum of 10 (ten) years from the date of their issuance.
4. | Voting |
4.1 | From and after the issuance of the Series D CCPS, the voting rights of every holder of Series D CCPS on every resolution placed before the Company shall, to the extent permissible under applicable Law, be in proportion to the share capital that the Equity Shares held by such holder represent, assuming the Series D CCPS have been converted into Equity Shares of the Company on the basis of the Conversion Factor set out below. |
4.2 | From the date of conversion of the Series D CCPS, the voting percentage of their holders in the Company shall be in proportion to their shareholding in the Company. |
5. | Conversion |
5.1 | The Series D CCPS shall be convertible into Equity Shares of the Company at the option of the holders of the Series D CCPS in accordance with paragraph 5.2. Any Series D CCPS that have not been converted into the Equity Shares of the Company shall compulsorily convert into the Equity Shares of the Company in accordance with paragraph 5.3 below, upon the earlier of: |
(i) | Prior to the filing of the DRHP with SEBI in connection with the QIPO, or prior to listing of equity shares of Companys holding company in connection with an IPO; and |
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(ii) | The date which is 10 (ten) years from the date of the issuance of the Series D CCPS (the Maturity Date ), |
in each case, in accordance with the terms of this Agreement.
5.2 | Optional Conversion |
(i) | The holders of the Series D CCPS shall severally have the right, at any time and from time to time at their sole option after their issuance, to require the Company, by written notice (the Conversion Notice ), to convert their respective Series D CCPS into Equity Shares of the Company. A copy of the Conversion Notice shall also be sent to the Sponsors, Proparco, Helion, FC and IFC. In case the conversion occurs prior to the expiry of the Maturity Date, then the conversion shall be completed within a period of 21 (twenty one) days from the date of the Conversion Notice. The Series D CCPS will be convertible into Equity Shares of the Company at a conversion ratio of 1:1 (the Conversion Factor ), without being required to pay any amount for such conversion. However, if the holders of Series D CCPS are unable to receive amounts equal to their entitlements under Clause 4.1, Clause 6.4, Clause 6.5 or Clause 9 of the SHA (as applicable) on the basis of the Conversion Factor of 1:1 due to pricing restrictions under applicable Law, then each Series D CCPS shall be converted at such higher conversion ratio that will permit the holders of Series D CCPS to receive the amounts that they are entitled under Clause 4.1, Clause 6.4, Clause 6.5 or Clause 9 of the SHA as applicable; in which event the term Conversion Factor shall be reckoned accordingly. For avoidance of doubts, the holders of Series D CCPS shall not be entitled to any proceeds over and above their entitlements under Clause 4.1, Clause 6.4, Clause 6.5 or Clause 9 of the SHA, irrespective of the Conversion Factor. |
(ii) | The Conversion Notice shall be dated and shall set forth: |
(a) | The number of Series D CCPS in respect of which the holders of the Series D CCPS are exercising their right to conversion in accordance with this paragraph 5.2; and |
(b) | The number of Equity Shares of the Company that the Series D CCPS shall convert into. |
(iii) | Upon receipt of the Conversion Notice, the Company shall effect the following: |
(a) | Convening of a meeting of the Board, in which meeting the Company shall approve the following: |
(A) | The conversion of the relevant Series D CCPS; |
(B) | The cancellation of the share certificates representing such number of the Series D CCPS; and |
(C) | The issuance and allotment of such number of Equity Shares of the Company that the Series D CCPS shall convert into, |
in each case, as are mentioned in the Conversion Notice;
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(b) | Issuance of duly stamped share certificates to the holders of the Series D CCPS to evidence such holders of the Series D CCPS as the owners of the shares issued upon conversion of their respective Series D CCPS as are mentioned in the Conversion Notice; |
(c) | Updating its register of members to reflect the holders of the Series D CCPS as the owners of the shares issued pursuant to the conversion of the relevant Series D CCPS as mentioned in the Conversion Notice; |
(d) | Filing with the jurisdictional Registrar of Companies Form PAS 3 of the Companies (Prospectus and Allotment of Securities) Rules, 2014 in respect of allotment of the shares to the holders of the Series D CCPS pursuant to such holders of the Series D CCPS exercising their rights in accordance with paragraph 5.1 and shall provide the holders of the Series D CCPS with certified true copies of Form PAS 3 duly filed with the jurisdictional Registrar of Companies along with the receipt in respect of Form PAS 3; and |
(e) | The Company and the Sponsors shall do all such acts and deeds as may be necessary to give effect to the provisions of this paragraph 5, including without limitation, convening a meeting of the Board to approve the splitting of the share certificates representing the Series D CCPS. |
5.3 | Automatic Conversion |
(i) | The Company shall forthwith convert all the Series D CCPS into shares, based on the Conversion Factor, if at any time after their issuance, the Company proposes to file a DRHP for a firmly underwritten issue of shares to the public if the shareholders of the Company have consented to the QIPO/IPO under the provisions of this Agreement. The Series D CCPS shall convert into Equity Shares of the Company at the Conversion Factor, immediately prior to filing of the DRHP with the SEBI. |
(ii) | In the event that: |
(a) | The Company files a DRHP with the SEBI in respect of the QIPO/IPO which, prior to such filing, has necessitated the conversion of the Series D CCPS into Equity Shares of the Company; and |
(b) | Within the Listing Date, the QIPO/IPO does not complete such that the entire issued, paid-up and subscribed share capital is not admitted to trading on a Relevant Market by the expiry of the Listing Date, |
then the Company and the Sponsors shall comply with the provisions of Clause 8 ( Reinstatement of Rights ) of this Agreement and shall undertake all necessary actions to ensure that the holders of the Series D CCPS are placed in the same position, and possess the same rights as set forth in this Schedule G, they had the benefit of immediately prior to the occurrence of the event set forth in (a) above.
6. | Liquidation Preference |
Upon the occurrence of a Liquidation Event A or Liquidation Event B with respect to the Company or its Subsidiaries and in accordance with the terms of this Agreement, the holders
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of the Series D CCPS shall receive the Liquidation Preference in accordance with the terms of this Agreement and in the order of precedence set forth in this Agreement.
Upon the exercise of the Drag Right of the Investors or Drag Right of IFC, DEG and Proparco in accordance with Clause 6.4 and 6.5 of this Agreement, the Series D CCPS shall be subject to the order of preference in terms of the sale of the Equity Securities and the returns on the Equity Securities as set out in this Agreement. Notwithstanding the above, the holders of the Series D CCPS will also be entitled to the buy-back preferences in accordance with the terms of this Agreement and in order of preference set forth in this Agreement.
7. | Transferability |
Subject to the terms of this Agreement, the Series D CCPS shall be freely transferable to any Person, and the holders of the Series D CCPS may assign all or any of the Series D CCPS and any rights attaching under the Agreement, without the prior consent of any Person.
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SCHEDULE H- TERMS AND CONDITIONS OF DEG CCDS
All capitalized terms used herein but not defined shall have the meaning given to them under the SHA. Reference to a paragraph under this Schedule shall be a reference to the paragraph of this Schedule.
1. | Form and Status of DEG CCDs |
Each of DEG CCDs shall have a face value of INR 1,000 (Indian Rupees One Thousand).
2. | Term |
Unless converted in accordance with the terms of this Schedule H, the Articles of the Company and applicable Laws, the term of the DEG CCDs shall be a maximum of 10 (ten) years from their issuance. The date on which the DEG CCDs were issued and allotted to DEG shall be referred as Subscription Closing Date .
The Company agrees to maintain a sufficient number of authorised and unissued shares till the conversion of the DEG CCDs to permit the full conversion of the DEG CCDs in accordance with this Schedule.
3. | Interest |
3.1 | The DEG CCDs will bear interest at the rate of 5% (five percent) per annum upto the date of their conversion into Equity Shares of the Company in accordance with paragraph 4 below. |
3.2 | The interest will accrue for a period of 18 (eighteen) months from issuance of the DEG CCDs and will be paid at the end of this period, subject to applicable Law, followed by quarterly payments on the 15 th (fifteenth) day of the relevant month of such quarterly payment until the date of conversion and the interest payable in respect of each calendar year shall be calculated by dividing the annual interest due by 365 (three hundred and sixty five). In relation to such interest payments, DEG shall provide its account details no later than 1 (one) month before the payment is due. If full interest payment cannot be made during an applicable period, due to any constraints including but not limited to regulatory constraints, then the unpaid interest payment will accrue and be paid in subsequent periods, compounded for the period of delay in payment. |
3.3 | If the dividend payout in any given financial year to the Shareholders or to the holders of Series A CCPS (as defined in the SHA) or to the holders of Series B CCPS (as defined in the SHA) or to the holders of Series C CCPS (as defined in this SHA) of the Company, whichever is highest, is more than 5% (five per cent) of the amount invested for such securities by the holder of those securities, then the holders of the DEG CCDs will be entitled to an additional interest which shall be equal to the difference between (a) the percentage return (on the amount invested) received by the holders of such Equity Shares or the holders of Series A CCPS or the holders of Series B CCPS or to the holders of Series C CCPS; and (b) the rate of interest received by the holder of the DEG CCDs for that financial year under the terms of paragraph 3.1. |
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4. | Conversion |
4.1 | The DEG CCDs shall be convertible into Equity Shares of the Company at the option of the holders of the DEG CCDs in accordance with paragraph 4.2. Any DEG CCDs that have not been converted into Equity Shares of the Company shall compulsorily convert into the Equity Shares of the Company upon the earlier of: |
(i) | In accordance with paragraph 4.3, prior to the filing of the DRHP with SEBI in connection with the QIPO or prior to listing of equity shares of Companys holding company in connection with an IPO; and |
(ii) | The date which is 10 (ten) years from the Subscription Closing Date in relation to the DEG CCDs (the Maturity Date ), |
in each case, in accordance with this SHA. Upon occurrence of any of the event under paragraph 4.1(i) and (ii) above the Company (and the Sponsors, where applicable) will immediately follow the procedure under paragraph 4.2 (iv) below.
4.2 | Optional Conversion |
The holders of the DEG CCDs shall have the right, in the events set out in paragraph 4.2 (ii) of this Schedule after the Subscription Closing Date of DEG CCDs to require the Company, by a written notice (the Conversion Notice ), to convert all or some of the DEG CCDs into Equity Shares of the Company. A copy of the Conversion Notice shall also be sent to the Sponsors, IFC, Proparco, Helion and FC. In case the conversion occurs prior to the expiry of the Maturity Date, then the conversion shall be completed within a period of 21 (twenty one) days from the date of the Conversion Notice.
(i) | Conversion Ratio & Conversion Price |
(a) | The Conversion Ratio for the purposes of DEG CCDs shall be such that each DEG CCD will convert into such number of Equity Shares, so as to give the DEG CCD holders the DEG Required Return, without DEG being required to pay any amount for such conversion. For avoidance of all doubts, it is further clarified that the conversion price of each such DEG CCD shall not be less than the fair value determined in accordance with the pricing guidelines prescribed by the Reserve Bank of India on the date of issuance and allotment of the DEG CCDs, i.e. INR 971.06 (Indian Rupees Nine Hundred and Seventy One and Six paisa). |
For purposes of this paragraph, the term DEG Required Return for the purposes of the DEG CCDs shall mean (aa) 16% (sixteen percent) IRR; or (bb) 18.4% (Eighteen point four Percent) IRR, in the event of conversion of the DEG CCDs into Equity Shares of the Company (a) in accordance with paragraph 4.1 (i) of this Schedule H, or (b) upon Transfer of the Equity Securities in terms of Clause 6.3.4 of the SHA, or (c) upon a voluntary sale of any or all the Equity Securities held by all the Investors and the voluntary sale of Equity Securities held by the Sponsors to a third party, such that pursuant to the sale of the Equity Securities there is a change in Control on the Company, or (d) upon a Liquidation
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Event B other than upon Transfer of all or more than 70% (seventy percent) in value of the Companys Assets.
Provided that, if the DEG CCD holder receives any interest from the Company prior to conversion, the value of the same will be deducted from the DEG Required Return.
(b) | A valuation of the Company to enable conversion of the DEG CCDs in accordance with (a) above shall be: |
1) | for the events specified in paragraph 4.2 (ii) (a), (b) and (g) and paragraph 4.1(ii), the valuation as determined by one of the Big Four Accounting Firms selected in accordance with the procedure laid down in paragraph 4.2 (c) below; |
2) | for the events specified in paragraph 4.2(ii) (c), (d), (e) and (f), the valuation as offered by the third party purchaser; and |
3) | for the events specified in paragraph 4.3(i), the valuation as determined by the merchant banker managing the IPO/QIPO. |
(c) | DEG shall set out in the Conversion Notice, the names of 2 (two) of the Big Four Accounting Firms that are selected by DEG for the purpose of paragraph 4.2(i)(c). Within 10 (ten) days of the date of the Conversion Notice, IFC, Helion, FC, DEG, Proparco, Company and Sponsors shall jointly agree to appoint one of the 2 (two) Big Four Accounting Firms mentioned in the Conversion Notice to do the valuation of the Company, and shall jointly issue a notice to DEG in this respect. If DEG does not receive the aforesaid notice within the period of 10 days from the date of the Conversion Notice, then DEG shall have the right to select, in its sole discretion, one of the 2 (two) Big Four Accounting Firms mentioned in the Conversion notice to do the valuation of the Company. |
(ii) | The holders of the DEG CCDs will be entitled to exercise their conversion right in respect of the DEG CCDs just prior to or on the occurrence of the following events: |
(a) | Liquidation Event A or Liquidation Event B as defined in the SHA. |
(b) | Buy-back of the DEG CCDs in accordance with the terms of the SHA. |
(c) | In the event holder of the DEG CCDs wishes to exercise its Co-Sale Right under Clause 6.3.3 (Co-Sale Rights) of the SHA. |
(d) | In the event holder of the DEG CCDs wishes to exercise its Co-Sale Right under Clause 6.3.4 (Transfer to a Competitor) of the SHA. |
(e) | In the event holder of the DEG CCDs wishes to exercise its Drag Along Right under Clause 6.4 (Drag Right to the Investors) of the SHA. |
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(f) | In the event holder of the DEG CCDs wishes to exercise its right under Clause 6.5 (Drag Right of DEG, IFC and Proparco) of the SHA. |
(g) | In the event holder of the DEG CCDs wishes to exercise the Deficit Call Option under Clause 6.6 (IFC, DEG and Proparco Call Option) of the SHA. |
(iii) | The conversion Notice shall be dated and shall set forth: |
(a) | The number of DEG CCDs in respect of which the holders of the DEG CCDs are exercising their right to conversion in accordance with this paragraph 4.2; |
(b) | The number of Equity Shares of the Company that the DEG CCDs shall convert into; and |
(c) | The names of 2 of the Big Four Accounting Firms that are selected by DEG for the purpose of paragraph 4.2(i)(c), if applicable; and the reference valuation as offered by the third party purchaser, if applicable. |
(iv) | Upon receipt of the Conversion Notice, the Company shall effect the following: |
(a) | Convening of a meeting of the Board, in which meeting the Company approve the following: |
| The conversion of such number of the DEG CCDs; |
| The cancellation of the certificates representing such number of DEG CCDs that are converted; |
| The issuance and allotment of such number of Equity Shares of the Company that the DEG CCDs shall convert into. |
in each case, as are mentioned in the Conversion Notice;
(b) | Issuance of duly stamped share certificates to the holders of the DEG CCDs to evidence such holders of the DEG CCDs as the owners of the Equity Shares issued upon conversion of such number of the DEG CCDs as are mentioned in the Conversion Notice; |
(c) | Updating its register of members to reflect the holders of the DEG CCDs as the owners of the Equity Shares issued pursuant to the conversion of such number of the DEG CCDs as are mentioned in the Conversion Notice; |
(d) |
Filing with the jurisdictional Registrar of Companies Form PAS 3 of the Companies (Prospectus and Allotment of Securities) Rules, 2014 in respect of allotment of the Equity Shares to the holders of the DEG CCDs pursuant to such holders of the DEG CCDs exercising their rights in accordance with this paragraph 4 and shall provide the holders of the DEG CCDs with certified true |
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copies of Form PAS 3 duly filed with the jurisdictional Registrar of Companies along with the receipt in respect of Form PAS 3; and |
(e) | The Company and the Sponsors shall do all such acts and deeds as may be necessary to give effect to the provision of this paragraph 4, including without limitation, convening a meeting of the Board to approve the splitting of the share certificates representing the DEG CCDs. |
4.3 | Automatic Conversion |
(i) | The Company shall forthwith convert all the DEG CCDs into Equity Shares based on the conversion price arrived in accordance with paragraph 4.2(i), if at any time after the Subscription Closing Date, the Company proposes to file a DRHP for a firmly underwritten issue of Equity Shares to the public and the shareholders of the Company have consented to the QIPO or an IPO under the provisions of the SHA. The DEG CCDs shall convert into Equity Shares of the Company immediately prior to filing of the DRHP with the SEBI. |
(ii) | In the event that: |
(a) | The Company files a DRHP with the SEBI in respect of the QIPO or an IPO which, prior to such filing, has necessitated the conversion of the DEG CCDs into Equity Shares of the Company; and |
(b) | Within the Listing Date, (as defined in the SHA), the QIPO or the IPO does not complete such that the entire issued, paid-up and subscribed share capital is not admitted to trading on a Relevant Market (as defined in the SHA) by the expiry of the Listing Date. |
Then the Company and the Sponsors shall comply with the provisions of Clause 8 (Reinstatement of Rights) of the SHA and shall undertake all necessary actions to ensure that the holders of the DEG CCDs are placed in the same position, and possess the same rights as set forth in this Schedule H, they had the benefit of immediately prior to the occurrence of the event set forth in (i) above.
5. | Liquidation Preference |
Upon the occurrence of a Liquidation Event A or a Liquidation Event B with respect to the Company or its Subsidiaries and in accordance with the terms of the SHA, the holders of the DEG CCDs shall receive the Liquidation Preference in accordance with the terms of the SHA and in the order of precedence set forth in the SHA.
Upon the exercise of the Drag Right of the Investors or Drag Right of IFC, DEG and Proparco in accordance with Clause 6.4 and 6.5 of the SHA, the DEG CCDs shall be subject to the order of preference in terms of the sale of the Equity Securities and the returns on the Equity Securities as set out in the SHA. Notwithstanding the above, the holders of the DEG CCDs will also be entitled to the buy-back preferences in accordance with the terms of the SHA and in order of preference set forth in the SHA.
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For the avoidance of doubt, it is hereby clarified that Equity Shares of the Company held by DEG pursuant to the conversion of the DEG CCDs shall be treated at par with the remaining Equity Shares of the Company for the purposes of this paragraph 5, save and except where the DEG CCDs are converted into Equity Shares of the Company on or immediately prior and only in connection with DEG exercising its right in the case of events set out in this paragraph 5, in which case, notwithstanding anything to the contrary contained herein, the Equity Shares issued to the holder of the DEG CCDs will be entitled to priority in terms of payment in the like manner as the DEG CCDs as set out in this paragraph 5.
6. | Transferability |
Subject to the terms of the SHA, the DEG CCDs shall be freely transferable to any person and holders of the DEG CCDs may assign all or any of the DEG CCDs and any rights attaching thereto tinder the SHA, without the prior consent of any Person.
7. | Voting Rights |
From and after the issuance of the DEG CCDs, DEG shall only be entitled to exercise voting rights on every resolution in respect of Schedule M placed before the Company on the basis of its shareholding in the Company on an As if Converted Basis subject to the terms of the SHA. Provided however that upon the transfer of the DEG CCDs in accordance with the terms of the SHA, the transferee of the DEG CCDs will be entitled to vote on every resolution placed before the Company, to the extent permissible under Law, in proportion to the Equity Shares held by such transferee in the share capital of the Company, assuming the transferred DEG CCDs have been converted into Equity Shares of the Company on the basis of the conversion price as determined in paragraph 4.2(i) above.
From the date of conversion of the DEG CCDs, the voting percentage of all the shareholders in the Company shall be in proportion to their shareholding in the Company.
For the avoidance of doubt, it is hereby clarified, that DEG shall be entitled to exercise its voting rights as a debenture holder in the Company available to it under applicable Law.
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SCHEDULE I- TERMS AND CONDITIONS OF IFC II CCDS
All capitalized terms used herein but not defined shall have the meaning given to them under the SHA. Reference to a paragraph under this Schedule shall be a reference to the paragraph of this Schedule.
1. | Form and Status of IFC II CCDs |
Each IFC II CCD shall have a face value of INR 2,000 (Indian Rupees Two Thousand).
2. | Term |
Unless converted in accordance with the terms of this Schedule I, the Articles of the Company and applicable Laws, the terms of the IFC II CCDs shall be a maximum of 10 (ten) years from their issuance. The date on which the IFC II CCDs were issued and allotted to IFC shall be referred as CCD II Closing Date .
The Company agrees to maintain a sufficient number of authorised and unissued shares till the conversion of the IFC II CCDs to permit the full conversion of the IFC II CCDs in accordance with this Schedule.
3. | Interest |
3.1 | IFC II CCDs shall not carry any annual interest; however, if any dividend payout is made in any given Financial Year to the Shareholders or the holders of any CCPS of the Company, whichever is higher, IFC II CCDs shall be entitled to interest/ dividend which shall be equal to the percentage return (on the amount invested) received by the holders of Equity Shares or the holders of such CCPS, as the case may be, for that financial year under the terms of the SHA. |
4. | Conversion |
4.1 | The IFC II CCDs shall be convertible into Equity Shares of the Company at the option of the holders of the IFC II CCDs in accordance with paragraph 4.2. Any IFC II CCDs that have not been converted into Equity Shares of the Company shall compulsorily convert into the Equity Shares of the Company upon the earlier of: |
(i) | In accordance with paragraph 4.3, prior to the filing of the DRHP with SEBI in connection with the QIPO or prior to listing of equity shares of Companys holding company in connection with an IPO; and |
(ii) | The date which is 10 (ten) years from the CCDs II Closing Date in relation to the IFC II CCDs (the Maturity Date ), |
in each case, in accordance with this SHA. Upon occurrence of any of the event under paragraph 4.1(i) and (ii) above the Company (and the Sponsors, where applicable) will immediately follow the procedure under paragraph 4.2 (iv) below.
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4.2 | Optional Conversion |
The holders of the IFC II CCDs shall have the right, in the events set out in paragraph 4.2 (ii) of this Schedule 1 after the CCDs II Closing Date of IFC II CCDs to require the Company, by a written notice (the Conversion Notice ), to convert all or some of the IFC II CCDs into Equity Shares of the Company. A copy of the Conversion Notice shall also be sent to the Sponsors, Proparco, DEG, Helion and FC. In case the conversion occurs prior to the expiry of the Maturity Date, then the conversion shall be completed within a period of 21 (twenty one) days from the date of the Conversion Notice.
(i) | Conversion Ratio & Conversion Price |
(a) | The Conversion Ratio for the purposes of IFC II CCDs shall be such that IFC II CCDs will convert into such number of Equity Shares, so as to give IFC II CCDs holders the IFC II Required Return, without IFC being required to pay any amount for such conversion. For avoidance of all doubts, it is further clarified that the conversion price of each such IFC II CCDs shall not be less than the fair value determined in accordance with the pricing guidelines prescribed by the Reserve Bank of India on the date of issuance and allotment of the IFC II CCDs, i.e. INR 1,119.23 (Indian Rupees One Thousand One Hundred and Nineteen and Twenty Three Paisa). |
For purposes of this paragraph, the term IFC II Required Return for the purposes of the IFC II CCDs shall mean (aa) 16% (sixteen percent) IRR; or (bb) 18.4% (Eighteen point four Percent) IRR, in the event of conversion of the IFC II CCDs into Equity Shares of the Company (a) in accordance with paragraph 4.1 (i) of this Schedule I, or (b) upon Transfer of the Equity Securities in terms of Clause 6.3.4 of the SHA, or (c) upon a voluntary sale of any or all the Equity Securities held by all the Investors and the voluntary sale of Equity Securities held by the Sponsors to a third party, such that pursuant to the sale of the Equity Securities there is a change in Control on the Company, or (d) upon a Liquidation Event B other than upon Transfer of all or more than 70% (seventy percent) in value of the Companys Assets.
Provided that, if the IFC II CCDs holder receives any interest from the Company prior to conversion, the value of the same will be deducted from the IFC II Required Return.
(b) | A valuation of the Company to enable conversion of the IFC II CCDs in accordance with (a) above shall be: |
1) | for the events specified in paragraph 4.2 (ii) (a), (b) and (g) and paragraph 4.1 (ii), the valuation as determined by one of the Big Four Accounting Firms selected in accordance with the procedure laid down in paragraph 4.2(i)(c) below; and |
2) | for the events specified in paragraph 4.2(ii) (c), (d), (e) and (f), the valuation as offered by the third party purchaser. |
3) | for the events specified in paragraph 4.3(i), the valuation as determined by the merchant banker managing the IPO/QIPO |
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(c) | IFC shall set out in the Conversion Notice, the names of 2 (two) of the Big Four Accounting Firms that are selected by IFC for the purpose of paragraph 4.2(i)(c). Within 10 days of the date of the Conversion Notice, IFC, Helion, FC, DEG, Proparco, Company and Sponsors shall jointly agree to appoint one of the 2 (two) Big Four Accounting Firms mentioned in the Conversion Notice to do the valuation of the Company, and shall jointly issue a notice to IFC in this respect. If IFC do not receive the aforesaid notice within the period of 10 days from the date of the Conversion Notice, then IFC shall have the right to select, in its sole discretion, one of the 2 (two) Big Four Accounting firms mentioned in the Conversion notice to do the valuation of the Company. |
(ii) | The holders of the IFC II CCDs will be entitled to exercise their conversion right in respect of the IFC II CCDs just prior to or on the occurrence of the following events: |
(a) | Liquidation Event A or Liquidation Event B as defined in the SHA. |
(b) | Buy-back of the IFC II CCDs in accordance with the terms of the SHA a. |
(c) | In the event holder of the IFC II CCDs wishes to exercise its Co-Sale Right under Clause 6.3.3 (Co Sale Rights) of the SHA. |
(d) | In the event holder of the IFC II CCDs wishes to exercise its Co-Sale Right under Clause 6.3.4 (Transfer to a Competitor) of the SHA. |
(e) | In the event holder of the IFC II CCDs wishes to exercise its Drag Along Right under Clause 6.4 (Drag Right to the Investors) of the SHA. |
(f) | In the event holder of the IFC II CCDs wishes to exercise its right under Clause 6.5(Drag Right of IFC, DEG and Proparco) of the SHA. |
(g) | In the event holder of the IFC II CCDs wishes to exercise the Deficit Call Option under Clause 6.6 (IFC, DEG and Proparco Call Option) of the SHA. |
(iii) | The conversion Notice shall be dated and shall set forth: |
(a) | The number of IFC II CCDs in respect of which the holders of the IFC II CCDs are exercising their right to conversion in accordance with this paragraph 4.2; |
(b) | The number of Equity Shares of the Company that the IFC II CCDs shall convert into; and |
(c) | The names of 2 of the Big Four Accounting Firms that are selected by IFC for the purpose of paragraph 4.2(i)(c), if applicable; and the reference valuation as offered by the third party purchaser, if applicable. |
(iv) | Upon receipt of the Conversion Notice, the Company shall effect the following: |
(a) | Convening of a meeting of the Board, in which meeting the Company approve the following: |
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| The conversion of such number of the IFC II CCDs; |
| The cancellation of the certificates representing such number of IFC II CCDs that are converted; |
| The issuance and allotment of such number of Equity Shares of the Company that the IFC II CCDs shall convert into. |
in each case, as are mentioned in the Conversion Notice;
(b) | Issuance of duly stamped share certificates to the holders of the IFC II CCDs to evidence such holders of the IFC II CCDs as the owners of the Equity Shares issued upon conversion of such number of the IFC II CCDs as are mentioned in the Conversion Notice; |
(c) | Updating its register of members to reflect the holders of the IFC II CCDs as the owners of the Equity Shares issued pursuant to the conversion of such number of the IFC II CCDs as are mentioned in the Conversion Notice; |
(d) | Filing with the jurisdictional Registrar of Companies Form PAS 3 of the Companies (Prospectus and Allotment of Securities) Rules, 2014 in respect of allotment of the Equity Shares to the holders of the IFC II CCDs pursuant to such holders of the IFC II CCDs exercising their rights in accordance with this paragraph 4 and shall provide the holders of the IFC II CCDs with certified true copies of Form PAS 3 duly filed with the jurisdictional Registrar of Companies along with the receipt in respect of Form PAS 3; and |
(e) | The Company and the Sponsors shall do all such acts and deeds as may be necessary to give effect to the provision of this paragraph 4, including without limitation, convening a meeting of the Board to approve the splitting of the share certificates representing the IFC II CCDs. |
4.3 | Automatic Conversion |
(i) | The Company shall forthwith convert all the IFC II CCDs into Equity Shares based on the conversion price arrived in accordance with paragraph 4.2(i), if at any time after the CCDs II Closing Date, the Company proposes to file a DRHP for a firmly underwritten issue of Equity Shares to the public and the shareholders of the Company have consented to the QIPO or an IPO under the provisions of the SHA. The IFC II CCDs shall convert into Equity Shares of the Company immediately prior to filing of the DRHP with the SEBI. |
(ii) | In the event that: |
(a) | The Company files a DRHP with the SEBI in respect of the QIPO or an IPO which, prior to such filing, has necessitated the conversion of the IFC II CCDs into Equity Shares of the Company; and |
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(b) | Within the Listing Date, (as defined in the SHA), the QIPO or the IPO does not complete such that the entire issued, paid-up and subscribed share capital is not admitted to trading on a Relevant Market (as defined in the SHA) by the expiry of the Listing Date. |
Then the Company and the Sponsors shall comply with the provisions of Clause 8 (Reinstatement of Rights) of the SHA and shall undertake all necessary actions to ensure that the holders of the IFC II CCDs are placed in the same position, and possess the same rights as set forth in this Schedule I, they had the benefit of immediately prior to the occurrence of the event set forth in (a) above.
5. | Liquidation Preference |
Upon the occurrence of a Liquidation Event A or a Liquidation Event B with respect to the Company or its Subsidiaries (as defined in the SHA) and in accordance with the terms of the SHA, the holders of the IFC II CCDs shall receive the Liquidation Preference in accordance with the terms of the SHA and in the order of precedence set forth in the SHA.
Upon the exercise of the Drag Right of the Investors or Drag Right of IFC, DEG and Proparco in accordance with Clause 6.4 and 6.5 of the SHA, the IFC II CCDs shall be subject to the order of preference in terms of the sale of the Equity Securities and the returns on the Equity Securities as set out in the SHA. Notwithstanding the above, the holders of the IFC II CCDs will also be entitled to the buy-back preferences in accordance with the terms of the SHA and in order of preference set forth in the SHA.
For the avoidance of doubt, it is hereby clarified that Equity Shares of the Company held by IFC pursuant to the conversion of the IFC II CCDs shall be treated at par with the remaining Equity Shares of the Company for the purposes of this paragraph 5, save and except where the IFC II CCDs are converted into Equity Shares of the Company on or immediately prior and only in connection with IFC exercising its right in the case of events set out in this paragraph 5, in which case, notwithstanding anything to the contrary contained herein, the Equity Shares issued to the holder of the IFC II CCDs will be entitled to priority in terms of payment in the like manner as the IFC II CCDs as set out in this paragraph 5.
6. | Transferability |
Subject to the terms of the SHA, the IFC II CCDs shall be freely transferable to any person and holders of the IFC II CCDs may assign all or any IFC II CCDs and any rights attaching thereto under the SHA, without the prior consent of any Person.
7. | Voting Rights |
From and after the issuance of the IFC II CCDs, IFC shall only be entitled to exercise voting rights on every resolution in respect of Schedule M placed before the Company on the basis of its shareholding in the Company on an As if Converted Basis subject to the terms of the SHA. Provided however that upon the transfer of the IFC II CCDs in accordance with the terms of the SHA, the transferee of the IFC II CCDs will be entitled to vote on every resolution placed before the Company, to the extent permissible under Law, in proportion to the Equity Shares held by such transferee in the share capital of the Company, assuming the transferred IFC II
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CCDs have been converted into Equity Shares of the Company on the basis of the conversion price as determined in paragraph 4.2(i) above.
From the date of conversion of the IFC II CCDs, the voting percentage of all the shareholders in the Company shall be in proportion to their shareholding in the Company.
For the avoidance of doubt, it is hereby clarified, that IFC shall be entitled to exercise its voting rights as a debenture holder in the Company available to it under applicable Law.
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SCHEDULE J- TERMS AND CONDITIONS OF SERIES E CCPS
All capitalized terms used herein but not defined shall have the meaning given to them under the SHA. Reference to a paragraph under this Schedule shall be a reference to the paragraph of this Schedule.
1. | Face Value |
The Series E CCPS shall have a face value of INR 10 (Indian Rupees Ten).
2. | Term |
Unless converted in accordance with the terms of this Schedule J, the Articles of the Company and applicable Laws, the term of the Series E CCPS shall be a maximum of 10 (ten) years from their issuance.
The Company agrees to maintain a sufficient number of authorised and unissued shares till the conversion of the Series E CCPS to permit the full conversion of the Series E CCPS in accordance with this Schedule.
3. | Dividend |
3.1 | Each of the holders of Series E CCPS shall be entitled to payment of 5% (five percent) non-cumulative dividend per annum (calculated on the sum of the face value and premium paid) on each of the Series E CCPS by way of dividend from the Company in accordance with applicable Law as and when the Board of the Company declares any dividend to any shareholder. |
3.2 | If the dividend payout in any given financial year to the Shareholders or to the holders of Series A CCPS, Series B CCPS, Series C CCPS, Series D CCPS, Series F CCPS and Series H CCPS (as defined in this SHA) of the Company, whichever is highest, is more than 5% (five percent) of the amount invested for such securities by the holder of those securities, then the holders of the Series E CCPS will be entitled to an additional dividend which shall be equal to the difference between (a) the percentage return (on the amount invested) received by the holders of such Equity Shares or the holders of Series A CCPS, Series B CCPS, Series C CCPS, Series D CCPS, Series F CCPS or Series H CCPS and (b) the rate of dividend received by the holder of the Series E CCPS for that Financial Year under the paragraph 3.1 above. It is clarified that in case the Company declares dividends to the holders of Equity Shares, Series A CCPS, Series B CCPS, Series C CCPS, Series D CCPS, Series F CCPS and/or Series H CCPS, the holders of Series E CCPS shall be entitled to receive dividends simultaneous with the holders of Equity Shares, Series A CCPS, Series B CCPS, Series C CCPS, Series D CCPS, Series F CCPS and/or Series H CCPS in the manner set out above. |
4. | Conversion |
4.1 |
The Series E CCPS shall be convertible into Equity Shares of the Company at the option of the holders of the Series E CCPS in accordance with paragraph 4.2. Any |
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Series E CCPS that have not been converted into Equity Shares of the Company shall compulsorily convert into the Equity Shares of the Company upon the earlier of: |
(i) | in accordance with paragraph 4.3, prior to the filing of the DRHP with SEBI in connection with the QIPO or prior to listing of equity shares of Companys holding company in connection with an IPO; and |
(ii) | The date which is 10 (ten) years from the date of the issuance of the Series E CCPS (the Maturity Date ), |
in each case, in accordance with this SHA. Upon occurrence of any of the event under paragraph 4.1(i) and (ii) above the Company (and the Sponsors, where applicable) will immediately follow the procedure under paragraph 4.2 (iv) below.
4.2 | Optional Conversion |
The holders of the Series E CCPS shall have the right, in the events set out in paragraph 4.2 (ii) of this Schedule J after the Proparco Closing Date-1 to require the Company, by a written notice (the Conversion Notice ), to convert all or some of the Series E CCPS into Equity Shares of the Company. A copy of the Conversion Notice shall also be sent to the Sponsors, IFC, Helion, DEG and FC. In case the conversion occurs prior to the expiry of the Maturity Date, then the conversion shall be completed within a period of 21 (twenty one) days from the date of the Conversion Notice.
(i) | Conversion Ratio & Conversion Price |
(a) | The Conversion Ratio for the purposes of Series E CCPS shall be such that each Series E CCPS will convert into such number of Equity Shares, so as to give the Series E CCPS holders the Proparco Required Return -1, without Proparco being required to pay any amount for such conversion. For avoidance of all doubts, it is further clarified that the conversion price of each such Series E CCPS shall not be less than the fair value determined in accordance with the pricing guidelines prescribed by the Reserve Bank of India on the date of issuance and allotment of the Series E CCPS, i.e. INR 3,392 (Indian Rupees Three Thousand Three Hundred and Ninety Two). |
For purposes of this paragraph, the term Proparco Required Return -1 for the purposes of the Series E CCPS shall mean (aa) 15% (fifteen percent) IRR; or (bb) 17% (seventeen percent) IRR, in the event of conversion of the Series E CCPS into Equity Shares of the Company (a) in accordance with paragraph 4.1(i) of this Schedule J, or (b) upon Transfer of the Equity Securities in terms of Clause 6.3.4 of the SHA, or (c) upon a voluntary sale of any or all the Equity Securities held by all the Investors and the voluntary sale of Equity Securities held by the Sponsors to a third party, such that pursuant to the sale of the Equity Securities there is a change in Control on the Company, or (d) upon a Liquidation Event B other than upon Transfer of all or more than 70% (seventy percent) in value of the Companys Assets.
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Provided that, if the Series E CCPS holder receives any dividend from the Company prior to conversion, the amount of dividends received by the holders of Series E CCPS will be deducted from the Proparco Required Return-1. It is clarified that the amount of dividends for the purposes of preceding sentence shall be considered net of Taxes, i.e. after deducting any Taxes deducted or paid on such dividends by the Company.
(b) | A valuation of the Company to enable conversion of the Series E CCPS in accordance with (a) above shall be: |
1) | for the events specified in paragraph 4.2 (ii) (a), (b) and (g) and paragraph 4.1 (ii), the valuation as determined by one of the Big Four Accounting Firms selected in accordance with the procedure laid down in paragraph 4.2(i)(c) below; |
2) | for the events specified in paragraph 4.2(ii) (c), (d), (e) and (f), the valuation as offered by the third party purchaser; and |
3) | for the events specified in paragraph 4.3(i), the valuation as determined by the merchant banker managing the IPO/QIPO. |
(c) | Proparco shall set out in the Conversion Notice, the names of 2 (two) of the Big Four Accounting Firms that are selected by Proparco for the purpose of paragraph 4.2(i)(b). Within 10 days of the date of the Conversion Notice, IFC, Helion, FC, DEG, Company and Sponsors shall jointly agree to appoint one of the 2 (two) Big Four Accounting Firms mentioned in the Conversion Notice to do the valuation of the Company, and shall jointly issue a notice to Proparco in this respect. If Proparco does not receive the aforesaid notice within the period of 10 days from the date of the Conversion Notice, then Proparco shall have the right to select, in its sole discretion, one of the 2 (two) Big Four Accounting firms mentioned in the Conversion notice to do the valuation of the Company. |
(ii) | The holders of the Series E CCPS will be entitled to exercise their conversion right in respect of the Series E CCPS just prior to or on the occurrence of the following events: |
(a) | Liquidation Event A or Liquidation Event B as defined in the SHA. |
(b) | Buy-back of the Series E CCPS in accordance with the terms of the SHA. |
(c) | In the event holder of the Series E CCPS wishes to exercise its Co-Sale Right under Clause 6.3.3 (Co Sale Rights) of the SHA. |
(d) | In the event holder of the Series E CCPS wishes to exercise its Co-Sale Right under Clause 6.3.4 (Transfer to a Competitor) of the SHA. |
(e) | In the event holder of the Series E CCPS wishes to exercise its Drag Along Right under Clause 6.4 (Drag Right to the Investors) of the SHA. |
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(f) | In the event holder of the Series E CCPS wishes to exercise its right under Clause 6.5 (Drag Right of IFC, DEG and Proparco) of the SHA. |
(g) | In the event holder of the Series E CCPS wishes to exercise the Deficit Call Option under Clause 6.6 (IFC, DEG and Proparco Call Option) of the SHA. |
(iii) | The conversion Notice shall be dated and shall set forth: |
(a) | The number of Series E CCPS in respect of which the holders of the Series E CCPS are exercising their right to conversion in accordance with this paragraph 4.2; |
(b) | The number of Equity Shares of the Company that the Series E CCPS shall convert into; and |
(c) | The names of 2 of the Big Four Accounting Firms that are selected by Proparco for the purpose of paragraph 4.2(i)(c), if applicable; and the reference valuation as offered by the third party purchaser, if applicable. |
(iv) | Upon receipt of the Conversion Notice, the Company shall effect the following: |
(a) | Convening of a meeting of the Board, in which meeting the Company approve the following: |
| The conversion of such number of the Series E CCPS; |
| The cancellation of the certificates representing such number of Series E CCPS that are converted; |
| The issuance and allotment of such number of Equity Shares of the Company that the Series E CCPS shall convert into. |
in each case, as are mentioned in the Conversion Notice;
(b) | Issuance of duly stamped share certificates to the holders of the Series E CCPS to evidence such holders of the Series E CCPS as the owners of the Equity Shares issued upon conversion of such number of the Series E CCPS as are mentioned in the Conversion Notice; |
(c) | Updating its register of members to reflect the holders of the Series E CCPS as the owners of the Equity Shares issued pursuant to the conversion of such number of the Series E CCPS as are mentioned in the Conversion Notice; |
(d) |
Filing with the jurisdictional Registrar of Companies Form PAS 3 of the Companies (Prospectus and Allotment of Securities) Rules, 2014 in respect of allotment of the Equity Shares to the holders of the Series E CCPS pursuant to such holders of the Series E CCPS exercising their rights in accordance with |
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this paragraph 4 and shall provide the holders of the Series E CCPS with certified true copies of Form PAS 3 duly filed with the jurisdictional Registrar of Companies along with the receipt in respect of Form PAS 3; and |
(e) | The Company and the Sponsors shall do all such acts and deeds as may be necessary to give effect to the provision of this paragraph 4, including without limitation, convening a meeting of the Board to approve the splitting of the share certificates representing the Series E CCPS. |
4.3 | Automatic Conversion |
(i) | The Company shall forthwith convert all the Series E CCPS into Equity Shares based on the conversion price arrived in accordance with paragraph 4.2(i), if at any time after the Proparco Closing Date-1, the Company proposes to file a DRHP for a firmly underwritten issue of Equity Shares to the public and the shareholders of the Company have consented to such QIPO or an IPO under the provisions of the SHA. The Series E CCPS shall convert into Equity Shares of the Company immediately prior to filing of the DRHP with the SEBI. |
(ii) | In the event that: |
(a) | The Company files a DRHP with the SEBI in respect of the QIPO or an IPO which, prior to such filing, has necessitated the conversion of the Series E CCPS into Equity Shares of the Company; and |
(b) | Within the Listing Date, (as defined in the SHA), the QIPO or the IPO does not complete such that the entire issued, paid-up and subscribed share capital is not admitted to trading on a Relevant Market (as defined in the SHA) by the expiry of the Listing Date. |
Then the Company and the Sponsors shall comply with the provisions of Clause 8 (Reinstatement of Rights) of the SHA and shall undertake all necessary actions to ensure that the holders of the Series E CCPS are placed in the same position, and possess the same rights as set forth in this Schedule J, they had the benefit of immediately prior to the occurrence of the event set forth in (a) above.
5. | Liquidation Preference |
Upon the occurrence of a Liquidation Event A or a Liquidation Event B with respect to the Company or its Subsidiaries (as defined in the SHA) and in accordance with the terms of the SHA, the holders of the Series E CCPS shall receive the Liquidation Preference in accordance with the terms of the SHA and in the order of precedence set forth in the SHA.
Upon the exercise of the Drag Right of the Investors or Drag Right of IFC, DEG and Proparco in accordance with Clause 6.4 and 6.5 of the SHA, the Series E CCPS shall be subject to the order of preference in terms of the sale of the Equity Securities and the returns on the Equity Securities as set out in the SHA. Notwithstanding the above, the holders of the Series E CCPS will also be entitled to the buy-back preferences in accordance with the terms of the SHA and in order of preference set forth in the SHA.
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For the avoidance of doubt, it is hereby clarified that Equity Shares of the Company held by Proparco pursuant to the conversion of the Series E CCPS shall be treated at par with the remaining Equity Shares of the Company for the purposes of this paragraph 5, save and except where the Series E CCPS are converted into Equity Shares of the Company on or immediately prior and only in connection with Proparco exercising its right in the case of events set out in this paragraph 5, in which case, notwithstanding anything to the contrary contained herein, the Equity Shares issued to the holder of the Series E CCPS will be entitled to priority in terms of payment in the like manner as the Series E CCPS as set out in this paragraph 5.
6. | Transferability |
Subject to the terms of the SHA, the Series E CCPS shall be freely transferable to any person and holders of the Series E CCPS may assign all or any of the Series E CCPS and any rights attaching thereto under the Transaction Documents, without the prior consent of any Person.
7. | Voting Rights |
From and after the issuance of the Series E CCPS, Proparco shall only be entitled to exercise voting rights on every resolution in respect of Schedule M placed before the Company on the basis of its shareholding in the Company on an As if Converted Basis subject to the terms of the SHA. Provided however that upon the transfer of the Series E CCPS in accordance with the terms of the SHA, the transferee of the Series E CCPS will be entitled to vote on every resolution placed before the Company, to the extent permissible under Law, in proportion to the Equity Shares held by such transferee in the share capital of the Company, assuming the transferred Series E CCPS have been converted into Equity Shares of the Company on the basis of the conversion price as determined in paragraph 4.2(i) above.
From the date of conversion of the Series E CCPS, the voting percentage of all the shareholders in the Company shall be in proportion to their shareholding in the Company.
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SCHEDULE K IFC POLICY COVENANTS
1. | DEFINITIONS: |
1.1 | The definitions used in Clause 1 of this Agreement shall apply to this Schedule. |
1.2 | For the purposes of this Schedule, the following terms (which have not been defined in Clause 1 of this Agreement) shall have the following meanings: |
Action Plan means the plan or plans developed by the Company or its Subsidiaries, a sample copy of which is attached as Annex B to this Schedule ( Action Plan ), setting out the specific social and environmental measures to be undertaken by the Company, to enable the Companys Operations to be constructed, equipped and operated in compliance with the Performance Standards;
Annual Monitoring Report the annual monitoring report to be submitted to IFC within 90 days after the end of each Financial Year, in the form and substance acceptable to IFC, setting out the specific social, environmental and developmental impact information to be provided by the Company in respect of its Operations, as such form of Annual Monitoring Report may be amended or supplemented from time to time with IFCs consent;
Applicable S&E Law means all applicable statutes, laws, ordinances, rules and regulations of India, including, without limitation, any license, permit or other governmental Authorization setting standards concerning environmental, social, labour, health and safety or security risks of the type contemplated by the Performance Standards or imposing liability for the breach thereof;
CAO means the Compliance Advisor Ombudsman, the independent accountability mechanism for IFC that responds to environmental and social concerns of affected communities and aims to enhance outcomes;
Material Adverse Effect means a material adverse effect on:
(a) | the Companys or any of its Subsidiaries Assets or properties; |
(b) | the Companys or any of its Subsidiaries business prospects or financial condition; |
(c) | the carrying on of the Companys or any of its Subsidiaries business or operations; or |
(d) | the ability of the Company to comply, and ensure that each of its Subsidiaries complies, with its obligations under this Agreement, any other Transaction Document to which it is a party or the Companys and in the case of each of its Subsidiaries, such Subsidiarys Memorandum and Articles of the Company; |
(e) | the ability of the Sponsors to comply with its obligations under this Agreement or any other Transaction Documents to which it is a party; |
Operations the operations, activities and facilities of the Company and its Subsidiaries (including the design, construction, operation, maintenance, management and monitoring
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thereof) as applicable in India;
MW means mega-watts;
Performance Standards means IFCs Performance Standards on Social & Environmental Sustainability, dated 1st January 2012, copies of which have been delivered to and receipt of which has been acknowledged by the Company pursuant to the letter dated 4 th June 2015;
Related Party means any Person: (a) that holds a material interest in the Company or any Subsidiary; (b) in which the Company or any Subsidiary holds a material interest; (c) that is otherwise an Affiliate of the Company; (d) who serves (or has within the past twelve (12) months served) as a director, officer or employee of the Company; or (e) who is a member of the family of any individual included in any of the foregoing. For the purpose of this definition, material interest shall mean a direct or indirect ownership of shares representing at least 1% (one percent) of the outstanding voting power or equity of the Company or any Subsidiary;
Relevant Parties means the Company, the Sponsors, and each of the other Shareholders of the Company that agrees to become a party to this Agreement pursuant to a Deed of Adherence;
S&EA means the social and environmental assessment prepared by the Company or its Subsidiaries in accordance with the Performance Standards and the Action Plan including but not limited to: audit report on the status of compliance of the existing (and under construction) solar power plant with IFC Performance Standards; social and environmental impact assessments including a Social and Environmental Management Plan (SEMP) and community engagement plan, which is consistent with IFC Performance Standards; and social and environmental impact assessment and mitigation plans developed as per the requirements of the S&E Management System;
S&E Management System means the Companys social and environmental management system, including but not limited to corporate-wide applicable S&E Management System acceptable to IFC, which includes all the elements discussed in the ESRS and is consistent with the Performance Standards, and the HR Policies and Procedures, both to be implemented in accordance with the schedule detailed in the Action Plan and enabling the Company to identify, asses and manage risks in respect of its Operations on an ongoing basis and in accordance with the Performance Standards;
Sanctionable Practice means any Corrupt Practice, Fraudulent Practice, Coercive Practice, Collusive Practice, or Obstructive Practice, as those terms are interpreted in accordance with the Anti-Corruption Guidelines attached to this Agreement as Annex A to this Schedule ( Anti-Corruption Guidelines for IFC Transactions );
2. | REPORTING COVENANTS |
2.1 | The Company shall promptly notify IFC upon becoming aware of any: (i) litigation or investigations or proceedings which have or may reasonably be expected to have a Material Adverse Effect; or (ii) any criminal investigations or proceedings against the Company or any Related Party, and any such notification shall specify the nature of the action or proceeding and any steps that the Company proposes to take in response to the same. |
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2.2 | Upon IFCs request, and with reasonable prior notice to the Company, the Company shall permit representatives of IFC and the CAO, during normal office hours, to: |
(a) | visit any of the sites and premises where the business of the Company or its Subsidiaries is conducted; |
(b) | inspect any of the sites, facilities, plants and equipment of the Company or its Subsidiaries; |
(c) | have access to the books of account and all records of the Company and its Subsidiaries; and |
(d) | have access to those employees, agents, contractors and subcontractors of the Company and its Subsidiaries who have or may have knowledge of matters with respect to which IFC or the CAO seeks information; |
provided that: (A) no such reasonable prior notice shall be necessary if special circumstances so require; and (B) in the case of the CAO, such access shall be for the purpose of carrying out the CAOs Role.
2.3 | The Company shall and shall ensure that each of its Subsidiaries shall: |
(a) | within 90 (ninety) days after the end of each Financial Year, deliver to IFC, the Annual Monitoring Report consistent with the requirements of this Agreement confirming compliance with the Action Plan, the social and environmental covenants of this Agreement and Applicable S&E Law or, as the case may be, identifying any non- compliance or failure, and the actions being taken to remedy any such deficiency; |
(b) | within 3 (three) days after its occurrence, notify IFC of any social, labor, health and safety, security or environmental incident, accident or circumstance having, or which could reasonably be expected to have, any material adverse social and/or environmental impact or any material adverse impact on the implementation or operation of the Operations in compliance with the Performance Standards, specifying in each case the nature of the incident, accident, or circumstance and the impact or effect arising or likely to arise therefrom, and the measures the Company or the relevant Subsidiary, as applicable, is taking or plans to take to address them and to prevent any future similar event; and keep IFC informed of the on-going implementation of those measures. |
3. | OTHER COVENANTS |
3.1 | The following covenants will continue to apply in the manner set out below till the time IFC holds Equity Securities or any other financial interest in the Company. |
(a) | Sanctionable Practices: |
(i) | Each of the Relevant Parties hereby agrees that it shall not engage in (nor authorize or permit any Affiliate or any other Person acting on its behalf to engage in) any Sanctionable Practice with respect to any shareholding in the Company or any Operations; |
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(ii) | Each of the Relevant Parties further covenants that should it become aware of any violation of paragraph 3.1(a)(i), it shall promptly notify IFC; and |
(iii) | If IFC notifies the Company and/or any other Relevant Party of its concern that there has been a violation of paragraph 3.1(a)(i), the Company and any other such Relevant Party shall cooperate in good faith with IFC and its representatives in determining whether such a violation has occurred, and shall respond promptly and in reasonable detail to any notice from IFC, and shall furnish documentary support for such response upon IFCs request. |
(b) | Affirmative Environmental Covenants: The Company shall and shall ensure that each of its Subsidiaries shall: |
(i) | implement the Action Plan and undertake the Operations in compliance with the Applicable S&E Law, Performance Standards and Applicable S&E Law; and |
(ii) | appoint and maintain in a position of responsibility, an appropriately qualified and experienced S&E Management System manager for oversight of management of S&E Management System aspects across all of the Operations (including its Subsidiaries) and to ensure consistent application of the S&E Management System; |
(iii) | ensure implementation of the mitigation and management plans developed based on the outcome of the S&EA; |
(iv) | ensure the implementation and continuing operation of the S&E Management System; |
(v) | not undertake or invest in any Person engaged in any of the prohibited activities listed in Annex C to this Schedule. |
(vi) | periodically review the form of the Annual Monitoring Report and advise IFC as to whether revision of the form is necessary or appropriate in light of changes to the Operations and revise the form of the S&E Performance Report, if applicable, with the prior written consent of IFC. |
(c) | Negative Environmental Covenant: The Company shall not amend the Action Plan in any material respect without the prior written consent of IFC. |
(d) | UN Security Council Resolutions: The Company shall not and shall ensure that each of its Subsidiaries shall not enter into any transaction or engage in any activity prohibited by any resolution of the United Nations Security Council under Chapter VII of the United Nations Charter. |
(e) | Shell Banks: The Company shall not and shall ensure that each of its Subsidiaries shall not conduct business or enter into any transaction with, or transmit any funds through, a Shell Bank. |
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(f) | Insurance: The Company shall, at all times, maintain a directors and officers liability insurance policy to IFC Nominee Director, providing adequate and customary coverage with a financially sound and reputable insurer or insurers. |
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ANNEX A TO SCHEDULE K
ANTI-CORRUPTION GUIDELINES FOR IFC TRANSACTIONS
The purpose of these Guidelines is to clarify the meaning of the terms Corrupt Practice, Fraudulent Practice, Coercive Practice, Collusive Practice and Obstructive Practice in the context of IFC operations.
1. | Corrupt Practices |
A Corrupt Practice is the offering, giving, receiving or soliciting, directly or indirectly, of anything of value to influence improperly the actions of another party.
Interpretation
A. | Corrupt practices are understood as kickbacks and bribery. The conduct in question must involve the use of improper means (such as bribery) to violate or derogate a duty owed by the recipient in order for the payer to obtain an undue advantage or to avoid an obligation. Antitrust, securities and other violations of law that are not of this nature are excluded from the definition of corrupt practices. |
B. | It is acknowledged that foreign investment agreements, concessions and other types of contracts commonly require investors to make contributions for bona fide social development purposes or to provide funding for infrastructure unrelated to the project. Similarly, investors are often required or expected to make contributions to bona fide local charities. These practices are not viewed as Corrupt Practices for purposes of these definitions, so long as they are permitted under local law and fully disclosed in the payers books and records. Similarly, an investor will not be held liable for corrupt or fraudulent practices committed by entities that administer bona fide social development funds or charitable contributions. |
C. | In the context of conduct between private parties, the offering, giving, receiving or soliciting of corporate hospitality and gifts that are customary by internationally-accepted industry standards shall not constitute corrupt practices unless the action violates applicable Law. |
D. | Payment by private sector persons of the reasonable travel and entertainment expenses of public officials that are consistent with existing practice under relevant law and international conventions will not be viewed as Corrupt Practices. |
E. | The World Bank Group 1 does not condone facilitation payments. For the purposes of implementation, the interpretation of Corrupt Practices relating to facilitation payments will take into account relevant law and international conventions pertaining to corruption. |
1 | The World Bank is the International Bank for Reconstruction and Development, an international organization established by Articles of Agreement among its member countries and the World Bank Group refers to the International Bank for Reconstruction and Development, the International Development |
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2. | Fraudulent Practices |
A Fraudulent Practice is any action or omission, including a misrepresentation that knowingly or recklessly misleads, or attempts to mislead, a party to obtain a financial or other benefit or to avoid an obligation.
Interpretation
A. | An action, omission, or misrepresentation will be regarded as made recklessly if it is made with reckless indifference as to whether it is true or false. Mere inaccuracy in such information, committed through simple negligence, is not enough to constitute a Fraudulent Practice for purposes of this Agreement. |
B. | Fraudulent Practices are intended to cover actions or omissions that are directed to or against a World Bank Group entity. It also covers Fraudulent Practices directed to or against a World Bank Group member country in connection with the award or implementation of a government contract or concession in a project financed by the World Bank Group. Frauds on other third parties are not condoned but are not specifically sanctioned in IFC, MIGA, or PRG operations. Similarly, other illegal behaviour is not condoned, but will not be considered as a Fraudulent Practice for purposes of this Agreement. |
3. | Coercive Practices |
A Coercive Practice is impairing or harming, or threatening to impair or harm, directly or indirectly, any party or the property of the party to influence improperly the actions of a party.
Interpretation
A. | Coercive Practices are actions undertaken for the purpose of bid rigging or in connection with public procurement or government contracting or in furtherance of a Corrupt Practice or a Fraudulent Practice. |
B. | Coercive Practices are threatened or actual illegal actions such as personal injury or abduction, damage to property, or injury to legally recognizable interests, in order to obtain an undue advantage or to avoid an obligation. It is not intended to cover hard bargaining, the exercise of legal or contractual remedies or litigation. |
4. | Collusive Practices |
A Collusive Practice is an arrangement between two or more parties designed to achieve an improper purpose, including to influence improperly the actions of another party.
Interpretation
Collusive Practices are actions undertaken for the purpose of bid rigging or in connection with public procurement or government contracting or in furtherance of a Corrupt Practice or a Fraudulent Practice.
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5. | Obstructive Practices |
An Obstructive Practice is (i) deliberately destroying, falsifying, altering or concealing of evidence material to the investigation or making of false statements to investigators, in order to materially impede a World Bank Group investigation into allegations of a corrupt, fraudulent, coercive or collusive practice, and/or threatening, harassing or intimidating any party to prevent it from disclosing its knowledge of matters relevant to the investigation or from pursuing the investigation, or (ii) an act intended to materially impede the exercise of IFCs access to contractually required information in connection with a World Bank Group investigation into allegations of a corrupt, fraudulent, coercive or collusive practice.
Interpretation
Any action legally or otherwise properly taken by a party to maintain or preserve its regulatory, legal or constitutional rights such as the attorney-client privilege, regardless of whether such action had the effect of impeding an investigation, does not constitute an Obstructive Practice.
General Interpretation
A person should not be liable for actions taken by unrelated third parties unless the first party participated in the prohibited act in question.
It is hereby understood and agreed that the rules of interpretation in Schedule K shall not be applicable with respect to the Companys and Sponsors obligations to Proparco.
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ANNEX B TO SCHEDULE K
ACTION PLAN
# |
Action |
Completion date |
||
1. |
The Company will implement a corporate-wide applicable S&E Management System acceptable to IFC, which includes all the elements discussed in the Environmental and Social Review Summary and which is consistent with IFCs Performance Standards. This ESMS will be implemented across all its projects |
Ongoing | ||
Complete full documentation of the above mentioned S&E Management System both a corporate and individual project level, which is acceptable to IFC. |
||||
Full Implementation of the S&E Management System in Azure Power projects and operations. |
||||
2. | The Company will appoint an appropriately qualified and experienced S&E Management System manager for oversight of management of S&E Management System aspects across all of the Companys operations (including its subsidiary companies) and to ensure consistent application of the S&E Management System. | Ongoing | ||
3. |
The Company will update and ensure full implementation of its HR Policies and Procedures Manual, which is consistent with IFCs Performance Standard 2 (PS2), 2012. |
Ongoing | ||
4. | Where relevant and applicable (and as assessed in the ESIA) agree with the affected communities in all the projects, measures for mitigation of impact in accordance with IFC Performance Standard 5. | Ongoing and as applicable | ||
5. | Implement procedures at all its under-construction and operating projects to ensure: (a) construction contractors are in full compliance with applicable labor laws; (b) occupational health and safety status at the site conforms to good international industry practices; (c) appropriate facilities and amenities are provided to construction workers at the project site; and (d) appropriate amenities and facilities are provided to workers residing in labor camps. | Ongoing and as applicable |
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# |
Action |
Completion date |
||
6. | The Company will provide to IFC information and audit report on the status of compliance of the existing (and under construction) solar power plant with IFC Performance Standards. | Ongoing | ||
7. | Complete and make available to IFC for review, a Social and Environmental Assessment (SEA) including a Social and Environmental Management Plan (SEMP) and community engagement plan, which is consistent with IFC Performance Standard for all its planned projects. | Ongoing and as applicable |
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ANNEX C TO SCHEDULE K
PROHIBITED ACTIVITIES
| Production or activities involving harmful or exploitative forms of forced labor 2 /harmful child labor. 3 |
| Production or trade in any product or activity deemed illegal under host country laws or regulations or international conventions and agreements. |
| Production or trade in weapons and munitions. 4 |
| Production or trade in alcoholic beverages (excluding beer and wine). |
| Production or trade in tobacco |
| Gambling, casinos and equivalent enterprises. |
| Trade in wildlife or wildlife products regulated under Convention on International Trade in Endangered Species of Wild Fauna and Flora. |
| Production or trade in radioactive materials. 5 |
| Production or trade in or use of unbonded asbestos fibres. 6 |
2 | Forced labor means all work or service, not voluntarily performed, that is extracted from an individual under threat of force or penalty. |
3 | Harmful child labor means the employment of children that is economical exploitive, or is likely to be hazardous to, or to interfere with, the childs education, or to be harmful to the childs health, or physical, mental, spiritual, moral, or social development. |
4 | These activities are prohibited only if a Portfolio Company is substantially involved in such activities, i.e. the activity is not considered ancillary to such portfolio Companys primary operations. |
5 | This does not apply to the purchase of medical equipment, quality control (measurement) equipment and any equipment where IFC considers the radioactive source to be trivial and/or adequately shielded. |
6 | This does not apply to the purchase and use of bonded asbestos cement sheeting where the asbestos content is <20%. |
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SCHEDULE L APGL CONSENT RIGHTS
Certain corporate actions by the Company or any of its Subsidiaries shall require the consent of APGL, including:
1) | amendment to the Memorandum and Articles of the Company or any Subsidiary in: (a) in any material manner; or (b) in any way which may alter or change the rights, privileges or preferences of the Equity Securities held by APGL; |
2) | change in the designations, powers, rights, preferences or privileges, or the qualifications, limitations or restrictions on Equity Securities held by APGL; |
3) | creation, authorization or issuance of any Equity Shares in the capital of the Company, or Share Equivalents in the Company whether having a structural or legal preference over, or ranking pari passu with, the Equity Securities held by APGL; |
4) | authorize or undertake any arrangement for the disposal of any shares of any Subsidiary that results in the Company owning (directly or indirectly) less than 100% (one hundred per cent) of any Subsidiary; |
5) | any amalgamation, merger, consolidation, reconstitution, restructuring or similar transaction that results in a change in control of the Company or any Subsidiary; |
6) | any sale or disposal of Assets of a cumulative amount of USD 5,000,000 (United States Dollar Five Million) or more within a consecutive period of 12 (twelve) months (other than pursuant to charge(s) on Assets created for securing borrowing(s) approved under paragraph 9 of Schedule M of the Agreement); |
7) | any sale or disposal of Assets of value more than USD 5,000,000 (United States Dollar Five Million) (other than pursuant to charge(s) on Assets created for securing borrowing(s) approved under paragraph 9 of Schedule M of the Agreement); |
8) | authorize or undertake any Liquidation Event A or Liquidation Event B with respect to the Company or any of its Subsidiaries; |
9) | authorize or undertake any listing, including a QIPO, other than any offering, any delisting of the Equity Securities of the Company or any Subsidiary, or creating any new Subsidiary; |
10) | authorize or undertake any reduction of capital or share repurchase, other than any buyback by the Company under Clauses 9 of the SHA, repurchase of Equity Securities issued to or held by Employees, officers, directors or consultants of the Company or its Subsidiaries pursuant to an employee stock plan approved by the Board of the Company; |
11) | any change to the Business of the Company or to the business of any of its Subsidiaries; |
12) | any change in the number of Directors of the Board other than as provided in this Agreement or any change to the committees of the Board, other than as provided in this Agreement; |
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13) | giving of any guarantee or comfort letter by the Company or any Subsidiary to any Person that is not in relation to securing project finance, working capital limits or non fund based facilities availed for solar power projects of the Company or any Subsidiary; |
14) | declaring any dividend or making any other distribution to Shareholders other than as provided in this Agreement; |
15) | entry into, amendment or termination of any agreement or commitment which imposes or is likely to impose obligations on the Company to make payments or otherwise incur liabilities exceeding the budget approved by the Board except automatic authorization to the CEO in accordance with point I under Schedule M; |
16) | Transfer of the Equity Securities held by any Shareholder, otherwise than in the manner permitted by the Transaction Documents; |
17) | appointment or removal of the statutory auditors or internal auditors of the Company; |
18) | amendments to any ESOP plan approved by the Company in accordance with the terms of this Agreement; |
19) | changes to accounting or tax compliance policies or practices; |
20) | constituting a committee of the Board or delegation of the powers of the Board to any committee or sub-committee; |
21) | incurring any single item of capital expenditure (including acquiring a business or asset) greater than INR 10,000,000 (Indian RupeesTen Million); and |
22) | any commitment or agreement or delegation of powers to do any of the foregoing. |
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SCHEDULE M APGL CONSENT RIGHTS
The following corporate actions of the Company or any of its Subsidiaries shall require the consent of APGL:
1) | approving or amending of the Annual Business Plan and Budget with automatic authorization to the CEO to exceed expenditure by a maximum of 10% (ten per cent); |
2) | establishment of a new power plant or entering into a new power purchase agreement or amendment to any existing power purchase agreement entered into by the Company, except where the amendment has no material implications, including on tariff, termination, security package such as, but not limited to, letter of consent/default escrow agreements, parties and duration of the power purchase agreement; |
3) | redeeming or buying back shares upon termination of a restricted stock purchase agreement of an officer, Employee or Director or consultant and buying back unvested shares held by the Sponsors and Employees of the Company; |
4) | appointment or removal and determination of the terms of employment (including remuneration) of Key Managerial Personnel; |
5) | giving any loans to the Key Managerial Personnel and Directors; |
6) | giving of any guarantee or comfort letter by the Company or any Subsidiary to any Person that is in relation to securing project finance, working capital limits or non fund based facilities availed for solar power projects of the Company or any Subsidiary; |
7) | approval or any employee or consultant stock option; |
8) | changes in the Financial Year for preparation of audited accounts; |
9) | borrowing in excess of INR 5,000,000 (Indian Rupees Five Million) and/or creating any charge on Assets for securing such borrowings; |
10) | any sale of all or substantially all the IP Rights of the Company; |
11) | entering into or varying any material contracts; |
12) | changing the status of a company from a private company to a public company; and |
13) | entering into any agreement, arrangement or transaction with any Shareholder or Director or Sponsors and/or their Affiliates, other than non-material agreements having a term of less than one (1) year that are negotiated on an arms-length basis in the ordinary course of business and contemplated by the Annual Business Plan and Budget; and |
14) | any commitment or agreement or delegation of powers to do any of the foregoing. |
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SCHEDULE N - DEG EXCLUSION LIST
1. | Production or trade in any product or activity deemed illegal under host country laws or regulations or international conventions and agreements, or subject to international bans, such as pharmaceuticals, pesticides/herbicides, chemicals, ozone depleting substances, PCBs wildlife or products regulated under CITES. |
2. | Business relating to pornography or prostitution. |
3. | Production and distribution of racist, anti-democratic and/or neo-nazi media. |
4. | Cross-border trade in waste and waste products unless complaint to the Basel Convention and the underlying regulations. |
5. | Production or trade in weapons and munitions. |
6. | Production or trade in alcoholic beverages (excluding beer and wine). |
7. | Production or trade in tobacco. |
8. | Gambling, casinos and equivalent enterprises. |
9. | Production or trade in radioactive materials. This does not apply to the purchase of medical equipment, quality control (measurement) equipment and any equipment where a Supranational Investor considers the radioactive source to be trivial and/or adequately shielded. |
10. | Production or trade in unbounded asbestos fibers. This does not apply to purchase and use of bonded asbestos cement sheeting where the asbestos content is less than 20%. |
11. | Drift net fishing in the marine environment using nets in excess of 2.5km. in length. |
12. | Production or activities involving harmful or exploitative forms of forced labor/harmful child labor. |
13. | Destruction 7 of Critical habitats 8 |
14. | Commercial logging operations for use in primary tropical moist forest. |
15. | Production or trade in wood or other forestry products other than from sustainably managed forest. |
7 | Destruction mans the (10 elimination or serve diminution of the integrity of a habitat caused by a major, long-term change in land or water use or (2) modification of a habitat in such a way that habitats ability to maintain its role (se footnote 10) is lost. |
8 | Critical habitat is a subset of both natural and modified habitat that deserves particulars attention. Critical habitat includes areas with high biodiversity value that meet the criteria of the World Conservation Union (IUCN) classification, including habitat required for the survival of critically endangered or endangered species as defined by the IUCN Red List of Threatened Species or as defined in any national legislation: areas having special significance for endemic or restricted-range species; sites that are critical for the survival of migratory species; areas supporting globally significant concentrations or numbers of individuals of congregatory species; areas with unique assemblages of species or which are associated with key evolutionary processes or provide key ecosystem services; and areas having biodiversity of significant social, economic or cultural importance to local communities. Primary Forest or forests of High Conservation Value shall be considered Critical Habitats. |
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SCHEDULE O - PROPARCO POLICY COVENANTS
1. | Representations |
The Company and the Sponsors represent that the equity, quasi equity and shareholders loans accounts invested in the Company and its Subsidiaries or in their Operations are not of Illicit Origin.
The Company and the Sponsors represent that, in the 5 (Five) years preceding the date of this Agreement, no res judicata decision, sentence, or order has been pronounced against the Company or its Subsidiaries in relation to any Corrupt Practice or Fraudulent Practice or any Anti-Competitive Practice.
2. | Undertakings |
The Company and the Sponsors undertake that the Company and its Subsidiaries will:
i. | not enter into Business Relationships with persons or entities which appear on any of the Financial Sanctions Lists. |
ii. | Not finance, buy or provide, materials or sectors subject to United Nations, European Union or French Embargo and/or shall not engage in any sectors under United Nations, European Union or French Embargo. |
iii. | and ensure that the Companys and each of its Subsidiarys equity, quasi equity and shareholders loans accounts are not and will not be of Illicit Origin. |
iv. | and ensure that the Companys and each of its Subsidiarys activities will not give rise to Corrupt Practice, Fraudulent Practice or Anti-Competitive Practices. |
v. | as soon as it becomes aware of any Corrupt Practice, Fraudulent Practice or Anticompetitive Practice or such alleged practices, inform Proparco without any delay and take all necessary preliminary steps to remedy the alleged Corrupt Practice, Fraudulent Practice or Anti-Competitive Practice to the satisfaction of Proparco within the time limit determined by Proparco which in any event shall not be more than thirty (30) business days. |
vi. | For any payment made under this Agreement to Proparco shall request that the bank in charge of making the transfers includes in its transfer message all of the following information and in the following order: |
| Instructing party: name, address, bank account number. |
| Bank of the instruction party. |
| The following references: name of instructing party, payment purpose, numéro du concours tbc |
The Company and the Sponsors undertake to provide to any Investor in the Company who so requests all information regarding the identity of each of the other Investors and their respective Beneficial Owners.
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The Company and the Sponsors shall notify Proparco as soon as practicable if an additional Investor representing more than 5% (five per cent) of the Companys share capital subscribes to the share capital of the Company.
3. | Other representations and undertakings: Proparco Environmental & Social Requirements |
a. | Definitions |
Anti Competitive Practice refers to:
i. any common or implied action having as object and/or as effect to impede, restrict or distort fair competition in a market, in particular when it tends to: (1) restrict market access or the free exercise of competition by other companies; (2) prevent price fixing by the free play of markets by artificially favouring the increase or reduction of prices; (3) limit or control production, markets, investments or technical progress or, (4) share out markets or sources of supply.
ii. any abuse by a company or a group of companies of a dominant position within an internal market or in a substantial part of it;
iii. any bid or predatory pricing having as object and/or as effect to eliminate from a market or to prevent a company or one of its product from accessing a market.
Associated Facilities means the facilities, including all transmission lines, that are not funded as part of the Project (funding may be provided separately by a client or a third party including the government), and that would not have been constructed or expanded if the Project did not exist and without which the Project would not be viable.
Basic Terms and Conditions of Employment means the requirements as applicable to the Company or its Subsidiaries (as the case may be) on wage, working hours, labour contracts and occupational health & safety issues, stemming from ILO conventions 26 and 131 (on remuneration), 1 (on working hours) and 155 (on health & safety).
Beneficial Owner means any individual or individuals who ultimately own or exercise control over any Investor.
Business Relationships means any professional or commercial contractual relationship established between a third party and the Company or its Subsidiaries and connected with the professional activities of the latter.
Core Labour Standards means the requirements as applicable to the Company or its Subsidiaries (as the case may be) on child and forced labour, discrimination and freedom of association and collective bargaining, stemming from the ILO Declaration on Fundamental Principles and Rights at Work, adopted in 1998 and covering: (i) freedom of association and the right to collective bargaining, (ii) the elimination of forced and compulsory labour, (iii) the abolition of child labour and (iv) the elimination of discrimination in the workplace.
Embargo means any economic sanction aiming at prohibiting the import and/or export (sale, supply, transfer) of one specific or several goods, products or services to or from a country for a specified period as published and amended from time to time by the UN, EU and France.
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Environmental and Social Action Plan or ESAP means the environmental and social action plan, agreed upon between Proparco and the Company (which is provided below in Annex A to this Schedule O), defining actions, responsibilities, budgets and a timeframe for the measures required to remedy the known non-compliances of the Company and its Subsidiaries with the Environmental and Social Requirements in the business activities of the Company and its Subsidiaries and the Associated Facilities as amended from time to time.
Environmental and Social Claim means any claim, proceeding or investigation by a person in respect of an Environmental Law, a Social Law or an environmental or social agreement between the Company and another person.
Environmental and Social Management System means the part of the overall management system of the Company and its Subsidiaries that includes the organisational structure, planning activities, responsibilities, practices, procedures and resources for developing, implementing, achieving, reviewing and maintaining compliance with the Environmental and Social Requirements and which is dedicated to the structural improvement of the environmental and social performance of the Company and its Subsidiaries satisfactory to Proparco.
Environmental and Social Monitoring Report means an annual written environmental and social monitoring report to be submitted to Proparco in the form satisfactory to Proparco after the end of each Financial Year but in any event no later than the date it has to deliver its audited or consolidated annual financial statements, setting out the specific social, environmental and developmental impact information to be provided by the Company and its Subsidiaries in respect of their Operations, and such form of Environmental and Social Annual Monitoring Report may be amended or supplemented from time to time with the consent of Proparco.
Environmental and Social Permit means any environmental and/or social permit, license, consent, approval or other Authorisation required by the Company and its Subsidiaries.
Environmental and Social Requirements means (i) Environmental Law, (ii) Social Law, (iii) Environmental and Social Permit, (iv) Basic Terms and Conditions of Employment, (v) Core Labour Standards and (vi) the IFC Performance Standards as applicable to the Company and its Subsidiaries from time to time.
Environmental Law means any law, rule or regulation (including international treaty obligations) applicable at national and state levels concerning environmental matters and natural resource management.
Financial Sanctions Lists means the list of persons, groups or entities which are subject to United Nations, European Union or French financial sanctions. For information purposes only and not for the benefit of the company (who may not rely on the references listed below and provided by Proparco):
(a) | As regards the United Nations, the lists may be consulted at the following address: http://www.un.org/sc/committees/list_compend.shtml; |
(b) | As regards the European Union, the lists may be consulted at the following address: http://eeas.europa.eu/cfsp/sanctions/consol-list_en.htm; and |
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(c) | As regards France, see http://www.tresor.economie.gouv.fr/4248_Dispositif-National-de-Gel-Terroriste |
Fraud against the Financial Interests of the European Communities refers to any intentional action or omission intended to damage the European Union budget and involving (i) the use or presentation of false, incorrect or incomplete statements or documents, which has as its effect the misappropriation or wrongful retention of funds or illegal diminution of resources of the general budget of the European Union, (ii) the non-disclosure of information, with the same effect and (iii) the misapplication of such funds for purposes other than those for which they were originally granted.
Fraudulent Practice refers to any unfair practices (action or omission) intended to deliberately mislead a third party, intentionally conceal elements there from, or betray or vitiate his/her consent, contravening legal or regulatory obligations and/or breaching the Borrowers or a third party internal rules for the purpose of obtaining an illegitimate benefit.
IFC Performance Standards means the IFC performance standards on social and environmental sustainability (including the technical reference documents known as IFCs Environmental, Health, and Safety Guidelines) which can be downloaded from the IFC website (http://www.ifc.org/ifcext/enviro.nsf/).
Illicit Origin means funds obtained through:
i. the commission of any predicate offence as designated in the FATF 40 Recommendations Glossary (http://www.fatf-gafi.org/pages/glossary/fatfrecommendations/d-i/),
ii. Corrupt Practice, and
iii. if or when applicable, through Fraud against the Financial Interests of the European Communities.
ILO means the International Labour Organisation, the tripartite United Nations agency which brings together governments, employers and workers of its member states in common action to promote decent work throughout the world.
Public Official means:
i. any holder of legislative, executive, administrative or judicial office appointed or elected, serving on a permanent basis or otherwise, paid or unpaid, regardless of rank;
ii. any other person exercising a public function, including for a public agency or company, or providing a public service;
iii. any other person defined as a public official under the domestic law of the Borrowers country.
Social Law means any law, rule or regulation (including international treaty obligations) applicable at national and state levels concerning (i) labour, (ii) social security, (iii) the regulation of industrial relations (between government, employers and employees), (iv) the protection of occupational as well as public health and safety, (v) the regulation of public participation, (vi) the protection and regulation of ownership of land rights (both formal and traditional), immovable goods and intellectual and cultural property rights, (vii) the protection and empowerment of
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indigenous peoples or ethnic groups, (viii) the protection, restoration and promotion of cultural heritage, (ix) all other laws, rules and regulations providing for the protection of employees and citizens.
b. | Representation |
Compliance with Environmental and Social Requirements
The Company represents that the Company and its Subsidiaries comply in all material respects with the Environmental and Social Requirements and for those items addressed in the Environmental and Social Action Plan, become compliant within the time-frames agreed upon from time to time.
Environmental and Social Claims
No Environmental and Social Claim has been commenced or (to the best of its knowledge and belief) is threatened against it except for the Environmental and Social Claims addressed in the Environmental and Social Action Plan.
c. | Information Undertakings |
Periodic environmental and social monitoring reporting
The Company shall as soon as it is available, but in any event no later than the date it has to deliver its audited or consolidated annual financial statements, deliver to the Shareholders an Environmental and Social Monitoring Report in the English language.
Notification of incidents
The Company shall promptly, but in any event within 3 days after the occurrence of any of the events set out in this Sub-clause, supply to the shareholders of the Company (including Proparco) (i) details of any incident of an environmental nature (including without limitation any explosion, spill or workplace accident which results in death, serious or multiple injuries or material environmental contamination) or any incident of a social nature (including without limitation any violent labour unrest or dispute with local communities), occurring on or nearby any site, plant, equipment or facility of the Company or its Subsidiaries which has or is reasonably likely to have a Material Adverse Effect or which has a material negative impact on the environment, the health, safety and security situation, or the social and cultural context, together with, in each case, a specification of the nature of the incident or accident and the on-site and off-site effects of such events and (ii) details of any action the Company or its Subsidiaries proposes to take in order to remedy the effects of these events, and shall keep the shareholders (including Proparco) informed about any progress in respect of such remedial action.
Environmental and Social Claim
The Company shall inform the Shareholders in writing as soon as reasonably practicable upon becoming aware of the same of (i) any Environmental and Social Claim being commenced against it and (ii) any facts or circumstances which will or are reasonably likely to result in any Environmental and Social Claim being commenced or threatened against it.
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d. | Positive Undertakings |
Compliance with Environmental and Social Requirements
The Company shall in all material respects comply, and shall ensure that its Subsidiaries comply, with the Environmental and Social Requirements and for those items addressed in the Environmental and Social Action Plan, become compliant within the time-frames agreed upon as amended from time to time and take all reasonable steps in anticipation of known or expected future changes to or obligations under the same.
Environmental and Social Management
The Company and its Subsidiaries undertake to ensure that its Subsidiaries will diligently design, construct, operate, maintain and monitor all of its plants, sites and equipment in a safe, efficient and business-like manner.
The Company and its Subsidiaries shall implement, maintain and continuously improve an adequate Environmental and Social Management System.
The Company and its Subsidiaries shall maintain a senior officer of the Company with management responsibility, who will among other things, ensure proper operation and maintenance of the Environmental and Social Management System.
Environmental and Social Action Plan
The Company and its Subsidaries shall implement all actions as provided in the Environmental and Social Action Plan within the time-frames mentioned.
Access for environmental and social monitoring
The Company and its Subsidiaries shall permit employees of the shareholders of the Company and/or consultants or other professional advisers and contractors on behalf of the shareholders free access at all reasonable times and on reasonable notice at the cost of the Company to carry out environmental and/or social monitoring visits by, (a) viewing the premises of the Company and its Subsidiaries and (b) meeting and discussing matters with senior management and employees of the Company and its Subsidiaries. The Company shall assist on a best effort basis in getting permission to visit plants and Associated Facilities of its clients and providers.
e. | Negative undertakings |
Excluded Activities
The Company and its Subsidaries shall not perform any of the excluded activities as listed in the Annex B to this Schedule O below (Excluded Activities).
4. | Proparco Buyback Events |
Business Relationship
| The existence of a Business Relationships with persons or entities which appear on any of the Financial Sanctions Lists. |
| The Company or the Sponsor finances, buy or provides, materials or sectors subject to United Nations, European Union or French Embargo and/or shall not engage in any sectors under United Nations, European Union or French Embargo. |
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Illicit Origin of Funds
| The Companys and each of its Subsidiarys equity, quasi equity and shareholders loans accounts are of Illicit Origin. |
Corruption
| The Companys and each of its Subsidiarys activities has been involved in Corrupt Practice, Fraudulent Practice or Anti-Competitive Practices. |
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ANNEX A TO SCHEDULE O
PROPARCO ENVIRONMENTAL AND SOCIAL ACTION PLAN
Item Nr. |
Measure and/or Corrective Actions |
Responsibility |
Deliverable (Report/Measurement/Document) |
Deadline |
||||||
1. | PS 1: Assessment and Management of Environmental and Social Management Risks and Impacts | |||||||||
1.1. |
Develop a comprehensive Social Baseline Survey procedure for assessing in details the land acquisition process including past land occupation and potential physical and/or economical resettlements that may have occurred as result of project settlement. To be included in the future ESIA reports. |
SHES department |
Detailed social baseline survey procedure | 3 months after the signing date | ||||||
1.2. |
Reinforce the ESIA studies regarding earth movement management and water management |
SHES department |
Futurer ESIAs |
On-going action |
||||||
2. | PS 3: Resource Efficiency and Pollution Prevention | |||||||||
2.1. |
Update the monitoring procedure to include the monitoring and recording of water consumption |
SHES department |
Monitoring procedure including water consumption monitoring. | 3 months after the signing date |
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ANNEX B TO SCHEDULE O
ENVIRONMENTAL AND SOCIAL EXCLUSION LIST
1) | Production or trade in any product or activity deemed illegal under host country laws and France or regulations or international conventions and agreements. |
2) | Production or activities involving forced labour 9 or child labour 10 |
3) | Trade in wildlife or wildlife products regulated under CITES 11 |
4) | Drift net fishing in the marine environment using nets in excess of 2.5 km in length. |
5) | Destruction 12 of Critical Habitat 13 and any forest project under which no sustainable development and managing plan is carried out. |
6) | Production or use of or trade in hazardous materials such as asbestos fibers and products containing PCBs 14 . |
7) | Production, use of or trade in pharmaceuticals, pesticides/herbicides, chemicals, ozone depleting substances 15 and other hazardous substances subject to international phase-outs or bans. |
8) | Cross-border trade in waste and waste products unless compliant to the Basel Convention and the underlying regulations. |
9) | Production or trade in 16 |
a) | weapons and munitions |
b) | tobacco |
9 | Forced labor means all work or service, not voluntarily performed, that is extracted from an individual under threat of force or penalty as defined by ILO conventions. |
10 | Employees may only be taken if they are at least 14 years old, as defined in the ILO Fundamental Human Rights Conventions (Minimum Age Convention C138, Art. 2), unless local legislation specifies compulsory school attendance or the minimum age for working. In such cases the higher age shall apply. |
11 | CITES: Convention on International Trade in Endangered Species or Wild Fauna and Flora. |
12 | Destruction means the (1) elimination or severe diminution of the integrity of a habitat caused by a major, long-term change in land or water use or (2) modification of a habitat in such a way that the habitats ability to maintain its role (see footnote 10) is lost. |
13 | Critical habitat is a subset of both natural and modified habitat that deserves particular attention. Critical habitat includes areas with high biodiversity value that meet the criteria of the World Conservation Union (IUCN) classification, including habitat required for the survival of critically endangered or endangered species as defined by the IUCN Red List of Threatened Species or as defined in any national legislation; areas having special significance for endemic or restricted-range species; sites that are critical for the survival of migratory species; areas supporting globally significant concentrations or numbers of individuals of congregatory species; areas with unique assemblages of species or which are associated with key evolutionary processes or provide key ecosystem services; and areas having biodiversity of significant social, economic or cultural importance to local communities. Primary Forest or forests of High Conservation Value shall be considered Critical Habitats. |
14 | PCBs: Polychlorinated biphenyls, a group of highly toxic chemicals. PCBs are likely to be found in oil-filled electrical transformers, capacitors and switchgear dating from 1950-1985. |
15 | Ozone Depleting Substances: Chemical compounds, which react with and delete stratospheric ozone, resulting in holes in the ozone layer. The Montreal Protocol lists ODs and their target reduction and phase-out dates. |
16 | Activities excluded when representing more than 10% of the balance sheet or the financed volume and for Financial Institutions more than 10% of the portfolio volume financing. |
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c) | hard liquor for human consumption. |
10) | Gambling, casinos and equivalent enterprises 17 |
11) | Any business relating to pornography or prostitution. |
12) | Any activity involving significant altercation, damage or removal of way critical cultural heritage 18 |
13) | Production and distribution of racist, anti-democratic or with the intent to discriminate part of the population. |
14) | Exploitation of diamond mines, and commercialization of diamonds, when the host country has not adhered to the Kimberley 19 , or other similar international agreements (actual or to be formed), on similar extractive resources. |
15) | Any sector or service subject to United Nations, European Union and/or French Embargo without limitation. |
17 | Activities excluded when representing more than 10% of the balance sheet or the financed volume and for Financial Institutions more than 10% of the portfolio volume financing |
18 | Consists of internationally and nationally recognised historical, social and/or cultural heritage. |
19 | The Kimberley Process Certification Scheme (KPCS), is a certification standard for diamond production that concerns governments; the diamonds are controlled at each stage of the production chain, from extraction through to retail of the finished product. The KPCS was created to prevent and stop conflict diamond trade. It is designed to certify the origin of diamonds from sources which are free of conflict fueled by diamond production. Member states adhere to adopt national laws on the issue, and to put in place the necessary export and import control mechanisms to implement the KPCS. More than 75 countries involved in the production, commercialization, and transformation of diamonds participate. |
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SCHEDULE P TERMS AND CONDITIONS OF IFC III CCDs
All capitalized terms used herein but not defined shall have the meaning given to them under the SHA. Reference to a paragraph under this Schedule shall be a reference to the paragraph of this Schedule.
1. | Form and Status of IFC III CCDs |
Each of IFC III CCDs shall have a face value of INR 5,000 (Indian Rupees Five Thousand).
2. | Term |
Unless converted in accordance with the terms of this Schedule P, the Articles of the Company and applicable Laws, the term of the IFC III CCDs shall be a maximum of 10 (ten) years from their issuance. The date on which the IFC III CCDs were issued and allotted to IFC shall be referred as IFC Subscription Closing Date .
The Company agrees to maintain a sufficient number of authorised and unissued shares till the conversion of the IFC III CCDs to permit the full conversion of the IFC III CCDs in accordance with this Schedule.
3. | Interest |
3.1 | The IFC III CCDs will bear interest at the rate of 5% (five percent) per annum upto the date of their conversion into Equity Shares of the Company in accordance with paragraph 4 below. |
3.2 | The interest will accrue for a period of 18 (eighteen) months from issuance of the IFC III CCDs and will be paid at the end of this period, subject to applicable Law, followed by quarterly payments on the 15 th (fifteenth) day of the relevant month of such quarterly payment until the date of conversion and the interest payable in respect of each calendar year shall be calculated by dividing the annual interest due by 365 (three hundred and sixty five). In relation to such interest payments, IFC shall provide its account details no later than 1 (one) month before the payment is due. If full interest payment cannot be made during an applicable period, due to any constraints including but not limited to regulatory constraints, then the unpaid interest payment will accrue and be paid in subsequent periods, compounded for the period of delay in payment. |
3.3 |
If the dividend payout in any given financial year to the Shareholders or to the holders of Series A CCPS (as defined in the SHA) or to the holders of Series B CCPS (as defined in the SHA) or to the Series C CCPS (as defined in this SHA) of the Company, whichever is highest, is more than 5% (five per cent) of the amount invested for such securities by the holder of those securities, then the holders of the IFC III CCDs will be entitled to an additional interest which shall be equal to the difference between (a) the percentage return (on the amount invested) received by the holders of such Equity Shares or the holders of Series A CCPS or the holders of Series B CCPS or to the holders of Series C CCPS; and (b) the rate of interest |
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received by the holder of the IFC III CCDs for that financial year under the terms of paragraph 3.1. |
4. | Conversion |
4.1 | The IFC III CCDs shall be convertible into Equity Shares of the Company at the option of the holders of the IFC III CCDs in accordance with paragraph 4.2. Any IFC III CCDs that have not been converted into Equity Shares of the Company shall compulsorily convert into the Equity Shares of the Company upon the earlier of: |
(i) | In accordance with paragraph 4.3, prior to the filing of the DRHP with SEBI in connection with the QIPO or prior to listing of equity shares of Companys holding company in connection with an IPO; and |
(ii) | The date which is 10 (ten) years from the Subscription Closing Date in relation to the IFC III CCDs (the Maturity Date ), |
in each case, in accordance with this SHA. Upon occurrence of any of the event under paragraph 4.1 (i) and (ii) above the Company (and the Sponsors, where applicable) will immediately follow the procedure under paragraph 4.2 (iv) below.
4.2 | Optional Conversion |
The holders of the IFC III CCDs shall have the right, in the events set out in paragraph 4.2 (ii) of this Schedule after the Subscription Closing Date of IFC III CCDs to require the Company, by a written notice (the Conversion Notice ), to convert all or some of the IFC III CCDs into Equity Shares of the Company. A copy of the Conversion Notice shall also be sent to the Sponsors, IFC, Proparco, Helion and FC. In case the conversion occurs prior to the expiry of the Maturity-Date, then the conversion shall be completed within a period of 21 (twenty one) days from the date of the Conversion Notice.
(i) | Conversion Ratio & Conversion Price |
(a) | The Conversion Ratio for the purposes of IFC III CCDs shall be such that each IFC III CCD will convert into such number of Equity Shares, so as to give the IFC III CCD holders the IFC III Required Return, without IFC being required to pay any amount for such conversion. For avoidance of all doubts, it is further clarified that the conversion price of each such IFC III CCD shall not be less than the fair value determined in accordance with the pricing guidelines prescribed by the Reserve Bank of India on the date of issuance and allotment of the IFC III CCDs, i.e. INR 5000 (Indian Rupees Five Thousand). |
For purposes of this paragraph, the term IFC III Required Return for the purposes of the IFC III CCDs shall mean (aa) 16% (sixteen) IRR; or (bb) 18.4% (Eighteen point four Percent) IRR, in the event of conversion of the IFC III CCDs into Equity Shares of the Company (a) in accordance with paragraph 4.1 (i) of this Schedule P, or (b) upon Transfer of the Equity Securities in terms of Clause 6.3.4 of the SHA, or (c) upon a voluntary sale of any or all the Equity Securities held by all the Investors and the voluntary sale of Equity Securities held by the Sponsors
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to a third party, such that pursuant to the sale of the Equity Securities there is a change in Control on the Company, or (d) upon a Liquidation Event B other than upon Transfer of all or more than 70% (seventy percent) in value of the Companys Assets.
Provided that, if the IFC III CCD holder receives any interest from the Company prior to conversion, the value of the same will be deducted from the IFC III Required Return.
(b) | A valuation of the Company to enable conversion of the IFC III CCDs in accordance with (a) above shall be: |
1) | for the events specified in paragraph 4.2 (ii) (a), (b) and (g) and paragraph 4.1 (ii), the valuation as determined by one of the Big Four Accounting Firms selected in accordance with the procedure laid down in paragraph 4.2 (c) below; |
2) | for the events specified in paragraph 4.2(ii) (c), (d), (e) and (f), the valuation as offered by the third party purchaser; and |
3) | for the events specified in paragraph 4.3(i), the valuation as determined by the merchant banker managing the IPO/QIPO. |
(c) | IFC shall set out in the Conversion Notice, the names of 2 (two) of the Big Four Accounting Firms that are selected by IFC for the purpose of paragraph 4.2(i)(c). Within 10 (ten) days of the date of the Conversion Notice, IFC, Helion, FC, Proparco, Company and Sponsors shall jointly agree to appoint one of the 2 (two) Big Four Accounting Firms mentioned in the Conversion Notice to do the valuation of the Company, and shall jointly issue a notice to IFC in this respect. If IFC does not receive the aforesaid notice within the period of 10 days from the date of the Conversion Notice, then IFC shall have the right to select, in its sole discretion, one of the 2 (two) Big Four Accounting Firms mentioned in the Conversion notice to do the valuation of the Company. |
(ii) | The holders of the IFC III CCDs will be entitled to exercise their conversion right in respect of the IFC III CCDs just prior to or on the occurrence of the following events: |
(a) | Liquidation Event A or Liquidation Event B as defined in the SHA. |
(b) | Buy-back of the IFC III CCDs in accordance with the terms of the SHA. |
(c) | In the event holder of the IFC III CCDs wishes to exercise its Co-Sale Right under Clause 6.3.3 (Co -Sale Rights) of the SHA. |
(d) | In the event holder of the IFC III CCDs wishes to exercise its Co-Sale Right under Clause 6.3.4 (Transfer to a Competitor) of the SHA. |
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(e) | In the event holder of the IFC III CCDs wishes to exercise its Drag Along Right under Clause 6.4 (Drag Right to the Investors) of the SHA. |
(f) | In the event holder of the IFC III CCDs wishes to exercise its right under Clause 6.5 (Drag Right of DEG, IFC and Proparco) of the SHA. |
(g) | In the event holder of the IFC III CCDs wishes to exercise the Deficit Call Option under Clause 6.6 (IFC, DEG and Proparco Call Option) of the SHA. |
(iii) | The Conversion Notice shall be dated and shall set forth: |
(a) | The number of IFC III CCDs in respect of which the holders of the IFC III CCDs are exercising their right to conversion in accordance with this paragraph 4.2; |
(b) | The number of Equity Shares of the Company that the IFC III CCDs shall convert into; and |
(c) | The names of 2 of the Big Four Accounting Firms that are selected by IFC for the purpose of paragraph 4.2(i)(c), if applicable; and the reference valuation as offered by the third party purchaser, if applicable. |
(iv) | Upon receipt of the Conversion Notice, the Company shall effect the following: |
(a) | Convening of a meeting of the Board, in which meeting the Company approve the following: |
| The conversion of such number of the IFC III CCDs; |
| The cancellation of the certificates representing such number of IFC III CCDs that are converted; |
| The issuance and allotment of such number of Equity Shares of the Company that the IFC III CCDs shall convert into. |
in each case, as are mentioned in the Conversion Notice;
(b) | Issuance of duly stamped share certificates to the holders of the IFC III CCDs to evidence such holders of the IFC III CCDs as the owners of the Equity Shares issued upon conversion of such number of the IFC III CCDs as are mentioned in the Conversion Notice; |
(c) | Updating its register of members to reflect the holders of the IFC III CCDs as the owners of the Equity Shares issued pursuant to the conversion of such number of the IFC III CCDs as are mentioned in the Conversion Notice; |
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(d) | Filing with the jurisdictional Registrar of Companies Form PAS 3 of the Companies (Prospectus and Allotment of Securities) Rules, 2014 in respect of allotment of the Equity Shares to the holders of the IFC III CCDs pursuant to such holders of the IFC III CCDs exercising their rights in accordance with this paragraph 4 and shall provide the holders of the IFC III CCDs with certified true copies of Form PAS 3 duly filed with the jurisdictional Registrar of Companies along with the receipt in respect of Form PAS 3; and |
(e) | The Company and the Sponsors shall do all such acts and deeds as may be necessary to give effect to the provision of this paragraph 4, including without limitation, convening a meeting of the Board to approve the splitting of the share certificates representing the IFC III CCDs. |
4.3 | Automatic Conversion |
(i) | The Company shall forthwith convert all the IFC III CCDs into Equity Shares based on the conversion price arrived in accordance with paragraph 4.2(i), if at any time after the Subscription Closing Date, the Company proposes to file a DRHP for a firmly underwritten issue of Equity Shares to the public and the shareholders of the Company have consented to the QIPO or an IPO under the provisions of the SHA. The IFC III CCDs shall convert into Equity Shares of the Company immediately prior to filing of the DRHP with the SEBI. |
(ii) | In the event that: |
(a) | The Company files a DRHP with the SEBI in respect of the QIPO or an IPO which, prior to such filing, has necessitated the conversion of the IFC III CCDs into Equity Shares of the Company; and |
(b) | Within the Listing Date, (as defined in the SHA), the QIPO or the IPO does not complete such that the entire issued, paid-up and subscribed share capital is not admitted to trading on a Relevant Market (as defined in the SHA) by the expiry of the Listing Date. |
Then the Company and the Sponsors shall comply with the provisions of Clause 8 (Reinstatement of Rights) of the SHA and shall undertake all necessary actions to ensure that the holders of the IFC III CCDs are placed in the same position, and possess the same rights as set forth in this Schedule P, they had the benefit of immediately prior to the occurrence of the event set forth in (i) above.
5. | Liquidation Preference |
Upon the occurrence of a Liquidation Event A or a Liquidation Event B with respect to the Company or its Subsidiaries and in accordance with the terms of the SHA, the holders of the IFC III CCDs shall receive the Liquidation Preference in accordance with the terms of the SHA and in the order of precedence set forth in the SHA.
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Upon the exercise of the Drag Right of the investors or Drag Right of DEG, IFC and Proparco in accordance with Clause 6.4 and 6.5 of the SHA, the IFC III CCDs shall be subject to the order of preference in terms of the sale of the Equity Securities and the returns on the Equity Securities as set out in the SHA. Notwithstanding the above, the holders of the IFC III CCDs will also be entitled to the buy-back preferences in accordance with the terms of the SHA and in order of preference set forth in the SHA.
For the avoidance of doubt, it is hereby clarified that Equity Shares of the Company held by IFC pursuant to the conversion of the IFC III CCDs shall be treated at par with the remaining Equity Shares of the Company for the purposes of this paragraph 5, save and except where the IFC III CCDs are converted into Equity Shares of the Company on or immediately prior and only in connection with IFC exercising its right in the case of events set out in this paragraph 5, in which case, notwithstanding anything to the contrary contained herein, the Equity Shares issued to the holder of the IFC III CCDs will be entitled to priority in terms of payment in the like manner as the IFC III CCDs as set out in this paragraph 5.
6. | Transferability |
Subject to the terms of the SHA, the IFC III CCDs shall be freely transferable to any person and holders of the IFC III CCDs may assign all or any of the IFC III CCDs and any rights attaching thereto under the SHA, without the prior consent of any Person.
7. | Voting Rights |
From and after the issuance of the IFC III CCDs, IFC shall only be entitled to exercise voting rights on every resolution in respect of Schedule M placed before the Company on the basis of its shareholding in the Company on an As if Converted Basis subject to the terms of the SHA. Provided however that upon the transfer of the IFC III CCDs in accordance with the terms of the SHA, the transferee of the IFC III CCDs will be entitled to vote on every resolution placed before the Company, to the extent permissible under Law, in proportion to the Equity Shares held by such transferee in the share capital of the Company, assuming the transferred IFC III CCDs have been converted into Equity Shares of the Company on the basis of the conversion price as determined in paragraph 4.2(i) above.
From the date of conversion of the IFC III CCDs, the voting percentage of all the shareholders in the Company shall be in proportion to their shareholding in the Company.
For the avoidance of doubt, it is hereby clarified, that IFC shall be entitled to exercise its voting rights as a debenture holder in the Company available to it under applicable Law.
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SCHEDULE Q TERMS AND CONDITIONS OF SERIES F CCPS
All capitalized terms used herein but not defined shall have the meaning given to them under the SHA. Reference to a paragraph under this Schedule shall be a reference to the paragraph of this Schedule.
1. | Face Value |
The Series F CCPS shall have a face value of INR 10 (Indian Rupees Ten).
2. | Dividend |
Each of the holders of Series F CCPS shall be entitled to payment of 8% (eight per cent) noncumulative dividend per annum (calculated on the sum of the face value and premium paid) on each of the Series F CCPS by way of dividend from the Company in accordance with applicable Law as and when the Board of the Company declares any dividend. The dividends payable on the Series F CCPS shall be senior to dividend payments to holders of Series A CCPS, Series B CCPS, Series C CCPS, Series D CCPS and other Equity Shares of the Company. Subject to applicable Law, each of the holders of Series F CCPS shall be individually entitled, in addition and cumulative to the above, to participate in the distribution of the profits of the Company to the other shareholders of the Company (for the purpose of this paragraph all the Series F CCPS shall be assumed as if have been converted to the Equity Shares at the Conversion Factor).
3. | Term |
Unless converted in accordance with the terms of this Schedule, the Articles of the Company and applicable Laws, the term of the Series F CCPS shall be a maximum of 10 (ten) years from the date of their issuance.
4. | Voting |
4.1 | The holders of Series F CCPS shall be entitled to attend all meetings of Shareholders of the Company. The holders of Series F CCPS shall be entitled to vote on all such matters which affect their rights directly or indirectly (including the consent rights of the Investors under the Agreement). To the extent (and as and when permitted under applicable Law), the holders of Series F CCPS shall be entitled to voting rights assuming the Series F CCPS have been converted into Equity Shares of the Company on the basis of the Conversion Factor set out below. |
4.2 | From the date of conversion of the Series F CCPS, the voting percentage of all their holders in the Company shall be in proportion to their shareholding in the Company. |
5. | Conversion |
5.1 | The Series F CCPS shall be convertible into Equity Shares of the Company at the option of the holders of the Series F CCPS in accordance with paragraph 5.2. Any Series F CCPS that have not been converted into Equity Shares of the Company shall compulsorily convert into the Equity Shares of the Company in accordance with paragraph 5.3 below, upon the earlier of: |
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(i) | Prior to the filing of the DRHP with SEBI in connection with the QIPO, or prior to listing of equity shares of Companys holding company in connection with an IPO; and |
(ii) | The date which is 10 (ten) years from the date of the issuance of the Series F CCPS (the Maturity Date ), |
in each case, in accordance with the terms of the Agreement.
