LETTER OF OFFER
This document is important and requires your immediate attention.
This Letter of Offer is being sent to you as an equity shareholder(s) of RayBan Sun Optics India Limited. If you require any clarifications about the action
to be taken, you may consult your stockbroker or investment consultant or the Manager to the Offer or the Registrar to the Offer. In case you have recently
sold your equity shares in RayBan Sun Optics India Limited, please hand over this Letter of Offer and the accompanying Form of Acceptance, Form of
Withdrawal and Transfer Deed to the member of the stock exchange through whom the sale was effected.
CASH OFFER
(Pursuant to the order of the Honourable Supreme Court of India dated December 12, 2006, and in compliance with Regulations 10 & 12 of Chapter III
of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 (hereinafter referred to as the
"Regulations"))
by
Luxottica Group S.p.A ("Luxottica")
Registered Office: Via Cantù 2, Milano 20123, Italy, Tel. No.: +39 02 863341; Fax No.: +39 02 86334636
&
Ray Ban Indian Holdings Inc. ("RI Holdings")
Registered Office: 1209 Orange Street, Wilmington, Delaware 19801, USA, Tel. No.: +516 484 4800; Fax No.: + 516 918 3151
(Luxottica and RI Holdings hereinafter together referred to as the "Acquirers")
To acquire up to 4,895,900 fully paid up equity shares representing up to 20.00% of the equity share capital of
RayBan Sun Optics India Limited (the "Target Company" or "RSIL")
Registered office: SP 810-811, RIICO Industrial Area, Phase-II, Bhiwadi - 301 019, Distt. Alwar, Rajasthan, India
Tel. No.: +91 (0)1493 221006/ 221012/ 222328; Fax No.: +91 (0)1493 221057
at Rs. 104.30 (Rupees One Hundred and Four and Thirty Paise Only) per Equity Share (the "Offer Price"). However, for Continuing Shareholders (as
defined herein after), whose Equity Shares are tendered and accepted under the Offer, the Offer Price would be Rs. 185.25 per Equity Share
(comprising of the Offer Price of Rs. 104.30 per Equity Share and Interest of Rs. 80.95 per Equity Share). The interest of Rs. 80.95 per Equity Share
calculated at the rate of 10% per annum from August 27, 1999 till May 29, 2007, i.e. the scheduled date of payment of consideration, in accordance
with the order of the Honourable Supreme Court of India dated December 12, 2006, is payable in cash (the interest amount is subject to change
depending upon the actual date of payment). Such interest is payable only to Continuing Shareholders, i.e., those persons who were shareholders of
the Target Company as on August 27, 1999 and continue to be shareholders of the Target Company till the date of the closing of the Offer, and whose
Equity Shares are tendered and accepted under the Offer.
The Offer is being made by Luxottica Group S.p.A and Ray Ban Indian Holdings Inc., pursuant to the order of the Honourable Supreme Court of India
dated December 12, 2006, and in compliance with Regulations 10 & 12 of Chapter III of the Regulations. All Equity Shares tendered and accepted under
the Offer, will be acquired by Ray Ban Indian Holdings Inc.
The Offer is not subject to a minimum level of acceptance by the shareholders of RSIL.
The Reserve Bank of India (hereinafter referred to as the "RBI"), vide letter dated March 3, 2007, has given its no objection for effecting the transfer of
the Equity Shares purchased from the shareholders of the Target Company by way of the Offer as per the instructions contained in A.P. (DIR Series)
Circular No.16 dated October 4, 2004 through the authorized dealer. In addition, the RBI, vide letter dated March 3, 2007, has given its permission for
opening of escrow account, and opening and operation of a special account for purposes of the Offer. As on the date of this Letter of Offer, there are
no other statutory approvals required to implement this Offer. If any other approvals are required subsequently, the Offer would be subject to such
additional approvals. In case of delay in receipt of any statutory approval(s), the Securities and Exchange Board of India ("SEBI") has the power to grant
an extension of the time required for payment of consideration under the Offer provided that the Acquirer agrees to pay interest in accordance with
Regulation 22(12) of the Regulations. If the delay occurs due to the wilful default or neglect or inaction or non-action on the part of the Acquirer in
obtaining the requisite approvals, Regulation 22(13) of the Regulations will become applicable.
Shareholders who accept the Offer by tendering the requisite documents as described under paragraph 9 and 11 of this Letter of Offer, in terms of the
public announcement dated January 24, 2007/ Letter of Offer, can withdraw the same up to 3 (three) working days prior to the date of closing of the Offer,
i.e. Wednesday, May 9, 2007, in terms of Regulations 22 (5A) of the Regulations. (i.e. Wednesday, May 9, 2007).
The Acquirer can revise the Offer Price upwards up to 7 (seven) working days prior to the date of closing of the Offer (i.e. Thursday, May 3, 2007). If
there is any upward revision in the Offer Price by the Acquirer till the last date for revising the Offer Price i.e. Thursday, May 3, 2007, or if the Offer
is withdrawn, the same would be communicated by a public announcement in the same newspapers in which the Public Announcement appeared. The
Acquirer would pay such revised Offer Price for all the equity shares validly tendered any time during the Offer and accepted under the Offer.
If there is a competitive bid(s):
The public offers under all the subsisting bids shall close on the same date;
As the Offer Price cannot be revised during 7 (seven) working days prior to the closing date of the offers/ bids, it would, therefore, be in the
interest of shareholders to wait till the commencement of that period to know the final offer price of each bid and tender their acceptance
accordingly.
Copies of the Public Announcements and the Letter of Offer (including Form of Acceptance and Form of Withdrawal) are also available on SEBI's website
(www.sebi.gov.in).
MANAGER TO THE OFFER
REGISTRAR TO THE OFFER
JM Morgan Stanley Private Limited
117, Himalaya House, 23, Kasturba Gandhi Marg,
New Delhi - 110 001, India
Phone : +91 (0)11 4130 5000, Fax : +91 (0)11 4151 0401
Email : arjun.mehra@jmmorganstanley.com
Contact Person: Mr. Arjun Mehra
Karvy Computershare Private Limited
Plot No.17 to 24, Vithalrao Nagar, Madhapur,
Hyderabad- 500 081
Phone: +91 40 23420818, Fax: +91 40 23431551
Email: murali@karvy.com
Contact Person: Mr. Muralikrishna
Shareholders of the Target Company may call this toll free number if they have any query relating to this Offer : 1-800-345
The table below summarizes the schedule of activities:
No.
Activity
Original Schedule
1.
First PA
Monday, November 3, 2003
2.
Second PA
Monday, November 24, 2003
3.
Third PA
Thursday, January 25, 2007
4.
Specified date *
Thursday, February 1, 2007
5.
Last date for receiving competitive bid
Thursday, February 15, 2007
6.
Date by which the letter of offer will be posted to shareholders
Thursday, March 8, 2007
7.
Date of opening of the Offer
Wednesday, March 21, 2007
8.
Last date for revising the Offer price / Offer size
Wednesday, March 28, 2007
9.
Last date for shareholders for withdrawing their acceptance of the Offer
Tuesday, April 3, 2007
10.
Date of the closing of the Offer
Monday, April 9, 2007
11.
Date by which acceptance / rejection under the Offer would be
Tuesday, April 24, 2007
intimated and the corresponding payment for the acquired shares and / or
the unaccepted shares / share certificates will be credited/ dispatched
* "Specified Date" is only for the purpose of determining the shareholders to whom the Letter of Offer is to be mailed.
4001
Revised Schedule
Monday, November 3, 2003
Monday, November 24, 2003
Thursday, January 25, 2007
Thursday, February 1, 2007
Thursday, February 15, 2007
Wednesday, April 18, 2007
Wednesday, April 25, 2007
Thursday, May 3, 2007
Wednesday, May 9, 2007
Monday, May 14, 2007
Tuesday, May 29, 2007
RISK FACTORS
The risk factors set forth below pertain to the Offer and are not in relation to the present or future business operations of
the Target Company or other related matters, and are neither exhaustive nor intended to constitute a complete analysis of
the risks involved in participation or otherwise by a shareholder in the Offer. Shareholders of the Target Company are
advised to consult their stockbroker or investment consultant, if any, for analyzing all the risks with respect to their
participation in the Offer.
Risks related to the proposed Offer
The RBI, vide letter dated March 3, 2007, has given its no objection for effecting the transfer of the Equity Shares
purchased from the shareholders of the Target Company by way of the Offer as per the instructions contained in A.P. (DIR
Series) Circular No.16 dated October 4, 2004 through the authorized dealer. In addition, the RBI, vide letter dated March
3, 2007, has given its permission for opening of escrow account, and opening and operation of a special account for
purposes of the Offer. As on the date of this Letter of Offer, there are no other statutory approvals required to implement
this Offer. If any other approvals are required subsequently, the Offer would be subject to such additional approvals. If any
other approvals are required subsequently, the Offer would be subject to such additional approvals. In terms of Regulation
27 of the Regulations, the Acquirer may not be able to proceed with the Offer in the event the approvals indicated above
are not received. Delay, if any, in the receipt of these approvals may delay completion of the Offer.
The Equity Shares tendered in the Offer will be held in trust by the Registrar to the Offer till the completion of the Offer
formalities, and the shareholders will not be able to trade such Equity Shares. During such period there may be fluctuations
in the market price of the Shares of RSIL. Accordingly, the Acquirers make no assurance with respect to the market price
of the Equity Shares both during the Offer period and upon the completion of the Offer, and disclaim any responsibility
with respect to any decision by any shareholder of RSIL on whether to participate or not to participate in the Offer.
For Continuing Shareholders, whose Equity Shares are tendered and accepted under the Offer, the Offer Price would be
Rs. 185.25 per Equity Share (comprising of the Offer Price of Rs. 104.30 per Equity Share and Interest of Rs. 80.95 per
Equity Share). The accrued interest of Rs. 80.95 per Equity Share is calculated at the rate of 10% per annum from August
27, 1999 till May 29, 2007, i.e. the scheduled date of payment of consideration, in accordance with the Supreme Court
Order. Such interest is payable only to Continuing Shareholders, i.e., those persons who were shareholders of the Target
Company as on August 27, 1999 and continue to be shareholders of the Target Company till the date of the closing of the
Offer, and whose Equity Shares are tendered and accepted under the Offer. The interest amount is subject to change
depending upon the actual date of payment of the consideration.
In the event the Equity Shares tendered in the Offer by the shareholders of RSIL are more than the Equity Shares to be
acquired under the Offer,
the acquisition of Equity Shares from each shareholder will be as per provisions of Regulation 21(6) of the Regulations
on a proportionate basis, irrespective of whether the Equity Shares are held in physical or dematerialised form.
Equity Shares validly tendered by the Continuing Shareholders shall be treated at par with the Equity Shares validly
tendered by the other shareholders of RSIL for the purposes of acceptance.