5.2 | Optional Conversion |
(i) | The holders of the Series F CCPS shall severally have the right, at any time and from time to time at their sole option after their issuance, to require the Company, by written notice (the Conversion Notice ), to convert their respective Series F CCPS into Equity Shares of the Company. A copy of the Conversion Notice shall also be sent to the Sponsors, Proparco, Helion, FC, DEG and IFC. In case the conversion occurs prior to the expiry of the Maturity Date, then the conversion shall be completed within a period of 21 (twenty one) days from the date of the Conversion Notice. The Series F CCPS will be convertible into Equity Shares of the Company at a conversion ratios of 1:1 (the Conversion Factor ), without being required to pay any amount for such conversion. However, if the holders of Series F CCPS are unable to receive amounts equal to their entitlements under the provisions of the Agreement (as amended from time to time) dealing with Liquidation Event A in the Company, Drag right of the Investor, Drag right of IFC, DEG and Proparco and Buy back of Equity Securities (as applicable) on the basis of the Conversion Factor of 1:1 due to pricing restrictions under applicable Law, then each Series F CCPS shall be converted at such higher conversion ratio that will permit the holders of Series F CCPS to receive the amounts that they are entitled under the provisions of Agreement (as amended from time to time) dealing with Liquidation Event A in the Company, Drag right of the Investor, Drag right of IFC, DEG and Proparco and Buy back of Equity Securities as applicable; in which event the term Conversion Factor shall be reckoned accordingly. For avoidance of doubts, the holders of Series F CCPS shall not be entitled to any proceeds over and above their entitlements under the provisions of Agreement (as amended from time to time) dealing with Liquidation Event A in the Company, Drag right of the Investor, Drag right of IFC, DEG and Proparco and Buy back of Equity Securities, irrespective of the Conversion Factor. |
(ii) | The Conversion Notice shall be dated and shall set forth: |
(a) | The number of Series F CCPS in respect of which the holders of the Series F CCPS are exercising their right to conversion in accordance with this paragraph 5.2; and |
(b) | The number of Equity Shares of the Company that the Series F CCPS shall convert into. |
(iii) | Upon receipt of the Conversion Notice, the Company shall effect the following: |
(a) | Convening of a meeting of the Board, in which meeting the Company shall approve the following: |
(A) | The conversion of the relevant Series F CCPS; |
(B) | The cancellation of the share certificates representing such number of the Series F CCPS; and |
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(C) | The issuance and allotment of such number of Equity Shares of the Company that the Series F CCPS shall convert into, |
in each case, as are mentioned in the Conversion Notice;
(b) | Issuance of duly stamped share certificates to the holders of the Series F CCPS to evidence such holders of the Series F CCPS as the owners of the shares issued upon conversion of their respective Series F CCPS as are mentioned in the Conversion Notice; |
(c) | Updating its register of members to reflect the holders of the Series F CCPS as the owners of the shares issued pursuant to the conversion of the relevant Series F CCPS as mentioned in the Conversion Notice; |
(d) | Filing with the jurisdictional Registrar of Companies of prescribed forms in respect of allotment of the shares to the holders of the Series F CCPS pursuant to such holders of the Series F CCPS exercising their rights in accordance with paragraph 5.1 and shall provide the holders of the Series F CCPS with certified true copies of prescribed forms duly filed with the jurisdictional Registrar of Companies along with the receipt in respect of such forms; and |
(e) | The Company and the Sponsors shall do all such acts and deeds as may be necessary to give effect to the provisions of this paragraph 5, including without limitation, convening a meeting of the Board to approve the splitting of the share certificates representing the Series F CCPS. |
5.3 | Automatic Conversion |
(i) | The Company shall forthwith convert all the Series F CCPS into shares, based on the Conversion Factor, if at any time after their issuance, the Company proposes to file a DRHP for a firmly underwritten issue of shares to the public if the shareholders of the Company have consented to the QIPO/IPO under the provisions of the Agreement. The Series F CCPS shall convert into Equity Shares of the Company at the Conversion Factor, immediately prior to filing of the DRHP with the SEBI. |
(ii) | In the event that: |
(a) | The Company files a DRHP with the SEBI in respect of the QIPO/IPO which, prior to such filing, has necessitated the conversion of the Series F CCPS into Equity Shares of the Company; and |
(b) | Within the Listing Date, the QIPO/IPO does not complete such that the entire issued, paid-up and subscribed share capital is not admitted to trading on a Relevant Market by the expiry of the Listing Date, |
then the Company and the Sponsors shall comply with the provisions of Clause 8 (Reinstatement of Rights) of the Agreement and shall undertake all necessary actions to ensure that the holders of the Series F CCPS are placed in the same position, and possess the same rights as set forth in this Schedule, they had the benefit of immediately prior to the occurrence of the event set forth in (a) above.
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6. | Liquidation Preference |
6.1 | Liquidation Event A in the Company |
6.1.1 | Subject to paragraph 6.2 below, on occurrence of a Liquidation Event A in the Company, the holders of the IFC CCDs, IFC II CCDs, IFC III CCDs, DEG CCDs and Proparco CCPS will be entitled to receive in preference to the holders of any other Equity Securities, proceeds representing an amount equal to the IFC CCD Liquidation Price, IFC II CCD Liquidation Price, IFC III CCD Liquidation Price, DEG CCD Liquidation Price and Proparco CCPS Liquidation Price, respectively, pro rata the amounts due to them in this paragraph 6.1.1. |
6.1.2 | Subject to paragraph 6.1.1 and paragraph 6.2 below, on occurrence of a Liquidation Event A in the Company, the holders of the Series F CCPS will be entitled to receive in preference to the holders of Series B CCPS, Series C CCPS, Series D CCPS and Series A CCPS and any other Equity Securities (other than IFC CCDs, IFC II CCDs, IFC III CCDs, DEG CCDs and Proparco CCPS), proceeds representing an amount equal to: |
1.5 x (one decimal five times) the price paid by the holders of Series F CCPS to the Company for subscription of the Series F CCPS plus any accrued but unpaid dividends, pro rata the amounts due to them in this paragraph 6.1.2.
6.1.3 | Subject to paragraph 6.1.1 and paragraph 6.1.2 above and paragraph 6.2 below, on occurrence of a Liquidation Event A in the Company, the holders of the Series B CCPS, Series C CCPS and Series D CCPS will be entitled to receive in preference to the holders of Series A CCPS and other Equity Securities (other than the IFC CCDs, IFC II CCDs, IFC III CCDs, DEG CCDs, Proparco CCPS and Series F CCPS) issued by the Company, for each of the Series B CCPS, Series C CCPS and Series D CCPS held by them, an amount equal to: |
2 x (two times) the price paid by each of IFC, Helion and FC to the Company for subscription of the respective Series B CCPS, Series C CCPS and Series D CCPS plus any accrued but unpaid dividends, pro rata the amounts due to them in this paragraph 6.1.3.
Notwithstanding anything to the contrary contained herein, the rights of the holders of Series F CCPS and the rights of the holders of Series B CCPS, Series C CCPS and Series D CCPS shall be subordinate to the rights of the holders of the CCDs and Proparco CCPS, and the rights of the holders of Series B CCPS, Series C CCPS and Series D CCPS shall also be subordinate to the rights of the holders of Series F CCPS under paragraph 6.1.2, in relation to the Liquidation Preferences of the Company.
6.1.4 | After the payment to the holders of the CCDs and Proparco CCPS in accordance with paragraph 6.1.1, and Series F CCPS in accordance with paragraph 6.1.2 above and the holders of the Series B CCPS, Series C CCPS and Series D CCPS in accordance with paragraph 6.1.3 above, on occurrence of a Liquidation Event A and subject to paragraph 6.2 below, the holders of the Series A CCPS will be entitled to receive in preference to the holders of Equity Securities (other than the holders of the CCDs, Proparco CCPS and the holders of the Series F CCPS, Series B CCPS, Series C CCPS and Series D CCPS), for each Series A CCPS held by Helion and FC, an amount equal to: |
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2 x (two times) the price paid by Helion and FC to the Company for subscription of the Series A CCPS plus any accrued but unpaid dividends, pro rata the amounts due to them in this paragraph 6.1.4.
6.2 | Other conditions |
6.2.1 | Liquidation Preferences in paragraph 6.1 above will be subject to applicable Law, including, if applicable, the right of workmen and secured creditors under applicable Law. |
6.2.2 | To the extent that proceeds available for distribution on a Liquidation Event A are inadequate to pay the Applicable Liquidation Price in full in accordance with paragraph 6.1 above, the total amount received and/or realised on such a Liquidation Event A, shall be used in same priority between first: Senior Liquidation Price to the holders of CCDs and Proparco CCPS ( pro rata the amounts due to them in paragraph 6.1.1), then second: to pay the Series F Liquidation Price to the holders of Series F CCPS ( pro rata the amounts due to them in paragraph 6.1.2), then third: to pay the CCPS Liquidation Price to the holders of the Series B CCPS, Series C CCPS and Series D CCPS, respectively, ( pro rata the amounts due to them in paragraph 6.1.3), and fourth: to pay the Series A Liquidation Price to the holders of Series A CCPS ( pro rata the amounts due to them in paragraph 6.1.4). For the avoidance of doubt, it is hereby clarified that Equity Shares of the Company held by the Investors pursuant to the conversion of the Share Equivalents held by them shall be treated at par with the remaining Equity Shares of the Company for the purposes of this paragraph 6.2.2 and such Equity Shares shall not be entitled to Liquidation Preference in paragraph 6.1; save and except where the Share Equivalents are converted into Equity Shares of the Company on or immediately prior to and only in connection with the Investors exercising their right upon the occurrence of a Liquidation Event A, in which case, notwithstanding anything to the contrary contained herein, the Equity Shares issued to the holder of the Share Equivalents will be entitled to priority in terms of payment in the like manner as the respective Share Equivalents which were converted into such Equity Shares, as set out in paragraph 6.1 and this paragraph 6.2.2. |
It is clarified that the Proparco CCPS shall have priority and preference over the Series A CCPS, Series B CCPS, Series C CCPS, Series D CCPS, Series F CCPS and Equity Shares issued by the Company, and the proceeds shall not be distributed to Series A CCPS, Series B CCPS, Series C CCPS, Series D CCPS, Series F CCPS and Equity Shares unless Proparco CCPS has received its applicable Senior Liquidation Price.
6.2.3 | Subject to paragraph 6.2.4 and 6.2.5 below: |
(a) | to the extent there are additional proceeds available for distribution after payment of the Applicable Liquidation Price to the holders of CCDs, Proparco CCPS and then Series F CCPS and then the Series B CCPS, Series C CCPS and Series D CCPS and then Series A CCPS, the holders of Equity Shares will share pro rata in the distribution of such remaining proceeds; and |
(b) |
upon payment of the Applicable Liquidation Price as stated in Clause 4.1 of the Agreement (as amended from time to time) and relevant clause(s) of this Agreement, the holders of CCDs, Proparco CCPS, Series B CCPS, Series C CCPS, Series D CCPS and Series A CCPS shall not be entitled to |
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participate or claim a share in such additional proceeds available for distribution. |
6.2.4 | In case, (a) at least one of the Series A CCPS, Series B CCPS, Series C CCPS or Series D CCPS are converted into Equity Shares of the Company (other than for receiving respective Applicable Liquidation Price in the manner provided in paragraph 6.1.3 and paragraph 6.1.4 above, as applicable); and (b) there are additional proceeds available for distribution after payment of the Applicable Liquidation Price to the holders of CCDs, Proparco CCPS, thereafter the Series F CCPS, thereafter Series B CCPS, Series C CCPS and Series D CCPS and thereafter, Series A CCPS, then the holders of Series F CCPS and the holders of Equity Shares will share pro rata in the distribution of remaining proceeds. Notwithstanding the above, the holders of Series F CCPS shall not be entitled to more than the Series F Participation under this paragraph 6.2.4. For the purpose of clarification in relation to this paragraph, upon payment of the Applicable Liquidation Price as stated in Clause 4.1 of Shareholders Agreement (as amended from time to time) and relevant clause(s) of this Agreement, the holders of CCDs, Proparco CCPS, Series B CCPS, Series C CCPS, Series D CCPS and Series A CCPS (when the same have not been converted to Equity Shares) shall not be entitled to participate or claim a share in such additional proceeds available for distribution. |
6.2.5 | Upon occurrence of a Liquidation Event A, |
a. | if all or some of the Series B CCPS or Series D CCPS are converted into Equity Shares of the Company (other than for receiving their respective Applicable Liquidation Price in the manner provided in paragraph 6.1.3) on or immediately prior to the occurrence of a Liquidation Event A, to participate pro rata to their shareholding on an As If Converted Basis in the proceeds available pursuant to the occurrence of Liquidation Event A; and |
b. | if the holders of Series F CCPS have not converted their respective Series F CCPS into Equity Shares (or have converted their respective Series F CCPS into Equity Shares for receiving their respective Applicable Liquidation Price in the manner provided in paragraph 6.1.2 above) and have exercised their right to the Series F Participation, pursuant to exercise of which, amounts to be received by IFC (with respect to Series B CCPS and Series D CCPS held by it that have been converted into Equity Shares, other than for receiving their respective Applicable Liquidation Price in the manner provided in paragraph 6.1.3 above) from the proceeds of the Liquidation Event A is less than the amounts IFC would have otherwise received (with respect to Series B CCPS and Series D CCPS held by it that have been converted into Equity Shares other than for receiving their respective Applicable Liquidation Price in the manner provided in paragraph 6.1.3 above), if the holders of Series F CCPS had not exercised the right of Series F Participation (the difference of such amount hereinafter referred to as the Liquidation Differential Amount ), |
then, the Sponsors shall through a suitable mechanism (as agreed upon with IFC) ensure that IFC receives the Liquidation Differential Amount simultaneously with the amounts received by the holders of Series F CCPS pursuant to Series F Participation. It is clarified that the:
i. |
failure of the Sponsors to ensure that the Liquidation Differential Amount is received by IFC (simultaneously with the amounts received by the |
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holders of Series F CCPS pursuant to Series F Participation) shall not affect the right of the holders of Series F CCPS to receive amounts pursuant to Series F Participation; and |
ii. | unless the Sponsors ensure that the Liquidation Differential Amount is received by IFC simultaneously with the amounts received by the holders of Series F CCPS pursuant to Series F Participation, the Sponsors shall not receive any amounts from the proceeds upon occurrence of Liquidation Event A. |
6.2.6 | The Sponsors and the Company agree and undertake that they shall honour the Liquidation Preference of first the holders of CCDs and Proparco CCPS, then second the holders of Series F CCPS, then third the holders of the Series B CCPS, Series C CCPS and Series D CCPS and finally the holders of Series A CCPS in distributing the proceeds of a Liquidation Event A in any manner legally permissible, including without limitation, re-distribution of proceeds that may be received by the Sponsors on a Liquidation Event A, to the Investors. |
6.3 | Liquidation Event B in the Company |
6.3.1 | The Parties agree that no Liquidation Event B can be completed by the Company unless such transaction has been approved in accordance with Clause 11.8 of the Shareholders Agreement. If on the occurrence of the Liquidation Event B in relation to the Company, every Investor issues a notice to the Company and the Sponsors, within 30 (thirty) days of any of them coming to be aware of such Liquidation Event B in respect of the Company, asking for the liquidation for the Company and its Subsidiaries, the Parties agree that the Company and its Subsidiaries shall be wound up and the proceeds so realised shall be distributed in order of the preference set out in paragraph 6.1 above and will be subject to the terms of paragraph 6.2. The Parties agree to take all such steps as may be required to ensure compliance of the terms of this paragraph 6.3. |
6.4 | Liquidation Event A or Liquidation Event B of a Subsidiary |
6.4.1 | The Parties agree that no Liquidation Event B can be completed by a Subsidiary unless such transaction has been approved in accordance with Clause 11.8 of the Shareholders Agreement. |
6.4.2 | Subject to applicable Law and paragraph 6.5, including if applicable, the right of workmen and secured creditors under applicable Law, on the occurrence of a Liquidation Event A or a Liquidation Event B in respect of the Subsidiary of the Company, the Parties agree that all proceeds received / available for distribution in respect of such Subsidiary (in case of Azure Power (Punjab) Private Limited, after payment of proceeds by Azure Power (Punjab) Private Limited to OPIC in repayment of any loan that may have been taken from OPIC by Azure Power (Punjab) Private Limited) shall be immediately paid to the Company, along with the other shareholders of such Subsidiary, and the amounts paid to the Company shall not be less than its pro rata share based on its shareholding percentage in such Subsidiary. |
6.5 | Liquidation Event A or Liquidation Event B of a Key Subsidiary or Key Subsidiaries |
6.5.1 |
In the event of a Liquidation Event A of a Key Subsidiary or Key Subsidiaries, the Parties agree that the Company and all the Subsidiaries of the Company will be wound up, and the proceeds of such winding up will be distributed amongst the |
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Shareholders in the manner set out in paragraph 6.1 and will be subject to the terms of paragraphs 6.2. |
6.5.2 | The Parties further agree that if on the occurrence of the Liquidation Event B in relation to the Key Subsidiary or Key Subsidiaries, every Investor issues a notice to the Company and the Sponsors within 30 (thirty) days of any of them coming to be aware of such Liquidation Event B in respect of the Key Subsidiaries or Key Subsidiaries, asking for the liquidation for the Company and its Subsidiaries, the Company and its Subsidiaries shall be wound up and the proceeds so realised shall be distributed in order of the preference set out in paragraph 6.1 above and will be subject to the terms of paragraph 6.2. The Parties agree to take all such steps as may be required to ensure compliance of the terms of this paragraph 6. |
6.6 | Upon the exercise of the Drag Right of the Investors or Drag Right of IFC, DEG and Proparco in accordance with Clause 6.4 and 6.5 of the Shareholders Agreement, the Series F CCPS will be entitled to receive amount in such order of preference (in terms of the sale of the Equity Securities and the returns on the Equity Securities) which should be similar to the liquidation preference provided under paragraph 6.1 and 6.2 above. The holders of the Series F CCPS will also be entitled to the buy-back preferences which should be similar to the liquidation preference provided under paragraph 6.1 above. |
7. | Transferability |
Subject to the terms of the Agreement, the Series F CCPS shall be freely transferable to any Person, and the holders of the Series F CCPS may assign all or any of the Series F CCPS and any rights attaching under the Agreement, without the prior consent of any Person.
8. | Anti Dilution Protection |
8.1 | If the Company offers any Equity Shares on conversion of CCDs and Proparco CCPS, then the holders of Series F CCPS shall be entitled to an anti-dilution protection such that the conversion price of the Series F CCPS is adjusted to ensure that % holding of Series F CCPS after conversion of CCDs and Proparco CCPS shall be same as the % holding of Series F CCPS before conversion of such CCDs and Proparco CCPS. Accordingly the Conversion Factor shall stand revised. It is clarified that the anti-dilution protection provided under this paragraph 8 (1) shall not apply to any compulsorily convertible debentures or any other fixed return instrument issued after April 30, 2014. |
8.2 | If the Company offers any preference shares, at a conversion price (the New Price ) less than the conversion price (the price at which the Series F CCPS converts into equity) of the Series F CCPS ( Dilutive Issuance ), then the holders of Series F CCPS shall be entitled to a broad based weighted-average basis anti-dilution protection as provided forth in the Annexure to this Schedule (the Valuation Protection Right ). |
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ANNEXURE TO SCHEDULE Q
All capitalized terms used herein but not defined shall have the meaning given to them under the SHA. Reference to a paragraph under this Annexure shall be a reference to the paragraph of this Annexure.
1. | Definitions |
For the purposes of this Annexure and unless the context requires a different meaning, the following terms have the meanings indicated.
(a) | Issue Date shall have the meaning ascribed to it in Section 2(a)(ii) of this Annexure. |
(b) | Lowest Permissible Price in relation to a holder of Series F CCPS shall mean the lowest possible price at which a Share may be issued to/acquired by that holder of Series F CCPS in accordance with applicable Law. |
(c) | New Issue Price shall have the meaning prescribed to it in Section 2(a)(i) of this Annexure. |
(d) | Issue Price shall mean the sum equal to the quotient of (x) the total sum paid for the Series F CCPS divided by (y) the number of Series F CCPS initially underlying such Series F CCPS. |
2. | Non-Dilution Protection |
(a) | Issuance below Issue Price. |
(i) | New Issues . If the Company shall at any time or from time to time issue any Preference Shares at a conversion price that is less than the Issue Price (the New Issue Price ), other than on a rights basis to all the Shareholders of the Company, then, the holders of Series F CCPS shall be issued additional Equity Shares at par or at the lowest value permitted under applicable Law as would enable them to maintain their shareholding of the Series F CCPS in accordance with Section 2(a)(iii) of this Annexure ( Anti-Dilution Issuance ) and to such an extent and in such manner as is permitted under applicable Law. |
(ii) | Timing for New Issues . Such Anti-Dilution Issuance shall be made whenever such New Securities are issued in accordance with Section 2(a)(i) of this Annexure, (x) in the case of an issuance to the Shareholders of the Company, as such, to a date immediately following the close of business on the record date for the determination of Shareholders entitled to receive such New Securities and (y) in all other cases, on the date (the Issue Date ) of such issuance; provided, however, that the determination as to whether an Anti-Dilution Issuance is required to be made pursuant to this Section 2 (a) of this Annexure shall be made immediately or simultaneously upon the issuance of such New Securities, and not upon the subsequent issuance of any security into which the New Securities convert, exchange or may be exercised. |
(iii) |
Anti Dilution Issuance . If an Anti-Dilution Issuance is to be undertaken pursuant to an occurrence of any event described in Section 2(a)(i) of this |
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Annexure while the Series F CCPS are outstanding, the conversion price (the price at which the Series F CCPS converts into equity) shall, to the extent permitted under applicable Law, stand adjusted in accordance with the following formula: |
NCP | = | (P1) | X |
(Q1) + (Q2)
|
||||||
(Q1) + (R) |
For the purposes of this Section, NCP is the new Purchase Price;
P1 is the Issue Price;
Q1 means the number of Equity Shares Outstanding immediately prior to the new issue;
Q2 means such number of Equity Shares that the aggregate consideration received by the Company for such issuance would purchase at Issue Price (Q2=R*(New Issue Price/ P1));
R means the number of Equity Shares issuable / issued upon conversion of the New Securities being issued.
For purposes of this condition, the term Equity Shares Outstanding shall mean the aggregate number of Equity Shares of the Company then outstanding (assuming for this purpose the exercise and/or conversion of all then-outstanding securities exercisable for and/or convertible into Equity Shares (including without limitation the conversion of all Preference Shares))
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SCHEDULE R - TERMS AND CONDITIONS OF SERIES G CCPS
All capitalized terms used herein but not defined shall have the meaning given to them under the SHA. Reference to a paragraph under this Schedule shall be a reference to the paragraph of this Schedule.
1. | Face Value |
The Series G CCPS shall have a face value of INR 10 (Indian Rupees Ten).
2. | Term |
Unless converted in accordance with the terms of this Schedule R, the Articles of the Company and applicable Laws, the term of the Series G CCPS shall be a maximum of 10 (ten) years from their issuance. The date on which the Series G CCPS were issued and allotted to Proparco shall be referred as Proparco Closing Date-2 .
The Company agrees to maintain a sufficient number of authorised and unissued shares till the conversion of the Series G CCPS to permit the full conversion of the Series G CCPS in accordance with this Schedule.
3. | Dividend |
3.1 | Each of the holders of Series G CCPS shall be entitled to payment of 5% (five percent) non-cumulative dividend per annum (calculated on the sum of the face value and premium paid) on each of the Series G CCPS by way of dividend from the Company in accordance with applicable Law as and when the Board of the Company declares any dividend to any shareholder. |
3.2 | If the dividend payout in any given financial year to the shareholders or to the holders of Series A CCPS, Series B CCPS, Series C CCPS, Series D CCPS, Series F CCPS or Series H CCPS of the Company, whichever is highest, is more than 5% (five percent) of the amount invested for such securities by the holder of those securities, then the holders of the Series G CCPS will be entitled to an additional dividend which shall be equal to the difference between (a) the percentage return (on the amount invested) received by the holders of such Equity Shares or the holders of Series A CCPS, Series B CCPS, Series C CCPS, Series D CCPS, Series F CCPS and/or Series H CCPS and (b) the rate of dividend received by the holder of the Series G CCPS for that financial year under the paragraph 3.1 above. It is clarified that in case the Company declares dividends to the holders of Equity Shares, Series A CCPS, Series B CCPS, Series C CCPS, Series D CCPS, Series F CCPS and/or Series H CCPS, the holders of Series G CCPS shall be entited to receive dividends simultaneous with the holders of Equity Shares, Series A CCPS, Series B CCPS, Series C CCPS, Series D CCPS, Series F CCPS and/or Series H CCPS in the manner set out above. |
4. | Conversion |
4.1 |
The Series G CCPS shall be convertible into Equity Shares of the Company at the option of the holders of the Series G CCPS in accordance with paragraph 4.2. Any Series G CCPS |
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that have not been converted into Equity Shares of the Company shall compulsorily convert into the Equity Shares of the Company upon the earlier of: |
(i) | in accordance with paragraph 4.3, prior to the filing of the DRHP with SEBI in connection with the QIPO or prior to listing of equity shares of Companys holding company in connection with an IPO; and |
(ii) | The date which is 10 (ten) years from the date of the issuance of the Series G CCPS (the Maturity Date ), |
in each case, in accordance with this SHA. Upon occurrence of any of the event under paragraph 4.1 (i) and (ii) above the Company (and the Sponsors, where applicable) will immediately follow the procedure under paragraph 4.2 (iv) below.
4.2 | Optional Conversion |
The holders of the Series G CCPS shall have the right, in the events set out in paragraph 4.2(ii) of this Schedule R after the Proparco Closing Date-2 to require the Company, by a written notice (the Conversion Notice ), to convert all or some of the Series G CCPS into Equity Shares of the Company. A copy of the Conversion Notice shall also be sent to the Sponsors, IFC Helion, DEG and FC. In case the conversion occurs prior to the expiry of the Maturity Date, then the conversion shall be completed within a period of 21 (twenty one) days from the date of the Conversion Notice.
(i) | Conversion Ratio & Conversion Price |
(a) | The Conversion Ratio for the purposes of Series G CCPS shall be such that each Series G CCPS will convert into such number of Equity Shares, so as to give the Series G CCPS holders the Proparco Required Return -2, without Proparco being required to pay any amount for such conversion. For avoidance of all doubts, it is further clarified that the conversion price of each such Series G CCPS shall not be less than the fair value determined in accordance with the pricing guidelines prescribed by the Reserve Bank of India on the date of issuance and allotment of the Series G CCPS. |
For purposes of this paragraph, the term Proparco Required Return -2 for the purposes of the Series G CCPS shall mean: ( A ) 16% (sixteen percent) IRR on the Proparco Investment Amount-2; or ( B ) 18.4% (eighteen decimal four percent) IRR on the Proparco Investment Amount-2, plus such amount that gives Proparco a return of 18.4% (eighteen decimal four percent) IRR on the Proparco Investment Amount-1 after taking into account Proparco Required Return-1 received by Proparco on Proparco Investment Amount-1, in the event of conversion of the Series G CCPS into Equity Shares of the Company in the following events: (I) in accordance with paragraph 4.1 (i) of this Schedule R; (II) upon Transfer of Equity Securities in terms of Clause 6.3.4 of the SHA; or (III) upon a voluntary sale of any or all the Equity Securities held by all the Investors and the voluntary sale of Equity Securities held by the Sponsors to a third party, such that pursuant to the sale of the Equity Securities there is a
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change in Control on the Company, or (IV) upon a Liquidation Event B other than upon Transfer of all or more than 70% (seventy percent) in value of the Companys Assets.
Provided that, if the Series G CCPS holder receives any dividend from the Company prior to conversion, the amount of dividends received by the holders of Series G CCPS will be deducted from the Proparco Required Return -2. It is clarified that the amount of dividends for the purposes of preceding sentence shall be considered net of Taxes, i.e. after deducting any Taxes deducted or paid on such dividends by the Company.
(b) | A valuation of the Company to enable conversion of the Series G CCPS in accordance with (a) above shall be: |
1) | for the events specified in paragraph 4.2 (ii) (a), (b) and (g) and paragraph 4.1 (ii), the valuation as determined by one of the Big Four Accounting Firms selected in accordance with the procedure laid down in paragraph 4.2(i)(c) below; |
2) | for the events specified in paragraph 4.2(ii) (c), (d), (e) and (f), the valuation as offered by the third party purchaser; and |
3) | for the events specified in paragraph 4.3(i), the valuation as determined by the merchant banker managing the IPO/QIPO. |
(c) | Proparco shall set out in the Conversion Notice, the names of 2 (two) of the Big Four Accounting Firms that are selected by Proparco for the purpose of paragraph 4.2(i)(b) (1). Within 10 days of the date of the Conversion Notice, IFC, Helion, FC, DEG, Company and Sponsors shall jointly agree to appoint one of the 2 (two) Big Four Accounting Firms mentioned in the Conversion Notice to do the valuation of the Company, and shall jointly issue a notice to Proparco in this respect. If Proparco does not receive the aforesaid notice within the period of 10 days from the date of the Conversion Notice, then Proparco shall have the right to select, in its sole discretion, one of the 2 (two) Big Four Accounting firms mentioned in the Conversion notice to do the valuation of the Company. |
(ii) | The holders of the Series G CCPS will be entitled to exercise their conversion right in respect of the Series G CCPS just prior to or on the occurrence of the following events: |
(a) | Liquidation Event A or Liquidation Event B as defined in the SHA. |
(b) | Buy-back of the Series G CCPS in accordance with the terms of the SHA. |
(c) | In the event holder of the Series G CCPS wishes to exercise its Co-Sale Right under Clause 6.3.3 (Co Sale Rights) of the SHA. |
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(d) | In the event holder of the Series G CCPS wishes to exercise its Co-Sale Right under Clause 6.3.4 (Transfer to a Competitor) of the SHA. |
(e) | In the event holder of the Series G CCPS wishes to exercise its Drag Along Right under Clause 6.4 (Drag Right to the Investors) of the SHA. |
(f) | In the event holder of the Series G CCPS wishes to exercise its right under Clause 6.5 (Drag Right of IFC, DEG and Proparco) of the SHA. |
(g) | In the event holder of the Series G CCPS wishes to exercise the Deficit Call Option under Clause 6.6 (IFC, DEG and Proparco Call Option) of the SHA. |
(iii) | The conversion Notice shall be dated and shall set forth: |
(a) | The number of Series G CCPS in respect of which the holders of the Series G CCPS are exercising their right to conversion in accordance with this paragraph 4.2; |
(b) | The number of Equity Shares of the Company that the Series G CCPS shall convert into; and |
(c) | The names of 2 of the Big Four Accounting Firms that are selected by Proparco for the purpose of paragraph 4.2(i)(c), if applicable; and the reference valuation as offered by the third party purchaser, if applicable. |
(iv) | Upon receipt of the Conversion Notice, the Company shall effect the following: |
(a) | Convening of a meeting of the Board, in which meeting the Company approve the following: |
| The conversion of such number of the Series G CCPS; |
| The cancellation of the certificates representing such number of Series G CCPS that are converted; |
| The issuance and allotment of such number of Equity Shares of the Company that the Series G CCPS shall convert into. |
in each case, as are mentioned in the Conversion Notice;
(b) | Issuance of duly stamped share certificates to the holders of the Series G CCPS to evidence such holders of the Series G CCPS as the owners of the Equity Shares issued upon conversion of such number of the Series G CCPS as are mentioned in the Conversion Notice; |
(c) |
Updating its register of members to reflect the holders of the Series G CCPS as the owners of the Equity Shares issued pursuant to the conversion |
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of such number of the Series G CCPS as are mentioned in the Conversion Notice; |
(d) | Filing with the jurisdictional Registrar of Companies Form PAS 3 of the Companies (Prospectus and Allotment of Securities) Rules, 2014 in respect of allotment of the Equity Shares to the holders of the Series G CCPS pursuant to such holders of the Series G CCPS exercising their rights in accordance with this paragraph 4 and shall provide the holders of the Series G CCPS with certified true copies of Form PAS 3 duly filed with the jurisdictional Registrar of Companies along with the receipt in respect of Form PAS 3; and |
(e) | The Company and the Sponsors shall do all such acts and deeds as may be necessary to give effect to the provision of this paragraph 4, including without limitation, convening a meeting of the Board to approve the splitting of the share certificates representing the Series G CCPS. |
4.3 | Automatic Conversion |
(i) | The Company shall forthwith convert all the Series G CCPS into Equity Shares based on the conversion price arrived in accordance with paragraph 4.2(i), if at any time after the Proparco Closing Date-2, the Company proposes to file a DRHP for a firmly underwritten issue of Equity Shares to the public and the shareholders of the Company have consented to such QIPO or an IPO under the provisions of the SHA. The Series G CCPS shall convert into Equity Shares of the Company immediately prior to filing of the DRHP with the SEBI. |
(ii) | In the event that: |
(a) | The Company files a DRHP with the SEBI in respect of the QIPO or an IPO which, prior to such filing, has necessitated the conversion of the Series G CCPS into Equity Shares of the Company; and |
(b) | Within the Listing Date, (as defined in the SHA), the QIPO or the IPO does not complete such that the entire issued, paid-up and subscribed share capital is not admitted to trading on a Relevant Market (as defined in the SHA) by the expiry of the Listing Date. |
Then the Company and the Sponsors shall comply with the provisions of Clause 8 (Reinstatement of Rights) of the SHA and shall undertake all necessary actions to ensure that the holders of the Series G CCPS are placed in the same position, and possess the same rights as set forth in this Schedule R, they had the benefit of immediately prior to the occurrence of the event set forth in (a) above.
5. | Liquidation Preference |
Upon the occurrence of a Liquidation Event A or a Liquidation Event B with respect to the Company or its Subsidiaries (as defined in the SHA) and in accordance with the terms of
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the SHA, the holders of the Series G CCPS shall receive the Liquidation Preference in accordance with the terms of the SHA and in the order of precedence set forth in the SHA.
Upon the exercise of the Drag Right of the Investors or Drag Right of IFC, DEG and Proparco in accordance with Clause 6.4 and 6.5 of the SHA, the Series G CCPS shall be subject to the order of preference in terms of the sale of the Equity Securities and the returns on the Equity Securities as set out in the SHA. Notwithstanding the above, the holders of the Series G CCPS will also be entitled to the buy-back preferences in accordance with the terms of the SHA and in order of preference set forth in the SHA.
For the avoidance of doubt, it is hereby clarified that Equity Shares of the Company held by Proparco pursuant to the conversion of the Series G CCPS shall be treated at par with the remaining Equity Shares of the Company for the purposes of this paragraph 5, save and except where the Series G CCPS are converted into Equity Shares of the Company on or immediately prior and only in connection with Proparco exercising its right in the case of events set out in this paragraph 5, in which case, notwithstanding anything to the contrary contained herein, the Equity Shares issued to the holder of the Series G CCPS will be entitled to priority in terms of payment in the like manner as the Series G CCPS as set out in this paragraph 5.
6. | Transferability |
Subject to the terms of the SHA, the Series G CCPS shall be freely transferable to any person and holders of the Series G CCPS may assign all or any of the Series G CCPS and any rights attaching thereto under the Transaction Documents, without the prior consent of any Person.
7. | Voting Rights |
From and after the issuance of the Series G CCPS, Proparco shall only be entitled to exercise voting rights on every resolution in respect of Schedule M placed before the Company on the basis of its shareholding in the Company on an As if Converted Basis subject to the terms of the SHA. Provided however that upon the transfer of the Series G CCPS in accordance with the terms of the SHA, the transferee of the Series G CCPS will be entitled to vote on every resolution placed before the Company, to the extent permissible under Law, in proportion to the Equity Shares held by such transferee in the share capital of the Company, assuming the transferred Series G CCPS have been converted into Equity Shares of the Company on the basis of the conversion price as determined in paragraph 4.2(i) above.
From the date of conversion of the Series G CCPS, the voting percentage of all the shareholders in the Company shall be in proportion to their shareholding in the Company.
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SCHEDULE S
[ Left Blank ]
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SCHEDULE T - TERMS AND CONDITIONS OF SERIES H CCPS
All capitalized terms used herein but not defined shall have the meaning given to them under the SHA. Reference to a paragraph under this Schedule shall be a reference to the paragraph of this Schedule
1. | Par Value |
The Series H CCPS shall have the face value of INR 10 (Indian Rupees Ten).
2. | Dividend |
Each of the holders of Series H CCPS shall be entitled to receive a dividend of 8% (eight per cent) in USD terms per annum on a cumulative basis calculated on the issue price paid on each such Series H CCPS. Subject to the Applicable Law, each holder of Series H CCPS shall be individually entitled, in addition and cumulative to the above, to participate in the distribution of the profits of the Company if made to the other shareholders (including the holders of Equity Shares and compulsorily convertible preference shares, but excluding Proparco CCPS) of the Company assuming that all Series H CCPS have been converted to Equity Shares at the Normal Conversion Factor set out below.
Pursuant to the above, it is clarified that the Company shall not declare, pay or set aside any dividends on Shares of any other class or kind of share capital (other than Proparco CCPS) unless the holders of the Series H CCPS first receive a dividend on each Series H CCPS equal to the sum of: (i) 8% (eight per cent) in USD terms per annum on a cumulative basis calculated on the issue price paid; and (ii) the corresponding dividend that the holders of Series H CCPS would receive if the profits of the Company are distributed to the other Shareholders of the Company.
The dividend pay-out as set out under this paragraph 2 shall be payable in cash or in kind.
3. | Term |
Unless converted in accordance with the terms of this Schedule, the Articles of the Company and the Applicable Laws, the term of the Series H CCPS shall be a maximum of 10 (ten) years from the date of their issuance.
4. | Voting |
4.1 | The holders of Series H CCPS shall be entitled to attend all meetings of Shareholders of the Company. Series H CCPS shall be entitled to vote on all matters which affect their rights directly or indirectly. The voting rights of each Series H CCPS on every resolution placed before the Company shall, to the extent permissible under the Applicable Law, be in proportion to the share capital that the Series H CCPS represent, assuming that the Series H CCPS have been converted into Equity Shares of the Company on the basis of the Normal Conversion Factor set out below. |
4.2 | From the date of conversion of the Series H CCPS into Equity Shares, the voting percentage of their holders in the Company shall be in proportion to their shareholding in the Company. |
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5. | Conversion |
5.1 | The Series H CCPS shall be convertible into Equity Shares of the Company at any time at the option of the holders of the Series H CCPS in accordance with paragraph 5.2. Any Series H CCPS that have not been converted into the Equity Shares of the Company shall compulsorily convert into the Equity Shares of the Company in accordance with paragraph 5.3 below, upon the earlier of: |
(i) | in accordance with paragraph 5.3, prior to the filing of the DRHP with SEBI in connection with the QIPO or prior to listing of equity shares of Companys holding company in connection with an IPO; and |
(ii) | the date which is 10 (ten) years from the date of the issuance of Series H CCPS (the Maturity Date ), |
in each case in accordance with the terms of the Agreement. It is clarified that the Series H CCPS shall convert on the listing of the Equity Shares pursuant to the QIPO or IPO as approved by the Shareholders, if all existing Equity Securities (including the IFC Securities, Helion Securities, FC Securities, DEG Securities, Proparco Securities and the Series G CCPS) convert on or before the date of conversion of the Series H CCPS.
5.2 | Optional Conversion |
(i) | The holders of the Series H CCPS shall severally have the right, at any time and from time to time at their sole option, after their issuance, to require the Company, by written notice (the Conversion Notice ), to convert their respective Series H CCPS into Equity Shares of the Company. A copy of the Conversion Notice shall also be sent to the other Shareholders of the Company. |
(ii) | In case the conversion occurs prior to the expiry of the Maturity Date, then the conversion shall be completed within a period of 21 (twenty one) days from the date of the Conversion Notice. |
(iii) | Normal Conversion Factor : The Series H CCPS will be convertible into the Equity Shares of the Company at a conversion ratio of 1:1 (i.e. 1 (one) Series H CCPS will convert into 1 (one) Equity Share), without being required to pay any amount for such conversion, and shall be adjusted for: |
(a) | dividends declared and not paid in accordance with paragraph 2 above; |
(b) | share splits, recapitalization or similar events; |
(c) | the anti-dilution provision as set out in paragraph 9 below; |
(d) | with respect to the CCDs and/or Proparco CCPS that are converted into Equity Shares on or before the conversion of Series H CCPS, the holders of Series H CCPS shall be entitled to an anti-dilution protection such that the conversion ratio of the Series H CCPS is adjusted upwards to ensure that percentage holding of the holders of Series H CCPS after conversion of such CCDs and/or Proparco CCPS shall be same as the percentage holding of the holders of Series H CCPS before the conversion of such CCDs and/or Proparco CCPS determined on a Fully Diluted Basis. |
The Normal Conversion Factor is specified based on the assumption that
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all the existing Equity Securities (including the IFC Securities, Helion Securities, FC Securities, DEG Securities, Proparco Securities and the Series G CCPS) have converted on or before the date of conversion of the Series H CCPS.
(iv) | The Conversion Notice shall be dated and shall set forth: |
(a) | The number of Series H CCPS in respect of which the holders of the Series H CCPS are exercising their right to conversion in accordance with this paragraph 5.2; and |
(b) | The number of Equity Shares of the Company that the Series H CCPS shall convert into. |
(v) | Upon receipt of the Conversion Notice, the Company shall and the Sponsors shall ensure that the Company shall effect the relevant board and shareholders meeting and undertake all such acts and deeds as may be necessary to give effect to the provision of this paragraph 5. |
(vi) | Upon receipt of the Conversion Notice, the Company shall effect the following: |
(a) | Convening of a meeting of the board of directors, in which meeting the Company shall approve the following: |
(A) | the conversion of the relevant Series H CCPS; |
(B) | the cancellation of the share certificates representing such number of the Series H CCPS; and |
(C) | the issuance and allotment of such number of Equity Shares of the Company that the Series H CCPS shall convert into, |
in each case, as are mentioned in the Conversion Notice;
(b) | cancellation of the share certificates of Series H CCPS in respect of which the conversion right is exercised in the Conversion Notice; and thereafter issuance of share certificates to the holders of Series H CCPS to evidence such holders of the Series H CCPS as the owners of the Equity Shares issued upon conversion of their respective Series H CCPS as mentioned in the Conversion Notice; |
(c) | making all the requisite filings with the appropriate Authority; |
(d) | the Company and the Sponsors shall do all such acts and deeds as may be necessary to give effect to the provisions of this paragraph 5. |
5.3 | Automatic Conversion |
(i) |
The Company shall forthwith convert all the Series H CCPS into Equity Shares, based on the applicable conversion rate as determined in accordance with this paragraph 5.3, if at any time after their issuance, the Company undertakes an IPO/QIPO, provided that the shareholders of the Company have consented to such IPO/QIPO in accordance with the Shareholders Agreement. The Series H CCPS shall convert into Equity Shares of the Company immediately prior to the listing of Equity Shares pursuant to the IPO/QIPO, provided that all the existing Equity |
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Securities (including the IFC Securities, Helion Securities, FC Securities, DEG Securities, Proparco Securities and the Series G CCPS) are converted on or before the date of conversion of the Series H CCPS. |
For the purpose of this Schedule T , QIPO means an initial public offering of the Company, which satisfies the following conditions: (i) the initial public offering results in the listing of the Equity Shares on the stock exchange acceptable to the Investor; (ii) the gross proceeds from the offer of new or existing Equity Shares in such initial public offering is not less than USD 100,000,000 (United States Dollars One Hundred Million); and (iii) the offering price of the Equity Share is based on the pre-money valuation of the Company of at least USD 450,000,000 (United States Dollars Four Hundred and Fifty Million).
(ii) | In the event an IPO/QIPO occurs subsequent to the expiry of the first anniversary of the date of subscription of the Series H CCPS by APGL ( Subscription Date ) and prior to the second anniversary of the Subscription Date, the applicable conversion rate for the conversion of the Series H CCPS shall be such that provides the holders of Series H CCPS such number of Equity Shares that is the greater of: (a) the number of Equity Shares which provide holders of Series H CCPS a USD return of 25% per annum on a cumulative basis on the Subscription Price from the Subscription Date till the actual date of conversion of Series H CCPS; the calculation of return shall include any dividend paid before the date of conversion to the holders of Series H CCPS; the valuation of Equity Shares in order to calculate a USD return of 25% per annum on a cumulative basis shall be based on the price at which Equity Shares are allotted to investors in the IPO/QIPO ;or (b) the number of Equity Shares received based on the Normal Conversion Factor. |
(iii) | In the event an IPO/QIPO occurs subsequent to the expiry of the second anniversary of the Subscription Date, the applicable conversion rate for the conversion of the Series H CCPS shall be such that provides the holders of Series H CCPS such number of Equity Shares that is the greater of: (a) the number of Equity Shares which provide holders of the Series H CCPS a USD return of 25% per annum on a cumulative basis on the Subscription Price for the period starting from the Subscription Date till the second anniversary of the Subscription Date and a USD return of 18% per annum on a cumulative basis on the Subscription Price after the second anniversary of the Subscription Date till the date of conversion. The calculation of return shall include any dividend paid before the date of conversion, and the valuation of Equity Shares to calculate the return to the holders of Series H CCPS shall be based on the price at which Equity Shares are allotted to investors in the IPO/QIPO; or (b) the number of Equity Shares received based on the Normal Conversion Factor. |
6. | If an IPO/QIPO occurs before the first anniversary of the Subscription Date, the applicable conversion rate for the conversion of the Series H CCPS shall be the Normal Conversion Factor. |
7. | In the event that: |
(a) | the Company initiates the procedure for IPO/QIPO which has necessitated the conversion of the Series H CCPS into the Equity Shares of the Company; and |
(b) |
within the Listing Date, the IPO/QIPO does not complete such that the entire issued, paid up and subscribed share capital is not admitted to trading |
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on a Relevant Market by the expiry of the Listing Date, |
then the Company and the Sponsors shall comply with the relevant provisions of the Shareholders Agreement and shall undertake all necessary actions to ensure that the holders of the Series H CCPS are placed in the same position, and possess the same rights as set forth in this Schedule, as they had the benefit of, immediately prior to the occurrence of the event set forth in (a) above.
8. | Liquidation Preference |
Upon the occurrence of a Liquidation Event A or Liquidation Event B with respect to the Company or its Subsidiaries and in accordance with the terms of this Agreement, the holders of the Series H CCPS shall receive in preference to the holders of Series A CCPS, Series B CCPS, Series C CCPS, Series D CCPS, Series F CCPS and other Equity Shares of the Company, the sum total of: (i) the amount equal to the total Subscription Price paid by holders of the Series H CCPS for such Series H CCPS; and (ii) an amount that provides the holders of Series H CCPS a return of 8% (eight per cent) in USD per annum on a cumulative basis on such total Subscription Price from the date of issuance of such Series H CCPS till the date of the Liquidation Event A or Liquidation Event B, as reduced by any dividends paid before the occurrence of a Liquidation Event A or Liquidation Event B to the holders of such Series H CCPS. It is clarified that the rights of the holders of the Series H CCPS shall be subordinate to the rights of the holders of the CCDs and Proparco CCPS in relation to the Liquidation Preferences of the Company.
9. | Transferability |
Subject to the terms of this Agreement, the Series H CCPS shall be freely transferable to any Person, and the holders of the Series H CCPS may assign all or any of the Series H CCPS and any rights attaching under the Agreement, without the prior consent of any Person.
10. | Anti-Dilution Protection |
If the Company issues or proposes to issue Equity Securities ( New Issuance ) to any person at an effective issue price that is less than the subscription price in USD of the Series H CCPS (as adjusted for share splits or similar reorganization of the share capital of the Company), other than the issue of Equity Shares on the conversion of the Equity Securities existing as on the date of subscription of Series H CCPS, then the holders of Series H CCPS shall be entitled to an adjustment to the Normal Conversion Factor based on broad-based weighted average method such that the holders of Series H CCPS receive a higher number of Equity Shares to compensate for the higher subscription price paid for the subscription of Series H CCPS by its holders than the effective issue price of Equity Securities in the New Issuance.
11. | Calculation in USD |
For the purposes of Clause 4 (Rights of the Investors), Clause 9 (Buy Back of Equity Securities), calculation of dividends in paragraph 2 above, or for the calculation of the entitled return on the conversion of Series H CCPS, the calculation of the entitled amounts to the holders of Series H CCPS shall be made in USD terms by taking the issue price paid by the holders of Series H CCPS in USD terms by applying the reference rate of the Reserve Bank of India for USD-INR conversion as on the date on which the issue price of Series H
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CCPS is received by the Company. However, at the time of payment of amounts to the holders of Series H CCPS, the USD entitled amounts shall be converted into USD amounts by applying the reference rate of the Reserve Bank of India for USD-INR conversion as on the date on which such payment is effected and payment shall thereupon be made in INR amounts.
Further, the subscription price and adjustment to Normal Conversion Factor for the purpose of anti-dilution provision shall be calculated in US$ based on the amount invested by holders of Series H CCPS in US$ as specified above.
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Exhibit 10.5
EMPLOYMENT CONTRACT
This Agreement is made on this 7th day of November 2008 at New Delhi
Between
Azure Power India Private Limited , a company under the Companies Act, 1956 and having its registered office at A-11, Kailash Colony, New Delhi 110048, India (hereafter referred to as the Company which expression shall mean and include the said company, its executors, assigns and successors- in-interest) of the First Part;
And
Inderpreet Singh Wadhwa , son of Mr. Harkanwal Wadhwa, residing at [Address] (which expression shall be deemed to mean and include his nominees, assigns and successors) (hereinafter referred to as the Employee ) of the Second Part.
WHEREAS
A. | The Company is engaged with the business of generation and production of solar energy and electricity. |
B. | The Employee has represented to the Company that he/she has the requisite knowledge, expertise, experience and skill to render the services in relation to the requirements of such person under the terms of this Agreement. |
C. | The Company has, based on the aforesaid representations made by the Employee, agreed to retain the services of the Employment for the consideration and subject to the terms and conditions herein contained. |
C. | The Company has, based on the aforesaid representations made by the Employee, agreed to retain the services of the Employment for the consideration and subject to the terms and conditions herein contained. |
In consideration for the mutual rights and obligations herein contained the parties agree as follows:
1. | Appointment |
The Employee shall, on the date of this Agreement, be designated as the Managing Director of the Company. The Employee shall while employed with the Company devote his entire time and attention and abilities to the business of the Company. However, the Employee shall be entitled to devote time to such activities or engagements (being inter alia in the nature of product sales/ development etc) that are not only beneficial to the Company but are also carried out in a manner that is not detrimental to the interests of the Company, and which are undertaken with the prior approval of the board of directors of the Company. The Employee agrees to use his best efforts in the performance of his duties and responsibilities and shall perform all of his duties with due care, skill and diligence.
1.2 | The Employee shall not, from the date of this Agreement, hold any position or perform any role that is or shall be in conflict with his position as the Managing Director. If the Employee is holding any other position in any company, firm or entity, he/she shall bring the same to the notice of the Company immediately, and shall relinquish such position if told by the Company to do so. |
1.3 | By executing this Agreement, the Employee agrees and covenants that he shall, at all times, be subject to and bound by the rules and regulations of the Company as may be in force from time to time or as may be brought to his notice by the Company. Further, the Employee shall ensure that during the term of this Agreement, he shall not commit any act or misconduct, or commit any acts subversive to the discipline of the Company, or otherwise misbehave in a manner that would be construed as being in violation of the rules and regulations of the Company for the time being in force. |
2. | Non Compete and Non Solicit |
2.1 | The Employee hereby undertakes and ensures that all business opportunities known to him or made known to him at any time, with respect to and/or connected with the business of the Company are referred to the Board and shall be undertaken in any other company only with the prior written consent of the Board. |
2.2 | The Employee covenants and agrees that during the subsistence of this Agreement, he/she shall not, directly or indirectly attempt in any manner to solicit from any client/customer, except on behalf of the Company, business of the type carried on by the Company or to persuade any person, firm or entity which is a client/customer of the Company to cease doing business or to reduce the amount of business which any such client/customer has customarily done or might propose doing with the Company whether or not the relationship between the Company and such client/customer was originally established in whole or in part through his or its efforts. |
2.3 | The Employee shall make full and true disclosure in writing to the Company of any direct or indirect interest or benefit that he/she has derived or is likely to derive through or in connection with any contractual arrangements, dealings, transactions or affairs of the Company, or any transactions which are likely to be detrimental to the Company. |
2.4 | The Employee acknowledges that the services he is to render to the Company are of a special and unusual character, with a unique value to the Company, the loss of which cannot adequately be compensated by damages or an action at law. In view of the unique value to the Company of his services for which the Company has contracted hereunder, because of the confidential information to be obtained by, or disclosed to, the Employee covenants and agrees that during the term of employment and during the for a period of one year thereafter, the Employee shall not, directly or indirectly, enter into the employment of, tender consulting or other services to, acquire any interest in (whether for the Employees own account as an individual proprietor, or as a partner, associate, stockholder, officer, director, trustee or otherwise), or otherwise participate in any business that competes, directly or indirectly, with any of the companies or entities (i) in the same lines of business that the Company is engaged in at the time the Employees employment is terminated. |
2.5 | During and for one year following termination of employment (i) the Employee may not solicit, encourage, or induce or attempt to solicit, encourage, or induce any (A) current employee, marketing agent, or consultant of the Company to terminate his or her employment, agency, or consultancy with the Company or any (B) prospective employee with whom the Company has had discussions or negotiations within six months prior to the Employees termination of employment not to establish a relationship with the Company, (ii) induce or attempt to induce any current customer to terminate its relationship with any of the Company or (iii) induce any potential customer with whom the Company has had discussions or negotiations within six months prior to the Employees termination of employment not to establish a relationship with the Company. |
3. | Confidentiality |
3.1 | The Employee recognizes that he is being hired in a position of trust and confidence with the Company and will in the course of his employment with the Company, be exposed to various items of secret and confidential information that are proprietary to the Company. The Employee acknowledges that the Company needs to protect such secret and confidential information, covenants to hold any such information in trust for the Company and undertakes not to disclose such information to any third party. |
3.2 |
The Employee represents that his performance of the terms of this Agreement and his employment with the Company does not and will not breach any agreement to keep in confidence information previously acquired by him in confidence from any third party. The Employee has not entered into, and agrees not to enter into, any agreement in conflict with this Agreement or which in any way prohibits his performance of or restricts his ability to perform his obligations under this Agreement. The Employee has not brought, and agrees he/she will not bring, with him/her to the Company for use in his/her employment with the Company any |
materials or documents of a former employer or any other person or entity for whom he/she has provided services (paid or unpaid) that are not generally available to the public unless he/she has obtained express written authorization from the former employer or other person or entity for whom he/she has provided such services for their possession and use. |
4. | Intellectual Property |
4.1 | The Employee acknowledges that ownership of, and all right, title, and interest in, all the trademarks, trade names, brand names, patents, designs, domain names and other intellectual property rights created by the Employee expressly for the Company ( Intellectual Properties ) shall vest in the Company. |
4.2 | The Employee expressly agrees that all Intellectual Properties created by the Employee expressly for the Company shall be a work for hire under the laws of any jurisdiction. In any event, the Employee hereby transfers and shall be deemed to have assigned in favour of the Company, all rights, title and interest in and to all the Intellectual Properties, together with the rights to sublicense or transfer any and all rights assigned hereunder to third parties, in perpetuity as and when the same come into existence. The Employee shall assist and cooperate with the Company in perfecting the Companys rights in the Intellectual Properties. |
4.3 | The Employee shall not during the continuation of this Agreement or thereafter, divulge or make use of any trade secret or confidential information concerning the business of the Company or any of its dealings, transactions and affairs or any information concerning any of its suppliers, agents, distributors or customers which the Employee possesses or comes into possession while in the employment of the Company or which he may make or discover while in the service of the Company and the Employee shall also use his best endeavour to prevent any other person from doing so. All data, documents, plans, drawings, photographs, reports, statements, correspondence, etc. and technical information, know-how and instructions as well as business details or commercial policies that pass to the Employee or which come to the Employees knowledge shall be treated as confidential and the Employee shall be bound to keep secret all such confidential matters including papers and documents, computer floppies, CDs containing the same and shall not disclose, communicate, reproduce or distribute the same or copies thereof to anyone except in the course of the rightful discharge of his duties as the chief executive officer of the Company. |
4.4 | The Employee represents and warrants that he/she will keep all Intellectual Properties created by the Employee expressly for the Company, in strict confidence and shall use the same only for the purpose of the business and benefit of the Company and for no other purpose, except with prior written consent of the Company. |
4.5 | The Employee further represents and warrants that all the Intellectual Properties created by the Employee expressly for the Company are original, and that the Employee possesses all rights necessary to effectuate the transfer of the rights as contemplated above. Nothing contained herein shall apply in the event of any innocent infringement. |
4.6 | The Employee shall forthwith communicate to the Company and transfer to it the exclusive benefits of all inventions, processes, improvements, and any other discoveries which the Employee may make or discover in the course of his association with the Company, relating to any trade or business of the Company and will give full information as to the exact mode of working and using the same and also all such explanations and instructions to the officers and workmen of the Company as may be necessary to enable them to work effectively and will at the expense of the Company furnish it with all necessary plans, drawing and models. |
4.7 | The Employee expressly agrees that all Intellectual Properties created by the Employee expressly for the Company shall be under a contract of service. In consideration of his employment with the Company, the Employee hereby transfers and shall be deemed to have assigned in favour of the Company, all rights, title and interest in and to all the Intellectual Properties, together with the rights to sublicense or transfer any and all rights assigned hereunder to third parties, in perpetuity. The Employee agrees that such assignment shall be perpetual, worldwide and royalty free. The Employee agrees that notwithstanding the provisions of Section 19(4) of the Copyright Act, 1957, such assignment in so far as it relates to copyrightable material shall not lapse nor the rights transferred therein revert to the Employee, even if the Company does not exercise the rights under the assignment within a period of one year from the date of assignment. The Employee acknowledges and agrees that he shall waive any right to and shall not raise any objection or claims to the Copyright Board with respect to the assignment, pursuant to Section 19A of the Copyright Act, 1957. The Employee shall assist and cooperate with the Company in perfecting the Companys rights in the Intellectual Properties. |
4.8 | The Employee shall, whenever requested so to do by the Company whether during or after the termination of his employment hereunder, at the cost of the Company execute and sign any and all applications, assignments and other instruments which the Company may deem necessary or advisable in order to obtain protection for the aforesaid improvements, inventions and discoveries in such countries as the Company may direct and to vest in the Company the whole, right, title and interest therein. |
5. | Termination |
5.1 | The term of the Employees employment with the Company shall commence from November 1, 2008 and shall continue until termination in accordance with this clause 5 of this Agreement. |
5.2 | Notwithstanding anything contained in this Agreement, the Company shall be entitled to terminate this Agreement forthwith in the event of: |
(a) | any breach of integrity, act of dishonesty, embezzlement or any misconduct by the Employee or in case of breach of the terms, conditions or stipulations contained in this Agreement, by the Employee; |
(b) | the Employees willful refusal, or willful or negligent failure, to perform duties reasonably assigned by the Company after being provided notice by the Company and a reasonable opportunity to cure such breach in a manner satisfactory to the Company; |
(c) | the Employee being convicted of any criminal offence or committing fraud against, or the misappropriation of material property belonging to the Company; |
(d) | the Employee breaching in any material respect the terms of this Agreement, any organizational documents of the Company, or any other material agreement of the Company, and failing to cure such breach in a manner satisfactory to the Company within ten (10) days after receipt of notice by the Company; |
(e) | any material violation by the Employee of the Companys policies prohibiting harassment of employees, any violation by the Employee of an engagement policy of the Company which results in material liability to the Company, or any act or omission which materially damages the Companys business or assets; or |
(f) | any other action or inaction on the part of the Employee that would constitute adequate cause for termination pursuant to applicable law and regulations |
5.3 | This Agreement may be terminated by the Company or the Employee upon rendering two months prior notice or two months salary in lieu of the notice. In case the final settlement is less than the amount due to the Employee, the Employee will have to pay the balance amount to the Company before exit of the Employee from the Company. |
5.4 | The Employee shall hand over all documents and materials constituting the property of the Company, including any proprietary and confidential information, which may be in the possession of the Employee at the time of termination of this Agreement. |
6. | Remuneration |
The Employee shall, for his services as Managing Director of the Company, receive a remuneration amounting to Rs. 60,00,000/- (Rupees Sixty lakhs only) per annum along with other statutory and non-statutory benefits as decided by the Company from time to time.
7. | Miscellaneous |
7.1 | The waiver by either Party hereto of a breach of any provision of this Agreement by the other Party shall not operate or be construed as a waiver of any subsequent breach by the waiving Party. |
7.2 | This Agreement shall be governed by and construed and enforced in accordance with the laws of India. |
7.3 | If any provision of this Agreement as applied to either Party or to any circumstances shall be adjudged by a Court of competent jurisdiction to be void or unenforceable, the same shall in no way affect any of the other provisions of this Agreement or the validity or enforceability of this Agreement. |
7.4 | Any dispute shall be resolved by reference to the court of competent jurisdiction over the subject matter of the dispute. The Parties hereby agree to submit themselves to the jurisdiction of the courts in New Delhi. |
Mr. Inderpreet Wadhwa |
Azure Power India Private Limited |
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/s/ Inderpreet Wadhwa |
/s/ Harkanwal Singh Wadhwa |
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Name: | Harkanwal Singh Wadhwa | |||||
|
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|
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Title: | Director | |||||
[/s/ ILLEGIBLE] |
[/s/ ILLEGIBLE] |
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Witness | Witness | |||||
[ILLEGIBLE] | [ILLEGIBLE] |
Exhibit 10.6
5th May 2011
Mr. Surendra Kumar Gupta
[Address]
SUB: APPOINTMENT LETTER
Dear Surendra:
With reference to your application and subsequent interviews you have had recently regarding your appointment with Azure Power India Pvt. Ltd. having its registered office at New Delhi (hereinafter referred to as Azure which shall mean and include the said company, its executors, assigns and successors -in -interest).
We are pleased to offer you a position in our organization on the following terms and conditions.
1. | Appointment/Designation |
You are being appointed as the Chief Financial Officer w.e.f 16 th May 2011.
WHEREAS
| The Company is engaged with the business of generation and production of solar energy and electricity. |
| The Employee has represented to the Company that he/she has the requisite knowledge, expertise, experience and skill to render the services in relation to the requirements of such person under the terms of this Agreement. |
| The Company has, based on the aforesaid representations made by the Employee, agreed to retain the services of the Employment for the consideration and subject to the terms and conditions herein contained. |
2. | Salary |
You will be entitled to a consolidated salary of Rs.50,00,000/annum (Inclusive of a 20% performance based incentive) which includes salary and other allowances/reimbursements as prescribed for the post. Please note that all payments will be strictly as per the rules and regulations as defined under the Income Tax Act, 1961 and other related statutes, and any subsequent modifications. The management reserves the right to merge, bifurcate or modify the salary structure at any time at its sole discretion keeping the CTC same.
You will be entitled to a company car as per the Company Car Policy.
ESOP: Subject to the approval of the board you will be granted 600 shares of ESOP as per company stock grant policy.
Performance based linked up to 20% (of Total CTC) will be based on the Individual and Company annual Performance and reviewed by the Management.
3. | Performance Management/Appraisals |
Performance management/Appraisals are designed to foster mutual understanding about job responsibilities, job interest and career objectives between the employees and their supervisors, share employee concerns and problems set mutually agreeable goals and targets for the nest review period.
4. | Job Responsibilities |
You will be a part of the Accounts & Finance Department at Azure. Your duties and responsibilities will be discussed with you in detail at the time of joining and may be re-assigned to you from time to time. You might be assigned additional responsibilities as and when required. We will continuously monitor your work performance to ensure that you remain challenged and that our work program brings out the best in you. We look forward to deliverables that fully attest to your background and qualifications. You shall abide by such rules and regulations, directions, instructions or orders of the Company, in this regard, as are issued or communicated from time to time.
Azure Power India Private Limited, No. 8, LSC, Madangir, Pushp Vihar, New Delhi-110062
Ph. : 011-49409800 Email : info@azurepower.com Web : www.azurepower.com
5. | Medical Fitness |
Your appointment and continuance will be subject to your being medically fit for job/work and the management will have the right to get you examined from the companys Medical Practioner, whose finding shall be final and binding upon you.
6. | Transferability |
1) | Your services may be transferred from one job/position/location to another, from one department to another or from the appointing company to any other company /division of Azure, whether existing at present or to be set up in future anywhere in India or abroad. |
2) | In such a case, you will be governed by the rules, regulation, and orders as applicable in the establishment to which you have been transferred, including conditions and rules covering Working Hours, Leave, Holidays Salary, Allowances and perquisites. |
7. | Leaves |
All leaves shall be in accordance with the Companys policy and would require prior sanction / approval of the sanctioning authority. In case of sick leave or casual leave or any other leave taken under unforeseen circumstances, for which prior approval is not possible, immediate information by telephone will be required to be sent to the sanctioning authority. The necessary written approval is to be taken on your next working day and mailed to HRD. In case you fail to do so, Management will have the right to take action against you under the rules of the Company.
8. | Probation |
You will be on probation for a period of twelve months from the date of your appointment. Please note that the following special Terms and Conditions of service are applicable to you only during the period of your Probation:
1) | Your transition into post-probation services for the Company is fully subject to and dependent on the satisfactory performance during the period of your Probation. Lack of such satisfaction of Azure from your services, may and should cause termination of your employment as detailed herein. |
2) | During the period of your Probation your service may be terminated at the discretion of the Company, without assigning any reason, by giving one months notice in writing or salary in lieu of the notice. During this period you may resign your appointment by giving one months notice in writing to the company or salary in lieu of the notice period. |
3) | During the period of your Probation only the fixed salary is taken into consideration for the calculation of the salary in lieu of the notice period i.e. all full & final settlements |
4) | You will be confirmed in the services of the Company after satisfactory performance during probation, and you will not be deemed to have been confirmed unless you are informed In writing to that effect. |
5) | Your period of Probation may be modified at the discretion of Azure, depending on your performance and other factors. |
9. | Termination from Service |
If you shall be found engaged in or abetting immoral, illegal or other activities against the interests of the organization or its employees or found absent for more than seven consecutive working days without prior permission in writing of the management or If you proceed on leave without prior sanction or overstay the sanctioned leave without proper intimation and/or approval, at the discretion of the Azure management, your service may automatically come to an end and a presumption will be drawn that you have abandoned the employment/service on your own accord by losing lien on the post and under such circumstances you will lose all rights to any compensation or other payables due to you after proper adjustments.
10. | Relinquishing Service / Relieving |
After confirmation both the parties to the contract may terminate the contract of employment by giving six months notice in writing or salary in lieu of the notice period. The organization has a right to deduct the amount from the salary or any other payable dues whatsoever. After confirmation the fixed salary is taken into consideration for the calculation of the salary in lieu of the notice period i.e. all full and final settlements.
11. | Job Assignments |
You may, during the course of your employment, be given any assignment that may derive from the Companys business needs as defined from time to time by your reporting manager and the Azure management. Such management shall give you any assignment that they, in their subjective judgment, feel is suited to your background, qualifications or experience. You will not refuse to carry out any assignment solely on the grounds that it has not been part of your usual duties during your employment. You will also not be entitled to any additional compensation for carrying out any job, which in the opinion of the Management is equivalent to the job you have been assigned earlier.
12. | Other General Terms of Employment |
1) | The employee shall not be associated in any whatsoever with any competitor company for. a period of at least 12 months after departure from Azure |
2) | The Employee shall while employed with the Company devote his entire time; attention and abilities to the business of the Company. However, the Employee shall be entitled to devote time to such activities or engagements (being inter alia in the nature of product sales/ development etc.) that are not only beneficial to the Company but are also carried out in a manner that is not detrimental to the interests of the Company, and which are undertaken with the prior approval of the board of directors of the Company. The Employee agrees to use his best efforts in the performance of his duties and responsibilities and shall perform all of his duties with due care, skill and diligence. |
3) | The Companys will impart to you training, and may expose you to vital, significant business information, and trade secrets, divulgence thereof could adversely affect the interests of the Company. Any and all Information you are exposed to during your probation period, training and/or employment and thereafter that is related to the Companys business, operation, commercial, technical and/or other interests, whether in oral or in written form, including but not limited to documentation, scientific, designs, software, prototypes, product descriptions, technical or business information, ideas, discoveries, inventions, specifications, formulas, processes, programs, plans, drawings, models, network configuration and rights-of-way, requirements, standards, financial and non-financial data, marketing, trade secrets, know-how, customer lists, prices, as well as any and all intellectual and industrial property rights contained therein and/or in relation thereto shall be considered as Strictly Confidential. Hence you will not, during employment with the Company in terms of this letter (except so far as may be proper in the ordinary course of business and in the interest of the Company or at any time thereafter) divulge any information in any way whatsoever relating to the Company or its business and/or any of its customer and/or any other information, data and or any sketches, drawings, specifications etc. which may come to your knowledge relating to the Companys business in the course of your employment. You shall always maintain strict secrecy regarding any technical, commercial, operational or other business Information gained or acquired by you or imparted to you in course of or after your employment. Any violation in this regard will make you liable for attendant consequential actions against you including termination without any further reference on the subject for which you will be solely responsible. |
4) | The assets/data given to you are exclusive rights of the organization; you are only given the mere authorization to utilize the assets/data on behalf and for the organization. All data created by you during your association with the company are also exclusive rights of the company. Upon resignation it Is your primary duty to hand-over all these assets/data to your reporting manager assigned by the company and obtain the necessary clearances from your department and subsequently the HRD. In case of any tampering or illegal usage of these assets/data or nonsubmission of the assets/data upon resignation, the company reserves all rights to initiate appropriate legal actions against you and you will automatically loose all rights to any dues payable to you. |
5) | All discoveries, inventions and designs of equipment and methods, which you may cause or come across or come In possession of during the course of your employment, shall be the property of the company. |
6) | In case Azure imparts High cost training to the employee, the employee shall be required to enter into a written agreement with Azure prior to the training and only after the agreement has been signed will the employee be permitted to proceed for the training. |
7) | The terms stated in clauses 12.1 and 12.2 shall survive the termination of your employment (whether willingly or unwillingly) for a period of three (3) years. |
8) | You will not, during or at any time after the termination of your employment with this company, either on your own or on behalf of any other person, firm or company canvass, solicit or entice any of the companys customer or any other employee working in the company. In case you indulge in such type of activities, this will be treated as a breach of the terms & conditions of this letter of appointment. |
9) | You will not carry on or be concerned with any business on your own or on behalf of anyone else directly or indirectly, nor shall you take on any other business or be associated with any other business with or without remuneration during the course of your employment with this company. In case you holding any other position in any company, firm, entity you are required to immediately bring it to the notice of the company and relinquish such a position as if told by the company to do so. You shall abide by such rules and regulation of the company as may be there in force from time to time. You shall at all times maintain absolute integrity and devotion to duty and conduct yourself in a manner conducive to the best interest, credit, and prestige of the company. You shall not, at any time, work against the interest, credit, and prestige of the company or commit any act, which Is unbecoming of an employee. Any act against the basic and universally accepted understanding or any violation of any of these norms of behavior on your part will be viewed as misconduct and management will be competent to take disciplinary against you. |
12) | You shall not enter into any financial relationship or receive any financial help or accept any favors or assistance of any kind, except in connection with and for the benefit the Companys business, from any suppliers, customers, and dealers of the company. |
13) | This appointment will cease immediately, if any of the statement made or particulars given in your application/employment form are found to be false or incorrect in material particulars. |
14) | This appointment letter along with the Annexure shall form the contract of employment between you and Azure (Azure or The Company). |
15) | Failing to observe any of the condition of service, including those specified in the rules will amount to the misconduct of Willful disobedience of any lawful and reasonable order of a superior. |
16) | The Company with the consent of the employee has the right to vary, amend and modify an item of the pay packet without adversely affecting the total pay packet |
17) | This appointment is based on the information given by you to us in your application/employee data form and during you evaluation process and shall be considered null and void of any material error/suppression in the companys opinion is discovered at any point of time. |
18) | In case of any change in the address during the course of your employment it shall be your duty to intimate the same to the management/personnel department in writing within three days from such change in address. |
19) | All communications sent to you by the mgt. At your last given address shall be deemed to have been delivered to you at correct address. |
20) | You will be responsible for the safe custody of the tools, equipment, documentation and any other items entrusted to you and in case of any damage or loss, the management shall have the right to deduct the same from your salary/wages besides taking any other disciplinary action as may deemed fit and proper. |
21) |
In case of theft, fraud, dishonesty, drunkenness, fighting, riotous or disorderly behavior or conduct, smoking and spitting on the premises, gambling, damaging or destroying records, files papers or other information (whether in tangible or non-tangible form), or properties of the company, impertinence, in subordination, threatening, assaulting or intimidating any superior officer/ manager/ Director, holding or organizing or taking part in any meeting, demonstration, illegal strike, unlawful and unjustified cessation of work or adopting go slow tactics or refusal of work or attempt to incite or intimidate or force other workmen to go on strike in advance, habitual negligence in discharge of duties, using insulting words or abusive languages towards the superior/manager, vulgarity, molestation of other employees, teasing and cutting indecent jokes or making indecent remarks towards other employees and any other act/omission/offence constituting misconduct is alleged against you in accordance with the provision of the standing |
orders/service Rules of the company you may be placed under suspension pending enquiry and shall not be entitled to any form of salary/wages during the period of such suspension. |
22) | If during the suspension enquiry or in accordance with the report of enquiry office your misconduct will be proved or you will be found guilty, your services will be liable to be terminated without giving notice or compensation or wages in lieu of notice. |
23) | You shall retire on attaining the age of 60 years; however extension of the appointment is performance based and subject to management discretion |
13. | Verification |
This appointment is based on the details provided by you to the Company. Your appointment is subject to satisfactory verification of your character, antecedents, and testimonials.
You will be required to submit the following prior to your first day of Employment with the Company
| Copy of pay slip of your last month of employment |
| Copy of current/last employers Appointment Letter |
| Copy of all Degree and/or Professional Course certificates |
| Photocopy of Passport /Driving License/PAN card |
| Relieving Letter from last employer |
| 4 Passport size photographs |
14. | Joining |
You shall take up your duties on or before the 16 th of May 2011. You will be reporting to the C.E.O. and will be posted at New Delhi.
This letter is being sent to you in duplicate. Please affix your signature on the duplicate copy in token of your acceptance of the salary, perks & benefits as well as all other terms and conditions contained in this letter and return the same to us for our records within seven days from issue of this letter.
We look forward to your favorable reply and to working with you at Azure
Wishing you all the best...
Yours Sincerely
/s/ H.S Wadhwa
H.S Wadhwa
C.O.O.
I Surendra Kumar Gupta hereby declare that I had fully read and understood the terms & conditions enumerated above to the best of my knowledge and belief.
I hereby agree & accept the all the above terms and conditions.
/s/ Surendra Kumar Gupta | ||
Signature of the Employee | ||
Name: | Surendra Kumar Gupta | |
Date: | 5th May, 2011 |
Annexure 1
Salary Details
Name: |
Surendra Kumar Gupta | |||
Designation: |
Chief Financial Officer |
Particulars |
Amount per
month (INR) |
Annual Amount
(INR) |
||||||
Basic Salary |
2,21,437 | 26,57,247 | ||||||
House Rent Allowance |
1,09,066 | 13,08,793 | ||||||
Conveyance Allowance |
800 | 9,600 | ||||||
Medical Reimbursement |
1,250 | 15,000 | ||||||
Employers PF Cont. |
780 | 9,360 | ||||||
Variable component |
| 10,00,000 | ||||||
GROSS SALARY |
3,33,333 | 50,00,000 |
Non-Disclosure Agreement
This agreement made on the 5 th of May in the year 2011 by and between Azure Power India Pvt. Ltd. a company incorporated under the Companies Act, 1956 and having its Registered Office at No. 8, LSC, Madangir, Pushp Vihar 110062 represented by its Director Mr. Inderpreet Wadhwa hereinafter referred to as Azure (which expression shall unless excluded by or repugnant to the subject or context be deemed to include its successors and assigns) of the ONE PART: AND Mr. Surendra Kumar Gupta, S/o. Late Mr. Krishan Lal Gupta aged about 58 years residing at [Address], hereinafter called the RECIPIENT (which expression shall unless excluded by or repugnant to the subject or context be deemed to include his/her heirs, executors, administrators, representatives and permitted assigns) of the OTHER PART.
WHEREAS Azure has been incorporated to carry on businesses of generation and production of solar energy and electricity
WHEREAS the RECIPIENT is employed as the chief Financial Officer in Azure AND WHEREAS for achieving its objectives, it is essential for Azure that any information related to its business or in any way concerning it, be treated as proprietary and kept strictly confidential by any party to whom such information is disclosed or made known.
AND WHEREAS Azure has employed the RECIPIENT as the Chief Financial Officer and in contemplation of such relationship, Azure expects to disclose certain confidential trade, business and scientific information to the RECIPIENT which Azure considers proprietary.
AND WHEREAS Azure requires that the RECIPIENT shall enter into a Non-Disclosure Agreement with Azure prior to commencement of employment by the RECIPIENT as Azure shall be disclosing certain confidential trade, business, technical, scientific and other information to it, which Azure considers proprietary.
AND WHEREAS the RECIPIENT acknowledges that such confidential information is valuable and agrees that the same shall be kept confidential and non-circumvented by it / him.
NOW THEREFORE THIS AGREEMENT WITNESSETH AS FOLLOWS:
Article 1. Confidential Information
The term Confidential Information shall mean all information (including but not limited to graphic material, specifications and other technical and business information and strategies) received by the RECIPIENT under the terms and conditions of this Agreement whether or not identified either in writing or orally as Confidential at the time of its disclosure.
Article 2. Use of Confidential Information
2.1. | The RECIPIENT shall hold in trust and confidence for Azure all Confidential Information of Azure and agrees not to disclose such information to any third party anywhere in the world or use such information for any purpose other than that for which such information has been disclosed to the RECIPIENT by Azure for a period of at least Three (3) years following the disclosure thereof. The RECIPIENT shall not make any copies of such Confidential Information of Azure. |
2.2 | The RECIPIENT agrees that all Confidential Information disclosed by Azure shall remain the property of Azure and shall not be disclosed by the RECIPIENT. |
2.3 | The RECIPIENT will not make any other use of the Confidential Information anywhere in the world except as expressly authorized by this Agreement or subsequently authorized in writing by Azure. |
2.4. | The RECIPIENT agrees to safeguard the disclosed Confidential Information by using reasonable efforts, consistent with those used in the protection of its own confidential / proprietary information of a similar nature, to prevent its disclosure to others. |
2.4 | It is agreed and understood between the parties that all the rights to the trade mark, copy right, patents, design and know- how (herein after referred to as IPR) are and shall remain the exclusive property of the Azure. |
Article 3. Non-Competition
3.1 | Any Confidential Information coming to the knowledge of the RECIPIENT or by virtue of his employment or course of his employment in Azure is strictly confidential and the RECIPIENT shall not directly or indirectly associate himself with third party to compete in any way anywhere in the world, with the entire range of business, concepts, products, services and intellectual properties of Azure or its clients. |
3.2 | The RECIPIENT agrees not to copy or reverse engineer, or attempt to derive the composition or underlying information of such proprietary information. |
Article 4. Non-Circumvention
The RECIPIENT further and irrevocably agrees not to circumvent, avoid, by pass or obviate Azure directly or indirectly, anywhere in the world and avoid payment of commission and sharing of profits, fees in any transaction, with any candidate, corporation, partnership or individual or introduced individual, in connection with any transaction, project, addition or renegotiation, renewal, extension, rollover, amendments, new contracts or agreements, parallel or collateral contracts or agreements or third party agreements in any manner whatsoever.
Article 5. Measures to Prevent Disclosure
5.1 | The RECIPIENT shall take all necessary measures to prevent any disclosure of the Confidential Information. |
5.2. | The RECIPIENT warrants and represents that it shall hold the Confidential Information securely and, that it shall not disclose any Confidential Information to any third party anywhere in the world. |
5.3. | The RECIPIENT shall maintain adequate facilities and procedures to prevent the loss of any confidential documents, information or work products. In the event of any loss the RECIPIENT shall notify Azure immediately. |
5.4 | The RECIPIENT shall under no circumstance, disclose Confidential information to contractors, subcontractors, agents or any other third party without first obtaining written consent from Azure or its duly authorized representative, except in case of its authorised employees. |
5.4. | The RECIPIENT shall return to Azure all Confidential Information of Azure including all copies, translations, conversions, modifications and derivations thereof, upon completion of the need for the same or on expiry or termination of the arrangements between the parties. If such information is needed to be retained for a longer period, the RECIPIENT must obtain a specific and prior time extension in writing from {COMPANY FIRST NAME}. |
Article 6. Possession of material for execution of duties
The RECIPIENT may be provided equipment by Azure such as mobile telephone, laptop, Personal Computer to execute his job effectively. These equipment may be the property of Azure or client/s of Azure. In the event of the severance of the employment the RECIPIENT shall return the said material in his position, immediately.
Article 7. Entire Agreement
This Agreement constitutes the sole and entire agreement between the parties relating to the subject matter and supersedes all prior agreements or understandings, expressed or implied, between the parties hereto.
Article 8. Exceptions
Azure agrees that the foregoing obligations shall not apply with respect to information that
(i) | It was in the possession of the RECIPIENT or known by him/her prior to receipt from the Azure, or It was rightfully disclosed to the RECIPIENT by another person without restriction, or |
(ii) | it was independently developed by the RECIPIENT without access to such Proprietary Information, or |
(iii) | it is required to be disclosed pursuant to any statutory or regulatory authority or court order, provided the RECIPIENT has given the Azure prompt notice of such requirement and the opportunity to contest it. |
(iv) | Azure agrees that under any circumstances, the foregoing obligations shall not be applicable after expiry of three (3) years from the date of disclosure of such proprietary information provided by Azure to the RECIPIENT |
Article 9. Effective Date
This Agreement shall become effective on its execution with immediate effect.
Article 10. Modification
No modification or amendment of any of the provisions of this Agreement shall be binding unless it is in writing and mutually agreed.
Article 11. Applicable Law
This Agreement shall be governed according to the substantive laws in India.
Articles 12. Jurisdiction
The Courts at Delhi shall have exclusive jurisdiction.
Article 13. Enforcement
13.1. | The RECIPIENT acknowledges that any breach or threatened breach of this Agreement shall cause Azure irreparable harm and Azure shall be entitled to take action / institute proceedings in any jurisdiction in the world with any authorities against the RECIPIENT and to enforce any damages, claim etc., that Azure may have against the RECIPIENT. |
13.2. | Without limitation to Azure rights set forth above, any dispute arising out of or in connection with this Agreement which cannot be resolved by the parties acting in good faith, shall be finally settled and determined, by arbitration in accordance with the Arbitration and Conciliation Act, 1996. The venue of arbitration shall be Delhi only. |
IN WITNESS WHEREOF the parties hereto have, themselves or through their duly authorized representatives, set and subscribed their respective hands the day, month and year first above written. SIGNED AND DELIVERED for and on behalf of Azure India Pvt. Ltd., duly represented by its C.O.O.
For AZURE POWER (INDIA) PVT.LTD. | ||||
/s/ H.S Wadhwa | ||||
/s/ Surendra Kumar Gupta | H.S Wadhwa | |||
Signature of Employee | C.O.O. |
Exhibit 10.7
February 1, 2013
Mr. Sandeep Chopra
[Address]
SUB: APPOINTMENT LETTER
Dear Sandeep:
With reference to your application and subsequent interviews you have had recently regarding your appointment with Azure Power India Pvt. Ltd. having its registered office at New Delhi (hereinafter referred to as Azure which shall mean and include the said company, its executors, assigns and successors-in-interest).
We are pleased to offer you a position in our organization on the following terms and conditions.
1. | Appointment/Designation |
You are being appointed as Head Strategy w.e.f 1 st May 2013. (May 6, 2013)
WHEREAS
| The Company is engaged with the business of generation and production of solar energy and electricity. |
| The Employee has represented to the Company that he/she has the requisite knowledge, expertise, experience and skill to render the services in relation to the requirements of such person under the terms of this Agreement. |
| The Company has, based on the aforesaid representations made by the Employee, agreed to retain the services of the Employment for the consideration and subject to the terms and conditions herein contained. |
2. | Salary |
You will be entitled to a Fixed Salary of Rs.62 Lacs/ annum, additionally a Variable component which is upto 16 Lacs/annum. Which includes salary and other allowances/ reimbursements as prescribed for the post. Please note that all payments will be strictly as per the rules and regulations as defined under the Income Tax Act, 1961 and other related statutes, and any subsequent modifications. The management reserves the right to merge, bifurcate or modify the salary structure at any time at its sole discretion keeping the CTC same.
ESOP: Subject to the approval of the board you will be granted 1300 shares of ESOP as per company stock grant policy.
You, your spouse and two children will be covered under the Mediclaim policy provided by the company.
The Personal accident policy provided by Azure for you accords cover upto Rs. 50 Lacs
3. | Performance Management/Appraisals |
Performance management/Appraisals are designed to foster mutual understanding about job responsibilities, job interest and career objectives between the employees and their supervisors, share employee concerns and problems set mutually agreeable goals and targets for the nest review period.
4. | Job Responsibilities |
You will be a part of the Business Development & Finance and Accounts Department at Azure. Your responsibilities will include, however not be limited to:
| Research of existing business models for Solar Power generation world-wide. |
| Research of policy frame works and incentives available in India for Solar Power development |
| Development of profitable business models for Solar Power Generation in grid connected and off-grid markets in India. |
| Identification and advocacy of policy and financing hurdles for Solar Power development. |
| Pilot implementation of innovative business ideas in both grid and off-grid markets. |
| Development of business plans for successful pilots for scale-up of the new business line. |
Your duties and responsibilities will be discussed with you in detail at the time of joining and may be re-assigned to you from time to time. You might be assigned additional responsibilities as and when required. We will continuously monitor your work performance to ensure that you remain challenged and that our work program brings out the best in you. We look forward to deliverables that fully attest to your background and qualifications. You shall abide by such rules and regulations, directions, instructions or orders of the Company, in this regard, as are issued or communicated from time to time.
5. | Medical Fitness |
Your appointment and continuance will be subject to your being medically fit for job/work and the management will have the right to get you examined from the companys Medical Practioner, whose finding shall be final and binding upon you.
6. | Transferability |
1) | Your services may be transferred from one job/position/location to another, from one department to another or from the appointing company to any other company/ division of Azure, whether existing at present or to be set up in future anywhere in India or abroad. |
2) | In such a case, you will be governed by the rules, regulation, and orders as applicable in the establishment to which you have been transferred, including conditions and rules covering Working Hours, Leave, Holidays Salary, Allowances and perquisites. |
7. | Leaves |
All leaves shall be in accordance with the Companys policy and would require prior sanction/ approval of the sanctioning authority. In case of sick leave or casual leave or any other leave taken under unforeseen circumstances, for which prior approval is not possible, immediate information by telephone will be required to be sent to the sanctioning authority. The necessary written approval is to be taken on your next working day and mailed to HRD. In case you fail to do so, Management will have the right to take action against you under the rules of the Company.
8. | Termination from Service |
If you shall be found engaged in or abetting immoral, illegal or other activities against the interests of the organization or its employees or found absent for more than seven consecutive working days without prior permission in writing of the management or if you proceed on leave without prior sanction or overstay the sanctioned leave without proper intimation and/or approval, at the discretion of the Azure management, your service may automatically come to an end and a presumption will be drawn that you have abandoned the employment/service on your own accord by losing lien on the post and under such circumstances you will lose all rights to any compensation or other payables due to you after proper adjustments.
Further, notwithstanding anything contained in this Agreement, the Company shall be entitled to terminate this Agreement forthwith in the event of:
8.1 any breach of integrity, act of dishonesty, embezzlement or any misconduct by the Employee or in case of breach of the terms, conditions or stipulations contained in this Agreement, by the Employee;
8.2. the Employees disobedience, willful refusal, willful or negligent failure, or unsatisfactory performances to perform duties reasonably assigned by the Company after being provided notice by the Company and a reasonable opportunity to cure such breach in a manner satisfactory to the Company;
8.3. the Employee being convicted of any criminal offence or committing fraud against, or the misappropriation of material property belonging to the Company;
8.4. the Employee breaching in any material respect the terms of this Agreement, any organizational documents of the Company, or any other material agreement of the Company, and failing to cure such breach in a manner satisfactory to the Company within ten (10) days after receipt of notice by the Company;
8.5. any material violation by the Employee of the Companys policies prohibiting harassment of employees, any violation by the Employee of an engagement policy of the Company which results in material liability to the Company, or any act or omission which materially damages the Companys business or assets; or
8.6. any other action or inaction on the part of the Employee that would constitute adequate cause for termination pursuant to applicable law and regulations.
9. | Relinquishing Service / Relieving |
Both the parties to the contract may terminate the contract of employment by giving six months notice in writing or salary in lieu of the notice period. However, if you choose to terminate this relationship, the company reserves the right to relive you at its sole discretion before the expiry of the notice period without any liability towards the payment of salary/emoluments etc.
1. | After confirmation if the management perceives the services of the employee are undesirable for the organization they may be terminated on an immediate basis without assigning any reason whatsoever. In this situation the employee will not be entitled to any salary/wages/expense reimbursement whatsoever. |
2. | The basic salary is taken into consideration for the calculation of the salary in lieu of the notice period i.e. all full and final settlements. |
10. | Job Assignments |
You may, during the course of your employment, be given any assignment that may derive from the Companys business needs as defined from time to time by your reporting manager and the Azure management. Such management shall give you any assignment that they, in their subjective judgment, feel is suited to your background, qualifications or experience. You will not refuse to carry out any assignment solely on the grounds that it has not been part of your usual duties during your employment. You will also not be entitled to any additional compensation for carrying out any job, which in the opinion of the Management is equivalent to the job you have been assigned earlier.
11. | Other General Terms of Employment |
1) | The employee shall not be associated in any whatsoever with any competitor company for a period of at least 12 months after departure from Azure. |
2) | The Employee shall while employed with the Company devote his entire time; attention and abilities to the business of the Company. However, the Employee shall be entitled to devote time to such activities or engagements (being inter alia in the nature of product sales/ development etc.) that are not only beneficial to the Company but are also carried out in a manner that is not detrimental to the interests of the Company, and which are undertaken with the prior approval of the board of directors of the Company. The Employee agrees to use his best efforts in the performance of his duties and responsibilities and shall perform all of his duties with due care, skill and diligence. |
3) | The Companys will impart to you training, and may expose you to vital, significant business information, and trade secrets, divulgence thereof could adversely affect the interests of the Company. Any and all information you are exposed to during your probation period, training and/or employment and thereafter that is related to the Companys business, operation, commercial, technical and/or other interests, whether in oral or in written form, including but not limited to documentation, scientific, designs, software, prototypes, product descriptions, technical or business information, ideas, discoveries, inventions, specifications, formulas, processes, programs, plans, drawings, models, network configuration and rights-of-way, requirements, standards, financial and non-financial data, marketing, trade secrets, know-how, customer lists, prices, as well as any and all intellectual and industrial property rights contained therein and/or in relation thereto shall be considered as Strictly Confidential. Hence you will not, during employment with the Company in terms of this letter (except so far as may be proper in the ordinary course of business and in the interest of the Company or at any time thereafter) divulge any information in any way whatsoever relating to the Company or its business and/or any of its customer and/or any other information, data and or any sketches, drawings, specifications etc. which may come to your knowledge relating to the Companys business in the course of your employment. You shall always maintain strict secrecy regarding any technical, commercial, operational or other business information gained or acquired by you or imparted to you in course of or after your employment. Any violation in this regard will make you liable for attendant consequential actions against you including termination without any further reference on the subject for which you will be solely responsible. |
4) | The assets/data given to you are exclusive rights of the organization; you are only given the mere authorization to utilize the assets/data on behalf and for the organization. All data created by you during your association with the company are also exclusive rights of the company. Upon resignation it is your primary duty to hand-over all these assets/data to your reporting manager assigned by the company and obtain the necessary clearances from your department and subsequently the HRD. In case of any tampering or illegal usage of these assets/data or non-submission of the assets/data upon resignation, the company reserves all rights to initiate appropriate legal actions against you and you will automatically loose all rights to any dues payable to you. |
5) | All discoveries, inventions and designs of equipment and methods, which you may cause or come across or come in possession of during the course of your employment, shall be the property of the company. |
6) | In case Azure imparts High cost training to the employee, the employee shall be required to enter into a written agreement with Azure prior to the training and only after the agreement has been signed will the employee be permitted to proceed for the training. |
7) | The terms stated in clauses 11.1 and 11.2 shall survive the termination of your employment (whether willingly or unwillingly) for a period of one (1) year. |
8) | You will not, during or at any time after the termination of your employment with this company, either on your own or on behalf of any other person, firm or company canvass, solicit or entice any of the companys customer or any other employee working in the company. In case you indulge in such type of activities, this will be treated as a breach of the terms & conditions of this letter of appointment. |
9) | You will not carry on or be concerned with any business on your own or on behalf of anyone else directly or indirectly, nor shall you take on any other business or be associated with any other business with or without remuneration during the course of your employment with this company. In case you holding any other position in any company, firm, entity you are required to immediately bring it to the notice of the company and relinquish such a position as if told by the company to do so. You shall abide by such rules and regulation of the company as may be there in force from time to time. You shall at all times maintain absolute integrity and devotion to duty and conduct yourself in a manner conducive to the best interest, credit, and prestige of the company. You shall not, at any time, work against the interest, credit, and prestige of the company or commit any act, which is unbecoming of an employee. Any act against the basic and universally accepted understanding or any violation of any of these norms of behavior on your part will be viewed as misconduct and management will be competent to take disciplinary against you. |
10) | You shall not enter into any financial relationship or receive any financial help or accept any favors or assistance of any kind, except in connection with and for the benefit the Companys business, from any suppliers, customers, and dealers of the company. |
11) | This appointment will cease immediately, if any of the statement made or particulars given in your application/employment form are found to be false or incorrect in material particulars. |
12) | This appointment letter along with the Annexure shall form the contract of employment between you and Azure (Azure or The Company). |
13) | Failing to observe any of the condition of service, including those specified in the rules will amount to the misconduct of Willful disobedience of any lawful and reasonable order of a superior. |
14) | The Company with the consent of the employee has the right to vary, amend and modify an item of the pay packet without adversely affecting the total pay packet |
15) | This appointment is based on the information given by you to us in your application/employee data form and during you evaluation process and shall be considered null and void of any material error/suppression in the companys opinion is discovered at any point of time. |
16) | In case of any change in the address during the course of your employment it shall be your duty to intimate the same to the mgt/personnel department in writing within three days from such change in address. |
17) | All communications sent to you by the mgt. At your last given address shall be deemed to have been delivered to you at correct address. |
18) | You will be responsible for the safe custody of the tools, equipment, documentation and any other items entrusted to you and in case of any damage or loss, the management shall have the right to deduct the same from your salary/wages besides taking any other disciplinary action as may deemed fit and proper. |
19) | In case of theft, fraud, dishonesty, drunkenness, fighting, riotous or disorderly behavior or conduct, smoking and spitting on the premises, gambling, damaging or destroying records, files papers or other information (whether in tangible or non-tangible form), or properties of the company, impertinence, in subordination, |
20) | threatening, assaulting or intimidating any superior officer/ manager/ Director, holding or organizing or taking part in any meeting, demonstration, illegal strike, unlawful and unjustified cessation of work or adopting go slow tactics or refusal of work or attempt to incite or intimidate or force other workmen to go on strike in advance, habitual negligence in discharge of duties, using insulting words or abusive languages towards the superior/manager, vulgarity, molestation of other employees, teasing and cutting indecent jokes or making indecent remarks towards other employees and any other act/omission/offence constituting misconduct is alleged against you in accordance with the provision of the standing orders/service Rules of the company you may be placed under suspension pending enquiry and shall not be entitled to any form of salary/wages during the period of such suspension. |
21) | If during the suspension enquiry or in accordance with the report of enquiry office your misconduct will be proved or you will be found guilty, your services will be liable to be terminated without giving notice or compensation or wages in lieu of notice. |
22) | You shall retire on attaining the age of 58 years. |
12. | Verification |
This appointment is based on the details provided by you to the Company. Your appointment is subject to satisfactory verification of your character, antecedents, and testimonials.
You will be required to submit the following prior to your first day of Employment with the Company
| Completed Application Form |
| Copy of pay slip of your last month of employment |
| Copy of current/last employers Appointment Letter |
| Copy of all Degree and/or Professional Course certificates |
| Photocopy of Passport /Driving License/PAN card |
| Relieving Letter from last employer |
| 4 Passport size photographs |
13. | Joining |
You shall take up your duties on or before the 1 st of May, 2013 solely at your own expenses and will be reimbursed on the scheduled date as per the company policy.
You will be reporting to the CEO and will be posted at New Delhi.
This letter is being sent to you in duplicate. Please affix your signature on the duplicate copy in token of your acceptance of the salary, perks & benefits as well as all other terms and conditions contained in this letter and return the same to us for our records within seven days from issue of this letter.
We look forward to your favorable reply and to working with you at Azure
Wishing you all the best
Yours Sincerely |
/s/ Radhika Kapoor |
Radhika Kapoor DGM Human Resources |
I Name of Employee, hereby declare that I had fully read and understood the terms & conditions enumerated above to the best of my knowledge and belief.
I hereby agree & accept all the above terms and conditions.
/s/ Sandeep Chopra | ||
Signature of the Employee | ||
Name: | Sandeep Chopra | |
Date: | 1 st February, 2013 |
BREAKUP OF CTC
NAME: Sandeep Chopra
DESIGNATION: Head - Strategy Officer
COMPANY: Azure Power India Pvt. Ltd.
Salary Components |
Monthly | Annual | ||||||
Basic Salary |
3,42,558 | 41,10,694 | ||||||
House Rent Allowance |
1,71,279 | 20,55,346 | ||||||
Conveyance |
800 | 9,600 | ||||||
Medical Allowance/ Reimbursement |
1,250 | 15,000 | ||||||
Provident Fund (Companys Share) |
780 | 9,360 | ||||||
|
|
|
|
|||||
Total Salary Components (A) |
5,16,667 | 62,00,000 | ||||||
|
|
|
|
|||||
Variable Component which is upto the defined limit (B) |
16,00,000 | |||||||
|
|
|||||||
Total Cost to the Company (A + B) |
78,00,000 | |||||||
|
|
/s/ Sandeep Chopra | ||
Signature of the Employee | ||
Name: | Sandeep Chopra | |
Date: | 1 st February, 2013 |
Exhibit 10.8
This Agreement is made on this 1st day of November 2009 at New Delhi. The joining date is Feb 1 st 2010.
Between
Azure Power India Private Limited , a company under the Companies Act, 1956 and having its registered office at A-11 kailash colony New Delhi -110048 (hereafter referred to as the Company which expression shall mean and include the said company, its executors, assigns and successors- in-interest) of the First Part;
And
Preet M S Sandhu , son of Mr. S.S. Sandhu residing at [Address] (which expression shall be deemed to mean and include his nominees, assigns and successors) (hereinafter referred to as the Employee ) of the Second Part.
WHEREAS
A. | The Company is engaged with the business of generation and production of solar energy and electricity. |
B. | The Employee has represented to the Company that he/she has the requisite knowledge, expertise, experience and skill to render the services in relation to the requirements of such person under the terms of this Agreement. |
C. | The Company has, based on the aforesaid representations made by the Employee, agreed to retain the services of the Employment for the consideration and subject to the terms and conditions herein contained. |
In consideration for the mutual rights and obligations herein contained the parties agree as follows:
1. | Appointment |
The Employee shall, on the date of this Agreement, be designated as the Senior Vice President Project Development of the Company. The Employee shall while employed with the Company devote his entire time and attention and abilities to the business of the Company. However, the Employee shall be entitled to devote time to such activities or engagements (being inter alia in the nature of product sales/ development etc) that are not only beneficial to the Company but are also carried out in a manner that is not detrimental to the interests of the Company, and which are undertaken with the prior approval of the board of directors of the Company. The Employee agrees to use his best efforts in the performance of his duties and responsibilities and shall perform all of his duties with due care, skill and diligence.
1.2 |
Subject to clause 2.1 below, the Employee shall not, from the date of this Agreement, hold any position or perform any role that is or shall be in conflict with his position as the Senior Vice President Project Development . If the Employee is holding any other position in any company, firm or entity, he/she shall bring the same to the notice of the |
Company immediately, and shall relinquish such position if told by the Company to do so. |
1.3 | By executing this Agreement, the Employee agrees and covenants that he shall, at all times, be subject to and bound by the rules and regulations of the Company as may be in force from time to time or as may be brought to his notice by the Company. Further, the Employee shall ensure that during the term of this Agreement, he shall not commit any act or misconduct, or commit any acts subversive to the discipline of the Company, or otherwise misbehave in a manner that would be construed as being in violation of the rules and regulations of the Company for the time being in force. |
2. | Non Compete and Non Solicit |
2.1 | The Employee hereby undertakes and ensures that all business opportunities known to him or made known to him at any time, with respect to and/or connected with the business of the Company are referred to the Board and shall be undertaken in any other company only if the Board does not avail of such opportunity, in which event the Employee may undertake the said business opportunity through any other entity provided that in so undertaking the said business opportunity, the Employee shall, at all times, ensure that the time spent by him on such other business opportunity not taken up by the Company shall not impede the performance of his services to the Company. |
2.2 | The Employee covenants and agrees that during the subsistence of this Agreement, he/she shall not, directly or indirectly attempt in any manner to solicit from any client/customer, except on behalf of the Company, business of the type carried on by the Company or to persuade any person, firm or entity which is a client/customer of the Company to cease doing business or to reduce the amount of business which any such client/customer has customarily done or might propose doing with the Company whether or not the relationship between the Company and such client/customer was originally established in whole or in part through his or its efforts. |
2.3 | The Employee shall make full and true disclosure in writing to the Company of any direct or indirect interest or benefit that he/she has derived or is likely to derive through or in connection with any contractual arrangements, dealings, transactions or affairs of the Company, or any transactions which are likely to be detrimental to the Company. |
2.4 | The Employee acknowledges that the services he is to render to the Company are of a special and unusual character, with a unique value to the Company, the loss of which cannot adequately be compensated by damages or an action at law. In view of the unique value to the Company of his services for which the Company has contracted hereunder, because of the confidential information to be obtained by, or disclosed to, the Employee covenants and agrees that during the term of employment and during the for a period of one year thereafter but subject to clause 2.1 above, the Employee shall not, directly or indirectly, enter into the employment of, tender consulting or other services to, acquire any interest in (whether for the Employees own account as an individual proprietor, or as a partner, associate, stockholder, officer, director, trustee or otherwise), or otherwise participate in any business that competes, directly or indirectly, with any of the companies or entities (i) in the same lines of business that the Company is engaged in at the time the Employees employment is terminated. |
2.5 | During and for one year following termination of employment (i) the Employee may not solicit, encourage, or induce or attempt to solicit, encourage, or induce any (A) current employee, marketing agent, or consultant of the Company to terminate his or her employment, agency, or consultancy with the Company or any (B) prospective employee with whom the Company has had discussions or negotiations within six months prior to the Employees termination of employment not to establish a relationship with the Company, (ii) induce or attempt to induce any current customer to terminate its relationship with any of the Company or (iii) induce any potential customer with whom the Company has had discussions or negotiations within [six months] prior to the Employees termination of employment not to establish a relationship with the Company. |
3. | Confidentiality |
3.1 | The Employee recognizes that he is being hired in a position of trust and confidence with the Company and will in the course of his employment with the Company, be exposed to various items of secret and confidential information that are proprietary to the Company. The Employee acknowledges that the Company needs to protect such secret and confidential information, covenants to hold any such information in trust for the Company and undertakes not to disclose such information to any third party. |
3.2 | The Employee represents that his performance of the terms of this Agreement and his employment with the Company does not and will not breach any agreement to keep in confidence information previously acquired by him in confidence from any third party. The Employee has not entered into, and agrees, subject to clause 2.1 above, not to enter into, any agreement in conflict with this Agreement or which in any way prohibits his performance of or restricts his ability to perform his obligations under this Agreement. The Employee has not brought, and agrees he/she will not bring, with him/her to the Company for use in his/her employment with the Company any materials or documents of a former employer or any other person or entity for whom he/she has provided services (paid or unpaid) that are not generally available to the public unless he/she has obtained express written authorization from the former employer or other person or entity for whom he/she has provided such services for their possession and use. |
4. | Intellectual Property |
4.1 | The Employee acknowledges that ownership of, and all right, title, and interest in, all the trademarks, trade names, brand names, patents, designs, domain names and other intellectual property rights created by the Employee expressly for the Company ( Intellectual Properties ) shall vest in the Company. |
4.2 | The Employee expressly agrees that all Intellectual Properties created by the Employee expressly for the Company shall be a work for hire under the laws of any jurisdiction. In any event, the Employee hereby transfers and shall be deemed to have assigned in favour of the Company, all rights, title and interest in and to all the Intellectual Properties, together with the rights to sublicense or transfer any and all rights assigned hereunder to third parties, in perpetuity as and when the same come into existence. The Employee shall assist and cooperate with the Company in perfecting the Companys rights in the Intellectual Properties. |
4.3 | The Employee shall not during the continuation of this Agreement or thereafter, divulge or make use of any trade secret or confidential information concerning the business of the Company or any of its dealings, transactions and affairs or any information concerning any of its suppliers, agents, distributors or customers which the Employee possesses or comes into possession while in the employment of the Company or which he may make or discover while in the service of the Company and the Employee shall also use his best endeavour to prevent any other person from doing so. All data, documents, plans, drawings, photographs, reports, statements, correspondence, etc. and technical information, know-how and instructions as well as business details or commercial policies that pass to the Employee or which come to the Employees knowledge shall be treated as confidential and the Employee shall be bound to keep secret all such confidential matters including papers and documents, computer floppies, CDs containing the same and shall not disclose, communicate, reproduce or distribute the same or copies thereof to anyone except in the course of the rightful discharge of his duties as the chief executive officer of the Company. |
4.4 | The Employee represents and warrants that he/she will keep all Intellectual Properties created by the Employee expressly for the Company, in strict confidence and shall use the same only for the purpose of the business and benefit of the Company and for no other purpose, except with prior written consent of the Company. |
4.5 | The Employee further represents and warrants that all the Intellectual Properties created by the Employee expressly for the Company are original, and that the Employee possesses all rights necessary to effectuate the transfer of the rights as contemplated above. Nothing contained herein shall apply in the event of any innocent infringement. |
4.6 | The Employee shall forthwith communicate to the Company and transfer to it the exclusive benefits of all inventions, processes, improvements, and any other discoveries which the Employee may make or discover in the course of his association with the Company, relating to any trade or business of the Company and will give full information as to the exact mode of working and using the same and also all such explanations and instructions to the officers and workmen of the Company as may be necessary to enable them to work effectively and will at the expense of the Company furnish it with all necessary plans, drawing and models. |
4.7 |
The Employee expressly agrees that all Intellectual Properties created by the Employee expressly for the Company shall be under a contract of service. In consideration of his employment with the Company, the Employee hereby transfers and shall be deemed to have assigned in favour of the Company, all rights, title and interest in and to all the Intellectual Properties, together with the rights to sublicense or transfer any and all rights assigned hereunder to third parties, in perpetuity. The Employee agrees that such assignment shall be perpetual, worldwide and royalty free. The Employee agrees that notwithstanding the provisions of Section 19(4) of the Copyright Act, 1957, such assignment in so far as it relates to copyrightable material shall not lapse nor the rights transferred therein revert to the Employee, even if the Company does not exercise the rights under the assignment within a period of one year from the date of assignment. The Employee acknowledges and agrees that he shall waive any right to and shall not raise any objection or claims to the Copyright Board with respect to the assignment, pursuant to Section 19A of the Copyright Act, 1957. The Employee shall assist and |
cooperate with the Company in perfecting the Companys rights in the Intellectual Properties. |
4.8 | The Employee shall, whenever requested so to do by the Company whether during or after the termination of his employment hereunder, at the cost of the Company execute and sign any and all applications, assignments and other instruments which the Company may deem necessary or advisable in order to obtain protection for the aforesaid improvements, inventions and discoveries in such countries as the Company may direct and to vest in the Company the whole, right, title and interest therein. |
5. | Termination |
5.1 | The term of the Employees employment with the Company shall commence from 1 st Feb, 2010 and shall continue until termination in accordance with this clause 5 of this Agreement. |
5.2 | Notwithstanding anything contained in this Agreement, the Company shall be entitled to terminate this Agreement forthwith in the event of: |
(a) | any breach of integrity, act of dishonesty, embezzlement or any misconduct by the Employee or in case of breach of the terms, conditions or stipulations contained in this Agreement, by the Employee; |
(b) | the Employees wilful refusal, or wilful or negligent failure, to perform duties reasonably assigned by the Company after being provided notice by the Company and a reasonable opportunity to cure such breach in a manner satisfactory to the Company; |
(c) | the Employee being convicted of any criminal offence or committing fraud against, or the misappropriation of material property belonging to the Company; |
(d) | the Employee breaching in any material respect the terms of this Agreement, any organizational documents of the Company, or any other material agreement of the Company, and failing to cure such breach in a manner satisfactory to the Company within ten (10) days after receipt of notice by the Company; |
(e) | any material violation by the Employee of the Companys policies prohibiting harassment of employees, any violation by the Employee of an engagement policy of the Company which results in material liability to the Company, or any act or omission which materially damages the Companys business or assets; or |
(f) | any other action or inaction on the part of the Employee that would constitute adequate cause for termination pursuant to applicable law and regulations |
5.3 | This Agreement may be terminated by the Company or the Employee upon rendering six months prior notice or six months salary in lieu of the notice. In case the final settlement is less than the amount due to the Employee, the Employee will have to pay the balance amount to the Company before exit of the Employee from the Company. |
5.4 | The Employee shall hand over all documents and materials constituting the property of the Company, including any proprietary and confidential information, which may be in the possession of the Employee at the time of termination of this Agreement. |
6. | Miscellaneous |
6.1 | The waiver by either Party hereto of a breach of any provision of this Agreement by the other Party shall not operate or be construed as a waiver of any subsequent breach by the waiving Party. |
6.2 | This Agreement shall be governed by and construed and enforced in accordance with the laws of India. |
6.3 | If any provision of this Agreement as applied to either Party or to any circumstances shall be adjudged by a Court of competent jurisdiction to be void or unenforceable, the same shall in no way affect any of the other provisions of this Agreement or the validity or enforceability of this Agreement. |
6.4 | Any dispute shall be resolved by reference to the court of competent jurisdiction over the subject matter of the dispute. The Parties hereby agree to submit themselves to the jurisdiction of the courts in New Delhi. |
Mr. Preet MS Sandhu | Azure Power India Private Limited | |||
[ILLEGIBLE] |
[ILLEGIBLE] |
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By | ||||
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Witness [ILLEGIBLE] | Witness |
This Agreement is made on this 1st day of November 2009 at New Delhi. The joining date is Feb 1 st 2010.
Between
Azure Power India Private Limited , a company under the Companies Act, 1956 and having its registered office at A-11 kailash colony New Delhi -110048 (hereafter referred to as the Company which expression shall mean and include the said company, its executors, assigns and successors- in-interest) of the First Part;
And
Preet M S Sandhu , son of Mr. S.S. Sandhu residing at [Address] (which expression shall be deemed to mean and include his nominees, assigns and successors) (hereinafter referred to as the Employee ) of the Second Part.
WHEREAS
A. | The Company is engaged with the business of generation and production of solar energy and electricity. |
B. | The Employee has represented to the Company that he/she has the requisite knowledge, expertise, experience and skill to render the services in relation to the requirements of such person under the terms of this Agreement. |
C. | The Company has, based on the aforesaid representations made by the Employee, agreed to retain the services of the Employment for the consideration and subject to the terms and conditions herein contained. |
In consideration for the mutual rights and obligations herein contained the parties agree as follows:
1. | Appointment |
The Employee shall, on the date of this Agreement, be designated as the Senior Vice President Project Development of the Company. The Employee shall while employed with the Company devote his entire time and attention and abilities to the business of the Company. However, the Employee shall be entitled to devote time to such activities or engagements (being inter alia in the nature of product sales/ development etc) that are not only beneficial to the Company but are also carried out in a manner that is not detrimental to the interests of the Company, and which are undertaken with the prior approval of the board of directors of the Company. The Employee agrees to use his best efforts in the performance of his duties and responsibilities and shall perform all of his duties with due care, skill and diligence.
1.2 |
Subject to clause 2.1 below, the Employee shall not, from the date of this Agreement, hold any position or perform any role that is or shall be in conflict with his position as the Senior Vice President Project Development . If the Employee is holding any other position in any company, firm or entity, he/she shall bring the same to the notice of the |
Company immediately, and shall relinquish such position if told by the Company to do so. |
1.3 | By executing this Agreement, the Employee agrees and covenants that he shall, at all times, be subject to and bound by the rules and regulations of the Company as may be in force from time to time or as may be brought to his notice by the Company. Further, the Employee shall ensure that during the term of this Agreement, he shall not commit any act or misconduct, or commit any acts subversive to the discipline of the Company, or otherwise misbehave in a manner that would be construed as being in violation of the rules and regulations of the Company for the time being in force. |
2. | Non Compete and Non Solicit |
2.1 | The Employee hereby undertakes and ensures that all business opportunities known to him or made known to him at any time, with respect to and/or connected with the business of the Company are referred to the Board and shall be undertaken in any other company only if the Board does not avail of such opportunity, in which event the Employee may undertake the said business opportunity through any other entity provided that in so undertaking the said business opportunity, the Employee shall, at all times, ensure that the time spent by him on such other business opportunity not taken up by the Company shall not impede the performance of his services to the Company. |
2.2 | The Employee covenants and agrees that during the subsistence of this Agreement, he/she shall not, directly or indirectly attempt in any manner to solicit from any client/customer, except on behalf of the Company, business of the type carried on by the Company or to persuade any person, firm or entity which is a client/customer of the Company to cease doing business or to reduce the amount of business which any such client/customer has customarily done or might propose doing with the Company whether or not the relationship between the Company and such client/customer was originally established in whole or in part through his or its efforts. |
2.3 | The Employee shall make full and true disclosure in writing to the Company of any direct or indirect interest or benefit that he/she has derived or is likely to derive through or in connection with any contractual arrangements, dealings, transactions or affairs of the Company, or any transactions which are likely to be detrimental to the Company. |
2.4 | The Employee acknowledges that the services he is to render to the Company are of a special and unusual character, with a unique value to the Company, the loss of which cannot adequately be compensated by damages or an action at law. In view of the unique value to the Company of his services for which the Company has contracted hereunder, because of the confidential information to be obtained by, or disclosed to, the Employee covenants and agrees that during the term of employment and during the for a period of one year thereafter but subject to clause 2.1 above, the Employee shall not, directly or indirectly, enter into the employment of, tender consulting or other services to, acquire any interest in (whether for the Employees own account as an individual proprietor, or as a partner, associate, stockholder, officer, director, trustee or otherwise), or otherwise participate in any business that competes, directly or indirectly, with any of the companies or entities (i) in the same lines of business that the Company is engaged in at the time the Employees employment is terminated. |
2.5 | During and for one year following termination of employment (i) the Employee may not solicit, encourage, or induce or attempt to solicit, encourage, or induce any (A) current employee, marketing agent, or consultant of the Company to terminate his or her employment, agency, or consultancy with the Company or any (B) prospective employee with whom the Company has had discussions or negotiations within six months prior to the Employees termination of employment not to establish a relationship with the Company, (ii) induce or attempt to induce any current customer to terminate its relationship with any of the Company or (iii) induce any potential customer with whom the Company has had discussions or negotiations within [six months] prior to the Employees termination of employment not to establish a relationship with the Company. |
3. | Confidentiality |
3.1 | The Employee recognizes that he is being hired in a position of trust and confidence with the Company and will in the course of his employment with the Company, be exposed to various items of secret and confidential information that are proprietary to the Company. The Employee acknowledges that the Company needs to protect such secret and confidential information, covenants to hold any such information in trust for the Company and undertakes not to disclose such information to any third party. |
3.2 | The Employee represents that his performance of the terms of this Agreement and his employment with the Company does not and will not breach any agreement to keep in confidence information previously acquired by him in confidence from any third party. The Employee has not entered into, and agrees, subject to clause 2.1 above, not to enter into, any agreement in conflict with this Agreement or which in any way prohibits his performance of or restricts his ability to perform his obligations under this Agreement. The Employee has not brought, and agrees he/she will not bring, with him/her to the Company for use in his/her employment with the Company any materials or documents of a former employer or any other person or entity for whom he/she has provided services (paid or unpaid) that are not generally available to the public unless he/she has obtained express written authorization from the former employer or other person or entity for whom he/she has provided such services for their possession and use. |
4. | Intellectual Property |
4.1 | The Employee acknowledges that ownership of, and all right, title, and interest in, all the trademarks, trade names, brand names, patents, designs, domain names and other intellectual property rights created by the Employee expressly for the Company ( Intellectual Properties ) shall vest in the Company. |
4.2 | The Employee expressly agrees that all Intellectual Properties created by the Employee expressly for the Company shall be a work for hire under the laws of any jurisdiction. In any event, the Employee hereby transfers and shall be deemed to have assigned in favour of the Company, all rights, title and interest in and to all the Intellectual Properties, together with the rights to sublicense or transfer any and all rights assigned hereunder to third parties, in perpetuity as and when the same come into existence. The Employee shall assist and cooperate with the Company in perfecting the Companys rights in the Intellectual Properties. |
4.3 | The Employee shall not during the continuation of this Agreement or thereafter, divulge or make use of any trade secret or confidential information concerning the business of the Company or any of its dealings, transactions and affairs or any information concerning any of its suppliers, agents, distributors or customers which the Employee possesses or comes into possession while in the employment of the Company or which he may make or discover while in the service of the Company and the Employee shall also use his best endeavour to prevent any other person from doing so. All data, documents, plans, drawings, photographs, reports, statements, correspondence, etc. and technical information, know-how and instructions as well as business details or commercial policies that pass to the Employee or which come to the Employees knowledge shall be treated as confidential and the Employee shall be bound to keep secret all such confidential matters including papers and documents, computer floppies, CDs containing the same and shall not disclose, communicate, reproduce or distribute the same or copies thereof to anyone except in the course of the rightful discharge of his duties as the chief executive officer of the Company. |
4.4 | The Employee represents and warrants that he/she will keep all Intellectual Properties created by the Employee expressly for the Company, in strict confidence and shall use the same only for the purpose of the business and benefit of the Company and for no other purpose, except with prior written consent of the Company. |
4.5 | The Employee further represents and warrants that all the Intellectual Properties created by the Employee expressly for the Company are original, and that the Employee possesses all rights necessary to effectuate the transfer of the rights as contemplated above. Nothing contained herein shall apply in the event of any innocent infringement. |
4.6 | The Employee shall forthwith communicate to the Company and transfer to it the exclusive benefits of all inventions, processes, improvements, and any other discoveries which the Employee may make or discover in the course of his association with the Company, relating to any trade or business of the Company and will give full information as to the exact mode of working and using the same and also all such explanations and instructions to the officers and workmen of the Company as may be necessary to enable them to work effectively and will at the expense of the Company furnish it with all necessary plans, drawing and models. |
4.7 |
The Employee expressly agrees that all Intellectual Properties created by the Employee expressly for the Company shall be under a contract of service. In consideration of his employment with the Company, the Employee hereby transfers and shall be deemed to have assigned in favour of the Company, all rights, title and interest in and to all the Intellectual Properties, together with the rights to sublicense or transfer any and all rights assigned hereunder to third parties, in perpetuity. The Employee agrees that such assignment shall be perpetual, worldwide and royalty free. The Employee agrees that notwithstanding the provisions of Section 19(4) of the Copyright Act, 1957, such assignment in so far as it relates to copyrightable material shall not lapse nor the rights transferred therein revert to the Employee, even if the Company does not exercise the rights under the assignment within a period of one year from the date of assignment. The Employee acknowledges and agrees that he shall waive any right to and shall not raise any objection or claims to the Copyright Board with respect to the assignment, pursuant to Section 19A of the Copyright Act, 1957. The Employee shall assist and |
cooperate with the Company in perfecting the Companys rights in the Intellectual Properties. |
4.8 | The Employee shall, whenever requested so to do by the Company whether during or after the termination of his employment hereunder, at the cost of the Company execute and sign any and all applications, assignments and other instruments which the Company may deem necessary or advisable in order to obtain protection for the aforesaid improvements, inventions and discoveries in such countries as the Company may direct and to vest in the Company the whole, right, title and interest therein. |
5. | Termination |
5.1 | The term of the Employees employment with the Company shall commence from 1st Feb, 2010 and shall continue until termination in accordance with this clause 5 of this Agreement. |
5.2 | Notwithstanding anything contained in this Agreement, the Company shall be entitled to terminate this Agreement forthwith in the event of: |
(a) | any breach of integrity, act of dishonesty, embezzlement or any misconduct by the Employee or in case of breach of the terms, conditions or stipulations contained in this Agreement, by the Employee; |
(b) | the Employees wilful refusal, or wilful or negligent failure, to perform duties reasonably assigned by the Company after being provided notice by the Company and a reasonable opportunity to cure such breach in a manner satisfactory to the Company; |
(c) | the Employee being convicted of any criminal offence or committing fraud against, or the misappropriation of material property belonging to the Company; |
(d) | the Employee breaching in any material respect the terms of this Agreement, any organizational documents of the Company, or any other material agreement of the Company, and failing to cure such breach in a manner satisfactory to the Company within ten (10) days after receipt of notice by the Company; |
(e) | any material violation by the Employee of the Companys policies prohibiting harassment of employees, any violation by the Employee of an engagement policy of the Company which results in material liability to the Company, or any act or omission which materially damages the Companys business or assets; or |
(f) | any other action or inaction on the part of the Employee that would constitute adequate cause for termination pursuant to applicable law and regulations |
5.3 | This Agreement may be terminated by the Company or the Employee upon rendering six months prior notice or six months salary in lieu of the notice. In ease the final settlement is less than the amount due to the Employee, the Employee will have to pay the balance amount to the Company before exit of the Employee from the Company. |
5.4 | The Employee shall hand over all documents and materials constituting the property of the Company, including any proprietary and confidential information, which may be in the possession of the Employee at the time of termination of this Agreement. |
6. | Miscellaneous |
6.1 | The waiver by either Party hereto of a breach of any provision of this Agreement by the other Party shall not operate or be construed as a waiver of any subsequent breach by the waiving Party. |
6.2 | This Agreement shall be governed by and construed and enforced in accordance with the laws of India. |
6.3 | If any provision of this Agreement as applied to either Party or to any circumstances shall be adjudged by a Court of competent jurisdiction to be void or unenforceable, the same shall in no way affect any of the other provisions of this Agreement or the validity or enforceability of this Agreement. |
6.4 | Any dispute shall be resolved by reference to the court of competent jurisdiction over the subject matter of the dispute. The Parties hereby agree to submit themselves to the jurisdiction of the courts in New Delhi. |
Mr. Preet MS Sandhu | Azure Power India Private Limited | |||||
[ILLEGIBLE] |
/s/ H.S. WADHWA |
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By |
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Name |
H.S. WADHWA | |||||
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Title |
C.O.O. | |||||
[ILLEGIBLE] |
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Witness |
Witness |
[ILLEGIBLE] |
Exhibit 10.9
This Agreement is made on this 31 th , August, 2011 at San Ramon, USA
BETWEEN
AZURE POWER US Inc , a company registered under the US Laws and having its office at 5546, Satinleaf Way, San Ramon, ca 94582 (hereafter referred to as the Company which expression shall mean and include the said company, its executors, assigns and successors-in-interest) of the First Part;
AND
Glen Minyard , residing at [Address] (expression shall be deemed to mean and include his nominees, assigns and successors) (hereinafter referred to as the Employee ) of the Second Part.
WHEREAS:
A. | The Company is engaged with the business of providing Engineering and Procurement services for Solar Power projects and is also raising Project Finance for such projects, |
B. | The Employee has represented to the Company that he has the requisite knowledge, expertise, experience and skill to render the services in relation to the requirements of such person under the terms of this Agreement. |
C. | The Company has, based on the aforesaid representations made by the Employee, agreed to retain the services of the Employment for the consideration and subject to the terms and conditions herein contained. |
In consideration for the mutual rights and obligations herein contained the parties agree as follows:
1. | Appointment |
1.1. | The Employee shall, on the date of this Agreement, be designated as the Sr. Vice President-Design, Engineering ( Sr.Vice President ) of the Company. The Employee will directly report to the Companys Chief Executive Officer ( CEO ) and his place of posting will be San Ramon, CA 94582. The working will generally be from the office only and this flexibility will be available in limited cases , as we are going to have a full-fledged team of people in the office. The Employee shall, while employed with the Company, render business and professional services in the performance of his duties consistent with the role of Sr. Vice President for the Company and as assigned to him by the CEO. As Sr. Vice President of the Company, he will work very closely with the project development and procurement teams to design world leading and largest PV power plants. Responsibilities include, not limited to: |
| Design and engineering of large scale (MW scale) solar power plants |
| Complete site assessment including shading analysis, PV Array Layouts |
| Complete electrical and mechanical designs for PV modules and mounting structures. |
| Component selection for the entire DC plant including cables, inverters and SCADA systems. |
| Evaluation of new technologies and optimization of electrical designs |
| Work with O&M team on optimization of new projects |
| Complete project planning |
|
Participate in strategy discussions for various off grid and on grid |
business models |
| Working with policy makers, industry experts, professional associations and local, state and national leaders in the rapid and sustainable development of solar programs. |
1.2. | The Employee devotes his entire time and attention and abilities to the Business of the Company. The Employee agrees to use his best efforts in the performance of his duties and responsibilities and shall perform all of his duties with due care, skill and diligence. |
1.3. | The Employee shall not, from the date of this Agreement, hold any position or perform any role that is or shall be in conflict with his position as the Sr. Vice President of the Company. If the Employee is holding any other position in any company, firm or entity, whether in India or abroad, he shall bring the same to the notice of the Company immediately, and shall relinquish such position forthwith, if told by the Company to do so. The employee shall be permitted to hold the title of President of Minyard Solar Electric Inc. a California corporation as an electrical contracting business but will not be involved in any business dealings on behalf of that company with any Party during the continuity of this agreement. He will, however, have flexibility in supporting his existing customers in the above Company for projects already implemented and running, therein |
1.4. | By executing this Agreement, the Employee agrees and covenants that he shall, at all times, be subject to and bound by the rules and regulations of the Company as may be in force from time to time or as may be brought to his notice by the Company. Further, the Employee shall ensure that during the term of this Agreement, he shall not commit any act or misconduct, or commit any acts subversive to the discipline of the Company, or otherwise misbehave in a manner that would be construed as being in violation of the rules and regulations of the Company for the time being in force. |
2. | Term |
2.1. | The term of the Employees employment with the Company shall commence from 1 st , September, 2011. |
Remuneration and benefits
2.2. | The Employee shall, for his services as Sr. Vice President of the Company, receive a remuneration amounting to USD 140,000 per annum (subject to applicable Tax deductions) along with other statutory and non-statutory benefits as decided by the Company from time to time and the said remuneration is payable on monthly basis. |
2.3. | The Company may, in its sole discretion, provide the following benefits to the Employee: |
2.3.1. | The Company shall arrange the Employee appropriate travel facility in accordance with the policies of the Company. |
2.3.2. | The Company shall procure a travel health insurance policy for the Employee with a reasonable coverage. |
2.3.3. | The Company shall provide the Employee a cell phone with an international coverage. |
2.3.4. | The employee will be entitled to leaves during the year as per the policy of the Company. |
2.3.5. | The employee will be entitled to a variable bonus pay of $ 20,000/- per annum, to be paid annually at the end of each year, based on his satisfactory performance during the year and as evaluated and agreed by the CEO. |
2.3.6. | The employee is granted 1350 stock options in the parent Company, i.e in Azure Power India Pvt. Ltd., |
2.3.7. | On plane flights longer than 5 hours in one direction, the employee shall be entitled to fly business class with fare limits, as may be agreed by the company from time to time. The current limit is Rs.2.17 Lacs for a return ticket. |
2.4. | During the Term, the Employee shall be entitled to receive prompt reimbursement for all travel and business expenses reasonably incurred by him (in accordance with the policies and procedures established from time to time by the Company) In performing services hereunder; provided that the Employee shall promptly and properly account therefore in accordance with the Companys expense policy. |
3. | Non Compete and Non Solicit |
3.1. | The Employee hereby undertakes and ensures that all business opportunities known to him or made known to him at any time, with respect to and/ or connected with the Business of the Company are referred to the Board |
3.2. | The Employee covenants and agrees that during the subsistence of this Agreement, he shall not, directly or indirectly attempt in any manner to solicit from any client/ customer, except on behalf of the Company, business of the type carried on by the Company or to persuade any person, firm or entity which is a client/ customer of the Company to cease doing business or to reduce the amount of business which any such client/ customer has customarily done or might propose doing with the Company whether or not the relationship between the Company and such client/ customer was originally established in whole or in part through his or its efforts. |
3.3. | The Employee shall make full and true disclosure in writing to the Company of any direct or indirect interest or benefit that he/she has derived or is likely to derive through or in connection with any contractual arrangements, dealings, transactions or affairs of the Company, or any transactions which are likely to be detrimental to the Company. |
3.4. | The Employee acknowledges that the services he is to render to the Company are of a special and unusual character, with a unique value to the Company, the loss of which cannot adequately be compensated by damages or an action at law. In view of the unique value to the Company of his services for which the Company has contracted hereunder, because of the confidential information to be obtained by, or disclosed to, the Employee covenants and agrees that during the term of employment and during the for a period of Six months, the same as the notice period (this is different now than previous contract because it was limited to India). thereafter, the Employee shall not, directly or indirectly, enter into the employment of, tender consulting or other services to, acquire any interest in (whether for the Employees own account as an individual proprietor, or as a partner, associate, stockholder, officer, director, trustee or otherwise), or otherwise participate in any business that competes, directly, with the Company. |
3.5. |
During and for one year following termination of employment (i) the Employee may not solicit, encourage, or induce or attempt to solicit, encourage, or induce |
any (A) current employee, marketing agent, or consultant of the Company to terminate his or her employment, agency, or consultancy with the Company or any (B) prospective employee with whom the Company has had discussions or negotiations within six months prior to the Employees termination of employment not to establish a relationship with the Company, (ii) induce or attempt to induce any current customer to terminate its relationship with any of the Company or (iii) induce any potential customer with whom the Company has had discussions or negotiations within [six months] prior to the Employees termination of employment not to establish a relationship with the Company. |
4. | Confidentiality |
4.1. | The Employee recognizes that he is being hired in a position of trust and confidence with the Company and will in the course of his employment with the Company, be exposed to various items of secret and confidential information that are proprietary to the Company. The Employee acknowledges that the Company needs to protect such secret and confidential information, covenants to hold any such information in trust for the Company and undertakes not to disclose such information to any third party. |
4.2. | The Employee represents that his performance of the terms of this Agreement and his employment with the Company does not and will not breach any agreement to keep in confidence information previously acquired by him in confidence from any third party. The Employee has not entered into, and agrees not to enter into, any agreement in conflict with this Agreement or which in any way prohibits his performance of or restricts his ability to perform his obligations under this Agreement. The Employee has not brought, and agrees he will not bring, with him to the Company for use in his employment with the Company any materials or documents of a former employer or any other person or entity for whom he has provided services (paid or unpaid) that are not generally available to the public unless he has obtained express written authorization from the former employer or other person or entity for whom he has provided such services for their possession and use. |
5. | Intellectual Property |
5.1. | The Employee acknowledges that ownership of, and all right, title, and interest in, all the trademarks, trade names, brand names, patents, designs, domain names and other intellectual property rights created by the Employee expressly for the Company ( Intellectual Properties ) shall vest in the Company. |
5.2. | The Employee expressly agrees that all Intellectual Properties created by the Employee expressly for the Company shall be a work for hire under the laws of any jurisdiction. In any event, the Employee hereby transfers and shall be deemed to have assigned in favour of the Company, all rights, title and interest in and to all the Intellectual Properties, together with the rights to sublicense or transfer any and all rights assigned hereunder to third parties, in perpetuity as and when the same come into existence. The Employee shall assist and cooperate with the Company in perfecting the Companys rights in the Intellectual Properties. |
5.3. |
The Employee shall not during the continuation of this Agreement or thereafter, divulge or make use of any trade secret or confidential information concerning the business of the Company or any of its dealings, transactions and affairs or any information concerning any of its suppliers, agents, distributors or customers which the Employee possesses or comes into possession while in the employment of the Company or which he may make or discover while in the service of the Company and the Employee shall also use his best |
endeavour to prevent any other person from doing so. All data, documents, plans, drawings, photographs, reports, statements, correspondence, etc. and technical information, know-how and instructions as well as business details or commercial policies that pass to the Employee or which come to the Employees knowledge shall be treated as confidential and the Employee shall be bound to keep secret all such confidential matters including papers and documents, computer floppies, CDs containing the same and shall not disclose, communicate, reproduce or distribute the same or copies thereof to anyone except in the course of the rightful discharge of his duties as the chief executive officer of the Company. |
5.4. | The Employee represents and warrants that he/she will keep all Intellectual Properties created by the Employee expressly for the Company, in strict confidence and shall use the same only for the purpose of the business and benefit of the Company and for no other purpose, except with prior written consent of the Company. |
5.5. | The Employee further represents and warrants that all the Intellectual Properties created by the Employee expressly for the Company are original, and that the Employee possesses all rights necessary to effectuate the transfer of the rights as contemplated above. Nothing contained herein shall apply in the event of any innocent infringement. |
5.6. | The Employee shall forthwith communicate to the Company and transfer to it the exclusive benefits of all inventions, processes, improvements, and any other discoveries which the Employee may make or discover in the course of his association with the Company, relating to any trade or business of the Company and will give full information as to the exact mode of working and using the same and also all such explanations and instructions to the officers and workmen of the Company as may be necessary to enable them to work effectively and will at the expense of the Company furnish it with all necessary plans, drawing and models. |
5.7. | The Employee expressly agrees that all Intellectual Properties created by the Employee expressly for the Company shall be under a contract of service. In consideration of his employment with the Company, the Employee hereby transfers and shall be deemed to have assigned in favour of the Company, all rights, title and interest in and to all the Intellectual Properties, together with the rights to sublicense or transfer any and all rights assigned hereunder to third parties, in perpetuity. The Employee agrees that such assignment shall be perpetual, worldwide and royalty free. The Employee agrees that notwithstanding the applicable US provisions in the matter, such assignment in so far as it relates to copyrightable material shall not lapse nor the rights transferred therein revert to the Employee, even if the Company does not exercise the rights under the assignment within a period of one year from the date of assignment. The Employee acknowledges and agrees that he shall waive any right to and shall not raise any objection or claims to the Copyright Board with respect to the assignment. The Employee shall assist and cooperate with the Company in perfecting the Companys rights in the Intellectual Properties. |
5.8. |
The Employee shall, whenever requested so to do by the Company whether during or after the termination of his employment hereunder, at the cost of the Company execute and sign any and all applications, assignments and other instruments which the Company may deem necessary or advisable in order to obtain protection for the aforesaid improvements, inventions and discoveries in |
such countries as the Company may direct and to vest in the Company the whole, right, title and interest therein. |
6. | Termination |
6.1. | Notwithstanding anything contained in this Agreement, the Company shall be entitled to terminate this Agreement forthwith in the event of: |
6.1.1. | any breach of integrity, act of dishonesty, embezzlement or any misconduct by the Employee or in case of breach of the terms, conditions or stipulations contained in this Agreement, by the Employee; |
6.1.2. | the Employees willful refusal, or willful or negligent failure, to perform duties reasonably assigned by the Company after being provided notice by the Company and a reasonable opportunity to cure such breach in a manner satisfactory to the Company; |
6.1.3. | the Employee being convicted of any criminal offence or committing fraud against, or the misappropriation of material property belonging to the Company; |
6.1.4. | the Employee breaching in any material respect the terms of this Agreement, any organizational documents of the Company, or any other material agreement of the Company, and failing to cure such breach in a manner satisfactory to the Company within ten (10) days after receipt of notice by the Company; |
6.1.5. | any material violation by the Employee of the Companys policies prohibiting harassment of employees, any violation by the Employee of an engagement policy of the Company which results in material liability to the Company, or any act or omission which materially damages the Companys business or assets; or |
6.1.6. | any other action or inaction on the part of the Employee that would constitute adequate cause for termination pursuant to applicable law and regulations. |
6.2. | The Company or the Employee upon rendering six months prior notice or six months salary in lieu of the notice may terminate this Agreement. In case the final settlement is less than the amount due to the Employee, the Employee will have to pay the balance amount to the Company before exit of the Employee from the Company. |
6.3. | The Employee shall hand over all documents and materials constituting the property of the Company, including any proprietary and confidential information, which may be in the possession of the Employee at the time of termination of this Agreement. |
7. | Miscellaneous |
7.1. | The waiver by either Party hereto of a breach of any provision of this Agreement by the other Party shall not operate or be construed as a waiver of any subsequent breach by the waiving Party. |
7.2. | This Agreement shall be governed by and construed and enforced in accordance with the laws of the United States (This is a US company now, yes?. |
7.3. |
If any provision of this Agreement as applied to either Party or to any circumstances shall be adjudged by a Court of competent jurisdiction to be void |
or unenforceable, the same shall in no way affect any of the other provisions of this Agreement or the validity or enforceability of this Agreement. |
7.4. | The Employee acknowledges that damages for any breach of term of this Agreement may be difficult to determine and inadequate to remedy the harm which may be caused and, therefore, consents that this Agreement may be enforced by temporary or permanent injunction. Such injunctive relief shall be in addition to and not in place of any other remedies available at law or equity, including damages. Should any court or tribunal decline to enforce this Agreement on the basis that such provisions are overly restrictive of activities of the Employee as to time, scope or geography, such provisions shall be deemed to be modified to restrict the Employees activities to the maximum extent of time, scope and geography which such court or tribunal shall find enforceable, and such provisions shall be so enforced. |
7.5. | Any claim for injunctive relief under this Agreement shall be instituted in any court of competent jurisdiction located San Ramon, and each party agrees not to assert, by way of motion, as a defense or otherwise, in any such claim, any claim that it is not subject personally to the jurisdiction of such court, that the claim is brought in an inconvenient forum, that the venue of the claim is improper or that this Agreement or the subject matter hereof may not be enforced in or by such court. Each party further irrevocably submits to the jurisdiction of such court in any such claim. Any and all service of process and any other notice in any such claim shall be effective against any party if given personally or by registered or certified mail, return receipt requested, or by any other means of mail that requires a signed receipt, postage prepaid, mailed to such party as herein provided. Nothing herein contained shall be deemed to affect the right of any party to serve process in any manner permitted by law or to commence legal proceedings or otherwise proceed against any other party in any other jurisdiction. |
IN WITNESS WHEREOF, the parties to this Agreement have executed this Agreement as of the date first above written.
By: |
/s/ S.K. Gupta |
|
Name: | S.K. Gupta | |
Title: | CEO | |
Azure Power US inc. | ||
Employee | ||
By: |
/s/ Glen E. Minyard |
|
Name: | Glen E. Minyard |
Exhibit 10.10
1-Feb-2014
Mr. Mohor Sen
[Address]
SUB: APPOINTMENT LETTER
Dear Mohor:
With reference to your application and subsequent interviews you have had recently regarding your appointment with Azure Power India Pvt. Ltd. having its registered office at New Delhi (hereinafter referred to as Azure which shall mean and include the said company, its executors, assigns and successors -in -interest).
We are pleased to offer you a position in our organization on the following terms and conditions,
1. | Appointment/Designation |
You are being appointed as Sr. VP Human Resources w. e. f. 1-Feb-2014.
WHEREAS
| The Company is engaged with the business of generation and production of solar energy and electricity. |
| The Employee has represented to the Company that he/she has the requisite knowledge, expertise, experience and skill to render the services in relation to the requirements of such person under the terms of this Agreement. |
| The Company has, based on the aforesaid representations made by the Employee, agreed to retain the services of the Employment for the consideration and subject to the terms and conditions herein contained. |
2. | Salary |
You will be entitled to a consolidated salary (Fixed) of Rs. 48, 00,000 Lacs/annum which includes salary and other allowances/reimbursements as prescribed for the post. Please note that all payments will be strictly as per the rules and regulations as defined under the Income Tax Act, 1961 and other related statutes, and any subsequent modifications. The management reserves the right to merge, bifurcate or modify the salary structure at any time at its sole discretion keeping the CTC same.
3. | Performance Management/Appraisals |
Performance management/Appraisals are designed to foster mutual understanding about job responsibilities, job interest and career objectives between the employees and their supervisors, share employee concerns and problems set mutually agreeable goals and targets for the nest review period.
4. | Job Responsibilities |
You will be a part of the Human Resources at Azure. Your duties and responsibilities will be discussed with you in detail at the time of joining and may be re-assigned to you from time to time. You might be assigned additional responsibilities as and when required. We will continuously monitor your work performance to ensure that you remain challenged and that our work program brings out the best in you. We look forward to deliverables that fully attest to your background and qualifications. You shall abide by such rules and regulations, directions, instructions or orders of the Company, in this regard, as are issued or communicated from time to time.
5. | Medical Fitness |
Your appointment and continuance will be subject to your being medically fit for job/work and the management will have the right to get you examined from the companys Medical Practioner, whose finding shall be final and binding upon you.
6. | Transferability |
1) | Your services may be transferred from one job/position/location to another, from one department to another or from the appointing company to any other company /division of Azure, whether existing at present or to be set up in future anywhere in India or abroad. |
2) | In such a case, you will be governed by the rules, regulation, and orders as applicable in the establishment to which you have been transferred, including conditions and rules covering Working Hours, Leave, Holidays Salary, Allowances and perquisites. |
7. | Leaves |
All leaves shall be in accordance with the Companys policy and would require prior sanction / approval of the sanctioning authority. In case of sick leave or casual leave or any other leave taken under unforeseen circumstances, for which prior approval is not possible, immediate information by telephone will be required to be sent to the sanctioning authority. The necessary written approval is to be taken on your next working day and mailed to HRD. In case you fail to do so, Management will have the right to take action against you under the rules of the Company.
8. | Probation |
You will be confirmed from the date of your appointment.
9. | Termination from Service |
If you shall be found engaged in or abetting immoral, illegal or other activities against the interests of the organization or its employees or found absent for more than seven consecutive working days without prior permission in writing of the management or if you proceed on leave without prior sanction or overstay the sanctioned leave without proper intimation and/or approval, at the discretion of the Azure management, your service may automatically come to an end and a presumption will be drawn that you have abandoned the employment/service on your own accord by losing lien on the post and under such circumstances you will lose all rights to any compensation or other payables due to you after proper adjustments.
Further, notwithstanding anything contained in this Agreement, the Company shall be entitled to terminate this Agreement forthwith in the event of:
9.1 any breach of integrity, act of dishonesty, embezzlement or any misconduct by the Employee or in case of breach of the terms, conditions or stipulations contained in this Agreement, by the Employee;
9.2. the Employees disobedience, willful refusal, willful or negligent failure, or unsatisfactory performance as to perform duties reasonably assigned by the Company after being provided notice by the Company and a reasonable opportunity to cure such breach in a manner satisfactory to the Company;
9.3. the Employee being convicted of any criminal offence or committing fraud against, or the misappropriation of material property belonging to the Company;
9.4. the Employee breaching in any material respect the terms of this Agreement, any organizational documents of the Company, or any other material agreement of the Company, and failing to cure such breach in a manner satisfactory to the Company within ten (10) days after receipt of notice by the Company;
9.5. any material violation by the Employee of the Companys policies prohibiting harassment of employees, any violation by the Employee of an engagement policy of the Company which results in material liability to the Company, or any act or omission which materially damages the Companys business or assets; or
9.6. any other action or inaction on the part of the Employee that would constitute adequate cause for termination pursuant to applicable law and regulations.
10. | Relinquishing Service / Relieving |
After confirmation both the parties to the contract may terminate the contract of employment by giving Six months notice in writing or salary in lieu of the notice period. However, if you choose to terminate this relationship, the company reserves the right to relive you at its sole discretion before the expiry of the notice period without any liability towards the payment of salary/emoluments etc.
1. | After confirmation if the management perceives the services of the employee are undesirable for the organization they may be terminated on an immediate basis without assigning any reason whatsoever. In this situation the employee will not be entitled to any salary/wages/expense reimbursement whatsoever. |
2. | Even after confirmation the basic salary is taken into consideration for the calculation of the salary in lieu of the notice period i.e. all full and final settlements. |
11. | Job Assignments |
You may, during the course of your employment, be given any assignment that may derive from the Companys business needs as defined from time to time by your reporting manager and the Azure management. Such management shall give you any assignment that they, in their subjective judgment, feel is suited to your background, qualifications or experience. You will not refuse to carry out any assignment solely on the grounds that it has not been part of your usual duties during your employment. You will also not be entitled to any additional compensation for carrying out any job, which in the opinion of the Management is equivalent to the job you have been assigned earlier.
12. | Non Compete and Non Solicit |
12.1 | The Employee hereby undertakes and ensures that all business opportunities known to him or made known to him at any time, with respect to and/or connected with the business of the Company are referred to the Board and shall be undertaken in any other company only if the Board does not avail of such opportunity, in which event the employee may undertake the said business opportunity through any other entity provided that in so undertaking the said business opportunity, the Employee shall, at all times, ensure that the time spent by him on such other business opportunity not taken up by the Company shall not impede the performance of his services to the Company. |
12.2 | The Employee covenants and agrees that during the subsistence of this Agreement, he/she shall not, directly or indirectly attempt in any manner to solicit from any client/customer, except on behalf of the company, business of the type carried on by the Company or to persuade any person, firm or entity which is a client/ customer of the Company to cease doing business or to reduce the amount of business which any such client/customer has customarily done or might propose doing with the Company whether or not the relationship between the Company and such client / customer was originally established in whole or in part through his or its efforts. |
12.3 | The Employee acknowledges that the services he is to render to the Company are of a special and unusual character, with a unique value to the Company, the loss of which cannot adequately be compensated by damages or an action at law. In view of the unique value to the Company of this services for which the Company has contracted hereunder, because of the confidential information to be obtained by, or disclosed to the Employee covenants and agrees that during the term of engagement and during the for a period of one year thereafter but subject to clause 12.1 above, the Employee shall not directly or indirectly, enter into the engagement of, tender consulting or other services to, acquire any interest in (whether for the Employees own account as an individual proprietor, or as a partner, associate, stockholder, officer, director, trustee or otherwise), or otherwise participate in any business that competes, directly or indirectly, with any of the companies or entitles (i) in the same lines of business that the Company is engaged in at the time the Employees engagement is terminated, |
12.4 | During and for one year following termination of engagement (i) the Employee may not solicit, encourage, or induce or attempt to solicit, encourage, or induce any (A) current Employee, marketing agent, or employee of the Company to terminate his or her engagement, agency or consultancy with the Company, or any (B) prospective Employee with whom the Company has had discussions or negotiations within six months prior to the Employees termination of engagement not to establish a relationship with the Company. (ii) induce or attempt to induce any current customer to terminate its relationship with any of the Company or (iii) induce any potential customer with whom the Company has had discussions or negotiations within [six months] prior to the Employees termination of engagement not to establish a relationship with the Company. |
13. | Confidentiality |
13.1 | The Employee recognizes that he is being hired in a position of trust and confidence with the Company and will in the course of his engagement with the Company, be exposed to various items of secret and confidential information that are proprietary to the Company. The Employee acknowledges that the Company needs to protect such secret and confidential information, covenants to hold any such information in trust for the Company and undertakes not to disclose such information to any third party. |
13.2 | The Employee represents that his performance of the terms of this Agreement and his engagement with the Company does not and will not breach any agreement to keep in confidence information previously acquired by him in confidence from any third party, The Employee has not entered into, and agrees, subject to clause 2.1 above, not to enter into, agreement in conflict with this Agreement or which in any way prohibits his performance of or restricts his ability to perform his obligations under this Agreement. The Employee has not brought, and agrees he/she will not bring. With him/her to the Company for use in his/her engagement with the Company any materials or documents of a former employer or any other person or entity for whom he/she has provided services (paid or unpaid) that are not generally available to the public unless he/she has obtained express written authorization from the former employer or other person or entity for whom he/she provided such services for their possession and use. |
14. | Intellectual property |
14.1 | The Employee acknowledge that ownership of, and all right, title, and interest in, all the trademarks, trade names, brand names, patents, designs, domain names and other intellectual property rights created by the Employee expressly for the Company (Intellectual Properties) shall vest in the Company. |
14.2 |
The Employee expressly agrees that all Intellectual Properties created by the Employee expressly for the Company shall be a work for hire under the laws of any jurisdiction. In any event, the Employee hereby transfers and shall be deemed to have assigned in favour of the Company, all rights, title and interest in and to all the Intellectual Properties, together with the rights to sublicense or transfer any and all rights assigned hereunder to third parties, in |
perpetuity as and when the same co me into existence. The Employee shall assist and cooperate with Company in perfecting the Companys rights in the Intellectual Properties. |
14.3 | The Employee shall not during the continuation of this Agreement or thereafter, divulge or make use of any trade secret or confidential information concerning the business of the Company or any of its dealing, transactions and affair or any information concerning any of its suppliers, agents, distributors or customers which the Employee possesses or comes into possession while in the engagement of the Company or which he may make or discover while in the service of the Company and the Employee shall also use his best endeavour to prevent and other person from doing so. All data, documents, plans, drawings, photographs, reports, statements, correspondence, etc, and technical information, know-how and instructions as well as business details or commercial policies that pass to the Employee or which come to the Employees knowledge shall be treated as confidential and the Employee shall be bound to keep secret all such confidential matters including papers and documents, computer floppies. CDs containing the same and shall not disclose, communicate, reproduce or distribute the same or copies thereof to anyone except In the course of the rightful discharge of his duties as the chief executive officer of the Company. |
14.4 | The Employee represents and warrants that he/she will keep all Intellectual Properties created by the Employee expressly for the Company, in strict confidence and shall use the same only for the purpose of the business and benefit of the company and for no other purpose, except with prior written consent of the Company. |
14.5 | The Employee further represent and warrants that all the Intellectual Properties created by the Employee expressly for the Company are original, and that the Employee possesses all rights necessary to effectuate the transfer of the rights as contemplated above. Nothing contained herein shall apply in the event of any innocent infringement. |
14.6 | The Employee shall forthwith communicate to the Company and transfer to it the exclusive benefits of all inventions, processes, improvements, and any other discoveries which the Employee may make or discover in the course of his association with the Company, relating to any trade or business of the Company and will give full information as to the exact mode of working and using the same and also all such explanations and instructions to the officers and workmen of the Company as may be necessary to enable them to work effectively and will at the expense of the Company furnish it with all necessary plans, drawing and models. |
14.7 | The Employee expressly agrees that all Intellectual Properties created by the Employee expressly for the Company shall be under a contract of service. In consideration of his engagement with the Company, the Employee hereby transfers and shall be deemed to have assigned in favor of the Company, all rights, title and interest in and to all the Intellectual Properties, together with the rights to sublicense or transfer any and all rights assigned hereunder to third parties, in perpetuity. The Employee agrees that such assignment shall be perpetual, worldwide and royalty free. The Employee agrees that notwithstanding the provisions of Section 19(4) of the Copyright Act, 1957, such assignment in so far as it relates to copyrightable material shall not lapse nor the rights transferred therein revert to the Employee, even if the Company does not exercise the rights under assignment within a period of one year from the date of assignment, The Employee acknowledges and agrees that he shall waive any right to and shall not raise any objection or claims to the Copyright Board with respect to the assignment, pursuant to Section 19A of the Copyright Act, 1957. The Employee shall assist and cooperate with Company in perfecting the Companys rights in the intellectual Properties. |
14.8 | The Employee shall, whenever requested so to do by the Company whether during or after the termination of his engagement hereunder, at the cost of the Company execute and sign any and all applications, assignments and other instruments which the Company may deem necessary or advisable in order to obtain protection for aforesaid improvement, inventions and discoveries in such countries as the Company may direct and to vest in the Company the whole, right, title and interest therein. |
15. | Other General Terms of Employment |
1) | The employee shall not be associated in any whatsoever with any competitor company for a period of at least 12 months after departure from Azure. |
2) | The assets/data given to you are exclusive rights of the organization; you are only given the mere authorization to utilize the assets/data on behalf and for the organization. All data created by you during your association with the company are also exclusive rights of the company. Upon resignation it is your primary duty to hand-over all these assets/data to your reporting manager assigned by the company and obtain the necessary clearances from your department and subsequently the HRD. In case of any tampering or illegal usage of these assets/data or non-submission of the assets/data upon resignation, the company reserves all rights to initiate appropriate legal actions against you and you will automatically loose all rights to any dues payable to you. |
3) | In case Azure imparts High cost training to the employee, the employee shall be required to enter into a written agreement with Azure prior to the training and only after the agreement has been signed will the employee be permitted to proceed for the training. |
4) | This appointment will cease immediately, if any of the statement made or particulars given in your application/employment form are found to be false or incorrect in material particulars. |
5) | This appointment letter along with the Annexure shall form the contract of employment between you and Azure (Azure or The Company). |
6) | Failing to observe any of the condition of service, including those specified in the rules will amount to the misconduct of Willful disobedience of any lawful and reasonable order of a superior. |
7) | The Company with the consent of the employee has the right to vary, amend and modify an item of the pay packet without adversely affecting the total pay packet |
8) | This appointment is based on the information given by you to us in your application/employee data form and during you evaluation process and shall be considered null and void of any material error/suppression in the companys opinion is discovered at any point of time. |
9) | In case of any change in the address during the course of your employment it shall be your duty to intimate the same to the mgt/personnel department in writing within three days from such change in address. |
10) | All communications sent to you by the mgt. At your last given address shall be deemed to have been delivered to you at correct address. |
11) | You will be responsible for the safe custody of the tools, equipment, documentation and any other items entrusted to you and in case of any damage or loss, the management shall have the right to deduct the same from your salary/wages besides taking any other disciplinary action as may deemed fit and proper. |
12) |
In case of theft, fraud, dishonesty, drunkenness, fighting, riotous or disorderly behavior or conduct, smoking and spitting on the premises, gambling, damaging or destroying records, files papers or other information (whether in tangible or non-tangible form), or properties of the company, impertinence, in subordination, threatening, assaulting or intimidating any superior officer/ manager/ Director, holding or organizing or taking part in any meeting, demonstration, illegal strike, unlawful and unjustified cessation of work or adopting go slow tactics or refusal of work or attempt to incite or intimidate or force other workmen to go on strike in advance, habitual negligence in discharge of duties, using insulting words or |
abusive languages towards the superior/manager, vulgarity, molestation of other employees, teasing and cutting indecent jokes or making indecent remarks towards other employees and any other act/omission/offence constituting misconduct is alleged against you in accordance with the provision of the standing orders/service Rules of the company you may be placed under suspension pending enquiry and shall not be entitled to any form of salary/wages during the period of such suspension. |
13) | If during the suspension enquiry or in accordance with the report of enquiry office your misconduct will be proved or you will be found guilty, your services will be liable to be terminated without giving notice or compensation or wages in lieu of notice. |
16. | Verification |
This appointment is based on the details provided by you to the Company. Your appointment is subject to satisfactory verification of your character, antecedents, and testimonials.
You will be required to submit the following prior to your first day of Employment with the Company
| Completed Application Form |
| Copy of pay slip of your last month of employment |
| Copy of current/last employers Appointment Letter |
| Copy of all Degree and/or Professional Course certificates |
| Photocopy of Passport /Driving License/PAN card |
| Relieving Letter from last employer |
| 4 Passport size photographs |
17. | Joining |
You shall take up your duties on or before the 1-Feb-2014 solely at your own expenses and will be reimbursed on the scheduled date as per the company policy. You will be reporting to the CEO and will be posted at New Delhi.
This letter is being sent to you in duplicate. Please affix your signature on the duplicate copy in token of your acceptance of the salary, perks & benefits as well as all other terms and conditions contained in this letter and return the same to us for our records within seven days from issue of this letter.
We look forward to your favorable reply and to working with you at Azure
Wishing you all the best... |
Yours Sincerely |
for Azure Power India Pvt. Ltd. |
[/s/ ILLEGIBLE] |
Authorized Signatory |
I Mohor Sen, hereby declare that I had fully read and understood the terms & conditions enumerated above to the best of my knowledge and belief.
I hereby agree & accept the all the above terms and conditions.
/s/ Mohor Sen | ||
Signature of the Employee | ||
Name: | Mohor Sen | |
Date: | 1-Feb-2014 |
Annexure I
BREAKUP OF CTC
Name | Mohor Sen | |||||
Designation | Sr. VP - Human Resources | |||||
Company | Azure Power India Pvt. Ltd. | Department | Human Resources |
Salary Components |
Monthly | Annual | ||||||
Basic Salary |
1,60,000 | 19,20,000 | ||||||
House Rent Allowance |
80,000 | 9,60,000 | ||||||
Conveyance |
800 | 9,600 | ||||||
Medical Allowance/ Reimbursement |
1,250 | 15,000 | ||||||
Special allowance |
1,57,170 | 18,86,040 | ||||||
|
|
|
|
|||||
Total Salary Components (A) |
3,99,220 | 47,90,640 | ||||||
|
|
|
|
|||||
Other Compensation Components |
||||||||
Provident Fund (Companys Share) |
9,360 | |||||||
Variable Component (up to 12.5% of the CTC) |
0 | |||||||
|
|
|||||||
Total of other Compensation Components (B) |
9,360 | |||||||
|
|
|||||||
Total Cost to the Company (A + B) |
48,00,000 | |||||||
|
|
for Azure Power India Pvt. Ltd.
[/s/ ILLEGIBLE]
Authorized Signatory
/s/ Mohor Sen
Signature of the Employee
Name: | Mohor Sen | |
Date: | 1-Feb-14 |
Exhibit 10.11
INDIA NON JUDICIAL
Government of National Capital Territory of Delhi
e-Stamp |
Certificate No. | : | IN-DL87866362679574L | ||
Certificate Issued Date | : | 15-Nov-2013 01:43 PM | ||
Account Reference | : | IMPACC (IV)/ dl843703/ DELHI/ DL-DLH | ||
Unique Doc. Reference | : | SUBIN-DLDL84370373702298314564L | ||
Purchased by | : | AZURE POWER INDIA PVT LTD | ||
Description of Document | : | Article Others | ||
Property Description | : | Not Applicable | ||
Consideration Price (Rs.) | : | 0 | ||
(Zero) | ||||
First Party | : | AZURE POWER INDIA PVT LTD | ||
Second Party | : | SUNBER SINGH WADHWA | ||
Stamp Duty Paid By | : | AZURE POWER INDIA PVT LTD | ||
Stamp Duty Amount(Rs.) | : | 100 | ||
(One Hundred only) |
Please write or type below this line
LEASE DEED
LEASE PERIOD | : | 5 YEARS | ||
MONTHLY RENT | : | Rs. 12,07,500/- per month |
THIS INDENTURE OF LEASE made at New Delhi on this 15th day of October 2013 between Mr. Sunbir Singh Wadhwa S/o Shri Harkanwal Singh Wadhwa and Mrs. Kulwinder Wadhwa 2W/o Mr. Sunbir Singh Wadhwa both are India Inhabitants, residing at [Address], (for the sake of convenience and brevity referred to as the LESSORS which expression shall, unless it be
Statutory Alert:
1. | The authenticity of this Stamp Certificate should be verified at www.shcilestamp.com. Any discrepancy in the details on this Certificate and as available on the website renders it invalid. |
2. | The onus of checking the legitimacy is on the users of the certificate. |
3. | In case of any discrepancy please inform the Competent Authority. |
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repugnant to the context or meaning thereof, me and include its successors and permitted assigns) of the ONE PART
M/s. AZURE POWER INDIA Pvt. Ltd., a Company registered in India under Companies Act, 1956, and having its registered office at 8, LSC, Pushp Vihar, New Delhi - 110062, acting through its Legal Counsel, Girish Narang, duty authorized by the Board of the Company (hereinafter for the sake of convenience and brevity referred to as the LESSEE which expression shall unless it be repugnant to the context or meaning thereof mean and include its successors and permitted assigns) of the OTHER PART:
AND
WHEREAS AS:
A. LESSORS HAVE REPRESENTED THAT
1. | They are owner and absolutely seized and possessed of and also otherwise well an sufficiently entitled to the Commercial building situated at No.8, Local Shopping Complex, Pushp Vihar Madangir, New Delhi 110 062 admeasuring approximately 8000 sq. ft. (Super Area) comprising of Basement, Ground Floor Mezzanine, 1 Floor, 2nd Floor & Terrace (hereinafter referred to as the BUILDING) as per ownership on joint and equal basis in the said building. |
2. | They are fully entitled to lease the aforesaid portion of the BUILDING with furniture and fixtures on as is where is basis including all amenities i.e. Air conditioners, generator, electrical panels etc. thereof and deal with the same if any manner whatsoever. |
3. | The LESSEE for the purpose of its business activities for running of its Corporate Office, is already occupying the said Building on Lease and is desirous to renew the Lease of the BUILDING viz. 8, Local Shopping Complex, Pushp Vihar Madangir, New Delhi having total area approximately 8000 sq. ft. area, hereinafter referred to as the Demised Premises for a period of 5 years along with the benefits as stipulated in para 4 below. |
4. | The demised premises shall include the following BENEFITS |
(i) The right to exclusive use of all the common passages, ways and open areas in around the Building including the roof rights.
(ii) The right to the put up/display LESSEES name board on the said Buildings prominent places.
(iii) Right to use amenities as provided herein.
B. | WHEREAS the LESSEE has offered a consolidated Monthly rent amounting to 12,07,500/ - (Rs. Twelve Lakhs Seven Thousand Five Hundred only) (plus applicable service tax) for the Demised Premises which the LESSOR has agreed upon. The LESSOR has now agreed to grant Lease of the Premises to the LESSEE on the stipulations terms and conditions recall hereunder. |
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NOW THIS INDENTURE WITNESSETH AND IT IS HEREBY AGREED, UNDERSTOOD, CONFIRMED AND DECLARED BY AND BETWEEN THE PARTIES HERETO AS FOLLOWS:
1. | That in pursuance of the aforesaid and in consideration of the rent reserved the covenants and conditions hereinafter contained and on the part of the LESSOR to be paid, performed and observed, the LESSOR doth hereby demise unto LESSEE, the Demised Premises to hold the same for a Period of Five Years commencing from 1 st May 2013 till 30th April, 2018. |
There shall be a LOCK-IN Period of initial 1 year wherein the LESSEE will not be able to vacate the Demised Premises. In case the LESSEE wants to vacate Demised Premises during the LOCK-IN Period, he may do so after payment of Rent balance for the remaining Period of this Lease Agreement.
The monthly rent will increase by 15% a period of Three Years further illustrated below:
| Monthly Rent applicable from 01 May 2013 to 30 th April 2016 INR 12,07,500 |
| Monthly Rent applicable from 01 May 2016 till 30 th April 2018 INR 13,88,625 |
Service Tax, as applicable on the monthly rent, will be paid separately by LESSEE to the LESSOR along with the monthly rental. The LESSEE will deduct tax at source from the said rental payment as per provisions of Income Tax Act. Corresponding TDS certificate will be made available to the LESSOR. The monthly Rent payable shall be joint and equal basis to the both the owners as ownership in the building. The monthly rent payable, in advance, to be paid before the 10th day of each succeeding month subject to the observance of
Before the expiry of the aforesaid Lease term, the LESSEE and LESSOR may agree to enter into a fresh Lease for a further period on mutually agreed terms. However any such continuation beyond the lock in period information of continuation by the either party will have to be given in writing six months before the expiry of the Lease. Incase if it is decided to further continue the agreement; the same shall be subject to a fresh negotiation mutually acceptable terms by both the parties.
2. | That the said Demised Premises belongs to Mr. Sunbir Singh Wadhwa and Mrs. Kulwinder Wadhwa each having 50% ownership rights respectively in the Demised Premises. Accordingly, as per the ownership rights between the joint owner conveyed to the LESSEE, the monthly rent payable for the demised premises be paid by the LESSEE by two separate cheques/ demand drafts drawn in favor of Mr. Sunbir Singh Wadhwa and Mrs. Kulwinder Wadhwa in ratio herein below mentioned : |
i. Mr. Sunbir Singh Wadhwa |
: 50% | |||
ii. Mrs. Kulwinder Wadhwa |
: 50% |
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Such payment made in the proportion indicated above shall be in complete discharge of the LESSEEs obligation to pay rent for occupation of the premised under this Agreement.
3. | The LESSOR shall provide Generator power back up of Demised Premises. LESSEE will be responsible for Annual Maintenance Contract and other recurring and maintenance costs for running of Generator. |
4. | Subject, expressly to the prior permission of the LESSOR in writing the LESSEE may be allowed to sub-let and/ or otherwise transfer their rights hereunder or any portion or portions of the demised premises along with the rights granted unto the LESSEE hereunder to the Holding Company/ Subsidiary Company/ Group Company of the LESSEE. However, the terms and conditions herein above shall be binding on such sub-LESSEE / sand / or Transferee and the LESSEE herein shall intimate to LESSOR of such subletting and / or other transfer of rights along with the registered address /s of such sub LESSEE/ transferee and all such transferee / sub LESSEE shall have to execute deed of adherence. Furthermore, if such a Sub-LESSEE is executed, the LESSEE shall continue to be fully responsible for payment of the rent for entire Demised Premises and the LESSEE will have no right to vacate Demised premises as long as the sub LESSEE, if any, is in possession of any part or whole of the sub-leased premises. The LESSEE will be fully responsible getting the Demised Premises vacated and satisfactory handing over of possession of the Demised Premises from the Sub-LESSEE, if any, after the expiry/ termination / early determination of the Lease Period. |
5. | The LESSEE for itself, its successors and assigns and to the extent that obligations may continue throughout the term hereby created, covenant with LESSOR as follows:- |
(a) | to regularly pay to the LESSOR monthly rent payable to them as aforesaid at time and in the manner aforesaid; |
(b) | It is agreed that LESSEE shall pay the electricity bills and the water bills as per consumption recorded in installed meters. The LESSEE shall always supply a copy to the LESSOR of the bills paid by it for the electricity and water charges upon demand. |
(c) | to permit access to the Premises to the LESSOR or any authorized person or per deputed by the LESSOR during the term of demised Lease Period hereunder a reasonable hours, but after 48 hours notice in writing previously given by LESSOR, to do enter upon to the demised premises only for the purpose of view the state and condition and\or making any necessary repairs etc. thereof; |
(d) | upon the expiry of the term hereby granted unless renewed as herein, provided, or early determination as hereinafter provided, to peaceably quietly yield up and deliver vacant possession of the demised premise good order as far as possible excepting reasonable wear and tear thereof; |
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(e) | That the LESSEE shall at their own cost, charges and expenses carry out minor internal repairs and maintenance to the Demised and keep the Premises in good conditions; |
(f) | to use the demised premises for the purpose of its own business and also for business of its associates / subsidiaries only and for no other purpose; |
(g) | not to hold the LESSOR and / or the owners / tenants or occupiers of the units in the said Demised Premises responsible or liable for any loss or damage suffered by the LESSEE or its employees, servants, agents, its visitors on account of any theft, fire or other accidents caused to the Demised Premises or any part thereof save and except the loss or damage caused due to negligence of the LESSOR or his / her agents, servants and contractors; |
(h) | not to do or permit to be done on the demised premises anything which is illegal, which may be or become a nuisance to the LESSOR or other occupants of building; |
(i) | not to bring or store in the demised premises combustible or inflammable materials or any dangerous things as may imperil the safety to the said building or as may increase the premium of insurance of the said building or render void insurance thereon; |
(j) | not to assign, sub-let, re-let, under-let, transfer or part with the demised premises or induct any third party / parties in the demised premises or part or portion thereof except after obtaining express permission in writing of LESSOR; |
(k) | the LESSEE shall indemnify and keep indemnified the LESSOR against any claim, demand, suit, prosecution, proceedings, costs, charges, penalty impositions, levies or expenses to which the LESSOR may become subject reason of any neglect, omission, failure, refusal or default on the part (LESSEE. |
6. | The LESSOR do hereby confirm, warrant, represent, declare and covenant with the LESSEE that: |
(a) | The demised premises has been constructed as per plans duly approved by Municipal Authorities without making any deviations /alterations therefrom and LESSOR hereby indemnifies and shall always keep indemnified the LESSEE for the same |
(b) | The demised premises have commercial use permission and the same can lawfully be used for running an office without any limitation including but limited to opening of an office. |
(c) |
The LESSOR has paid all the outgoings and other charges including maintenance charges, non-occupancy charges, water charges, electricity charges, Municipal rates, cesses, taxes, assessments, dues, duties, and all charges whatsoever payable in respect of the demised premises to all concern Government, Semi - government, local and public bodies and authorities up to the date execution of these presents and shall hereafter throughout the continuation of these presents |
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and any renewal thereof continue to pay all such rents, assessments, dues, duties, cesses, taxes, charges, other outgoings, and any full increase thereof without demur to the respective authorities in respect of demised premises. |
(d) | The LESSOR has not done or executed or omitted to do or execute any matter, deed, or thing and shall not to do or omit to do or execute any matter, deed or thing whereby or by reason whereof the LESSORs rights, interests and benefits in respect of the demised premises are prejudiced or adversely affected or extinguished in any manner whatsoever and that the present leas any renewal in respect thereof in respect of the demised premises grant thereunder shall become void or voidable or be affected in any manner cancelled or revoked on determined. |
(e) | Save and except as stated herein, the demised premises is not the subject matter of any legal proceedings pending before any court, tribunal or quasi-judicial body or authorities as on the date of these presents. |
(f) | The LESSOR agrees to keep indemnified and shall indemnify the LESSEE against suits, actions, and proceedings and all costs, charges, expenses, losses, liabilities, fines and penalties incurred or suffered by or caused to or level imposed on the LESSEE from and out of defect in title or actions, claims and proceedings relating to the title of the LESSOR to the demised premises. |
(g) | The LESSOR shall have the rights to Sell/ Mortgage / Gift / Transfer / Assign rights of the Demised premises or part thereof without the affecting the LESSE rights in this agreement and on any such Sale / Mortgage / Gift / Transfer Assigning the rights of the Demised Premises. LESSOR shall inform the LESSEE the same in writing and upon such intimation from LESSOR the LESSEE shall pay the rents to the purchaser and LESSOR shall handover the retention money to purchaser. The Purchaser / Mortgagee / Giftee / Transferee / Assignee of demised premises and the LESSEE both will be bound by the terms of Lease and will agree to attorney to and abide by the terms and conditions of Lease. The Purchaser/ Mortgagee/ Giftee/ Transferee / Assignee of the demised premises shall agree to bear the liability of the non - interest bearing deposit given by the LESSEE to the LESSOR. |
(h) | The LESSOR hereby further represents that he / she is the absolute owner of the said premises which is free from any charge or encumbrances and that apart LESSOR no one else has any right, title or interest in the said premises and that premises is not to subject to any acquisition, requisition, order of attachment other prohibitory order and further that he/ she is not aware of anything which in any manner limits, restricts or prevent the LESSOR from granting Lease to the LESSEE. |
(i) |
The LESSOR shall ensure that the exterior of the said Demised Premises, and entire sanitation system, drains, gutters and the external pipes are kept maintained in good order. With effect from the date of this Lease all minor and routine repair and maintenance of the common facilities and |
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the Demised Premises shall be by the LESSEE, However, any substantial repairs / maintenance/ replacement shall be carried out by the LESSOR at its own costs. |
(j) | The LESSOR shall provide the 35 KVA load to the entire BUILDING and Permit the LESSEE to get additional load required by the LESSEE sanctioned from the concerned authorities at LESSEEs own cost and expenses. |
(k) | The LESSOR agrees to carry out / bear the cost of any major repair / maintenance if necessary to the plumbing system of the premises arising out of normal wear tear. All minor repair / maintenance arising out of wear and tear shall be done by the LESSEE on his own cost. |
(l) | The LESSOR shall at his / her own cost keep the demised premises adequately insured covering risks such as fire, flood, earthquake, storm, tempest, collision, riots, sabotage, etc. However the LESSEE at its own cost shall ensure furniture, fixtures, equipments etc. installed by the LESSEE in the demised premises. |
(m) | The LESSOR shall ensure continuous and uninterrupted electricity supply to demised premises and other installation of other common areas, passage, compounds pertaining to the said Demised Premises except due to the power breakdown or shut down by the concerned authorities or any reasonable cause beyond the control of the LESSOR. All liabilities towards the repair & maintenance with the electricity department, liaison & correspondence with the author shall be carried out by the LESSOR only. The LESSEE has nothing to do in matter with the electricity departmental activities. |
(n) | The LESSOR shall allow the LESSEE and / or its nominee and / or its assigns display its / their name Board / s on the said Demised Premises by the LESSEE in consultation with the LESSOR and also for the display of such Board / s at the entrance hall and above or near the main entrance of the Demised Premises and the Demised Premises PROVIDED HOWEVER the display of such name Board/s shall not in any way adversely affect the aesthetics of the Building or is against the prevailing regulations of the local bodies like MCD or any other relevant authority. Any financial liability of tax, or charge arising of display / installation of such Board/s, signage will be borne by the LESSEE. |
(o) | The LESSOR shall indemnity and keep indemnified the LESSEE against any claim, demand, suit, prosecution, costs, charges, penalties, impositions, levies expenses to which the LESSEE may become subject to by reason of any negligence omission, failure, refusal or default on the part of the LESSOR. The LESSOR shall not be liable in any manner, whatsoever, for the illegal acts performed by LESSEE and LESSEE hereby agrees to keep the LESSOR harmless and indemnified against any such liability which may occur on account of illegal act by the LESSEE or by misuse of the Demised Premises. |
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7. | During the continuance of the terms of the demise hereby granted, the LESSEE shall have the following rights:- |
i. | In consultation and prior approval from the LESSOR, to carry out at their own cost further interior decoration work in the demised premises so as to suit requirements of the LESSEE by erecting, constructing and dismantling false ceiling internal electrifications for lighting, fans, power points, air - conditioning system of all types, cooling towers, cabling for telecoms, intercom and computer system, fire fighting and public address system, built - in storage systems including compactors, toilet facilities, kitchen and canteen facilities, channel music, office automation systems, diesel generator, etc. in accordance with Municipal regulations as may be applicable thereto and the LESSOR shall approve execution of documents as may be required to be submitted to the Municipal or other authorities in connection with such renovation at the expense of the LESSEE. LESSEE agrees that he shall not carry out any structural changes or changes in the external elevation of building without the prior written permission of the LESSOR. |
ii. | Upon determination of the Lease hereunder, the LESSEE shall be absolutely entitled to remove / take away any movable items of furniture or fixtures added by LESSEE at its own expenses during the tenure of the Lease. No fixtures or other article will be removed which may cause damage to the status of premises at the end of the terms of the Lease or vacation of the Demised Premises. |
8. | The LESSEE shall be entitled to allow its associates /subsidiaries /group companies to occupy and any portion of the demised premises. It is also specifically understood that termination or early determination of this Lease, the said associate/ subsidiaries shall, along with the LESSEE, also be liable to vacate the demised premises and hand over vacant and peaceful possession of the demised premises |
9. | The LESSOR doth hereby further covenant with the LESSEE, that on the LESSEE paying rent hereby reserved and performing and observing all the covenants conditions on the part of the LESSEE hereinbefore contained the LESSEE shall peaceably hold and enjoy the demised premises for the said term hereby grant without any interruption from or by the LESSOR or any person or persons claim under the LESSOR in whatsoever manner. |
10. | The Lease granted hereunder shall be governed by Section 108 of the Transfer Property Act 1882 save and except to the extent as modified and agreed between the LESSOR and the LESSEE as provided herein. |
11. | The LESSEE shall bear all the costs towards the execution, stamping registration to this. However each Party shall bear and pay the professional fee their respective Legal Advisers and Architects. This Lease has been executed in duplicate. LESSOR shall retain the registered Lease deed and copy shall be retained by the LESSEE. |
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12. | In case said Demised Premises or any part thereof shall at any time during term hereby created be destroyed or damaged by fire, act of God, riot civil commotion, enemy action and such like damage not within the control of LESSEE so as to be wholly or partially unfit for the use of the LESSEE, rent hereby reserved or proportionate part thereof according to the damage sustained shall cease to be payable from the time of such destruction or damage until the said demised premises shall be reinstated. The LESSOR shall upon: reinstatement be bound to put the LESSEE in possession of the demised premises and the period of the Lease shall be extended by such time as the said demise premises were in disuse by the LESSEE due to damage as above. |
13. | On the expiry and non - renewal of this Lease the LESSEE shall hand over to LESSOR quiet, vacant and peaceful possession of the said demised premises. |
14. | For the effective implementation of this Indenture of Lease, the LESSEE has agree to retain with the LESSORS, a sum of Rs. 63,00,000/- (Rupees Sixty Three Lacs Only) as interest free retention money on condition that such sum shall not be adjusted on any account by the LESSOR towards any rental, service or hire charges as may be due from the LESSEE under this Indenture of Lease during the period of Lease. However termination or expiry of the Lease period, whichever is earlier, LESSOR, after making the due adjustments if any, shall return to the LESSEE the afore retention money. |
15. | The LESSEE has already paid to the LESSOR retention money of Rs.63,00,000/ - (Rupees Sixty Three Lacs Only) (the amount hereinafter referred to as Retention Money) the receipt of which has been acknowledged by the LESSOR. |
16. | On the expiry of the Lease as herein contained or sooner determination termination of this Lease, the LESSEE shall handover the possession of Demised Premises back to the LESSOR by handing over the keys and satisfactory possession of the Demised Premises in the hands of the LESSOR and LESSOR shall refund to the LESSEE of the said Retention Money subject to provisions hereinafter contained. |
17. | On the expiry of the Lease or sooner determination / termination of this Lease, if the LESSEE fails to handover the satisfactory possession of the demised premise the LESSOR, the LESSOR shall not be required to return of the Retention Money if the demised premises is unsatisfactorily handed over to the LESSOR and the LESSEE will have to pay to the LESSOR an amount corresponding to double the monthly rental being last paid by the LESSEE (to be calculated pro-rata basis for such non-vacation (unsatisfactory) handing over of the Demised Premises to the LESSOR after the completion /termination/ determination of the agreed Lease period. The right of the LESSOR to retain the Retention Money to be without prejudice to the right of the LESSOR to take any other legal action under these presents or under this Indenture of Lease. |
18. |
It is further agreed by and between the Parties hereto that incase of failure on the part of the LESSOR, to refund the said Retention Money, then, without prejudice to the other rights of the |
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LESSEE in such case, the LESSOR shall be liable to pay interest @ 1% per annum, on the amount of Retention Money until the amount is repaid to the LESSEE. However in such an event the LESSEE shall hand over the Demised Premises back to the LESSOR or in alternate will be entitle to continue to occupy the Demised Premises along with all facilities and amenities provided by the LESSOR to the LESSEE under this Indenture of Lease without payment of any rent, additional deposit or any other charge whatsoever, under this Indenture of Lease, till the amount of Retention money is returned / refunded to the LESSEE. |
19. | In the event the LESSOR, at any time during the period of this Indenture of Lease, sell and / or transfers its rights in the demised premises as a whole or any part or parts thereof to any other person or persons, then in that event, LESSOR shall notify the same to LESSEE in writing. The LESSOR shall in such case ensure that the prospective new owner of the Demised Premises shall confirm to the satisfaction of the LESSEE that the terms herein agreed to and this Indenture of Lease shall be binding on the said new owner and the said new owner will acknowledge the receipt of the Retention Money from the LESSOR. |
20. | Any. notice / Letter required to be served by one party to another in pursuance this Lease Deed shall be served upon the other, in writing, at the respective address as mentioned herein below; |
(i) In case of LESSEE:
Azure Power India Private Limited
8, LSC Pushp Vihar, Madangir
New Delhi - 110062
Attention: CEO / Managing Director
(ii) In case of LESSOR:
Shri Sunbir Singh Wadhwa
[Address]
21. | All disputes, differences and question of any nature which at any time arise between the parties to this Agreement or their respective representatives and assigns or any of them out of construction or concerning anything contained in or arising out of this agreement or as to the rights, duties or liabilities under this lease of the parties to it hereto regarding the construction or interpretation of the terms or conditions herein contained or determination of any liability shall be subject to the exclusive jurisdiction of the courts at New Delhi only. |
i. | Any dispute, controversy or claim arising out of or relating to this Agreement or breach, termination or invalidity thereof, shall be settled by arbitrator accordance with the Arbitration and Conciliation Act 1996. |
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ii. | The arbitration tribunal shall be composed of one arbitrator to be appointed each by the LESSEE and the LESSOR and in case of any disagreement between the arbitrators; both the arbitrator shall nominate and appoint another arbitrator as Umpire. |
iii. | The place of arbitration shall be at New Delhi and any award made whether interim or final, shall be deemed for all the purposes between the Parties shall be made, in New Delhi. |
iv. | The arbitration proceedings shall be conducted in the English language and any award or awards shall be rendered in English. The procedural law of the arbitration shall be Indian Law. |
v. | The award of the arbitration shall be final and conclusive and binding upon both the parties. |
vi. | Each party shall bear the expenses of the arbitrator appointed by, and all other expenses related to the third arbitrator as Umpire and its expenses if any, shall be shared by both the parties equally. |
IN WITNESS WHEREOF the LESSOR has set his / her hands to these presents a duplicate thereof and the LESSEE have caused the same to be executed i manner appearing hereinafter, the day and year first hereinabove written.
SIGNED, SEALED, CONFIRMED AND DELIVERED
By the within named LESSOR
/s/ Sunbir Singh Wadhwa |
Mr. Sunbir Singh Wadhwa |
and |
/s/ Kulwinder Wadha |
Mrs. Kulwinder Wadha |
By the within named LESSEE |
For Azure Power India Pvt. Ltd. |
/s/ Surendra Kumar Gupta |
Surendra Kumar Gupta |
CFO |
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Exhibit 10.13
INVESTMENT NUMBER
Subscription Agreement
BETWEEN
AZURE POWER GLOBAL LIMITED
AND
MR. INDERPREET SINGH WADHWA
AND
MR. HARKANWAL SINGH WADHWA
AND
IFC GIF INVESTMENT COMPANY I
AND
IW GREEN INC.
Dated June 24, 2015
TABLE OF CONTENTS
Article/
|
Item |
Page No. |
||||||
ARTICLE I |
3 | |||||||
Definitions and Interpretation |
3 | |||||||
Section 1.01. |
Definitions |
3 | ||||||
Section 1.02. |
Interpretation |
8 | ||||||
Section 1.03. |
Third Party Rights |
9 | ||||||
ARTICLE II |
9 | |||||||
Agreement for Subscription |
9 | |||||||
Section 2.01. |
Subscription |
9 | ||||||
Section 2.02. |
Companys Obligations until all of the Subscription Shares are Issued |
11 | ||||||
Section 2.03. |
Cancellation of IFC Subscription |
12 | ||||||
ARTICLE III |
12 | |||||||
Representations and Warranties |
12 | |||||||
Section 3.01. |
Representations and Warranties |
12 | ||||||
Section 3.02. |
IFC Reliance |
18 | ||||||
Section 3.03. |
Survival of Representations and Warranties |
19 | ||||||
Section 3.04. |
Indemnity |
19 | ||||||
ARTICLE IV |
20 | |||||||
Conditions of Investor Subscription |
20 | |||||||
Section 4.01. |
Conditions of IFC Subscription |
20 | ||||||
ARTICLE V |
22 | |||||||
Miscellaneous |
22 | |||||||
Section 5.01. |
Notices |
22 | ||||||
Section 5.02. |
Saving of Rights |
23 | ||||||
Section 5.03. |
English Language |
23 | ||||||
Section 5.04. |
Applicable Law and Arbitration |
23 | ||||||
Section 5.05. |
Immunity |
24 | ||||||
Section 5.07. |
Successors and Assigns |
25 | ||||||
Section 5.08. |
Amendments, Waivers and Consents |
25 | ||||||
Section 5.09. |
Counterparts |
25 | ||||||
Section 5.10. |
Expenses |
25 | ||||||
Section 5.11. |
Entire Agreement |
26 | ||||||
Section 5.12. |
Invalid Provisions |
26 |
Article/
|
Item |
Page No. |
||||
ANNEX A |
30 | |||||
MINIMUM INSURANCE REQUIREMENTS |
30 | |||||
ANTI-CORRUPTION GUIDELINES FOR IFC TRANSACTIONS |
31 | |||||
SCHEDULE 1 |
34 | |||||
FORM OF SUBSCRIPTION NOTICE |
34 | |||||
SCHEDULE 2 |
36 | |||||
ORIGINAL COMPANY DISCLOSURE SCHEDULE |
36 | |||||
SCHEDULE 3 |
62 | |||||
FORM OF UPDATED COMPANY DISCLOSURE SCHEDULE |
62 | |||||
SCHEDULE 4 |
65 | |||||
FORM OF CERTIFICATE OF INCUMBENCY AND AUTHORITY |
65 | |||||
SCHEDULE 5 |
67 | |||||
FORM OF LETTER TO COMPANYS AUDITORS |
67 | |||||
SCHEDULE 6 |
68 | |||||
TERMS AND CONDITIONS OF SERIES H CCPS |
68 | |||||
SCHEDULE 7 |
73 | |||||
LIST OF PERMITTED MATTERS |
73 | |||||
SCHEDULE 8 |
74 | |||||
LIST OF RELATED AGREEMENTS |
74 |
- ii -
SUBSCRIPTION AGREEMENT
SUBSCRIPTION AGREEMENT (the Agreement ), dated June 24, 2015, between:
(1) AZURE POWER GLOBAL LIMITED, a company organized and existing under the laws of Mauritius ( Company ) having its principal office at 1st Floor, The Exchange, 18 Cybercity, Ebene, Mauritius;
(2) MR. INDERPREET SINGH WADHWA, son of Mr. Harkanwal Singh Wadhwa, residing at [Address] ( IW );
(3) MR. HARKANWAL SINGH WADHWA, son of Late Mr. Manohar Singh Wadhwa, residing at [Address] ( HW );
(4) IW GREEN INC., a company established under the laws of, having its principal office at 341, Raven Circile, Wyoming, Zip Code 19934, Kent, United States of America ( Sponsor Entity ); and
(5) IFC GIF INVESTMENT COMPANY I, a company established under the laws of Mauritius, having its principal office at C/o Cim Fund Services Ltd, 33 Edith Cavell Street, Port Louis, Mauritius ( Investor );
IW, HW and the Sponsor Entity shall hereinafter be collectively referred to as Sponsors and individually as Sponsor . The Sponsors, the Investor and the Company shall hereinafter be collectively referred to as Parties and individually be referred to as Party .
RECITALS
The Company desires to issue to the Investor, and the Investor desire to subscribe for, Series H CCPS (as defined hereinafter) in the Company referred to in Section 2.01(a) ( Subscription ), on the terms and conditions set forth in this Agreement.
ARTICLE I
Definitions and Interpretation
Section 1.01. Definitions . Wherever used in this Agreement, the following terms have the following meanings:
Accounting Standards in relation to the Company, means the generally accepted accounting principles promulgated by the Financial Accounting Board of the United States, as amended from time to time, and applied on a consistent basis; and in relation to Azure India and its Subsidiaries, means the Indian generally accepted accounting principles promulgated by Institute of Chartered Accountants of India, together with its pronouncements from time to time, and applied on consistent basis;
Action Plan means the plan or plans developed by Azure India, a sample copy of which is attached as Annex B to Schedule K ( Action Plan ) to the Shareholders Agreement, setting out the specific social and environmental measures to be undertaken by the Company, to enable the Company Operations to be undertaken in compliance with Performance Standards;
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Affiliate means with respect to any Person, any Person directly or indirectly Controlling, Controlled by or under common Control with, that Person;
Applicable Law means all applicable statutes, laws, ordinances, rules and regulations, including but not limited to, any license, permit or other governmental Authorization, in each case as in effect from time to time;
Applicable S&E Law means all applicable statutes, laws, ordinances, rules and regulations of the Country, including, without limitation, all Authorizations setting standards concerning environmental, social, labor, health and safety or security risks of the type contemplated by the Performance Standards or imposing liability for the breach thereof;
Auditors means the independent, external auditors of the Company;
Authority means any national, supranational, regional or local government or governmental, statutory, regulatory, administrative, fiscal, judicial, or government-owned body, department, commission, authority, tribunal, agency or entity, or central bank (or any Person whether or not government owned and howsoever constituted or called, that exercises the functions of a central bank);
Authorization means any consent, registration, filing, agreement, notarization, certificate, license, approval, permit, authority or exemption from, by or with any Authority, whether given by express action or deemed given by failure to act within any specified time period and all corporate, creditors and shareholders approvals or consents;
Authorized Representative means, in relation to the Company, any individual who is duly authorized by the Company to act on its behalf and whose name and a specimen of whose signature appear on the Certificate of Incumbency and Authority most recently delivered by the Company to the Investor and, in relation to the Sponsor Entity, any individual who is duly authorized by the Sponsor Entity to act on its behalf and whose name and a specimen of whose signature appear on the Certificate of Incumbency and Authority most recently delivered by the Sponsor Entity to the Investor;
Azure India means Azure Power India Private Limited, a company incorporated under the laws in India and having its registered office at 8, LSC, Madangir, Pushpvihar, New Delhi-110062, India;
Azure India SHA means the shareholders agreement to be executed between the Company, IW, HW and Azure India, in relation to the rights and obligations of the parties thereto for regulating the management and control of the affairs of Azure India and certain other rights and obligations inter se in relation to Azure India in accordance with the terms and conditions set out therein;
Business Day means a day when banks are open for business in New York, New York and the Republic of Mauritius;
Cancellation Date means the date immediately occouring after 30 (thirty) calender days of the date of execution of this Agreement;
Certificate of Incumbency and Authority means a certificate provided to the Investor by the Company or the Sponsor Entity (as may be relevant) substantially in the form set forth in Schedule 4 ( Form of Certificate of Incumbency and Authority );
Charter means the constituion, the memorandum of association, the articles of association or the by-laws of the Company or, as applicable, any Subsidiary;
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Coercive Practice has the meaning set forth in Annex B ( Anti-Corruption Guidelines for IFC Transactions );
Collusive Practice has the meaning set forth in Annex B ( Anti-Corruption Guidelines for IFC Transactions );
Co-Investor means IFC;
Co-Investor Shares means the Series H CCPS which the Co-Investor may subscribe in the Company or the Equity Securities with similar rights and preference which the Co-Investor may subscribe in Azure India, as the case may be;
Co-Investor Subscription Agreement means the subscription agreement entered into by the Co-Investor with the Company and/or Azure India for the issue and allotment of Co-Investor Shares to the Co-Investor;
Company Agreements has the meaning set forth in Section 3.01(x) ( Material Contracts );
Companys Employee Plan means any plan, program, or other arrangement providing for employment, compensation, retirement, deferred compensation, severance, separation, stock option or other benefits, which has been sponsored, contributed to or required to be contributed to by the Company for the benefit of any Person who performs or who has performed services for the Company;
Company Operations means the existing and future operations, activities and facilities of the Company and its Subsidiaries (including the design, construction, operations, maintenance, management and monitoring thereof as applicable);
Control means the power to direct the management or policies of a Person, directly or indirectly, whether through the ownership of shares or other securities, by contract or otherwise; provided that, in any event, the direct or indirect ownership of fifty per cent (50%) or more of the voting share capital of a Person is deemed to constitute Control of that Person, and Controlling and Controlled have corresponding meanings;
Corrupt Practice has the meaning set forth in Annex B ( Anti-Corruption Guidelines for IFC Transactions );
Country means the Republic of Mauritius;
Current Company Disclosure Schedule means the Original Company Disclosure Schedule, as modified and/or supplemented by each Updated Company Disclosure Schedule, if any, which has from time to time been delivered by the Company and accepted by the Investor, in accordance with Section 4.01(a)(ii) ( Conditions of the Subscription );
Dollars or $ means the lawful currency of the United States of America;
Equity Securities of a company means ordinary shares, preferred shares, bonds, loans, warrants, rights, options or other similar instruments or securities which are convertible into or exercisable or exchangeable for, or which carry a right to subscribe for or purchase ordinary shares of such company or any instrument or certificate representing a beneficial ownership interest in the ordinary shares of such company, including global depositary receipts and American depository receipts and any other security issued by the company, even if not convertible into ordinary shares, that derives its value and/or return based on the financial performance of the company or its shares;
5
Equity Shares or Shares means the ordinary shares of the Company having the par value of USD 0.01 (Dollars zero decimal zero one) each and carrying 1 (one) vote each;
Externalization Process means the signing and execution of the Transaction Documents by the parties thereto and the subscription of Equity Securities of the Company by: (a) Helion Venture Partners II, LLC; (b) Helion Venture Partners India II, LLC; (c) IFC; (d) DEG Deutsche Investitions -und Entwicklungsgesellschaft mbH; (e) FC VI India Venture (Mauritius) Ltd.; and (f) Société DE Promotion ET DE Participation Pour LA Coopération Économique as set out in Section 3.01(f) ( Capital Structure of the Company ) of the Current Company Disclosure Schedule;
Fraudulent Practice has the meaning set forth in Annex B ( Anti-Corruption Guidelines for IFC Transactions );
IFC means the International Finance Corporation, an international organization established by Articles of Agreement among its member countries, including the Republic of Mauritius;
Investor Subscription means any subscription for Equity Securities of the Company by the Investor as provided for in Article II ( Agreement for Subscription );
Key Subsidiary means, at the relevant time:
(a) Azure India; and
(b) each Subsidiary or such Subsidiaries (both direct or indirect) of Azure India where, as of the end of the then most recently completed fiscal year of Azure India:
(i) | the Assets of such Subsidiary or cumulative Assets of such Subsidiaries, as the case may be, account for more than 70% (seventy per cent) of the total consolidated Assets of Azure India; or |
(ii) | such Subsidiary or such Subsidiaries cumulatively, have earnings before interest, tax, depreciation and amortization representing more than 70% (seventy per cent) of Azure Indias total consolidated earnings before interest, tax, depreciation and amortization.; |
Lien means any mortgage, pledge, charge, assignment, hypothecation, security interest, title retention, preferential right, option (including call commitment), trust arrangement, right of set-off, counterclaim or bankers lien, privilege or priority of any kind having the effect of security, any designation of loss payees or beneficiaries or any similar arrangement under or with respect to any insurance policy or any preference of one creditor over another arising by operation of law;
Lock-up Agreement means the lock-in agreement dated on or around the date of this Agreement entered into between the Investor and certain other shareholders of the Company for setting out the lock-in modalities for the Equity Shares of the Investor received on conversion of the Subscription Shares in accordance with Schedule 6 ;
Material Adverse Effect means a material adverse effect on:
(a) the Companys or any of its Subsidiaries assets or properties;
(b) the Companys or any of its Subsidiaries business prospects or financial condition;
(c) the carrying on of the Companys or any of its Subsidiaries business or operations;
6
(d) the ability of the Company to comply, and ensure that each of its Subsidiaries complies, with its obligations under this Agreement, any other Transaction Document to which it is a party or the Companys and in the case of each of its Subsidiaries, such Subsidiarys Charter; or
(e) the ability of the Sponsors to comply with its obligations under this Agreement or any other Transaction Document to which it is a party;
Obstructive Practice has the meaning set forth in Annex B ( Anti-Corruption Guidelines for IFC Transactions );
OFAC has the meaning set forth in Section 3.01(aa) ( Financing );
Original Company Disclosure Schedule means the Companys completed disclosure schedule attached hereto as Schedule 2 ( Original Company Disclosure Schedule );
Performance Standards means IFCs Performance Standards on Social & Environmental Sustainability, dated January 1, 2012, copies of which have been delivered to and receipt of which has been acknowledged by the Company pursuant to the letter dated 4 th June 2015;
Person means any individual, corporation, company, partnership, firm, voluntary association, joint venture, trust, unincorporated organization, Authority or any other entity whether acting in an individual, fiduciary or other capacity;
Registration Rights Agreement means the registration rights agreement entered into by the shareholders of the Company setting out the right to have the registration statement filed with respect to the Equity Shares or Equity Securities held by them for resale/make an offering under the Securities Act of 1933, as amended;
Related Agreements means the Transaction Documents and other agreements and documents as referred in Schedule 8 hereto;
Relevant Parties means the Company and the Sponsors;
S&EA means the social and environmental assessment prepared by Azure India or a qualified third party consultant in accordance with the Performance Standards;
S&E Management System means the Companys social and environmental management system, including but not limited to corporate-wide applicable S&E Management System acceptable to the Investor, which includes all the elements discussed in the ESRS and is consistent with the Performance Standards and the HR Policies and Procedures, both to be implemented in accordance with the schedule detailed in the Action Plan and enabling the Company to identify, asses and manage risks in respect of the Company Operations on an ongoing basis and in accordance with the Performance Standards;
S&E Performance Report means the S&E Performance Report, in form and substance satisfactory to the Investor, setting out the specific social, environmental and developmental impact information to be provided by the Company in respect of the Company Operations;
Sanctionable Practice means any Corrupt Practice, Fraudulent Practice, Coercive Practice, Collusive Practice, or Obstructive Practice, as those terms are defined herein and interpreted in accordance with the Anti-Corruption Guidelines attached to this Agreement as Annex B ( Anti-Corruption Guidelines for IFC Transactions );
7
Series H CCPS means fully paid up compulsorily convertible preference shares of the Company having the rights, preferences and privileges as set forth in Schedule 6 hereto and in the Shareholders Agreement;
Shareholders Agreement means the shareholders agreement to be executed between the Company and its shareholders in relation to the rights and obligations of the parties thereto for regulating the management and control of the affairs of the Company and certain other rights and obligations inter se in relation to the Company;
Subscription Date has the meaning set forth in Section 2.01(b) ( Subscription );
Subscription Notice means a notice in the form set forth in Schedule 1 ( Form of Subscription Notice );
Subscription Price has the meaning set forth in Section 2.01(a) ( Subscription );
Subscription Shares has the meaning set forth in Section 2.01(a) ( Subscription );
Subsidiary means with respect to the Company, an Affiliate over fifty per cent (50%) of whose capital is owned, directly or indirectly by the Company, and shall include Azure India and such other companies in which over fifty per cent (50%) of whose capital is owned, directly or indirectly by Azure India;
Tax or Taxes means any present or future taxes (including stamp taxes), withholding obligations, duties and other charges of whatever nature levied by any Authority;
Transaction Documents means:
(a) | this Agreement; |
(b) | the Shareholders Agreement; |
(c) | the Azure India SHA; |
(d) | the Lock-up Agreement; |
(e) | Registration Rights Agreement; and |
(ef) | any other document mutually agreed by between the Parties as a Transaction Document; and |
Updated Company Disclosure Schedule means the Companys updated disclosure schedule, if any, which has been delivered by the Company in accordance with Section 4.01(a)(ii) ( Conditions of the Subscription ) and shall be in the form of Schedule 3 hereto.
Section 1.02. Interpretation . In this Agreement, unless the context otherwise requires:
(a) headings are for convenience only and do not affect the interpretation of this Agreement;
(b) words importing the singular include the plural and vice versa;
(c) a reference to an Annex, Article, party, Schedule or Section is a reference to that Article or Section of, or that Annex, party or Schedule to, this Agreement;
8
(d) a reference to a document in the agreed form is a reference to a document approved and for the purposes of identification initialed by or on behalf of the parties thereto;
(e) a reference to a document includes an amendment or supplement to, or replacement or novation of, that document but disregarding any amendment, supplement, replacement or novation made in breach of this Agreement;
(f) general words in this Agreement shall not be given a restrictive meaning by reason of their being preceded or followed by words indicating a particular class of acts, matters or things or by examples falling within the general words;
(g) a reference to a party to any document includes that partys successors and permitted assigns; and
(h) unless stated otherwise herein, a reference to shares of the Company means shares of the Company of any class.
Section 1.03. Third Party Rights . A Person who is not a party to this Agreement has no right under the Contracts (Rights of Third Parties) Act 1999 to enforce or enjoy the benefit of any term of this Agreement.
ARTICLE II
Agreement for Subscription
Section 2.01. Subscription. (a) On the terms and subject to the conditions of this Agreement, the Investor agrees to subscribe and pay for an aggregate of 111,071 (One Hundred Eleven Thousand and Seventy One) fully paid Series H CCPS in the Company (the Subscription Shares ) for a subscription price of USD 450.16 (Dollars Four Hundred and Fifty and Sixteen Cents) per Subscription Share (the Subscription Price ). The aggregate consideration payable by the Investor for the subscription of the Subscription Shares shall be up to Dollars Fifty Million ($ 50,000,000).
(b) Subject to the terms of this Agreement and the reasonable satisfaction (or waiver by the Investor) of the conditions of subscription set forth in Section 4.01 ( Conditions of Investor Subscription ), either:
(i) | the Company may request the Investor to subscribe for the Subscription Shares by delivering a Subscription Notice to the Investor; or |
(ii) | the Investor may notify the Company that it shall subscribe for the Subscription Shares by delivering a Subscription Notice to the Company, |
at least twelve (12) Business Days prior to the date of the Investor Subscription specified in such Subscription Notice (the Subscription Date ), subject to Section 2.03 ( Cancellation of Investor Subscription ).
(c) If a Subscription Notice is delivered by the Company to the Investor in accordance with Section 2.01 (b)(i), or the Investor delivers a Subscription Notice to the Company in accordance with Section 2.01 (b)(ii), then the Company shall be obliged to issue the Subscription Shares to the Investor on the Subscription Date and shall take all necessary corporate and other action, including but not limited to all appropriate steps to ensure that a meeting of the Companys shareholders or a meeting of the board of directors, as applicable, is promptly convened, to ensure that the Subscription Shares shall be issued to the Investor on the Subscription Date, in accordance with the terms of this Agreement.
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(d) On the Subscription Date:
(i) | the Investor shall pay the amount equal to the Subscription Price multiplied by the number of Subscription Shares in Dollars to the following account of the Company: |
Company Account (IBAN): [Account Number]
Bank Name: Barclays Bank Mauritius Limited
Bank Address: International Banking, 1ST Floor, Barclays House, Barclays House, 68-68A, Cybercity Ebene, Mauritius
SWIFT Code: BARCUS33,
or such other account specified in the Subscription Notice; and
(ii) | the Company shall: |
(A) | issue to the Investor, or as the Investor directs, the Subscription Shares free of all Liens or other encumbrances or rights of third parties and record the Investor as the legal and beneficial owner of the Subscription Shares in the Companys share register; |
(B) | deliver to the Investor, or as the Investor directs: (A) a share certificate in customary form; and (B) a certified copy of the Companys share register, evidencing the Investors valid title to the Subscription Shares, free of all Liens or other encumbrances or rights of third parties; and |
(C) | provide the Investor with a certifice copy of the resolutions passed by the board of directors and the shareholders of the Company for the issue and allotment of the Subscription Shares to the Investor; |
The Parties agree that the fulfillment of the obligations of the Company set forth in Sections 2.01(d)(ii)(A) through (C) above are conditions precedent to the application of any funds disbursed by the Investor under Section 2.01(d)(i) to the subscription for the Subscription Shares and that, accordingly, any funds disbursed in accordance with Section 2.01 (d)(i) shall be held in trust by the Company (for the benefit of the Investor) until the acts set forth in Section 2.01 (d)(ii)(A) through (C) have been performed and the Investor has notified the Company in writing that such funds can be released to the Company, and in the event that such acts are not performed as soon as practicable, and in any event within three (3) Business Days from any such disbursement of funds by the Investor, the Company shall, upon the Investors request, immediately return the funds disbursed in accordance with Section 2.01 (d)(i) to the Investor, unless instructed otherwise by the Investor.
(e) The Company shall pay all Taxes, fees or other charges payable on or in connection with the execution, issue, subscription, delivery, registration, translation or notarization of this Agreement, the other Transaction Documents, the Companys Charter, the Subscription Shares and any other documents related to this Agreement, the other Transaction Documents or the Companys Charter.
(f) The Company shall undertake all post-issue filings and other requirements associated with the issuance of the Subscription Shares in the time prescribed for the same under Applicable Law.
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(g) If the Company, for any reason, does not issue the Subscription Shares as set forth in Section 2.01(d), including by reason of failure of the Companys shareholders to authorize such issuance, such failure to issue the Subscription Shares shall constitute a breach of the Companys obligations under this Agreement, and the Investor shall have the right to exercise any and all rights or legal or equitable remedies of any kind which may accrue to it against the Company. It is clarified that provisions of this Section 2.01 (g) shall not apply if, upon reasonable satisfaction (or waiver by the Investor) of the conditions of subscription set forth in Section 4.01 ( Conditions of Investor Subscription ), the Investor does not subscribe to the Subscription Shares within Subscription Date.
Section 2.02. Companys Obligations until all of the Subscription Shares are Issued . (a) Until the Subscription Shares have been subscribed and issued or the right of the Company to request the subscription has been canceled as provided in Section 2.03 ( Cancellation of Investor Subscription ), whichever occurs first, the Company shall conduct its business in the ordinary course and shall use, and shall cause each of its Subsidiaries to use, its reasonable best efforts to preserve intact its business organizations and relationships with third parties and to keep available the services of its present officers and employees.
(b) In addition to Section 2.02(a), until the Subscription Shares have been subscribed and issued or the right of the Company to request the subscription has been canceled as provided in Section 2.03 (1) ( Cancellation of Investor Subscription ) or the right of the Investor to subscribe has been cancelled as provided in Section 2.03 (2), whichever occurs first, the Company shall not, and shall ensure that each of its Subsidiaries shall not, (other than in connection with the Investor Subscription, the issuance and allotment of Co-Investor Shares to the Co-Investor, the issuance and allotment of the Equity Securities of the Company as part of the Externalization Process and for matters listed in Schedule 7 or with the prior written approval of the Investor):
(i) | increase, allot, issue, acquire, repay or redeem any share capital or Equity Securities of any class; |
(ii) | change the par value of, or the rights attached to, any of its Equity Securities of any class; |
(iii) | take any action by amendment of its Charter or through reorganization, consolidation, sale of share capital, merger or sale of assets, or otherwise, which might result in a dilution or increase of the percentage interest in the Company to be held by the Investor when any Equity Securities are issued to the Investor pursuant to the Investor Subscription; |
(iv) | sell, lease, transfer or assign any of its assets, except in the ordinary course of business and consistent with past practice; |
(v) | assume or incur indebtedness, liabilities, obligations or expenses exceeding an aggregate of $1,000,000 (Dollars One Million) (or the equivalent in any other currency) except in the ordinary course of business; |
(vi) | make any capital expenditure exceeding $5,000,000 (Dollars Five Million) (or the equivalent in any other currency) except in the ordinary course of business; |
(vii) | create any Liens over any assets except in the ordinary course of business; |
(viii) | declare, pay or make a dividend or distribution; |
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(ix) | take any action that would make any representation or warranty contained in Section 3.01 ( Representations and Warranties ) (except as set forth in the Current Company Disclosure Schedule) untrue, inaccurate or misleading in any respect on or at any time prior to the Subscription Date; |
(x) | take any action that could reasonably be expected to prevent, impair or materially delay the ability of the Company to consummate the transactions contemplated by this Agreement; or |
(xi) | agree or commit to take any of the actions described above. |
Section 2.03. Cancellation of Investor Subscription . (1) The Investor may, by written notice to the Company, cancel the right of the Company to request the Investor to subscribe for any Subscription Shares:
(a) if at any time, in the reasonable opinion of the Investor, anything has occurred which has or may reasonably be expected to have a Material Adverse Effect or there exists any situation which indicates that performance by the Company, its Subsidiaries or the Sponsors of their respective obligations under any of the Transaction Documents, or the Companys Charter or the constitutional documents of the Sponsors who are not natural Persons cannot be expected;
(b) if the Company has breached Section 2.02 ( Companys Obligations until all of the Subscription Shares are Issued ) and such breach is incapable of cure (in the sole opinion of the Investor) or, where such breach is capable (in the sole opinion of the Investor) of cure, it has not been cured within thirty (30) days following receipt by the Company of notice of such breach from the Investor; or
(c) in any case, at any time on or after the Cancellation Date,
(2) The Company may, by written notice to the Investor, cancel the right of the Investor to subscribe to any Subscription Shares at any time on or after the Cancellation Date.
Upon any such cancellation, each Partys further rights and obligations shall terminate immediately, provided that such termination shall not affect a Partys accrued rights and obligations at the date of termination and shall be without prejudice to any and all rights or legal or equitable remedies of any kind which may accrue to the Investor against the Company and provided that the provisions of Section 5.01 ( Notices ), Section 5.03 ( English Language ), Section 5.04 ( Applicable Law and Arbitration ), Section 5.06 ( Announcements ) and Section 5.10 ( Expenses ) shall survive such termination.
ARTICLE III
Representations and Warranties
Section 3.01. Representations and Warranties . Each of the Company and the Sponsors hereby represents and warrants to the Investor that the statements contained in this Section 3.01: (i) are true, accurate and not misleading with respect to the Company and the Sponsors who are not natural Persons and/or, as the case may be, each of the Key Subsidiaries or Subsidiaries (as the case may be) as of the date of this Agreement, except as otherwise set forth in the Companys disclosure schedule (the Original Company Disclosure Schedule ) attached to this Agreement as Schedule 2 ( Company Disclosure Schedule ); and (ii) will remain true, accurate and not misleading immediately prior to the Investor Subscription except as set forth in any updated disclosure schedule, which shall be in the form of Schedule 3 and in substance satisfactory to the Investor (an Updated Company Disclosure
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Schedule ), delivered by the Company to the Investor and accepted and signed by the Investor at least ten (10) Business Days prior to the Subscription Date. No disclosure made in the Original Company Disclosure Schedule or an Updated Company Disclosure Schedule shall be deemed adequate to disclose an exception to a representation or warranty made herein, unless the disclosure contained therein identifies the relevant facts and circumstances for such exception fully, fairly, specifically and accurately.
(a) Organization and Authority . Each of the Company, and the Sponsors who are not natural Persons and the Subsidiaries is a legal entity duly organized and validly existing under the laws of its place of incorporation, and the Company has the corporate power and authority to enter into, deliver and perform its obligations under this Agreement and each of the other Transaction Documents to which it is a party. Each of the Sponsors who are natural Persons have the power and authority to enter into, deliver and perform their respective obligations under this Agreement and each of the Transaction Documents to which it is a party.
(b) Validity . This Agreement and each of the other Transaction Documents to which it is a party have been duly authorized and executed by the Company and the Sponsors and constitute its valid and legally binding obligation, enforceable in accordance with its terms.
(c) No Conflict . The execution and performance by each of the Company and the Sponsors of any of their respective obligations under the Transaction Documents to which it is a party including the issuance to the Investor of any of the Subscription Shares upon subscription therefor, do not (assuming all the Authorizations referred to in Section 3.01(d) ( Status of Authorizations ) of the Current Company Disclosure Schedule have been obtained): (i) conflict with or result in a breach of any of the terms, conditions or provisions of, or constitute a default, or require any consent under, any indenture, mortgage, agreement or other instrument or arrangement to which it is a party or by which it is bound; (ii) violate any of the terms or provisions of its respective Charter, as applicable; or (iii) violate any Authorization, judgment, decree or order or any statute, law, rule, regulation or requirement applicable to it.
(d) Status of Authorizations .