Risks related to the Acquirer
RI Holdings does not have any ongoing substantial business activities and is a holding company holding investments in
RSIL.
Risk related to the business of the Target
The current arrangement between Luxottica and RSIL for manufacture of eyewear under the RayBan trademark is an 'at
will' arrangement and there is no binding written trademark license agreement between the parties. There is no binding
agreement between Luxottica and RSIL for purposes of import and distribution of RayBan and other luxury brand eyewear
on a wholesale cash and carry basis.
Luxottica currently plans to set up a wholly owned subsidiary in India for undertaking wholesale cash and carry business
in luxury brand eyewear excluding the RayBan brand. In this regard, Luxottica plans to take effective steps in order to
obtain approvals, if any, required under applicable law. Subject to setting up a wholly owned subsidiary in India, Luxottica
also proposes to enter into a five year exclusive license agreement with the Company for the manufacturing and distribution
in India of frames and sunglasses under the trademark RayBan and a five year exclusive distribution agreement for the
distribution in India of frames and sunglasses manufactured by Luxottica under RayBan trademark. In the event the
subsidiary is established by Luxottica, and the corporate approval and statutory permissions are received, the business of
the Target Company will be limited to manufacture and distribution of the RayBan brand of eyewear under license from
Luxottica and the Target Company will not engage in the distribution of other luxury non-RayBan brand eyewear.
Note: Please refer to the "Definitions" section for the definition of various terms used above
2
TABLE OF CONTENTS
Sr. No.
Subject
Page No.
1.
Definitions ..........................................................................................................................................
4
2.
Disclaimer Clause ............................................................................................................................
6
3.
Details of the Offer ...........................................................................................................................
6
4.
Background of the Acquirers ..........................................................................................................
10
5.
Disclosure in terms of Regulation 21(3) .......................................................................................
34
6.
Background of RayBan Sun Optics India Limited ........................................................................
34
7.
Offer Price & Financial Arrangements ...........................................................................................
41
8.
Statutory Approvals ..........................................................................................................................
45
9.
Interest Payment & Continuing Shareholders ...............................................................................
45
10.
Terms & Conditions of the Offer .....................................................................................................
47
11.
Procedure for Acceptance and Settlement of the Offer ...............................................................
48
12.
Tax Deducted at Source ..................................................................................................................
52
13.
Documents for Inspection ................................................................................................................
54
14.
Declaration by the Acquirers ..........................................................................................................
55
3
1. DEFINITIONS
Acquirers
Luxottica Group S.p.A and Ray Ban Indian Holdings Inc.
ASE
The Stock Exchange, Ahmedabad.
Book Value per Share
Book Value per Share = Net worth at the end of a period/ Weighted average
number of diluted shares outstanding during the period.
BSE
The Bombay Stock Exchange Limited, Mumbai.
B&L Inc.
Bausch & Lomb Incorporated, a company listed on the New York Stock Exchange
and parent company of the Bausch & Lomb Group of USA.
CDSL
Central Depositary Services (India) Limited.
Certified financials
Certified financials shall mean that the financial information is extracted from an
audited or unaudited source document and the presented figures are in
agreement with those available in the source document. No audit procedures
have been performed on such financial information except for those related to
the audit of the source document when performed as required by law.
Continuing Shareholders
Those persons who were shareholders of the Target Company as on August 27,
1999 and continue to be shareholders of the Target Company on the date of the
closing of the Offer.
CSE
The Calcutta Stock Exchange Association.
Depository Escrow Account
Special depository account under the name and title of "KCPL Escrow A/c RSIL
Open Offer" opened by the Registrar to the Offer.
Dividend (%)
Dividend (%) = Dividend paid during a period/ Paid up share capital at the end
of the period.
DSE
The Delhi Stock Exchange Association Limited.
DP
Depository Participant.
Earnings per Share (diluted)
Earnings Per Share (diluted) = Profit after Tax during a period/ Weighted average
number of diluted shares outstanding during the period.
Escrow Account
Escrow account under the name and title of "Luxottica/Rayban - Open Offer
Escrow", established in accordance with Regulation 28 of the Regulations by
the Acquirers.
Escrow Agreement
Escrow agreement dated October 29, 2003 and an amendment to the escrow
agreement dated January 23, 2007.
Escrow Amount
An amount not less than 25% of the maximum purchase consideration payable
under the Offer.
Escrow Bank
Citibank N.A., a banking company having its branch office at Jeevan Bharti
Building, Sansad Marg, New Delhi - 110001, India.
Equity Share(s)
Fully paid up equity share(s) of RSIL of the face value of Rs. 10/- each.
FEMA
Foreign Exchange Management Act, 1999.
FII
Foreign Institutional Investor.
First PA
Public announcement dated November 3, 2003 and published on November 3,
2003.
Form of Acceptance
Form of Acceptance-cum-Acknowledgement.
JSE
The Jaipur Stock Exchange Limited.
Letter of Offer
This Letter of Offer dated April 14, 2007.
Luxottica
Luxottica Group S.p.A having its registered Office at Via Cantù 2, Milano 20123,
Italy.
Manager to the Offer
JM Morgan Stanley Private Limited.
4
NRI
Non Resident Indian.
NSDL
National Securities Depository Limited.
NSE
National Stock Exchange of India Limited.
OCB
Overseas Corporate Body.
Offer
This offer for acquisition of up to 4,895,900 equity shares of Rs. 10 each
representing 20.00% of the equity share capital of RSIL at a price of Rs. 104.30
per Equity Share payable in cash to the equity shareholders of RSIL, pursuant
to the order of the Honourable Supreme Court of India dated December 12,
2006, and in compliance with Regulation 10 & 12 of Chapter III of the
Regulations. The Offer is not conditional upon any minimum level of acceptance.
Offer Price
Rs. 104.30/- (Rupees One Hundred and Four and Thirty Paise only) per Equity
Share. However, for Continuing Shareholders, whose Equity Shares are tendered
and accepted under the Offer, the Offer Price would be Rs. 185.25 per Equity
Share (comprising of the Offer Price of Rs. 104.30 per Equity Share and Interest
of Rs. 80.95 per Equity Share).
Public Announcements
First PA, Second PA, Third PA and any corrigendum issued in continuation
thereto.
Purchase Agreement
Global purchase agreement entered into on April 28, 1999 by Luxottica with
B&L Inc. for the purchase of the eyewear business of B&L Inc.
RBI
Reserve Bank of India.
Registrar to the Offer
Karvy Computershare Private Limited.
Regulations
Securities and Exchange Board of India (Substantial Acquisition of Shares and
Takeovers) Regulations, 1997 as amended.
Return on Net Worth
Return on Net Worth = Profit after Tax during a period/ Net worth at the end of
the period.
RI Holdings
Ray Ban Indian Holdings Inc. having its registered office at 1209 Orange Street,
Wilmington, Delaware 19801, USA.
RSIL
RayBan Sun Optics India Limited having its registered office at SP 810-811,
RIICO Industrial Area, Phase-II, Bhiwadi - 301 019, Distt. Alwar, Rajasthan, India.
SAT
Securities Appellate Tribunal.
SAT Order
Order issued by the SAT dated August 29, 2003.
SEBI
Securities and Exchange Board of India.
SEBI Order
Order issued by the Chairman, SEBI dated August 5, 2002
Second PA
Revised public announcement dated November 24, 2003 and published on
November 24, 2003.
Specified Date
Thursday, February 1, 2007.
Supreme Court Order
Order of the Honourable Supreme Court of India dated December 12, 2006.
Target Company
RayBan Sun Optics India Limited.
Third PA
Public announcement of the Offer dated January 24, 2007 made by the Manager
to the Offer on behalf of the Acquirers and published on January 25, 2007.
CURRENCY OF PRESENTATION
In this Letter of Offer, all references to "US$" are to the US Dollar and all references to "Euro" are to the Euro.
Certain financial details contained herein are denominated in US Dollars and Euros. Unless otherwise stated, the
Rupee equivalent quoted in each case is calculated in accordance with the interbank rate appearing on
www.oanda.com on January 22, 2007; namely US$1: Rs. 44.170 & Euro 1: Rs. 57.2540. Such conversions are for
convenience purposes only. In this Letter of Offer, any discrepancy in any table between the total and sums of the
amount listed are due to rounding.
5
2.
DISCLAIMER CLAUSE
IT IS TO BE DISTINCTLY UNDERSTOOD THAT FILING OF THE LETTER OF OFFER WITH SEBI SHOULD NOT IN
ANY WAY BE DEEMED OR CONSTRUED THAT THE SAME HAS BEEN CLEARED, VETTED OR APPROVED BY
SEBI. THE LETTER OF OFFER HAS BEEN SUBMITTED TO SEBI FOR A LIMITED PURPOSE OF OVERSEEING
WHETHER THE DISCLOSURES CONTAINED THEREIN ARE GENERALLY ADEQUATE AND ARE IN CONFORMITY
WITH THE SEBI (SAST) REGULATION. THIS REQUIREMENT IS TO FACILITATE THE SHAREHOLDERS OF RAYBAN
SUN OPTICS INIDA LIMITED TO TAKE AN INFORMED DECISION WITH REGARD TO THE OFFER. SEBI DOES
NOT TAKE ANY RESPONSIBILITY EITHER FOR FINANCIAL SOUNDNESS OF THE ACQUIRER, ANY PERSONS
ACTING IN CONCERT OR THE TARGET COMPANY WHOSE SHARES/ CONTROL ARE PROPOSED TO BE
ACQUIRED OR FOR THE CORRECTNESS OF THE STATEMENTS MADE OR OPINIONS EXPRESSED IN THE
LETTER OF OFFER. IT SHOULD ALSO BE CLEARLY UNDERSTOOD THAT WHILE THE ACQUIRER IS PRIMARILY
RESPONSIBLE FOR THE CORRECTNESS, ADEQUACY AND DISCLOSURE OF ALL RELEVANT INFORMATION
IN THIS LETTER OF OFFER, THE MANAGER TO THE OFFER IS EXPECTED TO EXERCISE DUE DILIGENCE TO
ENSURE THAT THE ACQUIRER DULY DISCHARGES ITS RESPONSIBILITY ADEQUATELY. IN THIS BEHALF,
AND TOWARDS THIS PURPOSE, JM MORGAN STANLEY PRIVATE LIMITED, THE MANAGER TO THE OFFER,
HAS SUBMITTED A DUE DILIGENCE CERTIFICATE DATED FEBRUARY 8, 2007 TO SEBI IN ACCORDANCE
WITH THE REGULATIONS. THE FILING OF THE LETTER OF OFFER DOES NOT, HOWEVER, ABSOLVE THE
ACQUIRER FROM THE REQUIREMENT OF OBTAINING SUCH STATUTORY CLEARANCES AS MAY BE REQUIRED
FOR THE PURPOSE OF THE OFFER.