(i) | The Authorizations specified in Section 3.01(d) ( Status of Authorizations ) of the Current Company Disclosure Schedule are all of the Authorizations (other than Authorizations that are of a routine nature and are obtained in the ordinary course of business) needed by the Company or, the Sponsors and/or any of the Subsidiaries to conduct their business, execute, perform and comply with their obligations under this Agreement and each of the other Transaction Documents to which they are party. |
(ii) | All Authorizations specified in Section 1 of Section 3.01(d) ( Status of Authorizations ) of the Current Company Disclosure Schedule have been obtained and are in full force and effect and there are no facts or circumstances which indicate that any of such Authorizations would or might be revoked, cancelled, varied or not renewed. |
(iii) | The Company has applied (or is making arrangements to apply) for all Authorizations specified in Section 2 of Section 3.01(d) ( Status of Authorizations ) of the Current Company Disclosure Schedule, and has no reason to believe that it will not obtain those Authorizations in a timely manner and, in any event, prior to the Investor Subscription. |
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(e) Charter . The Charter delivered by the Company to the Investor is a true and current copy of the Charter of the Company, which has not been amended since the delivery to the Investor other than pursuant to Section 4.01(n) ( Charter Documents ), and Section 3.01(e) ( Charter ) of the Current Company Disclosure Schedule lists all of the current directors of the Company and its Subsidiaries and the respective terms of their appointments.
(f) Capital Structure of the Company.
(i) | The capitalization of the Company is as shown in Section 3.01(f) ( Capital Structure of the Company ) of the Current Company Disclosure Schedule and Section 3.01(f) ( Capital Structure of the Company ) of the Current Company Disclosure Schedule accurately sets out the number and type of Equity Securities of the Company owned by, and the name of, each holder of Equity Securities, both before and after the Investor Subscription is consummated. |
(ii) | Except as set forth in Section 3.01(f) ( Capital Structure of the Company ) of the Current Company Disclosure Schedule, there are no Equity Securities of the Company, or any agreements or undertakings to which the Company is a party, or by which it is bound, obligating it to issue, deliver, sell, repurchase or redeem or cause to be issued, delivered, sold, repurchased or redeemed any shares in its authorized capital or obligating it to grant or enter into any such option, warrant, call, right, commitment or agreement. All outstanding Equity Securities of the Company are duly authorized, validly issued to those Persons and in the amounts set forth across from their names in Section 3.01(f) ( Capital Structure of the Company ) of the Current Company Disclosure Schedule, fully paid and non-assessable and are free of any Liens and are not subject to preemptive rights, rights of first refusal or other restrictions on transfer or third party rights, except as set forth in the Companys Charter or the Shareholders Agreement. |
(iii) | The issuance of the Subscription Shares has been duly and validly authorized by all necessary corporate actions of the Company and when issued, sold and delivered in accordance with the terms of this Agreement, the Subscription Shares will be duly and validly issued, fully paid and non-assessable, free of all Liens and will not be subject to preemptive rights, rights of first refusal or other restrictions on transfers. |
(g) No Immunity . Neither the Company nor the Sponsors nor any of the Subsidiaries nor any of their respective properties enjoy any right of immunity from set-off, suit or execution with respect to their respective obligations under any Transaction Document.
(h) Financial Condition . For the Company, since its incorporation, and for its Subsidiaries, since March 31, 2015:
(i) | the business of the Company and each of its Subsidiaries has been conducted in the ordinary course so as to maintain the business as a going concern; |
(ii) | neither the Company nor any of its Subsidiaries nor the Sponsors has suffered any change having a Material Adverse Effect or incurred any substantial loss or liability other than notional forex losses due to mark to market variation of currency; |
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(iii) | neither the Company nor any of its Subsidiaries has undertaken or agreed to undertake any substantial obligation; and |
(iv) | no dividend or distribution has been declared or paid by the Company or any of its Subsidiaries. |
(i) Financial Statements . Azure Indias audited consolidated balance sheet as of March 31, 2014 and provisional balance sheet as of March 31, 2015 and the related audited consolidated statements of income and cash flows for the fiscal year ended March 31, 2014 and provisional consolidated statements of income for the fiscal year ended March 31, 2015 have been prepared in accordance with the Accounting Standards applied on a consistent basis throughout the periods therein specified, and give a true and fair view of the consolidated financial condition of Azure India as of the date as of which they were prepared and the results of Azure Indias operations during the periods therein specified. As on the date of the foregoing financial statements, there are no losses, liabilities (whether actual or contingent or otherwise) or bad or doubtful debts other than those fully disclosed in the consolidated financial statements of Azure India hereinbefore referred to.
(j) Taxes . All tax returns and reports of the Company and each of its Subsidiaries required by law to be filed have been duly filed and all Taxes, obligations, fees and other governmental charges upon the Company, or its properties, or its income or assets, which are due and payable or to be withheld, have been paid or withheld, other than those presently payable without penalty or interest.
(k) Litigation.
(i) | Neither the Company nor any of its Subsidiaries is involved in any litigation, arbitration, administrative, regulatory or governmental proceedings or investigations. No such proceedings or investigations are threatened against the Company or any of its Subsidiaries. No such proceedings or investigations are threatened against the Company or any of its Subsidiaries. The Company is not aware of any fact or circumstance which is likely to give rise to any such proceedings or investigations. |
(ii) | No judgment or order has been issued against the Company or any of its Subsidiaries or the Sponsors which has or may reasonably be expected to have a Material Adverse Effect. |
(iii) | Neither the Company nor any of its Subsidiaries has been charged, convicted, fined or otherwise sanctioned in any litigation, administrative, regulatory or criminal investigation or proceeding or freezing of assets by any Authority involving the Company or any of its Subsidiaries or their respective employees with regard to money laundering or financing of terrorism. |
(l) Compliance with Law . The Company and each of its Subsidiaries is in compliance with all Applicable Laws in all material aspects (whether civil, criminal, corporate or administrative), statutes, subordinate legislation, treaties, regulations, directives, decisions, by-laws, circulars, codes, orders, notices, demands, decrees, injunctions, guidance, judgments or resolutions of any Authority including, without limitation, all Applicable S&E Laws.
(m) Environmental Matters .
(i) | There are no material social or environmental risks or issues in respect of the Company Operations. |
(ii) | Neither the Company nor any of its Subsidiaries has received and is not aware of: (A) any existing or threatened complaint, order, directive, claim, citation or notice from any Authority; or (B) any written communication from any Person, in either case, concerning the failure of the Company Operations to comply with any matter covered by the Performance Standards or any Applicable S&E Law. |
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(n) Sanctionable Practices . Neither the Company, nor the Sponsors, nor any of its Affiliates, nor any Person acting on its or their behalf, has committed or engaged in, with respect to any transaction contemplated by this Agreement, any Sanctionable Practice.
(o) Insurance . The Company and each of its Subsidiaries maintain insurance policies with financially sound and reputable insurers that cover such risks and contain such policy limits, types of coverage as are adequate to insure against risks to which the Company, its Subsidiaries and their respective employees, business, properties and other assets would reasonably be expected to be exposed to in the operation of the business as currently conducted. All of these policies are valid and enforceable policies, all premiums due and payable under all these policies have been paid and the Company is otherwise in compliance in all material respects with the terms of the policies. None of these policies is void or voidable and neither the Company nor any of its Subsidiaries has done anything or omitted to do anything that would make any policy void or voidable. The Company and each of its Subsidiaries has no knowledge of any threatened termination of, or material premium increase with respect to, any of these policies. No material claim is outstanding under any of these policies and no event has occurred (and no circumstance exists) that gives rise or is likely to give rise to a material claim under any policy.
(p) Disclosure . None of this Agreement, any other Transaction Document, the Companys Charter, or certificates or schedules made and delivered to the Investor pursuant thereto (including the Current Company Disclosure Schedule) contains any information which is untrue, inaccurate or misleading in any material respect nor does it omit any information the omission of which makes the information contained in it untrue, inaccurate or misleading in any material respect. The Company is not aware of any material information with respect to the business of the Company or any of its Subsidiaries which should be considered and reviewed by a prospective investor such as the Investor in making its investment decision, which has not been disclosed to the Investor.
(q) Subsidiaries . The Persons listed in Section 3.01(q) ( Subsidiaries ) of the Current Company Disclosure Schedule are all of the Subsidiaries of the Company. Each such Subsidiary has the capitalization, ownership, domicile and head office identified therein. There is no Lien or other right of any third party over the share capital or other equity interest of the Company in any Subsidiary and there is no agreement to create any Lien or any such right. Other than its Subsidiaries listed in Section 3.01 (q) ( Subsidiaries ) of the Current Company Disclosure Schedule, the Company does not own or control (and has never owned or controlled), directly or indirectly, any share capital or other equity interest in any other Person and has not agreed or committed to acquire any such interest.
(r) UN Security Council Resolutions . Neither the Company nor the Sponsors nor any of the Subsidiaries nor any Person acting on their behalf, has entered into any transaction or engaged in any activity prohibited by any resolution issued by the United Nations Security Council under Chapter VII of the UN Charter.
(s) Criminal Offenses . Neither the Company nor its Subsidiaries nor any Person acting on their behalf whose acts could incur the Companys or any Subsidiarys vicarious liability has carried out any actions or made any omissions which could result in the Company or any Subsidiary incurring criminal sanctions.
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(t) Restrictions on Business Activities . There is no agreement, judgment, injunction, order, decree, proceeding or ongoing investigation imposing any penalty on the Company nor any of its Subsidiaries or, which has or could reasonably be expected to have the effect of prohibiting or impairing in any material respect any of its current or future business practices, its acquisition of property or the conduct of its business as it is currently conducted or as proposed to be conducted.
(u) Related Party Transactions . The Company has not entered into any agreement, arrangement or obligation (whether legally enforceable or not) which involves any of the Sponsors or any director, officer, employee, agent or shareholder of the Company (or any of their immediate family members or respective Affiliates). There is not, and there has not been at any time since March 31, 2014, any agreement, arrangement or obligation (whether legally enforceable or not) to which the Company or any of its Subsidiaries is or was a party and which involves any Sponsor, director, officer, employee, agent or shareholder of the Company (or any of their immediate family members or respective Affiliates), other than arrangements described in Section 3.01(u) ( Related Party Transactions ) of the Current Company Disclosure Schedule. No Person listed in the previous sentence has any direct or indirect ownership interest in any Person that is an Affiliate of the Company or with which the Company has a business relationship or in any Person that competes with the Company.
(v) Title to and Condition of Property . The Company does not own property and assets, movable and immovable, whatsoever. Each of its Subsidiaries has: (i) good and marketable title free and clear of all Liens to all of the property and assets, movable and immovable, reflected in the Companys most recent balance sheet included in the consolidated financial statements (except assets sold or otherwise disposed of since such date in the ordinary course of business), other than Liens in favour lenders pursuant to project financing/ loan agreements described in Section 3.01 (v) of the Current Company Disclosure Schedule; and (ii) with respect to leased properties and assets, valid leasehold interests therein free and clear of all Liens, other than liens in favour lenders pursuant to project financing/ loan agreements described in Section 3.01 (v) of the Current Company Disclosure Schedule. The plant, property and equipment of the Company and each of its Subsidiaries that are used in the Company Operations are in good operating condition and repair, subject to normal wear and tear not caused by neglect, and are adequate and suitable for the purposes for which they are currently being used. All properties used in the Company Operations are reflected in the Companys most recent balance sheet included in the consolidated financial statements to the extent the Accounting Standards require the same to be reflected.
(w) Books and Records . The books and records of the Company, including, without limitation, its stock record books and minute books, are complete and correct in all material respects and accurately and fairly reflect all meetings and other corporate actions of the Companys shareholders and its board of directors and committees and all material information relating to its business, the nature, acquisition, maintenance, location and character of its assets, and the nature of all transactions giving rise to its obligations or accounts receivable.
(x) Material Contracts . Section 3.01(x) ( Material Contracts ) of the Current Company Disclosure Schedule sets forth a complete list of all currently effective written or oral:
(i) | agreements, arrangements or obligations to which the Company or any of its Subsidiaries is a party involving, on an annual basis, One Million Dollars ($1,000,000) individually or Five Million Dollars ($ 5,000,000) in the aggregate (or the equivalent in any other currency), other than agreements entered in connection with issuance and allotment of Co-Investor Shares to the Co-Investor; |
(ii) |
agreements, arrangements or other obligations relating to indebtedness owed by the Company or any of its Subsidiaries involving, on an annual basis, One Million Dollars ($1,000,000) individually or Five Million Dollars ($ 5,000,000) in the aggregate (or the equivalent in any other currency); |
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(iii) | shareholders agreements relating to shares in the Company or any of its Subsidiaries or to which the Company or any of its Subsidiaries is a party; |
(iv) | employment agreements or arrangements of the Company or any of its Subsidiaries in excess of One Million Dollars ($1,000,000) each (or the equivalent in any other currency); and |
(v) | other agreements, arrangements and obligations to which the Company or any of its Subsidiaries is a party that are long-term, onerous or unusual or are not on arms-length terms. |
With respect to each agreement, arrangement or obligation in excess of One Million Dollars ($1,000,000) to which the Company or any of its Subsidiaries is a party or to which any of their respective properties are subject (the Company Agreements ), neither the Company nor any of its Subsidiaries nor any other party is in breach or default in any material respect. No event has occurred which, with notice or lapse of time or both, would: (A) constitute a breach or default in any material respect by the Company or any of its Subsidiaries, or by any such other party to the relevant Company Agreement; or (B) permit termination, modification or acceleration of or under the relevant Company Agreement.
(y) Labor Matters .
(i) | Neither the Company nor any of its Subsidiaries is a party to the collective bargaining agreements and other labor union contracts. There is no material activity or proceeding of any labor union to organize its employees and there are no ongoing or threatened strikes, slowdowns or work stoppages by employees of the Company or any of its Subsidiaries or any contractor with respect to any material operations of the Company or any of its Subsidiaries. |
(ii) | The Company has furnished to the Investor true and complete copies of the documents embodying each of the Companys Employee Plans and related plan documents. Each of the Companys Employee Plans complies with Applicable Law and regulations and will not negatively or materially affect the Companys ability to fulfill its obligations under this Agreement or any other Transaction Document. |
(z) Intellectual Property . The Company does not own or use any Intellectual Property. Each of the Subsidiaries owns or has the valid right to use at a nominal cost, all Intellectual Property that is material to the operation of its business as currently conducted or proposed to be conducted by it.
(aa) Economic Sanctions. None of the Company, its Subsidiaries, and the Sponsors has entered into a business relationship with any person which is the target of economic sanctions administered by U.S. Office of Foreign Assets and Control ( OFAC ) or provide any financing or services to, or in connection with, any activity in any sector under embargo by the United Nations.
Section 3.02. Investor Reliance . (a) The Company and the Sponsors acknowledge that they makes the representations and warranties under Section 3.01 ( Representations and Warranties ) with the intention of inducing the Investor to enter into this Agreement and each of the other Transaction Documents and to make the Investor Subscription and that the Investor enters into this Agreement and the other Transaction Documents and will make the Investor Subscription on the basis of, and in full reliance on, each of such representations and warranties.
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(b) Each of the representations and warranties is to be construed independently and (except where this Agreement provides otherwise) is not limited by any provision of this Agreement or another representation and/or warranty.
(c) A reference to any facts and circumstances being disclosed shall be deemed to be a reference to them being fully, fairly, specifically and accurately disclosed in the Current Company Disclosure Schedule in such a manner that:
(i) | in the context of the disclosures contained in the Current Company Disclosure Schedule: |
(A) | the significance of the information disclosed and its relevance to a particular representation and/or warranty shall be highlighted by the Company in a manner reasonably expected to be understandable by the Investor, taking into account the paragraphs or subject matters in relation to which the information was disclosed; and |
(B) | there is not omitted from the information disclosed any information which would have the effect of rendering the information so disclosed misleading in any respect; and |
(ii) | in the context of any document treated as disclosed by the Current Company Disclosure Schedule, the matter disclosed is reasonably apparent from the terms of the document, |
and nothing disclosed by the Company to the Investor other than in the Current Company Disclosure Schedule and in accordance with the provisions of this Section 3.02 shall constitute disclosure to the Investor for the purposes of this Agreement.
Section 3.03. Survival of Representations and Warranties . The representations and warranties set forth in this Article III or made in writing by or on behalf of the Company and the Sponsors in connection with the transactions contemplated by this Agreement shall continue in full force and effect and survive the Investor Subscription.
Section 3.04. Indemnity. Each of the Company and the Sponsors hereby agrees that it shall jointly and severally indemnify, defend and hold harmless the Investor from, against and in respect of any damages, losses, charges, liabilities, claims demands, actions, suits, proceedings, payments, judgments, settlements, assessments, deficiencies, interest and costs and expenses (including reasonable attorneys fees) imposed on, sustained, incurred or suffered by, or asserted against, the Investor (whether in respect of third party claims, claims between the parties hereto, or otherwise) directly or indirectly relating to or arising out of any breach by the Company or the Sponsors, as the case may be of any respective representation or warranty made by it in this Agreement.
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ARTICLE IV
Conditions of Investor Subscription
Section 4.01. Conditions of Investor Subscription . The obligation of the Investor to make the Investor Subscription is subject to the fulfillment, to the Investors reasonable satisfaction, prior to or concurrently with the making of the Investor Subscription, of the following conditions:
(a) Representations and Warranties .
(i) | The representations and warranties made by the Company and the Sponsors herein, and in the Original Company Disclosure Schedule and in any schedule, exhibit or certificate delivered by the Company and the Sponsors pursuant to this Agreement, remain true, accurate and not misleading immediately prior to the Investor Subscription, save as modified or supplemented by the Updated Company Disclosure Schedule pursuant to Sections 3.01 and 4.01 (a)(ii) of this Agreement; and |
(ii) | If it is necessary for the Company to modify or supplement the Original Company Disclosure Schedule, it shall deliver an Updated Company Disclosure Schedule to the Investor not less than ten (10) Business Days prior to the proposed Subscription Date and the substance of any modification or supplementation of any of the representations and warranties referred to in (i) made in such Updated Company Disclosure Schedule is acceptable to the Investor in its sole discretion; |
(b) Performance; No Breaches . All of the agreements and covenants of the Company and the Sponsors to be performed prior to the Investor Subscription pursuant to each Transaction Document have been duly performed in all material respects, and no breach (or any event which, with notice, lapse of time, the making of a determination or any combination, would become a breach) under any Transaction Document has occurred and is continuing;
(c) Authorizations . The Company has obtained and provided to the Investor copies of all Authorizations listed in Sections 1 and 2 of Section 3.01(d) ( Status of Authorizations ) of the Current Company Disclosure Schedule and all those Authorizations are in full force and effect;
(d) No Material Adverse Effect; . Nothing has occurred which has or may reasonably be expected to have since the date of this Agreement, a Material Adverse Effect;
(e) Expenses . The Investor has received payment for, or reimbursement of all fees and expenses of the Investor, and the invoiced fees and expenses of its counsel, as provided in Section 5.10 ( Expenses ), or confirmation from its counsel that those fees and expenses have been paid directly to such counsel;
(f) Environmental Matters . The Company:
(i) | has confirmed in writing to the Investor that it is in agreement with the S&EA; |
(ii) | has agreed in writing with the Investor on the form of the S&E Performance Report; |
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(iii) | remains in compliance with the S&E Management System and the S&E Management System has not been amended, waived or otherwise restricted in scope or effect since February 25, 2010, except in accordance with the Action Plan; and |
(iv) | the Company has complied with all matters set forth in the Action Plan required to be completed prior to the Investor Subscription, as set forth in the Action Plan; |
(g) Company Certifications . The Investor has received certifications by the Company and the Sponsors, substantially in the form set forth in Schedule 1 ( Form of Subscription Notice ), with respect to the conditions specified in this Section 4.01 and expressed to be effective as of the date of the Investor Subscription;
(h) Opinions of Counsel . The Investor has received a legal opinion or opinions, in form and substance satisfactory to the Investor, from the Investors counsels on Mauritian laws and on English laws (as applicable) covering such matters relating to the transactions contemplated by this Agreement, the other Transaction Documents and the Companys Charter, as the Investor may reasonably request;
(i) Appointment of Auditors . The Company (i) has appointed a firm of internationally recognized independent public accountants acceptable to the Investor as Auditors of the Company, (ii) has authorized and instructed them, in the form set forth in Schedule 5 ( Form of Letter to Companys Auditors ), to communicate directly with the Investor; and (iii) has taken such actions, issued such instructions and delivered such documents as necessary to procure the firms compliance with such request;
(j) Accounting Systems . The Company has certified to the Investor, in form and substance satisfactory to the Investor, that it has installed and has in operation an accounting and control system, management information system and books of account and other records, which together adequately give a true and fair view of the financial condition of the Company and the results of its operations in conformity with the Accounting Standards;
(k) Certificate of Incumbency and Authority . The Investor has received a Certificate of Incumbency and Authority from the Company;
(l) Insurance Requirements . The Investor has received copies of all insurance policies evidencing compliance with the requirements of Annex A ( Minimum Insurance Requirements ) and a certification from the Companys insurers or insurance agents confirming that such policies are in full force and effect and all premiums then due and payable under those policies have been paid;
(m) Transaction Documents . The Investor has received a counterpart of each of the Transaction Documents, duly executed and delivered by all other parties thereto, all of which are or will be, on delivery by the Investor of its counterpart, fully effective and unconditional, and each is in form and substance satisfactory to the Investor;
(n) Charter Documents . The Company and each of the Subsidiary has adopted an amended Charter, such amended Charter is fully effective, and such amended Charter is in form and substance satisfactory to the Investor and is consistent with the provisions of the Shareholders Agreement, including but not limited to provisions of the Shareholders Agreement in respect of consent and/or voting rights, restrictions on transfer, corporate governance and any other matter provided for in the Shareholders Agreement which is desirable or necessary to be included in the Charter;
21
(o) Employee Stock Plan . The Company has formally adopted an employee stock plan in a form acceptable to the Investor that meets the criteria set forth in the Shareholders Agreement;
(p) Externalization Process . The Externalization Process has been completed in form and substance satisfactory to the Investor, and pursuant to such Externalization Process, Equity Securities of the Company have been issued and allotted to: (i) Helion Venture Partners II, LLC, (ii) Helion Venture Partners India II, LLC, (iii) IFC, (iv) DEG-Deutsche Investitions -und Entwicklungsgesellschaft mbH, (v) FC VI India Venture (Mauritius) Ltd., and (vi) Société DE Promotion ET DE Participation Pour LA Coopération Économique as set out in Section 3.01(f) ( Capital Structure of the Company ) of the Current Company Disclosure Schedule;
(q) Co-Investor Subscription . The Co-Investor has, along with the other parties thereto, duly signed and executed the Co-Investor Subscription Agreement for subscription to the Co-Investor Shares, and all the conditions to subscription of Co-Investor Shares by the Co-Investor under the Co-Investor Subscription Agreement have been fulfilled to the Co-Investors reasonable satisfaction or waived by the Co-Investor; and
(r) Waiver of Pre-emptive Rights . The Investor has received intimation in writing from the existing shareholders or investors of the Company, in the form acceptable to the Investor, waiving their pre-emptive rights under the Shareholders Agreement to subscribe to the Equity Securities of the Company arising from the issuance of Subscription Shares to the Investor under this Agreement.
ARTICLE V
Miscellaneous
Section 5.01. Notices . (a) Any notice, request or other communication to be given or made under this Agreement shall be in writing. Any such communication shall be delivered by hand, airmail, established courier service or facsimile to the party to which it is required or permitted to be given or made at such partys address specified below or at such other address as such party has from time to time designated by written notice to the other parties hereto, shall be effective upon the earlier of (a) actual receipt and (b) deemed receipt under Section 5.01(b) below.
For the Company:
1st Floor, The Exchange,
18 Cybercity, Ebene, Mauritius
Facsmile: +91 1149409807
Attention: Inderpreet Singh Wadhwa
For the Sponsors:
Inderpreet Singh Wadhwa
[Address]
Fascimile: [Fax Number]
Attention: Inderpreet Singh Wadhwa
Harkanwal Singh Wadhwa
[Address]
Facsimile: [Fax Number]
Attention: Harkanwal Singh Wadhwa
22
IW Green Inc.:
341, Raven Circile
Wyoming, Zip Code 19934
Kent, United States of America
Facsimile: 91 1149409807
Attention: Inderpreet Singh Wadhwa
For the Investor:
C/o Cim Fund Services Ltd, 33 Edith Cavell Street
Port Louis, Mauritius
Facsimile: + 2302129833
Attention: Ashraf Ramtoola
(b) Unless there is reasonable evidence that it was received at a different time, notice pursuant to this Section 5.01 is deemed given if: (i) delivered by hand, when left at the address referred to in Section 5.01(a); (ii) sent by airmail or established courier services within a country, three (3) Business Days after posting it; (iii) sent by airmail or established courier service between two countries, six (6) Business Days after posting it; and (iv) sent by facsimile, when confirmation of its transmission has been recorded by the senders facsimile machine.
Section 5.02. Saving of Rights . (a) The rights and remedies of the Investor in relation to any misrepresentation or breach of warranty on the part of any of the Relevant Parties shall not be prejudiced by any investigation by or on behalf of the Investor into the affairs of any of the Relevant Parties, by the execution or the performance of this Agreement or by any other act or thing by or on behalf of the Investor which might prejudice such rights or remedies.
(b) No course of dealing and no failure or delay by the Investor in exercising any power, remedy, discretion, authority or other right under this Agreement or any other agreement shall impair, or be construed to be a waiver of or an acquiescence in, that or any other power, remedy, discretion, authority or right under this Agreement, or in any manner preclude its additional or future exercise.
Section 5.03. English Language . All documents to be provided or communications to be given or made under this Agreement shall be in English and, where the original version of any such document or communication is not in English, shall be accompanied by an English translation certified by an Authorized Representative to be a true and correct translation of the original. The Investor may, if it so requires, obtain an English translation of any document or communication received in any other language at the cost and expense of the Company. In either case the Investor may deem any such translation to be the governing version.
Section 5.04. Applicable Law and Arbitration .
(a) This Agreement is governed by, and construed in accordance with, the laws of England and Wales.
(b) Any dispute arising out of or in connection with this Agreement, including any question regarding its existence, validity or termination (a Dispute ) shall be referred to and finally resolved by arbitration under the Rules of Arbitration of the Singapore International Arbitration Centre (the SIAC ) in force at that time (the SIAC Rules ), which SIAC Rules are deemed to be incorporated by reference into this Section 5.04.
23
(c) There shall be 1 (one) arbitrator, who shall be nominated by agreement of the parties within thirty (30) days of receipt of the request for arbitration by the respondent(s). If the sole arbitrator is not nominated within this time period, the SIAC shall make the appointment.
(d) The place of arbitration shall be Singapore,
(e) The language of arbitration shall be English.
(f) The Parties acknowledge and agree that no provision of this Agreement or of the SIAC Rules, nor the submission to arbitration by the Investor, in any way constitutes or implies a waiver, termination or modification by the Investor of any privilege, immunity or exemption of the Investor.
(g) If two or more arbitrations are commenced hereunder and/or the Related Agreements, and even if this Agreement and the Related Agreements are governed by different laws, any party to any of these arbitrations may petition any arbitral tribunal appointed in these arbitrations for an order that the several arbitrations be consolidated in a single arbitration before that arbitral tribunal (a Consolidation Order ). In deciding whether to make such a Consolidation Order, the arbitral tribunal shall consider whether the several arbitrations raise common issues of law or facts and whether to consolidate the several arbitrations would serve the interests of justice and efficiency. If before a Consolidation Order is made by an arbitral tribunal with respect to another arbitration, the arbitrator has already been appointed in that other arbitration, their appointment terminates upon the making of such Consolidation Order and they are deemed to be functus officio without prejudice to the validity of any acts done or orders made by them prior to the termination. In the event of two or more conflicting Consolidation Orders, the Consolidation Order that was made first in time shall prevail.
(h) The provisions of this Section 5.04 shall survive the termination of this Agreement for any reason whatsoever.
Section 5.05. Immunity . To the extent any Relevant Party may be entitled in any jurisdiction to claim for itself or its assets immunity in respect of its obligations under this Agreement or any other Transaction Document from any suit, execution, attachment (whether provisional or final, in aid of execution, before judgment or otherwise) or other legal process or to the extent that in any jurisdiction that immunity (whether or not claimed) may be attributed to it or its assets, such Relevant Party irrevocably agrees not to claim and irrevocably waives such immunity to the fullest extent permitted now or in the future by the laws of such jurisdiction.
Section 5.06. Announcements. (a) None of the Relevant Parties may represent the Investors views on any matter, or use the Investors name in any written material provided to third parties, without the Investors prior written consent.
(b) No Relevant Party shall:
(i) | disclose any information either in writing or orally to any Person which is not a party to this Agreement; or |
(ii) |
make or issue a public announcement, communication or circular, |
24
about the Investor Subscription or the subject matter of, or the transactions referred to in, this Agreement or any other Transaction Document, including by way of press release, promotional and publicity materials, posting of information on websites, granting of interviews or other communications with the press, or otherwise, other than: (A) to such of its officers, employees and advisers as reasonably require such information in connection with the Investor Subscription or to comply with the terms of this Agreement or any other Transaction Document; (B) to the extent required by law or regulation (including the rules of any stock exchange on which the Companys Shares are listed); (C) to the extent required for it to enforce its rights under this Agreement; and (D) with the prior written consent of the Investor. Before any information is disclosed or any public announcement, communication or circulation made or issued pursuant to this Section 5.06(b), such Relevant Party must consult with the Investor in advance about the timing, manner and content of the disclosure, announcement, communication or circulation (as the case may be).
(c) Each Relevant Party shall expressly inform any Person to whom it discloses any information under Section 5.06(b) of the restrictions set out in Section 5.06(b) with regards disclosure of such information and shall procure their compliance with the terms of this Section 5.06 as if they each were party to this Agreement as such Relevant Party and such Relevant Party shall be responsible for any breach by any such Person of the provisions of this Section 5.06.
Section 5.07. Successors and Assigns . This Agreement binds and benefits the respective successors and assignees of the Parties. However, neither the Sponsors nor the Company may assign, transfer or delegate any of its rights or obligations under this Agreement without the prior written consent of the Investor.
Section 5.08. Amendments, Waivers and Consents . Any amendment or waiver of, or any consent given under, any provision of this Agreement shall be in writing and, in the case of an amendment, signed by all of the Parties hereto.
Section 5.09. Counterparts . This Agreement may be executed in several counterparts, each of which is an original, but all of which constitute one and the same agreement.
Section 5.10. Expenses . (a) The Company and the Sponsors shall pay to the Investor or as the Investor may direct:
(i) | the fees and expenses of the Investors legal counsel incurred in connection with: |
(A) | the preparation of the investment by the Investor provided for under this Agreement; |
(B) | the preparation and/or review, execution and, where appropriate, translation, registration, amendment, supplement or modification of, or waiver under, the Transaction Documents and any other documents related to any of them; |
(C) | the giving of any legal opinions required by the Investor under the Transaction Documents and any other documents related to any of them; |
(ii) |
the costs and expenses of the Investor in respect of its investment in the Company, including but not limited to any registration, filing or similar fees |
25
incurred by the Investor and the costs and expenses incurred by the Investor in relation to efforts to enforce or protect its rights under this Agreement, or the exercise of its rights or powers consequent upon or arising out of any breach of this Agreement, including legal and other professional consultants fees on a full indemnity basis. |
(b) The provisions of Section 5.10(a) shall survive the completion of the the Investor Subscription.
Section 5.11. Entire Agreement . This Agreement, together with the other Transaction Documents, supersedes all prior discussions, memoranda of understanding, agreements and arrangements (whether written or oral, including all correspondence), if any, between the parties with respect to the subject matter of this Agreement, and this Agreement (together with any amendments or modifications and the other Transaction Documents) contains the sole and entire agreement between the parties with respect to the subject matter of this Agreement.
Section 5.12. Invalid Provisions . If any provision of this Agreement is held to be illegal, invalid or unenforceable under any law from time to time: (a) such provision will be fully severable from this Agreement; (b) this Agreement will be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a part hereof; and (c) the remaining provisions of this Agreement will remain in full force and effect and will not be affected by the illegal, invalid or unenforceable provision or by its severance herefrom.
( Signature Pages Follow)
26
IN WITNESS WHEREOF, the parties mentioned below, acting through their duly authorized representatives, have caused this Agreement to be signed in their respective names, as of the date first written above.
AZURE POWER GLOBAL LIMITED | ||
By: |
/s/ Inderpreet Singh Wadhwa |
|
Name: | Inderpreet Singh Wadhwa | |
Title: | Director | |
MR. INDERPREET SINGH WADHWA | ||
/s/ INDERPREET SINGH WADHWA |
||
MR. HARKANWAL SINGH WADHWA | ||
/s/ HARKANWAL SINGH WADHWA |
27
IN WITNESS WHEREOF, the parties mentioned below, acting through their duly authorized representatives, have caused this Agreement to be signed in their respective names, as of the date first written above
IW GREEN | ||
By: |
/s/ Inderpreet Singh Wadhwa |
|
Name: | Inderpreet Singh Wadhwa | |
Title: | Director |
28
IN WITNESS WHEREOF, the parties mentioned below, acting through their duly authorized representatives, have caused this Agreement to be signed in their respective names, as of the date first written above
IFC GIF INVESTMENT COMPANY I | ||
By: |
/s/ SHEREFEDIN ZURGA |
|
Name: | SHEREFEDIN ZURGA | |
Title: | DIRECTOR |
29
ANNEX A
MINIMUM INSURANCE REQUIREMENTS
(See Section 3.01(o) and 4.01(l) of this Agreement)
| The Company shall, at all times, maintain a directors and officers liability insurance policy for Investors nominee director on the Board of the Company, providing adequate and customary coverage with a financially sound and reputable insurer or insurers. |
| Construction All Risks, based on full contract value and including: |
| Strike, riots and civil commotion |
| Debris removal |
| Extra Expenses |
| Extended Maintenance Period |
| Third Party Liability |
| Marine All Risks (including war) in respect of all transportation of critical items for the project |
| Fire and named perils (including earthquake) or Property All Risks, based on new replacement cost of assets |
| Machinery breakdown |
| All insurances required by local legislation |
ANNEX B
ANTI-CORRUPTION GUIDELINES FOR IFC TRANSACTIONS
The purpose of these Guidelines is to clarify the meaning of the terms Corrupt Practice, Fraudulent Practice, Coercive Practice, Collusive Practice and Obstructive Practice in the context of IFC operations.
1. | C ORRUPT P RACTICES |
A Corrupt Practice is the offering, giving, receiving or soliciting, directly or indirectly, of anything of value to influence improperly the actions of another party.
I NTERPRETATION
A. | Corrupt practices are understood as kickbacks and bribery. The conduct in question must involve the use of improper means (such as bribery) to violate or derogate a duty owed by the recipient in order for the payor to obtain an undue advantage or to avoid an obligation. Antitrust, securities and other violations of law that are not of this nature are excluded from the definition of corrupt practices. |
B. | It is acknowledged that foreign investment agreements, concessions and other types of contracts commonly require investors to make contributions for bona fide social development purposes or to provide funding for infrastructure unrelated to the project. Similarly, investors are often required or expected to make contributions to bona fide local charities. These practices are not viewed as Corrupt Practices for purposes of these definitions, so long as they are permitted under local law and fully disclosed in the payors books and records. Similarly, an investor will not be held liable for corrupt or fraudulent practices committed by entities that administer bona fide social development funds or charitable contributions. |
C. | In the context of conduct between private parties, the offering, giving, receiving or soliciting of corporate hospitality and gifts that are customary by internationally-accepted industry standards shall not constitute corrupt practices unless the action violates Applicable Law. |
D. | Payment by private sector persons of the reasonable travel and entertainment expenses of public officials that are consistent with existing practice under relevant law and international conventions will not be viewed as Corrupt Practices. |
E. | The World Bank Group 1 does not condone facilitation payments. For the purposes of implementation, the interpretation of Corrupt Practices relating to facilitation payments will take into account relevant law and international conventions pertaining to corruption. |
1 | The World Bank is the International Bank for Reconstruction and Development, an international organization established by Articles of Agreement among its member countries and the World Bank Group refers to the International Bank for Reconstruction and Development, the International Development Association, the International Finance Corporation, the Multilateral Investment Guarantee Agency, and the International Centre for Settlement of Investment Disputes. |
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2. | F RAUDULENT P RACTICES |
A Fraudulent Practice is any action or omission, including a misrepresentation, that knowingly or recklessly misleads, or attempts to mislead, a party to obtain a financial or other benefit or to avoid an obligation.
I NTERPRETATION
A. | An action, omission, or misrepresentation will be regarded as made recklessly if it is made with reckless indifference as to whether it is true or false. Mere inaccuracy in such information, committed through simple negligence, is not enough to constitute a Fraudulent Practice for purposes of this Agreement. |
B. | Fraudulent Practices are intended to cover actions or omissions that are directed to or against a World Bank Group entity. It also covers Fraudulent Practices directed to or against a World Bank Group member country in connection with the award or implementation of a government contract or concession in a project financed by the World Bank Group. Frauds on other third parties are not condoned but are not specifically sanctioned in IFC, MIGA, or PRG operations. Similarly, other illegal behavior is not condoned, but will not be considered as a Fraudulent Practice for purposes of this Agreement. |
3. | C OERCIVE P RACTICES |
A Coercive Practice is impairing or harming, or threatening to impair or harm, directly or indirectly, any party or the property of the party to influence improperly the actions of a party.
I NTERPRETATION
A. | Coercive Practices are actions undertaken for the purpose of bid rigging or in connection with public procurement or government contracting or in furtherance of a Corrupt Practice or a Fraudulent Practice. |
B. | Coercive Practices are threatened or actual illegal actions such as personal injury or abduction, damage to property, or injury to legally recognizable interests, in order to obtain an undue advantage or to avoid an obligation. It is not intended to cover hard bargaining, the exercise of legal or contractual remedies or litigation. |
4. | C OLLUSIVE P RACTICES |
A Collusive Practice is an arrangement between two or more parties designed to achieve an improper purpose, including to influence improperly the actions of another party.
I NTERPRETATION
Collusive Practices are actions undertaken for the purpose of bid rigging or in connection with public procurement or government contracting or in furtherance of a Corrupt Practice or a Fraudulent Practice.
5. | O BSTRUCTIVE P RACTICES |
An Obstructive Practice is (i) deliberately destroying, falsifying, altering or concealing of evidence material to the investigation or making of false statements to investigators, in order to materially impede a World Bank Group investigation into allegations of a corrupt, fraudulent, coercive or collusive practice, and/or threatening, harassing or intimidating any party to prevent it from disclosing its
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knowledge of matters relevant to the investigation or from pursuing the investigation, or (ii) an act intended to materially impede the exercise of IFCs access to contractually required information in connection with a World Bank Group investigation into allegations of a corrupt, fraudulent, coercive or collusive practice.
I NTERPRETATION
Any action legally or otherwise properly taken by a party to maintain or preserve its regulatory, legal or constitutional rights such as the attorney-client privilege, regardless of whether such action had the effect of impeding an investigation, does not constitute an Obstructive Practice.
G ENERAL I NTERPRETATION
A person should not be liable for actions taken by unrelated third parties unless the first party participated in the prohibited act in question.
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SCHEDULE 1
FORM OF SUBSCRIPTION NOTICE
[Letterhead of the Company/the Investor]
[Date]
IFC GIF Investment Company I | ||||||
|
||||||
|
||||||
|
||||||
Attention: [●] |
Ladies and Gentlemen:
Investment No.
Request for Investor Subscription No. (Equity)
1. Please refer to the Subscription Agreement (the Subscription Agreement , dated [●], between, inter alia , Azure Power Global Limited (the Company ), the Sponsors and IFC GIF Investment Company I ( Investor ). Terms defined in the Subscription Agreement, including terms defined by reference to any other Transaction Document (as defined in the Subscription Agreement), have their defined meanings wherever used in this request.
2. In accordance with the provisions of the Subscription Agreement [and the enclosed resolution of the Companys [board of directors]/[shareholders]], the Company requests the subscription of [[●] of Subscription Shares each at the Subscription Price. Therefore, the Company requests the Investor to pay [●] [Dollars] on the Subscription Date to [●], for credit to the Companys account no. [●].]
3. The Subscription Date for the Investor Subscription [contemplated by this Subscription Notice] shall be [●].
4. For the purpose of Section 4.01 ( Conditions of Investor Subscription ) of the Subscription Agreement, the Company certifies as follows:
(a) | the representations and warranties made in Article III of the Subscription Agreement, and in the Current Company Disclosure Schedule and in any schedule, exhibit or certificate, delivered by the Company pursuant to the Subscription Agreement are true, accurate and not misleading in all respects (other than as set out in the Current Company Disclosure Schedule) on and as of the date of this request with the same effect as if such representations and warranties had been made on and as of such date; |
(b) | all of the agreements and covenants of the Company to be performed prior to the Investor Subscription pursuant to each Transaction Document have been duly performed in all material respects, and no breach (or any event which, with notice, lapse of time, the making of a determination or any combination, would become a breach) under any Transaction Document has occurred and is continuing; |
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(c) | the Company has obtained and provided to the Investor copies of, all Authorizations listed in Sections 1 and 2 of Section 3.01(d) (Status of Authorizations) of the Current Company Disclosure Schedule, and all such Authorizations are in full force and effect; |
(d) | since the date of the Subscription Agreement nothing has occurred which has had or could reasonably be expected to have a Material Adverse Effect; |
(e) | it has confirmed in writing to the Investor that it is in agreement with the S&EA, it has agreed in writing with the Investor on the form of the S&E Performance Report; it remains in compliance with the S&E Management System and the S&E Management System has not been amended, waived or otherwise restricted in scope or effect by the Company since February 25, 2010, except in accordance with the Action Plan; and has complied with all matters set forth in the Action Plan required to be completed prior to the Investor Subscription, as set forth in the Action Plan and |
(f) | has appointed a firm of internationally recognized independent public accountants acceptable to the Investor as Auditors of the Company, and has authorized and instructed them, in the form set forth in Schedule 5 ( Form of Letter to Companys Auditors ) to the Subscription Agreement, to communicate directly with the Investor; and has taken such actions, issued such instructions and delivered such documents as necessary to procure the firms compliance with such request; |
(g) | has installed and has in operation an accounting and control system, management information system and books of account and other records, which together adequately give a true and fair view of the financial condition of the Company and the results of its operations in conformity with the Accounting Standards; and |
(h) | has formally adopted an employee stock plan in a form acceptable to the Investor that meets the criteria set forth in the Shareholders Agreement. |
5. The above certifications are effective as of the date of this Subscription Notice and shall continue to be effective as of the Subscription Date set out in paragraph 3 (as if made by reference to such date). If any such certification is no longer valid as of or prior to that Subscription Date, the Company undertakes to promptly notify the Investor by facsimile.
Yours faithfully, | ||
By |
|
|
Authorized Representative | ||
By |
|
|
Authorized Representative |
[Enclosure[s]]: | [Resolution of the Companys [board of directors]/[shareholders]]; | |
[Subscription Form] | ||
Copy to: | IFC GIF INVESTMENT COMPANY I | |
Attention: [●] |
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SCHEDULE 2
ORIGINAL COMPANY DISCLOSURE SCHEDULE
DISCLOSURE SCHEDULE
The purpose of this Schedule is to disclose matters which may be relevant to the Representations and Warranties of the Company as contained in the Subscription Agreement. The Representations and Warranties of the Company are qualified by the facts and circumstances fully, fairly, specifically and accurately contained or disclosed in the Subscription Agreement, this Schedule or in any of the documents annexed to this Schedule.
The Company is not, nor shall it be deemed to be, in breach of any of the Representations and Warranties of the Company in respect of any such facts and circumstances.
If an inconsistency exists between the Agreement and this Schedule or any of the documents annexed to this Schedule, this Schedule prevails and is deemed to contain the relevant disclosure.
DISCLOSURES
The following specific disclosures are made in relation to the Representations and Warranties of the Company. Each matter disclosed is listed against the sub-section number of the Representation and Warranty to which the disclosure relates but a disclosure applies to all of the Representations and Warranties of the Company only to the extent it is reasonably apparent on its face.
Representation/Warranty No. | Disclosure | |
Section 3.01 (c) (No Conflict) | No disclosure. | |
Section 3.01(d) (Status of Authorizations) | Section 3.01 (d) (i): | |
Resolution of the board of directors of the Company for signing and executing this Agreement and other applicable Transaction Documents | ||
Resolution of the board of directors of the Sponsor Entity dated for signing and executing this Agreement and other applicable Transaction Documents | ||
Section 3.01 (d) (i) : Section 1: No disclosure | ||
Section 3.01 (d) (ii): Section 2: Shareholders resolution for amendment of Charter Documents. |
||
Resolution of the board of directors of the Company for issuance of Shares. |
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Representation/Warranty No. | Disclosure | |||
Section 3.01(e) ( Charter ) | List of Directors | |||
| Azure Power Global Limited | |||
a. Inderpreet Wadhwa |
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b. Eric Ng. |
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c. Khalid Peyrye |
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| Details of directors of the Subsidiaries are set out in Annexure 2 (A) ). | |||
Section 3.01(f) ( Capital Structure of the Company ) | Paid up Capital of the Company is USD 1,098.30 | |||
(Details of the Capital Structure attached separately as Annexure 1 ) | ||||
Section 3.01(g) ( Capital Structure of the Company ) | No disclosure | |||
Section 3.01(h) ( Financial Condition ) | Section 3.01 (h) (i): No Disclosure | |||
Section 3.01 (h) (ii): No Disclosure | ||||
Section 3.01 (h) (iii): Details of disclosures are set out in Annexure 3 | ||||
Section 3.01 (h) (iv): No Disclosure | ||||
Section 3.01 (i) ( Financial Statements ) | No disclosure | |||
Section 3.01 (j) ( Taxes ) | No disclosure | |||
Section 3.01(k) ( Litigation ) | Section 3.01 (k) (i): | |||
1. |
Civil Suit No. 22/2012 along with temporary injunction application no. 20/2012 filed by Sh. Mehram before Civil Judge (Jr. Div.) Jayal, District Nagaur on 9 th July 2012 against Azure Power (Rajasthan) Pvt. Ltd., In the continuation of this a Writ Petition (S. B. Civil Writ Petition No. 9685/2012) filed by Azure Power Rajasthan Pvt. Ltd., at High Court, Jodhpur - a portion of land leased admeasuring Khasra Number 1175, Tehsil Jayal District Nagour, Rajasthan from the |
- 37 -
Representation/Warranty No. | Disclosure | |||
Government of Rajasthan for the projects of Azure Power Rajasthan Pvt. Ltd., in Rajasthan, is presently disputed as third parties have sought establishment of mining rights through the Mining Department of the State of Rajasthan. Azure Power Rajasthan Pvt. Ltd, has filed a petition with the High Court of Rajasthan seeking non-renewal of the mining rights. Presently, this matter is pending before the High Court of Rajasthan. Relief Claimed : Azure Power Rajasthan Private Limited has prayed before the honorable high court that the mining lease under dispute should not be renewed. | ||||
2. | Case pending before the Supreme Court of India - The Gujarat Urja Vikas Nigam Limited, had filed a petition with the Gujarat Electricity Regulatory Commission, seeking recalculation on the basis of actual cash flow required for development of solar projects and consequent revision of the tariff payable by it, in relation to certain solar power projects including 10 MW Gujarat project of Azure Power (Haryana) Pvt. Ltd. While the Gujarat Electricity Regulatory Commission and the Appellate Tribunal for Electricity dismissed the claims made by Gujarat Urja Vikas Nigam Limited, an appeal filed by Gujarat Urja Vikas Nigam Limited is pending with the Supreme Court of India (GUVNL vs GERC & Others CA No. 10301/ 2014). Relief Claimed : All respondents have prayed for dismissal of the appeal. | |||
3. | WP No. 13132/2012 pending before the High Court of Rajasthan at Jodhpur filed by Radhan Kishan & Deepa Ram against the State of Rajasthan and the Azure Power Rajasthan Private Limited involving a challenge of the allotment of 1059 Bighas land to the Company by the Government of Rajasthan in Katothi. |
- 38 -
Representation/Warranty No. | Disclosure | |||
Relief Claimed : Azure Power Rajasthan Private Limited has, in its prayers, requested for dismissal of the petition. | ||||
4. | Ordinary Assessment proceedings pending before the Income Tax department against Azure Power (Rajasthan) Private Limited for the assessment year 2012-13. | |||
5. | Ordinary Assessment proceedings pending before the Income Tax department against Azure Power India Private Limited for the assessment year 2012-13. | |||
Section 3.01 (k) (ii) : No Disclosure | ||||
Section 3.01 (k) (iii) : No Disclosure | ||||
Section 3.01 (l) ( Compliance with Law ) | No disclosure | |||
Section 3.01 (m) ( Environmental Matters ) | No disclosure | |||
Section 3.01 (n) ( Sanctionable Practices ) | No disclosure | |||
Section 3.01 (o) ( Insurance ) | Description of any Material Claims | |||
1. | Azure Urja Private Limited:- Claim of Rs. 5.6 Million is pending with National Insurance Company on account of solar module damage. | |||
2. | Azure Clean Energy Pvt. Ltd., Azure Sunshine Pvt. Ltd. and Azure Greentech Pvt. Ltd.:- Claim of Rs. 7 Million is pending with National Insurance Company on account of solar module damage | |||
Section 3.01 (p) ( Disclosure ) | No disclosure | |||
Section 3.01(q) ( Subsidiaries ) | Attached Separately list of Subsidiaries, their directors, ownership, domicile and head office as Annexure 2 (A) and (B) | |||
Section 3.01 (r) ( UN Security Council Resolutions ) | No disclosure |
- 39 -
Representation/Warranty No. | Disclosure | |||
Section 3.01 (s) ( Criminal Offenses) | No disclosure | |||
Section 3.01 (t) ( Restrictions on Business Activities) | No disclosure | |||
Section 3.01(u) (Related Party Transactions) | No disclosure | |||
Section 3.01(v) (Title to and Condition of Property) | No disclosure | |||
Section 3.01(w) ( Books and Records) | No disclosure | |||
Section 3.01(x) ( Material Contracts ) | Section 3.01 (x) (i): | |||
| Operations & Maintenance Agreements hereinafter referred to as the O & M Contract ) between the Azure Power India Private Limited (AZI) and its Subsidiaries (attached separately as Annexure 4 (A) ). | |||
| Agreement in respect of lease of office premises at corporate office of the Company between Sunbir Singh Wadhwa & Kulwinder Wadhwa (Lessors) and Azure Power India Pvt. Ltd. (Lessee) dated 15 th October, 2013. Agreement in respect of lease of project land for Azure Power Punjab Pvt. Ltd. | |||
| Agreement in respect of lease of project land for Azure Power Rajasthan Pvt. Ltd. | |||
| Agreement in respect of lease of project land for Azure Solar Pvt. Ltd. | |||
| Agreement in respect of lease of project land for Azure Urja Pvt. Ltd. | |||
| Agreement in respect of lease of project land for Azure Clean Energy Pvt. Ltd. | |||
| Agreement in respect of lease of project land for Azure Sunshine Pvt. Ltd. | |||
| Agreement in respect of lease of project land for Azure Greentech Pvt. Ltd. | |||
Section 3.01 (x) (ii): Details of disclosures set out in Annexure 3 . The Company or any of its Subsidiaries has not defaulted with respect to any Company Agreements in relation to indebtedness. |
- 40 -
Representation/Warranty No. | Disclosure | |
Section 3.01 (x) (iii): No disclosure | ||
Section 3.01 (x) (iv): No disclosure | ||
Section 3.01 (x) (v): No disclosure | ||
Section 3.01 (y) ( Labor Matters ) | No disclosure | |
Section 3.01 (z) ( Intellectual Property ) | No disclosure | |
Section 3.01 (aa) ( Economic Sanctions) | No disclosure |
Yours faithfully, | ||
By |
|
|
Authorized Representative | ||
By |
|
|
Authorized Representative |
Acknowledged and accepted by: | ||
IFC GIF INVESTMENT COMPANY I | ||
By: |
|
|
Name: | ||
Title: | ||
Date: |
- 41 -
ANNEXURE 1
SHARE CAPITAL TABLE
Pre Cap Table | Post Cap table | |||||||||||||||
Shareholders |
Number of
shares |
% |
Number of
shares |
% | ||||||||||||
IW Green Inc. |
102497 | 93.32 | 102497 | 12.82 | ||||||||||||
Azure Power Inc. |
5700 | 5.19 | 5700 | 0.71 | ||||||||||||
Mr. Satnam Sanghera |
1633 | 1.49 | 1633 | 0.20 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total promoter + Angel investors (Founders) |
109830 | 100.00 | 109830 | 13.73 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
FC VI India Venture (Mauritius) Limited |
219883 | 27.50 | ||||||||||||||
Helion Venture Partners II LLC + Helion Ventures Partners India II LLC |
203126 | 25.40 | ||||||||||||||
International Finance Corporation |
98028 | 12.26 | ||||||||||||||
DEG |
10 | 0.00 | ||||||||||||||
Proparco |
10 | 0.00 | ||||||||||||||
IFC GIF Investment Company I |
111071 | 13.89 | ||||||||||||||
IFC |
22214 | 2.78 | ||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total non-founder investors |
654342 | 81.82 | ||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
ESOP |
35543 | 4.44 | ||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total shares |
109830 | 100.00 | 799715 | 100.00 | ||||||||||||
|
|
|
|
|
|
|
|
* | it is upon completion of Clause 4.01(p) and 4.01(q) of Subscription agreement. |
** | CCDs, Series E CCPS and any other fixed return instruments are not part of this calculation |
- 42 -
ANNEXURE 2 (A)
LIST OF SUBSIDIARIES, THEIR DIRECTORS, OWNERSHIP, DOMICILE AND HEAD OFFICE [pursuant to Section 3.01(e) ( Charter and Number of Director s) & Section 3.01(g) ( Subsidiaries )]
Sl. |
Name of Subsidiary |
Directors |
Capitalisation |
Shareholding/ Ownership |
Registered Office/
|
Head office |
||||||||||
1. |
Azure Power India Private Limited (AZI) |
a. b. c. d. e. f. |
Mr. Inderpreet S Wadhwa. Mr. H.S. Wadhwa. Mr. Sanjeev Aggarwal, Mr. William Bruce Elmore Ms. Dianne Goss Farrell Mr. Robert Douglas Kelly |
Rs. 9,220,570/- Divided into 1,09,880 Equity Shares of Rs. 10 Each & 8,12,177 Preference share of Rs. 10 each. |
1. Mr. Inderpreet Singh Wadhwa holds 97,497 Equity Shares of Rs 10 Each. 2. Azure Power Inc. Holds 5,700 Equity Shares of Rs 10 Each. 3. Mr. Harkanwal singh Holds 5,000 Equity Shares of Rs 10 Each. 4. FC VI India Venture (Mauritius) Ltd Holds 10 Equity Shares of Rs 10 Each and 295,458 Compulsorily Convertible Preference Shares of Rs. 10 Each. 5. Helion Ventures Partners II LLC Holds 10 Equity Shares of Rs 10 Each and 261,891 Compulsorily Convertible Preference Shares of Rs. 10 Each. |
8, G.F., Local Shopping Compex, Pushp Vihar, Madangir, New Delhi - 62 |
8, G.F., Local Shopping Compex, Pushp Vihar, Madangir, New Delhi - 62 |
- 43 -
Sl. |
Name of Subsidiary |
Directors |
Capitalisation |
Shareholding/ Ownership |
Registered Office/
|
Head office |
||||||||||
6. International Finance Corporation Holds 10 Equity Shares of Rs 10 Each, 98018 Compulsorily Convertible Preference Shares of Rs. 10 Each, 11,00,000 Compulsorily Convertible Debentures of Rs. 224.19, 37,500 Compulsorily Convertible Debentures of Rs. 2,000 and 36,000 Compulsorily Convertible Debentures of Rs. 5,000. | ||||||||||||||||
7. Satnam Sanghera Holds 1,633 Equity Shares of Rs 10 Each. | ||||||||||||||||
8. DEG Holds 10 Equity Shares of Rs 10 Each and 680,390 Compulsorily Convertible Debentures of Rs. 1,000/-. | ||||||||||||||||
9. PROPARCO holds 10 Equity Share of Rs 10 Each and 140,000 Compulsorily Convertible Preference Shares of Rs. 10 Each. |
- 44 -
Sl. |
Name of Subsidiary |
Directors |
Capitalisation |
Shareholding/ Ownership |
Registered Office/
|
Head office |
||||||||||
10. Helion Venture Partners India II LLC holds 16,810 Compulsorily Convertible Preference Shares of Rs. 10 Each. | ||||||||||||||||
2. | Azure Power (Punjab) Pvt. Ltd. |
g. h. |
Inderpreet Wadhwa H.S. Wadhwa |
Rs. 1,265,240/- divided into 1,265,24 equity shares of Rs. 10 each. | 1. | Mr. H.S. Wadhwa holds 1 Equity Share | C - 2324, Ranjit Avenue, Amritsar | 8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 | ||||||||
2. |
Azure Power India Private Limited Holds 126523 Equity Share of Rs 10 Each | |||||||||||||||
3. | Azure Power (Haryana) Pvt. Ltd. |
a. b. c. d. |
Inderpreet Wadhwa H.S. Wadhwa Sanjeev Aggarwal Natarajan Ranganathan |
Rs. 20,49,200 Lacs Divided into 204920 Equity Shares of Rs. 10 Each. | 1. | Mr. H.S. Wadhwa holds 1 Equity Share | Villa No. 148, Tatvam Villas, Sohna Road, Gurgaon, Haryana - 122018 | 8, G.F., Local Shopping Compex, Pushp Vihar, Madangir, New Delhi - 62 | ||||||||
2. | Azure Power India Private Limited Holds 163935 Equity Share of Rs 10 Each | |||||||||||||||
3. |
Suntech Power International Ltd. holds 40984 Equity Share of Rs 10 Each | |||||||||||||||
4. |
Azure Power (Rajasthan) Pvt. Ltd. |
a. b. |
Inderpreet Wadhwa H.S. Wadhwa |
Rs. 988,740 Divided into 988,74/ Equity Shares of Rs. 10 Each. | 1. | Mr. H.S. Wadhwa holds 1 equity share | 8, G.F., Local Shopping Compex, Pushp Vihar, Madangir, New Delhi - 62 | 8, G.F., Local Shopping Compex, Pushp Vihar, Madangir, New Delhi - 62 | ||||||||
2. | Azure Power India Private Limited holds 98873 Equity Share of Rs 10 Each |
- 45 -
Sl. |
Name of Subsidiary |
Directors |
Capitalisation |
Shareholding/ Ownership |
Registered Office/
|
Head office |
||||||||||
5. | Azure Solar Pvt. Ltd. |
a. b. |
Inderpreet Wadhwa H.S. Wadhwa |
Rs. 11,845,800 Divided Equity Shares of Rs. 10 Each. | 1. | Mr. H.S. Wadhwa holds 1 equity share of Rs 10 each. | 8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 | 8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 | ||||||||
2. | Azure Power India Private Limited holds 1093521 Equity Share of Rs 10 Each | |||||||||||||||
3. | Azure Power US Inc. holds 91058 Equity Share of Rs 10 Each | |||||||||||||||
6. | Azure Sun Energy Pvt. Ltd. |
a. b. |
Inderpreet Wadhwa H.S. Wadhwa |
Rs. 7,56,240 Divided into 75,624 Equity Shares of Rs. 10 Each. |
1. | Mr. H.S. Wadhwa holds 1 equity share of Rs 10 each | 8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 | 8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 | ||||||||
2. | Azure Power India Private Limited holds 75623 Equity Share of Rs 10 Each. | |||||||||||||||
7. | Azure Solar Solutions Pvt. Ltd. |
a. b. |
Inderpreet Wadhwa H.S. Wadhwa |
Rs. 2,25,760 divided into 22,576 Equity Shares of Rs. 10 Each. | 1. | Mr. H.S. Wadhwa holds 1 equity share of Rs 10 each | 8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 | 8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 | ||||||||
2. | Azure Power India Private Limited holds 22575 Equity Share of Rs 10 Each | |||||||||||||||
8. | Azure Urja Pvt. Ltd. |
a. b. |
Inderpreet Wadhwa H.S. Wadhwa |
Rs. 1416380 Lacs Divided into 141638 Equity Shares Rs. 10 Each | 1. | Mr. H.S. Wadhwa holds 1 equity share of Rs 10 each | 8, Local Shopping Complex, Pushp Vihar, Madangir, | 8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 |
- 46 -
Sl. |
Name of Subsidiary |
Directors |
Capitalisation |
Shareholding/ Ownership |
Registered Office/
|
Head office |
||||||||||
2. |
Azure Power India Private Limited holds 104532 Equity Share of Rs 10 Each | New Delhi, Delhi, INDIA - 110062 | ||||||||||||||
3. |
Azure Power US Inc. holds 37105 Equity Share of Rs 10 Each | |||||||||||||||
9. |
Azure Power (Karnataka) Pvt. Ltd. |
a. b. |
Inderpreet Wadhwa H.S. Wadhwa |
Rs. 6,41,650 Divided into 64,165 Equity Shares of Rs. 10 Each. | 1. | Mr. H.S. Wadhwa holds 1 equity share of Rs 10 each |
PRASHANTH NILAYA, H.No. 279, 4TH CROSS, ARAVIND NAGAR, HUBLI - 580024 |
8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 |
||||||||
2. | Azure Power India Private Limited holds 37776 Equity Share of Rs 10 Each | |||||||||||||||
3. |
Azure Urja Private Limited holds 26388 Equity Share of Rs 10 Each | |||||||||||||||
10. | Azure Surya Pvt. Ltd. |
a. b. |
Inderpreet Wadhwa H.S. Wadhwa |
Rs. 666870 Divided into 66687 Equity Shares of Rs. 10 Each. | 1. | Mr. H.S. Wadhwa holds 1 equity share of Rs 10 each | 8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 | 8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 | ||||||||
2. |
Azure Power India Private Limited holds 44898 Equity Share of Rs 10 Each | |||||||||||||||
3. |
Azure Urja Private Limited holds 21788 Equity Share of Rs 10 Each |
- 47 -
Sl. |
Name of Subsidiary |
Directors |
Capitalisation |
Shareholding/ Ownership |
Registered Office/
|
Head office |
||||||||||
11. | Azure Sunshine Pvt. Ltd. |
a. b. |
Inderpreet Wadhwa H.S. Wadhwa |
Rs. 5,63,360 Divided 56336 Equity Shares of Rs. 10 Each. |
1. |
Mr. H.S. Wadhwa holds 1 equity share of Rs 10 Each | 8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 | 8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 | ||||||||
2. | Azure Power India Private Limited holds 56335 Equity Share of Rs 10 Each | |||||||||||||||
12. | Azure Greentech Pvt. Ltd. |
a. b. |
Inderpreet Wadhwa H.S. Wadhwa |
Rs. 5,64,030 Divided into 56,403 Equity Shares of Rs. 10 Each. |
1. |
Mr. H.S. Wadhwa holds 1 equity share of Rs 10 each | 8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 | 8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 | ||||||||
2. | Azure Power India Private Limited holds 56402 Equity Share of Rs 10 Each | |||||||||||||||
13. | Azure Clean Energy Pvt. Ltd. |
a. b. |
Inderpreet Wadhwa H.S. Wadhwa |
Rs. 4,63,550 Divided into 46,355 Equity Shares of Rs. 10 Each. |
1. |
Mr. H.S. Wadhwa holds 1 equity share of Rs 10 each | 8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 | 8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 | ||||||||
2. |
Azure Power India Private Limited holds 46354 Equity Share of Rs 10 Each | |||||||||||||||
14. | Azure Sunlight Pvt. Ltd. |
a. b. |
Inderpreet Wadhwa H.S. Wadhwa |
Rs. 109520 Divided into 10952 Equity Shares of Rs. 10 Each. |
1. |
Mr. H.S. Wadhwa holds 1 equity share of Rs 10 each | 8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 | =8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 | ||||||||
2. | Azure Power India Private Limited holds 10951 Equity Share of Rs 10 Each |
- 48 -
Sl. |
Name of Subsidiary |
Directors |
Capitalisation |
Shareholding/ Ownership |
Registered Office/
|
Head office |
||||||||||
15. | Azure Sunrise Pvt. Ltd. |
a. b. |
Inderpreet Wadhwa H.S. Wadhwa |
Rs. 101810.00 Divided into 10181 Equity Shares of Rs. 10 Each. |
1. |
Mr. H.S. Wadhwa holds 1 equity share of Rs 10 each | 8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 | 8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 | ||||||||
2. | Azure Power India Private Limited holds 10180 Equity Share of Rs 10 Each | |||||||||||||||
16. | Azure Power (Raj.) Pvt. Ltd. |
a. b. |
Inderpreet Wadhwa H.S. Wadhwa |
Rs. 201310 Divided into 20131 Equity Shares of Rs. 10 Each. |
1. |
Mr. H.S. Wadhwa holds 1 equity share of Rs 10 each | 8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 | 8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 | ||||||||
2. | Azure Power India Private Limited holds 20130 Equity Share of Rs 10 Each | |||||||||||||||
17. | Azure Renewable Energy Pvt. Ltd. |
a. b. |
Inderpreet Wadhwa H.S. Wadhwa |
Rs. 1228940 Divided into 122894 Equity Shares of Rs. 10 Each. |
1. |
Mr. H.S. Wadhwa holds 1 equity share of Rs 10 each | 8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 | 8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 | ||||||||
2. | Azure Power India Private Limited holds 122894 Equity Share of Rs 10 Each | |||||||||||||||
18. | Azure Photovoltaic Pvt. Ltd. |
a. b. |
Inderpreet Wadhwa H.S. Wadhwa |
Rs. 201,760.00 Divided into 20176 Equity Shares of Rs. 10 Each. |
1. |
Mr. H.S. Wadhwa holds 1 equity share of Rs 10 each | 8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA -110062 | 8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 | ||||||||
2. | Azure Power India Private Limited holds 122894 Equity Share of Rs 10 Each |
- 49 -
Sl. |
Name of Subsidiary |
Directors |
Capitalisation |
Shareholding/ Ownership |
Registered Office/
|
Head office |
||||||||||
19. | Azure Power Infrastructure Pvt. Ltd. |
a. b. |
Inderpreet Wadhwa H.S. Wadhwa |
Rs. 872880 Lacs Divided into 87288 Equity Shares of Rs. 10 Each. |
1. |
Mr. H.S. Wadhwa holds 1 equity share of Rs 10 | 8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 | 8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 | ||||||||
2. | Azure Power India Private Limited holds 76073 Equity Share of Rs 10 Each | |||||||||||||||
3. | Azure Urja Private Limited Holds 11214 Equity Share of Rs 10 Each | |||||||||||||||
20. | Azure Power Earth Pvt. Ltd. |
a. b. |
Surendra Kumar Gupta Preet Mohinder Singh Sandhu |
Rs. 1 Lacs Divided into 10 000/ Equity Shares of Rs. 10 Each. |
1. |
Mr. H.S. Wadhwa holds 1 equity share of Rs 10 | 8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 | 8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 | ||||||||
2. | Azure Power India Private Limited holds 9999 Equity Share of Rs 10 Each | |||||||||||||||
21. | Azure Power Eris Pvt. Ltd. |
a. b. |
Surendra Kumar Gupta Preet Mohinder Singh Sandhu |
Rs. 1 Lacs Divided into 10 000/ Equity Shares of Rs. 10 Each. |
1. |
Mr. H.S. Wadhwa holds 1 equity share of Rs 10 | 8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 | 8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 | ||||||||
2. | Azure Power India Private Limited holds 9999 Equity Share of Rs 10 Each | |||||||||||||||
22. | Azure Power Mars Pvt. Ltd. |
a. b. |
Surendra Kumar Gupta Preet Mohinder Singh Sandhu |
Rs. 881,250.00 Divided into 88,125 Equity Shares of Rs. 10 Each. |
1. |
Mr. H.S. Wadhwa holds 1 equity share of Rs 10 |
8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 | 8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 | ||||||||
2. | Azure Power India Private Limited holds 88124 Equity Share of Rs 10 Each |
- 50 -
Sl. |
Name of Subsidiary |
Directors |
Capitalisation |
Shareholding/ Ownership |
Registered Office/
|
Head office |
||||||||||
23. | Azure Power Mercury Pvt. Ltd. |
a. b. |
Surendra Kumar Gupta Preet Mohinder Singh Sandhu |
Rs. 1 Lacs Divided into 10 000/ Equity Shares of Rs. 10 Each. | 1. | Mr. H.S. Wadhwa holds 1 equity share of Rs 10 | 8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 | 8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 | ||||||||
2. | Azure Power India Private Limited holds 9999 Equity Share of Rs 10 Each | |||||||||||||||
24. | Azure Power Makemake Pvt. Ltd. |
a. b. |
Surendra Kumar Gupta Preet Mohinder Singh Sandhu |
Rs. 1,422,030.00 Divided into 1,42,203 Equity Shares of Rs. 10 Each. |
1. |
Mr. H.S. Wadhwa holds 1 equity share of Rs 10 | 8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 | 8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 | ||||||||
2. | Azure Power India Private Limited holds 142202 Equity Share of Rs 10 Each | |||||||||||||||
25. | Azure Power Pluto Pvt. Ltd. |
a. b. |
Surendra Kumar Gupta Preet Mohinder Singh Sandhu |
Rs. 1 Lacs Divided into 10 000/ Equity Shares of Rs. 10 Each. |
1. |
Mr. H.S. Wadhwa holds 1 equity share of Rs 10 | 8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 | 8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 | ||||||||
2. | Azure Power India Private Limited holds 9999 Equity Share of Rs 10 Each | |||||||||||||||
26. | Azure Power Venus Pvt. Ltd. |
a. b. |
Surendra Kumar Gupta Preet Mohinder Singh Sandhu |
Rs. 1 Lacs Divided into 10 000/ Equity Shares of Rs. 10 Each. |
1. |
Mr. H.S. Wadhwa holds 1 equity share of Rs 10 | 8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 | 8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 | ||||||||
2. | Azure Power India Private Limited holds 9999 Equity Share of Rs 10 Each | |||||||||||||||
27. | Azure Power Saturn Pvt. Ltd. | a. | Surendra Kumar Gupta | Rs. 1 Lacs Divided into 10 000/ Equity Shares of Rs. 10 Each. | 1. | Mr. H.S. Wadhwa holds 1 equity share of Rs 10 | 8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 | 8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 |
- 51 -
Sl. |
Name of Subsidiary |
Directors |
Capitalisation |
Shareholding/ Ownership |
Registered Office/
|
Head office |
||||||||||
b. | Preet Mohinder Singh Sandhu | 2. | Azure Power India Private Limited holds 9999 Equity Share of Rs 10 Each | |||||||||||||
28. | Azure Power Uranus Pvt. Ltd. |
a. b. |
Surendra Kumar Gupta Preet Mohinder Singh Sandhu |
Rs. 1 Lacs Divided into 10 000/ Equity Shares of Rs. 10 Each. |
1. |
Mr. H.S. Wadhwa holds 1 equity share of Rs 10 |
8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 | 8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 | ||||||||
2. | Azure Power India Private Limited holds 9999 Equity Share of Rs 10 Each | |||||||||||||||
29. | Azure Power Jupiter Pvt. Ltd. |
a. b. |
Surendra Kumar Gupta Preet Mohinder Singh Sandhu |
Rs. 1 Lacs Divided into 10 000/ Equity Shares of Rs. 10 Each. |
1. |
Mr. H.S. Wadhwa holds 1 equity share of Rs 10 |
8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 | 8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 | ||||||||
2. | Azure Power India Private Limited holds 9999 Equity Share of Rs 10 each | |||||||||||||||
30. | Aster Power Inc. | Inderpreet Wadhwa | 531,001 Shares of US$ 1 each. | Azure Power India Private Limited holds 531,001 Shares of US$ 1 each. | United States of America | 1054 31st Street, NW, Suite 545, Washington, DC 20007. | ||||||||||
31. | Azure Power US Inc. | Inderpreet Wadhwa | 1,543,001 Shares of US$ 1 each. | Azure Power India Private Limited holds 1543,001 Shares of US$ 1 each. | United States of America | 1054 31st Street, NW, Suite 545, Washington, DC 20007. |
- 52 -
ANNEXURE 2 (B)
LIST OF SUBSIDIARIES AND THE RELATED DETAILS [pursuant to Section 3.01(q) (Subsidiaries)]
Sl. |
Name of Subsidiary |
Lien, if any |
Other Remarks |
|||
32. | Azure Power (Punjab) Pvt. Ltd. |
OPIC has lien on the project assets of Azure Power (Punjab) Pvt. Ltd. Shareholding of the Company in Azure Power (Punjab) Pvt. Ltd., has been pledged in favour of OPIC. |
||||
33. | Azure Power (Haryana) Pvt. Ltd. |
OPIC has lien on the project assets of Azure Power (Haryana) Pvt. Ltd. Shareholding of the Company in Azure Power (Haryana) Pvt. Ltd., has been pledged in favour of OPIC. |
20% of shareholding is held by M/s Suntech. | |||
34. | Azure Power (Rajasthan) Pvt. Ltd. |
US Exim Bank has lien on the project assets of Azure Power (Rajasthan) Pvt. Ltd. Shareholding of the Company in Azure Power (Rajasthan) Pvt. Ltd., has been pledged in favour of US Exim Bank/ their trustees. |
||||
35. | Azure Solar Pvt. Ltd. |
US Exim Bank has lien on the project assets of Azure Solar Pvt. Ltd. Shareholding of the Company in Azure Solar Pvt. Ltd., has been pledged in favour of the US Exim Bank/ their trustees. |
||||
36. | Azure Sun Energy Pvt. Ltd. |
IFC has lien on the project assets of Azure Sun Energy Pvt. Ltd. Shareholding of the Company in Azure Sun Energy Pvt. Ltd., has been pledged in favour of the trustee of IFC/ their trustees. |
||||
37. | Azure Solar Solutions Pvt. Ltd. |
Central Bank of India Ltd., has lien on the project assets of Azure Solar Solutions Pvt. Ltd. Shareholding of the Company in Azure Solar Solutions Pvt. Ltd., has been pledged in favour of Central Bank of India Ltd. |
||||
38. | Azure Urja Pvt. Ltd. |
PTC Financial Services Ltd., has lien on the project assets of Azure Urja Pvt. Ltd. Shareholding of the Company in Azure Urja Pvt. Ltd. has been pledged in favour of PTC Financial Services Ltd. |
||||
39. | Azure Power (Karnataka) Pvt. Ltd. | PTC Financial Services Ltd., has lien on the project assets of Azure (Karnataka) Pvt. Ltd. | ||||
Shareholding of the Company in Azure (Karnataka) Pvt. Ltd., has been pledged in favour of PTC Financial Services Ltd. |
- 53 -
Sl. |
Name of Subsidiary |
Lien, if any |
Other Remarks |
|||
40. | Azure Surya Pvt. Ltd. |
PTC Financial Services Ltd., has lien on the project assets of Azure Surya Pvt. Ltd. Shareholding of the Company in Azure Surya Pvt. Ltd., has been pledged in favour of PTC Financial Services Ltd. |
||||
41. | Azure Sunshine Pvt. Ltd. |
IREDA and Central Bank have lien on the project assets of Azure Sunshine Pvt. Ltd. Shareholding of the Company in Azure Sunshine Pvt. Ltd., has been pledged in favour of IREDA and Central Bank. |
||||
42. | Azure Greentech Pvt. Ltd. |
IREDA and Central Bank have lien on the project assets of Azure Greentech Pvt. Ltd. Shareholding of the Company in Azure Greentech Pvt. Ltd., has been pledged in favour of IREDA and Central Bank. |
||||
43. | Azure Clean Energy Pvt. Ltd. |
IREDA, IFC and IIFCL have lien on the project assets of Azure Clean Energy Pvt. Ltd. Shareholding of the Company in Azure Clean Energy Pvt. Ltd. has been pledged in favour of IREDA, IFC and IIFCL. |
||||
44. | Azure Sunlight Pvt. Ltd. | Not applicable | ||||
45. | Azure Sunrise Pvt. Ltd. | Not applicable | ||||
46. | Azure Power (Raj.) Pvt. Ltd. | Not applicable | ||||
47. | Azure Renewable Energy Pvt. Ltd. | Not applicable | ||||
48. | Azure Photovoltaic Pvt. Ltd. | Not applicable | ||||
49. | Azure Power Infrastructure Pvt. Ltd. | Not applicable | ||||
50. | Azure Power Earth Pvt. Ltd. | Not applicable | ||||
51. | Azure Power Eris Pvt. Ltd. | Not applicable | ||||
52. | Azure Power Mars Pvt. Ltd. | Not applicable | ||||
53. | Azure Power Mercury Pvt. Ltd. | Not applicable |
- 54 -
Sl. |
Name of Subsidiary |
Lien, if any |
Other Remarks |
|||
54. | Azure Power Makemake Pvt. Ltd. | Not applicable | ||||
55. | Azure Power Pluto Pvt. Ltd. | Not applicable | ||||
56. | Azure Power Venus Pvt. Ltd. | Not applicable | ||||
57. | Azure Power Saturn Pvt. Ltd. | Not applicable | ||||
58. | Azure Power Uranus Pvt. Ltd. | Not applicable | ||||
59. | Azure Power Jupiter Pvt. Ltd. | Not applicable |
- 55 -
ANNEXURE 3 Section 3.01(h) (Financial Conditions)
DETAILS OF TERM LOAN AGREEMENTS AND OTHER FINANCING AGREEMENTS EXECUTED
BY AZI AND ITS SUBSIDIARIES
S. No |
Project/ Location |
Details of the
|
Lender |
Description of the agreement |
Date of Execution of Agreements |
Loan Amount | ||||||||
1. |
2 MW Punjab | Azure Power Punjab Pvt. Ltd | OPIC | Term Loan Agreement and the related financing documents | February 20, 2009 | USD | 6,230,000 | |||||||
1 st Amendment to the Term Loan Agreement | April 27, 2009 | |||||||||||||
2 nd Amendment to the Term Loan Agreement | March 11, 2010 | |||||||||||||
3 rd Amendment to the Term Loan Agreement | June 22, 2010 | |||||||||||||
2. |
10 MW Gujarat | Azure Power (Haryana) Pvt. Ltd. | OPIC | Term Loan Agreement and the related financing documents | January 27, 2011 | USD | 26,835,436 | |||||||
1 st Amendment to the Term Loan Agreement | February 16, 2011 | |||||||||||||
2 nd Amendment to the Term Loan Agreement | June 2, 2011 | |||||||||||||
3 rd Amendment to the Term Loan Agreement | November 3, 2011 | |||||||||||||
4 th Amendment to the Term Loan Agreement | November 16, 2012 | |||||||||||||
3. |
5 MW Rajasthan | Azure Power (Rajasthan) Pvt. Ltd. | US EX-IM Bank | Term Loan Agreement and the related financing documents | August 25, 2011 | USD | 15,776,702 | |||||||
1 st Amendment to the Term Loan Agreement | Sep 15, 2011 | |||||||||||||
2 nd Amendment to the Term Loan Agreement | November 22, 2011 | |||||||||||||
3 rd Amendment to the Term Loan Agreement | Feb 6, 2012 |
- 56 -
S. No |
Project/ Location |
Details of the
|
Lender |
Description of the agreement |
Date of Execution of Agreements |
Loan Amount | ||||||||
4. |
35 MW Rajasthan | Azure Solar Pvt. Ltd. | US EX-IM Bank | Term Loan Agreement and the related financing documents | August 29, 2012 | USD | 63,708,791 | |||||||
5. |
2.5 MW Rooftop Gujarat | Azure Sun Energy Pvt. Ltd. | IFC | Term Loan Agreement and the related financing documents | May 24, 2013 | INR | 158,400,000 | |||||||
1 st Amendment to the Term Loan Agreement | Sep 16, 2013 | |||||||||||||
6. |
34 MW Punjab | Azure Urja Pvt. Ltd. | PTC India Financial Services Ltd | Term Loan Agreement and the related financing documents | March 13, 2014 | INR | 1,88,00,00,000 | |||||||
7. |
Rooftop projects |
Azure Solar Solution Private Ltd. | Central Bank of India | Term Loan Agreement and the related financing documents | March 25, 2014 | INR | 31,45,00,000 | |||||||
8. |
Working Capital |
Azure Power India Pvt. Ltd. | Central Bank of India | Non-fund based facility Agreement and the related financing documents | May 31, 2014 | INR | 1,98,00,00,000 | |||||||
9. |
BG Facility | Azure Power India Pvt. Ltd. | Yes Bank Ltd | Non-fund based facility Agreement and the related financing documents | March 2, 2015 | INR | 50,00,00,000 | |||||||
10. |
BG Facility | Azure Power India Pvt. Ltd. |
Indusind Bank |
Non-fund based facility Agreement and the related financing documents | April 6, 2015 | INR | 75,00,00,000 | |||||||
11. |
Chhattisgarh 30 MW | Azure Power India Pvt. Ltd. | Yes Bank Ltd | Term Loan Agreement and the related financing documents | May 8, 2015 | INR | 1,60,10,00,000 | |||||||
12. |
10 MW Uttar Pradesh | Azure Surya Pvt. Ltd. | PTC India Financial Services Ltd | Term Loan and the related financing documents Agreement | September 19, 2014 | INR | 55,00,00,000 | |||||||
13. |
40 MW Rajasthan | Azure Clean Energy Pvt. Ltd. |
IREDA, IIFCL |
Common Loan Facility Agreement and the related financing documents | March 13, 2015 | INR | 2,05,00,00,000 |
- 57 -
S. No |
Project/ Location |
Details of the
|
Lender |
Description of the agreement |
Date of Execution of Agreements |
Loan Amount | ||||||||
IFC | Loan Agreement and the related financing documents | October 31, 2014 | ||||||||||||
IFC | 1 st Amendment to the Term Loan Agreement | Feb 11, 2015 | ||||||||||||
IFC | 2 nd Amendment to the Term Loan Agreement | March 10, 2015 | ||||||||||||
SECI | VGF Agreement | March 28, 2014 | ||||||||||||
14. |
20 MW Rajasthan | Azure Sunshine Pvt. Ltd. | IREDA | Term Loan Agreement and the related financing documents | September 23, 2014 | INR | 1,17,40,00,000 | |||||||
Central Bank of India | Term Loan Agreement and the related financing documents | October 30, 2014 | ||||||||||||
SECI | VGF Agreement | March 28, 2014 | ||||||||||||
15. |
40 MW Rajasthan | Azure Green Tech Pvt. Ltd. | IREDA | Term Loan Agreement and the related financing documents | September 23, 2014 | INR | 2,36,30,00,000 | |||||||
Central Bank of India | Term Loan Agreement and the related financing documents | October 30, 2014 | ||||||||||||
SECI | VGF Agreement | March 28, 2014 | ||||||||||||
16. |
Karnataka 10 MW | Azure Power Karnataka Pvt Ltd | PTC India Financial Services Ltd | Term Loan Agreement and the related financing documents | November 3, 2014 | INR | 58,50,00,000 |
- 58 -
ANNEXURE 4 (A) [Section 3.01(X) (Material Contracts)]
DETAILS OF O & M AND EPC CONTRACTS BETWEEN
AZI AND ITS SUBSIDIARIES
Sl. No. |
Descriptions |
Amount (in INR) payable to the
Company on an annual basis |
Terms |
|||||
1. |
O & M Contract with Azure Power Haryana Private Limited dated 09-12-2011. | 1,05,00,000 | 5% to be increased every year | |||||
2. |
O&M Contract with Azure Power Punjab Private Limited dated 01-04-2013. | 22,00,000 | 5.72% to be increased every year | |||||
3. |
O&M Contract with Azure Power Rajasthan Private Limited dated 01-04-2013. | 55,00,000 | 5.72% to be increased every year | |||||
4. |
O&M Contract with Azure Solar Limited dated 01-04-2013 | 3,84,00,000 | 5.72% to be increased every year | |||||
5. |
O&M Contract with Azure Sun Energy Private Limited dated 01-06-2013 | 26,15,000 | 5.72% to be increased every year | |||||
6. |
O&M Contract with Azure Urja Private Limited dated 01-06-2014 | 3,94,40,000 | 5.72% to be increased every year | |||||
7. |
O&M Contract with Azure Power Karnataka Private Limited dated 01-09-2014 | 1,16,00,000 | 5.72% to be increased every year | |||||
8. |
O&M Contract with Azure Surya Private Limited dated 01-06-2014 | 1,16,00,000 | 5.72% to be increased every year | |||||
9. |
O&M Contract with Azure Clean Energy Private Limited dated 01-09-2014 | 2,00,00,000 | 5% to be increased in every year | |||||
10. |
O&M Contract with Azure Green Tech Private Limited dated 01-09-2014 | 2,00,00,000 | 5% to be increased in every year | |||||
11. |
O&M Contract with Azure Sunshine Private Limited dated 01-09-2014 | 1,00,00,000 | 5% to be increased in every year | |||||
12. |
EPC Contracts with Azure Mars Private Limited dated 01-04-2015 | 35,90,00,000 | Not Applicable |
- 59 -
ANNEXURE 4 (B) [Section 3.01(x) (Material Contracts)]
DETAILS OF POWER PURCHASE AGREEMENT BY
AZI AND ITS SUBSIDIARIES
Sr. No. |
Plant |
Capacity (MW) |
Offtaker |
Tariff (Price in Rs.
|
PPA Date |
|||||
1. | Punjab | 2 | NTPC Vidyut Vyapar Nigam (NVVN) | 17.91 | 15-Oct-10 | |||||
2. | Gujarat | 10 | Gujarat Urja Vikas Nigam Limited (GUVNL) | 15.00 | 30-Apr-10 | |||||
3. | Rajasthan | 5 | NTPC Vidyut Vyapar Nigam (NVVN) | 11.94 | 10-Jan-11 | |||||
4. | Rajasthan | 15 | NTPC Vidyut Vyapar Nigam (NVVN) | 8.21 | 25-Jan-12 | |||||
5. | Rajasthan | 20 | NTPC Vidyut Vyapar Nigam (NVVN) | 8.21 | 25-Jan-12 | |||||
6. | Punjab I | 15 | Punjab State Power Corporation Limited (PSPCL) | 7.67 | 27-Dec-13 | |||||
7. | Punjab -II | 15 | Punjab State Power Corporation Limited (PSPCL) | 7.97 | 27-Dec-13 | |||||
8. | Punjab - III | 4 | Punjab State Power Corporation Limited (PSPCL) | 8.28 | 27-Dec-13 | |||||
9. | Uttar Pradesh | 10 | Uttar Pradesh Power Corporation Limited (UPPCL) | 8.99 | 27-Dec-13 | |||||
10. | Karnataka I | 10 | Bangalore Electricity Supply Company ( BESCOM ) | 7.47 | 18-Jan-14 | |||||
11. | Rajasthan | 100 | Solar Energy Corporation of India (SECI) | 5.45 +VGF Funding | 28-Mar-14 |
- 60 -
Sr. No. |
Plant |
Capacity (MW) |
Offtaker |
Tariff (Price in Rs.
|
PPA Date |
|||||
12. | Karnataka II | 10 | Bangalore Electricity Supply Company ( BESCOM ) | 6.66 | 27-Sep-14 | |||||
13. | Chhattisgarh - I | 10 | Chhattisgarh State Power Distribution Company Limited | 6.44 | 1-Aug-14 | |||||
14. | Chhattisgarh - II | 10 | Chhattisgarh State Power Distribution Company Limited | 6.45 | 15-Sep-14 | |||||
15. | Chhattisgarh - III | 10 | Chhattisgarh State Power Distribution Company Limited | 6.46 | 15-Sep-14 | |||||
16. | Karnataka III P-I | 50 | Chamundeshwari Electricity Supply Corporation Limited (CESC) | 6.89 | 2-Jan-15 | |||||
17. | Karnataka III P-II | 40 | Hubli Electricity Supply Company Limited (HESCOM) | 6.93 | 14-Jan-15 | |||||
18. | Karnataka III P-III | 40 | Gulbarga Electricity Supply Corporation (GESCOM) | 6.96 | 23-Jan-15 | |||||
19. | Bihar | 10 | North Bihar Power Distribution Company Limited and South Bihar Power Distribution Company Limited. | 8.39 | 17-Jan -15 | |||||
20. | Andhra Pradesh | 50 | Southern Power Distribution Company of Andhra Pradesh Limited | 5.89 with 3% escalation i.e. (6.93) | 5-Dec-14 | |||||
21. | Rajasthan | 5 | Solar Energy Corporation of India (SECI) | 5.45 | 5-Feb-15 |
- 61 -
SCHEDULE 3
[FORM OF] UPDATED COMPANY DISCLOSURE SCHEDULE
[Letterhead of the Company]
[Date]
IFC GIF Investment Company I | ||||||
|
||||||
|
||||||
|
||||||
Attention: [●] |
Investment No.
Updated Company Disclosure Schedule
Ladies and Gentlemen:
We refer to a subscription agreement, dated [●], between Azure Power Global Limited (the Company ), the Sponsors and IFC GIF Investment Company I ( Investor ) (the Subscription Agreement ) relating to the subscription by the Investor for certain securities in the Company (the Subscription ). Words and expressions defined in the Agreement have the same meaning when used in this Schedule, unless otherwise defined in this Schedule.
In connection with an upcoming the Investor Subscription, we are delivering this Updated Company Disclosure Schedule to you to update the [Original Company Disclosure Schedule][Current Company Disclosure Schedule(s)] previously delivered to the Investor, in order to modify or supplement, as of the date hereof, matters which have been disclosed therein.
The representations and warranties made in connection with the Subscription Agreement and the matters which have been previously disclosed in the [Original Company Disclosure Schedule][Current Company Disclosure Schedule(s)] are qualified by the facts and circumstances fully, fairly, specifically and accurately contained or disclosed in this Updated Company Disclosure Schedule as of the date hereof.
If the substance of this Updated Disclosure Schedule is acceptable to the Investor, please sign below to evidence your acknowledgement and acceptance, for purposes of [Section 4.01(a)(ii)] of the Subscription Agreement.
DISCLOSURES
The following specific disclosures are made in relation to the representations and warranties contained in the Subscription Agreement. Each matter disclosed is listed against the sub-section number of the representation and warranty to which the disclosure relates but a disclosure applies to all of the representations and warranties only to the extent it is reasonably apparent on its face.
- 62 -
Representation/Warranty No. | Disclosure | |
[Section 3.01(d) ( Status of Authorizations )] | Section 1: [Authorizations already obtained] | |
Section 2: [Authorizations to be obtained prior to Investor Subscription] | ||
Section 3: [Other Authorizations] | ||
[Section 3.01(e) ( Charter )] |
[List of Directors and Officers]
[Other Disclosures] |
|
[Section 3.01(f) ( Capital Structure of the Company )] | [ ] | |
[Section 3.01 (g) ( No Immunity )] | [ ] | |
[Section 3.01(h) ( Financial Condition )] | [ ] | |
[Section 3.01(i) ( Financial Statements )] | [ ] | |
[Section 3.01(j) ( Taxes )] | [ ] | |
[Section 3.01(k) ( Litigation )] | [ ] | |
[Section 3.01(l) ( Compliance with Law )] | [ ] | |
[Section 3.01(m) ( Environmental Matters )] | [ ] | |
[Section 3.01(n) ( Sanctionable Practices )] | [ ] | |
[Section 3.01(o) ( Insurance )] | [List of Policies] | |
[List of Deductibles] | ||
[List of Retention Amounts] | ||
[Description of any Material Claims] | ||
[Section 3.01(p) ( Disclosure )] | [ ] | |
[Section 3.01 (q) ( Subsidiaries )] | [ ] | |
[Section 3.01(r) ( UN Security Council Resolutions )] | [ ] | |
[Section 3.01(s) ( Criminal Offenses )] | [ ] |
- 63 -
Representation/Warranty No. | Disclosure | |
[Section 3.01(t) ( Restrictions on Business Activities )] | [ ] | |
[Section 3.01(u) ( Related Party Transactions )] | [ ] | |
[Section 3.01(v) ( Title to and Condition of Property )] | [ ] | |
[Section 3.01 (w) ( Books and Records )] | [ ] | |
[Section 3.01 (x) ( Material Contracts )] | [ ] | |
[Section 3.01(y) ( Labor Matters ] | [List of collective bargaining agreements and other labor union contracts] | |
[Other disclosures] | ||
[Section 3.01(z) ( Intellectual Property )] | [ ] | |
[Section 3.01(aa) ( Economic Sanctions )] | [ ] |
Yours faithfully, | ||
By |
|
|
Authorized Representative | ||
By |
|
|
Authorized Representative |
Acknowledged and accepted by: | ||
IFC GIF INVESTMENT COMPANY I | ||
By: |
|
|
Name: | ||
Title: | ||
Date: |
- 64 -
SCHEDULE 4
FORM OF CERTIFICATE OF INCUMBENCY AND AUTHORITY
[Letterhead of the Company/Sponsor]
[Date]
IFC GIF Investment Company I | ||||||
|
||||||
|
||||||
|
||||||
Attention: [●] |
Investment No.
Certificate of Incumbency and Authority
Reference is made to the Subscription Agreement, dated [●], between the Investor, the Company and the Sponsors (the Subscription Agreement ). Unless otherwise defined herein, capitalized terms used herein shall have the meaning set forth in the Subscription Agreement.
I, the undersigned [Chairman/Director] of (the [ Company ]/[ Sponsor ]), duly authorized to do so, hereby certify that the following are the names, offices and true specimen signatures of the individuals [each]/[any two] of whom are, and will continue to be, authorized:
(a) to sign on behalf of the Company the requests for the subscription for shares of the Company provided for in Section 2.01 ( Subscription ) of the Subscription Agreement;
(b) to sign the certifications required under Section [4.01 ( Conditions of Investor Subscription )] of the Subscription Agreement; and
(c) to take any other action required or permitted to be taken, done, signed or executed under the Subscription Agreement or any other agreement to which the Investor and the [Company]/[Sponsor] may be parties.
*Name | Office | Specimen Signature | ||||
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|
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|
||||
|
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|
You may assume that any such individual continues to be so authorized until you receive written notice from an Authorized Representative of the [Company]/[Sponsor] that they, or any of them, is no longer so authorized.
Yours faithfully,
* | Designations may be changed by the Company/Sponsor at any time by issuing a new Certificate of Incumbency and Authority authorized by the board of directors of the Company/Sponsor where applicable. |
- 65 -
|
||
By |
|
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Name: | ||
Title: | [Chairman/Director] |
- 66 -
SCHEDULE 5
FORM OF LETTER TO COMPANYS AUDITORS
[Letterhead of the Company]
[Date]
[NAME OF AUDITORS]
[ADDRESS]
Investment No.
Letter to Auditors
Ladies and Gentlemen:
We hereby authorize and instruct you to give to IFC GIF Investment Company I of [●] ( Investor ), all such information as the Investor may reasonably request with regard to the financial statements (both audited and unaudited), accounts and operations of the undersigned company. We have agreed to supply that information and those statements under the terms of a shareholders agreement, dated [●], between the undersigned company and the Shareholders named therein (the Shareholders Agreement ). For your information we enclose a copy of the Shareholders Agreement.
We authorize and instruct you to send two (2) copies of the audited accounts of the undersigned company to the Investor each year to assist us in satisfying our obligation to the Investor under Section 3.01(a) of the Shareholders Agreement. When submitting the same to the Investor, please also send, at the same time, a copy of your full report on such accounts to the Investor.
For our records, please ensure that you send to us a copy of every letter that you receive from the Investor immediately upon receipt and a copy of each reply made by you immediately upon the issue of that reply.
Yours faithfully, | ||
AZURE POWER GLOBAL LIMITED | ||
By |
|
|
Name: | ||
Title: | [Authorized Representative] |
Enclosure: Shareholders Agreement
cc: | Director | |||||||
IFC GIF Investment Company I | ||||||||
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|
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Attention: [●] |
- 67 -
SCHEDULE 6
TERMS AND CONDITIONS OF SERIES H CCPS
All capitalized terms used herein but not defined shall have the meaning given to them under the Shareholders Agreement. Reference to a paragraph under this Schedule shall be a reference to the paragraph of this Schedule.
1. | Par Value |
The Series H CCPS shall have the issue price of USD 450.16 (Dollars Four Hundred and Fifty and Sixteen Cents).
2. | Dividend |
Each of the holders of Series H CCPS shall be entitled to receive a dividend of 8% in USD (eight per cent) per annum on a cumulative basis calculated on the issue price paid on each such Series H CCPS. Subject to the Applicable Law, each holder of Series H CCPS shall be individually entitled, in addition and cumulative to the above, to participate in the distribution of the profits of the Company if made to the other shareholders (including the holders of Equity Shares and compulsorily convertible preference shares, but excluding Proparco CCPS) of the Company assuming that all Series H CCPS have been converted to Equity Shares at the Normal Conversion Factor set out below.
Pursuant to the above, it is clarified that the Company shall not declare, pay or set aside any dividends on Shares of any other class or kind of share capital (other than Proparco CCPS) unless the holders of the Series H CCPS first receive a dividend on each Series H CCPS equal to the sum of: (i) 8% in USD (eight per cent) per annum on a cumulative basis calculated on the issue price paid; and (ii) the corresponding dividend that the holders of Series H CCPS would receive if the profits of the Company are distributed to the other Shareholders of the Company.
The dividend pay-out as set out under this paragraph 2 shall be payable in cash or in kind.
3. | Term |
Unless converted in accordance with the terms of this Schedule, the Charter of the Company and the Applicable Laws, the term of the Series H CCPS shall be a maximum of 20 (twenty) years from the date of their issuance.
4. | Voting |
4.1 | The holders of Series H CCPS shall be entitled to attend all meetings of Shareholders of the Company. Series H CCPS shall be entitled to vote on all matters which affect their rights directly or indirectly. The voting rights of each Series H CCPS on every resolution placed before the Company shall be in proportion to the share capital that the Equity Shares that the Series H CCPS represent, assuming that the Series H CCPS have been converted into Equity Shares of the Company on the basis of the Normal Conversion Factor set out below. |
4.2 | From the date of conversion of the Series H CCPS into Equity Shares, the voting percentage of their holders in the Company shall be in proportion to their shareholding in the Company. |
- 68 -
5. | Conversion |
5.1 | The Series H CCPS shall be convertible into Equity Shares of the Company at any time at the option of the holders of the Series H CCPS in accordance with paragraph 5.2. Any Series H CCPS that have not been converted into the Equity Shares of the Company shall compulsorily convert into the Equity Shares of the Company in accordance with paragraph 5.3 below, upon the earlier of: |
(i) | immediately prior to the listing of the Equity Shares pursuant to the QIPO or IPO, as approved by the Shareholders of the Company; and |
(ii) | the date which is 20 (twenty) years from the date of the issuance of Series H CCPS (the Maturity Date ), |
in each case in accordance with the terms of the Agreement. It is clarified that the Series H CCPS shall convert on the listing of the Equity Shares pursuant to the QIPO or IPO as approved by the Shareholders, if all existing Equity Securities (including the IFC Securities, Helion Securities, FC Securities, DEG Securities, Proparco Securities and the Series G CCPS) convert on or before the date of conversion of the Series H CCPS.
5.2 | Optional Conversion |
(i) | The holders of the Series H CCPS shall severally have the right, at any time and from time to time at their sole option, after their issuance, to require the Company, by written notice (the Conversion Notice ), to convert their respective Series H CCPS into Equity Shares of the Company. A copy of the Conversion Notice shall also be sent to the Sponsors, Proparco, Helion, FC, DEG and IFC, who are the other Shareholders of the Company. |
(ii) | In case the conversion occurs prior to the expiry of the Maturity Date, then the conversion shall be completed within a period of 21 (twenty one) days from the date of the Conversion Notice. |
(iii) | Normal Conversion Factor : The Series H CCPS will be convertible into the Equity Shares of the Company at a conversion ratio of 1:1 (i.e. 1 (one) Series H CCPS will convert into 1 (one) Equity Share), without being required to pay any amount for such conversion, and shall be adjusted for: |
(a) | dividends declared and not paid in accordance with paragraph 2 above; |
(b) | share splits, recapitalization or similar events; |
(c) | the anti-dilution provision as set out in paragraph 9 below; |
(d) | with respect to the CCDs and/or Proparco CCPS that are converted into Equity Shares on or before the conversion of Series H CCPS, the holders of Series H CCPS shall be entitled to an anti-dilution protection such that the conversion ratio of the Series H CCPS is adjusted upwards to ensure that percentage holding of the holders of Series H CCPS after conversion of such CCDs and/or Proparco CCPS shall be same as the percentage holding of the holders of Series H CCPS before the conversion of such CCDs and/or Proparco CCPS determined on a Fully Diluted Basis. |
The Normal Conversion Factor is specified based on the assumption that all
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the existing Equity Securities (including the IFC Securities, Helion Securities, FC Securities, DEG Securities, Proparco Securities and the Series G CCPS) have converted on or before the date of conversion of the Series H CCPS.
(iv) | The Conversion Notice shall be dated and shall set forth: |
(a) | The number of Series H CCPS in respect of which the holders of the Series H CCPS are exercising their right to conversion in accordance with this paragraph 5.2; and |
(b) | The number of Equity Shares of the Company that the Series H CCPS shall convert into. |
(v) | Upon receipt of the Conversion Notice, the Company shall and the Sponsors shall ensure that the Company shall effect the relevant board and shareholders meeting and undertake all such acts and deeds as may be necessary to give effect to the provision of this paragraph 5. |
(vi) | Upon receipt of the Conversion Notice, the Company shall effect the following: |
(a) | Convening of a meeting of the board of directors, in which meeting the Company shall approve the following: |
(A) | the conversion of the relevant Series H CCPS; |
(B) | the cancellation of the share certificates representing such number of the Series H CCPS; and |
(C) | the issuance and allotment of such number of Equity Shares of the Company that the Series H CCPS shall convert into, |
in each case, as are mentioned in the Conversion Notice;
(b) | Cancellation of the share certificates of Series H CCPS in respect of which the conversion right is exercised in the Conversion Notice; and thereafter issuance of share certificates to the holders of Series H CCPS to evidence such holders of the Series H CCPS as the owners of the Equity Shares issued upon conversion of their respective Series H CCPS as mentioned in the Conversion Notice; |
(c) | Making all the requisite filings with the appropriate Authority; |
(d) | The Company and the Sponsors shall do all such acts and deeds as may be necessary to give effect to the provisions of this paragraph 5. |
5.3 | Automatic Conversion |
(i) |
The Company shall forthwith convert all the Series H CCPS into Equity Shares, based on the applicable conversion rate as determined in accordance with this paragraph 5.3, if at any time after their issuance, the Company undertakes an IPO/QIPO, provided that the shareholders of the Company have consented to such IPO/QIPO in accordance with the Shareholders Agreement. The Series H CCPS shall convert into Equity Shares of the Company immediately prior to the listing of Equity Shares pursuant to the |
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IPO/QIPO, provided that all the existing Equity Securities (including the IFC Securities, Helion Securities, FC Securities, DEG Securities, Proparco Securities and the Series G CCPS) are converted on or before the date of conversion of the Series H CCPS. |
For the purpose of this Schedule 6 , QIPO means an initial public offering of the Company, which satisfies the following conditions: (i) the initial public offering results in the listing of the Equity Shares on the stock exchange acceptable to the Investor; (ii) the gross proceeds from the issuance of new Equity Shares in such initial public offering is not less than USD 100,000,000 (United States Dollars One Hundred Million); and (iii) the offering price of the Equity Share is based on the pre-money valuation of the Company of at least USD 450,000,000 (United States Dollars Four Hundred and Fifty Million).
(ii) | In the event an IPO/QIPO occurs subsequent to the expiry of the first anniversary of the Subscription Date and prior to the second anniversary of the Subscription Date, the applicable conversion rate for the conversion of the Series H CCPS shall be such that provides the holders of Series H CCPS such number of Equity Shares that is the greater of: (a) the number of Equity Shares which provide holders of Series H CCPS a USD return of 25% per annum on a cumulative basis on the Subscription Price from the Subscription Date till the actual date of conversion of Series H CCPS; the calculation of return shall include any dividend paid before the date of conversion to the holders of Series H CCPS; the valuation of Equity Shares in order to calculate a USD return of 25% per annum on a cumulative basis shall be based on the price at which Equity Shares are allotted to investors in the IPO/QIPO;or (b) the number of Equity Shares received based on the Normal Conversion Factor. |
(iii) | In the event an IPO/QIPO occurs subsequent to the expiry of the second anniversary of the Subscription Date, the applicable conversion rate for the conversion of the Series H CCPS shall be such that provides the holders of Series H CCPS such number of Equity Shares that is the greater of: (a) the number of Equity Shares which provide holders of the Series H CCPS a USD return of 25% per annum on a cumulative basis on the Subscription Price for the period starting from the Subscription Date till the second anniversary of the Subscription Date and a USD return of 18% per annum on a cumulative basis on the Subscription Price after the second anniversary of the Subscription Date till the date of conversion. The calculation of return shall include any dividend paid before the date of conversion, and the valuation of Equity Shares to calculate the return to the holders of Series H CCPS shall be based on the price at which Equity Shares are allotted to investors in the IPO/QIPO; or (b) the number of Equity Shares received based on the Normal Conversion Factor. |
6. | If an IPO/QIPO occurs before the first anniversary of the Subscription Date, the applicable conversion rate for the conversion of the Series H CCPS shall be the Normal Conversion Factor. |
7. | In the event that: |
(a) | the Company initiates the procedure for IPO/QIPO which has necessitated the conversion of the Series H CCPS into the Equity Shares of the Company; and |
(b) |
within the Listing Date, the IPO/QIPO does not complete such that the entire issued, paid up and subscribed share capital is not admitted to trading on a Relevant Market by the expiry of the Listing Date, |
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then the Company and the Sponsors shall comply with the relevant provisions of the Shareholders Agreement and shall undertake all necessary actions to ensure that the holders of the Series H CCPS are placed in the same position, and possess the same rights as set forth in this Schedule, as they had the benefit of, immediately prior to the occurrence of the event set forth in (a) above. |
8. | Liquidation Preference |
Upon the occurrence of a Liquidation Event A or Liquidation Event B with respect to the Company or its Subsidiaries and in accordance with the terms of this Agreement, the holders of the Series H CCPS shall receive in preference to the holders of Series A CCPS, Series B CCPS, Series C CCPS, Series D CCPS, Series F CCPS and other Equity Shares of the Company, the sum total of: (i) the amount equal to the total Subscription Price paid by holders of the Series H CCPS for such Series H CCPS; and (ii) an amount that provides the holders of Series H CCPS a return of 8% (eight per cent) in USD per annum on a cumulative basis on such total Subscription Price from the date of issuance of such Series H CCPS till the date of the Liquidation Event A or Liquidation Event B, as reduced by any dividends paid before the occurrence of a Liquidation Event A or Liquidation Event B to the holders of such Series H CCPS. It is clarified that the rights of the holders of the Series H CCPS shall be subordinate to the rights of the holders of the CCDs and Proparco CCPS in relation to the Liquidation Preferences of the Company.
9. | Transferability |
Subject to the terms of this Agreement, the Series H CCPS shall be freely transferable to any Person, and the holders of the Series H CCPS may assign all or any of the Series H CCPS and any rights attaching under the Agreement, without the prior consent of any Person.
10. | Anti-Dilution Protection |
If the Company issues or proposes to issue Equity Securities ( New Issuance ) to any person at an effective issue price that is less than the subscription price in USD of the Series H CCPS (as adjusted for share splits or similar reorganization of the share capital of the Company), other than the issue of Equity Shares on the conversion of the Equity Securities existing as on the date of subscription of Series H CCPS, then the holders of Series H CCPS shall be entitled to an adjustment to the Normal Conversion Factor based on broad-based weighted average method such that the holders of Series H CCPS receive a higher number of Equity Shares to compensate for the higher subscription price paid for the subscription of Series H CCPS by its holders than the effective issue price of Equity Securities in the New Issuance.
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SCHEDULE 7
LIST OF PERMITTED MATTERS
The following disbursements under the existing loan facility arrangements entered into by the Company and/or its Subsidiaries may be applied/received without requiring approval from the Investor pursuant to Clause 2.02(b) of this Agreement.
Company name |
Date of
Agreement |
Lender |
Total of Loan
(amount in INR crores) |
Remaining Disbursement
(amount in INR crores) |
||||||||||
Azure Sunshine Pvt. Ltd |
23-Sep-14 | IREDA | 53.41 | 2.67 | ||||||||||
30-Oct-14 | CBI | 63.94 | 3.20 | |||||||||||
Azure Green Tech Pvt. Ltd |
23-Sep-14 | IREDA | 105.68 | 5.28 | ||||||||||
30-Oct-14 | CBI | 130.63 | 6.53 | |||||||||||
Azure Clean Energy Pvt. Ltd |
13-Mar-15 | IREDA | 87.49 | 4.37 | ||||||||||
31-Oct-14 | IFC | 86.10 | 8.61 | |||||||||||
13-Mar-15 | IIFCL | 31.40 | 1.57 | |||||||||||
Azure Power India Pvt. Ltd. |
8-May-15 | Yes Bank | 160.10 | 10.01 | ||||||||||
Azure Sunlight Pvt. Ltd |
Yet to be Signed | OPIC | Approx. 128 | Approx. 128 | ||||||||||
Azure Mars Pvt. Ltd. |
Yet to be Signed |
Reliance Capital
Bridge Loan |
25 | 25 | ||||||||||
Azure Solar Solution Pvt Ltd |
25-03-2014 |
Central Bank of
India |
31.45 | 19.45 |
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SCHEDULE 8
LIST OF RELATED AGREEMENTS
All capitalized terms used herein but not defined shall have the meaning given to them under the Agreement.
1. | Shareholders Agreement; |
2. | Azure India SHA; |
3. | Co-Investor Subscription Agreement; |
4. | Registration Rights Agreement; |
5. | Lock-up Agreement; |
6. | Sponsor lock-in agreement between, inter alia , the Investor, Co-Investor, Helion Venture Partners II, LLC, Helion Venture Partners India II, LLC, IW and IW Green Inc, with respect to the lock-in and distribution of proceeds from the sale of equity shares held by IW Green Inc. in the Company; |
7. | All securities purchase agreements and securities subscription agreements entered into by: (a) Helion Venture Partners II, LLC; (b) Helion Venture Partners India II, LLC; (c) Co-Investor; (d) DEG Deutsche Investitions -und Entwicklungsgesellschaft mbH; (e) FC VI India Venture (Mauritius) Ltd.; and (f) Société DE Promotion ET DE Participation Pour LA Coopération Économique, pursuant to the Externalization Process; and |
8. | Any other document executed pursuant to and/or to give effect to the understanding set out in the above mentioned agreements; and any amendments or modifications to the above mentioned agreements. |
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Exhibit 10.14
INVESTMENT NUMBER
Subscription Agreement
BETWEEN
AZURE POWER INDIA PRIVATE LIMITED
AND
MR. INDERPREET SINGH WADHWA
AND
MR. HARKANWAL SINGH WADHWA
AND
INTERNATIONAL FINANCE CORPORATION
Dated June 24, 2015
TABLE OF CONTENTS
Article/ Section |
Item |
Page No. |
||||
ARTICLE I |
3 | |||||
Definitions and Interpretation |
3 | |||||
Section 1.01. |
Definitions | 3 | ||||
Section 1.02. |
Interpretation | 8 | ||||
Section 1.03. |
Third Party Rights | 9 | ||||
ARTICLE II |
9 | |||||
Agreement for Subscription |
9 | |||||
Section 2.01. |
Subscription | 9 | ||||
Section 2.02. |
Companys Obligations until all of the Subscription Shares are Issued | 11 | ||||
Section 2.03. |
Cancellation of IFC Subscription | 13 | ||||
ARTICLE III |
13 | |||||
Representations and Warranties |
13 | |||||
Section 3.01. |
Representations and Warranties | 13 | ||||
Section 3.02. |
IFC Reliance | 19 | ||||
Section 3.03. |
Survival of Representations and Warranties | 20 | ||||
Section 3.04. |
Indemnity | 20 | ||||
ARTICLE IV |
20 | |||||
Conditions of Investor Subscription |
20 | |||||
Section 4.01. |
Conditions of IFC Subscription | 20 | ||||
ARTICLE V |
23 | |||||
Miscellaneous |
23 | |||||
Section 5.01. |
Notices | 23 | ||||
Section 5.02. |
Saving of Rights | 24 | ||||
Section 5.03. |
English Language | 24 | ||||
Section 5.04. |
Applicable Law and Arbitration | 25 | ||||
Section 5.05. |
Immunity | 25 | ||||
Section 5.07. |
Successors and Assigns | 26 | ||||
Section 5.08. |
Amendments, Waivers and Consents | 26 | ||||
Section 5.09. |
Counterparts | 26 | ||||
Section 5.10. |
Expenses | 26 | ||||
Section 5.11. |
Entire Agreement | 27 | ||||
Section 5.12. |
Invalid Provisions | 27 |
Article/ Section |
Item |
Page No. |
||||
ANNEX A |
30 | |||||
MINIMUM INSURANCE REQUIREMENTS |
30 | |||||
ANTI-CORRUPTION GUIDELINES FOR IFC TRANSACTIONS |
31 | |||||
SCHEDULE 1 |
34 | |||||
FORM OF SUBSCRIPTION NOTICE |
34 | |||||
SCHEDULE 2 |
36 | |||||
ORIGINAL COMPANY DISCLOSURE SCHEDULE |
36 | |||||
SCHEDULE 3 |
64 | |||||
FORM OF UPDATED COMPANY DISCLOSURE SCHEDULE |
64 | |||||
SCHEDULE 4 |
67 | |||||
TERMS AND CONDITIONS OF SERIES H CCPS |
67 | |||||
SCHEDULE 5 |
77 | |||||
LIST OF PERMITTED MATTERS |
77 | |||||
SCHEDULE 6 |
78 | |||||
LIST OF RELATED AGREEMENTS |
78 |
- ii -
SUBSCRIPTION AGREEMENT
SUBSCRIPTION AGREEMENT (the Agreement ), dated June 24, 2015, between:
(1) AZURE POWER INDIA PRIVATE LIMITED, a company incorporated under the laws in India and having its registered office at 8, LSC, Madangir, Pushpvihar, New Delhi-110062, India ( Company );
(2) MR. INDERPREET SINGH WADHWA, son of Mr. Harkanwal Singh Wadhwa, residing at [Address] ( IW );
(3) MR. HARKANWAL SINGH WADHWA, son of Late Mr. Manohar Singh Wadhwa, residing at [Address] ( HW );
(4) INTERNATIONAL FINANCE CORPORATION, an international organization established by the Articles of Agreement among its member countries including the Republic of India ( Investor );
IW and HW shall hereinafter be collectively referred to as Sponsors and individually as Sponsor . The Sponsors, the Investor and the Company shall hereinafter be collectively referred to as Parties and individually be referred to as Party .
RECITALS
The Company desires to issue to the Investor, and the Investor desires to subscribe for, Series H CCPS (as defined hereinafter) in the Company referred to in Section 2.01(a) ( Subscription ), on the terms and conditions set forth in this Agreement.
ARTICLE I
Definitions and Interpretation
Section 1.01. Definitions . Wherever used in this Agreement, the following terms have the following meanings:
Accounting Standards in relation to the Company and its Subsidiaries, means the Indian generally accepted accounting principles promulgated by the Institute of Chartered Accountants of India, together with its pronouncements from time to time, and applied on consistent basis;
Action Plan means the plan or plans developed by the Company, a sample copy of which is attached as Annex B to Schedule K ( Action Plan ) to the Shareholders Agreement, setting out the specific social and environmental measures to be undertaken by the Company, to enable the Company Operations to be undertaken in compliance with Performance Standards;
3
Affiliate means with respect to any Person, any Person directly or indirectly Controlling, Controlled by or under common Control with, that Person;
APGL means Azure Power Global Limited, a company incorporated and existing under the laws of the Republic of Mauritius;
Applicable Law means all applicable statutes, laws, ordinances, rules and regulations, including but not limited to, any license, permit or other governmental Authorization, in each case as in effect from time to time;
Applicable S&E Law means all applicable statutes, laws, ordinances, rules and regulations of the Country, including, without limitation, all Authorizations setting standards concerning environmental, social, labor, health and safety or security risks of the type contemplated by the Performance Standards or imposing liability for the breach thereof;
Authority means any national, supranational, regional or local government or governmental, statutory, regulatory, administrative, fiscal, judicial, or government-owned body, department, commission, authority, tribunal, agency or entity, or central bank (or any Person whether or not government owned and howsoever constituted or called, that exercises the functions of a central bank);
Authorization means any consent, registration, filing, agreement, notarization, certificate, license, approval, permit, authority or exemption from, by or with any Authority, whether given by express action or deemed given by failure to act within any specified time period and all corporate, creditors and shareholders approvals or consents;
Authorized Representative means, in relation to the Company, any individual who is duly authorized by the Company to act on its behalf and whose name and a specimen of whose signature appear on the Certificate of Incumbency and Authority most recently delivered by the Company to the Investor;
APGL SHA means the shareholders agreement to be executed between APGL and its shareholders in relation to the rights and obligations of the parties thereto for regulating the management and control of the affairs of APGL and certain other rights and obligations inter se in relation to the APGL;
Business Day means a day when banks are open for business in New York, New York and the Republic of India;
Cancellation Date means the date immediately occurring after 30 (thirty) calendar days of the date of execution of this Agreement;
Charter means the memorandum of association and the articles of association of the Company or, as applicable, any Subsidiary;
Certificate of Incumbency and Authority means a certificate provided to the Investor by the Company or the Sponsor Entity (as may be relevant) substantially in the form set forth in Schedule 7 ( Form of Certificate of Incumbency and Authority );
Coercive Practice has the meaning set forth in Annex B ( Anti-Corruption Guidelines for IFC Transactions );
4
Collusive Practice has the meaning set forth in Annex B ( Anti-Corruption Guidelines for IFC Transactions );
Co-Investor means IFC GIF Investment Company I, a company incorporated under the laws of Mauritius and having its principal office at C/o Cim Fund Services Ltd, 33 Edith Cavell Street, Port Louis, Mauritius;
Co-Investor Shares means the Series H CCPS in APGL which the Co-Investor has agreed to subscribe under the Co-Investor Subscription Agreement;
Co-Investor Subscription Agreement means the subscription agreement entered into between, inter alia , the Co-Investor and APGL on or around the date of this Agreement for subscription of the Co-Investor Shares in accordance with the terms and condition contained therein;
Company Agreements has the meaning set forth in Section 3.01(x) ( Material Contracts );
Companys Employee Plan means any plan, program, or other arrangement providing for employment, compensation, retirement, deferred compensation, severance, separation, stock option or other benefits, which has been sponsored, contributed to or required to be contributed to by the Company for the benefit of any Person who performs or who has performed services for the Company;
Company Operations means the existing and future operations, activities and facilities of the Company and its Subsidiaries (including the design, construction, operations, maintenance, management and monitoring thereof as applicable);
Control means the power to direct the management or policies of a Person, directly or indirectly, whether through the ownership of shares or other securities, by contract or otherwise; provided that, in any event, the direct or indirect ownership of fifty per cent (50%) or more of the voting share capital of a Person is deemed to constitute Control of that Person, and Controlling and Controlled have corresponding meanings;
Corrupt Practice has the meaning set forth in Annex B ( Anti-Corruption Guidelines for IFC Transactions );
Country means the Republic of India;
Current Company Disclosure Schedule means the Original Company Disclosure Schedule, as modified and/or supplemented by each Updated Company Disclosure Schedule, if any, which has from time to time been delivered by the Company and accepted by the Investor, in accordance with Section 4.01(a)(ii) ( Conditions of the Subscription );
Dollars or $ means the lawful currency of the United States of America;
Equity Securities of a company means common shares, preferred shares, bonds, loans, warrants, rights, options or other similar instruments or securities which are convertible into or exercisable or exchangeable for, or which carry a right to subscribe for or purchase common shares of such company or any instrument or certificate representing a beneficial ownership interest in the common shares of such company, including global depositary receipts and American depository receipts and any other security issued by the company, even if not convertible into ordinary shares, that derives its value and/or return based on the financial performance of the company or its shares;
5
Equity Shares or Shares means the common shares of the Company having the face value of INR 10 (Rupees Ten) each and carrying 1 (one) vote each;
Externalization Process means the signing and execution of the APGL SHA and Registration Rights Agreement by the parties thereto, and subscription of Equity Securities of APGL: (a) Helion Venture Partners II, LLC; (b) Helion Venture Partners India II, LLC; (c) Investor; (d) DEG Deutsche Investitions -und Entwicklungsgesellschaft mbH; (e) FC VI India Venture (Mauritius) Ltd.; and (f) Société DE Promotion ET DE Participation Pour LA Coopération Économique, to subscribe to the Equity Securities of APGL;
Fraudulent Practice has the meaning set forth in Annex B ( Anti-Corruption Guidelines for IFC Transactions );
INR or Rupees means the lawful currency of the Republic of India;
Investor Subscription means any subscription for Series H CCPS of the Company by the Investor as provided for in Article II ( Agreement for Subscription );
Key Subsidiary means, at the relevant time, each Subsidiary or such Subsidiaries where, as of the end of the then most recently completed fiscal year of the Company:
(a) | the Assets of such Subsidiary or cumulative Assets of such Subsidiaries, as the case may be, account for more than 70% (seventy per cent) of the total consolidated Assets of the Company; or |
(b) | such Subsidiary or such Subsidiaries cumulatively, have earnings before interest, tax, depreciation and amortization representing more than 70% (seventy per cent) of the Companys total consolidated earnings before interest, tax, depreciation and amortization; |
Lien means any mortgage, pledge, charge, assignment, hypothecation, security interest, title retention, preferential right, option (including call commitment), trust arrangement, right of set-off, counterclaim or bankers lien, privilege or priority of any kind having the effect of security, any designation of loss payees or beneficiaries or any similar arrangement under or with respect to any insurance policy or any preference of one creditor over another arising by operation of law;
Material Adverse Effect means a material adverse effect on:
(a) the Companys or any of its Subsidiaries assets or properties;
(b) the Companys or any of its Subsidiaries business prospects or financial condition;
(c) the carrying on of the Companys or any of its Subsidiaries business or operations;
(d) the ability of the Company to comply, and ensure that each of its Subsidiaries complies, with its obligations under this Agreement, any other Transaction Document to which it is a party or the Companys and in the case of each of its Subsidiaries, such Subsidiarys Charter; or
(e) the ability of the Sponsors to comply with their obligations under this Agreement or any other Transaction Document to which they are a party;
6
Obstructive Practice has the meaning set forth in Annex B ( Anti-Corruption Guidelines for IFC Transactions );
Original Company Disclosure Schedule means the Companys completed disclosure schedule attached hereto as Schedule 2 ( Original Company Disclosure Schedule );
Performance Standards means IFCs Performance Standards on Social & Environmental Sustainability, dated January 1, 2012, copies of which have been delivered to and receipt of which has been acknowledged by the Company pursuant to the letter, dated 4th June 2015;
Person means any individual, corporation, company, partnership, firm, voluntary association, joint venture, trust, unincorporated organization, Authority or any other entity whether acting in an individual, fiduciary or other capacity;
Registration Rights Agreement means the registration rights agreement entered into by the shareholders of APGL setting out the right to have the registration statement filed with respect to the equity shares or equity securities of APGL held by them for resale/make an offering under the Securities Act of 1933, as amended;
Related Agreements means the Transaction Documents and such other agreements and documents as referred in Schedule 6 hereto;
Relevant Parties means the Company and the Sponsors;
S&EA means the social and environmental assessment prepared by the Company or a qualified third party consultant in accordance with the Performance Standards;
S&E Management System means the Companys social and environmental management system, including but not limited to corporate-wide applicable S&E Management System acceptable to the Investor, which includes all the elements discussed in the ESRS and is consistent with the Performance Standards and the HR Policies and Procedures, both to be implemented in accordance with the schedule detailed in the Action Plan and enabling the Company to identify, asses and manage risks in respect of the Company Operations on an ongoing basis and in accordance with the Performance Standards;
S&E Performance Report means the S&E Performance Report, in form and substance satisfactory to the Investor, setting out the specific social, environmental and developmental impact information to be provided by the Company in respect of the Company Operations;
Sanctionable Practice means any Corrupt Practice, Fraudulent Practice, Coercive Practice, Collusive Practice, or Obstructive Practice, as those terms are defined herein and interpreted in accordance with the Anti-Corruption Guidelines attached to this Agreement as Annex B ( Anti-Corruption Guidelines for IFC Transactions );
Series H CCPS means fully paid up compulsorily convertible preference shares of the Company having the rights, preferences and privileges as set forth in Schedule 4 hereto and in the Shareholders Agreement;
Shareholders Agreement means the shareholders agreement dated June 10, 2015 between, inter alia , the Company and the Shareholders as defined therein;
Subscription Date has the meaning set forth in Section 2.01(b) ( Subscription );
7
Subscription Notice means a notice in the form set forth in Schedule 1 ( Form of Subscription Notice );
Subscription Price has the meaning set forth in Section 2.01(a) ( Subscription );
Subscription Shares has the meaning set forth in Section 2.01(a) ( Subscription );
Subsidiary means with respect to the Company, an Affiliate over fifty per cent (50%) of whose capital is owned, directly or indirectly by the Company;
Tax or Taxes means any present or future taxes (including stamp taxes), withholding obligations, duties and other charges of whatever nature levied by any Authority;
Transaction Documents means:
(a) this Agreement;
(b) the Shareholders Agreement;
(c) any other document mutually agreed by between the Parties as a Transaction Document; and
Updated Company Disclosure Schedule means the Companys updated disclosure schedule, if any, which has been delivered by the Company in accordance with Section 4.01(a)(ii) ( Conditions of the Subscription ) and shall be in the form of Schedule 3 hereto.
Section 1.02. Interpretation . In this Agreement, unless the context otherwise requires:
(a) headings are for convenience only and do not affect the interpretation of this Agreement;
(b) words importing the singular include the plural and vice versa;
(c) a reference to an Annex, Article, party, Schedule or Section is a reference to that Article or Section of, or that Annex, party or Schedule to, this Agreement;
(d) a reference to a document in the agreed form is a reference to a document approved and for the purposes of identification initialed by or on behalf of the parties thereto;
(e) a reference to a document includes an amendment or supplement to, or replacement or novation of, that document but disregarding any amendment, supplement, replacement or novation made in breach of this Agreement;
(f) general words in this Agreement shall not be given a restrictive meaning by reason of their being preceded or followed by words indicating a particular class of acts, matters or things or by examples falling within the general words;
(g) a reference to a party to any document includes that partys successors and permitted assigns; and
(h) unless stated otherwise herein, a reference to shares of the Company means shares of the Company of any class.
8
Section 1.03. Third Party Rights . A Person who is not a party to this Agreement has no right under the Contracts (Rights of Third Parties) Act 1999 to enforce or enjoy the benefit of any term of this Agreement.
ARTICLE II
Agreement for Subscription
Section 2.01. Subscription . (a) On the terms and subject to the conditions of this Agreement, the Investor agrees to subscribe and pay for an aggregate of 22,214 (twenty two thousand two hundred and fourteen) fully paid and non-assessable Series H CCPS in the Company (the Subscription Shares ) for the subscription price of INR 29,260.826 (rupees twenty nine thousand two hundred and sixty decimal eight hundred and twenty six) per Subscription Share (the Subscription Price ). The aggregate amount to be paid by the Investor for the subscription of the Subscription Shares shall be up to INR 649,999,989 (rupees six hundred and forty nine million nine hundred and ninety nine thousand nine hundred and eighty nine), and not exceeding INR equivalent of USD 10,000,000 (dollars ten million) calculated by applying the Dollar-INR conversion reference rate as published by the Reserve Bank of India on the date on which the wire transfer of the subsequent amount is initiated by the Investor.
(b) Subject to the terms of this Agreement and the reasonable satisfaction (or waiver by the Investor) of the conditions of subscription set forth in Section 4.01 ( Conditions of Investor Subscription ), either:
(i) | the Company may request the Investor to subscribe for the Subscription Shares by delivering a Subscription Notice to the Investor; or |
(ii) | the Investor may notify the Company that it shall subscribe for the Subscription Shares by delivering a Subscription Notice to the Company, |
at least twelve (12) Business Days prior to the date of the Investor Subscription specified in such Subscription Notice (the Subscription Date ), subject to Section 2.03 ( Cancellation of Investor Subscription ).
(c) If a Subscription Notice is delivered by the Company to the Investor in accordance with Section 2.01 (b)(i), or the Investor delivers a Subscription Notice to the Company in accordance with Section 2.01(b)(ii), then the Company shall be obliged to issue the Subscription Shares to the Investor on the Subscription Date and shall take all necessary corporate and other action, including but not limited to all appropriate steps to ensure that a meeting of the Companys shareholders or a meeting of the board of directors, as applicable, is promptly convened, to ensure that the Subscription Shares shall be issued to the Investor on the Subscription Date, in accordance with the terms of this Agreement.
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(d) On the Subscription Date:
(i) | the Investor shall pay the amount equal to the Subscription Price multiplied by the number of Subscription Shares in INR to the following account of the Company: |
Beneficiary Name | Azure Power India Private Limited | |
Credit Account No. |
[Account Number] |
|
Bank | Central Bank Of India | |
Branch | Press Area, New Delhi | |
Account Type | Current A/c | |
IFSC Code | CBIN0280306 | |
Swift Code | CBININBBCFD, |
or such other account specified in the Subscription Notice; and
(ii) | the Company shall: |
(A) | in a meeting of the board of directors, issue and allot to the Investor, or as the Investor directs, the Subscription Shares free of all Liens or other encumbrances or rights of third parties and record the Investor as the legal and beneficial owner of the Subscription Shares in the Companys register of members; |
(B) | deliver to the Investor, or as the Investor directs: (A) a copy of the resolution of the board of directors in which the Subscription Shares are allotted to the Investor; (B) a share certificate in customary form; and (C) a certified copy of the Companys share register, evidencing the Investors valid title to the Subscription Shares, free of all Liens or other encumbrances or rights of third parties; and |
(C) | provide Investor with evidence satisfactory to the Investor that the Subscription Shares have been duly and validly authorized and issued, are fully paid and, save and except as agreed in the Shareholders Agreement, freely transferable without requiring any Authorization of any Authority, and that all other legal requirements in connection with their authorization, issue and delivery have been duly satisfied (save any post-issue filings and other requirements to be undertaken by the Company in accordance with Section 2.01 (f) below). |
The Parties agree that the fulfillment of the obligations of the Company set forth in Sections 2.01 (d)(ii)(A) through (C) above are conditions precedent to the application of any funds disbursed by the Investor under Section 2.01 (d)(i) to the subscription for the Subscription Shares and that, accordingly, any funds disbursed in accordance with Section 2.01 (d)(i) shall be held in trust by the Company (for the benefit of the Investor) until the acts set forth in Section 2.01(d)(ii)(A) through (C) have been performed and the Investor has notified the Company in writing that such funds can be released to the Company, and in the event that such acts are not performed as soon as practicable, and in any event within three (3) Business Days from any such disbursement of funds by the Investor, the Company shall, upon the Investors request, immediately return the funds disbursed in accordance with Section 2.01(d)(i) to the Investor, unless instructed otherwise by the Investor.
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(e) The Company shall pay all Taxes, fees or other charges payable on or in connection with the execution, issue, subscription, delivery, registration, translation or notarization of this Agreement, the other Transaction Documents, the Companys Charter, the Subscription Shares and any other documents related to this Agreement, the other Transaction Documents or the Companys Charter.
(f) On or immediately following the Subscription Date, the Company shall undertake all post-issue filings as required by Applicable Law, including the filing of:
(i) | E-Form No. MGT. 14 of the Companies (Management and Administration) Rules, 2014 with respect to the filing of resolution passed by the Board approving issue of the Subscription Shares; |
(ii) | E-Form No. MGT. 14 of the Companies (Management and Administration) Rules, 2014 with respect to the filing of special resolution passed by the shareholders of the Company approving issue of the Subscription Shares; |
(iii) | E-Form No. PAS. 3 of the Companies (Prospectus and Allotment of Securities) Rules, 2014 with respect to the allotment of the Subscription Shares; |
(iv) | A report on remittance of the Subscription Amount for the Subscription Shares in the prescribed form together with all documents required for inward remittance as prescribed under the Foreign Exchange Management Act, 1999 and the rules and regulations made thereunder; and |
(v) | filing of Form FC-GPR, and all necessary documents required for the purposes of an effective filing of Form FC-GPR pursuant to the Foreign Exchange Management Act, 1999 and the rules and regulations there under, |
and shall provide a copy of the above mentioned filings to the Investor within 3 (three) Business Days of making such filings with the relevant Authority.
(g) If the Company, for any reason, does not issue the Subscription Shares as set forth in Section 2.01(d), including by reason of failure of the Companys board of directors to authorize such issuance, such failure to issue the Subscription Shares shall constitute a breach of the Companys obligations under this Agreement, and the Investor shall have the right to exercise any and all rights or legal or equitable remedies of any kind which may accrue to it against the Company. It is clarified that provisions of this Section 2.01 (g) shall not apply if, upon reasonable satisfaction (or waiver by the Investor) of the conditions of subscription set forth in Section 4.01 ( Conditions of Investor Subscription ), the Investor does not subscribe to the Subscription Shares within Subscription Date.
Section 2.02. Companys Obligations until all of the Subscription Shares are Issued . (a) Until the Subscription Shares have been subscribed and issued or the right of the Company to request the subscription has been canceled as provided in Section 2.03 (1) ( Cancellation of Investor Subscription ) or the right of the Investor to subscribe has been cancelled as provided in Section 2.03 (2), whichever occurs first: (i) the Company shall at all times maintain a sufficient number of authorized and unissued shares to permit the subscription by the Investor of all the Subscription Shares; and (ii) the Company shall conduct its business in the ordinary course and shall use, and shall cause each of its Subsidiaries to use, its reasonable best efforts to preserve intact its business organizations and relationships with third parties and to keep available the services of its present officers and employees.
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(b) In addition to Section 2.02(a), until the Subscription Shares have been subscribed and issued or the right of the Company to request the subscription has been canceled as provided in Section 2.03 ( Cancellation of Investor Subscription ), whichever occurs first, the Company shall not, and shall ensure that each of its Subsidiaries shall not (other than in connection with the Investor Subscription, matters listed in Schedule 5 hereto or with the prior written approval of the Investor);
(i) | increase, allot, issue, acquire, repay or redeem any share capital or Equity Securities of any class; |
(ii) | change the par value of, or the rights attached to, any of its Equity Securities of any class; |
(iii) | take any action by amendment of its Charter or through reorganization, consolidation, sale of share capital, merger or sale of assets, or otherwise, which might result in a dilution or increase of the percentage interest in the Company to be held by the Investor when any Equity Securities are issued to the Investor pursuant to the Investor Subscription; |
(iv) | sell, lease, transfer or assign any of its assets, except in the ordinary course of business and consistent with past practice; |
(v) | assume or incur indebtedness, liabilities, obligations or expenses exceeding an aggregate of $1,000,000 (Dollars One Million) (or the equivalent in any other currency) except in the ordinary course of business; |
(vi) | make any capital expenditure exceeding $5,000,000 (Dollars Five Million) (or the equivalent in any other currency) except in the ordinary course of business; |
(vii) | create any Liens over any assets except in the ordinary course of business; |
(viii) | declare, pay or make a dividend or distribution; |
(ix) | take any action that would make any representation or warranty contained in Section 3.01 ( Representations and Warranties ) (except as set forth in the Current Company Disclosure Schedule) untrue, inaccurate or misleading in any respect on or at any time prior to the Subscription Date; |
(x) | take any action that could reasonably be expected to prevent, impair or materially delay the ability of the Company to consummate the transactions contemplated by this Agreement; or |
(xi) | agree or commit to take any of the actions described above. |
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Section 2.03. Cancellation of Investor Subscription . (1) The Investor may, by written notice to the Company, cancel the right of the Company to request the Investor to subscribe for any Subscription Shares:
(a) if at any time, in the reasonable opinion of the Investor, anything has occurred which has or may reasonably be expected to have a Material Adverse Effect or there exists any situation which indicates that performance by the Company, its Subsidiaries or the Sponsors of their respective obligations under any of the Transaction Documents, or the Companys Charter cannot be expected;
(b) if the Company has breached Section 2.02 ( Companys Obligations until all of the Subscription Shares are Issued ) and such breach is incapable of cure (in the sole opinion of the Investor) or, where such breach is capable (in the sole opinion of the Investor) of cure, it has not been cured within thirty (30) days following receipt by the Company of notice of such breach from the Investor; or
(c) in any case, at any time on or after the Cancellation Date,
(2) The Company may, by written notice to the Investor, cancel the right of the Investor to subscribe to any Subscription Shares at any time on or after the Cancellation Date.
Upon any such cancellation, each Partys further rights and obligations shall terminate immediately, provided that such termination shall not affect a Partys accrued rights and obligations at the date of termination and shall be without prejudice to any and all rights or legal or equitable remedies of any kind which may accrue to the Investor against the Company and provided that the provisions of Section 5.01 ( Notices ), Section 5.03 ( English Language ), Section 5.04 ( Applicable Law and Arbitration ), Section 5.06 ( Announcements ) and Section 5.10 ( Expenses ) shall survive such termination.
ARTICLE III
Representations and Warranties
Section 3.01. Representations and Warranties . Each of the Company and the Sponsors hereby represents and warrants to the Investor that the statements contained in this Section 3.01: (i) are true, accurate and not misleading with respect to the Company and the Sponsors who are not natural Persons and/or, as the case may be, each of the Key Subsidiaries or Subsidiaries (as the case may be) as of the date of this Agreement, except as otherwise set forth in the Companys disclosure schedule (the Original Company Disclosure Schedule ) attached to this Agreement as Schedule 2 ( Company Disclosure Schedule ); and (ii) will remain true, accurate and not misleading immediately prior to the Investor Subscription except as set forth in any updated disclosure schedule, which shall be in the form of Schedule 3 and in substance satisfactory to the Investor (an Updated Company Disclosure Schedule ), delivered by the Company to the Investor and accepted and signed by the Investor at least ten (10) Business Days prior to the Subscription Date. No disclosure made in the Original Company Disclosure Schedule or an Updated Company Disclosure Schedule shall be deemed adequate to disclose an exception to a representation or warranty made herein, unless the disclosure contained therein identifies the relevant facts and circumstances for such exception fully, fairly, specifically and accurately.
(a) Organization and Authority . Each of the Company and the Subsidiaries is a legal entity duly organized and validly existing under the laws of its place of incorporation, and the Company has the corporate power and authority to enter into, deliver and perform its obligations under this Agreement and each of the other Transaction Documents to which it is a party. Each of the Sponsors have the power and authority to enter into, deliver and perform their respective obligations under this Agreement and each of the Transaction Documents to which it is a party.
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(b) Validity . This Agreement and each of the other Transaction Documents to which it is a party have been duly authorized and executed by the Company and the Sponsors and constitute its valid and legally binding obligation, enforceable in accordance with its terms.
(c) No Conflict . The execution and performance by each of the Company and the Sponsors of any of their respective obligations under the Transaction Documents to which it is a party including the issuance to the Investor of any of the Subscription Shares upon subscription therefor, do not (assuming all the Authorizations referred to in Section 3.01 (d) ( Status of Authorizations ) of the Current Company Disclosure Schedule have been obtained): (i) conflict with or result in a breach of any of the terms, conditions or provisions of, or constitute a default, or require any consent under, any indenture, mortgage, agreement or other instrument or arrangement to which it is a party or by which it is bound; (ii) violate any of the terms or provisions of its respective Charter, as applicable; or (iii) violate any Authorization, judgment, decree or order or any statute, law, rule, regulation or requirement applicable to it.
(d) Status of Authorizations .
(i) | The Authorizations specified in Section 3.01(d) ( Status of Authorizations ) of the Current Company Disclosure Schedule are all of the Authorizations (other than Authorizations that are of a routine nature and are obtained in the ordinary course of business) needed by the Company or, the Sponsors and/or any of the Subsidiaries to conduct their business, execute, perform and comply with their obligations under this Agreement and each of the other Transaction Documents to which they are party. |
(ii) | All Authorizations specified in Section 1 of Section 3.01(d) ( Status of Authorizations ) of the Current Company Disclosure Schedule have been obtained and are in full force and effect and there are no facts or circumstances which indicate that any of such Authorizations would or might be revoked, cancelled, varied or not renewed. |
(iii) | The Company has applied (or is making arrangements to apply) for all Authorizations specified in Section 2 of Section 3.01(d) ( Status of Authorizations ) of the Current Company Disclosure Schedule, and has no reason to believe that it will not obtain those Authorizations in a timely manner and, in any event, prior to the Investor Subscription. |
(e) Charter . The Charter delivered by the Company to the Investor is a true and current copy of the Charter of the Company, which has not been amended since the delivery to the Investor, and Section 3.01(e) ( Charter ) of the Current Company Disclosure Schedule lists all of the current directors of the Company and its Subsidiaries and the respective terms of their appointments.
(f) Capital Structure of the Company.
(i) | The authorized capitalization of the Company is as shown in Section 3.01(f) ( Capital Structure of the Company ) of the Current Company Disclosure Schedule and Section 3.01(f) ( Capital Structure of the Company ) of the Current Company Disclosure Schedule accurately sets out the number and type of Equity Securities of the Company owned by, and the name of, each holder of Equity Securities, both before and after the Investor Subscription is consummated. |
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(ii) | Except as set forth in Section 3.01 (f) ( Capital Structure of the Company ) of the Current Company Disclosure Schedule, there are no Equity Securities of the Company, or any agreements or undertakings to which the Company is a party, or by which it is bound, obligating it to issue, deliver, sell, repurchase or redeem or cause to be issued, delivered, sold, repurchased or redeemed any shares in its authorized capital or obligating it to grant or enter into any such option, warrant, call, right, commitment or agreement. All outstanding Equity Securities of the Company are duly authorized, validly issued to those Persons and in the amounts set forth across from their names in Section 3.01(f) ( Capital Structure of the Company ) of the Current Company Disclosure Schedule, fully paid and non-assessable and are free of any Liens and are not subject to preemptive rights, rights of first refusal or other restrictions on transfer or third party rights, except as set forth in the Companys Charter or the Shareholders Agreement. |
(iii) | The issuance of the Subscription Shares has been duly and validly authorized by all necessary corporate actions of the Company and when issued, sold and delivered in accordance with the terms of this Agreement, the Subscription Shares will be duly and validly issued, fully paid and non-assessable, free of all Liens and will not be subject to preemptive rights, rights of first refusal or other restrictions on transfers. |
(g) No Immunity . Neither the Company nor the Sponsors nor any of the Subsidiaries nor any of their respective properties enjoy any right of immunity from set-off, suit or execution with respect to their respective obligations under any Transaction Document.
(h) Financial Condition . Since March 31, 2015:
(i) | the business of the Company and each of its Subsidiaries has been conducted in the ordinary course so as to maintain the business as a going concern; |
(ii) | neither the Company nor any of its Subsidiaries nor the Sponsors has suffered any change having a Material Adverse Effect or incurred any substantial loss or liability, other than notional forex losses due to mark to market variation of currency; |
(iii) | neither the Company nor any of its Subsidiaries has undertaken or agreed to undertake any substantial obligation; and |
(iv) | no dividend or distribution has been declared or paid by the Company or any of its Subsidiaries. |
(i) Financial Statements . The Companys audited consolidated balance sheet as of March 31, 2014 and provisional balance sheet as of March 31, 2015 and the related audited consolidated statements of income and cash flows for the fiscal year ended March 31, 2014 and provisional consolidated statements of income for the fiscal year ended March 31, 2015 have been prepared in accordance with the Accounting Standards applied on a consistent basis throughout the periods therein specified, and give a true and fair view of the consolidated financial condition of the Company as of the date as of which they were prepared and the results of the Companys operations during the periods therein specified. As on the date of the foregoing financial statements, there are no losses, liabilities (whether actual or contingent or otherwise) or bad or doubtful debts other than those fully disclosed in the consolidated financial statements of the Company hereinbefore referred to.
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(j) Taxes . All tax returns and reports of the Company and each of its Subsidiaries required by law to be filed have been duly filed and all Taxes, obligations, fees and other governmental charges upon the Company, or its properties, or its income or assets, which are due and payable or to be withheld, have been paid or withheld, other than those presently payable without penalty or interest.
(k) Litigation .
(i) | Neither the Company nor any of its Subsidiaries is involved in any litigation, arbitration, administrative, regulatory or governmental proceedings or investigations. No such proceedings or investigations are threatened against the Company or any of its Subsidiaries. No such proceedings or investigations are threatened against the Company or any of its Subsidiaries. The Company is not aware of any fact or circumstance which is likely to give rise to any such proceedings or investigations. |
(ii) | No judgment or order has been issued against the Company or any of its Subsidiaries or the Sponsors which has or may reasonably be expected to have a Material Adverse Effect. |
(iii) | Neither the Company nor any of its Subsidiaries has been charged, convicted, fined or otherwise sanctioned in any litigation, administrative, regulatory or criminal investigation or proceeding or freezing of assets by any Authority involving the Company or any of its Subsidiaries or their respective employees with regard to money laundering or financing of terrorism. |
(l) Compliance with Law . The Company and each of its Subsidiaries is in compliance with all Applicable Laws in all material aspects (whether civil, criminal, corporate or administrative), statutes, subordinate legislation, treaties, regulations, directives, decisions, by-laws, circulars, codes, orders, notices, demands, decrees, injunctions, guidance, judgments or resolutions of any Authority including, without limitation, all Applicable S&E Laws.
(m) Environmental Matters .
(i) | There are no material social or environmental risks or issues in respect of the Company Operations. |
(ii) | Neither the Company nor any of its Subsidiaries has received and is not aware of: (A) any existing or threatened complaint, order, directive, claim, citation or notice from any Authority; or (B) any written communication from any Person, in either case, concerning the failure of the Company Operations to comply with any matter covered by the Performance Standards or any Applicable S&E Law. |
(n) Sanctionable Practices . Neither the Company, nor the Sponsors, nor any of its Affiliates, nor any Person acting on its or their behalf, has committed or engaged in, with respect to any transaction contemplated by this Agreement, any Sanctionable Practice.
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(o) Insurance . The Company and each of its Subsidiaries maintain insurance policies with financially sound and reputable insurers that cover such risks and contain such policy limits, types of coverage as are adequate to insure against risks to which the Company, its Subsidiaries and their respective employees, business, properties and other assets would reasonably be expected to be exposed to in the operation of the business as currently conducted. All of these policies are valid and enforceable policies, all premiums due and payable under all these policies have been paid and the Company is otherwise in compliance in all material respects with the terms of the policies. None of these policies is void or voidable and neither the Company nor any of its Subsidiaries has done anything or omitted to do anything that would make any policy void or voidable. The Company and each of its Subsidiaries has no knowledge of any threatened termination of, or material premium increase with respect to, any of these policies. No material claim is outstanding under any of these policies and no event has occurred (and no circumstance exists) that gives rise or is likely to give rise to a material claim under any policy.
(p) Disclosure . None of this Agreement, any other Transaction Document, the Companys Charter, or certificates or schedules made and delivered to the Investor pursuant thereto (including the Current Company Disclosure Schedule) contains any information which is untrue, inaccurate or misleading in any material respect nor does it omit any information the omission of which makes the information contained in it untrue, inaccurate or misleading in any material respect. The Company is not aware of any material information with respect to the business of the Company or any of its Subsidiaries which should be considered and reviewed by a prospective investor such as the Investor in making its investment decision, which has not been disclosed to the Investor.
(q) Subsidiaries . The Persons listed in Section 3.01(q) ( Subsidiaries ) of the Current Company Disclosure Schedule are all of the Subsidiaries of the Company. Each such Subsidiary has the capitalization, ownership, domicile and head office identified therein. There is no Lien or other right of any third party over the share capital or other equity interest of the Company in any Subsidiary and there is no agreement to create any Lien or any such right. Other than its Subsidiaries listed in Section 3.01(q) ( Subsidiaries ) of the Current Company Disclosure Schedule, the Company does not own or control (and has never owned or controlled), directly or indirectly, any share capital or other equity interest in any other Person and has not agreed or committed to acquire any such interest.
(r) UN Security Council Resolutions . Neither the Company nor the Sponsors nor any of the Subsidiaries nor any Person acting on their behalf, has entered into any transaction or engaged in any activity prohibited by any resolution issued by the United Nations Security Council under Chapter VII of the UN Charter.
(s) Criminal Offenses . Neither the Company nor its Subsidiaries nor any Person acting on their behalf whose acts could incur the Companys or any Subsidiarys vicarious liability has carried out any actions or made any omissions which could result in the Company or any Subsidiary incurring criminal sanctions.
(t) Restrictions on Business Activities . There is no agreement, judgment, injunction, order, decree, proceeding or ongoing investigation imposing any penalty on the Company nor any of its Subsidiaries or, which has or could reasonably be expected to have the effect of prohibiting or impairing in any material respect any of its current or future business practices, its acquisition of property or the conduct of its business as it is currently conducted or as proposed to be conducted.
(u) Related Party Transactions . The Company has not entered into any agreement, arrangement or obligation (whether legally enforceable or not) which involves any of the Sponsors or any director, officer, employee, agent or shareholder of the Company (or any of their immediate family members or respective Affiliates). There is not, and there has not been at any time since March 31,
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2014, any agreement, arrangement or obligation (whether legally enforceable or not) to which the Company or any of its Subsidiaries is or was a party and which involves any Sponsor, director, officer, employee, agent or shareholder of the Company (or any of their immediate family members or respective Affiliates), other than arrangements described in Section 3.01(u) ( Related Party Transactions ) of the Current Company Disclosure Schedule. No Person listed in the previous sentence has any direct or indirect ownership interest in any Person that is an Affiliate of the Company or with which the Company has a business relationship or in any Person that competes with the Company.
(v) Title to and Condition of Property . The Company and each of its Subsidiaries has: (i) good and marketable title free and clear of all Liens to all of the property and assets, movable and immovable, reflected in the Companys most recent balance sheet included in the consolidated financial statements (except assets sold or otherwise disposed of since such date in the ordinary course of business), other than Liens in favour of lenders pursuant to project financing/ loan agreements described in Section 3.01 (v) of the in the Current Company Disclosure Schedule; and (ii) with respect to leased properties and assets, valid leasehold interests therein free and clear of all Liens, other than liens in favour of lenders pursuant to project financing/ loan agreements described in Section 3.01 (v) of the Current Company Disclosure Schedule. The plant, property and equipment of the Company and each of its Subsidiaries that are used in the Company Operations are in good operating condition and repair, subject to normal wear and tear not caused by neglect, and are adequate and suitable for the purposes for which they are currently being used. All properties used in the Company Operations are reflected in the Companys most recent balance sheet included in the consolidated financial statements to the extent the Accounting Standards require the same to be reflected.
(w) Books and Records . The books and records of the Company, including, without limitation, its stock record books and minute books, are complete and correct in all material respects and accurately and fairly reflect all meetings and other corporate actions of the Companys shareholders and its board of directors and committees and all material information relating to its business, the nature, acquisition, maintenance, location and character of its assets, and the nature of all transactions giving rise to its obligations or accounts receivable.
(x) Material Contracts . Section 3.01(x) ( Material Contracts ) of the Current Company Disclosure Schedule sets forth a complete list of all currently effective written or oral:
(i) | agreements, arrangements or obligations to which the Company or any of its Subsidiaries is a party involving, on an annual basis, One Million Dollars ($1,000,000) individually or Five Million Dollars ($ 5,000,000) in the aggregate (or the equivalent in any other currency); |
(ii) | agreements, arrangements or other obligations relating to indebtedness owed by the Company or any of its Subsidiaries involving, on an annual basis, One Million Dollars ($1,000,000) individually or Five Million Dollars ($ 5,000,000) in the aggregate (or the equivalent in any other currency); |
(iii) | shareholders agreements relating to shares in the Company or any of its Subsidiaries or to which the Company or any of its Subsidiaries is a party; |
(iv) | employment agreements or arrangements of the Company or any of its Subsidiaries in excess of One Million Dollars ($1,000,000) each (or the equivalent in any other currency); and |
(v) | other agreements, arrangements and obligations to which the Company or any of its Subsidiaries is a party that are long-term, onerous or unusual or are not on arms-length terms. |
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With respect to each agreement, arrangement or obligation in excess of One Million Dollars ($1,000,000) to which the Company or any of its Subsidiaries is a party or to which any of their respective properties are subject (the Company Agreements ), neither the Company nor any of its Subsidiaries nor any other party is in breach or default in any material respect. No event has occurred which, with notice or lapse of time or both, would: (A) constitute a breach or default in any material respect by the Company or any of its Subsidiaries, or by any such other party to the relevant Company Agreement; or (B) permit termination, modification or acceleration of or under the relevant Company Agreement.
(y) Labor Matters .
(i) | Neither the Company nor any of its Subsidiaries is a party to the collective bargaining agreements and other labor union contracts. There is no material activity or proceeding of any labor union to organize its employees and there are no ongoing or threatened strikes, slowdowns or work stoppages by employees of the Company or any of its Subsidiaries or any contractor with respect to any material operations of the Company or any of its Subsidiaries. |
(ii) | The Company has furnished to the Investor true and complete copies of the documents embodying each of the Companys Employee Plans and related plan documents. Each of the Companys Employee Plans complies with Applicable Law and regulations and will not negatively or materially affect the Companys ability to fulfill its obligations under this Agreement or any other Transaction Document. |
(z) Intellectual Property . Each of the Company and its Subsidiaries owns or has the valid right to use at a nominal cost, all Intellectual Property that is material to the operation of its business as currently conducted or proposed to be conducted by it.
Section 3.02. Investor Reliance . (a) The Company and the Sponsors acknowledge that they makes the representations and warranties under Section 3.01 ( Representations and Warranties ) with the intention of inducing the Investor to enter into this Agreement and each of the other Transaction Documents and to make the Investor Subscription and that the Investor enters into this Agreement and the other Transaction Documents and will make the Investor Subscription on the basis of, and in full reliance on, each of such representations and warranties.
(b) Each of the representations and warranties is to be construed independently and (except where this Agreement provides otherwise) is not limited by any provision of this Agreement or another representation and/or warranty.
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(c) A reference to any facts and circumstances being disclosed shall be deemed to be a reference to them being fully, fairly, specifically and accurately disclosed in the Current Company Disclosure Schedule in such a manner that:
(i) | in the context of the disclosures contained in the Current Company Disclosure Schedule: |
(A) | the significance of the information disclosed and its relevance to a particular representation and/or warranty shall be highlighted by the Company in a manner reasonably expected to be understandable by the Investor, taking into account the paragraphs or subject matters in relation to which the information was disclosed; and |
(B) | there is not omitted from the information disclosed any information which would have the effect of rendering the information so disclosed misleading in any respect; and |
(ii) | in the context of any document treated as disclosed by the Current Company Disclosure Schedule, the matter disclosed is reasonably apparent from the terms of the document, |
and nothing disclosed by the Company to the Investor other than in the Current Company Disclosure Schedule and in accordance with the provisions of this Section 3.02 shall constitute disclosure to the Investor for the purposes of this Agreement.
Section 3.03. Survival of Representations and Warranties . The representations and warranties set forth in this Article III or made in writing by or on behalf of the Company and the Sponsors in connection with the transactions contemplated by this Agreement shall continue in full force and effect and survive the Investor Subscription.
Section 3.04. Indemnity. Each of the Company and the Sponsors hereby agrees that it shall jointly and severally indemnify, defend and hold harmless the Investor from, against and in respect of any damages, losses, charges, liabilities, claims demands, actions, suits, proceedings, payments, judgments, settlements, assessments, deficiencies, interest and costs and expenses (including reasonable attorneys fees) imposed on, sustained, incurred or suffered by, or asserted against, the Investor (whether in respect of third party claims, claims between the parties hereto, or otherwise) directly or indirectly relating to or arising out of any breach by the Company or the Sponsors, as the case may be of any respective representation or warranty made by it in this Agreement.
ARTICLE IV
Conditions of Investor Subscription
Section 4.01. Conditions of Investor Subscription . The obligation of the Investor to make the Investor Subscription is subject to the fulfillment, to the Investors reasonable satisfaction, prior to or concurrently with the making of the Investor Subscription, of the following conditions:
(a) Representations and Warranties .
(i) | The representations and warranties made by the Company and the Sponsors herein, and in the Original Company Disclosure Schedule and in any schedule, exhibit or certificate delivered by the Company and the Sponsors pursuant to this Agreement, remain true, accurate and not misleading immediately prior to the Investor Subscription, save as modified or supplemented by the Updated Company Disclosure Schedule pursuant to Sections 3.01 and 4.01(a)(ii) of this Agreement; and |
(ii) | If it is necessary for the Company to modify or supplement the Original Company Disclosure Schedule, it shall deliver an Updated Company Disclosure Schedule to the Investor not less than ten (10) Business Days prior to the proposed Subscription Date and the substance of any modification or supplementation of any of the representations and warranties referred to in (i) made in such Updated Company Disclosure Schedule is acceptable to the Investor in its sole discretion; |
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(b) Performance: No Breaches . All of the agreements and covenants of the Company and the Sponsors to be performed prior to the Investor Subscription pursuant to each Transaction Document have been duly performed in all material respects, and no breach (or any event which, with notice, lapse of time, the making of a determination or any combination, would become a breach) under any Transaction Document has occurred and is continuing;
(c) Authorizations . The Company has obtained and provided to the Investor copies of all Authorizations listed in Sections 1 and 2 of Section 3.01(d) ( Status of Authorizations ) of the Current Company Disclosure Schedule and all those Authorizations are in full force and effect;
(d) No Material Adverse Effect. Nothing has occurred which has or may reasonably be expected to have since the date of this Agreement, a Material Adverse Effect;
(e) Expenses . The Investor has received payment for, or reimbursement of all fees and expenses of the Investor, and the invoiced fees and expenses of its counsel, as provided in Section 5.10 ( Expenses ), or confirmation from its counsel that those fees and expenses have been paid directly to such counsel;
(f) Environmental Matters . The Company:
(i) | has confirmed in writing to the Investor that it is in agreement with the S&EA; |
(ii) | has agreed in writing with the Investor on the form of the S&E Performance Report; |
(iii) | remains in compliance with the S&E Management System and the S&E Management System has not been amended, waived or otherwise restricted in scope or effect since February 25, 2010, except in accordance with the Action Plan; and |
(iv) | the Company has complied with all matters set forth in the Action Plan required to be completed prior to the Investor Subscription, as set forth in the Action Plan; |
(g) Company Certifications . The Investor has received certifications by the Company and the Sponsors, substantially in the form set forth in Schedule 1 ( Form of Subscription Notice ), with respect to the conditions specified in this Section 4.01 and expressed to be effective as of the date of the Investor Subscription;
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(h) Opinions of Counsel . The Investor has received a legal opinion, in form and substance satisfactory to the Investor, from the Investors counsel covering such matters relating to the transactions contemplated by this Agreement, the other Transaction Documents and the Companys Charter, as the Investor may reasonably request;
(i) Accounting Systems . The Company has certified to the Investor, in form and substance satisfactory to the Investor, that it has installed and has in operation an accounting and control system, management information system and books of account and other records, which together adequately give a true and fair view of the financial condition of the Company and the results of its operations in conformity with the Accounting Standards;
(j) Certificate of Incumbency and Authority . The Investor has received a Certificate of Incumbency and Authority from the Company;
(k) Insurance Requirements . The Investor has received copies of all insurance policies evidencing compliance with the requirements of Annex A ( Minimum Insurance Requirements ) and a certification from the Companys insurers or insurance agents confirming that such policies are in full force and effect and all premiums then due and payable under those policies have been paid;
(l) Transaction Documents . The Investor has received a counterpart of each of the Transaction Documents, duly executed and delivered by all other parties thereto, all of which are or will be, on delivery by the Investor of its counterpart, fully effective and unconditional, and each is in form and substance satisfactory to the Investor;
(m) Externalization Process . The Externalization Process has been completed in the form and substance satisfactory to the Investor, and pursuant to such Externalization Process, Equity Securities of APGL have been issued and allotted to each of: (a) Helion Venture Partners II, LLC; (b) Helion Venture Partners India II, LLC; (c) Investor; (d) DEG - Deutsche Investitions -und Entwicklungsgesellschaft mbH; (e) FC VI India Venture (Mauritius) Ltd.; and (f) Société DE Promotion ET DE Participation Pour LA Coopération Economique;
(n) Co-Investor Subscription . The Co-Investor has, along with the other parties thereto, duly signed and executed the Co-Investor Subscription Agreement for subscription to the Co-Investor Shares, and all the conditions to subscription of Co-Investor Shares by the Co-Investor under the Co-Investor Subscription Agreement have been fulfilled to the Co-Investors reasonable satisfaction or waived by the Co-Investor;
(o) Private Placement Offer Document . The Investor has received (i) the copy of the private placement offer letter (with respect to issue of the Subscription Shares) along with all relevant documents in accordance with the provision of the Companies Act, 2013 and rules made thereunder; and (ii) copy of complete record of private placement offer that is required to be maintained by the Company (with respect to issue of the Subscription Shares);
(p) Filings with Registrar of Companies . Investor has received the filings made by the Company with the jurisdictional Registrar of Companies in Form No. GNL-2 with respect to the private placement offer letter (with respect to issue of the Subscription Shares ) and the record of a private placement offer kept by the Company (with respect to issue of the Subscription Shares);
(q) Valuation Certificate. The Company shall obtain and provide to the Investor a valuation certificate from a firm of chartered accountants having a minimum experience of 10 years, approved by the Investor certifying that, on the date of the issue of the Subscription Shares, (i) the Subscription Price
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for the issue of the Subscription Shares, is in compliance with the Applicable Law; and (ii) the fair value of the shares of the Company, calculated as required by the applicable Law, that may be issued on the conversion of the Subscription Shares is less than the Subscription Price;
(r) Consent Letters . Receipt of consent letters, in form and substance acceptable to the Investor, from other Investors (as defined under the Shareholders Agreement) and the Sponsors confirming the terms of issue of the Subscription Shares to the Investor and accordingly approval to the issue of the Subscription Shares to the Investor and waiving any pre-emptive rights that the other Investors (as defined under the Shareholders Agreement) and Sponsors have under the Shareholders Agreement and the Charter; and
(s) Lender Consents . The Company shall have procured and provided copies to the Investor of the approvals from banks and financial institutions, if required pursuant to any financing arrangements entered into by the Company with any such banks or financial institutions in order to undertake the transactions contemplated under this Agreement.
Section 4A.01. Conditions Subsequent to Investor Subscription . (a) Amendment of the Shareholders Agreement : Within 60 (sixty) days from the Subscription Date, the Company and the Sponsors shall cause the Shareholders Agreement to be amended to incorporate the rights and privileges of IFC pursuant to subscription of the Subscription Shares carrying such terms as set forth in Schedule 4. The Company shall amend the Charter in accordance with the amendment to the Shareholders Agreement, and such amended Charter shall be filed by the Company in prescribed E-Form No. MGT. 14 of the Companies (Management and Administration) Rules, 2014.
(b) Issue of Share Certificate : Immediately on procuring stamping on the certificates, and in no event later than 30 (thirty) days from the Subscription Date, the Company and the Sponsors shall issue and deliver duly signed and stamped share certificates evidencing valid title of IFC over the Subscription Shares.
ARTICLE V
Miscellaneous
Section 5.01. Notices . (a) Any notice, request or other communication to be given or made under this Agreement shall be in writing. Any such communication shall be delivered by hand, airmail, established courier service or facsimile to the party to which it is required or permitted to be given or made at such partys address specified below or at such other address as such party has from time to time designated by written notice to the other parties hereto, shall be effective upon the earlier of (a) actual receipt and (b) deemed receipt under Section 5.01(b) below.
For the Company:
8, LSC, Pushp Vihar, Madangir,
New Delhi-110062
Facsimile: +91-11-49409807
Attention: Mr. Inderpreet Singh Wadhwa
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For the Sponsors:
Inderpreet Singh Wadhwa
[Address]
Fascimile: [Fax Number]
Attention: Inderpreet Singh Wadhwa
Harkanwal Singh Wadhwa
[Address]
Facsimile: [Fax Number]
Attention: Harkanwal Singh Wadhwa
For the Investor:
IFC Corporate Relations
2121 Pennsylvania Avenue, NW
Washington DC 20433
Telephone: 202-473-3800
Fax: 202-974-4384
For attention of: Sujoy Bose, Director, Global Infrastructure Department
With a copy to:
International Finance Corporation
Infrastructure and Natural Resources Department
3 rd Floor, Maruti Suzuki Building, 1 Nelson Mandela Marg
Vasant Kunj, New Delhi -110070
(b) Unless there is reasonable evidence that it was received at a different time, notice pursuant to this Section 5.01 is deemed given if: (i) delivered by hand, when left at the address referred to in Section 5.01(a); (ii) sent by airmail or established courier services within a country, three (3) Business Days after posting it; (iii) sent by airmail or established courier service between two countries, six (6) Business Days after posting it; and (iv) sent by facsimile, when confirmation of its transmission has been recorded by the senders facsimile machine.
Section 5.02. Saving of Rights . (a) The rights and remedies of the Investor in relation to any misrepresentation or breach of warranty on the part of any of the Relevant Parties shall not be prejudiced by any investigation by or on behalf of the Investor into the affairs of any of the Relevant Parties, by the execution or the performance of this Agreement or by any other act or thing by or on behalf of the Investor which might prejudice such rights or remedies.
(b) No course of dealing and no failure or delay by the Investor in exercising any power, remedy, discretion, authority or other right under this Agreement or any other agreement shall impair, or be construed to be a waiver of or an acquiescence in, that or any other power, remedy, discretion, authority or right under this Agreement, or in any manner preclude its additional or future exercise.
Section 5.03. English Language . All documents to be provided or communications to be given or made under this Agreement shall be in English and, where the original version of any such document or communication is not in English, shall be accompanied by an English translation certified by an Authorized Representative to be a true and correct translation of the original. The Investor may, if it so
24
requires, obtain an English translation of any document or communication received in any other language at the cost and expense of the Company. In either case the Investor may deem any such translation to be the governing version.
Section 5.04. Applicable Law and Arbitration .
(a) This Agreement is governed by, and construed in accordance with, the laws of India.
(b) Any dispute arising out of or in connection with this Agreement, including any question regarding its existence, validity or termination (a Dispute ) shall be referred to and finally resolved by arbitration under the Rules of Arbitration of the Singapore International Arbitration Centre (the SIAC ) in force at that time (the SIAC Rules ), which SIAC Rules are deemed to be incorporated by reference into this Section 5.04.
(c) There shall be 1 (one) arbitrator, who shall be nominated by agreement of the parties within thirty (30) days of receipt of the request for arbitration by the respondent(s). If the sole arbitrator is not nominated within this time period, the SIAC shall make the appointment.
(d) The place of arbitration shall be Singapore.
(e) The language of arbitration shall be English.
(f) The Parties acknowledge and agree that no provision of this Agreement or of the SIAC Rules, nor the submission to arbitration by the Investor, in any way constitutes or implies a waiver, termination or modification by the Investor of any privilege, immunity or exemption of the Investor.
(g) If two or more arbitrations are commenced hereunder and/or the Related Agreements, and even if this Agreement and the Related Agreements are governed by different laws, any party to any of these arbitrations may petition any arbitral tribunal appointed in these arbitrations for an order that the several arbitrations be consolidated in a single arbitration before that arbitral tribunal (a Consolidation Order ). In deciding whether to make such a Consolidation Order, the arbitral tribunal shall consider whether the several arbitrations raise common issues of law or facts and whether to consolidate the several arbitrations would serve the interests of justice and efficiency. If before a Consolidation Order is made by an arbitral tribunal with respect to another arbitration, the arbitrator has already been appointed in that other arbitration, their appointment terminates upon the making of such Consolidation Order and they are deemed to be functus officio without prejudice to the validity of any acts done or orders made by them prior to the termination. In the event of two or more conflicting Consolidation Orders, the Consolidation Order that was made first in time shall prevail.
(h) The provisions of this Section 5.04 shall survive the termination of this Agreement for any reason whatsoever.
Section 5.05. Immunity . To the extent any Relevant Party may be entitled in any jurisdiction to claim for itself or its assets immunity in respect of its obligations under this Agreement or any other Transaction Document from any suit, execution, attachment (whether provisional or final, in aid of execution, before judgment or otherwise) or other legal process or to the extent that in any jurisdiction that immunity (whether or not claimed) may be attributed to it or its assets, such Relevant Party irrevocably agrees not to claim and irrevocably waives such immunity to the fullest extent permitted now or in the future by the laws of such jurisdiction.
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Section 5.06. Announcements . (a) None of the Relevant Parties may represent the Investors views on any matter, or use the Investors name in any written material provided to third parties, without the Investors prior written consent.
(b) No Relevant Party shall:
(i) | disclose any information either in writing or orally to any Person which is not a party to this Agreement; or |
(ii) | make or issue a public announcement, communication or circular, |
about the Investor Subscription or the subject matter of, or the transactions referred to in, this Agreement or any other Transaction Document, including by way of press release, promotional and publicity materials, posting of information on websites, granting of interviews or other communications with the press, or otherwise, other than: (A) to such of its officers, employees and advisers as reasonably require such information in connection with the Investor Subscription or to comply with the terms of this Agreement or any other Transaction Document; (B) to the extent required by law or regulation (including the rules of any stock exchange on which the Companys Shares are listed); (C) to the extent required for it to enforce its rights under this Agreement; and (D) with the prior written consent of the Investor. Before any information is disclosed or any public announcement, communication or circulation made or issued pursuant to this Section 5.06(b), such Relevant Party must consult with the Investor in advance about the timing, manner and content of the disclosure, announcement, communication or circulation (as the case may be).
(c) Each Relevant Party shall expressly inform any Person to whom it discloses any information under Section 5.06(b) of the restrictions set out in Section 5.06(b) with regards disclosure of such information and shall procure their compliance with the terms of this Section 5.06 as if they each were party to this Agreement as such Relevant Party and such Relevant Party shall be responsible for any breach by any such Person of the provisions of this Section 5.06.
Section 5.07. Successors and Assigns . This Agreement binds and benefits the respective successors and assignees of the Parties. However, neither the Sponsors nor the Company may assign, transfer or delegate any of its rights or obligations under this Agreement without the prior written consent of the Investor.
Section 5.08. Amendments, Waivers and Consents . Any amendment or waiver of, or any consent given under, any provision of this Agreement shall be in writing and, in the case of an amendment, signed by all of the Parties hereto.
Section 5.09. Counterparts . This Agreement may be executed in several counterparts, each of which is an original, but all of which constitute one and the same agreement.
Section 5.10. Expenses . (a) The Company and the Sponsors shall pay to the Investor or as the Investor may direct:
(i) | the fees and expenses of the Investors legal counsel incurred in connection with: |
(A) | the preparation of the investment by the Investor provided for under this Agreement; |
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(B) | the preparation and/or review, execution and, where appropriate, translation, registration, amendment, supplement or modification of, or waiver under, the Transaction Documents and any other documents related to any of them; |
(C) | the giving of any legal opinions required by the Investor under the Transaction Documents and any other documents related to any of them; |
(ii) | the costs and expenses of the Investor in respect of its investment in the Company, including but not limited to any registration, filing or similar fees incurred by the Investor and the costs and expenses incurred by the Investor in relation to efforts to enforce or protect its rights under this Agreement, or the exercise of its rights or powers consequent upon or arising out of any breach of this Agreement, including legal and other professional consultants fees on a full indemnity basis. |
(b) The provisions of Section 5.10(a) shall survive the completion of the Investor Subscription.
Section 5.11. Entire Agreement . This Agreement, together with the other Transaction Documents, supersedes all prior discussions, memoranda of understanding, agreements and arrangements (whether written or oral, including all correspondence), if any, between the parties with respect to the subject matter of this Agreement, and this Agreement (together with any amendments or modifications and the other Transaction Documents) contains the sole and entire agreement between the parties with respect to the subject matter of this Agreement.
Section 5.12. Invalid Provisions . If any provision of this Agreement is held to be illegal, invalid or unenforceable under any law from time to time: (a) such provision will be fully severable from this Agreement; (b) this Agreement will be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a part hereof; and (c) the remaining provisions of this Agreement will remain in full force and effect and will not be affected by the illegal, invalid or unenforceable provision or by its severance herefrom.
( Signature Pages Follow)
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IN WITNESS WHEREOF, the parties mentioned below, acting through their duly authorized representatives, have caused this Agreement to be signed in their respective names, as of the date first written above.
AZURE POWER INDIA PRIVATE LIMITED | ||
By: |
/s/ Inderpreet Singh Wadhwa |
|
Name: | Inderpreet Singh Wadhwa | |
Title: | Director | |
MR. INDERPREET SINGH WADHWA | ||
/s/ INDERPREET SINGH WADHWA |
||
MR. HARKANWAL SINGH WADHWA | ||
/s/ HARKANWAL SINGH WADHWA |
28
IN WITNESS WHEREOF, the party mentioned below, acting through their duly authorized representatives, has caused this Agreement to be signed in their respective names, as of the date first written above.
INTERNATIONAL FINANCE CORPORATION | ||
By: |
/s/ SUMEET THAKUR |
|
Name: | SUMEET THAKUR | |
Title: | MANAGER |
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ANNEX A
MINIMUM INSURANCE REQUIREMENTS
(See Section 3.01 (o) and 4.01(k) of this Agreement)
| The Company shall, at all times, maintain a directors and officers liability insurance policy for Investors nominee director on the Board of the Company, providing adequate and customary coverage with a financially sound and reputable insurer or insurers. |
| Construction All Risks, based on full contract value and including: |
| Strike, riots and civil commotion |
| Debris removal |
| Extra Expenses |
| Extended Maintenance Period |
| Third Party Liability |
| Marine All Risks (including war) in respect of all transportation of critical items for the project |
| Fire and named perils (including earthquake) or Property All Risks, based on new replacement cost of assets |
| Machinery breakdown |
| All insurances required by local legislation |
ANNEX B
ANTI-CORRUPTION GUIDELINES FOR IFC TRANSACTIONS
The purpose of these Guidelines is to clarify the meaning of the terms Corrupt Practice, Fraudulent Practice, Coercive Practice, Collusive Practice and Obstructive Practice in the context of IFC operations.
1. | C ORRUPT P RACTICES |
A Corrupt Practice is the offering, giving, receiving or soliciting, directly or indirectly, of anything of value to influence improperly the actions of another party.
I NTERPRETATION
A. | Corrupt practices are understood as kickbacks and bribery. The conduct in question must involve the use of improper means (such as bribery) to violate or derogate a duty owed by the recipient in order for the payor to obtain an undue advantage or to avoid an obligation. Antitrust, securities and other violations of law that are not of this nature are excluded from the definition of corrupt practices. |
B. | It is acknowledged that foreign investment agreements, concessions and other types of contracts commonly require investors to make contributions for bona fide social development purposes or to provide funding for infrastructure unrelated to the project. Similarly, investors are often required or expected to make contributions to bona fide local charities. These practices are not viewed as Corrupt Practices for purposes of these definitions, so long as they are permitted under local law and fully disclosed in the payors books and records. Similarly, an investor will not be held liable for corrupt or fraudulent practices committed by entities that administer bona fide social development funds or charitable contributions. |
C. | In the context of conduct between private parties, the offering, giving, receiving or soliciting of corporate hospitality and gifts that are customary by internationally- accepted industry standards shall not constitute corrupt practices unless the action violates Applicable Law. |
D. | Payment by private sector persons of the reasonable travel and entertainment expenses of public officials that are consistent with existing practice under relevant law and international conventions will not be viewed as Corrupt Practices. |
E. | The World Bank Group 1 does not condone facilitation payments. For the purposes of implementation, the interpretation of Corrupt Practices relating to facilitation payments will take into account relevant law and international conventions pertaining to corruption. |
1 | The World Bank is the International Bank for Reconstruction and Development, an international organization established by Articles of Agreement among its member countries and the World Bank Group refers to the International Bank for Reconstruction and Development, the International Development Association, the International Finance Corporation, the Multilateral Investment Guarantee Agency, and the International Centre for Settlement of Investment Disputes. |
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2. | F RAUDULENT P RACTICES |
A Fraudulent Practice is any action or omission, including a misrepresentation, that knowingly or recklessly misleads, or attempts to mislead, a party to obtain a financial or other benefit or to avoid an obligation.
I NTERPRETATION
A. | An action, omission, or misrepresentation will be regarded as made recklessly if it is made with reckless indifference as to whether it is true or false. Mere inaccuracy in such information, committed through simple negligence, is not enough to constitute a Fraudulent Practice for purposes of this Agreement. |
B. | Fraudulent Practices are intended to cover actions or omissions that are directed to or against a World Bank Group entity. It also covers Fraudulent Practices directed to or against a World Bank Group member country in connection with the award or implementation of a government contract or concession in a project financed by the World Bank Group. Frauds on other third parties are not condoned but are not specifically sanctioned in IFC, MIGA, or PRG operations. Similarly, other illegal behavior is not condoned, but will not be considered as a Fraudulent Practice for purposes of this Agreement. |
3. | C OERCIVE P RACTICES |
A Coercive Practice is impairing or harming, or threatening to impair or harm, directly or indirectly, any party or the property of the party to influence improperly the actions of a party.
I NTERPRETATION
A. | Coercive Practices are actions undertaken for the purpose of bid rigging or in connection with public procurement or government contracting or in furtherance of a Corrupt Practice or a Fraudulent Practice. |
B. | Coercive Practices are threatened or actual illegal actions such as personal injury or abduction, damage to property, or injury to legally recognizable interests, in order to obtain an undue advantage or to avoid an obligation. It is not intended to cover hard bargaining, the exercise of legal or contractual remedies or litigation. |
4. | C OLLUSIVE P RACTICES |
A Collusive Practice is an arrangement between two or more parties designed to achieve an improper purpose, including to influence improperly the actions of another party.
I NTERPRETATION
Collusive Practices are actions undertaken for the purpose of bid rigging or in connection with public procurement or government contracting or in furtherance of a Corrupt Practice or a Fraudulent Practice.
5. | O BSTRUCTIVE P RACTICES |
An Obstructive Practice is (i) deliberately destroying, falsifying, altering or concealing of evidence material to the investigation or making of false statements to investigators, in order to materially impede a World Bank Group investigation into allegations of a corrupt, fraudulent, coercive or collusive practice, and/or threatening, harassing or intimidating any party to prevent it from disclosing its
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knowledge of matters relevant to the investigation or from pursuing the investigation, or (ii) an act intended to materially impede the exercise of IFCs access to contractually required information in connection with a World Bank Group investigation into allegations of a corrupt, fraudulent, coercive or collusive practice.
I NTERPRETATION
Any action legally or otherwise properly taken by a party to maintain or preserve its regulatory, legal or constitutional rights such as the attorney-client privilege, regardless of whether such action had the effect of impeding an investigation, does not constitute an Obstructive Practice.
G ENERAL I NTERPRETATION
A person should not be liable for actions taken by unrelated third parties unless the first party participated in the prohibited act in question.
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SCHEDULE 1
FORM OF SUBSCRIPTION NOTICE
[Letterhead of the Company/the Investor]
[Date]
International Finance Corporation |
|
|
||
|
||
Attention: [●] |
Ladies and Gentlemen:
Investment No.
Request for Investor Subscription No. (Equity)
1. Please refer to the Subscription Agreement (the Subscription Agreement , dated [●], between, inter alia, Azure Power India Private Limited (the Company ), the Sponsors and International Finance Corporation ( Investor ). Terms defined in the Subscription Agreement, including terms defined by reference to any other Transaction Document (as defined in the Subscription Agreement), have their defined meanings wherever used in this request.
2. In accordance with the provisions of the Subscription Agreement and the enclosed resolution of the Companys board of directors and shareholders, the Company requests the subscription of 56,521 (Fifty Six Thousand Five Hundred and Twenty One) Subscription Shares each at the Subscription Price. Therefore, the Company requests the Investor to pay up to INR 649,991,500 (Rupees Six Hundred and Forty Nine Million Nine Hundred and Ninety One Thousand and Five Hundred), which shall not exceed INR equivalent of USD 10,000,000 (Dollars Ten Million) calculated by applying the Dollar-INR conversion reference rate as published by the Reserve Bank of India on the date on which the wire transfer of the subsequent amount is initiated by the Investor, for credit to the Companys account no. [●].
3. The Subscription Date for the Investor Subscription [contemplated by this Subscription Notice] shall be [●].
4. For the purpose of Section 4.01 ( Conditions of Investor Subscription ) of the Subscription Agreement, the Company certifies as follows:
(a) | the representations and warranties made in Article III of the Subscription Agreement, and in the Current Company Disclosure Schedule and in any schedule, exhibit or certificate, delivered by the Company pursuant to the Subscription Agreement are true, accurate and not misleading in all respects (other than as set out in the Current Company Disclosure Schedule) on and as of the date of this request with the same effect as if such representations and warranties had been made on and as of such date; |
(b) | all of the agreements and covenants of the Company to be performed prior to the Investor Subscription pursuant to each Transaction Document have been duly performed in all material respects, and no breach (or any event which, with notice, lapse of time, the making of a determination or any combination, would become a breach) under any Transaction Document has occurred and is continuing; |
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(c) | the Company has obtained and provided to the Investor copies of, all Authorizations listed in Sections 1 and 2 of Section 3.01(d) (Status of Authorizations) of the Current Company Disclosure Schedule, and all such Authorizations are in full force and effect; |
(d) | since the date of the Subscription Agreement nothing has occurred which has had or could reasonably be expected to have a Material Adverse Effect; |
(e) | it is in agreement with the S&EA, has agreed in writing on the form of the S&E Performance Report and remains in compliance with the S&E Management System and the S&E Management System has not been amended, waived or otherwise restricted in scope or effect by the Company since February 25, 2015, except in accordance with the Action Plan; and |
(f) | it has installed and has in operation an accounting and control system, management information system and books of account and other records, which together adequately give a true and fair view of the financial condition of the Company and the results of its operations in conformity with the Accounting Standards. |
5. The above certifications are effective as of the date of this Subscription Notice and shall continue to be effective as of the Subscription Date set out in paragraph 3 (as if made by reference to such date). If any such certification is no longer valid as of or prior to that Subscription Date, the Company undertakes to promptly notify the Investor by facsimile.
Yours faithfully, | ||
By |
|
|
Authorized Representative | ||
By |
|
|
Authorized Representative |
[Enclosure[s]]: |
[Resolution of the Companys [board of directors]/[shareholders]]; [Subscription Form] |
|
Copy to: |
INTERNATIONAL FINANCE CORPORATION Attention: [●] |
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SCHEDULE 2
ORIGINAL COMPANY DISCLOSURE SCHEDULE
DISCLOSURE SCHEDULE
The purpose of this Schedule is to disclose matters which may be relevant to the Representations and Warranties of the Company as contained in the Subscription Agreement. The Representations and Warranties of the Company are qualified by the facts and circumstances fully, fairly, specifically and accurately contained or disclosed in the Subscription Agreement, this Schedule or in any of the documents annexed to this Schedule.
The Company is not, nor shall it be deemed to be, in breach of any of the Representations and Warranties of the Company in respect of any such facts and circumstances.
If an inconsistency exists between the Agreement and this Schedule or any of the documents annexed to this Schedule, this Schedule prevails and is deemed to contain the relevant disclosure.
DISCLOSURES
The following specific disclosures are made in relation to the Representations and Warranties of the Company. Each matter disclosed is listed against the sub-section number of the Representation and Warranty to which the disclosure relates but a disclosure applies to all of the Representations and Warranties of the Company only to the extent it is reasonably apparent on its face.
Representation/Warranty No. | Disclosure | |||||
Section 3.01 (c) (No Conflict) | No disclosure | |||||
Section 3.01 (d) (Status of Authorizations) | Section 3.01 (d) (i) Section 1: | |||||
Resolution of the board of directors of the Company dated June 17, 2015; and | ||||||
Resolution of the shareholders of the Company dated June 19, 2015 for signing and executing this Agreement and other applicable Transaction Documents. | ||||||
Section 3.01 (d) (i ): Section 2: No disclosure | ||||||
Section 3.01 (d) (i ): Section 3: No disclosure | ||||||
[Section 3.01(e) ( Charter )] | List of Directors | |||||
- | Azure Power India Pvt. Ltd. | |||||
a. | Inderpreet Wadhwa | |||||
b. | H.S. Wadhwa | |||||
c. | Bill Elmore |
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Representation/Warranty No. | Disclosure | |||||
d. | Sanjeev Aggarwal | |||||
e. | Robert D. Kelly | |||||
f. | Diana Ferrell | |||||
- | Details of directors of the Subsidiaries are set out in Annexure 2 (A) ). | |||||
[Section 3.01(f) ( Capital Structure of the Company )] | Authorized Share Capital | |||||
- | 4,33,33,333 equity shares of Rs. 10/- each | |||||
- |
8,66,66,667 Preference Shares of Rs. 10/- each |
|||||
Paid up Capital | ||||||
(Details of the Capital Structure attached separately as Annexure 1 ) | ||||||
[Section 3.01(h) ( Financial Condition )] | Section 3.01 (h) (i): No Disclosure | |||||
Section 3.01 (h) (ii): No Disclosure | ||||||
Section 3.01 (h) (iii): Details are set out in Annexure 3 | ||||||
Section 3.01 (h) (iv): No Disclosure | ||||||
Section 3.01 (i) ( Financial Statements ) | No disclosure | |||||
Section 3.01 (i) ( Taxes) | No disclosure | |||||
[Section 3.01(k) ( Litigation)] |
1. |
Civil Suit No. 22/2012 along with temporary injunction application no. 20/2012 filed by Sh. Mehram before Civil Judge (Jr. Div.) Jayal, District Nagaur on 9 th July 2012 against Azure Power (Rajasthan) Pvt. Ltd.,
In the continuation of this a Writ Petition (S. B. Civil Writ Petition No. 9685/2012) filed by Azure Power Rajasthan Pvt. Ltd., at High Court, Jodhpur - a portion of land leased admeasuring Khasra Number 1175, Tehsil Jayal District Nagour, Rajasthan from the Government of Rajasthan for the projects of Azure Power Rajasthan Pvt. Ltd., in Rajasthan, is presently disputed as third parties have sought establishment of mining rights through the Mining Department of the State of Rajasthan. Azure Power Rajasthan |
- 37 -
Representation/Warranty No. | Disclosure | |||
Pvt. Ltd., has filed a petition with the High Court of Rajasthan seeking non-renewal of the mining rights. Presently, this matter is pending before the High Court of Rajasthan.
Prayer : Azure Power Rajasthan Private Limited has prayed before the honorable high court that the mining lease under dispute should not be renewed. |
||||
2. |
Case pending before the Supreme Court of India - The Gujarat Urja Vikas Nigam Limited, had filed a petition with the Gujarat Electricity Regulatory Commission, seeking recalculation on the basis of actual cash flow required for development of solar projects and consequent revision of the tariff payable by it, in relation to certain solar power projects including 10 MW Gujarat project of Azure Power (Haryana) Pvt. Ltd. While the Gujarat Electricity Regulatory Commission and the appellate tribunal for electricity dismissed the claims made by Gujarat Urja Vikas Nigam Limited, an appeal filed by Gujarat Urja Vikas Nigam Limited is pending with the Supreme Court of India (GUVNL vs GERC & Others CA No. 10301/ 2014).
Prayer : All respondents have prayed for dismissal of the appeal. |
|||
3. |
WP No. 13132/2012 pending before the High Court of Rajasthan at Jodhpur filed by Radhan Kishan & Deepa Ram against the State of Rajasthan and the Azure Power Rajasthan Private Limited involving a challenge of the allotment of 1059 Bighas land to the Company by the Government of Rajasthan in Katothi.
Prayer : Azure Power Rajasthan Private Limited has, in its prayers, requested for dismissal of the petition. |
|||
4. | Ordinary Assessment proceedings pending before the Income Tax department against Azure Power (Rajasthan) Private Limited for the assessment year 2012-13. | |||
5. | Ordinary Assessment proceedings pending before the Income Tax department against Azure Power India Private Limited for the assessment year 2012-13. |
- 38 -
Representation/Warranty No. | Disclosure | |||
Section 3.01 (k) (ii) : No Disclosure | ||||
Section 3.01 (k) (iii) : No Disclosure | ||||
Section 3.01 (l) ( Compliance with Law) | No Disclosure | |||
Section 3.01 (m) ( Environmental Matters ) | No Disclosure | |||
Section 3.01 (n) ( Sanctionable Practices ) | No Disclosure | |||
[Section 3.01(o) ( Insurance )] | Description of any Material Claims | |||
1. | Azure Urja Private Limited:- Claim of Rs. 5.6 Million is pending with National Insurance Company on account of solar module damage. | |||
2. | Azure Clean Energy Pvt. Ltd., Azure Sunshine Pvt. Ltd. and Azure Greentech Pvt. Ltd. :- Claim of Rs. 7 Million is pending with National Insurance Company on account of solar module damage | |||
Section 3.01 (p) ( Disclosure ) | No disclosure | |||
[Section 3.01(q) ( Subsidiaries)] | Attached Separately list of Subsidiaries, their directors, ownership, domicile and head office as Annexure 2 (A) and (B) | |||
Section 3.01 (r) ( UN Security Council Resolutions) | No disclosure | |||
Section 3.01 (s) ( Criminal Offenses) | No disclosure | |||
Section 3.01 (t) ( Restrictions on Business Activities) | No disclosure |
- 39 -
Representation/Warranty No. | Disclosure | |||
Section 3.01(u) (Related Party Transactions) | No disclosure | |||
Section 3.01(v) (Title to and Condition of Property) | No disclosure | |||
Section 3.01(w) ( Books and Records ) | No disclosure | |||
[Section 3.01(x) ( Material Contracts )] | - | Operations & Maintenance Agreements hereinafter referred to as the O & M Contract ) between the Company and its Subsidiaries (attached separately as Annexure 4 (A)). | ||
- | Agreement in respect of lease of office premises at corporate office of the Company between Sunbir Singh Wadhwa & Kulwinder Wadhwa (Lessors) and Azure Power India Pvt. Ltd. (Lessee) dated 15 th October, 2013. Agreement in respect of lease of project land for Azure Power Punjab Pvt. Ltd. | |||
- | Agreement in respect of lease of project land for Azure Power Rajasthan Pvt. Ltd. | |||
- | Agreement in respect of lease of project land for Azure Solar Pvt. Ltd. | |||
- | Agreement in respect of lease of project land for Azure Urja Pvt. Ltd. | |||
- | Agreement in respect of lease of project land for Azure Clean Energy Pvt. Ltd. | |||
- | Agreement in respect of lease of project land for Azure Sunshine Pvt. Ltd. | |||
- | Agreement in respect of lease of project land for Azure Greentech Pvt. Ltd. | |||
Section 3.01 (x) (ii): Details of disclosures set out in Annexure 3. The Company or any of its Subsidiaries has not defaulted with respect to any Company Agreements in relation to indebtedness. | ||||
Section 3.01 (x) (iii): No disclosure | ||||
Section 3.01 (x) (iv): No disclosure | ||||
Section 3.01 (x) (v): No disclosure |
- 40 -
Representation/Warranty No. | Disclosure | |
Section 3.01(y) ( Labor Matters ) | No disclosure | |
Section 3.01(z) ( Intellectual Property ) | No disclosure | |
Section 3.01(aa) (Economic Sanctions) | No disclosure |
- 41 -
Yours faithfully, | ||
By |
|
|
Authorized Representative | ||
By |
|
|
Authorized Representative |
Acknowledged and accepted by: | ||
International Finance Corporation | ||
By: |
|
|
Name: | ||
Title: | ||
Date: |
- 42 -
ANNEXURE 1
SHARE CAPITAL TABLE
S. No |
Shareholder |
Pre-Closing | Post-Closing | |||||||||||||||||||||
Total
No. of Shares |
Shareholding
Percentage |
Series
H Number of Shares |
Total
Number of Shares |
Shareholding
Percentage |
||||||||||||||||||||
1 | Inderpreet S Wadhwa* | 97,497 | 14.63 | % | 97,497 | 14.16 | % | |||||||||||||||||
2 | Harkanwal S Wadhwa | 5,000 | 0.75 | % | 5,000 | 0.73 | % | |||||||||||||||||
3 | Azure Power Inc | 5,700 | 0.86 | % | 5,700 | 0.83 | % | |||||||||||||||||
4 | Helion Venture Partner India II | 16,810 | 2.52 | % | 16,810 | 2.44 | % | |||||||||||||||||
5 | Helion Venture Partners II, LLC | 186,316 | 27.96 | % | 186,316 | 27.06 | % | |||||||||||||||||
6 | FC VI India Ventures (Mauritius) Ltd | 219,883 | 32.99 | % | 219,883 | 31.93 | % | |||||||||||||||||
7 | International Finance Corporation | 98,028 | 14.71 | % | 22214 | 120,242 | 17.46 | % | ||||||||||||||||
8 | DEG | 10 | 0.00 | % | 10 | 0.00 | % | |||||||||||||||||
9 | Proparco | 10 | 0.00 | % | 10 | 0.00 | % | |||||||||||||||||
10 | Satnam Sanghera | 1,633 | 0.25 | % | 1,633 | 0.24 | % | |||||||||||||||||
11 | ESOP | 35,543 | 5.33 | % | 35,543 | 5.16 | % | |||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||||
Total | 666 430 | 22214 | 688,644 | 100.00 | % | |||||||||||||||||||
|
|
|
|
|
|
|
|
* | includes 3,127 Equity Shares that may be transferred to Preet MS Sandhu in the manner prescribed in the Shareholders Agreement. |
Note: The above shareholding pattern does not include the outstanding CCDs and Series E CCPS issued by the Company and is subject to the terms of the Shareholders Agreement
- 43 -
ANNEXURE 2 (A)
LIST OF SUBSIDIARIES, THEIR DIRECTORS, OWNERSHIP, DOMICILE AND HEAD OFFICE [pursuant to Section 3.01(e) ( Charter and
Number of Directors ) & Section 3.01(q) ( Subsidiaries )]
Sl. |
Name of Subsidiary |
Directors |
Capitalisation |
Shareholding/ Ownership |
Registered Office/ Domicile |
Head office |
||||||||||
1. | Azure Power (Punjab) Pvt. Ltd. |
a. b. |
Inderpreet Wadhwa H.S. Wadhwa |
Rs. 1,265,240/- divided into 1,265,24 equity shares of Rs. 10 each. | 1. | Mr. H.S. Wadhwa holds 1 Equity Share | C - 2324, Ranjit Avenue, Amritsar | 8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA 110062 | ||||||||
2. | Azure Power India Private Limited Holds 126523 Equity Share of Rs 10 Each | |||||||||||||||
2. | Azure Power (Haryana) Pvt. Ltd. |
a. b. c. d. |
Inderpreet Wadhwa H.S. Wadhwa Sanjeev Aggarwal Natarajan Ranganathan |
Rs. 20,49,200 Lacs Divided into 204920 Equity Shares of Rs. 10 Each. |
1. |
Mr. H.S. Wadhwa holds 1 Equity Share | Villa No. 148, Tatvam Villas, Sohna Road, Gurgaon, Haryana - 122018 | 8, G.F., Local Shopping Compex, Pushp Vihar, Madangir, New Delhi 62 | ||||||||
2. | Azure Power India Private Limited Holds 163935 Equity Share of Rs 10 Each | |||||||||||||||
3. | Suntech Power International Ltd. holds 40984 Equity Share of Rs 10 Each | |||||||||||||||
3. |
Azure Power (Rajasthan) Pvt. Ltd. |
a. b. |
Inderpreet Wadhwa H.S. Wadhwa |
Rs. 988,740 Divided into 988,74/ Equity Shares of Rs. 10 Each. |
1. |
Mr. H.S. Wadhwa holds 1 equity share | 8, G.F., Local Shopping Compex, Pushp Vihar, Madangir, New Delhi - 62 | 8, G.F., Local Shopping Compex, Pushp Vihar, Madangir, New Delhi - 62 | ||||||||
2. | Azure Power India Private Limited holds 98873 Equity Share of Rs 10 Each |
- 44 -
Sl. |
Name of Subsidiary |
Directors |
Capitalisation |
Shareholding/ Ownership |
Registered Office/ Domicile |
Head office |
||||||||||
4. |
Azure Solar Pvt. Ltd. |
a. b. |
Inderpreet Wadhwa H.S. Wadhwa |
Rs. 11,845,800 Divided Equity Shares of Rs. 10 Each. | 1. | Mr. H.S. Wadhwa holds 1 equity share of Rs 10 each. | 8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 | 8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 | ||||||||
2. | Azure Power India Private Limited holds 1093521 Equity Share of Rs 10 Each | |||||||||||||||
3. |
Azure Power US Inc. holds 91058 Equity Share of Rs 10 Each | |||||||||||||||
5. |
Azure Sun Energy Pvt. Ltd. |
a. b. |
Inderpreet Wadhwa H.S. Wadhwa |
Rs. 7,56,240 Divided into 75,624 Equity Shares of Rs. 10 Each. | 1. | Mr. H.S. Wadhwa holds 1 equity share of Rs 10 each | 8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 | 8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 | ||||||||
2. | Azure Power India Private Limited holds 75623 Equity Share of Rs 10 Each. | |||||||||||||||
6. | Azure Solar Solutions Pvt. Ltd. |
a. b. |
Inderpreet Wadhwa H.S. Wadhwa |
Rs. 2,25,760 divided into 22,576 Equity Shares of Rs. 10 Each. | 1. | Mr. H.S. Wadhwa holds 1 equity share of Rs 10 each | 8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 | 8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 | ||||||||
2. | Azure Power India Private Limited holds 22575 Equity Share of Rs 10 Each. | |||||||||||||||
7. |
Azure Urja Pvt. Ltd. | a. | Inderpreet Wadhwa | Rs. 1416380 Lacs Divided into 141638 | 1. | Mr. H.S. Wadhwa holds 1 equity share of Rs 10 each |
8, Local Shopping Complex, Pushp Vihar, Madangir, |
8, Local Shopping Complex, Pushp Vihar, Madangir, |
- 45 -
Sl. |
Name of Subsidiary |
Directors |
Capitalisation |
Shareholding/ Ownership |
Registered Office/ Domicile |
Head office |
||||||||||
b. | H.S. Wadhwa | Equity Shares Rs. 10 Each | 2. | Azure Power India Private Limited holds 104532 Equity Share of Rs 10 Each | New Delhi, Delhi, INDIA - 110062 | New Delhi, Delhi, INDIA - 110062 | ||||||||||
3. | Azure Power US Inc. holds 37105 Equity Share of Rs 10 Each | |||||||||||||||
8. |
Azure Power (Karnataka) Pvt. Ltd. |
a. b. |
Inderpreet Wadhwa H.S. Wadhwa |
Rs. 6,41,650 Divided into 64,165 Equity Shares of Rs. 10 Each. | 1. | Mr. H.S. Wadhwa holds 1 equity share of Rs 10 each | PRASHANTH NILAYA, H.No. 279, 4TH CROSS, ARAVIND NAGAR, HUBLI - 580024 | 8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 | ||||||||
2. | Azure Power India Private Limited holds 37776 Equity Share of Rs 10 Each | |||||||||||||||
3. | Azure Urja Private Limited holds 26388 Equity Share of Rs 10 Each | |||||||||||||||
9. | Azure Surya Pvt. Ltd. |
a. b. |
Inderpreet Wadhwa H.S. Wadhwa |
Rs. 666870 Divided into 66687 Equity Shares of Rs. 10 Each. | 1. | Mr. H.S. Wadhwa holds 1 equity share of Rs 10 each | 8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 | 8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 | ||||||||
2. | Azure Power India Private Limited holds 44898 Equity Share of Rs 10 Each | |||||||||||||||
3. | Azure Urja Private Limited holds 21788 Equity Share of Rs 10 Each |
- 46 -
Sl. |
Name of Subsidiary |
Directors |
Capitalisation |
Shareholding/ Ownership |
Registered Office/ Domicile |
Head office |
||||||||||
10. |
Azure Sunshine Pvt. Ltd. |
a. b. |
Inderpreet Wadhwa H.S. Wadhwa |
Rs. 5,63,360 Divided 56336 Equity Shares of Rs. 10 Each. | 1. | Mr. H.S. Wadhwa holds 1 equity share of Rs 10 Each | 8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 | 8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 | ||||||||
2. | Azure Power India Private Limited holds 56335 Equity Share of Rs 10 Each | |||||||||||||||
11. |
Azure Greentech Pvt. Ltd. |
a. b. |
Inderpreet Wadhwa H.S. Wadhwa |
Rs.5,64,030 Divided into 56,403 Equity Shares of Rs. 10 Each. |
1. | Mr. H.S. Wadhwa holds 1 equity share of Rs 10 each |
8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 |
8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 | ||||||||
2. | Azure Power India Private Limited holds 56402 Equity Share of Rs 10 Each | |||||||||||||||
12. |
Azure Clean Energy Pvt. Ltd. |
a. b. |
Inderpreet Wadhwa H.S. Wadhwa |
Rs.4,63,550 Divided into 46,355 Equity Shares of Rs. 10 Each. | 1. | Mr. H.S. Wadhwa holds 1 equity share of Rs 10 each | 8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 |
8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 |
||||||||
2. | Azure Power India Private Limited holds 46354 Equity Share of Rs 10 Each | |||||||||||||||
13. |
Azure Sunlight Pvt. Ltd. |
a. b. |
Inderpreet Wadhwa H.S. Wadhwa |
Rs. 109520 Divided into 10952 Equity Shares of Rs. 10 Each. | 1. | Mr. H.S. Wadhwa holds 1 equity share of Rs 10 each | 8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 | =8, Local Shopping Complex, Pushp Vihar, Madangir, | ||||||||
2. | Azure Power India Private Limited holds 10951 Equity Share of Rs 10 Each | New Delhi, Delhi, INDIA - 110062 |
- 47 -
Sl. |
Name of Subsidiary |
Directors |
Capitalisation |
Shareholding/ Ownership |
Registered Office/ Domicile |
Head office |
||||||||||
14. | Azure Sunrise Pvt. Ltd. | a. b. |
Inderpreet Wadhwa H.S. Wadhwa |
Rs. 101810.00 Divided into 10181 Equity Shares of Rs. 10 Each. | 1. | Mr. H.S. Wadhwa holds 1 equity share of Rs 10 each | 8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 | 8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 | ||||||||
2. | Azure Power India Private Limited holds 10180 Equity Share of Rs 10 Each | |||||||||||||||
15. | Azure Power (Raj.) Pvt. Ltd. |
a. b. |
Inderpreet Wadhwa H.S. Wadhwa |
Rs. 201310 Divided into 20131 Equity Shares of Rs. 10 Each. | 1. | Mr. H.S. Wadhwa holds 1 equity share of Rs 10 each | 8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 | 8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 | ||||||||
2. | Azure Power India Private Limited holds 20130 Equity Share of Rs 10 Each | |||||||||||||||
16. | Azure Renewable Energy Pvt. Ltd. |
a. b. |
Inderpreet Wadhwa H.S. Wadhwa |
Rs. 1228940 Divided into 122894 Equity Shares of Rs. 10 Each. | 1. | Mr. H.S. Wadhwa holds 1 equity share of Rs 10 each | 8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 | 8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 | ||||||||
2. |
Azure Power India Private Limited holds 122894 Equity Share of Rs 10 Each |
- 48 -
Sl. |
Name of Subsidiary |
Directors |
Capitalisation |
Shareholding/ Ownership |
Registered Office/
|
Head office |
||||||||||
17. | Azure Photovoltaic Pvt. Ltd. |
a. b. |
Inderpreet Wadhwa H.S. Wadhwa |
Rs. 201,760.00 Divided into 20176 Equity Shares of Rs. 10 Each. | 1. | Mr. H.S. Wadhwa holds 1 equity share of Rs 10 each | 8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 | 8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 | ||||||||
2. | Azure Power India Private Limited holds 122894 Equity Share of Rs 10 Each | |||||||||||||||
18. | Azure Power Infrastructure Pvt. Ltd. |
a. b. |
Inderpreet Wadhwa H.S. Wadhwa |
Rs. 872880 Lacs Divided into 87288 Equity Shares of Rs. 10 Each. | 1. |
Mr. H.S. Wadhwa holds 1 equity share of Rs 10 |
8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 |
8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 | ||||||||
2. |
Azure Power India Private Limited holds 76073 Equity Share of Rs 10 Each |
|||||||||||||||
3. | Azure Urja Private Limited Holds 11214 Equity Share of Rs 10 Each | |||||||||||||||
19. | Azure Power Earth Pvt. Ltd. |
a. b. |
Surendra Kumar Gupta Preet Mohinder Singh Sandhu |
Rs. 1 Lacs Divided into 10 000/ Equity Shares of Rs. 10 Each. | 1. | Mr. H.S. Wadhwa holds 1 equity share of Rs 10 |
8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 |
8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 | ||||||||
2. | Azure Power India Private Limited holds 9999 Equity Share of Rs 10 Each | |||||||||||||||
20. | Azure Power Eris Pvt. Ltd. |
a. b. |
Surendra Kumar Gupta Preet Mohinder Singh Sandhu |
Rs. 1 Lacs Divided into 10 000/ Equity Shares of Rs. 10 Each. | 1. | Mr. H.S. Wadhwa holds 1 equity share of Rs 10 | 8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 | 8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 | ||||||||
2. | Azure Power India Private Limited holds 9999 Equity Share of Rs 10 Each |
- 49 -
Sl. |
Name of Subsidiary |
Directors |
Capitalisation |
Shareholding/ Ownership |
Registered Office/
|
Head office |
||||||||||
21. | Azure Power Mars Pvt. Ltd. |
a. b. |
Surendra Kumar Gupta Preet Mohinder Singh Sandhu |
Rs. 881,250.00 Divided into 88,125 Equity Shares of Rs. 10 Each. | 1. |
Mr. H.S. Wadhwa holds 1 equity share of Rs 10 |
8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 | 8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 | ||||||||
2. | Azure Power India Private Limited holds 88124 Equity Share of Rs 10 Each | |||||||||||||||
22. | Azure Power Mercury Pvt. Ltd. |
a. b. |
Surendra Kumar Gupta Preet Mohinder Singh Sandhu |
Rs. 1 Lacs Divided into 10 000/ Equity Shares of Rs. 10 Each. | 1. |
Mr. H.S. Wadhwa holds 1 equity share of Rs 10 |
8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 | 8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 | ||||||||
2. | Azure Power India Private Limited holds 9999 Equity Share of Rs 10 Each | |||||||||||||||
23. | Azure Power Makemake Pvt. Ltd. |
a. b. |
Surendra Kumar Gupta Preet Mohinder Singh Sandhu |
Rs. 1,422,030.00 Divided into 1,42,203 Equity Shares of Rs. 10 Each. | 1. |
Mr. H.S. Wadhwa holds 1 equity share of Rs 10 |
8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 | 8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 | ||||||||
2. |
Azure Power India Private Limited holds 142202 Equity Share of Rs 10 Each |
|||||||||||||||
24. | Azure Power Pluto Pvt. Ltd. |
a. b. |
Surendra Kumar Gupta Preet Mohinder Singh Sandhu |
Rs. 1 Lacs Divided into 10 000/ Equity Shares of Rs. 10 Each. |
1. | Mr. H.S. Wadhwa holds 1 equity share of Rs 10 | 8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 | 8, Local Shopping Complex, Pushp Vihar, Madangir, | ||||||||
2. | Azure Power India Private Limited holds 9999 Equity Share of Rs 10 Each | New Delhi, Delhi, INDIA - 110062 |
- 50 -
Sl. |
Name of Subsidiary |
Directors |
Capitalisation |
Shareholding/ Ownership |
Registered Office/
|
Head office |
||||||||||
25. | Azure Power Venus Pvt. Ltd. |
a. b. |
Surendra Kumar Gupta Preet Mohinder Singh Sandhu |
Rs. 1 Lacs Divided into 10 000/ Equity Shares of Rs. 10 Each. | 1. | Mr. H.S. Wadhwa holds 1 equity share of Rs 10 | 8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 | 8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 | ||||||||
2. | Azure Power India Private Limited holds 9999 Equity Share of Rs 10 Each | |||||||||||||||
26. | Azure Power Saturn Pvt. Ltd. |
a. b. |
Surendra Kumar Gupta Preet Mohinder Singh Sandhu |
Rs. 1 Lacs Divided into 10 000/ Equity Shares of Rs. 10 Each. | 1. | Mr. H.S. Wadhwa holds 1 equity share of Rs 10 | 8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 | 8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 | ||||||||
2. | Azure Power India Private Limited holds 9999 Equity Share of Rs 10 Each | |||||||||||||||
27. |
Azure Power Uranus Pvt. Ltd. |
a. b. |
Surendra Kumar Gupta Preet Mohinder Singh Sandhu |
Rs. 1 Lacs Divided into 10 000/ Equity Shares of Rs. 10 Each. |
1. | Mr. H.S. Wadhwa holds 1 equity share of Rs 10 | 8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 | 8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 | ||||||||
2. | Azure Power India Private Limited holds 9999 Equity Share of Rs 10 Each | |||||||||||||||
28. |
Azure Power Jupiter Pvt. Ltd. |
a. b. |
Surendra Kumar Gupta Preet Mohinder Singh Sandhu |
Rs. 1 Lacs Divided into 10 000/ Equity Shares of Rs. 10 Each. |
1.