The Acquirers and the Manager to the Offer accept no responsibility for statements made otherwise than in the
Letter of Offer or in the Public Announcements or in any advertisement or other announcement issued by, or at the
instance of the Acquirers and the Manager to the Offer, and any person placing reliance on any other source of
information for purpose of this Offer or in relation thereto would be doing so entirely at its own risk.
3.
DETAILS OF THE OFFER
3.1
Background of the Offer
3.1.1
The Offer is being made by Luxottica and RI Holdings to the equity shareholders of the Target
Company pursuant to the order of the Honourable Supreme Court of India dated December 12,
2006 and in compliance with Regulation 10 & 12 of Chapter III of the Regulations, i.e., for
substantial acquisition of shares and change in control, as mentioned below.
3.1.2
Purchase of the Eyewear Business of Luxottica in 1999
3.1.2.1 On April 28, 1999, Luxottica entered into a global purchase agreement governed by the
laws of New York, USA, for the purchase from B&L Inc., of its business of production,
marketing, distribution and sale of sunglasses and spectacle frames and certain related
accessories in various locations around the world (hereinafter referred to as the "Eyewear
Business").
3.1.2.2 At the time of entering into the Purchase Agreement, the B&L Inc. and its subsidiaries
carried on various businesses including the manufacture and sale of surgical aids and
eye care products, and the Eyewear Business referred to above. In order for it to spin off
the Eyewear Business, which was the subject matter of the Purchase Agreement, it was
necessary for the B&L Inc. to take various steps with reference to various countries and
places in which the Eyewear Business was carried on, depending upon the applicable
laws.
3.1.2.3 In India, the B&L Inc. held 44.152% of the equity share capital in the Target Company,
then known as Bausch & Lomb India Limited, through a subsidiary known as Bausch and
Lomb South Asia Inc. At that time, the Target Company's product range was divided into
two parts, namely eyewear products which consisted of sunglasses and prescription frames,
and eyecare/ visioncare products which consisted of contact lenses, cleaning solutions
and distribution of surgical products.
3.1.2.4 Since the Purchase Agreement was restricted only to the sale of the Eyewear Business,
one of the pre-conditions for the transaction insofar as concerns India was that B&L Inc.
would first transfer and spin-off all businesses of the Target Company other than its Eyewear
Business and apply the proceeds of such transfer to clear the liabilities of the other noneyewear business so that the Target Company was left with only the assets and liabilities
of the Eyewear Business.
3.1.2.5 Pursuant to an amendment to the Purchase Agreement of April 28, 1999, 44.152% of the
Equity Shares in the Target Company hitherto held by Bausch & Lomb South Asia Inc.
were transferred on March 24, 2000 to Bausch & Lomb Indian Holdings Inc. Bausch &
Lomb Indian Holdings Inc. (now known as Ray Ban Indian Holdings Inc.) was in turn held
6
by Bausch & Lomb South Asia Holdings Inc. As envisaged in the amendment to the
Purchase Agreement and pursuant to the shareholders resolution dated July 21, 2000 of
the Target Company, the non-eyewear businesses of the Target Company were sold to an
Indian subsidiary of Bausch & Lomb South Asia Inc. on October 23, 2000.
3.1.2.6 Subsequent to the divestment of the non-eyewear business of the Target Company, and
pursuant to a merger agreement dated October 27, 2000, Bausch & Lomb South Asia
Holdings Inc. merged into Ray Ban Holdings Inc., in the state of Delaware, USA. The
merger has been duly recognized and certified by the Secretary of State of Delaware,
USA.
3.1.3
SEBI Order, SAT Order, First PA, Second PA and Supreme Court Order
3.1.3.1 Pursuant to a show cause notice issued by SEBI vide its letter dated February 19, 2002
to Luxottica alleging, inter alia, that (i) Luxottica, by acquiring 44.152% of the Equity
Shares in the Target Company and consequently, control over the Target Company, without
making a public announcement, had prima facie contravened the provisions of Regulation
10 and Regulation 12 read with Regulations 14(1) and 14(3) of the Regulations, and (ii)
since the Equity Shares had been acquired without making a public announcement in
violation of the Regulations, Luxottica was liable for penal action under the Regulations
and the SEBI Act, 1992, a hearing was granted before the Chairman, SEBI to Luxottica on
May 30, 2002 at which time submissions were made by Luxottica reiterating the position
that by reason of entering into the Purchase Agreement, no indirect acquisition of Equity
Shares of the Target Company had occurred and that there was no change in the control
of the Target Company.
3.1.3.2 Subsequent to the aforesaid hearing and submissions, SEBI, vide the Chairman's order
dated August 5, 2002 (hereinafter referred to as the "SEBI Order"), directed Luxottica to
make a public announcement taking April 28, 1999 as the reference date for calculating
the offer price, within 45 days of passing of such order. Further, a direction was also
issued by the Chairman, SEBI directing Luxottica to pay interest at the rate of 15% per
annum on the offer price, from August 27, 1999 (being the last date by which payment
would have been due on the basis of April 28, 1999 as the reference date) till the actual
date of payment of consideration to all the shareholders who tender their Equity Shares in
the open offer and whose Equity Shares are accepted pursuant to the open offer.
3.1.3.3 Being aggrieved by the SEBI Order, Luxottica, Ray Ban Holdings Inc. and RI Holdings
(hereinafter collectively referred to as the "Appellants") filed an appeal before the SAT
praying to set aside the SEBI Order. This was finally disposed by SAT vide order dated
August 29, 2003 (hereinafter referred to as the "SAT Order") wherein the SAT directed the
Appellants to make a public announcement and ordered that interest at the rate of 15%
per annum shall be payable from August 27, 1999 to those persons who were shareholders
of the Target Company eligible to participate in the public offer required to be made taking
April 28, 1999 as the reference date for making public announcement and who continue
to be shareholders of the Target Company on the closing of the public offer. The Appellants
filed an appeal against the SAT Order in the Supreme Court of India on September 12,
2003. SEBI also filed a counter appeal before the Supreme Court of India against the SAT
Order seeking relief to the effect that the interest payments to be made should extend to
all the shareholders who tendered their shares in the open offer.
3.1.3.4 In the meantime, the Acquirers made a public announcement dated November 3, 2003
(hereinafter referred to as the "First PA") to the shareholders of RSIL to acquire up to
4,895,900 Equity Shares, representing 20% of the equity shares capital of RSIL at a price
of Rs. 104.30 per share and interest of Rs. 70.68 per Equity Share, calculated at the rate
of 15% per annum from August 27, 1999 to March 1, 2004, i.e. the deemed date of
payment of consideration as per the First PA, and payable to those persons who were
eligible to participate in the public offer required to be made taking April 28, 1999 as the
reference date for making public announcement and who continue to be shareholders of
the Target Company on the closing of the public offer.
3.1.3.5 On November 17, 2003, the Honorable Supreme Court of India passed an order staying
the operation of the SAT Order. Subsequent to such order of the Honorable Supreme
Court of India, the Acquirers made a revised public announcement dated November 24,
2003 (hereinafter referred to as the "Second PA") informing the shareholders of the Target
Company that all further steps with respect to the open offer announced through the First
PA have been stayed.
7
As per the said Supreme Court stay order, the Acquirers furnished a Bank Guarantee for
a sum of Rs. 630.6 million in favour of SEBI. Since then, the Bank Guarantee has been
renewed from time to time, the last such renewal being valid upto April 9, 2007. This Bank
Guarantee which was valid upto April 9, 2007 has been now further renewed for a period
of two months, i.e., upto June 9, 2007.
3.1.3.6 The Honorable Supreme Court of India finally disposed of the appeals by an order dated
December 12, 2006 (hereinafter referred to as the "Supreme Court Order"). The Supreme
Court Order directed the Acquirers to make a public announcement within 45 days of
passing of its order, taking April 28, 1999 as the reference date for calculating the offer
price. Further, the Supreme Court Order directed the payment of interest at the rate of
10% per annum with effect from August 27, 1999, to all those who were shareholders on
August 27, 1999 and continue to be shareholders of the Target Company on the closing
date, till the date of payment at closing of the public offer.
3.1.4
3.2
Neither the Acquirers nor the Target Company have been prohibited by SEBI from dealing in
securities, in terms of directions issued u/s 11B of, or any other regulation made under the SEBI
Act, 1992.
Details of the Proposed Offer
3.2.1
The Public Announcements in relation to this Offer were made in the following newspapers on
Monday, November 3, 2003, Monday, November 24, 2003 and Thursday, January 25, 2007, as
per Regulation 15(1) of the Regulations:
Newspaper
Language
Editions
Business Standard
English
All
Rajasthan Patrika
Hindi
All
Sakal
Marathi
Mumbai
Subsequently two public announcements dated April 4, 2007 and April 14, 2007 were published
in the above newspapers to convey the revised Schedule of Activity.
A copy of the Public Announcement is available on the SEBI website at http://www.sebi.gov.in/.
Any decision for an upward revision in the Offer Price by the Acquirers till the last date of
revision i.e. Thursday, May 3, 2007, or withdrawal of the Offer would be communicated by way
of a public announcement in the same newspapers in which the Public Announcements had
appeared.
3.2.2
The Offer is being made by the Acquirers to the equity shareholders of the Target Company to
acquire up to 4,895,900 Equity Shares, representing 20.00% of the equity share capital of the
Target Company at a price of Rs. 104.30 per Equity Share payable in cash. However, for
Continuing Shareholders, whose Equity Shares are tendered and accepted under the Offer, the
Offer Price would be Rs. 185.25 per Equity Share (comprising of the Offer Price of Rs. 104.30
per Equity Share and Interest of Rs. 80.95 per Equity Share). Interest of Rs. 80.95 per Equity
Share, calculated, at the rate of 10% per annum from August 27, 1999 till May 29, 2007, i.e. the
scheduled date of payment of consideration, in accordance with the Supreme Court Order, is
payable in cash (the interest amount is subject to change depending upon the actual date of
payment).
In case of an upward revision in the Offer Price, the Acquirers would pay such revised price for
all the Equity Shares validly tendered any time during the Offer and accepted under the Offer.
For Equity Shares in respect of which calls are in arrears/ unpaid, the offer price shall be
calculated as the difference between the aforesaid Offer Price and the amount due towards
calls-in-arrears or calls remaining unpaid together with interest, if any, payable on the amount
called up but remaining unpaid.
3.2.3
All Equity Shares tendered and accepted under the Offer, will be acquired by RI Holdings,
subject to the terms and conditions set out in the Third PA and this Letter of Offer.
3.2.4
This Offer is not subject to any minimum level of acceptance and RI Holdings will acquire the
Equity Shares of RSIL that are tendered in valid form in terms of this Offer up to a maximum of
4,895,900 Equity Shares.