2. |
Mr. H.S. Wadhwa holds 1 equity share of Rs 10 Azure Power India Private Limited holds 9999 Equity Share of Rs 10 each |
8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 | 8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 | ||||||||
- 51 -
Sl. |
Name of Subsidiary |
Directors |
Capitalisation |
Shareholding/ Ownership |
Registered Office/
|
Head office |
||||||||||
29. |
Aster Power Inc. | Inderpreet Wadhwa | 531,001 Shares of US$ 1 each. | Azure Power India Private Limited holds 531,001 Shares of US$ 1 each. | United States of America | 1054 31st Street, NW, Suite 545, Washington, DC 20007. | ||||||||||
30. |
Azure Power US Inc. | Inderpreet Wadhwa | 1,543,001 Shares of US$ 1 each. | Azure Power India Private Limited holds 1543,001 Shares of US$ 1 each. | United States of America | 1054 31st Street, NW, Suite 545, Washington, DC 20007. |
- 52 -
ANNEXURE 2 (B)
LIST OF SUBSIDIARIES AND THE RELATED DETAILS [pursuant to Section 3.01(q) (Subsidiaries)]
Sl. |
Name of Subsidiary |
Lien, if any |
Other Remarks |
|||
31. | Azure Power (Punjab) Pvt. Ltd. |
OPIC has lien on the project assets of Azure Power (Punjab) Pvt. Ltd. Shareholding of the Company in Azure Power (Punjab) Pvt. Ltd., has been pledged in favour of OPIC. |
||||
32. | Azure Power (Haryana) Pvt. Ltd. |
OPIC has lien on the project assets of Azure Power (Haryana) Pvt. Ltd. Shareholding of the Company in Azure Power (Haryana) Pvt. Ltd., has been pledged in favour of OPIC. |
20% of shareholding is held by M/s Suntech. | |||
33. | Azure Power (Rajasthan) Pvt. Ltd. | US Exim Bank has lien on the project assets of Azure Power (Rajasthan) Pvt. Ltd. Shareholding of the Company in Azure Power (Rajasthan) Pvt. Ltd., has been pledged in favour of US Exim Bank/ their trustees. | ||||
34. | Azure Solar Pvt. Ltd. |
US Exim Bank has lien on the project assets of Azure Solar Pvt. Ltd. Shareholding of the Company in Azure Solar Pvt. Ltd., has been pledged in favour of the US Exim Bank/ their trustees. |
||||
35. | Azure Sun Energy Pvt. Ltd. |
IFC has lien on the project assets of Azure Sun Energy Pvt. Ltd. Shareholding of the Company in Azure Sun Energy Pvt. Ltd., has been pledged in favour of the trustee of IFC/ their trustees. |
||||
36. | Azure Solar Solutions Pvt. Ltd. |
Central Bank of India Ltd., has lien on the project assets of Azure Solar Solutions Pvt. Ltd. Shareholding of the Company in Azure Solar Solutions Pvt. Ltd., has been pledged in favour of Central Bank of India Ltd. |
||||
37. | Azure Urja Pvt. Ltd. | PTC Financial Services Ltd., has lien on the project assets of Azure Urja Pvt. Ltd. Shareholding of the Company in Azure Urja Pvt. Ltd. has been pledged in favour of PTC Financial Services Ltd. |
- 53 -
Sl. |
Name of Subsidiary |
Lien, if any |
Other Remarks |
|||
38. | Azure Power (Karnataka) Pvt. Ltd. | PTC Financial Services Ltd., has lien on the project assets of Azure (Karnataka) Pvt. Ltd. Shareholding of the Company in Azure (Karnataka) Pvt. Ltd., has been pledged in favour of PTC Financial Services Ltd. | ||||
39. | Azure Surya Pvt. Ltd. | PTC Financial Services Ltd., has lien on the project assets of Azure Surya Pvt. Ltd. Shareholding of the Company in Azure Surya Pvt. Ltd., has been pledged in favour of PTC Financial Services Ltd. | ||||
40. | Azure Sunshine Pvt. Ltd. | IREDA and Central Bank have lien on the project assets of Azure Sunshine Pvt. Ltd. Shareholding of the Company in Azure Sunshine Pvt. Ltd., has been pledged in favour of IREDA and Central Bank. | ||||
41. | Azure Greentech Pvt. Ltd. | IREDA and Central Bank have lien on the project assets of Azure Greentech Pvt. Ltd. Shareholding of the Company in Azure Greentech Pvt. Ltd., has been pledged in favour of IREDA and Central Bank. | ||||
42. | Azure Clean Energy Pvt. Ltd. | IREDA, IFC and IIFCL have lien on the project assets of Azure Clean Energy Pvt. Ltd. Shareholding of the Company in Azure Clean Energy Pvt. Ltd. has been pledged in favour of IREDA, IFC and IIFCL. | ||||
43. | Azure Sunlight Pvt. Ltd. | Not applicable | ||||
44. | Azure Sunrise Pvt. Ltd. | Not applicable | ||||
45. | Azure Power (Raj.) Pvt. Ltd. | Not applicable | ||||
46. | Azure Renewable Energy Pvt. Ltd. | Not applicable | ||||
47. | Azure Photovoltaic Pvt. Ltd. | Not applicable | ||||
48. | Azure Power Infrastructure Pvt. Ltd. | Not applicable | ||||
49. | Azure Power Earth Pvt. Ltd. | Not applicable | ||||
50. | Azure Power Eris Pvt. Ltd. | Not applicable | ||||
51. | Azure Power Mars Pvt. Ltd. | Not applicable |
- 54 -
Sl. |
Name of Subsidiary |
Lien, if any |
Other Remarks |
|||
52. | Azure Power Mercury Pvt. Ltd. | Not applicable | ||||
53. | Azure Power Makemake Pvt. Ltd. | Not applicable | ||||
54. | Azure Power Pluto Pvt. Ltd. | Not applicable | ||||
55. | Azure Power Venus Pvt. Ltd. | Not applicable | ||||
56. | Azure Power Saturn Pvt. Ltd. | Not applicable | ||||
57. | Azure Power Uranus Pvt. Ltd. | Not applicable | ||||
58. | Azure Power Jupiter Pvt. Ltd. | Not applicable |
- 55 -
ANNEXURE 3 [Section 3.01(h) (Financial Conditions)]
DETAILS OF TERM LOAN AGREEMENTS AND OTHER FINANCING AGREEMENTS EXECUTED
BY THE COMPANY AND ITS SUBSIDIARIES
S. No |
Project/
Location |
Details of the
entity |
Lender |
Description of the agreement |
Date of Execution of Agreements |
Loan Amount | ||||||||
1. |
2 MW Punjab |
Azure Power
Punjab Pvt. Ltd |
OPIC | Term Loan Agreement and the related financing documents | February 20, 2009 | USD | 6,230,000 | |||||||
1 st Amendment to the Term Loan Agreement | April 27, 2009 | |||||||||||||
2 nd Amendment to the Term Loan Agreement | March 11, 2010 | |||||||||||||
3 rd Amendment to the Term Loan Agreement | June 22, 2010 | |||||||||||||
2. |
10 MW
Gujarat |
Azure Power
(Haryana) Pvt. Ltd. |
OPIC | Term Loan Agreement and the related financing documents | January 27, 2011 | USD | 26,835,436 | |||||||
1 st Amendment to the Term Loan Agreement | February 16, 2011 | |||||||||||||
2 nd Amendment to the Term Loan Agreement | June 2, 2011 | |||||||||||||
3 rd Amendment to the Term Loan Agreement | November 3, 2011 | |||||||||||||
4 th Amendment to the Term Loan Agreement | November 16, 2012 | |||||||||||||
3. |
5 MW
Rajasthan |
Azure Power
(Rajasthan) Pvt. Ltd. |
US EX-IM
Bank |
Term Loan Agreement and the related financing documents | August 25, 2011 | USD | 15,776,702 | |||||||
1 st Amendment to the Term Loan Agreement | Sep 15, 2011 | |||||||||||||
2 nd Amendment to the Term Loan Agreement | November 22, 2011 |
- 56 -
S. No |
Project/
Location |
Details of the
entity |
Lender |
Description of the agreement |
Date of Execution of
|
Loan Amount | ||||||||
3 rd Amendment to the Term Loan Agreement | Feb 6, 2012 | |||||||||||||
4. |
35 MW
Rajasthan |
Azure Solar Pvt.
Ltd. |
US EX-IM
Bank |
Term Loan Agreement and the related financing documents | August 29, 2012 | USD | 63,708,791 | |||||||
5. |
2.5 MW
Rooftop Gujarat |
Azure Sun
Energy Pvt. Ltd. |
IFC | Term Loan Agreement and the related financing documents | May 24, 2013 | INR | 158,400,000 | |||||||
1 st Amendment to the Term Loan Agreement | Sep 16, 2013 | |||||||||||||
6. |
34 MW
Punjab |
Azure Urja Pvt.
Ltd. |
PTC India
Financial Services Ltd |
Term Loan Agreement and the related financing documents | March 13, 2014 | INR | 1,88,00,00,000 | |||||||
7. |
Rooftop
projects |
Azure Solar
Solution Private Ltd. |
Central
Bank of India |
Term Loan Agreement and the related financing documents | March 25, 2014 | INR | 31,45,00,000 | |||||||
8. |
Working
Capital |
Azure Power
India Pvt. Ltd. |
Central
Bank of India |
Non-fund based facility Agreement and the related financing documents | May 31, 2014 | INR | 1,98,00,00,000 | |||||||
9. |
BG Facility |
Azure Power
India Pvt. Ltd. |
Yes Bank
Ltd |
Non-fund based facility Agreement and the related financing documents | March 2, 2015 | INR | 50,00,00,000 | |||||||
10. |
BG Facility |
Azure Power
India Pvt. Ltd. |
Indusind
Bank |
Non-fund based facility Agreement and the related financing documents | April 6, 2015 | INR | 75,00,00,000 | |||||||
11. |
Chhattisgarh
30 MW |
Azure Power
India Pvt. Ltd. |
Yes Bank
Ltd |
Term Loan Agreement and the related financing documents | May 8, 2015 | INR | 1,60,10,00,000 | |||||||
12. |
10 MW Uttar
Pradesh |
Azure Surya
Pvt. Ltd. |
PTC India
Financial Services Ltd |
Term Loan and the related financing documents Agreement | September 19, 2014 | INR | 55,00,00,000 |
- 57 -
S. No |
Project/
Location |
Details of the
entity |
Lender |
Description of the agreement |
Date of Execution of Agreements |
Loan Amount | ||||||||
13. |
40 MW
Rajasthan |
Azure Clean
Energy Pvt. Ltd. |
IREDA,
IIFCL |
Common Loan Facility Agreement and the related financing documents | March 13, 2015 | INR | 2,05,00,00,000 | |||||||
IFC | Loan Agreement and the related financing documents | October 31, 2014 | ||||||||||||
IFC | 1 st Amendment to the Term Loan Agreement | Feb 11, 2015 | ||||||||||||
IFC | 2 nd Amendment to the Term Loan Agreement | March 10, 2015 | ||||||||||||
SECI | VGF Agreement | March 28, 2014 | ||||||||||||
14. |
20 MW
Rajasthan |
Azure
Sunshine Pvt. Ltd. |
IREDA | Term Loan Agreement and the related financing documents | September 23, 2014 | INR | 1,17,40,00,000 | |||||||
Central
Bank of India |
Term Loan Agreement and the related financing documents | October 30, 2014 | ||||||||||||
SECI | VGF Agreement | March 28, 2014 | ||||||||||||
15. |
40 MW
Rajasthan |
Azure Green
Tech Pvt. Ltd. |
IREDA | Term Loan Agreement and the related financing documents | September 23, 2014 | INR | 2,36,30,00,000 | |||||||
Central
Bank of India |
Term Loan Agreement and the related financing documents | October 30, 2014 | ||||||||||||
SECI | VGF Agreement | March 28, 2014 | ||||||||||||
16. |
Karnataka
10 MW |
Azure Power
Karnataka Pvt Ltd |
PTC
India Financial Services Ltd |
Term Loan Agreement and the related financing documents | November 3, 2014 | INR | 58,50,00,000 |
- 58 -
ANNEXURE 4 (A) [Section 3.01(u) (Material Contracts)]
DETAILS OF O & M AND EPC CONTRACTS BETWEEN
THE COMPANY AND ITS SUBSIDIARIES
Sl. No. |
Descriptions |
Amount (in INR) payable to the
Company on an annual basis |
Terms |
|||||
1. |
O &M Contract with Azure Power Haryana Private Limited dated 09-12-2011. | 1,05,00,000 | 5% to be increased every year | |||||
2. |
O&M Contract with Azure Power Punjab Private Limited dated 01-04-2013. | 22,00,000 | 5.72% to be increased every year | |||||
3. |
O&M Contract with Azure Power Rajasthan Private Limited dated 01-04-2013. | 55,00,000 | 5.72% to be increased every year | |||||
4. |
O&M Contract with Azure Solar Limited dated 01-04- 2013 | 3,84,00,000 | 5.72% to be increased every year | |||||
5. |
O&M Contract with Azure Sun Energy Private Limited dated 01-06-2013 | 26,15,000 | 5.72% to be increased every year | |||||
6. |
O&M Contract with Azure Urja Private Limited dated 01-06-2014 | 3,94,40,000 | 5.72% to be increased every year | |||||
7. |
O&M Contract with Azure Power Karnataka Private Limited dated 01-09-2014 | 1,16,00,000 | 5.72% to be increased every year | |||||
8. |
O&M Contract with Azure Surya Private Limited dated 01-06-2014 | 1,16,00,000 | 5.72% to be increased every year | |||||
9. |
O&M Contract with Azure Clean Energy Private Limited dated 01-09-2014 | 2,00,00,000 | 5% to be increased in every year | |||||
10. |
O&M Contract with Azure Green Tech Private Limited dated 01-09-2014 | 2,00,00,000 | 5% to be increased in every year | |||||
11. |
O&M Contract with Azure Sunshine Private Limited dated 01-09-2014 | 1,00,00,000 | 5% to be increased in every year |
- 59 -
Sl. No. |
Descriptions |
Amount (in INR) payable to the
Company on an annual basis |
Terms |
|||||
12. |
EPC Contracts with Azure Mars Private Limited dated 01-04-2015 | 35,90,00,000 | Not Applicable |
- 60 -
ANNEXURE 4 (B) [Section 3.01(u) (Material Contracts)]
DETAILS OF POWER PURCHASE AGREEMENT BY
THE COMPANY AND ITS SUBSIDIARIES
Sr. No. |
Plant |
Capacity (MW) |
Offtaker |
Tariff (Price in Rs.
|
PPA Date |
|||||
1. |
Punjab | 2 | NTPC Vidyut Vyapar Nigam (NVVN) | 17.91 | 15-Oct-10 | |||||
2. |
Gujarat | 10 | Gujarat Urja Vikas Nigam Limited (GUVNL) | 15.00 | 30-Apr-10 | |||||
3. |
Rajasthan | 5 | NTPC Vidyut Vyapar Nigam (NVVN) | 11.94 | 10-Jan-11 | |||||
4. |
Rajasthan | 15 | NTPC Vidyut Vyapar Nigam (NVVN) | 8.21 | 25-Jan-12 | |||||
5. |
Rajasthan | 20 | NTPC Vidyut Vyapar Nigam (NVVN) | 8.21 | 25-Jan-12 | |||||
6. |
Punjab -I | 15 | Punjab State Power Corporation Limited (PSPCL) | 7.67 | 27-Dec-13 | |||||
7. |
Punjab -II | 15 | Punjab State Power Corporation Limited (PSPCL) | 7.97 | 27-Dec-13 | |||||
8. |
Punjab - III | 4 | Punjab State Power Corporation Limited (PSPCL) | 8.28 | 27-Dec-13 | |||||
9. |
Uttar Pradesh | 10 | Uttar Pradesh Power Corporation Limited (UPPCL) | 8.99 | 27-Dec-13 |
- 61 -
Sr. No. |
Plant |
Capacity (MW) |
Offtaker |
Tariff (Price in Rs. /Kw) |
PPA Date |
|||||
10. | Karnataka I | 10 | Bangalore Electricity Supply Company ( BESCOM) | 7.47 | 18-Jan-14 | |||||
11. | Rajasthan | 100 | Solar Energy Corporation of India (SECI) | 5.45 +VGF Funding | 28-Mar-14 | |||||
12. | Karnataka II | 10 | Bangalore Electricity Supply Company ( BESCOM) | 6.66 | 27-Sep-14 | |||||
13. | Chhattisgarh - I | 10 | Chhattisgarh State Power Distribution Company Limited | 6.44 | 1-Aug-14 | |||||
14. | Chhattisgarh - II | 10 | Chhattisgarh State Power Distribution Company Limited | 6.45 | 15-Sep-14 | |||||
15. | Chhattisgarh - III | 10 | Chhattisgarh State Power Distribution Company Limited | 6.46 | 15-Sep-14 | |||||
16. | Karnataka III P-I | 50 | Chamundeshwari Electricity Supply Corporation Limited (CESC) | 6.89 | 2-Jan-15 | |||||
17. | Karnataka III P-II | 40 | Hubli Electricity Supply Company Limited (HESCOM) | 6.93 | 14-Jan-15 | |||||
18. | Karnataka III P-III | 40 | Gulbarga Electricity Supply Corporation (GESCOM) | 6.96 | 23-Jan-15 |
- 62 -
Sr. No. |
Plant |
Capacity (MW) |
Offtaker |
Tariff (Price in Rs. /
|
PPA Date |
|||||
19. | Bihar | 10 | North Bihar Power Distribution Company Limited and South Bihar Power Distribution Company Limited. | 8.39 | 17-Jan -15 | |||||
20. | Andhra Pradesh | 50 | Southern Power Distribution Company of Andhra Pradesh Limited |
5.89 with 3%
escalation i.e. (6.93) |
5-Dec-14 | |||||
21. | Rajasthan | 5 | Solar Energy Corporation of India (SECI) | 5.45 | 5-Feb-15 |
- 63 -
SCHEDULE 3
[FORM OF] UPDATED COMPANY DISCLOSURE SCHEDULE
[Letterhead of the Company]
[Date]
International Finance Corporation
|
||||||
|
||||||
|
Attention: [●]
Investment No.
Updated Company Disclosure Schedule
Ladies and Gentlemen:
We refer to a subscription agreement, dated [●], between Azure Power India Private Limited (the Company ), the Sponsors and International Finance Corporation ( Investor ) (the Subscription Agreement ) relating to the subscription by the Investor for certain securities in the Company (the Subscription ). Words and expressions defined in the Agreement have the same meaning when used in this Schedule, unless otherwise defined in this Schedule.
In connection with an upcoming the Investor Subscription, we are delivering this Updated Company Disclosure Schedule to you to update the [Original Company Disclosure Schedule][Current Company Disclosure Schedule(s)] previously delivered to the Investor, in order to modify or supplement, as of the date hereof, matters which have been disclosed therein.
The representations and warranties made in connection with the Subscription Agreement and the matters which have been previously disclosed in the [Original Company Disclosure Schedule][Current Company Disclosure Schedule(s)] are qualified by the facts and circumstances fully, fairly, specifically and accurately contained or disclosed in this Updated Company Disclosure Schedule as of the date hereof.
If the substance of this Updated Disclosure Schedule is acceptable to the Investor, please sign below to evidence your acknowledgement and acceptance, for purposes of [Section 4.01 (a)(ii)] of the Subscription Agreement.
DISCLOSURES
The following specific disclosures are made in relation to the representations and warranties contained in the Subscription Agreement. Each matter disclosed is listed against the sub-section number of the representation and warranty to which the disclosure relates but a disclosure applies to all of the representations and warranties only to the extent it is reasonably apparent on its face.
- 64 -
Representation/Warranty No. | Disclosure | |
[Section 3.01(d) ( Status of Authorizations )] | Section 1: [Authorizations already obtained] | |
Section 2: [Authorizations to be obtained prior to Investor Subscription] | ||
Section 3:[Other Authorizations] | ||
[Section 3.01(e) ( Charter )] | [List of Directors and Officers] | |
[Other Disclosures] | ||
[Section 3.01(f) ( Capital Structure of the Company )] | [ ] | |
[Section 3.01(g) ( No Immunity )] | [ ] | |
[Section 3.01(h) ( Financial Condition )] | [ ] | |
[Section 3.01(i) ( Financial Statements )] | [ ] | |
[Section 3.01(j) ( Taxes )] | [ ] | |
[Section 3.01(k) ( Litigation), etc. ] | [ ] | |
[Section 3.01(l) ( Compliance with Law )] | [ ] | |
[Section 3.01(m) ( Environmental Matters )] | [ ] | |
[Section 3.01(n) ( Sanctionable Practices )] | [ ] | |
[Section 3.01(o) ( Insurance )] | [List of Policies] | |
[List of Deductibles] | ||
[List of Retention Amounts] | ||
[Description of any Material Claims] | ||
[Section 3.01(p) ( Disclosure )] | [ ] | |
[Section 3.01(q) ( Subsidiaries )] | [ ] | |
[Section 3.01(r) ( UN Security Council Resolutions )] | [ ] | |
[Section 3.01(s) ( Criminal Offenses )] | [ ] | |
[Section 3.01(t) ( Restrictions on Business Activities )] | [ ] |
- 65 -
Representation/Warranty No. | Disclosure | |
[Section 3.01(u) ( Related Party Transactions )] | [ ] | |
[Section 3.01(v) ( Title to and Condition of Property )] | [ ] | |
[Section 3.01(w) ( Books and Records )] | [ ] | |
[Section 3.01(x) ( Material Contracts )] | [ ] | |
[Section 3.01(y) ( Labor Matters ] | [List of collective bargaining agreements and other labor union contracts] | |
[Other disclosures] | ||
[Section 3.01(z) ( Intellectual Property )] | [ ] |
Yours faithfully, | ||
By |
|
|
Authorized Representative | ||
By |
|
|
Authorized Representative |
Acknowledged and accepted by: | ||
INTERNATIONAL FINANCE CORPORATION | ||
By: |
|
|
Name: | ||
Title: | ||
Date: |
- 66 -
SCHEDULE 4
TERMS AND CONDITIONS OF SERIES H CCPS
All capitalized terms used herein but not defined shall have the meaning given to them under the Shareholders Agreement. Reference to a paragraph under this Schedule shall be a reference to the paragraph of this Schedule.
1. | Face Value |
The Series H CCPS shall have a face value of INR 10 (Rupees Ten).
2. | Dividend |
Each of the holders of Series H CCPS shall be entitled to receive a dividend of 8% (eight per cent) per annum on a cumulative basis calculated on the sum of the face value and premium paid on each such Series H CCPS. Subject to the Applicable Law, each holder of Series H CCPS shall be individually entitled, in addition and cumulative to the above, to participate in the distribution of the profits of the Company if made to the other shareholders (including the holders of Equity Shares and compulsorily convertible preference shares, but excluding Proparco CCPS) of the Company assuming that all Series H CCPS have been converted to Equity Shares at the Normal Conversion Factor set out below.
Pursuant to the above, it is clarified that the Company shall not declare, pay or set aside any dividends on Shares of any other class or kind of share capital (other than Proparco CCPS) unless the holders of the Series H CCPS first receive a dividend on each Series H CCPS equal to the sum of: (i) 8% (eight per cent) per annum on a cumulative basis calculated on the sum of the face value and premium paid; and (ii) the corresponding dividend that the holders of Series H CCPS would receive if the profits of the Company are distributed to the other Shareholders of the Company.
The dividend pay-out as set out under this paragraph 2 shall be payable in cash or in kind.
3. | Term |
Unless converted in accordance with the terms of this Schedule, the Charter of the Company and the Applicable Laws, the term of the Series H CCPS shall be a maximum of 20 (twenty) years from the date of their issuance.
4. | Voting |
4.1 | The holders of Series H CCPS shall be entitled to attend all meetings of Shareholders of the Company. Series H CCPS shall be entitled to vote on all matters which affect their rights directly or indirectly. The voting rights of each Series H CCPS on every resolution placed before the Company shall, to the extent permissible under applicable Law, be in proportion to the share capital that the Equity Shares that the Series H CCPS represent, assuming that the Series H CCPS have been converted into Equity Shares of the Company on the basis of the Normal Conversion Factor set out below. |
4.2 | From the date of conversion of the Series H CCPS into Equity Shares, the voting percentage of their holders in the Company shall be in proportion to their shareholding in the Company. |
- 67 -
5. | Conversion |
5.1 | The Series H CCPS shall be convertible into Equity Shares of the Company at any time at the option of the holders of the Series H CCPS in accordance with paragraph 5.2. Any Series H CCPS that have not been converted into the Equity Shares of the Company shall compulsorily convert into the Equity Shares of the Company in accordance with paragraph 5.3 below, upon the earlier of: |
(i) | immediately prior to the listing of the Equity Shares pursuant to the QIPO or IPO, as approved by the Shareholders of the Company; and |
(ii) | the date which is 20 (twenty) years from the date of the issuance of Series H CCPS (the Maturity Date ), |
in each case in accordance with the terms of the Agreement. It is clarified that the Series H CCPS shall convert on the listing of the Equity Shares pursuant to the QIPO or IPO as approved by the Shareholders, if all existing Equity Securities (including the CCDs, Series A CCPS, Series B CCPS, Series C CCPS, Series D CCPS, Series F CCPS and Proparco CCPS) convert on or before the date of conversion of the Series H CCPS.
5.2 | Optional Conversion |
(i) | The holders of the Series H CCPS shall severally have the right, at any time and from time to time at their sole option, after their issuance, to require the Company, by written notice (the Conversion Notice ), to convert their respective Series H CCPS into Equity Shares of the Company. A copy of the Conversion Notice shall also be sent to the Sponsors, Proparco, Helion, FC, DEG and IFC, who are the other Shareholders of the Company. |
(ii) | In case the conversion occurs prior to the expiry of the Maturity Date, then the conversion shall be completed within a period of 21 (twenty one) days from the date of the Conversion Notice. |
(iii) | Normal Conversion Factor : The Series H CCPS will be convertible into the Equity Shares of the Company at a conversion ratio of 1:1 (i.e. 1 (one) Series H CCPS will convert into 1 (one) Equity Share), without being required to pay any amount for such conversion, and shall be adjusted for: |
(a) | dividends declared and not paid in accordance with paragraph 2 above; |
(b) | share splits, recapitalization or similar events; |
(c) | the anti-dilution provision as set out in paragraph 9 below; |
(d) | with respect to the CCDs and/or Proparco CCPS that are converted into Equity Shares on or before the conversion of Series H CCPS, the holders of Series H CCPS shall be entitled to an anti-dilution protection such that the conversion ratio of the Series H CCPS is adjusted upwards to ensure that percentage holding of the holders of Series H CCPS after conversion of such CCDs and/or Proparco CCPS shall be same as the percentage holding of the holders of Series H CCPS before the conversion of such CCDs and/or Proparco CCPS determined on a Fully Diluted Basis. |
- 68 -
The Normal Conversion Factor is specified based on the assumption that all the existing Equity Securities (including the CCDs, Series A CCPS, Series B CCPS, Series C CCPS, Series D CCPS, Series F CCPS and the Proparco CCPS) have converted on or before the date of conversion of the Series H CCPS.
(iv) | The Conversion Notice shall be dated and shall set forth: |
(a) | The number of Series H CCPS in respect of which the holders of the Series H CCPS are exercising their right to conversion in accordance with this paragraph 5.2; and |
(b) | The number of Equity Shares of the Company that the Series H CCPS shall convert into. |
(v) | Upon receipt of the Conversion Notice, the Company shall and the Sponsors shall ensure that the Company shall effect the relevant board and shareholders meeting and undertake all such acts and deeds as may be necessary to give effect to the provision of this paragraph 5. |
(vi) | Upon receipt of the Conversion Notice, the Company shall effect the following: |
(a) | Convening of a meeting of the board of directors, in which meeting the Company shall approve the following: |
(A) | the conversion of the relevant Series H CCPS; |
(B) | the cancellation of the share certificates representing such number of the Series H CCPS; and |
(C) | the issuance and allotment of such number of Equity Shares of the Company that the Series H CCPS shall convert into, |
in each case, as are mentioned in the Conversion Notice;
(b) | Issuance of duly stamped share certificates to the holders of the Series H CCPS to evidence such holders of the Series H CCPS as the owners of the shares issued upon conversion of their respective Series H CCPS as are mentioned in the Conversion Notice; |
(c) | Updating its register of members to reflect the holders of the Series H CCPS as the owners of the shares issued pursuant to the conversion of the relevant Series H CCPS as mentioned in the Conversion Notice; |
(d) | Filing with the jurisdictional Registrar of Companies of prescribed forms in respect of allotment of the shares to the holders of the Series H CCPS pursuant to such holders of the Series H CCPS exercising their rights in accordance with paragraph 5 and shall provide the holders of the Series H CCPS with certified true copies of prescribed forms duly filed with the jurisdictional Registrar of Companies along with the receipt in respect of such forms; and |
(e) | The Company and the Sponsors shall do all such acts and deeds as may be necessary to give effect to the provisions of this paragraph 5. |
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5.3 | Automatic Conversion |
(i) | The Company shall forthwith convert all the Series H CCPS into Equity Shares, based on the applicable conversion rate as determined in accordance with this paragraph 5.3, if at any time after their issuance, the Company undertakes an IPO/QIPO, provided that the shareholders of the Company have consented to such IPO/QIPO in accordance with the Shareholders Agreement. The Series H CCPS shall convert into Equity Shares of the Company immediately prior to the listing of Equity Shares pursuant to the IPO/QIPO, provided that all the existing Equity Securities (including the CCDs, Series A CCPS, Series B CCPS, Series C CCPS, Series D CCPS, Series F CCPS and Proparco Securities) are converted on or before the date of conversion of the Series H CCPS |
For the purpose of this Schedule, QIPO means an initial public offering of the Company, which satisfies the following conditions: (i) the initial public offering results in the listing of the Equity Shares on the stock exchange acceptable to the Investor; (ii) the gross proceeds from the issuance of new Equity Shares in such initial public offering is not less than USD 100,000,000 (United States Dollars One Hundred Million); and (iii) the offering price of the Equity Share is based on the pre-money valuation of the Company of at least USD 450,000,000 (United States Dollars Four Hundred and Fifty Million).
(ii) | In the event an IPO/QIPO occurs subsequent to the expiry of the first anniversary of the Subscription Date and prior to the second anniversary of the Subscription Date, the applicable conversion rate for the conversion of the Series H CCPS shall be such that provides the holders of Series H CCPS such number of Equity Shares that is the greater of: (a) the number of Equity Shares which provide holders of Series H CCPS a return of 25% per annum on a cumulative basis on the Subscription Price from the Subscription Date till the actual date of conversion of Series H CCPS; the calculation of return shall include any dividend paid before the date of conversion to the holders of Series H CCPS; the valuation of Equity Shares in order to calculate a return of 25% per annum on a cumulative basis shall be based on the price at which Equity Shares are allotted to investors in the IPO/QIPO; or (b) the number of Equity Shares received based on the Normal Conversion Rate. |
(iii) | In the event an IPO/QIPO occurs subsequent to the expiry of the second anniversary of the Subscription Date, the applicable conversion rate for the conversion of the Series H CCPS shall be such that provides the holders of Series H CCPS such number of Equity Shares that is the greater of: (a) the number of Equity Shares which provide holders of the Series H CCPS a return of 25% per annum on a cumulative basis on the Subscription Price for the period starting from the Subscription Date till the second anniversary of the Subscription Date and a return of 18% per annum on a cumulative basis on the Subscription Price after the second anniversary of the Subscription Date till the date of conversion. The calculation of return shall include any dividend paid before the date of conversion, and the valuation of Equity Shares to calculate the return to the holders of Series H CCPS shall be based on the price at which Equity Shares are allotted to investors in the IPO/QIPO; or (b) the number of Equity Shares received based on the Normal Conversion Rate. |
6. | If an IPO/QIPO occurs before the first anniversary of the Subscription Date, the applicable conversion rate for the conversion of the Series H CCPS shall be the Normal Conversion Rate. |
6A. | In the event that: |
(a) | the Company initiates the procedure for IPO/QIPO which has necessitated the conversion of the Series H CCPS into the Equity Shares of the Company; and |
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(b) | within the Listing Date, the IPO/QIPO does not complete such that the entire issued, paid up and subscribed share capital is not admitted to trading on a Relevant Market by the expiry of the Listing Date, |
then the Company and the Sponsors shall comply with the relevant provisions of the Shareholders Agreement and shall undertake all necessary actions to ensure that the holders of the Series H CCPS are placed in the same position, and possess the same rights as set forth in this Schedule, as they had the benefit of, immediately prior to the occurrence of the event set forth in (a) above.
7. | Liquidation Preference |
7.1 | Liquidation Event A in the Company |
(a) | Subject to paragraph 7.2 below, on occurrence of a Liquidation Event A in the Company, the holders of the IFC CCDs, IFC II CCDs, IFC III CCDs, DEG CCDs and Proparco CCPS will be entitled to receive in preference to the holders of any other Equity Securities, proceeds representing an amount equal to the IFC CCD Liquidation Price, IFC II CCD Liquidation Price, IFC III CCD Liquidation Price, DEG CCD Liquidation Price and Proparco CCPS Liquidation Price, respectively, pro rata the amounts due to them in this paragraph 7.1(a). |
(b) | Subject to paragraph 7.1 (a) above and paragraph 7.2 below, on occurrence of a Liquidation Event A in the Company, the holders of Series H CCPS will be entitled receive in preference to the holders of the Series F CCPS, Series B CCPS, Series C CCPS, Series D CCPS, Series A CCPS and other Equity Securities issued by the Company (other than the IFC CCDs, IFC II CCDs, IFC III CCDs, DEG CCDs and Proparco CCPS), for each of the Series H CCPS held by them, an amount equal to: |
the amount equal to the total Subscription Price paid by the holders of the Series H CCPS plus an amount that provides a return of 8% (eight percent) IRR on the issue price paid by the holders of Series H CCPS to the Company for subscription of the Series H CCPS ( Series H Liquidation Price ), pro rata the amounts due to them under this paragraph 7.1 (b).
(c) | Subject to paragraph 7.1 (a), paragraph 7.1 (b) above and paragraph 7.2 below, on occurrence of a Liquidation Event A in the Company, the holders of the Series F CCPS will be entitled to receive in preference to the holders of the Series B CCPS, Series C CCPS, Series D CCPS, Series A CCPS and other Equity Securities issued by the Company (other than the IFC CCDs, IFC II CCDs, IFC III CCDs, DEG CCDs, Proparco CCPS and Series H CCPS), for each of the Series F CCPS held by them, an amount equal to: |
1.5 x (one decimal five times) the price paid by the holders of Series F CCPS to the Company for subscription of the Series F CCPS plus any accrued but unpaid dividends (the Series F Liquidation Price ), pro rata the amounts due to them in this paragraph 7.1(c).
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Notwithstanding anything to the contrary contained herein, the rights of the holders of the Series F CCPS shall be subordinate to the rights of the holders of the CCDs, Proparco CCPS and Series H CCPS in relation to the Liquidation Preferences of the Company.
(d) | Subject to paragraph 7.1 (a), paragraph 7.1 (b), paragraph 7.1 (c) above and paragraph 7.2 below, on occurrence of a Liquidation Event A in the Company, the holders of the Series B CCPS, Series C CCPS and Series D CCPS will be entitled to receive in preference to the holders of Series A CCPS and other Equity Securities issued by the Company (other than the IFC CCDs, IFC II CCDs, IFC III CCDs, DEG CCDs, Proparco CCPS, Series H CCPS and Series F CCPS), for each of the Series B CCPS, Series C CCPS and Series D CCPS held by them, an amount equal to: |
2 x (two times) the price paid by each of IFC, Helion and FC to the Company for subscription of the respective Series B CCPS, Series C CCPS and Series D CCPS plus any accrued but unpaid dividends (the Series B Liquidation Price , Series C Liquidation Price and Series D Liquidation Price , as the case may be; and collectively, the CCPS Liquidation Price ), pro rata the amounts due to them in this paragraph 7.1 (d).
Notwithstanding anything to the contrary contained herein, the rights of the holders of the Series B CCPS, Series C CCPS and Series D CCPS shall be subordinate to the rights of the holders of the CCDs, Proparco CCPS, Series H CCPS and Series F CCPS in relation to the Liquidation Preferences of the Company.
(e) | After the payment to the holders of the CCDs and Proparco CCPS in accordance with paragraph 7.1 (a) above, the holders of Series H CCPS in accordance with Clause paragraph 7.1 (b) above, the holders of the Series F CCPS in accordance with paragraph 7.1(c) above and the holders of the Series B CCPS, Series C CCPS and Series D CCPS in accordance with paragraph 7.1 (d) above, on occurrence of a Liquidation Event A in the Company and subject to paragraph 7.1.2 below, the holders of the Series A CCPS will be entitled to receive in preference to the holders of Equity Securities (other than the holders of the CCDs, Proparco CCPS, Series H CCPS, Series F CCPS, Series B CCPS, Series C CCPS and Series D CCPS) an amount equal to, for each Series A CCPS held by Helion and FC, 2 x (two times) the price paid by Helion and FC to the Company for subscription of the Series A CCPS plus any accrued but unpaid dividends ( Series A Liquidation Price ), pro rata the amounts due to them in this paragraph 7.1 (e). |
7.2 | Other conditions |
(a) | Liquidation Preferences in paragraph 7.1 above will be subject to applicable Law, including, if applicable, the rights of workmen and secured creditors under applicable Law. |
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(b) | To the extent that proceeds available for distribution on a Liquidation Event A in the Company are inadequate to pay the Applicable Liquidation Price in full in accordance with paragraph 7.1 above, the total amount received and/or realised on such a Liquidation Event A, shall be used in same priority, first: to pay the Senior Liquidation Price to the holders of CCDs and Proparco CCPS ( pro rata the amounts due to them in paragraph 7.1 (a)), then second: to pay the Series H Liquidation Price to the holders of Series H CCPS ( pro rata the amounts due to them in paragraph 7.1 (b)), then third: to pay the Series F Liquidation Price to the holders of the Series F CCPS ( pro rata the amounts due to them in paragraph 7.1 (c)), then fourth: to pay the CCPS Liquidation Price to the holders of the Series B CCPS, Series C CCPS and Series D CCPS, respectively, ( pro rata the amounts due to them in paragraph 7.1 (d)), and fifth: to pay the Series A Liquidation Price to the holders of Series A CCPS ( pro rata the amounts due to them in paragraph 7.1 (e)). For the avoidance of doubt, it is hereby clarified that Equity Shares of the Company held by the Investors pursuant to the conversion of the Share Equivalents held by them shall be treated at par with the remaining Equity Shares of the Company for the purposes of this paragraph 7.2 (b) and such Equity Shares shall not be entitled to Liquidation Preference in paragraph 7.1; save and except where the Share Equivalents are converted into Equity Shares of the Company on or immediately prior to and only in connection with the Investors exercising their right upon the occurrence of a Liquidation Event A, in which case, notwithstanding anything to the contrary contained herein, the Equity Shares issued to the holder of the Share Equivalents will be entitled to priority in terms of payment in the like manner as the respective Share Equivalents which were converted into such Equity Shares, as set out in paragraph 7.1 and this paragraph 7.2(b). |
It is clarified that the Proparco CCPS shall have priority and preference over the Series A CCPS, Series B CCPS, Series C CCPS, Series D CCPS, Series F CCPS, Series H CCPS and Equity Shares issued by the Company, and the proceeds shall not be distributed to Series A CCPS, Series B CCPS, Series C CCPS, Series D CCPS, Series F CCPS, Series H CCPS and Equity Shares unless Proparco CCPS has received its applicable Senior Liquidation Price.
(c) | Subject to paragraph 7.2 (d) and (e) below: |
(i) | to the extent there are additional proceeds available for distribution after payment of the Applicable Liquidation Price to the holders of CCDs, Proparco CCPS, and then Series H CCPS and then Series F CCPS and then the Series B CCPS, Series C CCPS and Series D CCPS and then Series A CCPS, the holders of Equity Shares will share pro rata in the distribution of such remaining proceeds; and |
(ii) | upon payment of the Applicable Liquidation Price as stated in paragraph 7.1 above, the holders of CCDs, Proparco CCPS, Series H CCPS, Series B CCPS, Series C CCPS, Series D CCPS and Series A CCPS shall not be entitled to participate or claim a share in such additional proceeds available for distribution. |
(d) |
In case, (i) at least one of the Series A CCPS, Series B CCPS, Series C CCPS or Series D CCPS are converted into Equity Shares of the Company (other than for receiving respective Applicable Liquidation Price in the manner provided in paragraph 7.1 (d) |
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and paragraph 7.1 (e) above, as applicable); and (ii) there are additional proceeds available for distribution after payment of the Applicable Liquidation Price to the holders of CCDs, Proparco CCPS, thereafter the Series H CCPS, thereafter the Series F CCPS, thereafter Series B CCPS, Series C CCPS and Series D CCPS and thereafter, Series A CCPS, then the holders of Series F CCPS and the holders of Equity Shares will share pro rata in the distribution of remaining proceeds. Notwithstanding the above, the holders of Series F CCPS shall not be entitled to more than half the price paid by each of their original holders to the Company for subscription of the Series F CCPS ( Series F Participation ) under this paragraph 7.2(d). For the purpose of clarification in relation to this paragraph, upon payment of the Applicable Liquidation Price as stated in Clause paragraph 7.1, the holders of CCDs, Proparco CCPS, Series H CCPS, Series B CCPS, Series C CCPS, Series D CCPS and Series A CCPS shall not be entitled to participate or claim a share in such additional proceeds available for distribution. It is further clarified that in relation to this paragraph, the holders of Series F CCPS shall, in no event, be entitled to receive an amount in excess of the Series F Liquidation Price as stated in paragraph 7.1 plus the Series F Participation. |
(e) | Upon occurrence of a Liquidation Event A in the Company: |
(i) | if all or some of the Series B CCPS or Series D CCPS are converted into Equity Shares of the Company (other than for receiving their respective Applicable Liquidation Price in the manner provided in paragraph 7.1 (d) above) on or immediately prior to the occurrence of a Liquidation Event A, they shall have a right to participate pro rata to their shareholding on an As If Converted Basis in the proceeds available pursuant to the occurrence of Liquidation Event A; and |
(ii) | if the holders of Series F CCPS have not converted their respective Series F CCPS into Equity Shares (or have converted their respective Series F CCPS into Equity Shares for receiving their respective Applicable Liquidation Price in the manner provided in paragraph 7.1 (c) above) and have exercised their right to the Series F Participation, pursuant to exercise of which, amounts to be received by IFC (with respect to Series B CCPS and Series D CCPS held by it that have been converted into Equity Shares, other than for receiving their respective Applicable Liquidation Price in the manner provided in paragraph 7.1(d) above) from the proceeds of the Liquidation Event A is less than the amounts IFC would have otherwise received (with respect to Series B CCPS and Series D CCPS held by it that have been converted into Equity Shares other than for receiving their respective Applicable Liquidation Price in the manner provided in paragraph 7.1 (d) above) if the holders of Series F CCPS had not exercised the right of Series F Participation (the difference of such amount hereinafter referred to as the Liquidation Differential Amount ), |
then, the Sponsors shall through a suitable mechanism (as agreed upon with IFC) ensure that IFC receives the Liquidation Differential Amount simultaneously with the amounts received by the holders of Series F CCPS pursuant to the Series F Participation. It is clarified that:
(i) | the failure of the Sponsors to ensure that the Liquidation Differential Amount is received by IFC (simultaneously with the amounts received by the holders of Series F CCPS pursuant to Series F Participation) shall not affect the right of the holders of Series F CCPS to receive amounts pursuant to the Series F Participation; and |
(ii) | unless the Sponsors ensure that the Liquidation Differential Amount is received by IFC simultaneously with the amounts received by the holders of Series F CCPS pursuant to the Series F Participation, the Sponsors shall not receive any amounts from the proceeds upon occurrence of Liquidation Event A. |
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The Sponsors and the Company agree and undertake that they shall honour the Liquidation Preference of first, the holders of CCDs and Proparco CCPS, then second, the holders of the Series H CCPS, then third, the holders of the Series F CCPS, then fourth, the holders of the Series B CCPS, Series C CCPS and Series D CCPS and finally, the holders of Series A CCPS in distributing the proceeds of a Liquidation Event A in any manner legally permissible, including without limitation, re-distribution of proceeds that may be received by the Sponsors on a Liquidation Event A, to the Investors.
7.3 | Liquidation Event B in the Company |
The Parties agree that no Liquidation Event B can be completed by the Company unless such transaction has been approved in accordance with Clause 11.8 of the Shareholders Agreement. If on the occurrence of a Liquidation Event B in relation to the Company, every Investor issues a notice to the Company and the Sponsors, within 30 (thirty) days of any of them coming to be aware of such Liquidation Event B in respect of the Company, asking for the liquidation for the Company and its Subsidiaries, the Parties agree that the Company and its Subsidiaries shall be wound up and the proceeds so realised shall be distributed in order of the preference set out in paragraph 7.1 above and will be subject to the terms of paragraph 7.2. The Parties agree to take all such steps as may be required to ensure compliance of the terms of this paragraph 7.
7.4 | Liquidation Event A or Liquidation Event B of a Subsidiary |
The Parties agree that no Liquidation Event B can be completed by a Subsidiary unless such transaction has been approved in accordance with Clause 11.8 of the Shareholders Agreement.
Subject to applicable Law, including if applicable, the right of workmen and secured creditors under applicable Law and paragraph 7.5, on the occurrence of a Liquidation Event A or a Liquidation Event B in respect of a Subsidiary of the Company, the Parties agree that all proceeds received / available for distribution in respect of such Subsidiary (in case of Azure Power Punjab Private Limited, after payment of proceeds by Azure Power Punjab Private Limited to OPIC in repayment of any loan that may have been taken from OPIC by Azure Power Punjab Private Limited) shall be immediately paid to the Company, along with the other shareholders of such Subsidiary, and the amounts paid to the Company shall not be less than its pro rata share based on its shareholding percentage in such Subsidiary.
7.5 | Liquidation Event A or Liquidation Event B of a Key Subsidiary or Key Subsidiaries |
In the event of a Liquidation Event A of a Key Subsidiary or Key Subsidiaries, the Parties agree that the Company and all the Subsidiaries of the Company will be wound up, and the proceeds of such winding up will be distributed amongst the Shareholders in the manner set out in paragraph 7.1 and will be subject to the terms of paragraph 7.2.
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The Parties further agree that if on the occurrence of the Liquidation Event B in relation to the Key Subsidiary or Key Subsidiaries, every Investor issues a notice to the Company and the Sponsors within 30 (thirty) days of any of them coming to be aware of such Liquidation Event B in respect of the Key Subsidiaries or Key Subsidiaries, asking for the liquidation for the Company and its Subsidiaries, the Company and its Subsidiaries shall be wound up and the proceeds so realised shall be distributed in order of the preference set out in paragraph 7.1 above and will be subject to the terms of paragraph 7.2. The Parties agree to take all such steps as may be required to ensure compliance of the terms of this paragraph 7.
8. | Transferability |
Subject to the terms of this Agreement, the Series H CCPS shall be freely transferable to any Person, and the holders of the Series H CCPS may assign all or any of the Series H CCPS and any rights attaching under the Agreement, without the prior consent of any Person.
9. | Anti-Dilution Protection |
If the Company issues or proposes to issue Equity Securities ( New Issuance ) to any person at an effective issue price that is less than the subscription price of the Series H CCPS (as adjusted for share splits or similar reorganization of the share capital of the Company), other than the issue of Equity Shares on the conversion of the Equity Securities existing as on the date of subscription of Series H CCPS, then the holders of Series H CCPS shall be entitled to an adjustment to the Normal Conversion Factor based on broad-based weighted average method such that the holders of Series H CCPS receive a higher number of Equity Shares to compensate for the higher subscription price paid for the subscription of Series H CCPS by its holders than the effective issue price of Equity Securities in the New Issuance.
10. | Calculation in USD |
The amount that the holders of Series H CCPS are entitled pursuant to the provisions relating to dividends and Liquidation Event A or Liquidation Event B shall be calculated in US$ based on the amounts invested by the holders of Series H CCPS in US$ terms. However, the payment to the holders of Series H CCPS shall be made in INR by applying the Reserve Bank of India reference rate for US$-INR conversion as on the date of payment by the Company to the holders of Series H CCPS.
The calculation of the entitled return on the conversion of Series H CCPS shall also be calculated in US$ terms based on the amounts invested by the holders of Series H CCPS in US$ terms. Further, the subscription price and adjustment to Normal Conversion Factor for the purpose of anti-dilution provision shall be calculated in US$ based on the amount invested by holders of Series H CCPS in US$.
For the purposes of the above, the amount invested by the holders of Series H CCPS in US$ terms shall be the US$ paid by the holders as mentioned in the foreign inward remittance certificates as the US$ amount converted into INR for the purposes of foreign direct investment by the holders in the Company.
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SCHEDULE 5
LIST OF PERMITTED MATTERS
The following disbursements under the existing loan facility arrangements entered into by the Company and/or its Subsidiaries may be applied/received without requiring approval from the Investor pursuant to Clause 2.02(b) of this Agreement.
Company name |
Date of
Agreement |
Lender |
Total of Loan
(amount in INR crores) |
Remaining Disbursement
(amount in INR crores) |
||||||||||
Azure Sunshine Pvt. Ltd |
23-Sep-14 | IREDA | 53.41 | 2.67 | ||||||||||
30-0ct-14 | CBI | 63.94 | 3.20 | |||||||||||
Azure Green Tech Pvt. Ltd |
23-Sep-14 | IREDA | 105.68 | 5.28 | ||||||||||
30-0ct-14 | CBI | 130.63 | 6.53 | |||||||||||
Azure Clean Energy Pvt. Ltd |
13-Mar-15 | IREDA | 87.49 | 4.37 | ||||||||||
31-Oct-14 | IFC | 86.10 | 8.61 | |||||||||||
13-Mar-15 | IIFCL | 31.40 | 1.57 | |||||||||||
Azure Power India Pvt. Ltd. |
8-May-15 | Yes Bank | 160.10 | 10.01 | ||||||||||
Azure Sunlight Pvt. Ltd |
Yet to be Signed | OPIC | Approx. 128 | Approx. 128 | ||||||||||
Azure Mars Pvt. Ltd. |
Yet to be Signed |
Reliance Capital
Bridge Loan |
25 | 25 | ||||||||||
Azure Solar Solution Pvt Ltd |
25-03-2014 |
Central Bank of
India |
31.45 | 19.45 |
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SCHEDULE 6
LIST OF RELATED AGREEMENTS
All capitalized terms used herein but not defined shall have the meaning given to them under the Agreement.
1. | Shareholders Agreement between APGL, Investor, Co-Investor, Helion Venture Partners II, LLC, Helion Venture Partners India II, LLC, DEG Deutsche Investitions -und Entwicklungsgesellschaft mbH, FC VI India Venture (Mauritius) Ltd., Société DE Promotion ET DE Participation Pour LA Coopération Économique and other shareholders of APGL in relation to the affairs and their respective rights and obligations in relation their investments in APGL; |
2. | Co-Investor Subscription Agreement; |
3. | Registration Rights Agreement; |
4. | Shareholders Agreement; |
5. | Sponsor lock-in agreement between, inter alia , the Co-Investor, IW and IW Green Inc, with respect to the lock-in and distribution of proceeds from the sale of equity shares held by IW Green Inc. in APGL; |
6. | All securities purchase agreements and securities subscription agreements entered into by: (a) Helion Venture Partners II, LLC; (b) Helion Venture Partners India II, LLC; (c) Investor; (d) DEG Deutsche Investitions und Entwicklungsgesellschaft mbH; (e) FC VI India Venture (Mauritius) Ltd.; and (f) Société DE Promotion ET DE Participation Pour LA Coopération Économique, pursuant to the Externalization Process; |
7. | Any other document executed pursuant to and/or to give effect to the understanding set out in the above mentioned agreements; and any amendments or modifications to the above mentioned agreements. |
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SCHEDULE 7
FORM OF CERTIFICATE OF INCUMBENCY AND AUTHORITY
[Letterhead of the Company/Sponsor]
[Date]
International Finance Corporation
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Attention: [●]
Investment No.
Certificate of Incumbency and Authority
Reference is made to the Subscription Agreement, dated [●], between the Investor, the Company and the Sponsors (the Subscription Agreement ). Unless otherwise defined herein, capitalized terms used herein shall have the meaning set forth in the Subscription Agreement.
I, the undersigned [Chairman/Director] of (the [ Company ]/[ Sponsor ]), duly authorized to do so, hereby certify that the following are the names, offices and true specimen signatures of the individuals [each]/[any two] of whom are, and will continue to be, authorized:
(a) to sign on behalf of the Company the requests for the subscription for shares of the Company provided for in Section 2.01 ( Subscription ) of the Subscription Agreement;
(b) to sign the certifications required under Section [4.01 ( Conditions of Investor Subscription )] of the Subscription Agreement; and
(c) to take any other action required or permitted to be taken, done, signed or executed under the Subscription Agreement or any other agreement to which the Investor and the [Company]/[Sponsor] may be parties.
*Name | Office | Specimen Signature | ||||
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You may assume that any such individual continues to be so authorized until you receive written notice from an Authorized Representative of the [Company]/[Sponsor] that they, or any of them, is no longer so authorized.
* | Designations may be changed by the Company/Sponsor at any time by issuing a new Certificate of Incumbency and Authority authorized by the board of directors of the Company/Sponsor where applicable. |
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Yours faithfully,
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By |
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Name: | ||
Title: | [Chairman/Director] |
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Exhibit 10.15
CCPS SUBSCRIPTION AGREEMENT
Among
AZURE POWER GLOBAL LIMITED
And
SPONSORS
And
SOCIETE DE PROMOTION ET DE PARTICIPATION POUR LA COOPERATION
ECONOMIQUE S.A.
Dated: 22 July, 2015
TABLE OF CONTENTS
ARTICLE I DEFINITIONS AND INTERPRETATION |
2 | |||
Section 1.01. Definitions |
2 | |||
Section 1.02. Interpretation |
11 | |||
Section 1.03. Third Party Rights |
11 | |||
ARTICLE II AGREEMENT FOR SUBSCRIPTION |
11 | |||
Section 2.01. Subscription |
11 | |||
Section 2.02. Cancellation of Proparco Subscription |
13 | |||
Section 2.03. Use of Proceeds |
14 | |||
Section 2.04. Payments |
14 | |||
ARTICLE III REPRESENTATIONS AND WARRANTIES |
14 | |||
Section 3.01. Representations and Warranties |
14 | |||
Section 3.02. Proparco Reliance |
22 | |||
Section 3.03. Survival of Representations and Warranties |
23 | |||
Section 3.04. Undertaking by the Sponsors |
23 | |||
Section 3.05. Indemnity |
24 | |||
ARTICLE IV CONDITIONS OF THE PROPARCO SUBSCRIPTION |
25 | |||
Section 4.01. Conditions of the Proparco Subscription |
25 | |||
ARTICLE V MISCELLANEOUS |
27 | |||
Section 5.01. Notices |
27 | |||
Section 5.02. Saving of Rights |
28 | |||
Section 5.03. English Language |
28 | |||
Section 5.04. Applicable Law and Arbitration |
28 | |||
Section 5.05. Immunity |
29 | |||
Section 5.06. Successors and Assigns |
29 | |||
Section 5.07. Amendments, Waivers and Consents |
29 | |||
Section 5.08. Counterparts |
29 | |||
Section 5.09. Expenses |
29 | |||
Section 5.10. Entire Agreement |
30 | |||
Section 5.11. Disclosures |
30 | |||
Section 5.12. Invalid Provisions |
30 | |||
SCHEDULE 1 FORM OF SUBSCRIPTION NOTICE |
34 | |||
SCHEDULE 2 ORIGINAL COMPANY DISCLOSURE SCHEDULE |
36 | |||
SCHEDULE 3 FORM OF CERTIFICATE OF INCUMBENCY AND AUTHORITY |
62 | |||
SCHEDULE 4 TERMS OF THE SERIES G CCPS |
64 | |||
SCHEDULE 5 ENVIRONMENTAL AND SOCIAL ACTION PLAN |
70 | |||
SCHEDULE 6 FORM OF LETTER TO COMPANYS AUDITORS |
71 | |||
SCHEDULE 7 LIST OF RELATED AGREEMENTS |
72 | |||
SCHEDULE 8 PROPARCO POLICY COVENANTS |
73 | |||
SCHEDULE 9 REPORTING IMPACT INDICATORS |
80 |
i
CCPS SUBSCRIPTION AGREEMENT
This CCPS SUBSCRIPTION AGREEMENT (the Agreement ), dated 22 July, 2015 between:
(1) AZURE POWER GLOBAL LIMITED , a company incorporated under the laws of Mauritius and having its registered office at c/o AAA Global Services Ltd, 1st Floor, The Exchange, 18 Cybercity, Ebene, Mauritius (the Company );
(2) MR. INDERPREET SINGH WADHWA , son of Mr. Harkanwal Singh Wadhwa, residing at [Address] (hereinafter referred to as IW , which expression shall include his successors and legal heirs);
(3) MR. HARKANWAL SINGH WADHWA , son of Late Mr. Manohar Singh Wadhwa, residing at [Address] (hereinafter referred to as HW , which expression shall include his successors and legal heirs);
(4) IW GREEN INC. , a company established under the laws of the United States of America, having its principal office at 341 Raven Circle in the City of Wyoming, 19934, in the County of Kent, State of Delaware, USA ( Sponsor Entity ); and
(5) SOCIÉTÉ DE PROMOTION ET DE PARTICIPATION POUR LA COOPÉRATION ECONOMIQUE S.A. , a société anonyme having a share capital of Euros 693.079.200 registered with the RCS of Paris under the number 310 792 205, which registered office is at 151 rue Saint Honoré, 75001- PARIS ( Proparco ).
(IW, HW and the Sponsor Entity shall collectively be referred to as the Sponsors and individually as the Sponsor ).
(The Company, the Sponsors and Proparco shall be collectively referred to as the Parties and individually as the Party ).
RECITALS
(A) | The Company has been incorporated with the object of holding the entire share capital of Azure Power India Private Limited ( AZI ), a company incorporated under the laws of India and having its registered office at 8, LSC, Madangir, Pushpvihar, New Delhi 110062, India and engaged in the business of development and operation of solar power plants in India and generation of solar electricity therefrom. |
(B) | Proparco has agreed to subscribe to the Proparco CCPS (defined hereinafter) on the terms and conditions set forth in this Agreement and under the Shareholders Agreement. |
(C) | The Parties are desirous of reducing to writing the terms and conditions of Proparcos subscription of the Series G CCPS in this Agreement. |
ARTICLE I
DEFINITIONS AND INTERPRETATION
Section 1.01. Definitions .
Wherever used in this Agreement, the following terms have the following meanings:
Accounting Standards in relation to the Company, means the generally accepted accounting principles promulgated by the Financial Accounting Board of the United States, as amended from time to time, and applied on a consistent basis; and in relation to AZI and its Subsidiaries, means the Indian
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generally accepted accounting principles promulgated by Institute of Chartered Accountants of India, together with its pronouncements from time to time, and applied on consistent basis;
Affiliate means with respect to any Person, any Person directly or indirectly Controlling, Controlled by or under common Control with, that Person;
Anti-Competitive Practice refers to:
(i) | any common or implied action having as object and/or as effect to impede, restrict or distort fair competition in a market, in particular when it tends to: (1) restrict market access or the free exercise of competition by other companies; (2) prevent price fixing by the free play of markets by artificially favouring the increase or reduction of prices; (3) limit or control production, markets, investments or technical progress or, (4) share out markets or sources of supply; |
(ii) | any abuse by a company or a group of companies of a dominant position within an internal market or in a substantial part of it; |
(iii) | any bid or predatory pricing having as object and/or as effect to eliminate from a market or to prevent a company or one of its product from accessing a market; |
Applicable Law means all applicable statutes, laws, ordinances, rules and regulations, including but not limited to, any license, permit or other governmental Authorization, in each case as in effect from time to time;
APGL Sharing Agreement means the agreement entered into between IFC, GIF, Proparco, DEG, Helion and FC with respect to distribution of proceeds received by them upon the occurrence of events set out in clause 4 of the Shareholders Agreement;
Associated Facilities means the facilities (i) which are not funded as part of the project; (ii) which would not have been constructed or expanded if the project did not exist; and (iii) without which the project would not be viable (e.g.: roads, transmission lines, pipelines, utilities, etc);
Auditors means the independent, external auditors of the Company;
Authority means any national, supranational, regional or local government or governmental, statutory, regulatory, administrative, fiscal, judicial, or government-owned body, department, commission, authority, tribunal, agency or entity, or central bank (or any Person whether or not government owned and howsoever constituted or called, that exercises the functions of a central bank);
Authorization means any consent, registration, filing, agreement, notarization, certificate, license, approval, permit, authority or exemption from, by or with any Authority, whether given by express action or deemed given by failure to act within any specified time period and all corporate, creditors and shareholders approvals or consents;
Authorized Representative means, in relation to the Company, any individual who is duly authorized by the Company to act on its behalf and whose name and a specimen of whose signature appear on the Certificate of Incumbency and Authority most recently delivered by the Company to Proparco and, in relation to the Sponsor Entity, any individual who is duly authorized by the Sponsor Entity to act on its behalf and whose name and a specimen of whose signature appear on the Certificate of Incumbency and Authority most recently delivered by the Sponsor Entity to Proparco;
AZ Clean Energy means Azure Clean Energy Private Limited, a company incorporated under the laws of India;
AZ Green Tech means Azure Green Tech India Private Limited, a company incorporated under the laws of India;
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AZ Rajasthan means Azure Power (Rajasthan) Private Limited, a company incorporated under the laws of India;
AZ Solar means Azure Solar (Rajasthan) Private Limited, a company incorporated under the laws of India;
AZ Sunshine means Azure Sunshine Private Limited, a company incorporated under the laws of India;
AZ Urja means Azure Urja Private Limited, a company incorporated under the laws of India;
AZI SHA means the shareholders agreement to be executed between the Company, IW, HW and AZI, in relation to the rights and obligations of the parties thereto for regulating the management and control of the affairs of AZI and certain other rights and obligations inter se in relation to AZI in accordance with the terms and conditions set out therein;
Basic Terms and Conditions of Employment means the requirements as applicable to the Company or Subsidiaries (as the case may be) in relation to wages, working hours, labour contracts and occupational health & safety issues, stemming from ILO conventions 26 and 131 (on remuneration), I (on working hours) and 155 (on health & safety);
Business Day means a day when banks are open for business in Paris (France) and Mauritius;
Business Relationships means any professional or commercial contractual relationship established between a third party and the Company or its Subsidiaries and connected with the professional activities of the latter;
Certificate of Incumbency and Authority means a certificate provided to Proparco by the Company substantially in the form set forth in Schedule 3 ( Form of Certificate of Incumbency and Authority );
Chhattisgarh Projects means collectively 3 (three) solar power generation projects being developed by the Company in the state of Chhattisgarh having a capacity of 10 MW (Ten Megawatts) each;
Chhattisgarh Projects Private Land has the meaning set forth in Section 3.01 A (x) (iv);
Charter means the constitution of the Company or, as applicable, the memorandum of association and articles of association of any Subsidiary;
Company Agreements has the meaning set forth in Section 3.01 A (u) ( Material Contracts );
Control means the power to direct the management or policies of a Person, directly or indirectly, whether through the ownership of shares or other securities, by contract or otherwise; provided that, in any event, the direct or indirect ownership of 50% (fifty per cent) or more of the voting share capital of a Person is deemed to constitute Control of that Person, and Controlling and Controlled have corresponding meanings;
Core Labour Standards means the requirements as applicable to the Company or its Subsidiaries (as the case may be) on child and forced labour, discrimination and freedom of association and collective bargaining, stemming from the ILO Declaration on Fundamental Principles and Rights at Work, adopted in 1998 and covering: (i) freedom of association and the right to collective bargaining, (ii) the elimination of forced and compulsory labour, (iii) the abolition of child labour and (iv) the elimination of discrimination in the workplace;
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Corrupt Practice means the following acts:
(a) | the promise, offering or giving, directly or indirectly, to a Public Official or to any person who directs or works, in any capacity, for a private sector entity, of an undue advantage of any nature, for the relevant person himself or herself or for another person or entity, in order that this person acts or refrains from acting in the exercise of his or her official duties or in breach of his or her legal, contractual or professional obligations having for effect to influence his or her own actions or the ones of another party or entity; |
(b) | the solicitation or acceptance, directly or indirectly, by a Public Official or by any person who directs or works, in any capacity, for a private sector entity, of an undue advantage of any nature, for the relevant person himself or herself or for another person or entity, in order that this person acts or refrains from acting in the exercise of his or her official duties or in breach of his or her legal, contractual or professional obligations having for effect to influence his or her own actions or the ones of another party or entity; |
CP Fulfillment Notice means the notice issued by Proparco to the Company confirming the fulfillment of the conditions to the Proparco Subscription as set out in Section 4.01 to its satisfaction;
CP Waiver Notice means the notice issued by Proparco to the Company confirming the waiver of certain conditions to the Proparco Subscription at its sole discretion;
Current Company Disclosure Schedule means the Original Company Disclosure Schedule, as supplemented by the Updated Company Disclosure Schedule which has been provided in accordance with the introductory paragraph of Section 3.01 A ( Representations and Warranties of the Company );
Dollars or $ means the lawful currency of the United States of America;
DEG means DEG Deutsche Investitions und Entwicklungsgesellschaft mbH, a company established under the laws of the Federal Republic of Germany, having its office at Kammergasse 22, 50676 Cologne, Germany;
Embargo means any economic sanction aiming at prohibiting the import and/or export (sale, supply, transfer) of one specific or several goods, products or services to or from a country for a specified period as published and amended from time to time by the United Nations, European Union and France;
Employee Benefit Plan means any plan, program, policy, practice, contract, agreement or other arrangement providing for compensation, severance, retirement benefits, termination pay, indemnity in lieu of notice, bonus, commissions, profit-sharing, deferred compensation, performance awards, stock or stock-related awards, fringe benefits or other employee benefits or remuneration of any kind, whether written, unwritten or otherwise, funded or unfunded, including each retirement plan, pension plan, group insurance, death benefit, vacation, health and welfare, dental, disability or employee benefit plan, which is or has been maintained, contributed to, or required to be contributed to, by the company for the benefit of any employee of the company, as the case may be;
Environmental and Social Action Plan or ESAP means the environmental and social action plan, agreed upon between Proparco and the Company (which is provided in Schedule 5 and schedule P of the Shareholders Agreement), defining actions, responsibilities, budgets and a timeframe for the measures required to remedy the known non-compliances of the Company, AZI and its Subsidiaries with the Environmental and Social Requirements in the business activities of the Company and the Associated Facilities, as amended from time to time;
Environmental and Social Claim means any claim, proceeding or investigation by a person in respect of an Environmental Law, a Social Law or an environmental or social agreement between the Company and another Person;
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Environmental and Social Management System means the part of the overall management system of the Company, AZI and its Subsidiaries that includes the organisational structure, planning activities, responsibilities, practices, procedures and resources for developing, implementing, achieving, reviewing and maintaining compliance with the Environmental and Social Requirements and which is dedicated to the structural improvement of the environmental and social performance of the Company, AZI and its Subsidiaries, satisfactory to Proparco;
Environmental and Social Monitoring Report means the annual monitoring report to be submitted to Proparco, in the form and substance satisfactory to Proparco, after the end of each Financial Year but in any event no later than the date it has to deliver its audited or consolidated annual financial statements, setting out the specific social, environmental and developmental impact information to be provided by the Company and its Subsidiaries in respect of their Operations, and such form of Environmental and Social Annual Monitoring Report may be amended or supplemented from time to time with the consent of Proparco;
Environmental and Social Requirements means (i) Environmental Law, (ii) Social Law, (iii) Environmental and Social Permit, (iv) Basic Terms and Conditions of Employment, (v) Core Labour Standards and (vi) the IFC Performance Standards as applicable to the Company and its Subsidiaries from time to time;
Environmental and Social Permit means any environmental and/or social permit, license, consent, approval or other Authorisation required by the Company and its Subsidiaries;
Environmental Law means any law, rule or regulation (including international treaty obligations) applicable at national and state levels concerning environmental matters and natural resource management;
Equity Securities of a company means ordinary shares, preferred shares, bonds, loans, warrants, rights, options or other similar instruments or securities which are convertible into or exercisable or exchangeable for, or which carry a right to subscribe for or purchase ordinary shares of such company or any instrument or certificate representing a beneficial ownership interest in the ordinary shares of such company, including global depositary receipts and American depository receipts and any other security issued by the company, even if not convertible into ordinary shares, that derives its value and/or return based on the financial performance of the company or its shares;
Equity Shares or Shares means the ordinary shares of the Company having the par value of USD 0.01 (Dollars zero decimal zero one) each and carrying 1 (one) vote each;
Externalization Process means the signing and execution of the Transaction Documents and the issue and allotment of Equity Securities by the Company to: (a) Helion (b) IFC; (c) DEG; (d) FC; and (e) Proparco as set out in Section 3.01(f) ( Capital Structure of the Company ) of the Current Company Disclosure Schedule;
FATF means Financial Action Task Force, an independent inter-governmental body that develops and promotes policies to perfect the global financial system against money laundering, terrorist financing and the financing of proliferation of weapons of mass destruction;
FC means FC VI India Venture (Mauritius) Ltd., a company established under the laws of Mauritius, having its principal office at International Financial Services Limited, IPS Court, 28 Cybercity, Ebene, Mauritius;
Financial Year means the accounting year of the Company commencing each year on April 1 and ending on the following March 31;
Financial Sanctions Lists means the list of persons, groups or entities which are subject to United Nations, European Union or French financial sanctions. For information purposes only and not for the benefit of the company (who may not rely on the references listed below and provided by Proparco):
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a) | As regards the United Nations, the lists may be consulted at the following address: http://www.un.org/sc/committees/list_compend.shtml; |
b) | As regards the European Union, the lists may be consulted at the following address: http://eeas.europa.eu/cfsp/sanctions/consol-list_en.htm; and |
c) | As regards France, see http://www.tresor.economie.gouv.fr/4248_Dispositif-National-de-Gel-Terroriste. |
Fraud against the Financial Interests of the European Communities refers to any intentional action or omission intended to damage the European Union budget and involving (i) the use or presentation of false, incorrect or incomplete statements or documents, which has as its effect the misappropriation or wrongful retention of funds or illegal diminution of resources of the general budget of the European Union, (ii) the non-disclosure of information, with the same effect and (iii) the misapplication of such funds for purposes other than those for which they were originally granted;
Fraudulent Practice refers to any unfair practices (action or omission) intended to deliberately mislead a third party, intentionally conceal elements there from, or betray or vitiate his/her consent, contravening legal or regulatory obligations and/or breaching the Companys or a third party internal rules for the purpose of obtaining an illegitimate benefit;
GIF means IFC Investment Company I, a company established under the laws of Republic of Mauritius, having its principal office at C/o Cim Fund Services Ltd., 33 Edith Cavell Street, Port Louis, Mauritius;
Hard Stop Date shall refer to the day that is immediately after a period of 30 (thirty) calendar days from the date of signing of this Agreement, or such other later date as may be mutually agreeable by the Parties in writing;
Helion means collectively, Helion India and Helion Partners;
Helion India means Helion Venture Partners India II, LLC, a company established under the laws of Mauritius, having its principal office at International Management (Mauritius) Ltd., Les Cascades Building, Edith Cavell Street, Port Louis, Mauritius;
Helion Partners means Helion Venture Partners II, LLC, a company established under the laws of Mauritius, having its principal office at International Management (Mauritius) Ltd., Les Cascades Building, Edith Cavell Street, Port Louis, Mauritius;
IFC means International Finance Corporation, an international organization established by the Articles of Agreement among its member countries including the Republic of Mauritius;
IFC Performance Standards means the IFC performance standards on social and environmental sustainability (including the technical reference documents known as IFCs Environmental, Health, and Safety Guidelines) which can be downloaded from the IFC website (http://www.ifc.org/ifcext/enviro.nsf/);
Illicit Origin means funds obtained through: (i) the commission of any predicate offence as designated in the FATF 40 Recommendations Glossary (http://www.fatf-gafl.org/pages/glossary/fatfrecommendations/d-i/), (ii) Corrupt Practices, and (iii) if or when applicable, through Fraud against the Financial Interests of the European Communities;
ILO means the International Labour Organisation, the tripartite United Nations agency which brings together governments, employers and workers of its member states in common action to promote decent work throughout the world;
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Lien means any mortgage, pledge, charge, assignment, hypothecation, security interest, title retention, preferential right, option (including call commitment), trust arrangement, right of set-off, counterclaim or bankers lien, privilege or priority of any kind having the effect of security, any designation of loss payees or beneficiaries or any similar arrangement under or with respect to any insurance policy or any preference of one creditor over another arising by operation of law;
Material Adverse Effect means a material adverse effect on:
(a) | the Companys or any of its Subsidiaries assets or properties; |
(b) | the Companys or any of its Subsidiaries business prospects or financial condition; |
(c) | the carrying on of the Companys or any of its Subsidiaries business or operations; |
(d) | the ability of the Company to comply, and ensure that each of its Subsidiaries complies, with its obligations under this Agreement, any other Transaction Document to which it is a party or the Companys Charter and in the case of each of its Subsidiaries, such Subsidiarys Charter; or |
(e) | the ability of the Sponsors to comply with their obligations under this Agreement or any other Transaction Document to which they are a party; |
MW means mega-watts;
Original Company Disclosure Schedule has the meaning set forth in the introductory paragraph to Section 3.01A ( Representations and Warranties of the Company );
Operations the operations, activities and facilities of the Company and its Subsidiaries (including the design, construction, operation, maintenance, management and monitoring thereof) as applicable in India;
Person means any individual, corporation, company, partnership, firm, voluntary association, joint venture, trust, unincorporated organization, Authority or any other entity whether acting in an individual, fiduciary or other capacity;
Proparco CCPS means 18,882 (Eighteen Thousand Eight Hundred and Eighty Two) Series G CCPS of the Company, being the compulsorily convertible preference shares having the issue price of USD 450.16 (Dollars Four Hundred and Fifty and Sixteen Cents) each and carrying rights, preferences and privileges (including conversion terms) as set out in Schedule 4 hereto and under schedule T of the Shareholders Agreement;
Proparco Subscription means the subscription of the Subscription Shares by Proparco as provided for in Article II ( Agreement for Subscription );
Public Official means:
(a) | any holder of legislative, executive, administrative or judicial office (in a State or a subdivision thereof), appointed or elected serving on a permanent basis or otherwise, paid or unpaid, regardless of rank; |
(b) | any other person exercising a public function, including for a public agency or enterprise or providing a public service; or |
(c) | any other person defined as a public official under the Indian law and Mauritius law; |
Punjab CLU Permissions means collectively the Punjab Project I CLU Permission, the Punjab Project II CLU Permission and the Punjab Project III CLU Permission;
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Punjab Project I means the 15 MW (Fifteen Megawatts) solar power generation project being developed in the state of Punjab by AZ Urja over an area admeasuring 45.696 (forty five decimal six hundred and ninety six) acres;
Punjab Project I CLU Permission means the change in land use permission obtained from the Punjab Bureau of Investment Promotion dated 10 th November 2014 for an area admeasuring 45.696 (forty five decimal six hundred and ninety six) acres comprising the Punjab Project I;
Punjab Project II means the 15 MW (Fifteen Megawatts) solar power generation project in the state of Punjab being developed by AZ Urja over an area admeasuring 77.86875 (seventy seven decimal eighty six thousand eight hundred and seventy five) acres;
Punjab Project II CLU Permission means the change in land use permission obtained from the Punjab Bureau of Investment Promotion dated 8 th May 2015 for Punjab Project II for an area admeasuring 77.86875 (seventy seven decimal eighty six thousand eight hundred and seventy five) acres comprising the Punjab Project II;
Punjab Project III means the 4 MW (Four Megawatts) solar power generation project being developed in the state of Punjab by AZ Urja over an area admeasuring 20.4625 (twenty decimal four thousand six hundred and twenty five) acres;
Punjab Project III CLU Permission means the change in land use permission obtained from the Punjab Bureau of Investment Promotion dated 10 th November 2014 for Punjab Project III for an area admeasuring 20.4625 (twenty decimal four thousand six hundred and twenty five) acres comprising the Punjab Project III;
Punjab Projects means collectively the Punjab Project I, Punjab Project II and Punjab Project III;
Punjab Projects Private Land has the meaning set forth in Section 3.01 (x) (vii);
Rajasthan NSM Project means the 5 MW (Five Megawatt) solar power generation project in the state of Rajasthan being developed by AZ Rajasthan;
Rajasthan Project I means the 35 MW (Thirty Five Megawatt) solar power generation project in the state of Rajasthan being developed by AZ Solar;
Rajasthan Project II means the 40 MW (Forty Megawatt) solar power generation project in the state of Rajasthan being developed by AZ Green Tech over an area admeasuring 100 (hundred) hectares;
Rajasthan Project IV means the 20 MW (Twenty Megawatt) solar power generation project in the state of Rajasthan being developed by AZ Sunshine over an area admeasuring 50 (fifty) hectares;
Rajasthan Project V means the 40 MW (Forty Megawatt) solar power generation project in the state of Rajasthan being developed by AZ Clean Energy over an area admeasuring 140 (one hundred and forty) hectares;
Registration Rights Agreement means the registration rights agreement entered into by the shareholders of the Company setting out the right to have the registration statement filed with respect to the Equity Shares or Equity Securities held by them for resale/make an offering under the Securities Act of 1933, as amended;
Related Agreements means the Transaction Documents and other agreements and documents as referred in Schedule 7 hereto;
Relevant Party means each of the Company and the Sponsors;
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Shareholders Agreement or SHA means the shareholders agreement to be executed between the Company and its shareholders in relation to the rights and obligations of the parties thereto for regulating the management and control of the affairs of the Company and certain other rights and obligations inter se in relation to the Company;
Share Equivalents means preference shares, bonds, debentures, loans, warrants, options or other similar instruments or securities which are convertible into or exercisable or exchangeable for, or which carry a right to subscribe for or purchase, ordinary shares of the company whether by way of conversion or exercise or in any other manner;
Social Law means any law, rule or regulation (including international treaty obligations) applicable at national and state levels concerning (i) labour, (ii) social security, (iii) the regulation of industrial relations (between government, employers and employees), (iv) the protection of occupational as well as public health and safety, (v) the regulation of public participation, (vi) the protection and regulation of ownership of land rights (both formal and traditional), immovable goods and intellectual and cultural property rights, (vii) the protection and empowerment of indigenous peoples or ethnic groups, (viii) the protection, restoration and promotion of cultural heritage, (ix) all other laws, rules and regulations providing for the protection of employees and citizens;
Subscription Amount has the meaning set forth in Section 2.01 ( Subscription );
Subscription Notice means a notice in the form set forth in Schedule 1 ( Form of Subscription Notice );
Subscription Closing Date has the meaning set forth in Section 2.01 ( Subscription );
Subscription Shares means the Proparco CCPS subscribed to by Proparco pursuant to Section 2.01 ( Subscription );
Subsidiary means with respect to the Company, an Affiliate over fifty per cent (50%) of whose capital is owned, directly or indirectly by the Company, and shall include AZI and such other companies in which over fifty per cent (50%) of whose capital is owned, directly or indirectly by AZI;
Tax or Taxes means any present or future taxes (including stamp taxes), withholding obligations, duties and other charges of whatever nature levied by any Authority;
Transaction Documents means:
(a) | this Agreement; |
(b) | the Shareholders Agreement; |
(c) | the AZI SHA; |
(d) | the APGL Sharing Agreement; |
(e) | Registration Rights Agreement; |
(f) | all securities purchase agreements and securities subscription agreements entered into by: (a) Helion; (b) IFC; (c) DEG; and (d) FC and (e) Proparco, pursuant to the Externalization Process; and |
(g) | any other document that may be entered into by the parties therein for the purpose of executing the transactions contemplated in the Transaction Documents; and |
Updated Company Disclosure Schedule has the meaning set forth in the introductory paragraph to Section 3.01 A ( Representations and Warranties of the Company ).
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Section 1.02. Interpretation .
In this Agreement, unless the context otherwise requires:
(a) | headings are for convenience only and do not affect the interpretation of this Agreement; |
(b) | words importing the singular include the plural and vice versa and words denoting any gender shall include all genders unless the context otherwise requires; |
(c) | a reference to an Annex, Article, party, Schedule or Section is a reference to that Article or Section of, or that Annex, party or Schedule to, this Agreement; |
(d) | a reference to a document includes an amendment or supplement to, or replacement or novation of, that document but disregarding any amendment, supplement, replacement or novation made in breach of this Agreement; |
(e) | general words in this Agreement shall not be given a restrictive meaning by reason of their being preceded or followed by words indicating a particular class of acts, matters or things or by examples falling within the general words; |
(f) | a reference to a party to any document includes that partys successors and permitted assigns; |
(g) | all references in this Agreement to statutory provisions shall be construed as meaning and including references to: (i) any statutory modification, consolidation or re-enactment (whether before or after the date of this Agreement) for the time being in force; and (ii) all statutory instruments or orders made pursuant to a statutory provision; |
(h) | any reference to writing includes printing, typing and other means of reproducing words in permanent visible form; |
(i) | capitalized terms used but not defined herein shall have the meaning ascribed to such terms under the Shareholders Agreement; and |
(j) | the terms include and including shall mean include without limitation. |
Section 1.03. Third Party Rights .
A Person who is not a party to this Agreement has no right under the Contracts (Rights of Third Parties) Act 1999 to enforce or enjoy the benefit of any term of this Agreement.
ARTICLE II
AGREEMENT FOR SUBSCRIPTION
Section 2.01. Subscription .
(a) | On the terms and subject to the conditions of this Agreement, Proparco agrees to subscribe and pay for 18,882 (Eighteen Thousand Eight Hundred and Eighty Two) fully paid Proparco CCPS in the Company (the Subscription Shares ). The issue price per Subscription Share shall be USD 450.16 (Dollars Four Hundred and Fifty and Sixteen Cents) and the aggregate consideration payable for the Subscription Shares by Proparco shall be up to USD 8,499,921 (Dollars Eight Million, Four Hundred and Ninety Nine Thousand and Nine Hundred and Twenty One) (the Subscription Amount ). |
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(b) | Subject to the terms of this Agreement and the satisfaction of or waiver, as evidenced by the issuance of a CP Fulfillment Notice or a CP Waiver Notice by Proparco, of the conditions of subscription set forth in Section 4.01 ( Conditions of the Proparco Subscription ), the Company may request Proparco to subscribe to the Subscription Shares and pay the Subscription Amount by delivering a Subscription Notice to Proparco at least 3 (three) Business Days prior to the proposed date of the Proparco Subscription as specified in such Subscription Notice (the Subscription Closing Date ). |
(c) | Notwithstanding anything contained in this Agreement, Proparco may, at any time before the termination of rights and obligations of Proparco as against the Company and the Sponsors in accordance with Section 2.03 ( Termination of Proparco Subscription ), in its sole discretion and without request by the Company, deliver a Subscription Notice to the Company by providing 3 (three) Business Days prior written notice to the Company and specify the proposed date of Proparco Subscription in such Subscription Notice. On the Subscription Closing Date, Proparco shall remit the Subscription Amount for Subscription Shares in accordance with Section 2.01(e)(i), and the Company shall take the actions set forth in subsection 2.01(e)(ii) in respect of such Subscription Shares. It is clarified that upon Proparco delivering the Subscription Notice to the Company, all the outstanding conditions of subscription set forth in Section 4.01 ( Conditions of the Proparco Subscription ) shall be deemed to have been either satisfied or waived by Proparco, as the case may be. |
(d) | If a Subscription Notice is delivered by the Company to Proparco in accordance with Section 2.01(b), or Proparco delivers a Subscription Notice to the Company in accordance with Section 2.01(c), then the Company shall be obliged to issue to Proparco the Subscription Shares on the Subscription Closing Date and shall take all necessary corporate and other actions, including but not limited to all appropriate steps to ensure that a meeting of the Companys shareholders or a meeting of the board of directors is promptly convened, to ensure that the Subscription Shares shall be issued to Proparco on the Subscription Closing Date, in accordance with the terms of this Agreement. |
(e) | On Subscription Closing Date, the following events shall take place: |
(i) | Proparco shall remit the Subscription Amount to the following account of the Company: |
Beneficiary account name: Azure Power Global Ltd
Beneficiary account number (IBAN): MU 52 BARC030500000 7069376 000 USD
Beneficiary bank : Barclays Bank Mauritius Limited
Beneficiary bank SWIFT code : BARCMUMUOBU
Beneficiary bank address : Barclays Bank Mauritius Limited, International Banking, 1 ST Floor, Barclays House, Barclays House, 68-68A, Cybercity Ebene, Mauritius
Name of correspondent bank name (for transaction in USD): Barclays Bank PLC
Correspondent bank SWIFT code : BARCUS33
Correspondent bank address : Barclays Bank PLC, 200 Park Avenue, New York, NY 10166, USA.
or such other account specified in the Subscription Notice.
(ii) | The Company shall: |
(A) |
Upon receipt of the Subscription Amount, issue the Subscription Shares to Proparco, free of all Liens or other encumbrances or rights of third parties and record Proparco as the legal and beneficial owner of the Subscription Shares in |
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the Companys share register; |
(B) | Issue share certificates in customary form to Proparco, to reflect Proparco as the owner of the Subscription Shares; |
(C) | Deliver to Proparco, or as Proparco directs: (a) a copy of the resolution of the board of directors and shareholders of the Company in which the issue and allotment of Subscription Shares to Proparco was approved; and (b) a certified true copy of the Companys share register, evidencing Proparcos valid title to the Subscription Shares, free of all Liens or other encumbrances or rights of third parties; |
(D) | The Company shall reimburse Proparco for all fees and expenses of Proparco, as provided in Section 5.09 ( Expenses ) of this Agreement including the invoiced fees and expenses of their counsels (or pay such counsels directly and provide their confirmation on the same to Proparco). |
All transactions contemplated by this Agreement to be consummated at the Subscription Closing Date shall be deemed to occur simultaneously.
(f) | Within 5 (five) Business Days from the Subscription Closing Date, the Company shall undertake all post-issue filings and other requirements associated with the issuance of the Subscription Shares in the time prescribed for the same under Applicable Law, including filing of (i) the notice of issue of Subscription Shares with the Registrar of Companies; (ii) intimation notice with the Financial Services Commission in relation to issue of the Subscription Shares; and (iii) filing of the amended Charter with the Registrar of Companies along with a copy of such amended Charter to the Financial Services Commission. |
(g) | The Company shall pay Taxes, registration charges, fees or other charges, if any, payable on or in connection with the execution, issue, subscription, delivery, registration, translation or notarization of this Agreement, the other Transaction Documents, the Companys Charter, the Subscription Shares and any other documents related to this Agreement. |
(h) | If the Company, for any reason, does not issue the Subscription Shares as set forth in Section 2.01 (e), including by reason of failure of the Companys board to authorize such issuance, such failure to issue the Subscription Shares shall constitute a breach of the Companys and the Sponsors obligations under this Agreement, and Proparco shall have the right to exercise any and all rights or legal or equitable remedies of any kind which may accrue to it against the Company and the Sponsors. |
Section 2.02. Cancellation of Proparco Subscription .
Proparco may, by written notice to the Company and before the Subscription Notice is issued by either the Company or Proparco, terminate this Agreement, and upon the termination, all its rights and obligations against the Company and the Sponsors shall stand terminated, if:
(a) | at any time, in the reasonable opinion of Proparco, anything has occurred which has a Material Adverse Effect or there exists any situation which renders the performance by the Company or the Sponsors of their respective obligations under any of the Transaction Documents, or the Companys Charter, impossible; |
(b) | the Company or the Sponsors have breached any of the provisions of the Transaction Documents and such breach has not been cured within 30 (thirty) days following the receipt by the Company or the Sponsors of notice of such breach from Proparco; or |
(c) | there is a default by the Company in issuing the Subscription Shares in accordance with Section 2.01(e) of this Agreement; |
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Provided further that, and notwithstanding anything contained in any of the Transaction Documents, the right of Proparco to subscribe to the Subscription Shares shall terminate on the Hard Stop Date.
Upon any such termination of this Agreement by Proparco in accordance with Section 2.02 of this Agreement, Proparcos further rights and obligations under this Agreement against the Company and the Sponsors shall terminate immediately, provided that such termination shall not affect its accrued rights and obligations against the Company and the Sponsors at the date of termination and shall be without prejudice to any and all rights or legal or equitable remedies of any kind which may accrue to Proparco against the Company and the Sponsors, and provided further that the provisions of Section 3.04 ( Undertaking by the Company and Sponsors ) (c) and (d), Section 3.05 ( Indemnity ), Section 5.01 ( Notices ), Section 5.03 ( English Language ), Section 5.04 ( Applicable Law and Arbitration ) and Section 5.09 ( Expenses ) shall survive such termination.
Section 2.03. Use of Proceeds
The Subscription Amount received by the Company on the Proparco Subscription shall be used by the Company to invest in AZI, which amounts will be used by AZI to finance the development and the construction of solar power generation plants until 2017.
Section 2.04 Payments
For any payment made by the Company to Proparco pursuant to this Agreement, the Company shall request the bank-in-charge of wiring the amounts to Proparco to provide comprehensively and in the same order the following information in wire transfer messages SWIFT MT 202 and 103 protocol:
| The name, address and account number of the remitter (SWIFT field n° 50); |
| The name of the remitters bank (SWIFT field n° 52); and |
| The reason for the payment (including a reference to this Agreement) (SWIFT field n° 70). |
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.0.1. Representations and Warranties .
Section 3.01A Representations and Warranties of the Company
The Company hereby represents and warrants to Proparco that the statements contained in this Section 3.01 A: (i) are true, accurate and not misleading with respect to the Company and its Subsidiaries as of the date of this Agreement, except as otherwise set forth in the Companys disclosure schedule (the Original Company Disclosure Schedule ) attached to this Agreement as Schedule 2 (Company Disclosure Schedule ), and (ii) will remain true, accurate and not misleading immediately prior to the Proparco Subscription except as set forth in any updated disclosure schedule, which shall be in the form and substance satisfactory to Proparco (an Updated Company Disclosure Schedule ), delivered by the Company to Proparco and accepted and signed by Proparco at least ten (10) Business Days prior to the Subscription Closing Date. No disclosure made in the Original Company Disclosure Schedule or an Updated Company Disclosure Schedule shall be deemed adequate to disclose an exception to a representation or warranty made herein, unless the disclosure contained therein identifies the relevant facts and circumstances for such exception fully, fairly, specifically and accurately.
(a) | Organization and Authority . Bach of the Company and its Subsidiaries is a legal entity duly organized and validly existing under the laws of its place of incorporation, and the Company has the corporate power and authority to own its assets, conduct its business as presently conducted and to enter into, deliver and perform its obligations under this Agreement and each of the other Transaction Documents to which it is a party. |
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(b) | Validity . This Agreement and each of the other Transaction Documents to which it is a party have been duly authorized and executed by the Company and constitutes its valid and legally binding obligation, enforceable in accordance with its terms. |
(c) | No Conflict . The execution and performance by the Company of any of its obligations under the Transaction Documents to which it is a party including the issuance to Proparco of any of the Subscription Shares upon subscription thereof, do not: (i) conflict with or result in a breach of any of the terms, conditions or provisions of, or constitute a default, or require any consent under, any indenture, mortgage, agreement or other instrument or arrangement to which it is a party or by which it is bound; (ii) violate any of the terms or provisions of the Companys Charter; or (iii) violate any Authorization, judgment, decree or order or any statute, law, rule, regulation or requirement applicable to it. |
(d) | Status of Authorizations . |
(i) | All Authorizations and third party consents needed by the Company and/or any of Companys Subsidiaries to conduct their business and execute, perform and comply with their obligations under this Agreement and each of the other Transaction Documents to which they are a party have been obtained and are in full force and effect and there are no facts or circumstances which indicate that any of such Authorizations or third party consents would or might be revoked, cancelled, varied or not renewed. |
(ii) | All Authorizations and consents required by each of the Companys Subsidiaries to undertake the development, construction and operation of their respective solar power generation projects, considering the stage at which such solar power generation projects currently are, have been obtained and are in full force and effect and there are no facts or circumstances which indicate that any of such Authorizations or consents would or might be revoked, cancelled, varied or not renewed, and all conditions and obligations as are required to be complied with by the Companys Subsidiaries in obtaining or pursuant to such Authorizations or consent have been fulfilled or complied with by such Subsidiaries. |
(e) | Charter and Number of Directors . The Company has delivered to Proparco a true and current copy of its Charter, which has not been amended other than pursuant to Section 4.01 (I) ( Charter Documents ); and Section 3.01 A(e) ( Charter and Number of Directors ) of the Current Company Disclosure Schedule lists all of the current directors and officers of the Company and its Subsidiaries. |
(f) | Capital Structure of the Company. |
(i) | The share capital of the Company is as shown in Section 3.01 A (f) ( Capital Structure of the Company ) of the Current Company Disclosure Schedule and Section 3.01 A (f) ( Capital Structure of the Company ) of the Current Company Disclosure Schedule accurately sets out the number and type of shares of the Company and Share Equivalents owned by, and the name of, each holder of shares and/or Share Equivalents, both before and after the Proparco Subscription is consummated. |
(ii) |
Except as set forth in Section 3.01A(f) ( Capital Structure of the Company ) of the Current Company Disclosure Schedule, there are no shares of the Company or Share Equivalents, or any agreements or undertakings to which the Company is a party, or by which it is bound, obligating it to issue, deliver, sell, repurchase or redeem or cause to be issued, delivered, sold, repurchased or redeemed any shares in its authorized capital or obligating it to grant or enter into any such option, warrant, call, right, commitment or agreement. All outstanding shares of the Company are duly authorized, validly issued to those Persons and in the amounts set forth across from their names in Section 3.01 A(f) ( Capital Structure of the Company ) of the Current Company Disclosure |
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Schedule, fully paid and are free of any Liens and are not subject to preemptive rights, rights of first refusal or other restrictions on transfer or third party rights, except as set forth in the Companys Charter or the Shareholders Agreement. |
(iii) | The issuance of the Subscription Shares has been duly and validly authorized by all necessary corporate actions of the Company and when issued and delivered in accordance with the terms of this Agreement, the Subscription Shares will be duly and validly issued, fully paid, free of all Liens and will not be subject to preemptive rights, rights of first refusal or other restrictions on transfers, except as set forth in the Companys Charter or the Shareholders Agreement. |
(g) | No Immunity . Neither the Company nor any of the Subsidiaries of the Company nor any of their respective properties enjoy any right of immunity from set-off, suit or execution with respect to their respective obligations under any Transaction Document. |
(h) | Financial Condition . For the Company since its incorporation, and for AZI and its Subsidiaries since March 31, 2015: |
(i) | the business of the Company and each of its Subsidiaries has been carried on in the ordinary course so as to maintain the business as a going concern; |
(ii) | neither the Company nor any of its Subsidiaries has suffered any change having a Material Adverse Effect or incurred any substantial loss or liability other than notional forex losses due to mark to market variation of currency; |
(iii) | neither the Company nor any of its Subsidiaries has undertaken or agreed to undertake any substantial obligation; and |
(iv) | no dividend or distribution has been declared or paid by the Company or any of its Subsidiaries. |
The Company (i) does not have a dividend policy, (ii) has not availed any loan or indebtedness, and (iii) does not have any outstanding liability (actual or contingent), other than transactions undertaken as part of the Externalization Process. As on the date of this Agreement, and other than holding equity securities of AZI immediately prior to the Proparco Subscription, the Company does not have any other business or operations.
(i) | Financial Statements . AZIs audited consolidated balance sheet as of March 31, 2014 and the provisional balance sheet as of March 31, 2015 related audited consolidated statements of income and cash flows for the fiscal year ended March 31, 2014 and provisional consolidated statements of income and cash flows for the fiscal year ended March 31, 2015 have been prepared in accordance with the Accounting Standards applied on a consistent basis throughout the periods therein specified, and give a true and fair view of the consolidated financial condition of AZI as of the date as of which they were prepared and the results of the AZIs consolidated operations during the periods therein specified. As of March 31, 2015, there are no losses, liabilities (whether actual or contingent or otherwise) or bad or doubtful debts other than those fully disclosed in the consolidated financial statements hereinbefore referred to. |
(j) | Taxes . All tax returns and reports of the Company and each of its Subsidiaries required by Applicable Law to be filed have been duly filed and all Taxes, obligations, fees and other governmental charges upon the Company, or its Subsidiaries or their properties, or their income or assets, which are due and payable or to be withheld, have been paid or withheld, other than those presently payable without penalty or interest. |
(k) | Litigation . Except as set forth in Section 3.01A(k) ( Litigation ) of the Current Company Disclosure Schedule: |
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(i) | neither the Company nor any of its Subsidiaries is involved in any litigation, arbitration, administrative, regulatory or governmental proceedings or investigations. No such proceedings or investigations are threatened against the Company or any of its Subsidiaries; and the Company is not aware of any fact or circumstance which is reasonably likely to give rise to any such proceedings or investigations; |
(ii) | no judgment or order has been issued against the Company or any of its Subsidiaries which has or may reasonably be expected to have a Material Adverse Effect; and |
(iii) | neither the Company nor any of its Subsidiaries have been charged, convicted, fined or otherwise sanctioned in any litigation, administrative, regulatory or criminal investigation or proceeding or freezing of assets by any Authority involving the Company or any of its Subsidiaries or their respective employees with regard to money laundering or financing of terrorism. |
(1) | Compliance with Law . The Company and each of its Subsidiaries is in compliance with all Applicable Laws (whether civil, criminal, corporate or administrative), statutes, subordinate legislation, treaties, regulations, directives, decisions, by-laws, circulars, codes, orders, notices, demands, decrees, injunctions, guidance, judgments or resolutions of any Authority, including in case of AZI and its Subsidiaries, the applicable provisions of the Companies Act, 2013, the Foreign Exchange Management Act, 1999, the Factories Act, 1948 and the Employees State Insurance Act, 1948. |
(m) | Environmental and Social Matters . |
(i) | The Company represents that the Company and AZI are compliant, in all material respects, with the Environmental and Social Requirements and for all such items as addressed in the Environmental and Social Action Plan, they shall become compliant within the time-frames agreed upon from time to time. |
(ii) | No Environmental and Social Claim has been commenced or (to the best of its knowledge and belief) is threatened against the Company or AZI except for the Environmental and Social Claims addressed in the Environmental and Social Action Plan. |
(iii) | Environmental and Social Matters. Each of the Company and AZI: (a) remains in compliance with the Environmental and Social Management System; (b) maintains an appropriately qualified and experienced Environmental and Social Management System manager for oversight of management of Environmental Management System aspects across all of the Companys Operations (including its Subsidiaries) and to ensure consistent application of the Environmental and Social Management System; and (c) has agreed with Proparco on the form of Environmental and Social Monitoring Report. |
(n) | Corrupt Practice . Neither the Company nor any of its Subsidiaries nor any Person acting on its or their behalf, has committed or engaged in, with respect to Operations, any Corrupt Practice. The constitution of the Company or AZI has not given rise to any Corrupt Practice. |
(o) |
Insurance . The Company and each of its Subsidiaries maintain insurance policies with financially sound and reputable insurers that cover such risks and contain such policy limits, types of coverage as are adequate to insure fully against risks listed in Annex A and such other risks to which the Company, its Subsidiaries and their employees, business, properties and other assets would reasonably be expected to be exposed to in the operation of the business as currently conducted. All of these policies are valid and enforceable policies, all premiums due and payable under all these policies have been paid and the Company and its Subsidiaries are otherwise in compliance in all material respects with the terms of the policies. None of these policies are void or voidable and neither the Company nor any of its Subsidiaries have done |
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anything or omitted to do anything that would make any policy void or voidable. The Company does not have any knowledge of any threatened termination of, or material premium increase with respect to, any of these policies. No material claim is outstanding under any of these policies and no event has occurred (and no circumstance exists) that gives rise or is reasonably likely to give rise to a material claim under any policy. |
(p) | Disclosure . This Agreement, any other Transaction Document, the Companys Charter, or certificates or schedules made and delivered to Proparco pursuant thereto (including the Current Company Disclosure Schedule) does not contain any information which is untrue, inaccurate or misleading in any material respect nor does it omit any information the omission of which makes the information contained in it untrue, inaccurate or misleading in any material respect. |
(q) | Subsidiaries . The Persons listed in Section 3.01 A (q) ( Subsidiaries ) of the Current Company Disclosure Schedule are all of the Subsidiaries of the Company. Each such Subsidiary has the capitalization, ownership, domicile and head office identified therein. There is no Lien or other third party right over the share capital or other equity interest of the Company in any Subsidiary and there is no agreement to create any Lien or any such right. Other than its Subsidiaries listed in Section 3.01 A (q) ( Subsidiaries ) of the Current Company Disclosure Schedule the Company does not own or Control (and has never owned or Controlled), directly or indirectly, any share capital or other equity interest in any other Person and has not agreed or committed to acquire any such interest. |
(r) | UN Security Council Resolutions . Neither the Company nor any of its Subsidiaries nor any Person acting on their behalf, has entered into any transaction or engaged in any activity prohibited by any resolution issued by the United Nations Security Council under Chapter VII of the UN Charter. |
(s) | Criminal Offenses . Neither the Company nor its Subsidiaries nor any Person acting on their behalf whose acts could incur the Companys or any Subsidiarys vicarious liability has carried out any actions or made any omissions which could result in the Company or any Subsidiary incurring criminal sanctions. |
(t) | Restrictions on Business Activities . There is no agreement, judgment, injunction, order or decree binding upon the Company nor any of its Subsidiaries which has or could reasonably be expected to have the effect of prohibiting or impairing in any material respect any of its current or future business practices, its acquisition of property or the conduct of its business as it is currently conducted or as proposed to be conducted. |
(u) | Material Contracts . Section 3.01 A(u) ( Material Contracts ) of the Current Company Disclosure Schedule sets forth a complete list of all currently effective written or oral: |
(i) | power purchase agreements entered into by the Companys Subsidiaries and other material agreements entered into by the Companys Subsidiaries with respect to the construction, development and operation of their respective solar power generation projects (including agreements in relation to rights over project land); |
(ii) | agreements, arrangements or obligations to which the Company or any of its Subsidiaries is a party involving, on an annual basis, One Million Dollars ($1,000,000) individually for an agreement/ arrangement or Five Million Dollars ($ 5,000,000) in the aggregate (or the equivalent in any other currency) other than agreements entered in connection with the Externalisation Process and issue of Series H CCPS (as defined in the Shareholders Agreement) to IFC and GIF; |
(iii) | agreements, arrangements or other obligations relating to indebtedness owed by the Company or any of its Subsidiaries involving, on an annual basis, USD 1,000,000 (Dollars One Million) (or the equivalent in any other currency) individually or Five Million Dollars ($ 5,000,000) in the aggregate (or the equivalent in any other currency); |
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(iv) | shareholders agreements relating to shares in the Company or any of its Subsidiaries or to which the Company or any of its Subsidiaries is a party; |
(v) | agreements, arrangements and obligations to which the Company or any of its Subsidiaries is a party that is not on arms-length terms. |
With respect to (A) each agreement, arrangement or obligation mentioned in Section 3.01 A(u) ( Material Contracts ) of the Current Company Disclosure Schedule, and (B) employment agreements or arrangements of the Company or any of its Subsidiaries in excess of Dollars ($1,000,000) (Dollars One Million) each (or the equivalent in any other currency), to which the Company or any of its Subsidiaries is a party or to which any of its properties are subject (the Company Agreements ), neither the Company nor any of its Subsidiaries, and nor to the Companys knowledge, any other party, is in breach or default in any material respect, and all such Company Agreements are valid, existing and enforceable on its parties. No event has occurred which, with notice or lapse of time or both, would: (A) constitute a breach or default in any material respect by the Company or any of its Subsidiaries or, to the Companys knowledge, by any such other party to the relevant Company Agreement; or (B) permit imposition of liquidated damages of an amount exceeding Dollard One Million ($1,000,000), termination, modification or acceleration of or under the relevant Company Agreement.
AZ Solar, a Subsidiary of the Company, has fulfilled all disclosure requirements under the credit agreement dated August 29, 2012 executed by it with Export-Import Bank of the United States and the bank guarantee facility availed by it from Orient Bank of Commerce with respect to the litigations involving the Company and/or its Subsidiaries as set forth in Section 3.01A(k) ( Litigation ) of the Current Company Disclosure Schedule. On the disclosure of information as mentioned above by AZ Solar, Export-Import Bank of the United States has not declared, threatened or alleged a default, penalty or acceleration of repayment of loan by AZ Solar under the credit agreement dated August 29, 2012 entered into between AZ Solar and Export-Import Bank of the United States.
The transmission line for the Rajasthan Project I, connecting the Rajasthan Project I to the transmission line constructed for Rajasthan NSM Project, is not constructed on the land that is involved in or is subject matter of the litigations as set forth in 3.01A(k) ( Litigation ) of the Current Company Disclosure Schedule. AZ Solar has a valid and lawful right free from all encumbrances and lien to construct and operate the transmission line for the Rajasthan Project I(as discussed above) on the land on which it is constructed.
(v) | Intellectual Property . The Company does not own or use any intellectual property. Each of its Subsidiaries owns or has the valid right to use at a nominal cost, all intellectual property that is material to the Operation as currently conducted. |
(w) | Interested Party Transactions . The Company or any of its Subsidiaries is not indebted to, nor has it entered into any transactions with any Subsidiary (or the Company in case of a Subsidiary), Sponsor, director, officer, employee, agent or shareholder of the Company, or any of their immediate family members or respective Affiliates (except for amounts due as normal salaries and bonuses and in reimbursement of ordinary expenses), and no such Person is indebted to the Company. None of such Persons has any direct or indirect ownership interest in any Person that is an Affiliate of the Company or with which the Company or any of its Subsidiary has a Business Relationship or in any Person that competes with the Company or any of its Subsidiaries. |
(x) | Title to and Condition of Property . |
(i) |
The Company does not own property and assets, movable and immovable, whatsoever. Each of its Subsidiaries have: (i) good and marketable title free and clear of all Liens to all of the property and assets, movable and immovable, |
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reflected in the Companys and/or the respective Subsidiaries most recent balance sheet included in the consolidated financial statements (except assets sold or otherwise disposed of since such date in the ordinary course of business and liens in favor of lenders created pursuant to project finance facilities as described in Section 3.01 A (x) of the Current Company Disclosure Schedule); (ii) with respect to leased properties and assets, valid leasehold interests therein free and clear of all Liens other than Liens in favor of lenders created pursuant to project finance facilities as described in Section 3.01 A (x) of the Current Company Disclosure Schedule; and (iii) in accordance with Applicable Law, acquired and/or leased adequate land required for development of each of the solar power generation projects being implemented by the Subsidiaries, and where relevant, the appropriate land records have been updated to reflect the Subsidiary as the sole and absolute owner of such land or lessee, as applicable. Each of the Subsidiaries owns or has valid right to use all property and assets (tangible or intangible) necessary for the conduct of its business as now conducted. |
(ii) | The plant, property and equipment of the Subsidiaries that are used in the Operations are in good operating condition and repair, subject to normal wear and tear not caused by neglect, and are adequate and suitable for the purposes for which they are currently being used. All properties used in the Operations are reflected in the Companys and AZIs most recent balance sheet included in the consolidated financial statements to the extent the Accounting Standards require the same to be reflected. |
(iii) | AZI has acquired absolute, clear and marketable title free of all Liens over private land admeasuring 91.8 (ninety one decimal eight) acres, being the aggregate land on which the Chhattisgarh Projects are being developed by AZI for which AZI has issued a letter of intimation dated 26 December 2014 to the Collector and District Magistrate, Durg) ( Chhattisgarh Projects Private Land ); AZI is permitted to use the Chhattisgarh Projects Private Land for the development of the Chhattisgarh Projects and AZI is not required to seek prior Authorization from any Authority for use of the Chhattisgarh Projects Private Land for the development of the Chhattisgarh Projects; the relevant land records have been updated to reflect AZI as the sole and absolute owner of the Chhattisgarh Projects Private Land in accordance with Applicable Law; and AZI has control and holds actual possession without any encumbrance/interference/encroachments from third parties over the Chhattisgarh Projects Private Land. |
(iv) | AZ Urja has acquired leasehold rights over private land admeasuring 45.696 (forty five decimal six hundred and ninety six) acres for Punjab Project I, 77.86875 (seventy seven decimal eighty six thousand eight hundred and seventy five) acres for Punjab Project II, and 20.4625 (twenty decimal four thousand six hundred and twenty five) acres for Punjab Project III (collectively the Punjab Projects Private Land ), being the entire aggregate land used by AZ Urja for the development of the Punjab Projects and for which AZ Urja has obtained the Punjab CLU Permissions; the relevant land records have been updated to reflect AZ Urja as the holder of leasehold rights of the Punjab Projects Private Land in accordance with Applicable Law; and AZ Urja has control and holds actual possession without any encumbrance/interference/encroachments from third parties over the Punjab Projects Private Land. |
(y) |
Books and Records . The books and records of the Company and each of its Subsidiaries, including, without limitation, its/their share record books and minute books, are complete and correct in all material respects and accurately and fairly reflect all meetings and other corporate actions of their shareholders and their board of directors and committees and all material |
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information relating to its business, the nature, acquisition, maintenance, location and character of their assets, and the nature of all transactions giving rise to their obligations or accounts receivable. |
(z) | Labour Employee Matters . |
(i) | Other than (I) Azure Sunshine Private Limited; and (II) Azure Green Tech India Private Limited, none of the Subsidiaries have any permanent employees. |
(ii) | Neither the Company nor any of its Subsidiaries are a party to any collective bargaining agreement or other labour union contract and, to the Companys knowledge and belief, after due inquiry there is no material activity or private or governmental material action, suit, proceeding, claim, arbitration or investigation of any labour union to organize its employees. There are no ongoing or, to the best of the Companys knowledge and belief, after due inquiry threatened strikes, slowdowns or work stoppages by employees of the Company or any contractor with respect to any material operations of the Company. |
(aa) | Employee Benefit Plans . The Company and each of its Subsidiaries have performed all obligations including making all contributions, reserves or premium payments required to be made or accrued (absolute, accrued, asserted or unasserted, contingent or otherwise), required to be performed by them under each of the Employees Benefit Plans, and are not in default or violation of any Applicable Law in this regard, and have no knowledge of any default or violation by the Company or any of the Subsidiaries to each Employee Benefit Plan or any claims pending or threatened (for which a notice has been received) against the Company / relevant Subsidiary in this regard, and each Employee Benefit Plan has been established and maintained in all respects in accordance with its terms and in compliance with Applicable Laws. The consummation of the transactions contemplated by this Agreement will not (either alone or in conjunction with any other event, such as a termination of employment or other service) (i) entitle any current or former director, officer, employee or other service provider of the Company to severance benefits or any other payment (including unemployment compensation, golden parachute, bonus, retention or benefits under any of the Companys Employee Plans) or forgiveness of debt or (ii) accelerate the time of payment or vesting of any such benefits or increase the amount of compensation due to any such employee or service provider. Each of the Companys Employee Plans can be amended, terminated or otherwise discontinued after the date of this Agreement, without liability to the Company. |
(bb) | Customers and Suppliers . The Company or any of its Subsidiaries do not have any information which might reasonably indicate that any of its/their customers or suppliers intend(s) to cease purchasing from, selling to or dealing with them, nor has any information been brought to the Companys attention which might reasonably lead them to believe any such customer, subcontractor or supplier intends to alter in any material respect the amount of such purchases or sales or the extent of dealings with the Company or its Subsidiaries or would alter in any material respect such purchases, sales or dealings in the event of the consummation of the transactions contemplated by this Agreement. |
(cc) | Illicit Origin of Funds . The Company represents that the Company and AZIs equity, quasi equity and shareholders loan accounts and current accounts are not of Illicit Origin. The Company represents that, in the 5 (five) years preceding the date of this Agreement, no res judicata decision, sentence, or order has been pronounced against AZI or the Company in relation to any Corrupt Practice or Fraudulent Practice or any Anti-Competitive Practice. |
(dd) | Business Relationship . Each of the Company and AZI does not have a Business Relationship with any Person, group or entity which is listed in one of the Financial Sanctions Lists. The Company and AZI have not purchased or supplied any equipment to perform any activity in any sector under Embargo by the United Nations, the European Union and/or France. |
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(ee) | Compliance with guarantees and borrowings . AZI is not in breach or non-compliance with any of the terms of any guarantee, comfort letter or any other security provided by AZI with respect to any loans or other borrowings availed by its Subsidiaries. The Subsidiaries are not in breach or non-compliance with any of the terms or conditions, including any financial covenants, of the loans or other borrowings availed by them from any bank or financial institution. |
(ff) | Commissioning Obligations . Bach of the Companys Subsidiaries have commissioned their respective solar power generation projects within the timelines prescribed in the respective solar power purchase agreements executed with the relevant Authority. |
Section 3.01B Representations and Warranties of the Sponsors
The Sponsors hereby represent and warrant to Proparco that the statements contained in this Section 3.01 B: (i) are true, accurate and not misleading with respect to the Sponsors as of the date of this Agreement, and (ii) will remain true, accurate and not misleading immediately prior to the Proparco Subscription.
(a) | Authority . Each of IW and HW have the power and authority to enter into, deliver and perform its obligations under this Agreement and each of the other Transaction Documents to which it they are a party. The Sponsor Entity is a legal entity duly organized and validly existing under the laws of its place of incorporation and has the corporate power and authority to own its assets, conduct its business as presently conducted and to enter into, deliver and perform its obligations under this Agreement and each of the other Transaction Documents to which it is a party. |
(b) | Validity . This Agreement and each of the other Transaction Documents to which it is a party have been duly authorized and executed by the Sponsors and constitutes its valid and legally binding obligation, enforceable in accordance with its terms. |
(c) | Illicit Origin of Funds . Each of the Sponsors represent that AZIs and the Companys equity, quasi equity and shareholders loan accounts and current accounts are not of Illicit Origin. The Sponsors represent that, in the 5 (five) years preceding the date of this Agreement, no res judicata decision, sentence, or order has been pronounced against AZI or the Company in relation to any Corrupt Practice or Fraudulent Practice or any Anti-Competitive Practice. |
(d) | Business Relationship . None of the Sponsors have a Business Relationship with any Person, group or entity which is listed in one of the Financial Sanctions Lists. None of the Sponsors have purchased or supplied any equipment to perform any activity in any sector under Embargo by the United Nations, the European Union and/or France. |
(e) | Corrupt Practice . None of the Sponsors have committed or engaged in any Corrupt Practice. |
Section 3.02. Proparco Reliance .
(a) | The Company and the Sponsors acknowledge that they make the representations and warranties under Section 3.01 A ( Representations and Warranties of the Company ) and Section 3.0 IB ( Representations and Warranties of the Sponsors ) with the intention of inducing Proparco to enter into this Agreement and each of the other Transaction Documents and to make the Proparco Subscription and that Proparco enters into this Agreement and the other Transaction Documents and will make the Proparco Subscription on the basis of, and in full reliance on, each of such representations and warranties. |
(b) | Each of the representations and warranties is to be construed independently and (except where this Agreement provides otherwise) is not limited by any provision of this Agreement or another representation and/or warranty. |
(c) |
A reference to any facts and circumstances being disclosed shall be deemed to be a reference to them being fully, fairly, specifically and accurately disclosed in the Current Company |
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Disclosure Schedule in such a manner that:
(i) | in the context of the disclosures contained in the Current Company Disclosure Schedule: |
(A) | the significance of the information disclosed and its relevance to a particular representation and/or warranty shall be reasonably understandable by Proparco, taking into account the paragraphs or subject matters in relation to which the information was disclosed; and |
(B) | there is not omitted from the information disclosed any information which would have the effect of rendering the information so disclosed misleading in any respect; and |
(ii) | in the context of any document treated as disclosed by the Current Company Disclosure Schedule, the matter disclosed is reasonably apparent from the terms of the document. |
Nothing disclosed by the Company to Proparco other than in the Current Company Disclosure Schedule and in accordance with the provisions of this Section 3.02 shall constitute disclosure to Proparco for the purposes of this Agreement.
Section 3.03. Survival of Representations and Warranties .
The representations and warranties set forth in this Article III or made in writing by or on behalf of the Company and the Sponsors in connection with the transactions contemplated by this Agreement shall continue in full force and effect and survive the Proparco Subscription.
Section 3.04. Undertaking by the Company and Sponsors .
(a) Without prejudice to the other provisions of this Agreement, the Sponsors hereby agree to exercise all powers and rights available to them (including the voting rights available to them in relation to the Company and shall ensure that the directors nominated by them on the board of directors of the Company vote in a board meeting of the Company) in support of the provisions of this Agreement so as to procure and ensure that the provisions of this Agreement are complied with in all respects by the Company. The Sponsors shall be jointly and severally liable to ensure the performance of the Companys obligations under this Agreement.
(b) The Company and Sponsors undertake to ensure that:
(i) | the Chhattisgarh Projects are commissioned within the time period specified under the power purchase agreements executed with Chhattisgarh State Power Distribution Company; and |
(ii) | AZI maintains its ownership and control in its Subsidiaries as required for the development and operation of the solar power generation projects under the relevant power purchase agreements entered into by the Subsidiaries. |
(c) For so long as Proparco holds any Equity Securities or Equity Shares in the Company, the Company and Sponsors shall comply, and shall ensure that AZI and its Subsidiaries comply with Proparcos standard policies on environment, social, anti-corruption, anti-money laundering and insurance issues, as provided in Schedule 8 .
(d) For so long as Proparco holds any Equity Securities or Equity Shares in the Company the Company shall furnish to Proparco all information as required by Schedule 9 with respect to the Company and its Subsidiaries on an annual basis within 90 (ninety) days from the end of each Financial Year.
23
Section 3.05. Indemnity
(a) | The Company hereby agrees to indemnify, defend and hold harmless Proparco from, against and in respect of any damages, losses, charges, liabilities, claims, demands, actions, suits, proceedings, payments, judgments, settlements, assessments, deficiencies, interest and costs and expenses (including reasonable attorneys fees) actually imposed on, sustained, incurred or suffered by, Proparco (whether in respect of third party claims, claims between the parties hereto, or otherwise) directly or indirectly relating to or arising out of: |
(i) | any breach of any representation or warranty or covenant made by the Company, contained in this Agreement; |
(ii) | any form of defect in the title over the land acquired by AZI (whether on a freehold or a leasehold basis) for the development and operation of any of the 3 (three) 10 MW solar power generation projects that are being developed by AZI in the state of Chhattisgarh; and |
(iii) | failure to commission 20 MW of Rajasthan Project II and 20 MW of Rajasthan Project IV within the timelines prescribed under the respective power purchase agreements executed with the Solar Energy Corporation of India. |
This indemnity will not be prejudiced by:
(i) | The knowledge of Proparco or any investigation by or on behalf of Proparco into the affairs of the Company, the Subsidiaries or the Sponsors; or |
(ii) | The execution or the performance of this Agreement; or |
(iii) | Any other act or thing which may be done by or on behalf of Proparco in connection with this Agreement and which might, apart from this Section, prejudice such rights or remedies. |
(b) | The Sponsors hereby jointly and severally agree to indemnify, defend and hold harmless Proparco from, against and in respect of any damages, losses, charges, liabilities, claims, demands, actions, suits, proceedings, payments, judgments, settlements, assessments, deficiencies, interest and costs and expenses (including reasonable attorneys fees) actually imposed on, sustained, incurred or suffered by, Proparco (whether in respect of third party claims, claims between the parties hereto, or otherwise) directly or indirectly relating to or arising out of (i) any breach of any representation or warranty or covenant made by the Sponsors, and (ii) any breach of the representation made by the Company under Section 3.01 A (x) ( Title and Condition of Properly ) contained in this Agreement. This indemnity will not be prejudiced by: |
(i) | The knowledge of Proparco or any investigation by or on behalf of Proparco into the affairs of the Company, the Subsidiaries or the Sponsors; or |
(ii) | The execution or the performance of this Agreement; or |
(iii) | Any other act or thing which may be done by or on behalf of Proparco in connection with this Agreement and which might, apart from this Section, prejudice such rights or remedies. |
Proparco shall be indemnified under Section 3.05(a) and 3.05(b), as applicable, against any costs and expenses incurred by Proparco in relation to efforts to enforce or protect its rights under the Transaction Documents, or the exercise of its rights or powers consequent upon or arising out of any breach of the Transaction Documents, including legal and other professional consultants fees on a full indemnity basis.
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(c) | The remedies set forth in this Section 3.05 shall be without prejudice to all the rights and remedies that Proparco may have under Applicable Law and shall not be the sole and exclusive remedies of Proparco for any breach of or any matter relating to any representation or warranty contained in this Agreement. Proparco shall be entitled to pursue any remedy that is available to it under Applicable Law. |
(d) | It is further clarified that the Sponsors shall not claim any restitution from the Company in relation to any payments that may be made by it to Proparco pursuant to the terms hereof. |
ARTICLE IV
CONDITIONS OF THE PROPARCO SUBSCRIPTION
Section 4.01. Conditions of the Pro narco Subscription .
The obligation of Proparco to subscribe to the Subscription Shares is subject to the fulfillment, to Proparcos satisfaction (at its sole discretion), or waiver by Proparco, prior to or concurrently with the making of the Proparco Subscription, of the following conditions:
(a) | Representations and Warranties . |
(i) | The representations and warranties made by the Company and the Sponsors herein, and in the Current Company Disclosure Schedule and in any schedule, exhibit or certificate delivered by the Company and the Sponsors pursuant to this Agreement, remain true, accurate and not misleading immediately prior to the Proparco Subscription, save as modified by the Current Company Disclosure Schedule; and |
(ii) | If the Current Company Disclosure Schedule has been supplemented by an Updated Company Disclosure Schedule, such Current Company Disclosure Schedule was delivered to, and accepted by, Proparco not less than ten (10) Business Days prior to the proposed Subscription Closing Date and the substance of any update of any of the representations and warranties referred to in (i) which was made in such Current Company Disclosure Schedule is acceptable to Proparco in its sole discretion; |
(b) | Performance; No Breaches . All of the agreements and covenants of the Company and the Sponsors to be performed prior to the Proparco Subscription pursuant to each Transaction Document have been duly performed in all material respects, and no breach (or any event which, with notice, lapse of time, the making of a determination or any combination, would become a breach) under any Transaction Document has occurred and is continuing; |
(c) | Authorizations . The Company has obtained and provided to Proparco copies of all Authorizations and third party consents required by the Company and/or any of Companys Subsidiaries to conduct their business and execute, perform and comply with their obligations under this Agreement and each of the other Transaction Documents and all those Authorizations and third party consents are in full force and effect; |
(d) | No Material Adverse Effect . Nothing has occurred which has or may reasonably be expected to have, since the date of this Agreement, a Material Adverse Effect; |
(e) | Company Certifications . Proparco has received certifications by the Company, substantially in the form set forth in Schedule 1 ( Form of Proparco Subscription Notice ), with respect to the conditions specified in this Section 4.01 and expressed to be effective as of the date of the Proparco Subscription; |
(f) |
Opinion of Counsel . Proparco has received a legal opinion, in form and substance reasonably satisfactory to Proparco, from Proparcos counsel in Mauritius and in England and Wales, as applicable, covering such matters relating to the transactions contemplated by this Agreement and the validity and enforceability of the Transaction Documents as Proparco may reasonably |
25
request; |
(g) | Accounting Systems . The Company and the Sponsors have certified to Proparco, in form and substance reasonably satisfactory to Proparco, that the Company has installed and has in operation an accounting and control system, management information system and books of account and other records, which together adequately give a true and fair view of the financial condition of the Company and the results of its operations in conformity with the Accounting Standards; |
(h) | Certificate of Incumbency and Authority . Proparco has received a Certificate of Incumbency and Authority from the Company; |
(i) | Transaction Documents . Proparco has received a counterpart of each of the Transaction Documents, duly executed and delivered by all other parties thereto, all of which are or will be, on delivery by Proparco of its counterpart, fully effective and unconditional, and each is in form and substance satisfactory to Proparco; |
(j) | Charter Documents . The Company and each of its Subsidiaries has adopted an amended Charter, and such amended Charter is in form and substance satisfactory to Proparco and is consistent with the provisions of the Shareholders Agreement; |
(k) | Due Diligence . The legal due diligence report with respect to AZI prepared by Proparcos relevant counsel in India is in the form and substance satisfactory to Proparco; |
(l) | Authority . The Sponsors have delivered to Proparco, certified true copies of the resolutions of the board of directors of the Company and the Sponsor Entity approving the Transaction Documents, authorizing and approving the execution, delivery and performance of the Transaction Documents and the issuance of the Subscription Shares to Proparco subject to receipt of the Subscription Amount; |
(m) | Expenses . Proparco has received evidence satisfactory to it of payment by the Company of all the invoiced fees and expenses of its counsels, being Trilegal, Bird & Bird LLP, Shardul Amarchand Mangaldas, Fieldfisher, Madun Gujadhur Chambers and Shearman & Sterling LLP, as provided in Section 5.09 (Expenses), or confirmation from each of these counsels that their respective invoiced fees and expenses have been paid; |
(n) | Externalization Process . The Externalization Process has been completed in form and substance satisfactory to the Investor and pursuant to such Externalization Process Equity Securities have been issued and allotted to (i) Helion (ii) IFC, (iii) DEG, (iv) FC, and (v) Proparco as set out in Section 3.01 A (f) ( Capital Structure of the Company ) of the Current Company Disclosure Schedule has been completed; |
(o) | Waiver of Pre-emptive Rights . Proparco has received intimation in writing from the existing shareholders or investors of the Company, in the form acceptable to Proparco, waiving their pre-emptive rights under the Shareholders Agreement to subscribe to the Equity Securities of the Company arising from the issuance of Subscription Shares to Proparco under this Agreement; |
(p) | Appointment of Auditors . The Company (i) has appointed a firm of internationally recognized independent public accountants acceptable to Proparco as Auditors of the Company, (ii) has authorized and instructed them, in the form set forth in Schedule 6 (Form of Letter to Companys Auditors), to communicate directly with the Investor; and (iii) has taken such actions, issued such instructions and delivered such documents as necessary to procure the firms compliance with such request; and |
(q) |
Insurance Requirements . Proparco has received copies of all insurance policies evidencing compliance with the requirements of Annex A ( Minimum Insurance Requirements ) and a |
26
certification from the Companys insurers or insurance agents confirming that such policies are in full force and effect and all premiums then due and payable under those policies have been paid. |
ARTICLE V
MISCELLANEOUS
Section 5.01. Notices .
(a) | Any notice, request or other communication to be given or made under this Agreement shall be in writing. Any such communication shall be delivered by hand, airmail, established courier service or facsimile to the party to which it is required or permitted to be given or made at such partys address specified below or at such other address as such party has from time to time designated by written notice to the other parties hereto, shall be effective upon the earlier of (a) actual receipt and (b) deemed receipt under Section 5.01(b) below. |
For the Company:
Azure Power Global Limited
1st Floor, The Exchange,
18 Cybercity, Ebene, Mauritius
Facsimile: +91 1149409807
Attention: Inderpreet Singh Wadhwa
For the Sponsors:
Inderpreet Singh Wadhwa
[Address]
Fascimile: [Fax Number]
Attention: Inderpreet Singh Wadhwa
Harkanwal Singh Wadhwa
[Address]
Facsimile: [Fax Number]
Attention: Harkanwal Singh Wadhwa
IW Green Inc.
341, Raven Circle
Wyoming, Zip Code 19934
Kent, United States of America
Facsimile: 91 1149409807
Attention: Inderpreet Singh Wadhwa
For Proparco:
151 Rue Saint Honoré 75001 Paris
France
Facsimile: +3315-344-3838
Attention: Head of Private Equity Division
With a copy (in the case of communications relating to payments) sent to the attention of the Director, Department of Financial Operations, at:
Facsimile: +33 1 53 44 42 94
27
(b) | Unless there is reasonable evidence that it was received at a different time, notice pursuant to this Section 5.01 is deemed given if: (i) delivered by hand, when left at the address referred to in Section 5.01(a); (ii) sent by airmail or established courier services within a country, 3(three) Business Days after posting it; (iii) sent by airmail or established courier service between two countries, 6 (six) Business Days after posting it; and (iv) sent by facsimile, when confirmation of its transmission has been recorded by the senders facsimile machine. |
Section 5.02. Saving of Rights .
(a) | The rights and remedies of Proparco in relation to any misrepresentation or breach of warranty on the part of any of the Relevant Party shall not be prejudiced by any investigation by or on behalf of Proparco into the affairs of any Relevant Party, by the execution or the performance of this Agreement or by any other act or thing by or on behalf of Proparco which might, apart from this Section, prejudice such rights or remedies. |
(b) | No course of dealing and no failure or delay by Proparco in exercising any power, remedy, discretion, authority or other right under this Agreement or any other agreement shall impair, or be construed to be a waiver of or an acquiescence in, that or any other power, remedy, discretion, authority or right under this Agreement, or in any manner preclude its additional or future exercise. |
Section 5.03. English Language .
All documents to be provided or communications to be given or made under this Agreement shall be in English and, where the original version of any such document or communication is not in English, shall be accompanied by an English translation certified by an Authorized Representative to be a true and correct translation of the original. Proparco may, if it so requires, obtain an English translation of any document or communication received in any other language at the cost and expense of the Company. In either case Proparco may deem any such translation to be the governing version.
Section 5.04. Applicable Law and Arbitration .
(a) | This Agreement, and all non-contractual obligations arising out of or in connection with it, shall be governed by the laws of England and Wales. |
(b) | Subject to this Section 5.04, any dispute arising out of or in connection with this Agreement, including any question regarding its existence, validity or termination (a Dispute ) shall be referred to and finally resolved by arbitration under the Arbitration Rules of the Singapore International Arbitration Centre (the SIAC ) in force at that time (the SIAC Rules ), which SIAC Rules are deemed to be incorporated by reference into this Section 5.04 ( Applicable Law and Arbitration ). |
(c) | There shall be one (1) arbitrator, who shall be nominated by agreement of the parties within thirty (30) days of receipt of the request for arbitration by the respondent(s). If the sole arbitrator is not nominated within this time period, the SIAC shall make the appointment. |
(d) | The place of arbitration shall be Singapore. |
(e) | The language of arbitration shall be English. |
(f) |
Notwithstanding the provisions of this Section 5.04, the arbitral tribunal shall not be authorized to take or provide, and neither the Company nor the Sponsors shall be authorized to seek from any judicial authority, any interim measures of protection or pre-award relief against Proparco, any provisions of the SIAC Rules notwithstanding. However, subject to Applicable Law, Proparco may approach any judicial authority for seeking any interim measures against the |
28
Company and/or the Sponsors, on equitable grounds or otherwise. |
(g) | The Parties acknowledge and agree that no provision of this Agreement or of the SIAC Rules, nor the submission to arbitration by Proparco, in any way constitutes or implies a waiver, termination or modification by Proparco of any privilege, immunity or exemption of Proparco granted in international conventions or the Applicable Law. |
(h) | If two or more arbitrations are commenced hereunder and/or the Related Agreements, and even if this Agreement and the Related Agreements are governed by different laws, any party to any of these arbitrations may petition any arbitral tribunal appointed in these arbitrations for an order that the several arbitrations be consolidated in a single arbitration before that arbitral tribunal (a Consolidation Order ). In deciding whether to make such a Consolidation Order, the arbitral tribunal shall consider whether the several arbitrations raise common issues of law or facts and whether to consolidate the several arbitrations would serve the interests of justice and efficiency. If before a Consolidation Order is made by an arbitral tribunal with respect to another arbitration, the arbitrator has already been appointed in that other arbitration, their appointment terminates upon the making of such Consolidation Order and they are deemed to be functus officio without prejudice to the validity of any acts done or orders made by them prior to the termination. In the event of two or more conflicting Consolidation Orders, the Consolidation Order that was made first in time shall prevail. |
(i) | The provisions of this Section 5.04 shall survive the termination of this Agreement for any reason whatsoever. |
Section 5.05. Immunity .
To the extent any Relevant Party may be entitled in any jurisdiction to claim for itself or its assets immunity in respect of its obligations under this Agreement or any other Transaction Document from any suit, execution, attachment (whether provisional or final, in aid of execution, before judgment or otherwise) or other legal process or to the extent that in any jurisdiction that immunity (whether or not claimed) may be attributed to it or its assets, such Relevant Party irrevocably agrees not to claim and irrevocably waives such immunity to the fullest extent permitted now or in the future by the laws of such jurisdiction.
Section 5.06. Successors and Assigns .
This Agreement binds and benefits the respective successors and assignees of the Parties. However, neither the Sponsors nor the Company may assign, transfer or delegate any of their rights or obligations under this Agreement without the prior written consent of Proparco.
Section 5.07. Amendments, Waivers and Consents .
Any amendment or waiver of, or any consent given under, any provision of this Agreement shall be in writing and, in the case of an amendment, signed by all of the Parties hereto.
Section 5.08. Counterparts .
This Agreement may be executed in several counterparts, each of which is an original, but all of which constitute one and the same agreement.
Section 5.09. Expenses .
(a) | The Company shall pay to Proparco or as Proparco may direct: |
(i) | the fees and expenses of Proparcos legal counsel in India, Mauritius, United States of America and England and Wales incurred in connection with: |
29
(A) | the preparation of the investment by Proparco provided for under this Agreement; |
(B) | the preparation and/or review, execution and, where appropriate, translation, registration, amendment, supplement or modification of, or waiver under, the Transaction Documents and any other documents related to any of them; |
(C) | the giving of any legal opinions required by Proparco under the Transaction Documents and any other documents related to any of them; |
(ii) | the administrative costs (including all out-of pocket expenses of Proparcos own staff) and expenses of Proparco in respect of its investment in the Company including but not limited to any registration, filing or similar fees incurred by Proparco and the costs and expenses incurred by Proparco in relation to efforts to enforce or protect its rights under this Agreement, or the exercise of its rights or powers consequent upon or arising out of any breach of this Agreement, including legal and other professional consultants fees on a full indemnity basis; and |
(iii) | the fees, charges and out of pocket expenses of Proparcos auditors and independent technical consultants. |
(b) | The provisions of Section 5.9 (a) shall survive the termination of this Agreement. |
Section 5.10. Entire Agreement .
This Agreement, together with the other Transaction Documents, supersedes all prior discussions, memoranda of understanding, agreements and arrangements (whether written or oral, including all correspondence), if any, between the Parties with respect to the subject matter of this Agreement, and this Agreement (together with any amendments or modifications and the other Transaction Documents) contains the sole and entire agreement between the Parties with respect to the subject matter of this Agreement.
Section 5.11. Disclosures .
The Company agrees and acknowledges that Proparco shall have the right, on and from the date of execution of this Agreement, to publish information or make disclosures, in the manner it deems fit, with respect to the Company, its Subsidiaries, projects undertaken by its Subsidiaries and investment by Proparco in the Company and Subsidiaries, including without limitation disclosures pertaining to the: (a) project name; (b) country of realization of the project; (c) name of the company; (d) country of the head office of the company; (e) business sector; (f) legal nature of the company; (g) signing date of the shareholders agreements; (h) amount of the financing in euros and in currency; (i) type of financing; (j) environmental and social categorization of the project; (k) presentation of the company and project description; and (1) developmental impacts of the project.
Section 5.12. Invalid Provisions .
If any provision of this Agreement is held to be illegal, invalid or unenforceable under any law from time to time: (a) such provision will be fully severable from this Agreement; (b) this Agreement will be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a part hereof; and (c) the remaining provisions of this Agreement will remain in full force and effect and will not be affected by the illegal, invalid or unenforceable provision or by its severance here from.
[ Intentionally left blank ]
30
IN WITNESS WHEREOF, the Parties hereto, acting through their duly authorized representatives, have caused this Agreement to be signed in their respective names, as of the date first written above.
AZURE POWER GLOBAL LIMITED | ||
By: |
/s/ INDERPREET SINGH WADHWA |
|
Name: | ||
Title: | ||
MR. INDERPREET SINGH WADHWA | ||
By: |
/s/ INDERPREET SINGH WADHWA |
|
MR. HARKANWAL SINGH WADHWA | ||
By: |
/s/ HARKANWAL SINGH WADHWA |
|
IW GREEN INC. | ||
By: |
/s/ INDERPREET SINGH WADHWA |
|
Name: | ||
Title: |
31
IN WITNESS WHEREOF, the Party hereto, acting through its duly authorized representative, has caused this Agreement to be signed in its respective name, as of the date first written above.
SOCIÉTÉ DE PROMOTION ET DE PARTICIPATION POUR LA COOPÉRATION ECONOMIQUE S.A. | ||
By: |
/s/ Amaury MULLIEZ |
|
Name: | Amaury MULLIEZ | |
Title: | Deputy CEO |
32
ANNEX A
MINIMUM INSURANCE REQUIREMENTS
| The Company shall, at all times, maintain a directors and officers liability insurance policy for Investors nominee director on the Board of the Company, providing adequate and customary coverage with a financially sound and reputable insurer or insurers. |
| Construction All Risks, based on full contract value and including: |
| Strike, riots and civil commotion |
| Debris removal |
| Extra Expenses |
| Extended Maintenance Period |
| Third Party Liability |
| Marine All Risks (including war) in respect of all transportation of critical items for the project |
| Fire and named perils (including earthquake) or Property All Risks, based on new replacement cost of assets |
| Machinery breakdown |
| All insurances required by local legislation |
33
SCHEDULE 1
FORM OF SUBSCRIPTION NOTICE
[Letterhead of the Company/Proparco]
[Date]
SOCIÉTÉ DE PROMOTION ET DE PARTICIPATION POUR LA COOPÉRATION ECONOMIQUE S.A.
|
||
|
Attention:
Azure Power Global Limited
Ladies and Gentlemen:
Request for Proparco Subscription
1. | Please refer to the CCPS Subscription Agreement (the Subscription Agreement , dated [●], between, inter alia , Azure Power Global Limited (the Company ), Mr. Inderpreet Singh Wadhwa, Mr. Harkanwal Singh Wadhwa and IW Green Inc. (collectively, referred to as the Sponsors ) and SOCIETE DE PROMOTION ET DE PARTICIPATION POUR LA COOPERATION ECONOMIQUE S.A. ( Proparco ). Terms defined in the Subscription Agreement, including terms defined by reference to any other Transaction Document (as defined in the Subscription Agreement), have their defined meanings wherever used in this request. |
2. | In accordance with the provisions of the Subscription Agreement and the enclosed resolution of the Companys board of directors and Companys shareholders, the Company requests the subscription of Subscription Shares. Therefore, the Company requests Proparco to pay [●] on the Subscription Closing Date to [●], for credit to the Companys account no. [●]. |
3. | The Subscription Closing Date for the subscription contemplated by this Subscription Notice shall be [ specify date no earlier than 3 Business Days after the date on which this notice will be delivered ]. |
4. | For the purpose of Section 4.01 ( Conditions of the Proparco Subscription ) of the Subscription Agreement, the Company certifies as follows: |
(a) | representations and warranties made by the Company and the Sponsors, and in any schedule, exhibit or certificate delivered by the Company and the Sponsors pursuant to the Subscription Agreement, remain true, accurate and not misleading immediately prior to the subscription made by Proparco, save as modified by the Current Company Disclosure Schedule; |
34
(b) | all of the agreements and covenants of the Company and the Sponsors to be performed prior to the Proparco Subscription pursuant to each Transaction Document have been duly performed in all material respects, and no breach (or any event which, with notice, lapse of time, the making of a determination or any combination of the foregoing, would become a breach) under the Subscription Agreement has occurred and is continuing; |
(c) | the Company has obtained and provided to Proparco copies of all Authorizations and third party consents required by the Company and/or any of the Companys Subsidiaries to conduct their business and execute, perform and comply with their obligations under the Subscription Agreement and each of the other Transaction Documents and all those Authorizations and third party consents are in full force and effect; |
(d) | nothing has occurred which has had or would reasonably be expected to have since the date of the Subscription Agreement, a Material Adverse Effect; |
(e) | the Company and the Sponsor have certified to Proparco, in form and substance satisfactory to Proparco, that the Company has installed and has in operation an accounting and cost control system, management information system and books of account and other records, which together adequately give a true and fair view of the financial condition of the Company and the results of its operations in conformity with the Accounting Standards; and |
(f) | it has appointed a firm of internationally recognized independent public accountants acceptable to Proparco as Auditors of the Company, and has authorized and instructed them, in the form set forth in Schedule 6 of the Subscription Agreement to communicate directly with the Proparco; and it has taken such actions, issued such instructions and delivered such documents as necessary to procure the firms compliance with such request. |
5. | The above certifications are effective as of the date of this Subscription Notice and shall continue to be effective as of the Subscription Closing Date set out in paragraph 3 (as if made by reference to such date). If any such certification is no longer valid as of or prior to that Subscription Closing Date, the Company undertakes to promptly notify Proparco by email. |
Yours faithfully, | ||
By |
|
|
Authorized Representative | ||
By |
|
|
Authorized Representative |
[Enclosure[s]]: | [Resolution of the Companys [board of directors]/[shareholders]]; | |
[Subscription Form] | ||
Copy to: | SOCIÉTÉ DE PROMOTION ET DE PARTICIPATION POUR LA COOPÉRATION ECONOMIQUE S.A. | |
Attention: [●] |
35
SCHEDULE 2
ORIGINAL COMPANY DISCLOSURE SCHEDULE
The purpose of this Schedule is to disclose matters which may be relevant to the representations and warranties contained in the Subscription Agreement. The representations and warranties are qualified by the facts and circumstances fully, fairly, specifically and accurately contained or disclosed in this Schedule or in any of the documents annexed to this Schedule.
DISCLOSURES
The following specific disclosures are made in relation to the representations and warranties. Each matter disclosed is listed against the sub-section number of the representation and warranty to which the disclosure relates but a disclosure applies to all of the representations and warranties only to the extent it is reasonably apparent on its face.
Representation/Warranty No. | Disclosure | |||
Clause 3.01A.1(c) ( No Conflict ) | No disclosure. | |||
Clause 3.01A.1(d) ( Status of Authorizations ) | Section 3.01A.1(d) (i): | |||
Resolution of the board of directors of the Company for signing and executing this Agreement and other applicable Transaction Documents | ||||
Resolution of the board of directors of the Sponsor Entity dated for signing and executing this Agreement and other applicable Transaction Documents | ||||
Section 3.01A.1 (d)(ii) :
Shareholders resolution for amendment of Charter Documents. |
||||
Resolution of the board of directors of the Company for issuance of Shares. | ||||
Clause 3.01A (e) ( Charter and Number of Directors ) | List of Directors | |||
Azure Power Global Limited |
||||
a. Inderpreet Wadhwa | ||||
b. Eric Ng. | ||||
c. Khalid Peyrye | ||||
Details of directors of the Subsidiaries are set out in Annexure 2 (A) ). |
||||
Clause 3.01A (f) ( Capital Structure of the Company ) | Paid up Capital of the Company is USD 1,098.30 | |||
(Details of the Capital Structure attached separately as Annexure 1 ) | ||||
Clause 3.01A (g) ( No Immunity ) | No disclosure | |||
Clause 3.01A (h) ( Financial Condition ) | Section 3.01A (h) (i): No Disclosure |
36
Representation/Warranty No. | Disclosure | |||
Section 3.01A (h) (ii): No Disclosure | ||||
Section 3.01A (h) (iii): Details of disclosures are set out in Annexure 3 | ||||
Section 3.01A (h) (iv): No Disclosure | ||||
Clause 3.01A (i) ( Financial Statements ) | No disclosure | |||
Clause 3.01A (j) ( Taxes ) | No disclosure | |||
Clause 3.01A (k) ( Litigation ) | Section 3.01A (k) (i) : | |||
1. |
Civil Suit No. 22/2012 along with temporary injunction application no. 20/2012 filed by Sh. Mehram before Civil Judge (Jr. Div.) Jayal, District Nagaur on 9 th July 2012 against Azure Power (Rajasthan) Pvt. Ltd., In the continuation of this a Writ Petition (S. B. Civil Writ Petition No. 9685/2012) filed by Azure Power Rajasthan Pvt. Ltd., at High Court, Jodhpur - a portion of land leased admeasuring Khasra Number 1175, Tehsil Jayal District Nagour, Rajasthan from the Government of Rajasthan for the projects of Azure Power Rajasthan Pvt. Ltd., in Rajasthan, is presently disputed as third parties have sought establishment of mining rights through the Mining Department of the State of Rajasthan. Azure Power Rajasthan Pvt. Ltd, has filed a petition with the High Court of Rajasthan seeking non-renewal of the mining rights. Presently, this matter is pending before the High Court of Rajasthan.
Prayer : Azure Power Rajasthan Private Limited has prayed before the honorable high court that the mining lease under dispute should not be renewed. |
|||
2. | Case pending before the Supreme Court of India - The Gujarat Urja Vikas Nigam Limited, had filed a petition with the Gujarat Electricity Regulatory Commission, seeking recalculation on the basis of actual cash flow required for development of solar projects and consequent revision of the tariff payable by it, in relation to certain solar power projects including 10 MW Gujarat project of Azure Power (Haryana) Pvt. Ltd. While the Gujarat Electricity Regulatory Commission and the Appellate Tribunal for Electricity dismissed the claims made by Gujarat Urja Vikas Nigam Limited, an appeal filed by Gujarat Urja Vikas Nigam Limited is pending |
37
38
Representation/Warranty No. | Disclosure | |||
Clause 3.01A (l) ( Compliance with Law ) | No disclosure | |||
Clause 3.01A (m) ( Environmental and Social Matters ) | No disclosure | |||
Clause 3.01A (n) ( Corrupt Practice ) | No disclosure | |||
Clause 3.01A (o) ( Insurance ) | Description of any Material Claims | |||
1. | Azure Urja Private Limited:- Claim of Rs. 5.6 Million is pending with National Insurance Company on account of solar module damage. | |||
2. | Azure Clean Energy Pvt. Ltd., Azure Sunshine Pvt. Ltd. and Azure Greentech Pvt. Ltd. :- Claim of Rs. 7 Million is pending with National Insurance Company on account of solar module damage | |||
Clause 3.01A (p) ( Disclosure ) | No disclosure | |||
Clause 3.01A (q) ( Subsidiaries ) | Attached Separately list of Subsidiaries, their directors, ownership, domicile and head office as Annexure 2 (A) and (B) | |||
Clause 3.01A (r) ( UN Security Council Resolutions ) | No disclosure | |||
Clause 3.01A (s) ( Criminal Offenses ) | No disclosure | |||
Clause 3.01A (t) ( Restrictions on Business Activities ) | No disclosure | |||
Clause 3.01A (u) ( Material Contracts ) | Section 3.01A(u) (i): | |||
| Operations & Maintenance Agreements hereinafter referred to as the O & M Contract ) between the Azure Power India Private Limited (AZI) and its Subsidiaries (attached separately as Annexure 4 (A) ). | |||
| Agreement in respect of lease of office premises at corporate office of the Company between Sunbir Singh Wadhwa & Kulwinder Wadhwa (Lessors) and Azure Power India Pvt. Ltd. (Lessee) dated 15 th October, 2013. Agreement in respect of lease of project land for Azure Power Punjab Pvt. Ltd. | |||
| Agreement in respect of lease of project land for Azure Power Rajasthan Pvt. Ltd. | |||
| Agreement in respect of lease of project land for Azure Solar Pvt. Ltd. | |||
| Agreement in respect of lease of project land for Azure Urja Pvt. Ltd. | |||
| Agreement in respect of lease of project land for Azure Clean Energy Pvt. Ltd. |
39
Representation/Warranty No. | Disclosure | |||
| Agreement in respect of lease of project land for Azure Sunshine Pvt. Ltd. | |||
| Agreement in respect of lease of project land for Azure Greentech Pvt. Ltd. | |||
Section 3.01A(u) (ii): Details of disclosures set out in Annexure 3 . The Company or any of its Subsidiaries has not defaulted with respect to any Company Agreements in relation to indebtedness. | ||||
Section 3.01A(u) (iii): No disclosure | ||||
Section 3.01A(u) (iv): No disclosure | ||||
Section 3.01A(u) (v): No disclosure | ||||
Clause 3.01A (v) ( Intellectual Property ) | No disclosure | |||
Clause 3.01A (w) ( Interested Party Transactions ) | No disclosure | |||
Clause 3.01A (x) ( Title to and Condition of Property ) | No disclosure | |||
Clause 3.01A (y) ( Books and Records ) | No disclosure | |||
Clause 3.01A (z) ( Labour Employee Matters ) | No disclosure | |||
Clause 3.01A (aa) ( Employee Benefit Plans ) | No disclosure | |||
Clause 3.01A (bb) ( Customers and Suppliers ) | No disclosure | |||
Clause 3.01A (cc) ( Illicit Origin of Funds ) | No disclosure | |||
Clause 3.01A (dd) ( Business Relationship ) | No disclosure | |||
Clause 3.01A (ee) ( Compliance with guarantees and borrowings ) | No disclosure | |||
Clause 3.01A (ff) ( Commissioning Obligations ) | No disclosure |
40
ANNEXURE 1
PAID-UP CAPITAL & SHARE EQUIVALENTS
Pre
Externalization |
Post Externalization | |||||||||||||||
Name of Party |
Equity
Shares |
Preference
Shares |
CCDs | |||||||||||||
International Finance Corporation |
| 10 |
|
73,272 Series B CCPS
4,439 Series D CCPS 20,307 Series F CCPS |
|
|
1,100,000 IFC CCDs
37,500 IFC II CCDs
|
|
||||||||
Helion Venture Partners II, LLC |
| 10 |
|
2,575 Series A CCPS
53,887 Series B CCPS 114,940 Series C CCPS 26,636 Series D CCPS 63,853 Series F CCPS |
|
| ||||||||||
Helion Venture Partners India II, LLC |
| | 16,810 Series A CCPS | | ||||||||||||
FC VI India Venture (Mauritius) Ltd. |
| 10 |
|
19,385 Series A CCPS
53,887 Series B CCPS 114,940 Series C CCPS
53273 Series
D CCPS
|
|
| ||||||||||
DEG Deutsche Investitions und Entwicklungsgesellschaft mbH |
| 10 | | 680,390 DEG CCDs | ||||||||||||
Société de Promotion et de Participation pour la Coopération Économique S.A. |
| 10 | 140,000 Series E CCPS | | ||||||||||||
IW Green Inc. |
102,497 | 102,497 | | | ||||||||||||
Azure Power Inc. |
5,700 | 5,700 | | | ||||||||||||
Satnam Sanghera |
1,633 | 1,633 | | | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total |
109,880 | 109,880 | 812,177 | 1,853,890 | ||||||||||||
|
|
|
|
|
|
|
|
41
ANNEXURE 2 (A)
LIST OF SUBSIDIARIES, THEIR DIRECTORS, OWNERSHIP, DOMICILE AND HEAD OFFICE [pursuant to Section 4.1(e) ( Charter and Number of Directors ) & Section 4.1(q) ( Subsidiaries )]
SI. |
Name of Subsidiary |
Directors |
Capitalisation |
Shareholding/ Ownership |
Registered Office/
|
Head office |
||||||||
1. | Azure Power India Private Limited (AZI) |
(a) Mr. Inderpreet S Wadhwa.
(b) Mr. H.S. Wadhwa.
(c) Mr. Sanjeev Aggarwal,
(d) Mr. William Bruce Elmore
(e) Ms. Dianne Goss Farrell
(f) Mr. Robert Douglas Kelly |
Rs. 9,220,570/- Divided into 1,09,880 Equity Shares of Rs. 10 Each & 8,12,177 Preference share of Rs. 10 each. |
1. Mr. Inderpreet Singh Wadhwa holds 97,497 Equity Shares of Rs 10 Each.
2. Azure Power Inc. Holds 5,700 Equity Shares of Rs 10 Each.
3. Mr. Harkanwal Singh Holds 5,000 Equity Shares of Rs 10 Each. |
8, G.F., Local Shopping Complex, Pushp Vihar, Madangir, New Delhi - 62 |
8, G.F., Local Shopping Complex, Pushp Vihar, Madangir, New Delhi - 62 | ||||||||
4. FC VI India Venture (Mauritius) Ltd Holds 10 Equity Shares of Rs 10 Each and 295,458 Compulsorily Convertible Preference Shares of Rs. 10 Each. |
||||||||||||||
5. Helion Ventures Partners II LLC Holds 10 Equity Shares of Rs 10 Each and 261,891 Compulsorily Convertible Preference Shares of Rs. 10 Each. |
42
SI. |
Name of Subsidiary |
Directors |
Capitalisation |
Shareholding/ Ownership |
Registered Office/
|
Head office |
||||||||
6. International Finance Corporation Holds 10 Equity Shares of Rs 10 Each, 98018 Compulsorily Convertible Preference Shares of Rs. 10 Each, 11,00,000 Compulsorily Convertible Debentures of Rs. 224.19 , 37,500 Compulsorily Convertible Debentures of Rs. 2,000 and 36,000 Compulsorily Convertible Debentures of Rs.5,000. |
||||||||||||||
7. Satnam Sanghera Holds 1,633 Equity Shares of Rs 10 Each. | ||||||||||||||
8. DEG Holds 10 Equity Shares of Rs 10 Each and 680,390 Compulsorily Convertible Debentures of Rs. 1,000/-. | ||||||||||||||
9. PROPARCO holds 10 Equity Share of Rs 10 Each and 140,000 Compulsorily |
43
SI. |
Name of Subsidiary |
Directors |
Capitalisation |
Shareholding/ Ownership |
Registered Office/
|
Head office |
||||||||
Convertible Preference Shares of Rs. 10 Each.
10. Helion Venture Partners India II LLC holds 16,810 Compulsorily Convertible Preference Shares of Rs. 10 Each. |
||||||||||||||
2. | Azure Power (Punjab) Pvt. Ltd. |
(a) Inderpreet Wadhwa
(b) H.S. Wadhwa |
Rs. 1,265,240/- divided into 1,265,24 equity shares of Rs. 10 each. |
1. Mr. H.S. Wadhwa holds 1 Equity Share
2. Azure Power India Private Limited Holds 126523 Equity Share of Rs 10 Each |
C - 2324, Ranjit Avenue, Amritsar |
8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 |
||||||||
3. | Azure Power (Haryana) Pvt. Ltd. |
(a) Inderpreet Wadhwa
(b) H.S. Wadhwa
(c) Sanjeev Aggarwal
(d) Natarajan Ranganathan |
Rs. 20,49,200 Lacs Divided into 204920 Equity Shares of Rs. 10 Each. |
1. Mr. H.S. Wadhwa holds 1 Equity Share
2. Azure Power India Private Limited Holds 163935 Equity Share of Rs 10 Each
3. Suntech Power International Ltd. holds 40984 Equity Share of Rs 10 Each |
Villa No. 148, Tatvam Villas, Sohna Road, Gurgaon, Haryana - 122018 | 8, G.F., Local Shopping Complex, Pushp Vihar, Madangir, New Delhi - 62 | ||||||||
4. | Azure Power (Rajasthan) Pvt. Ltd. |
(a) Inderpreet Wadhwa
(b) H.S. Wadhwa |
Rs. 988,740 Divided into 988,74/ Equity Shares of Rs. 10 Each. |
1. Mr. H.S. Wadhwa holds 1 equity share
2. Azure Power India Private Limited holds 98873 Equity Share of Rs 10 Each |
8, G.F., Local Shopping Complex, Pushp Vihar, Madangir, New Delhi - 62 |
8, G.F., Local Shopping Complex, Pushp Vihar, Madangir, New Delhi - 62 |
44
SI. |
Name of Subsidiary |
Directors |
Capitalisation |
Shareholding/ Ownership |
Registered Office/
|
Head office |
||||||
5. | Azure Solar Pvt. Ltd. |
(a) Inderpreet Wadhwa
(b) H.S. Wadhwa |
Rs.11,845,800 Divided Equity Shares of Rs. 10 Each. |
1. Mr. H.S. Wadhwa holds 1 equity share of Rs 10 each.
2. Azure Power India Private Limited holds 1093521 Equity Share of Rs 10 Each
3. Azure Power US Inc. holds 91058 Equity Share of Rs 10 Each |
8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 |
8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 |
||||||
6. | Azure Sun Energy Pvt. Ltd. |
(a) Inderpreet Wadhwa
(b) H.S. Wadhwa |
Rs. 7,56,240 Divided into 75,624 Equity Shares of Rs. 10 Each. |
1. Mr. H.S. Wadhwa holds 1 equity share of Rs 10 each
2. Azure Power India Private Limited holds 75623 Equity Share of Rs 10 Each. |
8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 |
8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 |
||||||
7. | Azure Solar Solutions Pvt. Ltd. |
(a) Inderpreet Wadhwa
(b) H.S. Wadhwa |
Rs. 2,25,760 divided into 22,576 Equity Shares of Rs. 10 Each. |
1. Mr. H.S. Wadhwa holds 1 equity share of Rs 10 each
2. Azure Power India Private Limited holds 22575 Equity Share of Rs 10 Each |
8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 |
8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 |
||||||
8. | Azure Urja Pvt. Ltd. |
(a) Inderpreet Wadhwa
(b) H.S. Wadhwa |
Rs. 1416380 Lacs Divided into 141638 Equity Shares Rs. 10 Each |
1. Mr. H.S. Wadhwa holds 1 equity share of Rs 10 each
2. Azure Power India Private Limited holds 104532 Equity Share of Rs 10 Each |
8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 |
8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 |
45
SI. |
Name of Subsidiary |
Directors |
Capitalisation |
Shareholding/ Ownership |
Registered Office/
|
Head office |
||||||
3. Azure Power US Inc. holds 37105 Equity Share of Rs 10 Each |
||||||||||||
9. | Azure Power (Karnataka) Pvt. Ltd. |
(a) Inderpreet Wadhwa
(b) H.S. Wadhwa |
Rs. 6,41,650 Divided into 64,165 Equity Shares of Rs. 10 Each. |
1. Mr. H.S. Wadhwa holds 1 equity share of Rs 10 each
2. Azure Power India Private Limited holds 37776 Equity Share of Rs 10 Each
3. Azure Urja Private Limited holds 26388 Equity Share of Rs 10 Each |
PRASHANTH NILAYA, H.No. 279, 4TH CROSS, ARAVIND NAGAR, HUBLI - 580024 |
8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 |
||||||
10. | Azure Surya Pvt. Ltd. |
(a) Inderpreet Wadhwa
(b) H.S. Wadhwa |
Rs. 666870 Divided into 66687 Equity Shares of Rs. 10 Each. |
1. Mr. H.S. Wadhwa holds 1 equity share of Rs 10 each
2. Azure Power India Private Limited holds 44898 Equity Share of Rs 10 Each
3. Azure Urja Private Limited holds 21788 Equity Share of Rs 10 Each |
8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 |
8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 |
||||||
11. |
Azure Sunshine Pvt. Ltd. |
(a) Inderpreet Wadhwa
(b) H.S. Wadhwa |
Rs. 5,63,360 Divided 56336 Equity Shares of Rs. 10 Each. |
1. Mr. H.S. Wadhwa holds 1 equity share of Rs 10 Each
2. Azure Power India Private Limited |
8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 |
8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 |
46
SI. |
Name of Subsidiary |
Directors |
Capitalisation |
Shareholding/ Ownership |
Registered Office/
|
Head office |
||||||
holds 56335 Equity Share of Rs 10 Each | ||||||||||||
12. |
Azure Greentech Pvt. Ltd. |
(a) Inderpreet Wadhwa
(b) H.S. Wadhwa |
Rs.5,64,030 Divided into 56,403 Equity Shares of Rs. 10 Each. |
1. Mr. H.S. Wadhwa holds 1 equity share of Rs 10 each
2. Azure Power India Private Limited holds 56402 Equity Share of Rs 10 Each |
8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 |
8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 |
||||||
13. | Azure Clean Energy Pvt. Ltd. |
(a) Inderpreet Wadhwa
(b) H.S. Wadhwa |
Rs.4,63,550 Divided into 46,355 Equity Shares of Rs. 10 Each. |
1. 1. Mr. H.S. Wadhwa holds 1 equity share of Rs 10 each
2. Azure Power India Private Limited holds 46354 Equity Share of Rs 10 Each |
8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 |
8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 |
||||||
14. | Azure Sunlight Pvt. Ltd. |
(a) Inderpreet Wadhwa
(b) H.S. Wadhwa |
Rs. 109520 Divided into 10952 Equity Shares of Rs. 10 Each. |
1. Mr. H.S. Wadhwa holds 1 equity share of Rs 10 each
2. Azure Power India Private Limited holds 10951 Equity Share of Rs 10 Each |
8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 |
=8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 |
||||||
15. | Azure Sunrise Pvt. Ltd. |
(a) Inderpreet Wadhwa
(b) H.S. Wadhwa |
Rs. 101810.00 Divided into 10181 Equity Shares of Rs. 10 Each. |
1. Mr. H.S. Wadhwa holds 1 equity share of Rs 10 each
2. Azure Power India Private Limited holds 10180 Equity Share of Rs 10 Each |
8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 |
8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 |
47
SI. |
Name of Subsidiary |
Directors |
Capitalisation |
Shareholding/ Ownership |
Registered Office/
|
Head office |
||||||
16. | Azure Power (Raj.) Pvt. Ltd. |
(a) Inderpreet Wadhwa
(b) H.S. Wadhwa |
Rs. 201310 Divided into 20131 Equity Shares of Rs. 10 Each. |
1. Mr. H.S. Wadhwa holds 1 equity share of Rs 10 each
2. Azure Power India Private Limited holds 20130 Equity Share of Rs 10 Each |
8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 |
8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 |
||||||
17. | Azure Renewable Energy Pvt. Ltd. |
(a) Inderpreet Wadhwa
(b) H.S. Wadhwa |
Rs. 1228940 Divided into 122894 Equity Shares of Rs. 10 Each. |
1. Mr. H.S. Wadhwa holds 1 equity share of Rs 10 each
2. Azure Power India Private Limited holds 122894 Equity Share of Rs 10 Each |
8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 |
8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 |
||||||
18. |
Azure Photovoltaic Pvt. Ltd. |
(a) Inderpreet Wadhwa
(b) H.S. Wadhwa |
Rs. 201,760.00 Divided into 20176 Equity Shares of Rs. 10 Each. |
1. Mr. H.S. Wadhwa holds 1 equity share of Rs 10 each
2. Azure Power India Private Limited holds 122894 Equity Share of Rs 10 Each |
8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 |
8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 |
||||||
19. | Azure Power Infrastructure Pvt. Ltd. |
(a) Inderpreet Wadhwa
(b) H.S. Wadhwa |
Rs. 872880 Lacs Divided into 87288 Equity Shares of Rs. 10 Each. |
1. Mr. H.S. Wadhwa holds 1 equity share of Rs 10
2. Azure Power India Private Limited holds 76073 Equity Share of Rs 10 Each
3. Azure Urja Private Limited Holds 11214 Equity Share of Rs 10 Each |
8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 |
8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 |
48
SI. |
Name of Subsidiary |
Directors |
Capitalisation |
Shareholding/ Ownership |
Registered Office/
|
Head office |
||||||
20. | Azure Power Earth Pvt. Ltd. |
(a) Surendra Kumar Gupta
(b) Preet Mohinder Singh Sandhu |
Rs. 1 Lacs Divided into 10 000/ Equity Shares of Rs. 10 Each. |
1. Mr. H.S. Wadhwa holds 1 equity share of Rs 10
2. Azure Power India Private Limited holds 9999 Equity Share of Rs 10 Each |
8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 |
8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 |
||||||
21. | Azure Power Eris Pvt. Ltd. |
(a) Surendra Kumar Gupta
(b) Preet Mohinder Singh Sandhu |
Rs. 1 Lacs Divided into 10 000/ Equity Shares of Rs. 10 Each. |
1. Mr. H.S. Wadhwa holds 1 equity share of Rs 10
2. Azure Power India Private Limited holds 9999 Equity Share of Rs 10 Each |
8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 |
8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 |
||||||
22. | Azure Power Mars Pvt. Ltd. |
(a) Surendra Kumar Gupta
(b) Preet Mohinder Singh Sandhu |
Rs. 881,250.00 Divided into 88,125 Equity Shares of Rs. 10 Each. |
1. Mr. H.S. Wadhwa holds 1 equity share of Rs 10
2. Azure Power India Private Limited holds 88124 Equity Share of Rs 10 Each |
8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 |
8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 |
||||||
23. | Azure Power Mercury Pvt. Ltd. |
(a) Surendra Kumar Gupta
(b) Preet Mohinder Singh Sandhu |
Rs. 1 Lacs Divided into 10 000/ Equity Shares of Rs. 10 Each. |
1. Mr. H.S. Wadhwa holds 1 equity share of Rs 10
2. Azure Power India Private Limited holds 9999 Equity Share of Rs 10 Each |
8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 |
8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 |
||||||
24. | Azure Power Makemake Pvt. Ltd. |
(a) Surendra Kumar Gupta
(b) Preet Mohinder Singh Sandhu |
Rs. 1,422,030.00 Divided into 1,42,203 Equity Shares of Rs. 10 Each. |
1. Mr. H.S. Wadhwa holds 1 equity share of Rs 10
2. Azure Power India Private Limited |
8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA- 110062 |
8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 |
49
SI. |
Name of Subsidiary |
Directors |
Capitalisation |
Shareholding/ Ownership |
Registered Office/
|
Head office |
||||||
holds 142202 Equity Share of Rs 10 Each |
||||||||||||
25. | Azure Power Pluto Pvt. Ltd. |
(a) Surendra Kumar Gupta
(b) Preet Mohinder Singh Sandhu |
Rs. 1 Lacs Divided into 10 000/ Equity Shares of Rs. 10 Each. |
1. Mr. H.S. Wadhwa holds 1 equity share of Rs 10
2. Azure Power India Private Limited holds 9999 Equity Share of Rs 10 Each |
8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 |
8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 |
||||||
26. | Azure Power Venus Pvt. Ltd. |
(a) Surendra Kumar Gupta
(b) Preet Mohinder Singh Sandhu |
Rs. 1 Lacs Divided into 10 000/ Equity Shares of Rs. 10 Each. |
1. Mr. H.S. Wadhwa holds 1 equity share of Rs 10
2. Azure Power India Private Limited holds 9999 Equity Share of Rs 10 Each |
8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 |
8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 |
||||||
27. | Azure Power Saturn Pvt. Ltd. |
(a) Surendra Kumar Gupta
(b) Preet Mohinder Singh Sandhu |
Rs. 1 Lacs Divided into 10 000/ Equity Shares of Rs. 10 Each. |
1. Mr. H.S. Wadhwa holds 1 equity share of Rs 10
2. Azure Power India Private Limited holds 9999 Equity Share of Rs 10 Each |
8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 |
8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 |
||||||
28. | Azure Power Uranus Pvt. Ltd. |
(a) Surendra Kumar Gupta
(b) Preet Mohinder Singh Sandhu |
Rs. 1 Lacs Divided into 10 000/ Equity Shares of Rs. 10 Each. |
1. Mr. H.S. Wadhwa holds 1 equity share of Rs 10
2. Azure Power India Private Limited holds 9999 Equity Share of Rs 10 Each |
8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 |
8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 |
||||||
29. | Azure Power Jupiter Pvt. Ltd. |
(a) Surendra Kumar Gupta |
Rs. 1 Lacs Divided into 10 000/ Equity |
1. Mr. H.S. Wadhwa holds 1 equity share of Rs 10 |
8, Local Shopping Complex, Pushp Vihar, Madangir, New |
8, Local Shopping Complex, Pushp Vihar, Madangir, |
50
SI. |
Name of Subsidiary |
Directors |
Capitalisation |
Shareholding/ Ownership |
Registered Office/
|
Head office |
||||||
(b) Preet Mohinder Singh Sandhu |
Shares of Rs. 10 Each. |
2. Azure Power India Private Limited holds 9999 Equity Share of Rs 10 each |
Delhi, Delhi, INDIA - 110062 | New Delhi, Delhi, INDIA - 110062 | ||||||||
30. | Aster Power Inc. |
Inderpreet Wadhwa |
531,001 Shares of US$ 1 each. | Azure Power India Private Limited holds 531,001 Shares of US$ 1 each. | United States of America | 1054 31st Street, NW, Suite 545, Washington, DC 20007. | ||||||
31. | Azure Power US Inc. |
Inderpreet Wadhwa |
1,543,001 Shares of US$ 1 each. | Azure Power India Private Limited holds 1543,001 Shares of US$ 1 each. | United States of America | 1054 31st Street, NW, Suite 545, Washington, DC 20007. |
51
ANNEXURE 2 (B)
LIST OF SUBSIDIARIES AND THE RELATED DETAILS [pursuant to Section 4.1(g) (Subsidiaries)]
SI. |
Name of Subsidiary |
Lien, if any |
Other Remarks |
|||
1. | Azure Power (Punjab) Pvt, Ltd. |
OPIC has lien on the project assets of Azure Power (Punjab) Pvt. Ltd. Shareholding of the Company in Azure Power (Punjab) Pvt. Ltd., has been pledged in favour of OPIC. |
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2. | Azure Power (Haryana) Pvt. Ltd. |
OPIC has lien on the project assets of Azure Power (Haryana) Pvt. Ltd. Shareholding of the Company in Azure Power (Haryana) Pvt. Ltd., has been pledged in favour of OPIC. |
20% of shareholding is held by M/s Suntech. | |||
3. | Azure Power (Rajasthan) Pvt. Ltd. | US Exim Bank has lien on the project assets of Azure Power (Rajasthan) Pvt. Ltd. Shareholding of the Company in Azure Power (Rajasthan) Pvt. Ltd., has been pledged in favour of US Exim Bank/ their trustees. | ||||
4. | Azure Solar Pvt. Ltd. |
US Exim Bank has lien on the project assets of Azure Solar Pvt. Ltd. Shareholding of the Company in Azure Solar Pvt. Ltd., has been pledged in favour of the US Exim Bank/ their trustees. |
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5. | Azure Sun Energy Pvt. Ltd. |
IFC has lien on the project assets of Azure Sun Energy Pvt. Ltd. Shareholding of the Company in Azure Sun Energy Pvt. Ltd., has been pledged in favour of the trustee of IFC/ their trustees. |
||||
6. | Azure Solar Solutions Pvt. Ltd. | Central Bank of India Ltd., has lien on the project assets of Azure Solar Solutions Pvt. Ltd. Shareholding of the Company in Azure Solar Solutions Pvt. Ltd., has been pledged in favour of Central Bank of India Ltd. | ||||
7. | Azure Urja Pvt. Ltd. | PTC Financial Services Ltd., has lien on the project assets of Azure Urja Pvt. Ltd. Shareholding of the Company in Azure Urja Pvt. Ltd. has been pledged in favour of PTC Financial Services Ltd. | ||||
8. | Azure Power (Karnataka) Pvt. Ltd. | PTC Financial Services Ltd., has lien on the project assets of Azure (Karnataka) Pvt. Ltd. Shareholding of the Company in Azure (Karnataka) Pvt. Ltd., has been pledged in favour of PTC Financial Services Ltd. | ||||
9. | Azure Surya Pvt. Ltd. | PTC Financial Services Ltd., has lien on the project assets of Azure Surya Pvt. Ltd. Shareholding of the Company in Azure Surya Pvt. Ltd., has been pledged in favour of PTC Financial Services Ltd. | ||||
10. | Azure Sunshine Pvt. Ltd. | IREDA and Central Bank have lien on the project assets of Azure Sunshine Pvt. Ltd. |
52
SI. |
Name of Subsidiary |
Lien, if any |
Other Remarks |
|||
Shareholding of the Company in Azure Sunshine Pvt. Ltd., has been pledged in favour of IREDA and Central Bank. | ||||||
11. | Azure Greentech Pvt. Ltd. | IREDA and Central Bank have lien on the project assets of Azure Greentech Pvt. Ltd. Shareholding of the Company in Azure Greentech Pvt. Ltd., has been pledged in favour of IREDA and Central Bank. | ||||
12. | Azure Clean Energy Pvt. Ltd. | IREDA, IFC and IIFCL have lien on the project assets of Azure Clean Energy Pvt. Ltd. Shareholding of the Company in Azure Clean Energy Pvt. Ltd. has been pledged in favour of IREDA, IFC and IIFCL. | ||||
13. | Azure Sunlight Pvt. Ltd. | Not applicable | ||||
14. | Azure Sunrise Pvt. Ltd. | Not applicable | ||||
15. | Azure Power (Raj.) Pvt. Ltd. | Not applicable | ||||
16. | Azure Renewable Energy Pvt. Ltd. | Not applicable | ||||
17. | Azure Photovoltaic Pvt. Ltd. | Not applicable | ||||
18. | Azure Power Infrastructure Pvt. Ltd. | Not applicable | ||||
19. | Azure Power Earth Pvt. Ltd. | Not applicable | ||||
20. | Azure Power Eris Pvt. Ltd. | Not applicable | ||||
21. | Azure Power Mars Pvt. Ltd. | Not applicable | ||||
22. | Azure Power Mercury Pvt. Ltd. | Not applicable | ||||
23. | Azure Power Makemake Pvt. Ltd. | Not applicable | ||||
24. | Azure Power Pluto Pvt. Ltd. | Not applicable | ||||
25. | Azure Power Venus Pvt. Ltd. | Not applicable | ||||
26. | Azure Power Saturn Pvt. Ltd. | Not applicable | ||||
27. | Azure Power Uranus Pvt. Ltd. | Not applicable | ||||
28. | Azure Power Jupiter Pvt. Ltd. | Not applicable |
53
ANNEXURE 3 [Section 4.1(h) (Financial Conditions)]
DETAILS OF TERM LOAN AGREEMENTS AND OTHER FINANCING AGREEMENTS EXECUTED
BY AZI AND ITS SUBSIDIARIES
S. No |
Project/ Location |
Details of the
|
Lender |
Description of the agreement |
Date of Execution of Agreements |
Loan Amount | ||||||||
1. | 2 MW Punjab | Azure Power Punjab Pvt. Ltd | OPIC | Term Loan Agreement and the related financing documents | February 20, 2009 | USD | 6,230,000 | |||||||
1 st Amendment to the Term Loan Agreement | April 27, 2009 | |||||||||||||
2 nd Amendment to the Term Loan Agreement | March 11, 2010 | |||||||||||||
3 rd Amendment to the Term Loan Agreement | June 22, 2010 | |||||||||||||
2. | 10 MW Gujarat | Azure Power (Haryana) Pvt. Ltd. | OPIC | Term Loan Agreement and the related financing documents | January 27, 2011 | USD | 26,835,436 | |||||||
1 st Amendment to the Term Loan Agreement | February 16, 2011 | |||||||||||||
2 nd Amendment to the Term Loan Agreement | June 2, 2011 | |||||||||||||
3 rd Amendment to the Term Loan Agreement | November 3, 2011 | |||||||||||||
4 th Amendment to the Term Loan Agreement | November 16, 2012 | |||||||||||||
3. | 5 MW Rajasthan | Azure Power (Rajasthan) Pvt. Ltd. | US EX-IM Bank | Term Loan Agreement and the related financing documents | August 25, 2011 | USD | 15,776,702 | |||||||
1 st Amendment to the Term Loan Agreement | Sep 15, 2011 |
54
S. No |
Project/ Location |
Details of the
|
Lender |
Description of the agreement |
Date of Execution of Agreements |
Loan Amount | ||||||||
2 nd Amendment to the Term Loan Agreement | November 22, 2011 | |||||||||||||
3 rd Amendment to the Term Loan Agreement | Feb 6, 2012 | |||||||||||||
4. | 35 MW Rajasthan | Azure Solar Pvt. Ltd. | US EX-IM Bank | Term Loan Agreement and the related financing documents | August 29, 2012 | USD | 63,708,791 | |||||||
5. | 2.5 MW Rooftop Gujarat | Azure Sun Energy Pvt. Ltd. | IFC | Term Loan Agreement and the related financing documents | May 24, 2013 | INR | 158,400,000 | |||||||
1 st Amendment to the Term Loan Agreement | Sep 16, 2013 | |||||||||||||
6. | 34 MW Punjab | Azure Urja Pvt. Ltd. | PTC India Financial Services Ltd | Term Loan Agreement and the related financing documents | March 13, 2014 | INR | 1,88,00,00,000 | |||||||
7. |
Rooftop projects |
Azure Solar Solution Private Ltd. | Central Bank of India | Term Loan Agreement and the related financing documents | March 25, 2014 | INR | 31,45,00,000 | |||||||
8. |
Working Capital |
Azure Power India Pvt. Ltd. | Central Bank of India | Non-fund based facility Agreement and the related financing documents | May 31, 2014 | INR | 1,98,00,00,000 | |||||||
9. | BG Facility | Azure Power India Pvt. Ltd. | Yes Bank Ltd | Non-fund based facility Agreement and the related financing documents | March 2, 2015 | INR | 50,00,00,000 | |||||||
10. | BG Facility | Azure Power India Pvt. Ltd. |
Indusind Bank |
Non-fund based facility Agreement and the related financing documents | April 6, 2015 | INR | 75,00,00,000 |
55
S. No |
Project/ Location |
Details of the
|
Lender |
Description of the agreement |
Date of Execution of Agreements |
Loan Amount | ||||||||
11. | Chhattisgarh 30 MW | Azure Power India Pvt. Ltd. | Yes Bank Ltd | Term Loan Agreement and the related financing documents | May 8, 2015 | INR | 1,60,10,00,000 | |||||||
12. | 10 MW Uttar Pradesh | Azure Surya Pvt. Ltd. | PTC India Financial Services Ltd | Term Loan and the related financing documents Agreement | September 19, 2014 | INR | 55,00,00,000 | |||||||
13. | 40 MW Rajasthan | Azure Clean Energy Pvt. Ltd. |
IREDA, IIFCL |
Common Loan Facility Agreement and the related financing documents | March 13, 2015 | INR | 2,05,00,00,000 | |||||||
IFC | Loan Agreement and the related financing documents | October 31, 2014 | ||||||||||||
IFC | 1 st Amendment to the Term Loan Agreement | Feb 11, 2015 | ||||||||||||
IFC | 2 nd Amendment to the Term Loan Agreement | March 10, 2015 | ||||||||||||
SECI | VGF Agreement | March 28, 2014 | ||||||||||||
14. | 20 MW Rajasthan |
Azure Sunshine Pvt. Ltd. |
IREDA | Term Loan Agreement and the related financing documents | September 23, 2014 | INR | 1,17,40,00,000 | |||||||
Central Bank of India | Term Loan Agreement and the related financing documents | October 30, 2014 | ||||||||||||
SECI | VGF Agreement | March 28, 2014 | ||||||||||||
15. | 40 MW Rajasthan | Azure Green Tech Pvt. Ltd. | IREDA | Term Loan Agreement and the related financing documents | September 23, 2014 | INR | 2,36,30,00,000 | |||||||
Central Bank of India | Term Loan Agreement and the related financing documents | October 30, 2014 |
56
S. No |
Project/ Location |
Details of the
|
Lender |
Description of the agreement |
Date of Execution of Agreements |
Loan Amount | ||||||||
SECI | VGF Agreement | March 28, 2014 | ||||||||||||
16. | Karnataka 10 MW | Azure Power Karnataka Pvt Ltd | PTC India Financial Services Ltd | Term Loan Agreement and the related financing documents | November 3, 2014 | INR | 58,50,00,000 |
57
ANNEXURE 4 (A) [Section 4.1(x) (Material Contracts)]
DETAILS OF O & M AND EPC CONTRACTS BETWEEN
AZI AND ITS SUBSIDIARIES
SI. No. |
Descriptions |
Amount (in INR) payable to
the Company on an annual basis |
Terms |
|||||
1. | O &M Contract with Azure Power Haryana Private Limited dated 09-12-2011. | 1,05,00,000 | 5% to be increased every year | |||||
2. | O&M Contract with Azure Power Punjab Private Limited dated 01-04-2013. | 22,00,000 | 5.72% to be increased every year | |||||
3. | O&M Contract with Azure Power Rajasthan Private Limited dated 01-04-2013. | 55,00,000 | 5.72% to be increased every year | |||||
4. | O&M Contract with Azure Solar Limited dated 01-04-2013 | 3,84,00,000 | 5.72% to be increased every year | |||||
5. | O&M Contract with Azure Sun Energy Private Limited dated 01-06-2013 | 26,15,000 | 5.72% to be increased every year | |||||
6. | O&M Contract with Azure Urja Private Limited dated 01-06-2014 | 3,94,40,000 | 5.72% to be increased every year | |||||
7. | O&M Contract with Azure Power Karnataka Private Limited dated 01-09-2014 | 1,16,00,000 | 5.72% to be increased every year | |||||
8. | O&M Contract with Azure Surya Private Limited dated 01-06-2014 | 1,16,00,000 | 5.72% to be increased every year | |||||
9. | O&M Contract with Azure Clean Energy Private Limited dated 01-09-2014 | 2,00,00,000 | 5% to be increased in every year | |||||
10. | O&M Contract with Azure Green Tech Private Limited dated 01-09-2014 | 2,00,00,000 | 5% to be increased in every year | |||||
11. | O&M Contract with Azure Sunshine Private Limited dated 01-09-2014 | 1,00,00,000 | 5% to be increased in every year | |||||
12. | EPC Contracts with Azure Mars Private Limited dated 01-04-2015 | 35,90,00,000 | Not Applicable |
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ANNEXURE 4 (B) [Section 4.1(x) (Material Contracts)]
DETAILS OF POWER PURCHASE AGREEMENT BY
AZI AND ITS SUBSIDIARIES
Sr. No. |
Plant |
Capacity
(MW) |
Offtaker |
Tariff (Price in
|
PPA Date |
|||||
1. | Punjab | 2 | NTPC Vidyut Vyapar Nigam (NVVN) | 17.91 | 15-Oct-10 | |||||
2. | Gujarat | 10 | Gujarat Urja Vikas Nigam Limited (GUVNL) | 15.00 | 30-Apr-10 | |||||
3 | Rajasthan | 5 | NTPC Vidyut Vyapar Nigam (NVVN) | 11.94 | 10-Jan-11 | |||||
4. | Rajasthan | 15 | NTPC Vidyut Vyapar Nigam (NVVN) | 8.21 | 25-Jan-12 | |||||
5. | Rajasthan | 20 | NTPC Vidyut Vyapar Nigam (NVVN) | 8.21 | 25-Jan-12 | |||||
6. | Punjab - I | 15 | Punjab State Power Corporation Limited (PSPCL) | 7.67 | 27-Dec-13 | |||||
7. | Punjab - II | 15 | Punjab State Power Corporation Limited (PSPCL) | 7.97 | 27-Dec-13 | |||||
8. | Punjab - III | 4 | Punjab State Power Corporation Limited (PSPCL) | 8.28 | 27-Dec-13 | |||||
9. | Uttar Pradesh | 10 | Uttar Pradesh Power Corporation Limited (UPPCL) | 8.99 | 27-Dec-13 | |||||
10. | Karnataka I | 10 | Bangalore Electricity Supply Company (BESCOM) | 7.47 | 18-Jan-14 | |||||
11. | Rajasthan | 100 | Solar Energy Corporation of India (SECI) | 5.45 +VGF Funding | 28-Mar-14 |
59
Sr. No. |
Plant |
Capacity
(MW) |
Offtaker |
Tariff (Price in
|
PPA Date |
|||||
12. | Karnataka II | 10 | Bangalore Electricity Supply Company (BESCOM) | 6.66 | 27-Sep-14 | |||||
13. | Chhattisgarh - I | 10 | Chhattisgarh State Power Distribution Company Limited | 6.44 | 1-Aug-14 | |||||
14. | Chhattisgarh - II | 10 | Chhattisgarh State Power Distribution Company Limited | 6.45 | 15-Sep-14 | |||||
15. | Chhattissarh - III | 10 | Chhattisgarh State Power Distribution Company Limited | 6.46 | 15-Sep-14 | |||||
16. | Karnataka III P-I | 50 | Chamundeshwari Electricity Supply Corporation Limited (CESC) | 6.89 | 2-Jan-l5 | |||||
17. | Karnataka III P-II | 40 | Hubli Electricity Supply Company Limited (HESCOM) | 6.93 | 14-Jan-15 | |||||
18. | Karnataka III P-III | 40 | Gulbarga Electricity Supply Corporation (GESCOM) | 6.96 | 23-Jan-15 | |||||
19. | Bihar | 10 | North Bihar Power Distribution Company Limited and South Bihar Power Distribution Company Limited. | 8.39 | 17-Jan -15 | |||||
20. | Andhra Pradesh | 50 | Southern Power Distribution Company of Andhra Pradesh Limited | 5.89 with 3% escalation i.e. (6.93) | 5-Dec-14 |
60
Sr. No. |
Plant |
Capacity
(MW) |
Offtaker |
Tariff (Price in
|
PPA Date |
|||||
21. | Rajasthan | 5 | Solar Energy Corporation of India (SECI) | 5.45 | 5-Feb-15 |
61
SCHEDULE 3
FORM OF CERTIFICATE OF INCUMBENCY AND AUTHORITY
Letterhead of the Company/Sponsor
[Date]
SOCIÉTÉ DE PROMOTION ET DE PARTICIPATION POUR LA COOPÉRATION ECONOMIQUE S.A.
Attention: Director, Department
Proparco Investment No.
Certificate of Incumbency and Authority
Reference is made to the CCPS Subscription Agreement, dated [●], between Proparco, the Company and the Sponsors (the Subscription Agreement ). Unless otherwise defined herein, capitalized terms used herein shall have the meaning set forth in the Subscription Agreement.
I, the undersigned Director of Azure Power Global Limited (the Company ), duly authorized to do so, hereby certify that the following are the names, offices and true specimen signatures of the individuals each of whom are, and will continue to be, authorized:
(a) | to sign on behalf of the Company the requests for the subscription for the Proparco Subscription Shares of the Company provided for in Section 2.01 ( Subscription ) of the Subscription Agreement; |
(b) | to sign the certifications required under Section 4.01 ( Conditions of the Proparco Subscriptions ) of the Subscription Agreement; and |
(c) | to take any other action required or permitted to be taken, done, signed or executed under the Subscription Agreement or any other agreement to which Proparco and the Company may be parties. |
*Name | Office | Specimen Signature | ||
|
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|
|
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|
|
|
You may assume that any such individual continues to be so authorized until you receive written notice from an Authorized Representative of the Company that they, or any of them, is no longer so authorized.
* | Designations may be changed by the Company/Sponsor at any time by issuing a new Certificate of Incumbency and Authority authorized by the board of directors of the Company/Sponsor where applicable. |
62
Yours faithfully, | ||
|
||
By |
|
|
Name: | ||
Title: | [Chairman/Director] |
63
SCHEDULE 4
TERMS OF THE SERIES G CCPS
All capitalized terms used in this Schedule but not defined in this Schedule shall have the meaning given to them under the Shareholders Agreement. Reference to paragraph under this Schedule shall be a reference to the paragraph of this Schedule.
1. | Issue Price |
The Series G CCPS shall have the issue price of USD 450.16 (Dollars Four Hundred and Fifty and Sixteen Cents).
2. | Term |
Unless converted in accordance with the terms of this Schedule 4 the Articles of the Company and applicable Laws, the term of the Series G CCPS shall be a maximum of 20 (twenty) years from their issuance.
3. | Dividend |
3.1 | Each of the holders of Series G CCPS shall be entitled to payment of 5% (five percent) non-cumulative dividend per annum (calculated on the sum of the face value and premium paid) on each of the Series G CCPS by way of dividend from the Company in accordance with applicable Law as and when the Board of the Company declares any dividend to any shareholder. |
3.2 | If the dividend payout in any given financial year to the shareholders or to the holders of Series A CCPS, Series B CCPS, Series C CCPS, Series D CCPS, Series F CCPS or Series H CCPS of the Company, whichever is highest, is more than 5% (five percent) of the amount invested for such securities by the holder of those securities, then the holders of the Series G CCPS will be entitled to an additional dividend which shall be equal to the difference between (a) the percentage return (on the amount invested) received by the holders of such Equity Shares or the holders of Series A CCPS, Series B CCPS, Series C CCPS, Series D CCPS, Series F CCPS and Series H CCPS, and (b) the rate of dividend received by the holder of the Series G CCPS for that financial year under the paragraph 3.1 above. |
It is clarified that in case the Company declares dividends to the holders of Equity Shares, Series A CCPS, Series B CCPS, Series C CCPS, Series D CCPS, Series F CCPS and/or Series H CCPS, the holders of Series G CCPS shall be entitled to receive dividends simultaneous with the holders of Equity Shares, Series A CCPS, Series B CCPS, Series C CCPS, Series D CCPS, Series F CCPS and/or Series H CCPS in the manner set out above.
3.3 |
For the purposes of calculation of dividends, the issue price (i.e. par value and premium) of each Series G CCPS shall be considered in INR terms by applying the reference rate of the Reserve Bank of India for INR-USD conversion as on the date on which the issue price is received by the Company. The payment of dividend shall, however, be made by the Company in USD terms by converting the INR amount so arrived at into USD amount by applying the |
64
reference rate of the Reserve Bank of India for INR-USD conversion as on the date on which the dividend is paid out by the Company. |
4. | Conversion |
4.1 | The Series G CCPS shall be convertible into Equity Shares of the Company at the option of the holders of the Series G CCPS in accordance with paragraph 4.2. Any Series G CCPS that have not been converted into Equity Shares of the Company shall compulsorily convert into the Equity Shares of the Company upon the earlier of: |
(i) | immediately prior to the listing of the Equity Shares pursuant to the QIPO or IPO, as approved by the Shareholders of the Company; and |
(ii) | The date which is 20 (twenty) years from the date of the issuance of the Series G CCPS (the Maturity Date ), |
in each case, in accordance with this SHA. Upon occurrence of any of the event under paragraph 4.1(i) and (ii) above the Company (and the Sponsors, where applicable) will immediately follow the procedure under paragraph 4.2 (iv) below.
4.2 | Optional Conversion |
The holders of the Series G CCPS shall have the right, in the events set out in paragraph 4.2 (ii) of this Schedule 4 after the Proparco Closing Date to require the Company, by a written notice (the Conversion Notice ), to convert all or some of the Series G CCPS into Equity Shares of the Company. A copy of the Conversion Notice shall also be sent to the Sponsors, GIF, IFC Helion, DEG and FC. In case the conversion occurs prior to the expiry of the Maturity Date, then the conversion shall be completed within a period of 21 (twenty one) days from the date of the Conversion Notice.
(i) | Conversion Ratio & Conversion Price |
(a) | The Conversion Ratio for the purposes of Series G CCPS shall be such that each Series G CCPS will convert into such number of Equity Shares, so as to give the Series G CCPS holders the Proparco Required Return -2, without Proparco being required to pay any amount for such conversion. |
For purposes of this paragraph, the term Proparco Required Return -2 for the purposes of the Series G CCPS shall mean (aa) 16% (sixteen percent) IRR; or (bb) 18.4% (eighteen decimal four percent) IRR, in the event of conversion of the Series G CCPS into Equity Shares of the Company (a) in accordance with paragraph 4.1 (i) of this Schedule 4 or (b) upon Transfer of the Equity Securities in terms of Clause 6.3.4 of the SHA, or (c) upon a voluntary sale of any or all the Equity Securities held by all the Investors and the voluntary sale of Equity Securities held by the Sponsors to a third party, such that pursuant to the sale of the Equity Securities there is a change in Control on the Company, or (d) upon a Liquidation Event B other than upon Transfer of all or more than 70% (Seventy percent) in value of the Companys Assets.
Provided that, if the Series G CCPS holder receives any dividend from the Company prior to conversion, the amount of dividends received by the holders
65
of Series G CCPS will be deducted from the Proparco Required Return -2. It is clarified that the amount of dividends for the purposes of preceding sentence shall be considered net of Taxes, i.e. after deducting any Taxes deducted or paid on such dividends by the Company.
(b) | A valuation of the Company to enable conversion of the Series G CCPS in accordance with (a) above shall be: |
1) | for the events specified in paragraph 4.2 (ii) (a), (b) and (g) and paragraph 4.1 (ii), the valuation as determined by one of the Big Four Accounting Firms selected in accordance with the procedure laid down in paragraph 4.2(i)(c) below; |
2) | for the events specified in paragraph 4.2(ii) (c), (d), (e) and (f), the valuation as offered by the third party purchaser; and |
3) | for the events specified in paragraph 4.3(i), the valuation per Equity Share (on a fully diluted basis after giving effect to the conversion of all Equity Securities that are convertible to Equity Shares, as provided in the SHA) shall be equal to the initial public offering price of Equity Shares offered for sale/issue of Equity Shares by the Company pursuant to the IPO or QIPO. |
(c) | Proparco shall set out in the Conversion Notice, the names of 2 (two) of the Big Four Accounting Firms that are selected by Proparco for the purpose of paragraph 4.2(i)(b) (1). Within 10 days of the date of the Conversion Notice, GIF, IFC, Helion, FC, DEG, Company and Sponsors shall jointly agree to appoint one of the 2 (two) Big Four Accounting Firms mentioned in the Conversion Notice to do the valuation of the Company, and shall jointly issue a notice to Proparco in this respect. If Proparco does not receive the aforesaid notice within the period of 10 days from the date of the Conversion Notice, then Proparco shall have the right to select, in its sole discretion, one of the 2 (two) Big Four Accounting firms mentioned in the Conversion notice to do the valuation of the Company. |
(ii) | The holders of the Series G CCPS will be entitled to exercise their conversion right in respect of the Series G CCPS just prior to or on the occurrence of the following events: |
(a) | Liquidation Event A or Liquidation Event B as defined in the SHA. |
(b) | Buy-back of the Series G CCPS in accordance with the terms of the SHA. |
(c) | In the event holder of the Series G CCPS wishes to exercise its Co-Sale Right under Clause 6.3.3 (Co Sale Rights) of the SHA. |
(d) | In the event holder of the Series G CCPS wishes to exercise its Co-Sale Right under Clause 6.3.4 (Transfer to a Competitor) of the SHA. |
66
(e) | In the event holder of the Series G CCPS wishes to exercise its Drag Along Right under Clause 6.4 (Drag Right to the Investors) of the SHA. |
(f) | In the event holder of the Series G CCPS wishes to exercise its right under Clause 6.5 (Drag Right of IFC, DEG and Proparco) of the SHA. |
(g) | In the event holder of the Series G CCPS wishes to exercise the Deficit Call Option under Clause 6.6 (IFC, DEG and Proparco Call Option) of the SHA. |
(iii) | The conversion Notice shall be dated and shall set forth: |
(a) | The number of Series G CCPS in respect of which the holders of the Series G CCPS are exercising their right to conversion in accordance with this paragraph 4.2; |
(b) | The number of Equity Shares of the Company that the Series G CCPS shall convert into; and |
(c) | The names of 2 of the Big Four Accounting Firms that are selected by Proparco for the purpose of paragraph 4.2(i)(c), if applicable; and the reference valuation as offered by the third party purchaser, if applicable. |
(iv) | Upon receipt of the Conversion Notice, the Company shall effect the following: |
(a) | Convening of a meeting of the Board, in which meeting the Company approve the following: |
| The conversion of such number of the Series G CCPS; |
| The cancellation of the certificates representing such number of Series G CCPS that are converted; |
| The issuance and allotment of such number of Equity Shares of the Company that the Series G CCPS shall convert into. |
in each case, as are mentioned in the Conversion Notice;
(b) | Cancellation of the share certificates of the Proparco Series G CCPS in respect of which the conversion right is exercised in the Conversion Notice; and thereafter issuance of duly stamped share certificates to the holders of the Series G CCPS to evidence such holders of the Series G CCPS as the owners of the Equity Shares issued upon conversion of such number of the Series G CCPS as are mentioned in the Conversion Notice; |
(c) | Updating its register of members to reflect the holders of the Series G CCPS as the owners of the Equity Shares issued pursuant to the conversion of such number of the Series G CCPS as are mentioned in the Conversion Notice; |
67
(d) | The Company and the Sponsors shall do all such acts and deeds as may be necessary to give effect to the provision of this paragraph 4, including without limitation, convening a meeting of the Board to approve the splitting of the share certificates representing the Series G CCPS. |
4.3 | Automatic Conversion |
(i) | The Company shall forthwith convert all the Series G CCPS into Equity Shares based on the conversion price arrived in accordance with paragraph 4.2(i), if at any time after the Proparco Closing Date the Company undertakes an IPO/QIPO, provided that the Shareholders of the Company have consented to such IPO/QIPO in accordance with the SHA. The Series G CCPS shall convert into Equity Shares of the Company immediately prior to the listing of Equity Shares on the Relevant Market pursuant to the IPO/QIPO. |
(ii) | In the event that: |
(a) | The Company files an offer document with the Relevant Document in respect of the QIPO or an IPO and, in connection with such filing, such Authority or Relevant Market requires the conversion of the Series G CCPS into Equity Shares of the Company prior to the completion of such IPO or QIPO; and |
(b) | The QIPO or the IPO does not complete on or prior to the Listing Date such that none of the issued, paid-up and subscribed share capital is admitted for trading on a Relevant Market (as defined in the SHA) on or prior to the Listing Date. |
Then such conversion of Series G CCPS into Equity Shares shall be deemed to be a Conforming of Rights and the Company and the Sponsors shall comply with the provisions of Clause 8 (Reinstatement of Rights) of the SHA and shall undertake all necessary actions to ensure that the holders of the Series G CCPS are placed in the same position, and possess the same rights as set forth in this Schedule 4 they had the benefit of immediately prior to the occurrence of the event set forth in (a) above.
5. | Liquidation Preference |
Upon the occurrence of a Liquidation Event A or a Liquidation Event B with respect to the Company or its Subsidiaries (as defined in the SHA) and in accordance with the terms of the SHA, the holders of the Series G CCPS shall receive the Liquidation Preference in accordance with the terms of the SHA and in the order of precedence set forth in the SHA.
Upon the exercise of the Drag Right of the Investors or Drag Right of IFC, DEG and Proparco in accordance with Clause 6.4 and 6.5 of the SHA, the Series G CCPS shall be subject to the order of preference in terms of the sale of the Equity Securities and the returns on the Equity Securities as set out in the SHA. Notwithstanding the above, the holders of the Series G CCPS will also be entitled to the buy-back preferences in accordance with the terms of the SHA and in order of preference set forth in the SHA.
For the avoidance of doubt, it is hereby clarified that Equity Shares of the Company held by Proparco pursuant to the conversion of the Series G CCPS shall be treated at par with the
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remaining Equity Shares of the Company for the purposes of this paragraph 5, save and except where the Series G CCPS are converted into Equity Shares of the Company on or immediately prior and only in connection with Proparco exercising its right in the case of events set out in this paragraph 5, in which case, notwithstanding anything to the contrary contained herein, the Equity Shares issued to the holder of the Series G CCPS will be entitled to priority in terms of payment in the like manner as the Series G CCPS as set out in this paragraph 5.
For the purposes of Clause 4 (Rights of the Investors), Clause 6.4 (Drag Right of the Investors), Clause 6.5 (Drag Right of IFC, DEG and Proparco), Clause 6.6 (IFC, DEG and Proparco Call Option), Clause 6.7 (Sponsors, Helion and FC Call Option), Clause 9 (Buy Back of Equity Securities) and Clause 9A (Buy Back from IFC, DEG and Proparco) of the SHA, the calculation of entitled amounts of the holders of Series G CCPS shall be considered in INR terms by applying the reference rate of the Reserve Bank of India for INR-USD conversion as on the date on which the issue price is received by the Company. However, to the extent relevant, at the time of payment of amounts to the holders of Series G CCPS in the above mentioned Clauses, the INR entitled amounts arrived at shall be converted into USD amount by applying the reference rate of the Reserve Bank of India for INR-USD conversion as on the date on which such payment is effected and the payment shall thereupon be made in USD terms.
6. | Transferability |
Subject to the terms of the SHA, the Series G CCPS shall be freely transferable to any person and holders of the Series G CCPS may assign all or any of the Series G CCPS and any rights attaching thereto under the Transaction Documents, without the prior consent of any Person.
7. | Voting Rights |
From and after the issuance of the Series G CCPS, Proparco shall only be entitled to exercise voting rights on every resolution in respect of Schedule M of the SHA placed before the Company on the basis of its shareholding in the Company on an As if Converted Basis subject to the terms of the SHA. Provided however that upon the transfer of the Series G CCPS in accordance with the terms of the SHA, the transferee of the Series G CCPS will be entitled to vote on every resolution placed before the Company in proportion to the Equity Shares held by such transferee in the share capital of the Company, assuming the transferred Series G CCPS have been converted into Equity Shares of the Company on the basis of the conversion price as determined in paragraph 4.2(i) above.
From the date of conversion of the Series G CCPS, the voting percentage of all the shareholders in the Company shall be in proportion to their shareholding in the Company
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SCHEDULE 5
ENVIRONMENTAL AND SOCIAL ACTION PLAN
Item No. |
Measure and/or Corrective Actions |
Responsibility |
Deliverable
Document) |
Deadline |
||||
1. | PS 1 : Assessment and Management of Environmental and Social Management Risks and Impacts | |||||||
1.1. |
Develop a comprehensive Social Baseline Survey procedure for assessing in details the land acquisition process including past land occupation and potential physical and/or economical resettlements that may have occurred as result of project settlement. To be included in the future ESIA reports. |
SHES department |
Detailed social baseline survey procedure | 3 months after the signing date | ||||
1.2. |
Reinforce the ESIA studies regarding earth movement management and water management |
SHES department |
Future ESIAs | On-going action | ||||
2. | PS 3: Resource Efficiency and Pollution Prevention | |||||||
2.1. |
Update the monitoring procedure to include the monitoring and recording of water consumption |
SHES department |
Monitoring procedure including water consumption monitoring. | 3 months after the signing date |
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SCHEDULE 6
FORM OF LETTER TO COMPANYS AUDITORS
[Letterhead of the Company]
[Date]
[NAME OF AUDITORS]
[ADDRESS]
Investment No.
Letter to Auditors
Ladies and Gentlemen:
We hereby authorize and instruct you to give to Société De Promotion Et De Participation Pour La Coopération Economique S.A. ( Proparco ), all such information as Proparco may reasonably request with regard to the financial statements (both audited and unaudited), accounts and operations of the undersigned company.
We authorize and instruct you to send two (2) copies of the audited accounts of the undersigned company to Proparco each year. When submitting the same to Proparco, please also send, at the same time, a copy of your full report on such accounts to the Proparco.
For our records, please ensure that you send to us a copy of every letter that you receive from Proparco immediately upon receipt and a copy of each reply made by you immediately upon the issue of that reply.
Yours faithfully, | ||
AZURE POWER GLOBAL LIMITED | ||
By |
|
|
Name: | ||
Title: | [Authorized Representative] |
cc: Proparco |
|
|
|
Attention : [●] |
71
SCHEDULE 7
LIST OF RELATED AGREEMENTS
All capitalized terms used herein but not defined shall have the meaning given to them under the Agreement.
1. | Shareholders Agreement; |
2. | AZI SHA; |
3. | Registration Rights Agreement; |
4. | APGL Sharing Agreement; |
5. | Sponsor lock-in agreement between, inter alia, the Investor, Co-Investor, Helion, IW and the Sponsor Entity, with respect to the lock-in and distribution of proceeds from sale of equity shares held by the Sponsor Entity in the Company; |
6. | All securities purchase agreements and securities subscription agreements entered into by: (a) Helion; (b) IFC; (c) DEG; (d) FC; and (e) Proparco, pursuant to the Externalization Process; |
7. | The securities subscription agreements entered into by each of IFC and GIF for the subscription of Series H CCPS to be issued and allotted by the Company; |
8. | Series H CCPS Lock-in Agreement(s) into by each of GIF and IFC with certain other shareholders, of the Company for setting out the lock-in obligation for the Equity Shares that will be received by GIF and IFC on conversion of Series H CCPS held by them on the occurrence of QIPO; and |
9. | Any other document executed pursuant to and/or to give effect to the understanding set out in the above mentioned agreements; and any amendments or modifications to the above mentioned agreements. |
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SCHEDULE 8
PROPARCO POLICY COVENANTS
1. | Representations |
The Company and the Sponsors represent that the equity quasi equity and shareholders loans accounts invested in the Company and its Subsidiaries or in their Operations are not of Illicit Origin.
The Company and the Sponsors represent that, in the 5 (five) years preceding the date of this Agreement, no res judicata decision, sentence, or order has been pronounced against the Company or its Subsidiaries in relation to any Corrupt Practice or Fraudulent Practice or any Anti-Competitive Practice.
2. | Undertakings |
The Company and the Sponsors undertake that the Company and its Subsidiaries will:
i. | not enter into Business Relationships with persons or entities which appear on any of the Financial Sanctions Lists. |
ii. | Not finance, buy or provide, materials or sectors subject to United Nations, European Union or French Embargo and/or shall not engage in any sectors under United Nations, European Union or French Embargo. |
iii. | and ensure that the Companys and each of its Subsidiaries equity, quasi equity and shareholders loans accounts are not and will not be of Illicit Origin. |
iv. | and ensure that the Companys and each of its Subsidiaries activities will not give rise to Corrupt Practice, Fraudulent Practice or Anti-Competitive Practices. |
v. | as soon as it becomes aware of any Corrupt Practice, Fraudulent Practice or Anti- Competitive Practice or such alleged practices, inform Proparco without any delay and take all necessary preliminary steps to remedy the alleged Corrupt Practice, Fraudulent Practice or Anti-Competitive Practice to the satisfaction of Proparco within the time limit determined by Proparco which in any event shall not be more than thirty (30) business days. |
vi. | For any payment made under this Agreement to Proparco shall request that the bank in charge of making the transfers includes in its transfer message all of the following information and in the following order: |
| Instructing party: name, address, bank account number. |
| Bank of the instruction party. |
| The following references: name of instructing party, payment purpose, numéro du concours tbc |
The Company and the Sponsors undertake to provide to any investor in the Company, who so requests all information regarding the identity of each of the other investors in the Company and their respective Beneficial Owners.
73
The Company and the Sponsors shall notify Proparco as soon as practicable if an additional investor representing more than 5% (five per cent) of the Companys share capital subscribes to the share capital of the Company.
3. | Other representations and undertakings: Proparco Environmental & Social Requirements |
a. | Representation |
Compliance with Environmental and Social Requirements
The Company represents that the Company and its Subsidiaries comply in all material respects with the Environmental and Social Requirements and for those items addressed in the Environmental and Social Action Plan, become compliant within the time-frames agreed upon from time to time.
Environmental and Social Claims
No Environmental and Social Claim has been commenced or (to the best of its knowledge and belief) is threatened against it except for the Environmental and Social Claims addressed in the Environmental and Social Action Plan.
b. | Information Undertakings |
Periodic environmental and social monitoring reporting
The Company shall as soon as it is available, but in any event no later than the date it has to deliver its audited or consolidated annual financial statements, deliver to the Shareholders an Environmental and Social Monitoring Report in the English language.
Reporting Impact Indicators
For so long as Proparco holds any Equity Securities in the Company, the Company shall furnish to Proparco and/ or their assignees/ nominees all information as required by Schedule 9 with respect to the Company and its Subsidiaries on an annual basis within 90 (ninety) days from the end of each Financial Year.
Notification of incidents
The Company shall promptly, but in any event within 3 days after the occurrence of any of the events set out in this Sub-clause, supply to the shareholders of the Company (including Proparco): (i) details of any incident of an environmental nature (including without limitation any explosion, spill or workplace accident which results in death, serious or multiple injuries or material environmental contamination) or any incident of a social nature (including without limitation any violent labour unrest or dispute with local communities), occurring on or nearby any site, plant, equipment or facility of the Company or its Subsidiaries (as the case may be) which has or is reasonably likely to have a Material Adverse Effect or which has a material negative impact on the environment, the health, safety and security situation, or the social and cultural context, together with, in each case, a specification of the nature of the incident or accident and the on-site and off-site
74
effects of such events and (ii) details of any action the Company or its Subsidiaries (as the case may be) propose to take in order to remedy the effects of these events, and shall keep the shareholders (including Proparco) informed about any progress in respect of such remedial action.
Environmental and Social Claim
The Company shall inform the Shareholders in writing as soon as reasonably practicable upon becoming aware of the same of (i) any Environmental and Social Claim being commenced against it and (ii) any facts or circumstances which will or are reasonably likely to result in any Environmental and Social Claim being commenced or threatened against it.
c. | Positive Undertakings |
Compliance with Environmental and Social Requirements
The Company shall, in all material respects comply, and shall ensure that its Subsidiaries comply with, with the Environmental and Social Requirements and for those items addressed in the Environmental and Social Action Plan, become compliant within the time-frames agreed upon as amended from time to time and take all reasonable steps in anticipation of known or expected future changes to or obligations under the same.
Environmental and Social Management
The Company and its Subsidiaries undertake to ensure that its Subsidiaries will diligently design, construct, operate, maintain and monitor all of its plants, sites and equipment in a safe, efficient and business-like manner.
The Company and its Subsidiaries shall implement, maintain and continuously improve an adequate Environmental and Social Management System.
The Company and its Subsidiaries shall maintain a senior officer of the Company with management responsibility, who will among other things, ensure proper operation and maintenance of the Environmental and Social Management System.
Environmental and Social Action Plan
The Company and its Subsidiaries shall implement all actions as provided in the Environmental and Social Action Plan within the time-frames mentioned.
Access for environmental and social monitoring
The Company and its Subsidiaries shall permit employees of the shareholders of the Company and/or consultants or other professional advisers and contractors on behalf of the shareholders free access at all reasonable times and on reasonable notice at the cost of the Company to carry out environmental and/or social monitoring visits by, (a) viewing the premises of the Company and its Subsidiaries and (b) meeting and discussing matters with senior management and employees of the Company and its Subsidiaries. The Company and its Subsidiaries shall assist on a best effort basis in getting permission to visit plants and Associated Facilities of its clients and providers.
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d. | Negative undertakings |
Excluded Activities
The Company and its Subsidiaries shall not perform any of the excluded activities as listed in the Annex B to this Schedule 8 below (Excluded Activities).
4. | Waiver of Rights |
Proparco may, by notice to the Company, elect not to receive any of the information described in this Schedule 8. in this case, the Company shall provide Proparco with copies of all information publicly disclosed and/or filed, in compliance with the rules and regulations of any securities exchange or automated quotation system on which any of its securities are listed and other Applicable Law.