8
3.2.5
3.3
In the event the Equity Shares tendered in the Offer by the shareholders of RSIL are more than
the Equity Shares to be acquired under the Offer,
the acquisition of Equity Shares from each shareholder will be as per provisions of
Regulation 21(6) of the Regulations on a proportionate basis, irrespective of whether the
Equity Shares are held in physical or dematerialised form.
Equity Shares validly tendered by the Continuing Shareholders shall be treated at par
with the Equity Shares validly tendered by the other shareholders of RSIL for the purposes
of acceptance.
3.2.6
Equity Shares which are continuing in nature are only the number of Equity Shares held for a
continuing period from August 27, 1999 upto the date of closing of the Offer and which are
tendered and accepted under the Offer (e.g., A shareholder who held 200 Equity Shares on
August 27, 1999 and on September 12, 2003 sold 50 Equity Shares will receive interest as a
Continuing Shareholder only for 150 Equity Shares provided that such Equity Shares are
tendered and accepted under the Offer; a shareholder who held 200 Equity Shares on August
27, 1999 and on September 12, 2003 purchased 50 Equity Shares will receive interest as a
Continuing Shareholder only for 200 Equity Shares provided that such Equity Shares are
tendered and accepted under the Offer).
3.2.7
This is not a competitive bid.
3.2.8
As on the date of this Letter of Offer, RI Holdings holds 10,808,083 Equity Shares of the Target
Company aggregating 44.152% of its outstanding share capital. Other than the above, no other
Equity Shares are held by the Acquirers in the Target Company. Following consummation of this
Offer and assuming full acceptances, RI Holdings will hold 15,703,983 Equity Shares of the
Target Company constituting 64.152% of the outstanding share capital of the Target Company.
3.2.9
This Offer is subject to receipt of the statutory approvals mentioned under the section titled
"Statutory Approvals" of this Letter of Offer. In accordance with Regulation 27 of the Regulations,
if the statutory approvals are refused, the Offer would stand withdrawn.
3.2.10
There are no "persons acting in concert" within the meaning of Regulation 2(1)(e) of the
Regulations in relation to the Offer.
Object of the Offer and Future Plans
3.3.1
The Acquirers are undertaking the Offer pursuant to the Supreme Court Order to discharge their
obligations under the Regulations.
3.3.2
The Acquirers do not currently have any plans to dispose of or otherwise encumber any assets
of the Target Company in the two year period from the date of the closing of this Offer except in
the ordinary course of business of the Target Company and except to the extent required for the
purpose of restructuring or rationalizing the existing lines of business, assets, investments,
liabilities or otherwise of RSIL. The Acquirers shall not sell, dispose of or otherwise encumber
any asset of the Target Company without the prior approval of the shareholders of the Target
Company to the extent required by the Regulations and applicable laws.
3.3.3
Currently, Luxottica, directly or indirectly, proposes to set up a wholly owned subsidiary in India
for undertaking wholesale cash and carry business in luxury brand eyewear excluding the
RayBan brand. In this regard, Luxottica proposes to take effective steps in order to obtain
approvals, if any, required under applicable law.
3.3.4
Subject to setting up of a wholly owned subsidiary in India for undertaking wholesale cash and
carry business in luxury brand eyewear, Luxottica proposes to enter into a five year exclusive
license agreement with the Target Company for the manufacturing and distribution in India of
frames and sunglasses under the RayBan trademark and a five year exclusive distribution
agreement with the Target Company for the distribution in India of frames and sunglasses
manufactured by Luxottica under the RayBan trademark.
3.3.5
Considering the business of Luxottica group, the acquisition of Equity Shares of RSIL by the
Acquirers under this Offer is not material and at the date hereof is not expected to change its
position in terms of market positioning/ capacity utilization.
9
4.
BACKGROUND OF THE ACQUIRERS
4.1
Luxottica Group S.p.A. ("Luxottica")
4.1.1
On November 23, 1981 Luxottica was incorporated under the laws of the Republic of Italy as
Fininco Srl. On June 1, 1982, it was transferred into Fininco S.p.A. On March 6, 1987, Fininco
S.p.A. was renamed as Luxottica Group S.p.A. Luxottica has its registered office at Via Cantù 2,
Milano 20123, Italy (Tel. No.: +39 02 86334641; Fax No.: +39 02 86334636).
4.1.2
Luxottica group is a world leader in eyewear. Luxottica group designs, manufactures, distributes
and retails a range of prescription frames and sunglasses. Luxottica group has an extensive
distribution network that covers key wholesale and retail markets. In the retail business, Luxottica
group has a network of approximately 5,700 sun and optical stores worldwide, and is a leading
player in the retail markets in North America (with LensCrafters, Pearle Vision and Sunglass
Hut), and in Australia and New Zealand (with OPSM, Laubman & Pank and Sunglass Hut).
Luxottica group also has a significant presence in optical retail in China and Hong Kong, with
approximately 275 stores. Luxottica group's wholesale distribution network covers approximately
130 countries with direct operations in some of the world's most important eyewear markets.
Luxottica group's brand portfolio currently consists of a total of 27 brands (eight house brands
and 19 license brands). Luxottica group's house brands include Ray-Ban, Vogue, Persol, Arnette
and Revo. License brands include Bvlgari, Chanel, Dolce & Gabbana, Donna Karan, Prada,
Versace, Burberry, Polo Ralph Lauren and Tiffany & Co. Luxottica products are designed and
manufactured in six production facilities in Italy and two wholly-owned plants in China.
4.1.3
Key milestones in Luxottica's history are as follows:
1981
Incorporation of Luxottica.
1990
Listing on the New York Stock Exchange (NYSE).
1995
Acquisition of LensCrafters, a leading optical retail brand in North America.
1999
Acquisition of the eyewear division of Bausch & Lomb, comprising such brands
as Ray-Ban, Revo, Arnette and Killer Loop, pursuant to the global purchase
agreement dated April 28, 1999.
2000
Listing on the Italian Stock Exchange (MTA).
2001
Acquisition of Sunglass Hut, a leading specialty sun retailer.
2003
Acquisition of OPSM Group, a leading optical store chain operator in Asia-Pacific.
2004
Acquisition of Cole National, a leading optical store operator in North America,
with retail brands such as Pearle Vision, Sears Optical, Target Optical and BJ's
Optical.
2005
Entry into the Chinese optical retail market through the acquisition of two retail
brands. Luxottica group established a significant presence in optical retail in
China and Hong Kong, with approximately 275 stores.
* Please note that the above acquisitions have been made through Luxottica's subsidiary companies.
4.1.4
Currently, Luxottica has, directly and indirectly, a 100% shareholding in its subsidiary Luxottica
U.S. Holdings Corp., a company incorporated under the laws of the State of Delaware, USA.
Luxottica U.S. Holdings Corp. holds a 100% interest in Ray Ban Holdings Inc., a company
incorporated under the laws of State of Delaware, USA, which, in turn, holds a 100% interest in
RI Holdings. RI Holdings currently holds 10,808,083 Equity Shares representing 44.152% of the
equity share capital of the Target Company. Luxottica does not directly hold any Equity Shares
in the Target Company.
4.1.5
The shares of Luxottica are listed on the Stock Exchange at Milan, Italy (Mercato Telematico
Azionario - MTA) and New York, USA (New York Stock Exchange - NYSE). On February 7, 2007,
the market price of the shares of Luxottica was Euro 24.24 (Rs. 1,387.8) per share on the MTA
and US$ 31.42 (Rs. 1,387.8) per share on the NYSE.
4.1.6
The paid up capital of Luxottica as of December 31, 2006 was Euro 27,612,974.88 (Rs. 15,809.53
lacs) consisting of 460,216,248 shares each of face value of Euro 0.06 (Rs. 3.44) per equity
share.
4.1.7
The key shareholders of Luxottica holding more than 2% of its shareholding capital, as on
December 31, 2006, are as follows:
10
S.No.
Name of Shareholder
1
Delfin Sarl *
2
Deutsche Bank Trust Company Americas **
3
Giorgio Armani ***
Total (more than 2%)
No. of shares held
%
321,238,125
69.8%
44,211,286
9.6%
22,724,000
4.9%
388,173,411
84.3%
* This amount includes 6,434,786 number of shares which are owned by Arnette Optics Illusions Inc., a subsidiary of
Luxottica. These shares have no voting rights.
** Deutsche Bank Trust Company Americas holds the 9.6% of ordinary shares as depositary bank of equal number of ADRS
traded on the NYSE
*** 13,514,000 shares are owned through ADRS and 200,000 shares are owned by Giorgio Armani S.p.A.
^ Delfin Sarl controls Luxottica.
4.1.8
The brief consolidated financials of Luxottica, audited for the years ended December 31, 2003,
2004 and 2005, and unaudited for the nine months ended September 30, 2006, Certified by
Deloitte & Touche, S.p.A., Italy (signing through Mr. Righetti), the statutory auditors of Luxottica,
based on US GAAP, are as follows:
Profit and Loss Statement
For the year
ended December
31, 2003
For the year
ended December
31, 2004
For the year
ended December
31, 2005
For the Nine
months ended
September 30, 2006
Euro Lacs
Rs. Lacs
Euro Lacs
Rs. Lacs
Euro Lacs
Rs. Lacs Euro Lacs
Rs. Lacs
Net Sales
Other Income (1)
28,522
51
1,632,999
2,920
32,553
205
1,863,789
11,737
43,707
213
2,502,401
12,195
35,656
-65
2,041,449
-3,722
Total Income
Total Expenditure (2)
28,573
22,857
1,635,919
1,308,655
32,758
26,097
1,875,527
1,494,158
43,920
35,739
2,514,596
2,046,201
35,591
28,217
2,037,727
1,615,536
5,716
327,264
6,661
381,369
8,181
468,395
7,374
422,191
1,348
471
3,897
1,173
2,724
77,178
26,967
223,119
67,159
155,960
1,528
561
4,572
1,617
2,955
87,484
32,119
261,765
92,580
169,186
1,942
663
5,576
2,060
3,516
111,187
37,959
319,248
117,943
201,305
1,528
542
5,304
1,930
3,374
87,484
31,032
303,675
110,500
193,175
-51
-2,920
-86
-4,924
-93
-5,325
-74
-4,237
2,673
153,040
2,869
164,262
3,423
195,980
3,300
188,938
0
0
0
0
0
0
-14
-802
2,673
-111
153,040
-6,355
2,869
-100
164,262
-5,725
3,423
-15
195,980
-859
3,286
0
188,137
0
2,652
151,838
2,769
158,536
3,408
195,122
3,286
188,137
Profit Before
Depreciation Interest
and Tax
Depreciation
Interest
Profit Before Tax
Provision for Tax
Profit before minority
interests in consolidation
Minority interests in
consolidation
Profit after tax from
continuing operations
Profit after tax from
discontinued operations
Profit After Tax
Adjustment on adoption
of SFAS 123R
Proforma results
11
Balance Sheet
As on
December 31,
2003
As on
December 31,
2004
As on
December 31,
2005
Euro Lacs
Rs. Lacs
Euro Lacs
Rs. Lacs
Euro Lacs
273
13,472
15,630
771,326
273
14,683
15,630
840,660
13,745
8,625
3,325
199
786,956
493,816
190,370
11,394
14,956
12,775
4,424
238
Total
Uses of funds
Net fixed assets
Goodwill
Intangible Assets
Investments
Other Assets
Net current assets
Total miscellaneous
expenditure not written off
25,894
1,482,535
4,974
13,289
7,647
131
415
-562
-
Total
25,894
Sources of funds
Paid up share capital
Reserves and Surplus
(excluding revaluation
reserves)
Net worth
Long Term Debt
Other Liabilities
Minority Interest in
consolidated subsidiaries
As on
September 30,
2006
Rs. Lacs Euro Lacs
Rs. Lacs
275
19,265
15,745
1,102,998
276
20,943
15,802
1,199,071
856,291
731,420
253,292
13,626
19,540
14,200
3,722
135
1,118,743
813,007
213,099
7,729
21,219
11,223
2,791
93
1,214,873
642,562
159,796
5,325
32,393
1,854,629
37,597
2,152,579
35,326
2,022,555
284,781
760,848
437,821
7,500
23,760
-32,177
-
5,992
15,010
9,721
134
230
1,306
-
343,066
859,383
556,566
7,672
13,168
74,774
-
7,351
17,004
9,948
158
457
2,679
-
420,874
973,547
569,563
9,046
26,165
153,383
-
7,396
16,677
8,637
226
1,011
1,379
-
423,451
954,825
494,503
12,939
57,884
78,953
-
1,482,535
32,393
1,854,629
37,597
2,152,579
35,326
2,022,555
Other Financial Data
For the year
ended December
31, 2003
Euro
Dividend (%)
Earnings per Share (diluted)
Return on Net Worth (%)
Book Value per Share
Rs.