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ANNEX A TO SCHEDULE 8
PROPARCO ENVIRONMENTAL AND SOCIAL ACTION PLAN
Item Nr. |
Measure and/or Corrective Actions |
Responsibility |
Deliverable (Report/Measurement/Document) |
Deadline |
||||||
1. | PS 1 : Assessment and Management of Environmental and Social Management Risks and Impacts | |||||||||
1.1 |
Develop a comprehensive Social Baseline Survey procedure for assessing in details the land acquisition process including past land occupation and potential physical and/or economical resettlements that may have occurred as result of project settlement. To be included in the future ESIA reports. |
SHES department | Detailed social baseline survey procedure | 3 months after the signing date | ||||||
1.2 |
Reinforce the ESIA studies regarding earth movement management and water management |
SHES department | Futurer ESIAs | On-going action | ||||||
2 | PS 3: Resource Efficiency and Pollution Prevention | |||||||||
2.1 |
Update the monitoring procedure to include the monitoring and recording of water consumption |
SHES department | Monitoring procedure including water consumption monitoring. | 3 months after the signing date |
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ANNEX B TO SCHEDULE 8
ENVIRONMENTAL AND SOCIAL EXCLUSION LIST
1) | Production or trade in any product or activity deemed illegal under host country laws and France or regulations or international conventions and agreements. |
2) | Production or activities involving forced labour 1 or child labour 2 |
3) | Trade in wildlife or wildlife products regulated under CITES 3 |
4) | Drift net fishing in the marine environment using nets in excess of 2.5 km in length. |
5) | Destruction 4 of Critical Habitat 5 and any forest project under which no sustainable development and managing plan is carried out. |
6) | Production or use of or trade in hazardous materials such as asbestos fibers and products containing PCBs 6 . |
7) | Production, use of or trade in pharmaceuticals, pesticides/herbicides, chemicals, ozone depleting substances 7 and other hazardous substances subject to international phase-outs or bans. |
8) | Cross-border trade in waste and waste products unless compliant to the Basel Convention and the underlying regulations. |
9) | Production or trade in 8 |
a) | weapons and munitions |
b) | tobacco |
c) | hard liquor for human consumption. |
10) | Gambling, casinos and equivalent enterprises 9 |
11) | Any business relating to pornography or prostitution. |
1 | Forced labor means all work or service, not voluntarily performed, that is extracted from an individual under threat of force or penalty as defined by ILO conventions. |
2 | Employees may only be taken if they are at least 14 years old, as defined in the ILO Fundamental Human Rights Conventions (Minimum Age Convention C138, Art. 2), unless local legislation specifies compulsory school attendance or the minimum age for working. In such cases the higher age shall apply. |
3 | CITES: Convention on International Trade in Endangered Species or Wild Fauna and Flora. |
4 | Destruction means the (1) elimination or severe diminution of the integrity of a habitat caused by a major, long- term change in land or water use or (2) modification of a habitat in such a way that the habitats ability to maintain its role (see footnote 10) is lost. |
5 | Critical habitat is a subset of both natural and modified habitat that deserves particular attention. Critical habitat includes areas with high biodiversity value that meet the criteria of the World Conservation Union (IUCN) classification, including habitat required for the survival of critically endangered or endangered species as defined by the IUCN Red List of Threatened Species or as defined in any national legislation; areas having special significance for endemic or restricted-range species; sites that are critical for the survival of migratory species; areas supporting globally significant concentrations or numbers of individuals of congregatory species; areas with unique assemblages of species or which are associated with key evolutionary processes or provide key ecosystem services; and areas having biodiversity of significant social, economic or cultural importance to local communities. Primary Forest or forests of High Conservation Value shall be considered Critical Habitats. |
6 | PCBs: Polychlorinated biphenyls, a group of highly toxic chemicals. PCBs are likely to be found in oil-filled electrical transformers, capacitors and switchgear dating from 1950-1985. |
7 | Ozone Depleting Substances: Chemical compounds, which react with and delete stratospheric ozone, resulting in holes in the ozone layer. The Montreal Protocol lists ODs and their target reduction and phase-out dates. |
8 | Activities excluded when representing more than 10 % of the balance sheet or the financed volume and for Financial Institutions more than 10% of the portfolio volume financing. |
9 | Activities excluded when representing more than 10 % of the balance sheet or the financed volume and for Financial Institutions more than 10% of the portfolio volume financing |
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12) | Any activity involving significant altercation, damage or removal of way critical cultural heritage 10 |
13) | Production and distribution of racist, anti-democratic or with the intent to discriminate part of the population. |
14) | Exploitation of diamond mines, and commercialization of diamonds, when the host country has not adhered to the Kimberley 11 , or other similar international agreements (actual or to be formed), on similar extractive resources. |
Any sector or service subject to United Nations, European Union and/or French Embargo without limitation.
10 | Consists of internationally and nationally recognised historical, social and/or cultural heritage. |
11 | The Kimberley Process Certification Scheme (KPCS), is a certification standard for diamond production that concerns governments; the diamonds are controlled at each stage of the production chain, from extraction through to retail of the finished product. The KPCS was created to prevent and stop conflict diamond trade. It is designed to certify the origin of diamonds from sources which are free of conflict fueled by diamond production. Member states adhere to adopt national laws on the issue, and to put in place the necessary export and import control mechanisms to implement the KPCS. More than 75 countries involved in the production, commercialization, and transformation of diamonds participate. |
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SCHEDULE 9
REPORTING IMPACT INDICATORS
INDICATORS |
SUB-INDICATORS |
DEFINITION |
UNIT |
COMPANY DATA
|
||||
COMMON INDICATORS | ||||||||
INF1 Net Government revenues = (A+B-C)
Take into account the government revenues in the countries concerned by the investments and specify the government/governments in question |
A Corporate tax | Annual value in year N-1 of financing for corporate tax | EUR K | |||||
B Other taxes: customs duties, fees, dividends/levies, etc. to be paid to the government | Annual value in year N-1 of financing for other taxes (customs duties, fees, dividends and levies to be paid to the government) | EUR K | ||||||
C - Subsidies and tax credits | Annual value in year N-1 of financing for subsidies and tax credits | EUR K | ||||||
D Net government revenues | = A+B+C | EUR K | ||||||
INF2 Direct jobs
Number of project employees at the end of year N-1 |
Number | |||||||
INF3 of which women
N° of women among the employees at the end of year N-1 |
Number | |||||||
INF4 Indirect jobs at direct suppliers | Number |
80
Annual value in year N-1 of permanent jobs at the direct suppliers that can be attributed to the activities of the company being financed | ||||||||
INF5 Number of seasonal workers (in FTE) | Number | |||||||
Annual value in year N-1 of seasonal workers that can be attributed to the activities of the company being financed | ||||||||
INF6 Number of induced jobs (theoretical/ proxy) | Number | |||||||
Annual value in year N-1 of theoretical induced jobs | ||||||||
INF7 Number of temporary construction workers FTE | Number | |||||||
Annual value in year N-1 of temporary jobs related to the construction | ||||||||
INF8 Number of jobs cut | Number | |||||||
Number of jobs cut during year N-1 | ||||||||
SUB-SECTOR ENERGY | ||||||||
INF9 Installed capacity | MW | |||||||
Value of installed capacity at the end of year N-1 | ||||||||
INF10 Renewable energy installed |
Teq CO 2 /year |
81
Value measured of the renewable energy of the client/project for the preceding full year (in MW) | ||||||||
INF11 Energy produced | GWh/year | |||||||
Annual value in year N-1 of the energy produced (in GWh/year) | ||||||||
INF27 Recovered energy capacity installed | MW | |||||||
Value measured of the energy recovered by the client/project for the preceding full year (in MW) | ||||||||
INF12 Renewable energy produced | MW | |||||||
Value measured in year N-1 of the renewable energy produced | ||||||||
INF28 Energy saved, recovered energy produced | GWh/year | |||||||
Value measured in year N-1 of the energy consumption saved by the project | ||||||||
INFO13 CO 2 emissions saved/reduced |
Teq CO 2 /year |
|||||||
Total value in year N-1 of the tons of equivalent CO 2 avoided thanks to the reduction in energy consumption, the implementation of an emission reduction system Indicate the source | ||||||||
INF14 Number of persons newly connected to the grid through the project | Number | |||||||
Estimation = Power generation from the new installed capacity (GWh) measured for year N- |
82
1/Average electricity consumption per capita in the country for year N-1 |
83
Exhibit 10.16
LETTER AGREEMENT
27 JULY 2015
INTERNATIONAL FINANCE CORPORATION
AND
AZURE POWER GLOBAL LIMITED
AND
AZURE POWER INDIA PRIVATE LIMITED
AND
IW GREEN INC.
AND
MR. INDERPREET SINGH WADHWA
AND
MR. HARKANWAL SINGH WADHWA
DELHI | MUMBAI | BANGALORE | HYDERABAD
TABLE OF CONTENTS
Article I - Definitions and Interpretation |
4 | |||
Section 1.01. Definitions |
4 | |||
Section 1.02. Interpretation |
7 | |||
Section 1.03. Third Party Rights |
7 | |||
Article II - Agreement for Subscription |
7 | |||
Section 2.01. Subscription |
7 | |||
Section 2.02. Companys Obligations until all of the Subscription Shares are Issued |
9 | |||
Section 2.03. Cancellation of Investor Subscription |
10 | |||
Article III - Representations and Warranties |
10 | |||
Section 3.01. Representations and Warranties |
10 | |||
Section 3.02. Other provisions |
12 | |||
Article IV - Conditions of Investor Subscription |
12 | |||
Section 4.01. Conditions of Investor Subscription |
12 | |||
Article V - Miscellaneous |
13 | |||
Section 5.01. Notices |
13 | |||
Section 5.02. Applicable Law and Arbitration |
14 | |||
Section 5.03. Other miscellaneous provisions |
14 | |||
Schedule 1 - Form of Subscription Notice |
20 | |||
Schedule 2 - Original Company Disclosure Schedule |
22 | |||
Schedule 3 - Form of Certificate of Incumbency and Authority |
46 | |||
Schedule 4 - Form of Letter to Companys Auditors |
48 | |||
Schedule 5 - Terms and Conditions of Series H CCPS |
49 | |||
Schedule 6 - List of Permitted Matters |
55 |
LETTER AGREEMENT
This LETTER AGREEMENT (the Agreement ) executed on July 27, 2015 between:
(1) AZURE POWER GLOBAL LIMITED, a company organized and existing under the laws of Mauritius ( Company ) having its principal office at 1st Floor, The Exchange, 18 Cybercity, Ebene, Mauritius;
(2) MR. INDERPREET SINGH WADHWA, son of Mr. Harkanwal Singh Wadhwa, residing at [Address] ( IW );
(3) MR. HARKANWAL SINGH WADHWA, son of Late Mr. Manohar Singh Wadhwa, residing at [Address] ( HW );
(4) IW GREEN INC., a company established under the laws of United States of America having its principal office at 341, Raven Circile, Wyoming, Zip Code 19934, Kent, United States of America ( Sponsor Entity );
(5) INTERNATIONAL FINANCE CORPORATION, an international organization established by the Articles of Agreement among its member countries including the Republic of India ( Investor ); and
(6) AZURE POWER INDIA PRIVATE LIMITED, a company incorporated under the laws in India and having its registered office at 8, LSC, Madangir, Pushpvihar, New Delhi-110062, India ( Azure India ).
IW, HW and the Sponsor Entity shall hereinafter be collectively referred to as Sponsors and individually as Sponsor . The Sponsors, the Investor, Azure India and the Company shall hereinafter be collectively referred to as Parties and individually be referred to as Party .
RECITALS
(1) | Azure India, IW, HW and the Investor entered into a subscription agreement dated June 24, 2015 ( Subscription Agreement ) with respect to the proposed investment by the Investor in Azure India. |
(2) | The Company is raising further funds and has approached the Investor to make an investment in the share capital of the Company as opposed to investing in Azure India. |
(3) | Upon the request of the Company and the Sponsors, the Investor has agreed to make an equity investment in the Company instead of investing in the share capital of Azure India. Therefore, based on the understanding set forth above, the Parties wish to enter into this Agreement to record the terms and conditions of the subscription of Series H CCPS of the Company to the Investor. |
3
ARTICLE I
Definitions and Interpretation
Section 1.01. Definitions . (a) Except as hereinafter provided in sub-section (b) below, wherever used in this Agreement, capitalized terms shall have the meaning set forth in the Subscription Agreement.
(b) Wherever used in this Agreement, the following terms shall have the following meanings:
Accounting Standards in relation to the Company, means the generally accepted accounting principles promulgated by the Financial Accounting Board of the United States, as amended from time to time, and applied on a consistent basis; and in relation to Azure India and its Subsidiaries, means the Indian generally accepted accounting principles promulgated by Institute of Chartered Accountants of India, together with its pronouncements from time to time, and applied on consistent basis;
Action Plan means the plan or plans developed by Azure India, a sample copy of which is attached as Annex B to Schedule K ( Action Plan ) to the Shareholders Agreement, setting out the specific social and environmental measures to be undertaken by the Company, to enable the Company Operations to be undertaken in compliance with Performance Standards;
Auditors means the independent, external auditors of the Company;
Authorized Representative means, in relation to the Company, any individual who is duly authorized by the Company to act on its behalf and whose name and a specimen of whose signature appear on the Certificate of Incumbency and Authority most recently delivered by the Company to the Investor and, in relation to the Sponsor Entity, any individual who is duly authorized by the Sponsor Entity to act on its behalf and whose name and a specimen of whose signature appear on the Certificate of Incumbency and Authority most recently delivered by the Sponsor Entity to the Investor;
Azure India has the meaning set forth in the Preamble;
Azure India SHA means the shareholders agreement to be executed between the Company, IW, HW and Azure India, in relation to the rights and obligations of the parties thereto for regulating the management and control of the affairs of Azure India and certain other rights and obligations inter se in relation to Azure India in accordance with the terms and conditions set out therein;
Business Day means a day when banks are open for business in New York, New York and the Republic of Mauritius;
Certificate of Incumbency and Authority means a certificate provided to the Investor by the Company or the Sponsor Entity (as may be relevant) substantially in the form set forth in Schedule 3 ( Form of Certificate of Incumbency and Authority );
Charter means the constitution, the memorandum of association, the articles of association or the by-laws of the Company or, as applicable, any Subsidiary;
Company has the meaning set forth in the Preamble;
4
Conversion Notice shall have the meaning set forth in Schedule 5;
Country means the Republic of Mauritius;
Current Company Disclosure Schedule means the Original Company Disclosure Schedule, as modified and/or supplemented by each Updated Company Disclosure Schedule, if any, which has from time to time been delivered by the Company and accepted by the Investor, in accordance with Section 4.01(a)(ii) ( Conditions of the Subscription );
Equity Shares or Shares means the ordinary shares of the Company having the par value of USD 0.01 (Dollars zero decimal zero one) each and carrying 1 (one) vote each;
Externalization Process means the signing and execution of the Transaction Documents by the parties thereto and the subscription of Equity Securities of the Company by: (a) Helion Venture Partners II, LLC; (b) Helion Venture Partners India II, LLC; (c) IFC; (d) DEG Deutsche Investitions und Entwicklungsgesellschaft mbH; (e) FC VI India Venture (Mauritius) Ltd.; and (f) Société de Promotion et de Participation Pour la Coopération Economique S.A. as set out in Section 3.01(f) ( Capital Structure of the Company ) of the Current Company Disclosure Schedule;
GIF Series H Lock-in Agreement means the lock-in agreement dated on or around the date of this Agreement entered into between the Co-Investor and certain other shareholders of the Company for setting out the lock-in modalities for the Equity Shares of the Co-Investor received on conversion of the Equity Securities of the Co-Investor in accordance with Schedule 6 of the Co-Investor Lock-up Agreement;
HW has the meaning set forth in the Preamble;
IFC Series H CCPS Lock-in Agreement means the lock-in agreement dated on or around the date of this Agreement entered into between the Investor and certain other shareholders of the Company for setting out the lock-in modalities for the Equity Shares of the Investor received on conversion of the Subscription Shares in accordance with Schedule 5 hereto;
Investor has the meaning set forth in the Preamble;
IW has the meaning set forth in the Preamble;
Key Subsidiary means, at the relevant time:
(a) | Azure India; and |
(b) | each Subsidiary or such Subsidiaries (both direct or indirect) of Azure India where, as of the end of the then most recently completed fiscal year of Azure India: |
(i) | the Assets of such Subsidiary or cumulative Assets of such Subsidiaries, as the case may be, account for more than 70% (seventy per cent) of the total consolidated Assets of Azure India; or |
(ii) | such Subsidiary or such Subsidiaries cumulatively, have earnings before interest, tax, depreciation and amortization representing more than 70% (seventy per cent) of Azure Indias total consolidated earnings before interest, tax, depreciation and amortization.; |
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Maturity Date has the meaning set forth in Schedule 5;
New Issuance shall have the meaning set forth in Schedule 5;
Normal Conversion Factor has the meaning set forth in Schedule 5;
OFAC has the meaning set forth in Section 3.01(f);
Original Company Disclosure Schedule means the Companys completed disclosure schedule attached hereto as Schedule 2 ( Original Company Disclosure Schedule );
Parties or Party has the meaning set forth in the Preamble;
Registration Rights Agreement means the registration rights agreement entered into by the shareholders of the Company setting out the right to have the registration statement filed with respect to the Equity Shares or Equity Securities held by them for resale/make an offering under the Securities Act of 1933, as amended;
Series H CCPS means fully paid up compulsorily convertible preference shares of the Company having the rights, preferences and privileges as set forth in Schedule 5 hereto and in the Shareholders Agreement;
Shareholders Agreement means the shareholders agreement to be executed between the Company and its shareholders in relation to the rights and obligations of the parties thereto for regulating the management and control of the affairs of the Company and certain other rights and obligations inter se in relation to the Company;
Sponsor Entity has the meaning set forth in the Preamble;
Sponsors has the meaning set forth in the Preamble;
Subscription Agreement has the meaning set forth in the Recitals;
Subscription Date has the meaning set forth in Section 2.01(b);
Subscription Price has the meaning set forth in Section 2.01(a);
Subscription Shares has the meaning set forth in in Section 2.01(a);
Subscription Notice means a notice in the form set forth in Schedule 1 ( Form of Subscription Notice );
Subsidiary means with respect to the Company, an Affiliate over fifty per cent (50%) of whose capital is owned, directly or indirectly by the Company, and shall include Azure India and such other companies in which over fifty per cent (50%) of whose capital is owned, directly or indirectly by Azure India;
Transaction Documents means:
(a) | this Agreement; |
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(b) | the Shareholders Agreement; |
(c) | the Azure India SHA; |
(d) | the IFC Series H Lock-in Agreement; |
(e) | the GIF Series H Lock-in Agreement; |
(f) | Registration Rights Agreement; and |
(g) | any other document designated as a Transaction Document under the Shareholders Agreement; |
Updated Company Disclosure Schedule means the Companys updated disclosure schedule, if any, which has been delivered by the Company in accordance with Section 3.01 ( Representations and Warranties ).
Section 1.02. Interpretation . (a) The provisions of Section 1.02 ( Interpretation ) of the Subscription Agreement are deemed to be incorporated herein and apply mutatis mutandis to this Agreement.
(b) Capitalized terms used in the provisions incorporated from the Subscription Agreement and defined under Section 1.01(b) ( Definitions ) of this Agreement shall, unless otherwise specified, have the meaning assigned to them in Section 1.01 (b) ( Definitions ). Without prejudice to the generality of the foregoing, it is clarified that: (i) any reference to this Agreement in the provisions incorporated from the Subscription Agreement shall be construed as a reference to this Agreement; (ii) any reference to the Company in the provisions incorporated from the Subscription Agreement shall be construed as a reference to the Company under this Agreement; and (iii) any reference to Sponsors in the provisions incorporated from the Subscription Agreement shall be construed as a reference to the Sponsors under this Agreement.
Section 1.03. Third Party Rights . The provisions of Section 1.03 ( Third Party Rights ) of the Subscription Agreement are deemed to be incorporated herein and apply mutatis mutandis to this Agreement.
ARTICLE II
Agreement for Subscription
Section 2.01. Subscription . (a) On the terms and subject to the conditions of this Agreement, the Investor agrees to subscribe and pay for an aggregate of 22,214 (Twenty Two Thousand and Two Hundred and Fourteen) fully paid Series H CCPS in the Company (the Subscription Shares ) for a subscription price of USD 450.16 (Dollars Four Hundred and Fifty and Sixteen Cents) per Subscription Share (the Subscription Price ). The aggregate consideration payable by the Investor for the subscription of the Subscription Shares shall be USD 9,999,854 (Dollars Nine Million Nine Hundred and Ninety Nine Thousand Eight Hundred Fifty Four).
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(b) Subject to the terms of this Agreement and the reasonable satisfaction (or waiver by the Investor) of the conditions of subscription set forth in Section 4.01 ( Conditions of Investor Subscription ), either:
(i) | the Company may request the Investor to subscribe for the Subscription Shares by delivering a Subscription Notice to the Investor; or |
(ii) | the Investor may notify the Company that it shall subscribe for the Subscription Shares by delivering a Subscription Notice to the Company, |
at least 12 (twelve) Business Days prior to the date of the Investor Subscription specified in such Subscription Notice (the Subscription Date ), subject to Section 2.03 ( Cancellation of Investor Subscription ).
(c) If a Subscription Notice is delivered by the Company to the Investor in accordance with Section 2.01(b)(i), or the Investor delivers a Subscription Notice to the Company in accordance with Section 2.01(b)(ii), then the Company shall be obliged to issue the Subscription Shares to the Investor on the Subscription Date and shall take all necessary corporate and other action, including but not limited to all appropriate steps to ensure that a meeting of the Companys shareholders or a meeting of the board of directors, as applicable, is promptly convened, to ensure that the Subscription Shares shall be issued to the Investor on the Subscription Date, in accordance with the terms of this Agreement.
(d) On the Subscription Date:
(i) | the Investor shall pay the amount equal to the Subscription Price multiplied by the number of Subscription Shares in Dollars to the following account of the Company: |
Company Account (IBAN): MU52BARC0305000007069376000USD
Bank Name: Barclays Bank Mauritius Limited
Bank Address: International Banking, 1ST Floor, Barclays House, Barclays House, 68-68A, Cybercity Ebene, Mauritius
SWIFT Code: BARCUS33,
or such other account specified in the Subscription Notice; and
(ii) | the Company shall: |
(A) | issue to the Investor, or as the Investor directs, the Subscription Shares free of all Liens or other encumbrances or rights of third parties and record the Investor as the legal and beneficial owner of the Subscription Shares in the Companys share register; |
(B) | deliver to the Investor, or as the Investor directs: (1) a share certificate in customary form; and (2) a certified copy of the Companys share register, evidencing the Investors valid title to the Subscription Shares, free of all Liens or other encumbrances or rights of third parties; and |
(C) | provide the Investor with a certified copy of the resolutions passed by the board of directors and the shareholders of the Company for the issue and allotment of the Subscription Shares to the Investor; |
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The Parties agree that the fulfillment of the obligations of the Company set forth in Sections 2.01(d)(ii)(A) through (C) above are conditions precedent to the application of any funds disbursed by the Investor under Section 2.01(d)(i) to the subscription for the Subscription Shares and that, accordingly, any funds disbursed in accordance with Section 2.01(d)(i) shall be held in trust by the Company (for the benefit of the Investor) until the acts set forth in Section 2.01(d)(ii)(A) through (C) have been performed, and in the event that such acts are not performed as soon as practicable, and in any event within three (3) Business Days from any such disbursement of funds by the Investor, the Company shall, upon the Investors request, immediately return the funds disbursed in accordance with Section 2.01(d)(i) to the Investor, unless instructed otherwise by the Investor.
(e) The Company shall pay all Taxes, fees or other charges payable on or in connection with the execution, issue, subscription, delivery, registration, translation or notarization of this Agreement, the other Transaction Documents, the Companys Charter, the Subscription Shares and any other documents related to this Agreement, the other Transaction Documents or the Companys Charter.
(f) The Company shall undertake all post-issue filings and other requirements associated with the issuance of the Subscription Shares in the time prescribed for the same under Applicable Law.
(g) If the Company, for any reason, does not issue the Subscription Shares as set forth in Section 2.01(d), including by reason of failure of the Companys shareholders to authorize such issuance, such failure to issue the Subscription Shares shall constitute a breach of the Companys obligations under this Agreement, and the Investor shall have the right to exercise any and all rights or legal or equitable remedies of any kind which may accrue to it against the Company. It is clarified that provisions of this Section 2.01(g) shall not apply if, upon reasonable satisfaction (or waiver by the Investor) of the conditions of subscription set forth in Section 4.01 ( Conditions of Investor Subscription ), the Investor does not subscribe to the Subscription Shares within Subscription Date.
Section 2.02. Companys Obligations until all of the Subscription Shares are Issued . (a) Until the Subscription Shares have been subscribed and issued or the right of the Company to request the subscription has been cancelled as provided in Section 2.03 ( Cancellation of Investor Subscription ), whichever occurs first, the Company shall conduct its business in the ordinary course and shall use, and shall cause each of its Subsidiaries to use, its reasonable best efforts to preserve intact its business organizations and relationships with third parties and to keep available the services of its present officers and employees.
(b) In addition to Section 2.02(a), until the Subscription Shares have been subscribed and issued or the right of the Company to request the subscription has been cancelled as provided in Section 2.03 (1) ( Cancellation of Investor Subscription ) or the right of the Investor to subscribe has been cancelled as provided in Section 2.03 (2), whichever occurs first, the Company shall not, and shall ensure that each of its Subsidiaries shall not (other than in connection with the Investor Subscription, the issuance and allotment of Co-Investor Shares to the Co-Investor, the issuance and allotment of the Equity Securities of the Company as part of the Externalization Process and for matters listed in Schedule 6 or with the prior written approval of the Investor) take any of the actions set forth in
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sub-sections (i) to (xi) of Section 2.02(b) ( Companys Obligations until all of the Subscription Shares are Issued ) of the Subscription Agreement (which shall be deemed to be incorporated herein and apply mutatis mutandis to this Agreement).
Section 2.03. Cancellation of Investor Subscription . (1) The Investor may, by written notice to the Company, cancel the right of the Company to request the Investor to subscribe for any Subscription Shares:
(a) if at any time, in the reasonable opinion of the Investor, anything has occurred which has or may reasonably be expected to have a Material Adverse Effect or there exists any situation which indicates that performance by the Company, its Subsidiaries or the Sponsors of their respective obligations under any of the Transaction Documents, or the Companys Charter or the constitutional documents of the Sponsors who are not natural Persons cannot be expected;
(b) if the Company has breached Section 2.02 ( Companys Obligations until all of the Subscription Shares are Issued ) and such breach is incapable of cure (in the sole opinion of the Investor) or, where such breach is capable (in the sole opinion of the Investor) of cure, it has not been cured within thirty (30) days following receipt by the Company of notice of such breach from the Investor; or
(c) in any case, at any time on or after the Cancellation Date,
(2) The Company may, by written notice to the Investor, cancel the right of the Investor to subscribe to any Subscription Shares at any time on or after the Cancellation Date.
Upon any such cancellation, each Partys further rights and obligations shall terminate immediately, provided that such termination shall not affect a Partys accrued rights and obligations at the date of termination and shall be without prejudice to any and all rights or legal or equitable remedies of any kind which may accrue to the Investor against the Company and provided that the provisions of Section 5.01 ( Notices ), Section 5.02 ( Applicable Law and Arbitration ) and Section 5.03(b) ( Other Miscellaneous Provisions ) shall survive such termination.
ARTICLE III
Representations and Warranties
Section 3.01. Representations and Warranties . The representations and warranties contained in Section 3.01 of the Subscription Agreement (except the representations set forth in sub-sections (a), (h), (i), (v) and (z) of Section 3.01 ( Representations and Warranties ) of the Subscription Agreement) are deemed to be incorporated herein and apply mutatis mutandis to this Agreement and shall also be deemed to be repeated as of the Subscription Date.
Each of the Company and the Sponsors hereby represents and warrants to the Investor that the representations and warranties incorporated by reference from the Subscription Agreement and the statements contained in this Section 3.01: (i) are true, accurate and not misleading with respect to the Company and the Sponsors who are not natural Persons and/or, as the case may be, each of the Key Subsidiaries or Subsidiaries (as the case may be) as of the date of this Agreement, except as otherwise set forth in the Companys disclosure schedule (the Original Company Disclosure Schedule ) attached to this Agreement as Schedule 2 ( Company Disclosure Schedule ); and (ii) will remain true,
10
accurate and not misleading immediately prior to the Investor Subscription except as set forth in any updated disclosure schedule, which shall be in the form and substance satisfactory to the Investor (an Updated Company Disclosure Schedule ), delivered by the Company to the Investor and accepted and signed by the Investor at least ten (10) Business Days prior to the Subscription Date. No disclosure made in the Original Company Disclosure Schedule or an Updated Company Disclosure Schedule shall be deemed adequate to disclose an exception to a representation or warranty made herein, unless the disclosure contained therein identifies the relevant facts and circumstances for such exception fully, fairly, specifically and accurately.
(a) Organization and Authority . Each of the Company, and the Sponsors who are not natural Persons and the Subsidiaries is a legal entity duly organized and validly existing under the laws of its place of incorporation, and the Company has the corporate power and authority to enter into, deliver and perform its obligations under this Agreement and each of the other Transaction Documents to which it is a party. Each of the Sponsors who are natural Persons have the power and authority to enter into, deliver and perform their respective obligations under this Agreement and each of the Transaction Documents to which it is a party.
(b) Financial Condition . For the Company, since its incorporation, and for its Subsidiaries, since March 31, 2015:
(i) | the business of the Company and each of its Subsidiaries has been conducted in the ordinary course so as to maintain the business as a going concern; |
(ii) | neither the Company nor any of its Subsidiaries nor the Sponsors has suffered any change having a Material Adverse Effect or incurred any substantial loss or liability other than notional forex losses due to mark to market variation of currency; |
(iii) | neither the Company nor any of its Subsidiaries has undertaken or agreed to undertake any substantial obligation; and |
(iv) | no dividend or distribution has been declared or paid by the Company or any of its Subsidiaries. |
(c) Financial Statements . Azure Indias audited consolidated balance sheet as of March 31, 2014 and provisional balance sheet as of March 31, 2015 and the related audited consolidated statements of income and cash flows for the fiscal year ended March 31, 2014 and provisional consolidated statements of income for the fiscal year ended March 31, 2015 have been prepared in accordance with the Accounting Standards applied on a consistent basis throughout the periods therein specified, and give a true and fair view of the consolidated financial condition of Azure India as of the date as of which they were prepared and the results of Azure Indias operations during the periods therein specified. As on the date of the foregoing financial statements, there are no losses, liabilities (whether actual or contingent or otherwise) or bad or doubtful debts other than those fully disclosed in the consolidated financial statements of Azure India hereinbefore referred to.
(d) Title to and Condition of Property . The Company does not own property and assets, movable and immovable, whatsoever. Each of its Subsidiaries has: (i) good and marketable title free and clear of all Liens to all of the property and assets, movable and immovable, reflected in the Companys most recent balance sheet included in the consolidated financial statements (except assets
11
sold or otherwise disposed of since such date in the ordinary course of business), other than Liens in favour lenders pursuant to project financing/loan agreements described in Section 3.01 (v) of the Current Company Disclosure Schedule; and (ii) with respect to leased properties and assets, valid leasehold interests therein free and clear of all Liens, other than liens in favour lenders pursuant to project financing/loan agreements described in Section 3.01 (v) of the Current Company Disclosure Schedule. The plant, property and equipment of the Company and each of its Subsidiaries that are used in the Company Operations are in good operating condition and repair, subject to normal wear and tear not caused by neglect, and are adequate and suitable for the purposes for which they are currently being used. All properties used in the Company Operations are reflected in the Companys most recent balance sheet included in the consolidated financial statements to the extent the Accounting Standards require the same to be reflected.
(e) Intellectual Property . The Company does not own or use any Intellectual Property. Each of the Subsidiaries owns or has the valid right to use at a nominal cost, all Intellectual Property that is material to the operation of its business as currently conducted or proposed to be conducted by it.
(f) Economic Sanctions . None of the Company, its Subsidiaries, and the Sponsors has entered into a business relationship with any person which is the target of economic sanctions administered by U.S. Office of Foreign Assets and Control ( OFAC ) or provide any financing or services to, or in connection with, any activity in any sector under embargo by the United Nations.
Section 3.02. Other provisions . The provisions of Section 3.02 ( Investor Reliance ), Section 3.03 ( Survival of Representations and Warranties ) and Section 3.04 ( Indemnity ) of the Subscription Agreement are deemed to be incorporated herein and apply mutatis mutandis to this Agreement.
ARTICLE IV
Conditions of Investor Subscription
Section 4.01. Conditions of Investor Subscription . The obligation of the Investor to make the Investor Subscription is subject to the fulfillment, to the Investors reasonable satisfaction, prior to or concurrently with the making of the Investor Subscription, of the conditions set forth under sub-sections (a), (b), (c), (d), (e), (f), (g), (i), (j), (k), (l) and (n) of Section 4.01 ( Conditions of Investor Subscription ) of the Subscription Agreement (which shall be deemed to be incorporated herein by reference and shall apply mutatis mutandis to this Agreement) and the following conditions:
(a) Opinions of Counsel . The Investor has received a legal opinion or opinions, in form and substance satisfactory to the Investor, from the Investors counsels on Mauritian laws and on English laws (as applicable) covering such matters relating to the transactions contemplated by this Agreement, the other Transaction Documents and the Companys Charter, as the Investor may reasonably request;
(b) Appointment of Auditors . The Company (i) has appointed a firm of internationally recognized independent public accountants acceptable to the Investor as Auditors of the Company, (ii) has authorized and instructed them, in the form set forth in Schedule 4 ( Form of Letter to Companys
12
Auditors ), to communicate directly with the Investor; and (iii) has taken such actions, issued such instructions and delivered such documents as necessary to procure the firms compliance with such request;
(c) Employee Stock Plan . The Company has formally adopted an employee stock plan in a form acceptable to the Investor that meets the criteria set forth in the Shareholders Agreement;
(d) Externalization Process . The Externalization Process has been completed in form and substance satisfactory to the Investor, and pursuant to such Externalization Process, Equity Securities of the Company have been issued and allotted to: (i) Helion Venture Partners II, LLC, (ii) Helion Venture Partners India II, LLC, (iii) IFC, (iv) DEG-Deutsche Investitions -und Entwicklungsgesellschaft mbH, (v) FC VI India Venture (Mauritius) Ltd., and (vi) Société de Promotion et de Participation Pour la Coopération Économique S.A. as set out in Section 3.01(f) ( Capital Structure of the Company ) of the Current Company Disclosure Schedule;
(e) Charter Documents . The Company and each of the Subsidiary has adopted an amended Charter, such amended Charter is fully effective, and such amended Charter is in form and substance satisfactory to the Investor and is consistent with the provisions of the Shareholders Agreement, including but not limited to provisions of the Shareholders Agreement in respect of consent and/or voting rights, restrictions on transfer, corporate governance and any other matter provided for in the Shareholders Agreement which is desirable or necessary to be included in the Charter;
(f) Waiver of Pre-emptive Rights . The Investor has received intimation in writing from the existing shareholders or investors of the Company, in the form acceptable to the Investor, waiving their pre-emptive rights under the Shareholders Agreement to subscribe to the Equity Securities of the Company arising from the issuance of Subscription Shares to the Investor under this Agreement.
ARTICLE V
Miscellaneous
Section 5.01. Notices . The provisions of Section 5.01 ( Notices ) of the Subscription Agreement are deemed to be incorporated herein and apply mutatis mutandis to this Agreement, subject to the following modifications:
For the Company:
1st Floor, The Exchange,
18 Cybercity, Ebene, Mauritius
Facsmile: +91 1149409807
Attention: Inderpreet Singh Wadhwa
For the Sponsors:
Inderpreet Singh Wadhwa
[Address]
Fascimile: [Fax Number]
Attention: Inderpreet Singh Wadhwa
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Harkanwal Singh Wadhwa
[Address]
Facsimile: [Fax Number]
Attention: Harkanwal Singh Wadhwa
IW Green Inc.:
341, Raven Circle
Wyoming, Zip Code 19934
Kent, United States of America
Facsimile: 91 1149409807
Attention: Inderpreet Singh Wadhwa
For the Investor:
International Finance Corporation
2121 Pennsylvania Avenue, N.W.
Washington, D.C. 20433
United States of America
Facsimile: +1 (202) 974-4307
Attention: Mr. Sujoy Bose, Director, Infrastructure and Natural Resources
With a copy (in the case of communications relating to payments) sent to the attention of the Director, Department of Financial Operations, at: Facsimile: +1 (202) 522-3064.
And a copy to:
IFCs South Asia Department
3rd and 4th Floor, Maruti Suzuki Building,
Plot No. 1, Nelson Mandela Road,
Vasant Kunj, New Delhi - 110070, India,
Facsimile Number: (91-11) 4111-1001
Section 5.02. Applicable Law and Arbitration . (a) This Agreement is governed by, and construed in accordance with, the laws of England and Wales.
(b) The provisions of sub-sections (b), (c), (d), (e), (f), (g) and (h) of Section 5.04 ( Applicable Law and Arbitration ) of the Subscription Agreement are deemed to be incorporated herein and apply mutatis mutandis to this Agreement. It is clarified that the term Related Agreements shall mean the Transaction Documents and such other agreements or documents referred to in Schedule X of the Shareholders Agreement.
Section 5.03. Other miscellaneous provisions . (a) The following provisions of Article V ( Miscellaneous ) of the Subscription Agreement are deemed to be incorporated herein and apply mutatis mutandis to this Agreement: Section 5.02 ( Saving of Rights ), Section 5.05 ( Immunity ), Section 5.06 ( Announcements ), Section 5.07 ( Successors and Assigns ), Section 5.08 ( Amendments, Waivers and Consents ), Section 5.09 ( Counterparts ) and Section 5.12 ( Invalid Provisions ).
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(b) The following provisions of Article V ( Miscellaneous ) of the Subscription Agreement are deemed to be incorporated herein and apply mutatis mutandis to this Agreement: Section 5.03 ( English Language ) and Section 5.10 ( Expenses ).
(c) This Agreement, together with the Subscription Agreement and other Transaction Documents supersedes all prior discussions, memoranda of understanding, agreements and arrangements (whether written or oral, including all correspondence), if any, between the Parties with respect to the subject matter of this Agreement, and this Agreement (together with the Subscription Agreement and the other Transaction Documents) contains the sole and entire agreement between the Parties with respect to the subject matter of this Agreement.
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IN WITNESS WHEREOF, the parties hereto, acting through their duly authorized representatives, have caused this Agreement to be signed in their respective names as of the date first written above
SIGNED AND DELIVERED BY INTERNATIONAL FINANCE CORPORATION BY THE HAND OF PRATIBHA BAJAJ (AUTHORIZED SIGNATORY) PORTFOLIO OFFICER Infrastructure & Natural Resources |
/s/ PRATIBHA BAJAJ | |||
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IN WITNESS WHEREOF, the parties hereto, acting through their duly authorized representatives, have caused this Agreement to be signed in their respective names as of the date first written above
SIGNED AND DELIVERED BY AZURE POWER GLOBAL LIMITED BY THE HAND OF (AUTHORIZED SIGNATORY) | ||||
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IN WITNESS WHEREOF, the parties hereto, acting through their duly authorized representatives, have caused this Agreement to be signed in their respective names as of the date first written above
SIGNED AND DELIVERED BY AZURE POWER INDIA PRIVATE LIMITED BY THE HAND OF (AUTHORIZED SIGNATORY) | ||||
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IN WITNESS WHEREOF, the parties hereto, acting through their duly authorized representatives, have caused this Agreement to be signed in their respective names as of the date first written above
SIGNED AND DELIVERED BY IW GREEN INC BY THE HAND OF (AUTHORIZED SIGNATORY) |
SIGNED AND DELIVERED BY MR. INDERPREET SINGH WADHWA |
SIGNED AND DELIVERED BY MR. HARKANWAL SINGH WADHWA |
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SCHEDULE 1
FORM OF SUBSCRIPTION NOTICE
[Letterhead of the Company/the Investor]
[Date]
International Finance Corporation
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|
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|
Attention: [●]
Ladies and Gentlemen:
Investment No.
Request for Investor Subscription No. (Equity)
1. | Please refer to the Letter Agreement (the Letter Agreement , dated [●], between, inter alia , Azure Power Global Limited (the Company ), the Sponsors and International Finance Corporation ( Investor ). Terms defined in the Subscription Agreement, including terms defined by reference to any other Transaction Document (as defined in the Subscription Agreement), have their defined meanings wherever used in this request. |
2. | In accordance with the provisions of the Letter Agreement [and the enclosed resolution of the Companys [board of directors]/[shareholders]], the Company requests the subscription of [[●] of Subscription Shares each at the Subscription Price. Therefore, the Company requests the Investor to pay [●] [Dollars] on the Subscription Date to [●], for credit to the Companys account no. [●].] |
3. | The Subscription Date for the Investor Subscription [contemplated by this Subscription Notice] shall be [●]. |
4. | For the purpose of Section 4.01 ( Conditions of Investor Subscription ) of the Subscription Agreement, the Company certifies as follows:[to be inserted] |
5. | The above certifications are effective as of the date of this Subscription Notice and shall continue to be effective as of the Subscription Date set out in paragraph 3 (as if made by reference to such date). If any such certification is no longer valid as of or prior to that Subscription Date, the Company undertakes to promptly notify the Investor by facsimile. |
Yours faithfully, | ||
By |
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Authorized Representative | ||
By |
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Authorized Representative |
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[Enclosure[s]]: | [Resolution of the Companys [board of directors]/[shareholders]]; [Subscription Form] | |
Copy to: | International Finance Corporation Attention: [●] |
21
SCHEDULE 2
ORIGINAL COMPANY DISCLOSURE SCHEDULE
The purpose of this Schedule is to disclose matters which may be relevant to the representations and warranties contained in the Subscription Agreement. The representations and warranties are qualified by the facts and circumstances fully, fairly, specifically and accurately contained or disclosed in this Schedule or in any of the documents annexed to this Schedule.
DISCLOSURES IN RELATION TO REPRESENTATIONS AND WARRANTIES UNDER SECTION 3.01(a) to (f) OF THIS AGREEMENT
The following specific disclosures are made in relation to the representations and warranties under Section 3.01(a) to (f) of this Agreement. Each matter disclosed is listed against the sub-section number of the representation and warranty to which the disclosure relates but a disclosure applies to all of the representations and warranties only to the extent it is reasonably apparent on its face.
Representation/Warranty No. | Disclosure | |
Clause 3.01(a) ( Organization and Authority ) | No disclosure. | |
Clause 3.01 (b) ( Financial Condition ) |
Section 3.01 (b) (i): No Disclosure
Section 3.01 (b) (ii): No Disclosure
Section 3.01 (b) (iii): Details of disclosures are set out in Annexure 3
Section 3.01 (b) (iv): No Disclosure |
|
Clause 3.01(c) ( Financial Statements ) | No disclosure | |
Clause 3.01(d) ( Title to and Condition of Property ) | No disclosure | |
Clause 3.01 (e) ( Intellectual Property ) | No disclosure | |
Clause 3.01 (f) ( Economic Sanctions ) | No disclosure |
DISCLOSURES IN RELATION TO REPRESENTATIONS AND WARRANTIES DEEMED TO BE INCORPORATED FROM THE SUBSCRIPTION AGREEMENT
The following specific disclosures are made in relation to the representations and warranties incorporated by reference from the Subscription Agreement. Each matter disclosed is listed against the sub-section number of the representation and warranty to which the disclosure relates but a disclosure applies to all of the representations and warranties only to the extent it is reasonably apparent on its face.
Representation/Warranty No. | Disclosure | |
Clause 3.01 (b) ( Validity ) | No disclosure. |
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Representation/Warranty No. | Disclosure | |||
Clause 3.01(c) ( No Conflict ) | No disclosure | |||
Clause 3.01(d) ( Status of Authorizations ) | Section 3.01(d) (i): | |||
Resolution of the board of directors of the Company for signing and executing this Agreement and other applicable Transaction Documents | ||||
Resolution of the board of directors of the Sponsor Entity dated for signing and executing this Agreement and other applicable Transaction Documents | ||||
Section 3.01(d)(ii): Shareholders resolution for amendment of Charter Documents. |
||||
Resolution of the board of directors of the Company for issuance of Shares. | ||||
Clause 3.01(e) ( Charter ) | List of Directors | |||
| Azure Power Global Limited | |||
a. Inderpreet Wadhwa |
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b. Eric Ng. |
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c. Khalid Peyrye |
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| Details of directors of the Subsidiaries are set out in Annexure 2 (A) ). | |||
Clause 3.01 (f) ( Capital Structure of the Company ) |
Paid up Capital of the Company is USD 1,098.30 (Details of the Capital Structure attached separately as Annexure 1 ) |
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Clause 3.01 (g) ( No immunity ) | No disclosure | |||
Clause 3.01 (i) ( Taxes ) | No disclosure | |||
Clause 3.01 (k) ( Litigation ) | Section 3.01 (k) (i) : | |||
1. |
Civil Suit No. 22/2012 along with temporary injunction application no. 20/2012 filed by Sh. Mehram before Civil Judge (Jr. Div.) Jayal, District Nagaur on 9 th July 2012 against Azure Power (Rajasthan) Pvt. Ltd., In the continuation of this a Writ Petition (S. B. Civil Writ Petition No. 9685/2012) filed by Azure Power Rajasthan Pvt. Ltd., at High Court, Jodhpur - a portion of land leased admeasuring Khasra Number 1175, Tehsil Jayal District Nagour, Rajasthan from the Government of Rajasthan for the projects of |
23
Representation/Warranty No. | Disclosure | |||
Azure Power Rajasthan Pvt. Ltd., in Rajasthan, is presently disputed as third parties have sought establishment of mining rights through the Mining Department of the State of Rajasthan. Azure Power Rajasthan Pvt. Ltd, has filed a petition with the High Court of Rajasthan seeking non-renewal of the mining rights. Presently, this matter is pending before the High Court of Rajasthan. | ||||
Prayer : Azure Power Rajasthan Private Limited has prayed before the honorable high court that the mining lease under dispute should not be renewed. | ||||
2. | Case pending before the Supreme Court of India - The Gujarat Urja Vikas Nigam Limited, had filed a petition with the Gujarat Electricity Regulatory Commission, seeking recalculation on the basis of actual cash flow required for development of solar projects and consequent revision of the tariff payable by it, in relation to certain solar power projects including 10 MW Gujarat project of Azure Power (Haryana) Pvt. Ltd. While the Gujarat Electricity Regulatory Commission and the Appellate Tribunal for Electricity dismissed the claims made by Gujarat Urja Vikas Nigam Limited, an appeal filed by Gujarat Urja Vikas Nigam Limited is pending with the Supreme Court of India (GUVNL vs GERC & Others CA No. 10301/ 2014). | |||
Prayer : All respondents have prayed for dismissal of the appeal. | ||||
3. | WP No. 13132/2012 pending before the High Court of Rajasthan at Jodhpur filed by Radhan Kishan & Deepa Ram against the State of Rajasthan and the Azure Power Rajasthan Private Limited involving a challenge of the allotment of 1059 Bighas land to the Company by the Government of Rajasthan in Katothi. | |||
Prayer : Azure Power Rajasthan Private Limited has, in its prayers, requested for dismissal of the petition. | ||||
4. | Ordinary Assessment proceedings pending before the Income Tax department against Azure Power (Rajasthan) Private Limited for the assessment year 2012-13. The assessment is of a routine nature and no adverse observation or adverse finding has been made by the Income Tax Department in this regard. | |||
5. | Ordinary Assessment proceedings pending before the Income Tax department against Azure Power India Private Limited for the assessment year 2012-13. The assessment is |
24
Representation/Warranty No. | Disclosure | |||
of a routine nature and no adverse observation or adverse finding has been made by the Income Tax Department in this regard. | ||||
6. | Ordinary Assessment proceedings pending before the Income Tax department against Azure Power India Private Limited for the assessment year 2013-14. The assessment is of a routine nature and no adverse observation or adverse finding has been made by the Income Tax Department in this regard. | |||
7. | Ordinary Assessment proceedings pending before the Income Tax department against Azure Solar Private Limited for the assessment year 2013-14. The assessment is of a routine nature and no adverse observation or adverse finding has been made by the Income Tax Department in this regard. | |||
8. | Ordinary Assessment proceedings pending before the Income Tax department against Azure Power (Rajasthan) Private Limited for the assessment year 2013-14. The assessment is of a routine nature and no adverse observation or adverse finding has been made by the Income Tax Department in this regard. | |||
Section 3.01 (k) (ii): No Disclosure | ||||
Section 3.01 (k) (iii): No Disclosure | ||||
Clause 3.01 (l) ( Compliance with Law ) | No disclosure | |||
Clause 3.01 (m) ( Environmental Matters ) | No disclosure | |||
Clause 3.01 (n) ( Sanctionable Practices ) | No disclosure | |||
Clause 3.01 (o) ( Insurance ) | Description of any Material Claims | |||
1. | Azure Urja Private Limited:- Claim of Rs. 5.6 Million is pending with National Insurance Company on account of solar module damage. | |||
2. | Azure Clean Energy Pvt. Ltd., Azure Sunshine Pvt. Ltd. and Azure Greentech Pvt. Ltd. :- Claim of Rs. 7 Million is pending with National Insurance Company on account of solar module damage. | |||
Clause 3.01 (p) ( Disclosure ) | No disclosure | |||
Clause 3.01 (q) ( Subsidiaries ) | Attached Separately list of Subsidiaries, their directors, ownership, domicile and head office as Annexure 2 (A) and (B) | |||
Clause 3.01 (r) ( UN Security Council Resolutions ) | No disclosure |
25
Representation/Warranty No. | Disclosure | |||
Clause 3.01 (s) ( Criminal Offenses ) | No disclosure | |||
Clause 3.01 (t) ( Restrictions on Business Activities ) | No disclosure | |||
Clause 3.01 (u) ( Related Party Transactions ) | No disclosure | |||
Clause 3.01 (w) ( Books and Records ) | No disclosure | |||
Clause 3.01 (x) ( Material Contracts ) | Section 3.01(x) (i): | |||
| Operations & Maintenance Agreements hereinafter referred to as the O & M Contract ) between the Azure Power India Private Limited (AZI) and its Subsidiaries (attached separately as Annexure 4 (A) ). | |||
| Agreement in respect of lease of office premises at corporate office of the Company between Sunbir Singh Wadhwa & Kulwinder Wadhwa (Lessors) and Azure Power India Pvt. Ltd. (Lessee) dated 15 th October, 2013. Agreement in respect of lease of project land for Azure Power Punjab Pvt. Ltd. | |||
| Agreement in respect of lease of project land for Azure Power Rajasthan Pvt. Ltd. | |||
| Agreement in respect of lease of project land for Azure Solar Pvt. Ltd. | |||
| Agreement in respect of lease of project land for Azure Urja Pvt. Ltd. | |||
| Agreement in respect of lease of project land for Azure Clean Energy Pvt. Ltd. | |||
| Agreement in respect of lease of project land for Azure Sunshine Pvt. Ltd. | |||
| Agreement in respect of lease of project land for Azure Greentech Pvt. Ltd. | |||
Section 3.01(x) (ii): Details of disclosures set out in Annexure 3 . The Company or any of its Subsidiaries has not defaulted with respect to any Company Agreements in relation to indebtedness. | ||||
Section 3.01(x) (iii): No disclosure | ||||
Section 3.01(x) (iv): No disclosure | ||||
Section 3.01(x) (v): No disclosure | ||||
Clause 3.01 (y) (Labour Matters) | No disclosure |
26
ANNEXURE 1
PAID-UP CAPITAL & SHARE EQUIVALENTS
Name of Party |
Pre
Externalization |
Post Externalization | ||||||||||||||
Equity
Shares |
Preference
Shares |
CCDs | ||||||||||||||
International Finance Corporation | | 10 | 73,272 Series B | 1,100,000 IFC | ||||||||||||
CCPS | CCDs | |||||||||||||||
4,439 Series D | 37,500 IFC II | |||||||||||||||
CCPS | CCDs | |||||||||||||||
20,307 Series F | 36,000 IFC III | |||||||||||||||
CCPS | CCDs | |||||||||||||||
Helion Venture Partners II, LLC | | 10 | 2,575 Series A | | ||||||||||||
CCPS | ||||||||||||||||
53,887 Series B | ||||||||||||||||
CCPS | ||||||||||||||||
114,940 Series | ||||||||||||||||
CCCPS | ||||||||||||||||
26,636 Series D | ||||||||||||||||
CCPS | ||||||||||||||||
63,853 Series F | ||||||||||||||||
CCPS | ||||||||||||||||
Helion Venture Partners India II, LLC | | | 16,810 Series A | | ||||||||||||
CCPS | ||||||||||||||||
FC VI India Venture (Mauritius) Ltd. | | 10 | 19,385 Series A | | ||||||||||||
CCPS | ||||||||||||||||
53,887 Series B | ||||||||||||||||
CCPS | ||||||||||||||||
114,940 Series | ||||||||||||||||
CCCPS | ||||||||||||||||
53273 Series D | ||||||||||||||||
CCPS | ||||||||||||||||
53,973 Series F | ||||||||||||||||
CCPS | ||||||||||||||||
DEG Deutsche Investitions -und EntwicklungsgesellschaftmbH | | 10 | | 680,390 DEG | ||||||||||||
CCDs | ||||||||||||||||
Société de Promotion et de Participation pour la Coopération Economique S.A. | | 10 | 140,000 Series | | ||||||||||||
ECCPS | ||||||||||||||||
IW Green Inc. | 102,497 | 102,497 | | | ||||||||||||
Azure Power Inc. | 5,700 | 5,700 | | | ||||||||||||
Satnam Sanghera | 1,633 | 1,633 | | | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total |
109,880 | 109,880 | 812,177 | 1,853,890 | ||||||||||||
|
|
|
|
|
|
|
|
27
ANNEXURE 2 (A)
LIST OF SUBSIDIARIES, THEIR DIRECTORS, OWNERSHIP, DOMICILE AND HEAD OFFICE [pursuant to Section 3.01(e) ( Charter and Number of Directors ) & Section 3.01(g) ( Subsidiaries ) of the Subscription Agreement]
Sl. |
Name of Subsidiary |
Directors |
Capitalisation |
Shareholding/ Ownership |
Registered Office/ Domicile |
Head office |
||||||
1. |
Azure Power India Private Limited (AZI) |
a. Mr. Inderpreet S Wadhwa. b. Mr. H.S. Wadhwa. c. Mr. Sanjeev Aggarwal, d. Mr. William Bruce Elmore e. Ms. Dianne Goss Farrell f. Mr. Robert Douglas Kelly |
Rs. 9,220,570/- Divided into 1,09,880 Equity Shares of Rs. 10 Each & 8,12,177 Preference share of Rs. 10 each. |
1. Mr. Inderpreet Singh Wadhwa holds 97,497 Equity Shares of Rs 10 Each.
2. Azure Power Inc. Holds 5,700 Equity Shares of Rs 10 Each.
3. Mr. Harkanwal singh Holds 5,000 Equity Shares of Rs 10 Each.
4. FC VI India Venture (Mauritius) Ltd Holds 10 Equity Shares of Rs 10 Each and 295,458 Compulsorily Convertible Preference Shares of Rs. 10 Each.
5. Helion Ventures Partners II LLC Holds 10 Equity Shares of Rs 10 Each and 261,891 Compulsorily Convertible Preference Shares of Rs. 10 Each. |
8, G.F., Local Shopping Complex, Pushp Vihar, Madangir, New Delhi - 62 | 8, G.F., Local Shopping Complex, Pushp Vihar, Madangir, New Delhi - 62 |
28
Sl. |
Name of Subsidiary |
Directors |
Capitalisation |
Shareholding/ Ownership |
Registered Office/ Domicile |
Head office |
||||||||||
6.International Finance Corporation Holds 10 Equity Shares of Rs 10 Each, 98018 Compulsorily Convertible Preference Shares of Rs. 10 Each, 11,00,000 Compulsorily Convertible Debentures of Rs. 224.19, 37,500 Compulsorily Convertible Debentures of Rs. 2,000 and 36,000 Compulsorily Convertible Debentures of Rs.5,000.
7. Satnam Sanghera Holds 1,633 Equity Shares of Rs 10 Each.
8. DEG Holds 10 Equity Shares of Rs 10 Each and 680,390 Compulsorily Convertible Debentures of Rs. 1,000/-.
9. PROPARCO holds 10 Equity Share of Rs 10 Each and 140,000 Compulsorily Convertible Preference Shares of Rs. 10 Each. |
29
Sl. |
Name of Subsidiary |
Directors |
Capitalisation |
Shareholding/ Ownership |
Registered Office/ Domicile |
Head office |
||||||||||
10. Helion Venture Partners India II LLC holds 16,810 Compulsorily Convertible Preference Shares of Rs. 10 Each. | ||||||||||||||||
2. | Azure Power (Punjab) Pvt. Ltd. |
g. Inderpreet Wadhwa h. H.S. Wadhwa |
Rs. 1,265,240/- divided into 1,265,24 equity shares of Rs. 10 each. |
1. |
Mr. H.S. Wadhwa holds 1 Equity Share | C - 2324, Ranjit Avenue, Amritsar | 8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 | |||||||||
2. | Azure Power India Private Limited Holds 126523 Equity Share of Rs 10 Each | |||||||||||||||
3. | Azure Power (Haryana) Pvt. Ltd. |
a. Inderpreet Wadhwa b. H.S. Wadhwa c. Sanjeev Aggarwal d. Natarajan Ranganathan |
Rs. 20,49,200 Lacs Divided into 204920 Equity Shares of Rs. 10 Each. |
1. |
Mr. H.S. Wadhwa holds 1 Equity Share |
Villa No. 148, Tatvam Villas, Sohna Road, Gurgaon, Haryana - 122018 |
8, G.F., Local Shopping Complex, Pushp Vihar, Madangir, New Delhi - 62 | |||||||||
2. | Azure Power India Private Limited Holds 163935 Equity Share of Rs 10 Each | |||||||||||||||
3. | Suntech Power International Ltd. holds 40984 Equity Share of Rs 10 Each | |||||||||||||||
4. |
Azure Power (Rajasthan) Pvt. Ltd. |
a. Inderpreet Wadhwa b. H.S. Wadhwa |
Rs. 988,740 Divided into 988,74/ Equity Shares of Rs. 10 Each. |
1. |
Mr. H.S. Wadhwa holds 1 equity share | 8, G.F., Local Shopping Complex, Pushp Vihar, Madangir, New Delhi - 62 |
8, G.F., Local Shopping Complex, Pushp Vihar, Madangir, New Delhi - 62 |
|||||||||
2. | Azure Power India Private Limited holds 98873 Equity Share of Rs 10 Each | |||||||||||||||
5. | Azure Solar Pvt. Ltd. |
a. Inderpreet Wadhwa b. H.S. Wadhwa |
Rs. 11,845,800 Divided Equity Shares of Rs. 10 Each. |
1. |
Mr. H.S. Wadhwa holds 1 equity share of Rs 10 each. | 8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 |
8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 |
|||||||||
2. | Azure Power India Private Limited holds | |||||||||||||||
30
Sl. |
Name of Subsidiary |
Directors |
Capitalisation |
Shareholding/ Ownership |
Registered Office/ Domicile |
Head office |
||||||||
1093521 Equity Share of Rs 10 Each | ||||||||||||||
3. |
Azure Power US Inc. holds 91058 Equity Share of Rs 10 Each | |||||||||||||
6. | Azure Sun Energy Pvt. Ltd. |
a. Inderpreet Wadhwa b. H.S. Wadhwa |
Rs. 7,56,240 Divided into 75,624 Equity Shares of Rs. 10 Each. |
1. |
Mr. H.S. Wadhwa holds 1 equity share of Rs 10 each | 8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 |
8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 |
|||||||
2. | Azure Power India Private Limited holds 75623 Equity Share of Rs 10 Each. | |||||||||||||
7. | Azure Solar Solutions Pvt. Ltd. |
a. Inderpreet Wadhwa b. H.S. Wadhwa |
Rs. 2,25,760 divided into 22,576 Equity Shares of Rs. 10 Each. |
1. |
Mr. H.S. Wadhwa holds 1 equity share of Rs 10 each | 8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 |
8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 |
|||||||
2. | Azure Power India Private Limited holds 22575 Equity Share of Rs 10 Each | |||||||||||||
8. | Azure Urja Pvt. Ltd. |
a. Inderpreet Wadhwa b. H.S. Wadhwa |
Rs. 1416380 Lacs Divided into 141638 Equity Shares Rs. 10 Each | 1. | Mr. H.S. Wadhwa holds 1 equity share of Rs 10 each |
8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 |
8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 |
|||||||
2. | Azure Power India Private Limited holds 104532 Equity Share of Rs 10 Each | |||||||||||||
3. | Azure Power US Inc. holds 37105 Equity Share of Rs 10 Each | |||||||||||||
9. |
Azure Power (Karnataka) Pvt. Ltd. |
a. Inderpreet Wadhwa b. H.S. Wadhwa |
Rs. 6,41,650 Divided into 64,165 Equity Shares of Rs. 10 Each. |
1. |
Mr. H.S. Wadhwa holds 1 equity share of Rs 10 each | PRASHANTH NILAYA, H.No. 279, 4TH CROSS, | 8, Local Shopping Complex, Pushp Vihar, Madangir, |
31
Sl. |
Name of Subsidiary |
Directors |
Capitalisation |
Shareholding/ Ownership |
Registered Office/ Domicile |
Head office |
||||||||
2. |
Azure Power India Private Limited holds 37776 Equity Share of Rs 10 Each | ARAVIND NAGAR, HUBLI - 580024 | New Delhi, Delhi, INDIA - 110062 | |||||||||||
3. | Azure Urja Private Limited holds 26388 Equity Share of Rs 10 Each | |||||||||||||
10. | Azure Surya Pvt. Ltd. |
a. Inderpreet Wadhwa b. H.S. Wadhwa |
Rs. 666870 Divided into 66687 Equity Shares of Rs. 10 Each. |
1. |
Mr. H.S. Wadhwa holds 1 equity share of Rs 10 each |
8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 |
8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 |
|||||||
2. | Azure Power India Private Limited holds 44898 Equity Share of Rs 10 Each | |||||||||||||
3. | Azure Urja Private Limited holds 21788 Equity Share of Rs 10 Each | |||||||||||||
11. | Azure Sunshine Pvt. Ltd. |
a. Inderpreet Wadhwa b. H.S. Wadhwa |
Rs. 5,63,360 Divided 56336 Equity Shares of Rs. 10 Each. |
1. |
Mr. H.S. Wadhwa holds 1 equity share of Rs 10 Each | 8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 |
8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 |
|||||||
2. | Azure Power India Private Limited holds 56335 Equity Share of Rs 10 Each | |||||||||||||
12. | Azure Greentech Pvt. Ltd. |
a. Inderpreet Wadhwa b. H.S. Wadhwa |
Rs.5,64,030 Divided into 56,403 Equity Shares of Rs. 10 Each. |
1. |
Mr. H.S. Wadhwa holds 1 equity share of Rs 10 each | 8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 |
8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 |
|||||||
2. | Azure Power India Private Limited holds 56402 Equity Share of Rs 10 Each |
32
Sl. |
Name of Subsidiary |
Directors |
Capitalisation |
Shareholding/ Ownership |
Registered Office/
|
Head office |
||||||||
13. | Azure Clean Energy Pvt. Ltd. |
a. Inderpreet Wadhwa b. H.S. Wadhwa |
Rs.4,63,550 Divided into 46,355 Equity Shares of Rs. 10 Each. |
1. |
Mr. H.S. Wadhwa holds 1 equity share of Rs 10 each | 8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 | 8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi. INDIA - 110062 | |||||||
2. |
Azure Power India Private Limited holds 46354 Equity Share of Rs 10 Each | |||||||||||||
14. | Azure Sunlight Pvt. Ltd. |
a. Inderpreet Wadhwa b. H.S. Wadhwa |
Rs. 109520 Divided into 10952 Equity Shares of Rs. 10 Each. |
1. |
Mr. H.S. Wadhwa holds 1 equity share of Rs 10 each | 8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 |
=8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 |
|||||||
2. | Azure Power India Private Limited holds 10951 Equity Share of Rs 10 Each | |||||||||||||
15. | Azure Sunrise Pvt. Ltd. |
a. Inderpreet Wadhwa b. H.S. Wadhwa |
Rs. 101810.00 Divided into 10181 Equity Shares of Rs. 10 Each. |
1. |
Mr. H.S. Wadhwa holds 1 equity share of Rs 10 each | 8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 |
8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 |
|||||||
2. | Azure Power India Private Limited holds 10180 Equity Share of Rs 10 Each | |||||||||||||
16. | Azure Power (Raj.) Pvt. Ltd. |
a. Inderpreet Wadhwa b. H.S. Wadhwa |
Rs. 201310 Divided into 20131 Equity Shares of Rs. 10 Each. |
1. |
Mr. H.S. Wadhwa holds 1 equity share of Rs 10 each | 8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 |
8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 |
|||||||
2. | Azure Power India Private Limited holds 20130 Equity Share of Rs 10 Each | |||||||||||||
17. | Azure Renewable |
a. Inderpreet Wadhwa b. H.S. Wadhwa |
Rs. 1228940 Divided into 122894 Equity Shares of Rs. 10 Each. |
1. |
Mr. H.S. Wadhwa holds 1 equity share of Rs 10 each | 8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 |
8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 |
|||||||
2. | Azure Power India Private Limited holds |
33
Sl. |
Name of Subsidiary |
Directors |
Capitalisation |
Shareholding/ Ownership |
Registered Office/
|
Head office |
||||||||
Energy Pvt. Ltd. | 122894 Equity Share of Rs 10 Each | |||||||||||||
18. | Azure Photovoltaic Pvt. Ltd. |
a. Inderpreet Wadhwa b. H.S. Wadhwa |
Rs. 201,760.00 Divided into 20176 Equity Shares of Rs. 10 Each. |
1. |
Mr. H.S. Wadhwa holds 1 equity share of Rs 10 each | 8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 |
8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 |
|||||||
2. | Azure Power India Private Limited holds 122894 Equity Share of Rs 10 Each | |||||||||||||
19. | Azure Power Infrastructure Pvt. Ltd. |
a. Inderpreet Wadhwa b. H.S. Wadhwa |
Rs. 872880 Lacs Divided into 87288 Equity Shares of Rs. 10 Each. |
1. |
Mr. H.S. Wadhwa holds 1 equity share of Rs 10 | 8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 | 8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 | |||||||
2. | Azure Power India Private Limited holds 76073 Equity Share of Rs 10 Each | |||||||||||||
3. | Azure Urja Private Limited Holds 11214 Equity Share of Rs 10 Each | |||||||||||||
20. | Azure Power Earth Pvt. Ltd. |
a. Surendra Kumar Gupta b. Preet Mohinder Singh Sandhu |
Rs. 1 Lacs Divided into 10 000/ Equity Shares of Rs. 10 Each. |
1. |
Mr. H.S. Wadhwa holds 1 equity share of Rs 10 | 8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 |
8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 |
|||||||
2. | Azure Power India Private Limited holds 9999 Equity Share of Rs 10 Each | |||||||||||||
21. | Azure Power Eris Pvt. Ltd. |
a. Surendra Kumar Gupta b. Preet Mohinder Singh Sandhu |
Rs. 1 Lacs Divided into 10 000/ Equity Shares of Rs. 10 Each. |
1. |
Mr. H.S. Wadhwa holds 1 equity share of Rs 10 | 8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 |
8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 |
|||||||
2. | Azure Power India Private Limited holds 9999 Equity Share of Rs 10 Each |
34
Sl. |
Name of Subsidiary |
Directors |
Capitalisation |
Shareholding/ Ownership |
Registered Office/
|
Head office |
||||||||
22. | Azure Power Mars Pvt. Ltd. |
a. Surendra Kumar Gupta b. Preet Mohinder Singh Sandhu |
Rs. 881,250.00 Divided into 88,125 Equity Shares of Rs. 10 Each. |
1. |
Mr. H.S. Wadhwa holds 1 equity share of Rs 10 | 8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 |
8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 |
|||||||
2. | Azure Power India Private Limited holds 88124 Equity Share of Rs 10 Each | |||||||||||||
23. | Azure Power Mercury Pvt. Ltd. |
a. Surendra Kumar Gupta b. Preet Mohinder Singh Sandhu |
Rs. 1 Lacs Divided into 10 000/ Equity Shares of Rs. 10 Each. |
1. |
Mr. H.S. Wadhwa holds 1 equity share of Rs 10 | 8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 |
8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 |
|||||||
2. | Azure Power India Private Limited holds 9999 Equity Share of Rs 10 Each | |||||||||||||
24. | Azure Power Makemake Pvt. Ltd. |
a. Surendra Kumar Gupta b. Preet Mohinder Singh Sandhu |
Rs. 1,422,030.00 Divided into 1,42,203 Equity Shares of Rs. 10 Each. |
1. |
Mr. H.S. Wadhwa holds 1 equity share of Rs 10 | 8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 |
8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 |
|||||||
2. | Azure Power India Private Limited holds 142202 Equity Share of Rs 10 Each | |||||||||||||
25. | Azure Power Pluto Pvt. Ltd. |
a. Surendra Kumar Gupta b. Preet Mohinder Singh Sandhu |
Rs. 1 Lacs Divided into 10 000/ Equity Shares of Rs. 10 Each. | 1. | Mr. H.S. Wadhwa holds 1 equity share of Rs 10 | 8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 |
8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 |
|||||||
2. | Azure Power India Private Limited holds 9999 Equity Share of Rs 10 Each | |||||||||||||
26. | Azure Power Venus Pvt. Ltd. |
a. Surendra Kumar Gupta b. Preet Mohinder Singh Sandhu |
Rs. 1 Lacs Divided into 10 000/ Equity Shares of Rs. 10 Each. |
1. |
Mr. H.S. Wadhwa holds 1 equity share of Rs 10 | 8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 |
8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 |
|||||||
2. | Azure Power India Private Limited holds 9999 Equity Share of Rs 10 Each |
35
Sl. |
Name of Subsidiary |
Directors |
Capitalisation |
Shareholding/ Ownership |
Registered Office/
|
Head office |
||||||||
27. | Azure Power Saturn Pvt. Ltd. |
a. Surendra Kumar Gupta b. Preet Mohinder Singh Sandhu |
Rs. 1 Lacs Divided into 10 000/ Equity Shares of Rs. 10 Each. |
1. |
Mr. H.S. Wadhwa holds 1 equity share of Rs 10 | 8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 |
8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 |
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2. | Azure Power India Private Limited holds 9999 Equity Share of Rs 10 Each | |||||||||||||
28. | Azure Power Uranus Pvt. Ltd. |
a. Surendra Kumar Gupta b. Preet Mohinder Singh Sandhu |
Rs. 1 Lacs Divided into 10 000/ Equity Shares of Rs. 10 Each. |
1. |
Mr. H.S. Wadhwa holds 1 equity share of Rs 10 | 8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 |
8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 |
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2. | Azure Power India Private Limited holds 9999 Equity Share of Rs 10 Each | |||||||||||||
29. | Azure Power Jupiter Pvt. Ltd. |
a. Surendra Kumar Gupta b. Preet Mohinder Singh Sandhu |
Rs. 1 Lacs Divided into 10 000/ Equity Shares of Rs. 10 Each. |
1. |
Mr. H.S. Wadhwa holds 1 equity share of Rs 10 | 8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 |
8, Local Shopping Complex, Pushp Vihar, Madangir, New Delhi, Delhi, INDIA - 110062 |
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2. | Azure Power India Private Limited holds 9999 Equity Share of Rs 10 each | |||||||||||||
30. | Aster Power Inc. | Inderpreet Wadhwa | 531,001 Shares of US$ 1 each. | Azure Power India Private Limited holds 531,001 Shares of US$ 1 each. | United States of America | 1054 31st Street, NW, Suite 545, Washington, DC 20007. | ||||||||
31. | Azure Power US Inc. | Inderpreet Wadhwa | 1,543,001 Shares of US$ 1 each. | Azure Power India Private Limited holds 1543,001 Shares of USS 1 each. | United States of America | 1054 31st Street, NW, Suite 545, Washington, DC 20007. |
36
ANNEXURE 2 (B)
LIST OF SUBSIDIARIES AND THE RELATED DETAILS [pursuant to Section 3.01(g) (Subsidiaries) of the Subscription Agreement]
Sl. |
Name of Subsidiary |
Lien, if any |
Other Remarks |
|||
32. | Azure Power (Punjab) Pvt. Ltd. |
OPIC has lien on the project assets of Azure Power (Punjab) Pvt. Ltd. Shareholding of the Company in Azure Power (Punjab) Pvt. Ltd., has been pledged in favour of OPIC. |
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33. | Azure Power (Haryana) Pvt. Ltd. |
OPIC has lien on the project assets of Azure Power (Haryana) Pvt. Ltd. Shareholding of the Company in Azure Power (Haryana) Pvt. Ltd., has been pledged in favour of OPIC. |
20% of shareholding is held by M/s Suntech. | |||
34. | Azure Power (Rajasthan) Pvt. Ltd. |
US Exim Bank has lien on the project assets of Azure Power (Rajasthan) Pvt. Ltd. Shareholding of the Company in Azure Power (Rajasthan) Pvt. Ltd., has been pledged in favour of US Exim Bank/ their trustees. |
||||
35. | Azure Solar Pvt. Ltd. |
US Exim Bank has lien on the project assets of Azure Solar Pvt. Ltd. Shareholding of the Company in Azure Solar Pvt. Ltd., has been pledged in favour of the US Exim Bank/ their trustees. |
||||
36. | Azure Sun Energy Pvt. Ltd. |
IFC has lien on the project assets of Azure Sun Energy Pvt. Ltd. Shareholding of the Company in Azure Sun Energy Pvt. Ltd., has been pledged in favour of the trustee of IFC/ their trustees. |
||||
37. | Azure Solar Solutions Pvt. Ltd. |
Central Bank of India Ltd., has lien on the project assets of Azure Solar Solutions Pvt. Ltd. Shareholding of the Company in Azure Solar Solutions Pvt. Ltd., has been pledged in favour of Central Bank of India Ltd. |
||||
38. | Azure Urja Pvt. Ltd. |
PTC Financial Services Ltd., has lien on the project assets of Azure Urja Pvt. Ltd. Shareholding of the Company in Azure Urja Pvt. Ltd. has been pledged in favour of PTC Financial Services Ltd. |
||||
39. | Azure Power (Karnataka) Pvt. Ltd. |
PTC Financial Services Ltd., has lien on the project assets of Azure (Karnataka) Pvt. Ltd. Shareholding of the Company in Azure (Karnataka) Pvt. Ltd., has been pledged in favour of PTC Financial Services Ltd. |
37
Sl. |
Name of Subsidiary |
Lien, if any |
Other Remarks |
|||
40. | Azure Surya Pvt. Ltd. |
PTC Financial Services Ltd., has lien on the project assets of Azure Surya Pvt. Ltd. Shareholding of the Company in Azure Surya Pvt. Ltd., has been pledged in favour of PTC Financial Services Ltd. |
||||
41. | Azure Sunshine Pvt. Ltd. |
IREDA and Central Bank have lien on the project assets of Azure Sunshine Pvt. Ltd. Shareholding of the Company in Azure Sunshine Pvt. Ltd., has been pledged in favour of IREDA and Central Bank. |
||||
42. | Azure Greentech Pvt. Ltd. |
IREDA and Central Bank have lien on the project assets of Azure Greentech Pvt. Ltd. Shareholding of the Company in Azure Greentech Pvt. Ltd., has been pledged in favour of IREDA and Central Bank. |
||||
43. | Azure Clean Energy Pvt. Ltd. |
IREDA, IFC and IIFCL have lien on the project assets of Azure Clean Energy Pvt. Ltd. Shareholding of the Company in Azure Clean Energy Pvt. Ltd. has been pledged in favour of IREDA, IFC and IIFCL. |
||||
44. | Azure Sunlight Pvt. Ltd. | Not applicable | ||||
45. | Azure Sunrise Pvt. Ltd, | Not applicable | ||||
46. | Azure Power (Raj.) Pvt. Ltd. | Not applicable | ||||
47. | Azure Renewable Energy Pvt. Ltd. | Not applicable | ||||
48. | Azure Photovoltaic Pvt. Ltd. | Not applicable | ||||
49. | Azure Power Infrastructure Pvt. Ltd. | Not applicable | ||||
50. | Azure Power Earth Pvt. Ltd. | Not applicable | ||||
51. | Azure Power Eris Pvt. Ltd. | Not applicable | ||||
52. | Azure Power Mars Pvt. Ltd. | Not applicable | ||||
53. | Azure Power Mercury Pvt. Ltd. | Not applicable | ||||
54. | Azure Power Makemake Pvt. Ltd. | Not applicable | ||||
55. | Azure Power Pluto Pvt. Ltd. | Not applicable | ||||
56. | Azure Power Venus Pvt. Ltd. | Not applicable |
38
Sl. |
Name of Subsidiary |
Lien, if any |
Other Remarks |
|||
57. | Azure Power Saturn Pvt. Ltd. | Not applicable | ||||
58. | Azure Power Uranus Pvt. Ltd. | Not applicable | ||||
59. | Azure Power Jupiter Pvt. Ltd. | Not applicable |
39
ANNEXURE 3 [Section 3.01(b) (Financial Conditions)]
DETAILS OF TERM LOAN AGREEMENTS AND OTHER FINANCING AGREEMENTS EXECUTED
BY AZI AND ITS SUBSIDIARIES
S. No |
Project/ Location |
Details of the
|
Lender |
Description of the agreement |
Date of Execution of Agreements |
Loan Amount | ||||||||
1. | 2 MW Punjab | Azure Power Punjab Pvt. Ltd | OPIC | Term Loan Agreement and the related financing documents | February 20, 2009 | USD | 6,230,000 | |||||||
1 st Amendment to the Term Loan Agreement | April 27, 2009 | |||||||||||||
2 nd Amendment to the Term Loan Agreement | March 11, 2010 | |||||||||||||
3 rd Amendment to the Term Loan Agreement | June 22, 2010 | |||||||||||||
2. | 10 MW Gujarat |
Azure Power (Haryana) Pvt. Ltd. |
OPIC | Term Loan Agreement and the related financing documents | January 27, 2011 | USD | 26,835,436 | |||||||
1 st Amendment to the Term Loan Agreement | February 16, 2011 | |||||||||||||
2 nd Amendment to the Term Loan Agreement | June 2, 2011 | |||||||||||||
3 rd Amendment to the Term Loan Agreement | November 3, 2011 | |||||||||||||
4 th Amendment to the Term Loan Agreement | November 16, 2012 | |||||||||||||
3. | 5 MW Rajasthan | Azure Power (Rajasthan) Pvt. Ltd. | US EX-IM Bank | Term Loan Agreement and the related financing documents | August 25, 2011 | USD | 15,776,702 | |||||||
1 st Amendment to the Term Loan Agreement | Sep 15, 2011 | |||||||||||||
2 nd Amendment to the Term Loan Agreement | November 22, 2011 | |||||||||||||
3 rd Amendment to the Term Loan Agreement | Feb 6, 2012 | |||||||||||||
4. | 35 MW Rajasthan | Azure Solar Pvt. Ltd. | US EX-IM Bank | Term Loan Agreement and the related financing documents | August 29, 2012 | USD | 63,708,791 |
40
S. No |
Project/ Location |
Details of the
|
Lender |
Description of the agreement |
Date of Execution of Agreements |
Loan Amount | ||||||||
5. | 2.5 MW Rooftop Gujarat | Azure Sun Energy Pvt. Ltd. | IFC | Term Loan Agreement and the related financing documents | May 24, 2013 | INR | 158,400,000 | |||||||
1 st Amendment to the Term Loan Agreement | Sep 16, 2013 | |||||||||||||
6. | 34 MW Punjab | Azure Urja Pvt. Ltd. | PTC India Financial Services Ltd | Term Loan Agreement and the related financing documents | March 13, 2014 | INR | 1,88,00,00,000 | |||||||
7. | Rooftop projects | Azure Solar Solution Private Ltd. | Central Bank of India | Term Loan Agreement and the related financing documents | March 25, 2014 | INR | 31,45,00,000 | |||||||
8. | Working Capital | Azure Power India Pvt. Ltd. | Central Bank of India | Non-fund based facility Agreement and the related financing documents | May 31, 2014 | INR | 1,98,00,00,000 | |||||||
9. | BG Facility | Azure Power India Pvt. Ltd. | Yes Bank Ltd | Non-fund based facility Agreement and the related financing documents | March 2, 2015 | INR | 50,00,00,000 | |||||||
10. | BG Facility | Azure Power India Pvt. Ltd. |
Indusind Bank |
Non-fund based facility Agreement and the related financing documents | April 6, 2015 | INR | 75,00,00,000 | |||||||
11. | Chhattisgarh 30 MW | Azure Power India Pvt. Ltd. | Yes Bank Ltd | Term Loan Agreement and the related financing documents | May 8, 2015 | INR | 1,60,10,00,000 | |||||||
12. | 10 MW Uttar Pradesh | Azure Surya Pvt. Ltd. | PTC India Financial Services Ltd | Term Loan and the related financing documents Agreement | September 19, 2014 | INR | 55,00,00,000 | |||||||
13. | 40 MW Rajasthan | Azure Clean Energy Pvt. Ltd. | IREDA, IIFCL | Common Loan Facility Agreement and the related financing documents | March 13, 2015 | INR | 2,05,00,00,000 | |||||||
IFC | Loan Agreement and the related financing documents | October 31, 2014 | ||||||||||||
IFC | 1 st Amendment to the Term Loan Agreement | Feb 11, 2015 | ||||||||||||
IFC | 2 nd Amendment to the Term Loan Agreement | March 10, 2015 | ||||||||||||
SECI | VGF Agreement | March 28, 2014 |
41
S. No |
Project/ Location |
Details of the
|
Lender |
Description of the agreement |
Date of Execution of Agreements |
Loan Amount | ||||||
14. | 20 MW Rajasthan | Azure Sunshine Pvt. Ltd. | IREDA | Term Loan Agreement and the related financing documents | September 23, 2014 | INR1,17,40,00,000 | ||||||
Central Bank of India | Term Loan Agreement and the related financing documents | October 30, 2014 | ||||||||||
SECI | VGF Agreement | March 28, 2014 | ||||||||||
15. | 40 MW Rajasthan | Azure Green Tech Pvt. Ltd. | IREDA | Term Loan Agreement and the related financing documents | September 23, 2014 | INR2,36,30,00,000 | ||||||
Central Bank of India | Term Loan Agreement and the related financing documents | October 30, 2014 | ||||||||||
SECI | VGF Agreement | March 28, 2014 | ||||||||||
16. | Karnataka 10 MW | Azure Power Karnataka Pvt Ltd | PTC India Financial Services Ltd | Term Loan Agreement and the related financing documents | November 3, 2014 | INR58,50,00,000 |
42
ANNEXURE 4 (A) [Section 3.01(x) (Material Contracts) of the Subscription Agreement]
DETAILS OF O & M AND EPC CONTRACTS BETWEEN AZI AND ITS SUBSIDIARIES
Sl. No. |
Descriptions |
Amount (in INR) payable to the
Company on an annual basis |
Terms |
|||||
1. | O &M Contract with Azure Power Haryana Private Limited dated 09-12-2011. | 1,05,00,000 | 5% to be increased every year | |||||
2. | O&M Contract with Azure Power Punjab Private Limited dated 01-04-2013. | 22,00,000 | 5.72% to be increased every year | |||||
3. | O&M Contract with Azure Power Rajasthan Private Limited dated 01-04-2013. | 55,00,000 | 5.72% to be increased every year | |||||
4. | O&M Contract with Azure Solar Limited dated 01-04-2013 | 3,84,00,000 | 5.72% to be increased every year | |||||
5. | O&M Contract with Azure Sun Energy Private Limited dated 01-06-2013 | 26,15,000 | 5.72% to be increased every year | |||||
6. | O&M Contract with Azure Urja Private Limited dated 01-06-2014 | 3,94,40,000 | 5.72% to be increased every year | |||||
7. | O&M Contract with Azure Power Karnataka Private Limited dated 01-09-2014 | 1,16,00,000 | 5.72% to be increased every year | |||||
8. | O&M Contract with Azure Surya Private Limited dated 01-06-2014 | 1,16,00,000 | 5.72% to be increased every year | |||||
9. | O&M Contract with Azure Clean Energy Private Limited dated 01-09-2014 | 2,00,00,000 | 5% to be increased in every year | |||||
10. | O&M Contract with Azure Green Tech Private Limited dated 01-09-2014 | 2,00,00,000 | 5% to be increased in every year | |||||
11. | O&M Contract with Azure Sunshine Private Limited dated 01-09-2014 | 1,00,00,000 | 5% to be increased in every year | |||||
12. | EPC Contracts with Azure Mars Private Limited dated 01-04-2015 | 35,90,00,000 | Not Applicable |
43
ANNEXURE 4 (B) [Section 3.01(x) (Material Contracts) of the Subscription Agreement]
DETAILS OF POWER PURCHASE AGREEMENT BY
AZI AND ITS SUBSIDIARIES
Sr. No. |
Plant |
Capacity (MW) |
Offtaker |
Tariff (Price in Rs. /Kw) |
PPA Date |
|||||
1. | Punjab | 2 | NTPC Vidyut Vyapar Nigam (NVVN) | 17.91 | 15-Oct-10 | |||||
2. | Gujarat | 10 | Gujarat Urja Vikas Nigam Limited (GUVNL) | 15.00 | 30-Apr-10 | |||||
3. | Rajasthan | 5 | NTPC Vidyut Vyapar Nigam (NVVN) | 11.94 | 10-Jan-11 | |||||
4. | Rajasthan | 15 | NTPC Vidyut Vyapar Nigam (NVVN) | 8.21 | 25-Jan-12 | |||||
5. | Rajasthan | 20 | NTPC Vidyut Vyapar Nigam (NVVN) | 8.21 | 25-Jan-12 | |||||
6. | Punjab I | 15 | Punjab State Power Corporation Limited (PSPCL) | 7.67 | 27-Dec-13 | |||||
7. | Punjab -II | 15 | Punjab State Power Corporation Limited (PSPCL) | 7.97 | 27-Dec-13 | |||||
8. | Punjab - III | 4 | Punjab State Power Corporation Limited (PSPCL) | 8.28 | 27-Dec-13 | |||||
9. | Uttar Pradesh | 10 | Uttar Pradesh Power Corporation Limited (UPPCL) | 8.99 | 27-Dec-13 | |||||
10. | Karnataka I | 10 | Bangalore Electricity Supply Company ( BESCOM ) | 7.47 | 18-Jan-14 | |||||
11. | Rajasthan | 100 | Solar Energy Corporation of India (SECI) | 5.45 +VGF Funding | 28-Mar-14 | |||||
12. | Karnataka II | 10 | Bangalore Electricity Supply Company ( BESCOM ) | 6.66 | 27-Sep-14 |
44
Sr. No. |
Plant |
Capacity (MW) |
Offtaker |
Tariff (Price in Rs. /Kw) |
PPA Date |
|||||
13. | Chhattisgarh - I | 10 | Chhattisgarh State Power Distribution Company Limited | 6.44 | 1-Aug-14 | |||||
14. | Chhattisgarh - II | 10 | Chhattisgarh State Power Distribution Company Limited | 6.45 | 15-Sep-14 | |||||
15. | Chhattisgarh - III | 10 | Chhattisgarh State Power Distribution Company Limited | 6.46 | 15-Sep-14 | |||||
16. | Karnataka III P-I | 50 | Chamundeshwari Electricity Supply Corporation Limited (CESC) | 6.89 | 2-Jan-15 | |||||
17. | Karnataka III P-II | 40 | Hubli Electricity Supply Company Limited (HESCOM) | 6.93 | 14-Jan-15 | |||||
18. | Karnataka III P-III | 40 | Gulbarga Electricity Supply Corporation (GESCOM) | 6.96 | 23-Jan-15 | |||||
19. | Bihar | 10 | North Bihar Power Distribution Company Limited and South Bihar Power Distribution Company Limited. | 8.39 | 17-Jan-15 | |||||
20. | Andhra Pradesh | 50 | Southern Power Distribution Company of Andhra Pradesh Limited |
5.89 with 3%
escalation i.e. (6.93) |
5-Dec-14 | |||||
21. | Rajasthan | 5 | Solar Energy Corporation of India (SECI) | 5.45 | 5-Feb-15 |
45
SCHEDULE 3
FORM OF CERTIFICATE OF INCUMBENCY AND AUTHORITY
[Letterhead of the Company/Sponsor]
[Date]
International Finance Corporation
|
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|
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|
Attention: [●]
Investment No.
Certificate of Incumbency and Authority
Reference is made to the Letter Agreement, dated [●], between the Investor, the Company and the Sponsors (the Letter Agreement ). Unless otherwise defined herein, capitalized terms used herein shall have the meaning set forth in the Letter Agreement.
I, the undersigned [Chairman/Director] of (the [ Company ]/[ Sponsor ]), duly authorized to do so, hereby certify that the following are the names, offices and true specimen signatures of the individuals [each]/[any two] of whom are, and will continue to be, authorized:
(a) to sign on behalf of the Company the requests for the subscription for shares of the Company provided for in Section 2.01 ( Subscription ) of the Subscription Agreement;
(b) to sign the certifications required under Section [4.01 ( Conditions of Investor Subscription )] of the Subscription Agreement; and
(c) to take any other action required or permitted to be taken, done, signed or executed under the Subscription Agreement or any other agreement to which the Investor and the [Company]/[Sponsor] may be parties.
*Name | Office | Specimen Signature | ||||
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* | Designations may be changed by the Company/Sponsor at any time by issuing a new Certificate of Incumbency and Authority authorized by the board of directors of the Company/Sponsor where applicable. |
46
You may assume that any such individual continues to be so authorized until you receive written notice from an Authorized Representative of the [Company]/[Sponsor] that they, or any of them, is no longer so authorized.
Yours faithfully, | ||
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By |
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Name: | ||
Title: | [Chairman/Director] |
47
SCHEDULE 4
FORM OF LETTER TO COMPANYS AUDITORS
[Letterhead of the Company]
[Date]
[NAME OF AUDITORS]
[ADDRESS]
Investment No.
Letter to Auditors
Ladies and Gentlemen:
We hereby authorize and instruct you to give to the Investor of [●] ( Investor ), all such information as the Investor may reasonably request with regard to the financial statements (both audited and unaudited), accounts and operations of the undersigned company. We have agreed to supply that information and those statements under the terms of a shareholders agreement, dated [●], between the undersigned company and the Shareholders named therein (the Shareholders Agreement ). For your information we enclose a copy of the Shareholders Agreement.
We authorize and instruct you to send two (2) copies of the audited accounts of the undersigned company to the Investor each year to assist us in satisfying our obligation to the Investor under Section 3.01(a) of the Shareholders Agreement. When submitting the same to the Investor, please also send, at the same time, a copy of your full report on such accounts to the Investor.
For our records, please ensure that you send to us a copy of every letter that you receive from the Investor immediately upon receipt and a copy of each reply made by you immediately upon the issue of that reply.
Enclosure: Shareholders Agreement | ||
cc: |
Director International Finance Corporation |
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Attention: [●] |
48
SCHEDULE 5
TERMS AND CONDITIONS OF SERIES H CCPS
All capitalized terms used herein but not defined shall have the meaning given to them under the Shareholders Agreement. Reference to a paragraph under this Schedule shall be a reference to the paragraph of this Schedule.
1. | Issue Price |
The Series H CCPS shall have the issue price of USD 450.16 (Dollars Four Hundred and Fifty and Sixteen Cents).
2. | Dividend |
Each of the holders of Series H CCPS shall be entitled to receive a dividend of 8% in USD (eight per cent) per annum on a cumulative basis calculated on the issue price paid on each such Series H CCPS. Subject to the Applicable Law, each holder of Series H CCPS shall be individually entitled, in addition and cumulative to the above, to participate in the distribution of the profits of the Company if made to the other shareholders (including the holders of Equity Shares and compulsorily convertible preference shares, but excluding Proparco CCPS) of the Company assuming that all Series H CCPS have been converted to Equity Shares at the Normal Conversion Factor set out below.
Pursuant to the above, it is clarified that the Company shall not declare, pay or set aside any dividends on Shares of any other class or kind of share capital (other than Proparco CCPS) unless the holders of the Series H CCPS first receive a dividend on each Series H CCPS equal to the sum of: (i) 8% in USD (eight per cent) per annum on a cumulative basis calculated on the issue price paid; and (ii) the corresponding dividend that the holders of Series H CCPS would receive if the profits of the Company are distributed to the other Shareholders of the Company.
The dividend pay-out as set out under this paragraph 2 shall be payable in cash or in kind.
3. | Term |
Unless converted in accordance with the terms of this Schedule, the Charter of the Company and the Applicable Laws, the term of the Series H CCPS shall be a maximum of 20 (twenty) years from the date of their issuance.
4. | Voting |
4.1 | The holders of Series H CCPS shall be entitled to attend all meetings of Shareholders of the Company. Series H CCPS shall be entitled to vote on all matters which affect their rights directly or indirectly. The voting rights of each Series H CCPS on every resolution placed before the Company shall be in proportion to the share capital that the Equity Shares that the Series H CCPS represent, assuming that the Series H CCPS have been converted into Equity Shares of the Company on the basis of the Normal Conversion Factor set out below. |
4.2 | From the date of conversion of the Series H CCPS into Equity Shares, the voting percentage of their holders in the Company shall be in proportion to their shareholding in the Company. |
49
5. | Conversion |
5.1 | The Series H CCPS shall be convertible into Equity Shares of the Company at any time at the option of the holders of the Series H CCPS in accordance with paragraph 5.2. Any Series H CCPS that have not been converted into the Equity Shares of the Company shall compulsorily convert into the Equity Shares of the Company in accordance with paragraph 5.3 below, upon the earlier of: |
(i) | immediately prior to the listing of the Equity Shares pursuant to the QIPO or IPO, as approved by the Shareholders of the Company; and |
(ii) | the date which is 20 (twenty) years from the date of the issuance of Series H CCPS (the Maturity Date ), |
in each case in accordance with the terms of the Agreement. It is clarified that the Series H CCPS shall convert on the listing of the Equity Shares pursuant to the QIPO or IPO as approved by the Shareholders, if all existing Equity Securities (including the IFC Securities, Helion Securities, FC Securities, DEG Securities, Proparco Securities and the Series G CCPS) convert on or before the date of conversion of the Series H CCPS.
5.2 | Optional Conversion |
(i) | The holders of the Series H CCPS shall severally have the right, at any time and from time to time at their sole option, after their issuance, to require the Company, by written notice (the Conversion Notice ), to convert their respective Series H CCPS into Equity Shares of the Company. A copy of the Conversion Notice shall also be sent to the Sponsors, Proparco, Helion, FC, DEG and IFC, who are the other Shareholders of the Company. |
(ii) | In case the conversion occurs prior to the expiry of the Maturity Date, then the conversion shall be completed within a period of 21 (twenty one) days from the date of the Conversion Notice. |
(iii) | Normal Conversion Factor : The Series H CCPS will be convertible into the Equity Shares of the Company at a conversion ratio of 1:1 (i.e. 1 (one) Series H CCPS will convert into 1 (one) Equity Share), without being required to pay any amount for such conversion, and shall be adjusted for: |
(a) | dividends declared and not paid in accordance with paragraph 2 above; |
(b) | share splits, recapitalization or similar events; |
(c) | the anti-dilution provision as set out in paragraph 9 below; |
(d) | with respect to the CCDs and/or Proparco CCPS that are converted into Equity Shares on or before the conversion of Series H CCPS, the holders of Series H CCPS shall be entitled to an anti-dilution protection such that the conversion |
50
ratio of the Series H CCPS is adjusted upwards to ensure that percentage holding of the holders of Series H CCPS after conversion of such CCDs and/or Proparco CCPS shall be same as the percentage holding of the holders of Series H CCPS before the conversion of such CCDs and/or Proparco CCPS determined on a Fully Diluted Basis. |
The Normal Conversion Factor is specified based on the assumption that all the existing Equity Securities (including the IFC Securities, Helion Securities, FC Securities, DEG Securities, Proparco Securities and the Series G CCPS) have converted on or before the date of conversion of the Series H CCPS.
(iv) | The Conversion Notice shall be dated and shall set forth: |
(a) | The number of Series H CCPS in respect of which the holders of the Series H CCPS are exercising their right to conversion in accordance with this paragraph 5.2; and |
(b) | The number of Equity Shares of the Company that the Series H CCPS shall convert into. |
(v) | Upon receipt of the Conversion Notice, the Company shall and the Sponsors shall ensure that the Company shall effect the relevant board and shareholders meeting and undertake all such acts and deeds as may be necessary to give effect to the provision of this paragraph 5. |
(vi) | Upon receipt of the Conversion Notice, the Company shall effect the following: |
(a) | Convening of a meeting of the board of directors, in which meeting the Company shall approve the following: |
(A) | the conversion of the relevant Series H CCPS; |
(B) | the cancellation of the share certificates representing such number of the Series H CCPS; and |
(C) | the issuance and allotment of such number of Equity Shares of the Company that the Series H CCPS shall convert into, |
in each case, as are mentioned in the Conversion Notice;
(b) | Cancellation of the share certificates of Series H CCPS in respect of which the conversion right is exercised in the Conversion Notice; and thereafter issuance of share certificates to the holders of Series H CCPS to evidence such holders of the Series H CCPS as the owners of the Equity Shares issued upon conversion of their respective Series H CCPS as mentioned in the Conversion Notice; |
(c) | Making all the requisite filings with the appropriate Authority; |
(d) | The Company and the Sponsors shall do all such acts and deeds as may be necessary to give effect to the provisions of this paragraph 5. |
51
5.3 | Automatic Conversion |
(i) | The Company shall forthwith convert all the Series H CCPS into Equity Shares, based on the applicable conversion rate as determined in accordance with this paragraph 5.3, if at any time after their issuance, the Company undertakes an IPO/QIPO, provided that the shareholders of the Company have consented to such IPO/QIPO in accordance with the Shareholders Agreement. The Series H CCPS shall convert into Equity Shares of the Company immediately prior to the listing of Equity Shares pursuant to the IPO/QIPO, provided that all the existing Equity Securities (including the IFC Securities, Helion Securities, FC Securities, DEG Securities, Proparco Securities and the Series G CCPS) are converted on or before the date of conversion of the Series H CCPS. |
For the purpose of this Schedule 5 , QIPO means an initial public offering of the Company, which satisfies the following conditions: (i) the initial public offering results in the listing of the Equity Shares on the stock exchange acceptable to the Investor; (ii) the gross proceeds from the issuance of new Equity Shares in such initial public offering is not less than USD 100,000,000 (United States Dollars One Hundred Million); and (iii) the offering price of the Equity Share is based on the pre-money valuation of the Company of at least USD 450,000,000 (United States Dollars Four Hundred and Fifty Million).
(ii) | In the event an IPO/QIPO occurs subsequent to the expiry of the first anniversary of the Subscription Date and prior to the second anniversary of the Subscription Date, the applicable conversion rate for the conversion of the Series H CCPS shall be such that provides the holders of Series H CCPS such number of Equity Shares that is the greater of: (a) the number of Equity Shares which provide holders of Series H CCPS a USD return of 25% per annum on a cumulative basis on the Subscription Price from the Subscription Date till the actual date of conversion of Series H CCPS; the calculation of return shall include any dividend paid before the date of conversion to the holders of Series H CCPS; the valuation of Equity Shares in order to calculate a USD return of 25% per annum on a cumulative basis shall be based on the price at which Equity Shares are allotted to investors in the IPO/QIPO; or (b) the number of Equity Shares received based on the Normal Conversion Factor. |
(iii) | In the event an IPO/QIPO occurs subsequent to the expiry of the second anniversary of the Subscription Date, the applicable conversion rate for the conversion of the Series H CCPS shall be such that provides the holders of Series H CCPS such number of Equity Shares that is the greater of: (a) the number of Equity Shares which provide holders of the Series H CCPS a USD return of 25% per annum on a cumulative basis on the Subscription Price for the period starting from the Subscription Date till the second anniversary of the Subscription Date and a USD return of 18% per annum on a cumulative basis on the Subscription Price after the second anniversary of the Subscription Date till the date of conversion. The calculation of return shall include any dividend paid before the date of conversion, and the valuation of Equity Shares to |
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calculate the return to the holders of Series H CCPS shall be based on the price at which Equity Shares are allotted to investors in the IPO/QIPO; or (b) the number of Equity Shares received based on the Normal Conversion Factor. |
6. | If an IPO/QIPO occurs before the first anniversary of the Subscription Date, the applicable conversion rate for the conversion of the Series H CCPS shall be the Normal Conversion Factor. |
7. | In the event that: |
(a) | the Company initiates the procedure for IPO/QIPO which has necessitated the conversion of the Series H CCPS into the Equity Shares of the Company; and |
(b) | within the Listing Date, the IPO/QIPO does not complete such that the entire issued, paid up and subscribed share capital is not admitted to trading on a Relevant Market by the expiry of the Listing Date, |
then the Company and the Sponsors shall comply with the relevant provisions of the Shareholders Agreement and shall undertake all necessary actions to ensure that the holders of the Series H CCPS are placed in the same position, and possess the same rights as set forth in this Schedule, as they had the benefit of, immediately prior to the occurrence of the event set forth in (a) above.
8. | Liquidation Preference |
Upon the occurrence of a Liquidation Event A or Liquidation Event B with respect to the Company or its Subsidiaries and in accordance with the terms of this Agreement, the holders of the Series H CCPS shall receive in preference to the holders of Series A CCPS, Series B CCPS, Series C CCPS, Series D CCPS, Series F CCPS and other Equity Shares of the Company, the sum total of: (i) the amount equal to the total Subscription Price paid by holders of the Series H CCPS for such Series H CCPS; and (ii) an amount that provides the holders of Series H CCPS a return of 8% (eight per cent) in USD per annum on a cumulative basis on such total Subscription Price from the date of issuance of such Series H CCPS till the date of the Liquidation Event A or Liquidation Event B, as reduced by any dividends paid before the occurrence of a Liquidation Event A or Liquidation Event B to the holders of such Series H CCPS. It is clarified that the rights of the holders of the Series H CCPS shall be subordinate to the rights of the holders of the CCDs and Proparco CCPS in relation to the Liquidation Preferences of the Company.
9. | Transferability |
Subject to the terms of this Agreement, the Series H CCPS shall be freely transferable to any Person, and the holders of the Series H CCPS may assign all or any of the Series H CCPS and any rights attaching under the Agreement, without the prior consent of any Person.
10. | Anti-Dilution Protection |
If the Company issues or proposes to issue Equity Securities ( New Issuance ) to any person at an effective issue price that is less than the subscription price in USD of the Series H CCPS (as adjusted for share splits or similar reorganization of the share capital of the Company), other than the issue of Equity Shares on the conversion of the Equity Securities existing as on the
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date of subscription of Series H CCPS, then the holders of Series H CCPS shall be entitled to an adjustment to the Normal Conversion Factor based on broad-based weighted average method such that the holders of Series H CCPS receive a higher number of Equity Shares to compensate for the higher subscription price paid for the subscription of Series H CCPS by its holders than the effective issue price of Equity Securities in the New Issuance.
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SCHEDULE 6
LIST OF PERMITTED MATTERS
The following disbursements under the existing loan facility arrangements entered into by the Company and/or its Subsidiaries may be applied/received without requiring approval from the Investor pursuant to Clause 2.02(b) of this Agreement.
Company name |
Date of
Agreement |
Lender |
Total of Loan
(amount in INR crores) |
Remaining Disbursement
(amount in INR crores) |
||||||||||
Azure Sunshine Pvt. Ltd |
23-Sep-14 | IREDA | 53.41 | 2.67 | ||||||||||
30-Oct-14 | CBI | 63.94 | 3.20 | |||||||||||
Azure Green Tech Pvt. Ltd |
23-Sep-14 | IREDA | 105.68 | 5.28 | ||||||||||
30-0ct-14 | CBI | 130.63 | 6.53 | |||||||||||
Azure Clean Energy Pvt. Ltd |
13-Mar-15 | IREDA | 87.49 | 4.37 | ||||||||||
31-Oct-14 | IFC | 86.10 | 8.61 | |||||||||||
13-Mar-15 | IIFCL | 31.40 | 1.57 | |||||||||||
Azure Power India Pvt. Ltd. |
8-May-15 | Yes Bank | 160.10 | 10.01 | ||||||||||
Azure Sunlight Pvt. Ltd |
Yet to be Signed | OPIC | Approx. 128 | Approx. 128 | ||||||||||
Azure Mars Pvt. Ltd. |
Yet to be Signed |
Reliance Capital
Bridge Loan |
25 | 25 | ||||||||||
Azure Solar Solution Pvt Ltd |
25-03-2014 |
Central Bank of
India |
31.45 | 19.45 |
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Exhibit 21.1
Significant Subsidiaries (As of September 30, 2015)
Name of Entity |
Place of Incorporation |
Ownership Interest |
||||
1. |
Azure Clean Energy Private Limited | India | 99.99% by Azure Power India Private Limited | |||
2. |
Azure Green Tech Private Limited | India | 99.99% by Azure Power India Private Limited | |||
3. |
Azure Power India Private Limited | India | % by Azure Power Global Limited | |||
4 |
Azure Solar Private Limited | India | 92% by Azure Power India Private Limited; 8% by Azure Power US Inc. |
Exhibit 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the reference to our firm under the caption Experts and to the use of our report dated December 16, 2015, with respect to the consolidated financial statements of Azure Power India Private Limited (Predecessor to Azure Power Global Limited) included in the Registration Statement (Form F-1) and related Prospectus of Azure Power Global Limited for the registration of its equity shares.
Ernst & Young Associates LLP
Gurgaon, India
December 16, 2015
Exhibit 23.2
[FORM OF CONSENT TO BE RECEIVED FROM COUNSEL]
Consent of Skadden, Arps, Slate, Meagher & Flom LLP
[Date]
Azure Power Global Limited
8 Local Shopping Complex
Pushp Vihar, Madangir, New Delhi 110062, India
Re: | Azure Power Global Limited |
Registration Statement on Form F-1 |
Ladies and Gentlemen:
We have acted as counsel to Azure Power Global Limited in connection with the Registration Statement on Form F-1 (the Registration Statement) filed with the United States Securities and Exchange Commission under the Securities Act of 1933, as amended (the Securities Act).
This letter of consent is being furnished in accordance with the requirements of Item 601(b)(23) of Regulation S-K of the General Rules and Regulations under the Securities Act.
We hereby consent to the reference to our firm under the caption Legal Matters in the prospectus forming part of the Registration Statement. In giving this consent, we do not thereby admit that we are included in the category of persons whose consent is required under Section 7 of the Securities Act or the rules and regulations of the United States Securities and Exchange Commission promulgated thereunder.
Very truly yours,