For the year
ended December
31, 2004
Euro
Rs.
For the year
ended December
31, 2005
Euro
350%
0.59
350%
33.78
345%
0.64
345%
36.64
377%
0.76
19.50%
19.50%
19.20%
19.20%
17.50%
3.05
174.62
3.32
190.08
4.31
1.
2.
Interest income and other - net
Cost of sales and operating expenses (excluding depreciation)
3.
Not annualised
Rs.
377%
43.51
For the Nine
months ended
September 30, 2006
Euro
476%
0.72
Rs.
476%
41.22
17.50% 15.50% (3) 15.50% (3)
246.76
4.65
266.23
Notes:
a)
Detailed consolidated financial statements of Luxottica, audited for the years ended December 31, 2003, 2004 and 2005, and unaudited for the nine
months ended September 30, 2006 are available on the website of Luxottica: www.luxottica.com
b)
Please refer to the section titled "Definitions" for the definition of accounting ratios and of the term "Certified".
4.1.9
Save as otherwise set forth in this Letter of Offer, Luxottica does not have any material offbalance sheet arrangements that have or are reasonably likely to have a current or future effect
on its financial condition, changes in financial condition, revenue or expenses, results of
operations, liquidity, capital expenditures or capital resources. Luxottica uses, from time to time,
derivative financial instruments, principally interest rate and currency swap agreements, as part
of its risk management policy to reduce its exposure to market risks from changes in foreign
exchange rates. Although Luxottica has not done so in the past, it may enter into other derivative
financial instruments when it assesses that the risk can be hedged effectively.
4.1.10
Reasons for the fall/ rise in the total income and profit after tax:
Year ended December 31, 2004 compared with December 31, 2003
The total income of Luxottica as given under paragraph 4.1.8 above consists of net sales and
other income. The reasons for the rise in the net sales and other income are given below:
Net sales: Net sales increased 14.1 percent to Euro 32,553 lacs (Rs. 1,863,789 lacs) during
2004 as compared to Euro 28,522 lacs (Rs. 1,632,999 lacs) for 2003.
12
Net sales in the retail segment, through LensCrafters, Sunglass Hut, OPSM and the newly
acquired Cole, increased by 15.7 percent to Euro 23,467 lacs (Rs. 1,343,580 lacs) for 2004
from Euro 20,282 lacs (Rs. 1,61,226 lacs) for 2003. This increase was primarily due to the
inclusion of Cole sales from the date of acquisition on October 4, 2004, which amounted to
Euro 2,405 lacs (137,696 lacs), as well as the inclusion of OPSM sales for an additional seven
months in 2004, which amounted to Euro 1,725 lacs (Rs. 98,763 lacs). In addition to such
increases, retail sales in North America increased due to a higher average sales price per
customer transaction resulting from an increase in the sale of premium products, partially offset
by the weakening of the U.S. dollar against the Euro. The effect of the weakening of the U.S.
dollar on 2004 retail sales in North America was approximately Euro 2,048 lacs (Rs. 117,256
lacs).
Net sales to third parties in the manufacturing and wholesale segment increased by 10.3 percent
to Euro 9,086 lacs (Rs. 520,210 lacs) for 2004 as compared to Euro 8,240 lacs (Rs. 471,773
lacs) in 2003. This increase was mainly attributable to increased sales of the Ray-Ban brand
and the new Prada and Versace product lines, which sales began after the first quarter of 2003
and have almost completely offset the loss of sales of Giorgio Armani licensed products due to
the cancellation of the license agreement with Armani in 2003. Luxottica does not believe that
the termination of the license agreement with Armani will have a material adverse effect on its
results of operations for future periods. These increases were partially offset by the weakening
of the U.S. dollar which represents approximately 15% of this segment's net sales for fiscal
2004. The effect of the weakening of the U.S. dollar on wholesale and manufacturing sales to
third parties in 2004 was approximately Euro 127 lacs (Rs. 7,271 lacs).
On a geographic basis net of intercompany transactions, operations in North America resulted
in net sales of Euro 20,835 lacs (Rs. 1,192,887 lacs) during 2004, comprising 64.0 percent of
total net sales, an increase of Euro 1,341 lacs (Rs. 76,778 lacs) from 2003. This increase was
primarily due to the inclusion of Cole sales from the date of acquisition on October 4, 2004,
which amounted to Euro 2,405 lacs (Rs. 137,696 lacs), partially offset by the weakening of the
U.S. dollar against the Euro. Net sales for operations in "Asia Pacific", which consists of Australia,
New Zealand, Singapore, Malaysia, Hong Kong, Thailand, China, Japan and Taiwan, were Euro
4,351 lacs (Rs. 249,112 lacs) during 2004, comprising 13.4 percent of total net sales, an increase
of Euro 1,813 lacs (Rs. 103,802 lacs) as compared to 2003. This increase was mainly attributable
to the inclusion of OPSM sales for an additional seven months in 2004. Net sales for the rest of
the world accounted for the remaining Euro 7,367 lacs (Rs. 421,790 lacs) of net sales during
2004, which represented a 13.5 percent increase as compared to 2003. The increase in the rest
of the world is mostly attributable to higher sales in the European and Latin American regions.
During 2004, net sales in the retail segment accounted for approximately 72.1 percent of total
net sales, as compared to approximately 71.1 percent of total net sales in 2003 due to the two
retail acquisitions previously mentioned.
Other income: Other income was Euro 205 lacs (Rs. 11,737 lacs) in 2004 as compared to Euro
51 lacs (Rs. 2,920 lacs) in 2003. This increase in other income is mainly attributable to higher
realized and unrealized foreign exchange gain on certain transactions.
Profit after tax: Profit before taxes increased by 17.3 percent to Euro 4,572 lacs (Rs. 261,765
lacs) in 2004 from Euro 3,897 lacs (Rs. 223,119 lacs) in 2003 due to an increase in sales,
which includes Cole sales for the last three months of 2004, while maintaining gross profit
margins and keeping operating expenses constant as a percentage of sales. As a percentage
of net sales, profit before taxes increased to 14.0 percent in 2004 from 13.7 percent in 2003.
Minority interest increased to Euro (86) lacs (Rs. (4,924) lacs) in 2004 from Euro (51) lacs (Rs.
(2,920) lacs) in 2003. With Luxottica's previously announced acquisition of the remaining shares
of OPSM, Luxottica expects its minority interest to decrease in future periods. Luxottica's effective
tax rate was 35.4 percent in 2004, while it was 30.1 percent in 2003. The effective tax rate is
estimated to be between 37 to 40 percent in 2005 as Luxottica ended its permanent benefits
from subsidiaries' losses. Profit after tax increased by 7.3 percent to Euro 2,869 lacs (Rs. 164,262
lacs) in 2004 from Euro 2,673 lacs (Rs. 153,040 lacs) in 2003. Profit after tax as a percentage
of net sales decreased to 8.8 percent in 2004 from 9.4 percent in 2003.
Year ended December 31, 2005 compared with December 31, 2004
The total income of Luxottica as given under paragraph 4.1.8 above consists of net sales and
other income. The reasons for the rise in the net sales and other income are given below:
Net sales: Net sales increased 34.3 percent to Euro 43,707 lacs (Rs. 2,502,401 lacs) during
2005 as compared to Euro 32,553 lacs (Rs. 1,863,789 lacs) for 2004. Net sales in the retail
segment, through LensCrafters, Sunglass Hut, OPSM and Cole, increased by 40.5 percent to
Euro 32,982 lacs (Rs. 1,888,351 lacs) for 2005 from Euro 23,467 lacs (Rs. 1,343,580 lacs) for
2004. This increase was primarily due to the inclusion of Cole sales from the date of acquisition
on October 4, 2004, which amounted to Euro 9,980 lacs (Rs. 571,395 lacs) for the full fiscal
year 2005 compared to Euro 2,405 lacs (Rs. 137,696 lacs) for the three-month period following
the acquisition in 2004.
13
Net sales to third parties in the manufacturing and wholesale segment increased by 18.3 percent
to Euro 10,750 lacs (Rs. 615,481 lacs) for 2005 as compared to Euro 9,086 lacs (Rs. 520,210
lacs) in 2004. This increase was mainly attributable to increased sales of the Ray-Ban brand, as
well as Prada, Versace, Bulgari and Dolce & Gabbana (which Luxottica began distributing in
October 2005). Wholesale sales were strong in all geographic areas.
On a geographic basis net of intercompany transactions, operations in North America resulted
in net sales of Euro 30,483 lacs (Rs. 1,745,274 lacs) during 2005, comprising 69.7 percent of
total net sales, an increase of Euro 9,648 lacs (Rs. 552,387 lacs) from 2004. This increase was
primarily due to the inclusion of Cole sales from the date of acquisition on October 4, 2004,
which amounted to Euro 9,980 lacs (Rs. 571,395 lacs) for the full fiscal year 2005 compared to
Euro 2,405 lacs (Rs. 137,696 lacs) for the three-month period following the acquisition in 2004.
This sales increase was mostly driven by Luxottica’s focus on selling premium frames and
products at both Luxottica's Sunglass Hut and LensCrafters North American retail outlets. This
focus included the remodeling, opening or relocation of over 250 Sunglass Hut outlets. Net
sales for operations in "Asia-Pacific," which consists of Australia, New Zealand, Singapore,
Malaysia, Hong Kong, Thailand, China, Japan and Taiwan, were Euro 4,612 lacs (Rs. 264,055
lacs) during 2005, comprising 10.6 percent of total net sales, an increase of Euro 262 lacs (Rs.
15,001 lacs) as compared to 2004. Net sales for the rest of the world accounted for the remaining
Euro 8,612 lacs (Rs. 493,071 lacs) of net sales during 2005, which represented a 16.9 percent
increase as compared to 2004.
During 2005, net sales in the retail segment accounted for approximately 75.4 percent of total
net sales, as compared to approximately 72.1 percent of total net sales in 2004 due to the retail
acquisition described above.
Other income: Other income was Euro 213 lacs (Rs. 12,195 lacs) in 2005 as compared to Euro
205 lacs (Rs. 11,737 lacs) in 2004.
Profit after tax: Profit before taxes increased by 22.0 percent to Euro 5,576 lacs (Rs. 319,248
lacs) in 2005 from Euro 4,572 lacs (Rs. 261,765 lacs) in 2004. As a percentage of net sales,
income before taxes decreased to 12.8 percent in 2005 from 14.0 percent in 2004, mainly due
to the integration of the Cole operations. Minority interest increased to Euro (93) lacs (Rs.
(5,325) lacs) in 2005 from Euro (86) lacs (Rs. (4,924) lacs) in 2004. Luxottica's effective tax rate
was 37.0 percent in 2005, while it was 35.4 percent in 2004. Profit after tax increased by 19.3
percent to Euro 3,423 lacs (Rs. 195,980 lacs) in 2005 from Euro 2,869 lacs (Rs. 164,262 lacs)
in 2004. Profit after tax as a percentage of net sales decreased to 7.8 percent in 2005 from 8.8
percent in 2004.
4.1.11
The Significant Accounting Policies of Luxottica for the years ended December 31, 2004 and
December 31, 2005 are as follows:
4.1.11.1
Principles of Consolidation and Basis of Presentation - The consolidated financial
statements of Luxottica Group include the financial statements of the parent company,
all wholly or majority-owned subsidiaries and variable interest entities for which the
Company is determined to be the primary beneficiary. The Company's investments
in unconsolidated subsidiaries which are at least 20 percent owned and where the
Company exercises significant influence over operating and financial policies are
accounted for using the equity method. Luxottica Group holds a 44 percent interest
in an affiliated manufacturing and wholesale distributor, located and publicly traded
in India, and a 50 percent interest in an affiliated company located in Great Britain,
which are both accounted for under the equity method. The results of operations of
these investments are not material to the results of the operations of the Company.
Investments in other companies in which the Company has less than a 20 percent
interest with no ability to exercise significant influence are carried at cost. All
significant intercompany accounts and transactions are eliminated in consolidation.
Luxottica Group prepares its consolidated financial statements in accordance with
accounting principles generally accepted in the United States of America ("U.S.
GAAP").
The Company has included a variable interest entity (the "Trust"), consisting of a
synthetic operating lease, for one of Cole's facilities. The Trust is included in these
consolidated financial statements since the Company is required to absorb any
expected losses from, and will receive the majority of expected returns on, the
activities of the Trust, and is the primary beneficiary of the Trust. The assets of Euro
16 lacs (Rs. 916 lacs) and liabilities of Euro 16 lacs (Rs. 916 lacs) have been
consolidated into the financial statements as of December 31, 2005. Future operating
results of the Trust are not expected to have a material effect on the Company's
financial position or operating results.
The North America Retail Division's fiscal year is a 52- or 53-week period ending
on the Saturday nearest December 31. The accompanying consolidated financial
14
4.1.11.2
statements include the operations of the North America Retail Division for the 53week period ended January 3, 2004, and the 52-week periods ended January 1,
2005 and December 31, 2005.
Foreign Currency Translation and Transactions - Luxottica Group accounts for its
foreign currency denominated transactions and foreign operations in accordance
with Statement of Financial Accounting Standards ("SFAS") No. 52, Foreign Currency
Translation. The financial statements of foreign subsidiaries are translated into Euro,
which is the functional currency of the parent company and the reporting currency of
the Company. Assets and liabilities of foreign subsidiaries, which use the local
currency as their functional currency, are translated at year-end exchange rates.
Results of operations are translated using the average exchange rates prevailing
throughout the year. The resulting cumulative translation adjustments have been
recorded as a separate component of "Accumulated Other Comprehensive Income
(Loss)."
The Company has one subsidiary in a highly inflationary country. The operations of
such subsidiary are currently not material to the Company's consolidated financial
statements.
Transactions in foreign currencies are recorded at the exchange rate in effect at the
transaction date. Gains or losses from foreign currency transactions, such as those
resulting from the settlement of foreign receivables or payables during the year, are
recognized in consolidated income in such year. Aggregate transaction gain/(loss)
for the years ended December 31, 2003, 2004 and 2005, were Euro 13 lacs (Rs.
744 lacs), Euro 125 lacs (Rs. 7,157 lacs) and Euro 95 lacs (Rs. 5,439 lacs),
respectively.
4.1.11.3
Cash and Cash Equivalents - Cash and cash equivalents includes cash on hand,
demand deposits, and highly liquid investments with an original maturity of three
months or less, and amounts in-transit from banks for customer credit cards, debit
card and electronic bank transfer ("EBT") transactions. Substantially all amounts in
transit from the banks are converted to cash within four business days from the time
of sale. Credit card, debit card and EBT transactions in transit were approximately
Euro 233 lacs (Rs. 13,340 lacs) and Euro 178 lacs (Rs. 10.191 lacs) at December
31, 2004 and 2005, respectively.
4.1.11.4
Bank Overdrafts - Bank overdrafts represent negative cash balances held in banks
and amounts borrowed under various unsecured short-term lines of credit that the
Company has obtained through local financial institutions. These facilities are usually
short-term in nature or may contain provisions that allow them to renew automatically
with a cancellation notice period. Certain subsidiaries' agreements require a guarantee
from Luxottica Group S.p.A. Interest rates on these lines of credit vary and can be
used to obtain various letters of credit when needed.
4.1.11.5
Inventories - Luxottica Group's manufactured inventories, approximately 65.0 percent
and 75.4 percent of total frame inventory for 2004 and 2005, respectively, are stated
at the lower of cost, as determined under the weighted-average method (which
approximates the first-in, first-out method, or "FIFO"), or market value. Retail inventory
not manufactured by the Company or its subsidiaries are stated at the lower of cost,
at FIFO or weighted-average cost, or market value. As of January 2, 2005, the
Company changed its method of valuing certain of its retail inventory from the lastin, first-out method ("LIFO") to FIFO in order to reduce the number of valuation
methods among retail divisions. The effect of the change in the inventory valuation
method had an immaterial effect on the 2005 Statement of Consolidated Income. At
December 31, 2003 and 2004, approximately 43 and 33 percent, or Euro 1,004 lacs
(Rs. 57,483 lacs) and Euro 977 lacs (Rs. 55,937 lacs), respectively, of retail inventory
cost was calculated using LIFO. The LIFO reserve at December 31, 2003 and 2004,
was less than Euro 20 lacs (Rs. 1,145 lacs) and Euro 30 lacs (Rs. 1,718 lacs),
respectively. Inventories are recorded net of allowances for estimated losses among
other reserves. These reserves are calculated using various factors including sales
volume, historical shrink results and current trends.
4.1.11.6
Property, Plant and Equipment - Property, plant and equipment are stated at
historical cost. Depreciation is computed principally on the straight-line method over
the estimated useful lives of the related assets.
Maintenance and repair expenses are expensed as incurred. Upon the sale or
disposition of property and equipment, the cost of the asset and the related
accumulated depreciation and leasehold amortization are removed from the accounts
and any resulting gain or loss is included in the Statements of Consolidated Income.
15
4.1.11.7
4.1.11.8
4.1.11.9
4.1.11.10
4.1.11.11
4.1.11.12
4.1.11.13
Capitalized Leased Property - Capitalized leased assets are amortized using the
straight-line method over the term of the lease, or in accordance with practices
established for similar owned assets if ownership transfers to the Company at the
end of the lease term.
Goodwill - Goodwill represents the excess of the purchase price (including acquisitionrelated expenses) over the value assigned to the net tangible and identifiable
intangible assets acquired. The Company's goodwill is tested annually for impairment
as of December 31 of each year in accordance with SFAS No. 142, Goodwill and
Other Intangible Assets ("SFAS 142"). Additional impairment tests are performed if,
for any reason, the Company believes that an event has occurred that may impair
goodwill. Such tests are performed at the reporting unit level which consists of two
units, Wholesale and Retail, as required by the provisions of SFAS 142. For the
years ended December 31, 2003, 2004 and 2005, the result of this process was the
determination that the carrying value of each reporting unit of the Company was not
impaired and, as a result, the Company has not recorded a goodwill impairment
charge.
Trade Names and Other Intangibles - In connection with various acquisitions,
Luxottica Group has recorded as intangible assets certain trade names and other
intangibles which the Company believes have a finite life. Trade names are amortized
on a straight-line basis over periods ranging from 20 to 25 years. Other intangibles
include, among other items, distributor networks, customer lists and contracts,
franchise agreements and license agreements, and are amortized over the respective
useful lives. All intangibles are subject to test for impairment in accordance with
SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets
("SFAS 144"). Aggregate amortization expense of trade names and other intangibles
for the years ended December 31, 2003, 2004 and 2005, was Euro 426 lacs (Rs.
24,390 lacs), Euro 516 lacs (Rs. 29,543 lacs) and Euro 646 lacs (Rs. 36,986 lacs),
respectively.
Impairment of Long-Lived Assets - Luxottica Group's long-lived assets, other than
goodwill, are tested for impairment whenever events or changes in circumstances
indicate that the net carrying amount may not be recoverable. When such events
occur, the Company measures impairment by comparing the carrying value of the
long-lived asset to the estimated undiscounted future cash flows expected to result
from the use of the long-lived assets and their eventual disposition. If the sum of the
expected undiscounted future cash flows were less than the carrying amount of the
long-lived assets, the Company would record an impairment loss, if determined to
be necessary. Such impairment loss is measured as the amount by which the carrying
amount of the long-lived asset exceeds the fair value in accordance with SFAS 144.
The aggregate impairment loss on certain non-performing long-lived assets charged
to the Statement of Consolidated Income during fiscal 2005 was not material and
there was no impairment loss charged in fiscal 2003 and 2004.
Store Opening and Closing Costs - Store opening costs are charged to operations
as incurred in accordance with Statement of Position No. 98-5, Accounting for the
Cost of Start-up Activities. The costs associated with closing stores or facilities are
recorded at fair value as such costs are incurred. Store closing costs charged to the
statements of consolidated income during fiscal 2003, 2004 and 2005 were not
material.
Self Insurance - The Company is self insured for certain losses relating to workers'
compensation, general liability, auto liability, and employee medical benefits for claims
filed and for claims incurred but not reported. The Company's liability is estimated
on an undiscounted basis using historical claims experience and industry averages;
however, the final cost of the claims may not be known for over five years. As of
December 31, 2004 and 2005, self insurance accruals were Euro 361 lacs (Rs.
20,669 lacs) and Euro 468 lacs (Rs. 26,795 lacs), respectively.
Income Taxes - Income taxes are recorded in accordance with SFAS No. 109,
Accounting for Income Taxes, which requires recognition of deferred tax assets and
liabilities for the expected future tax consequences of events that have been included
in the Company's consolidated financial statements or tax returns. Under this method,
deferred tax liabilities and assets are determined based on the difference between
the consolidated financial statement and tax basis of assets and liabilities using
enacted tax rates in effect for the year in which the differences are expected to
reverse. A valuation allowance is recorded for deferred tax assets if it is determined
that it is more likely than not that the asset will not be realized. Changes in valuation
allowances from period to period are included in the tax provisions in the relevant
period of change.
16
4.1.11.14
Liability for Termination Indemnities - The reserve for employee termination
indemnities of Italian companies is considered a defined benefit plan and is
accounted for accordingly. Termination indemnities in other countries are provided
through payroll tax and other social contributions in accordance with local statutory
requirements.
4.1.11.15
Revenue Recognition - Revenues include sales of merchandise (both wholesale
and retail), insurance and administrative fees associated with the Company's
managed vision care business, eye exams and related professional services, and
sales of merchandise to franchisees along with other revenues from franchisees
such as royalties based on sales and initial franchise fee revenues.
Wholesale Division revenues are recognized from sales of products at the time of
shipment, as title and the risks and rewards of ownership of the goods are assumed
by the customer at such time. The products are not subject to formal customer
acceptance provisions. In some countries, the customer has the right to return products
for a limited period of time after the sale. However, such right of return does not
impact the timing of revenue recognition as all conditions of SFAS No. 48, Revenue
Recognition When Right of Return Exists, are satisfied at the date of sale. Accordingly,
the Company has recorded an accrual for the estimated amounts to be returned.
This estimate is based on the Company's right of return policies and practices along
with historical data and sales trends. There are no other post-shipment obligations.
Revenues received for the shipping and handling of goods are included in sales
and the costs associated with shipments to customers are included in operating
expenses. Total shipping costs in fiscal 2003, 2004 and 2005 associated with the
sale of goods in the Wholesale Division were Euro 65 lacs (Rs. 3,722 lacs), Euro 62
lacs Rs. 3,550 lacs) and Euro 60 lacs (Rs. 3,435 lacs), respectively.
Retail Division revenues, including internet and catalog sales, are recognized upon
receipt by the customer at the retail location, or when goods are shipped directly to
the customer for internet and catalog sales. In some countries, the Company allows
retail customers to return goods for a period of time and as such the Company has
recorded an accrual for the estimated amounts to be returned. This accrual is based
on the historical return rate as a percentage of net sales and the timing of the
returns from the original transaction date. There are no other post-shipment
obligations. Additionally, the Retail Division enters into discount programs and similar
relationships with third parties that have terms of twelve or more months. Revenues
under these arrangements are likewise recognized as transactions occur in the
Company's retail locations and customers take receipt of products and services.
Also included in Retail Division revenues are managed vision care revenues
consisting of (i) insurance revenues, which are recognized when earned over the
terms of the respective contractual relationships, and (ii) administrative services
revenues, which are recognized when services are provided during the contract
period. Accruals are established for amounts due under these relationships
determined to be uncollectible.
Cole earns and accrues franchise revenues based on sales by franchisees which
are accrued as earned. Initial franchise fees are recorded as revenue when all
material services or conditions relating to the sale of the franchise have been
substantially performed or satisfied by Cole and when the related store begins
operations. Accruals are established for amounts due under these relationships when
they are determined to be uncollectible.
The Retail Division also sells separately priced extended warranty contracts with
terms of coverage of 12 to 24 months. Revenues from the sale of these warranty
contracts are deferred and amortized over the lives of the contracts, while costs to
service the warranty claims are expensed as incurred.
The Wholesale and Retail Divisions may offer certain promotions during the year.
Free frames given to customers as part of a promotional offer are recorded in cost of
sales at the time they are delivered to the customer. Discounts and coupons tendered
by customers are recorded as a reduction of revenue at the date of sale.
4.1.11.16
Managed Vision Care Underwriting and Expenses - The Company sells vision
insurance plans which generally have a duration of up to two years. Based on its
experience, the Company believes it can predict utilization and claims experience
under these plans, including claims incurred but not yet reported, with a high degree
of confidence. Claims are recorded as they are incurred and certain other membership
costs are amortized over the covered period.
17
4.1.11.17
Advertising and Direct Response Marketing - Costs to develop and create
newspaper, television, radio and other media advertising are expensed as incurred,
and the costs of the advertising are expensed the first time the airtime or advertising
space is used with the exception of certain direct response advertising programs.
Costs for certain direct response advertising programs are capitalized if such direct
response advertising costs are expected to result in future economic benefit and the
primary purpose of the advertising is to elicit sales to customers who could be
shown to have responded specifically to the advertising. Such costs related to the
direct response advertising are amortized over the period during which the revenues
are recognized, not to exceed 90 days. Generally, other direct response program
costs that do not meet the capitalization criteria are expensed the first time the
advertising occurs. Advertising expenses incurred for the years ended December
31, 2003, 2004 and 2005, were Euro 1,783 lacs (Rs. 102,084 lacs), Euro 1,924 lacs
(Rs. 110,157 lacs) and Euro 2,787 lacs (Rs. 159,567 lacs), respectively.
With the acquisition of Cole in October 2004, the Company receives a reimbursement
from its acquired franchisees for certain marketing costs. Operating expenses in the
Consolidated Statements of Income are net of amounts reimbursed by the franchisees
calculated based on a percentage of their sales. The amounts received in fiscal
2004 and 2005 for such reimbursement were Euro 42 lacs (Rs. 2,405 lacs) and
Euro 155 lacs (Rs. 8,874 lacs), respectively.
4.1.11.18
Pervasiveness of Estimates - The preparation of financial statements in conformity
with U.S. GAAP requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Significant judgment and
estimates are required in the determination of the valuation allowances against
receivables, inventory and deferred tax assets, calculation of pension and other
long-term employee benefit accruals, legal and other accruals for contingent liabilities
and the determination of the carrying value of long-lived assets, among other items.
Actual results could differ from those estimates.
4.1.11.19
Earnings Per Share - Luxottica Group calculates basic and diluted earnings per
share in accordance with SFAS No. 128, Earnings per Share. Net income available
to shareholders is the same for the basic and diluted earnings per share calculations
for the years ended December 31, 2003, 2004 and 2005. Basic earnings per share
are based on the weighted average number of shares of common stock outstanding
during the period. Diluted earnings per share are based on the weighted average
number of shares of common stock and common stock equivalents (options)
outstanding during the period, except when the common stock equivalents are antidilutive.
4.1.11.20
Fair Value of Financial Instruments - Financial instruments consist primarily of cash,
cash equivalents and marketable securities, debt obligations and, in 2004, derivative
financial instruments which are either accounted for as fair value or cash flow hedges.
Luxottica Group estimates the fair value of cash, cash equivalents and marketable
securities based on interest rates available to the Company and by comparison to
quoted market prices and its debt obligations, as there are no quoted market prices,
based on interest rates available to the Company. The fair value associated with
financial guarantees has been accrued for when applicable. The fair values of letters
of credit are not disclosed as it is not practicable for the Company to do so and
substantially all of these instruments are in place for operational purposes such as
security on leases and health benefits. At December 31, 2004 and 2005, the fair
value of the Company's financial instruments approximated the carrying value.
4.1.11.21
Stock-Based Compensation - The Company has elected to follow the accounting
provisions of Accounting Principles Board ("APB"), Opinion No. 25, Accounting for
Stock Issued to Employees ("APB 25"), for stock-based compensation and to provide
the disclosures required under SFAS No. 123, Accounting for Stock-Based
Compensation, as amended by SFAS No. 148, Accounting for Stock-Based
Compensation-Transition and Disclosure (collectively, "SFAS 123"). No stock-based
employee compensation cost is reflected in net income for options not included in
the incentive plans, as all options granted under the plans have an exercise price
equal to the market value of the underlying stock on the date of the grant. For
options issued under the incentive plans, stock compensation expense has been
recorded based on the conditions of the plan. The Company changed its method of
valuing options issued after January 1, 2004 from the Black-Scholes model to a
binomial model as the Company believes a binomial valuation technique will result
in a better estimate of the fair value of the options.
18
The fair value of options granted was estimated on the date of grant using the
Black-Scholes option pricing model for options issued prior to January 1, 2004 and
using a binomial model for options issued after such date with certain weighted
average assumptions.
The Company recognized forfeitures as they occur for the 2003 grants, and changing
to the binomial approach in 2004 has assumed a forfeiture rate of six percent for
2004 and 2005 grants.
4.1.11.22
Derivative Financial Instruments - Derivative financial instruments are accounted
for in accordance with SFAS No. 133, Accounting for Derivative Instruments and
Hedging Activities ("SFAS 133"), as amended and interpreted.
SFAS 133 requires that all derivatives, whether or not designed in hedging
relationships, be recorded on the balance sheet at fair value regardless of the
purpose or intent for holding them. If a derivative is designated as a fair-value
hedge, changes in the fair value of the derivative and the related change in the
hedge item are recognized in operations. If a derivative is designated as a cashflow hedge, changes in the fair value of the derivative are recorded in other
comprehensive income/(loss) ("OCI") in the Statements of Consolidated Shareholders'
Equity and are recognized in the Statements of Consolidated Income when the
hedged item affects operations. The effect of these derivatives in the Statements of
Consolidated Operations depends on the item hedged (for example, interest rate
hedges are recorded in interest expense). For a derivative that does not qualify as
a hedge, changes in fair value are recognized in the Statements of Consolidated
Operations, under the caption "Other-net".
Certain transactions and other future events, such as (i) the derivative no longer
effectively offsetting changes to the cash flow of the hedged instrument, (ii) the
expiration, termination or sale of the derivative, or (iii) any other reason of which the
Company becomes aware that the derivative no longer qualifies as a cash flow
hedge, would cause the balance remaining in other comprehensive income to be
realized immediately as earnings. Based on current interest rates and market
conditions, the estimated aggregate amount to be recognized as earnings from other
comprehensive income relating to these cash flow hedges in fiscal 2006 is
approximately Euro 5 lacs (Rs. 286 lacs), net of taxes.
Luxottica Group uses derivative financial instruments, principally interest rate and
currency swap agreements, as part of its risk management policy to reduce its
exposure to market risks from changes in interest and foreign exchange rates.
Although it has not done so in the past, the Company may enter into other derivative
financial instruments when it assesses that the risk can be hedged effectively.
4.1.11.23
Recent Accounting Pronouncements - In November 2004, the Financial Accounting
Standards Board ("FASB") issued SFAS No. 151, Inventory Costs-an amendment of
ARB No. 43, Chapter 4, to clarify that abnormal amounts of idle facility expense,
freight, handling costs and wasted material should be recognized as period costs. In
addition, this statement requires that the allocation of fixed production costs of
conversion be based on the normal capacity of the production facilities. The adoption
of such standard is for fiscal years beginning after June 15, 2005. The Company
believes the adoption will not have a material effect on the consolidated financial
statements.
In December 2004, the FASB issued SFAS No. 123-R (revised 2004), Share-Based
Payment ("SFAS 123-R"), which replaces the existing SFAS 123 and supersedes
APB 25. SFAS 123-R requires companies to measure and record compensation
expense for stock options and other share-based payment methods based on the
instruments' fair value. SFAS 123-R became effective for the Company beginning on
January 1, 2006. The Company has evaluated the impact of the adoption of SFAS
No. 123-R and determined that the additional compensation costs which would have
been recorded in fiscal 2005 were not material. Based on current options outstanding
as of December 31, 2005, excluding the incentive and shareholder grants for which
the effect of adopting SFAS 123-R would vary significantly due to numerous variables,
including, but not limited to, future stock price and estimated date of vesting, the
effect of the adoption of SFAS 123-R on the 2006 statement of consolidated income
would be a reduction of pre-tax income by approximately Euro 44 lacs (Rs. 2,519
lacs).
In December 2004, the FASB issued SFAS No. 153, Exchanges of Nonmonetary
Assets-an amendment of APB Opinion No. 29 ("SFAS 153"). SFAS 153 amends APB
No. 29, Accounting for Nonmonetary Transactions, to eliminate the exception for
nonmonetary exchanges of similar productive assets and replaces it with a general
19
exception for exchanges of nonmonetary assets that do not have commercial
substance. A nonmonetary exchange has commercial substance if the future cash
flows of the entity are expected to change significantly as a result of the exchange.
SFAS 153 is effective for reporting periods beginning after June 15, 2005. The
adoption of SFAS 153 is not expected to have a material effect on the Company's
consolidated financial statements.
In March 2005, the FASB issued Interpretation No. 47, Accounting for Conditional
Asset Retirement Obligations-an interpretation of FASB Statement No. 143 ("FIN 47"),
which clarifies the term "conditional asset retirement obligation" as used in SFAS
143 and requires the recognition of a liability for a "conditional asset retirement
obligation" if the fair value of the liability can be reasonably estimated. FIN 47 is
effective for reporting periods beginning after December 15, 2005. The adoption of
FIN 47 is not expected to have a material effect on the Company's consolidated
financial statements.
In May 2005, the FASB issued SFAS No. 154, Accounting Changes and Error
Corrections-a replacement of APB Opinion No. 20 and FASB Statement No. 3 ("SFAS
154"). SFAS 154 applies to all voluntary changes in accounting principles and
changes required by accounting pronouncements in instances where the
pronouncement does not include specific transition provisions. This Statement replaces
APB No. 20, Accounting Changes, and SFAS No. 3, Reporting Accounting Changes
in Interim Financial Statements. SFAS 154 requires retroactive application to prior
periods' financial statements of changes in accounting principles unless it is
impracticable to do so. SFAS 154 is effective for accounting changes and corrections
of errors made in fiscal years beginning after December 15, 2005.
In June 2005, the Emerging Issues Task Force ("EITF") reached a consensus on
Issue No. 05-6, Determining the Amortization Period for Leasehold Improvements
("EITF 05-6"), which requires that leasehold improvements acquired in a business
combination or purchased significantly after, and not contemplated at the inception
of the lease, be amortized over the lesser of the useful life of the asset or a term
that includes lease renewals that are reasonably assured. This consensus is applicable
for leasehold improvements acquired or purchased beginning after June 29, 2005
and will be followed in future periods if and when necessary.
In October 2005, the FASB issued FASB Staff Position No. 13-1, Accounting for
Rental Costs Incurred During a Construction Period ("FSP 13-1"), which concluded
that rental costs associated with ground and building operating leases that are
incurred during the construction period should be recognized as rental expense in
such period. This guidance is effective for reporting periods beginning after December
15, 2005. The adoption of FSP 13-1 is not expected to have a material effect on the
Company's consolidated financial statements and will be followed in future periods
if and when necessary.
In February 2006, the FASB issued SFAS No. 155, Accounting for Certain Hybrid
Financial Instruments-an amendment of FASB Statements No. 133 and 140 ("SFAS
155"), which amends SFAS 133 and SFAS 140, Accounting for Transfers and Servicing
of Financial Assets and Extinguishments of Liabilities. The statement:
Permits fair value remeasurement for any hybrid financial instrument that contains
an embedded derivative that otherwise would require bifurcation;
Clarifies which interest-only strips and principal-only strips are not subject to the
requirements of Statement No. 133;
Establishes a requirement to evaluate interests in securitized financial assets to
identify interests that are freestanding derivatives or that are hybrid financial
instruments that contain an embedded derivative requiring bifurcation;
Clarifies that concentrations of credit risk in the form of subordination are not
embedded derivatives; and
Amends Statement No. 140 to eliminate the prohibition on a qualifying specialpurpose entity from holding a derivative financial instrument that pertains to a
beneficial interest other than another derivative financial instrument.
SFAS 155 is effective for all financial instruments acquired or issued after the
beginning of an entity's first fiscal year that begins after September 15, 2006. The
adoption of SFAS 155 is not expected to have a material effect on the Company's
consolidated financial statements.
20
4.1.12
The Board of Directors of Luxottica as on the date of the Third PA was as follows:
Name
Title
Director
Since
Qualification
Experience
Mr. Leonardo Del
Vecchio
Chairman of
the Board of
Directors
1981
Honorary degree
in Business
Administration
Master "honoris
causa" in
International
Business from MIB
Honorary degree
in Managerial
Engineering
Honorary degree
in Materials
Engineering
Honorary
degree in
Business
Administration
from Constantinian
University
Mr. Luigi Francavilla
Deputy
Chairman
1985
21
Address
Mr. Del Vecchio is Via Cantù, 2,
the founder of the Milano, Italy
Luxottica group
and Chairman of
the Board since
the formation of
Luxottica.
In 1986 the
President of the
Republic of Italy
conferred on
Mr. Del Vecchio
the honor of
Cavaliere
dell'Ordine al
"Merito del
Lavoro" (Knight of
the Order for
Labor Merit).
Mr. Francavilla
Via Paganini 46,
joined the
32021 Agordo,
Luxottica group
Belluno, Italy
in 1968 and has
been Deputy
Chairman of
Luxottica since
1981.
Mr. Francavilla is
also the Chairman
of Luxottica S.r.l.,
Luxottica's
principal operating
subsidiary.
From 1972 to 1977,
Mr. Francavilla was
general manager
of Luxottica S.r.l.
and, from 1969 to
1971, he served
as technical
general manager
of Luxottica S.r.l.
Name
Title
Director
Since
Mr. Andrea Guerra
Chief Executive 2004
Officer and
Director
Qualification
Experience
Degree in
economics and
commerce
Mr. Tancredi Bianchi
Director
1990
Emeritus Professor
of Credit and
Banking at the
Bocconi University
in Milan
22
Address
Mr. Guerra was
Via Cantù, 2,
appointed as
Milano, Italy
Director and Chief
Executive Officer
of Luxottica on
July 27, 2004.
Prior to joining
Luxottica, Mr. Guerra
has worked with
Merloni
Elettrodomestici
since 1994 and
became the chief
executive officer in
2000. In addition,
Mr. Guerra worked
for Mariott Italia
as director of
marketing.
Mr. Guerra is also
director of Parmalat
S.p.A. and Banca
Nazionale del
Lavoro S.p.a.
Mr. Bianchi has
Via S. Tomaso
been a Director
22, Bergamo,
of Luxottica since Italy
1990.
He was also a
professor of Credit
and Banking at the
Bocconi University
in Milan from 1978
to 2003.
In 1959,
Mr. Bianchi
qualified for
university teaching
and began teaching
Banking Technique
at the Venice
University
(Cà Foscari"), as
well as the Pisa
and Rome ("La
Sapienza")
Universities.
Mr. Bianchi was
on the board of
directors of several
companies
including Montedison,
Credito Bergamasco
(where he was
Executive Vice
Chairman, Chief
Executive Officer
and Chairman
Name
Title
Director
Since
Qualification
Experience
Address
between 1981 and
1989), Credito
Emiliano, Credito
Romognalo, Cassa
di Risparmio di
Verona S.p.A.
From 1982 to 2003
Mr. Bianchi was
chairman of the
Italian Private
Banking Association.
In addition, from
1991 to 1998 he
was chairman of
the Italian Banking
Association, where
he is now the
Honorary Chairman
Mr. Mario Cattaneo
Director
2003
Emeritus professor
of Corporate
Finance at the
Catholic University
of Milan.
Mr. Cattaneo has
been a director of
Eni S.p.A. from
1998 until 2005, of
Unicredito from 1999
until 2005 and
statutory auditor of
the Bank of Italy
from 1991 to 1999.
Mr. Cattaneo is also
in the board of
directors of Banca
Lombarda S.p.A.,
Bracco S.p.a., Sella
Holding Banca Spa.,
Chaiman of CBI
Factor S.p.A., and
Chairman of the
Board of Statutory
Auditors of Intesa
Mediofactoring
S.p.A., Sara
Assicurazioni S.p.A.,
Italiana Assicurazioni
S.p.A. and B.P.U.
Assicurazioni S.p.A.
Corso Italia 50,
Milan, Italy
Mr. Enrico Cavatorta
Group Chief
Financial Officer
and Director
2003
Bachelor's degree
in Business
Administration
Mr. Cavatorta has
been a Director of
Luxottica since
2003 and Chief
Financial Officer
since 1999. He is
also a director in
the major
subsidiaries of the
Luxottica.
Prior to joining
Luxottica
Mr. Cavatorta
worked with
Piaggio S.p.A.,
Via Cantù, 2,
Milano, Italy
23
Name
Title
Director
Since
Qualification
Experience
Address
most recently as the
group controller
responsible for
planning and
control. From 1993
to 1996,
Mr. Cavatorta was
a consultant with
McKinsey & Co.,
having joined the
firm from Procter
& Gamble Italy,
where he worked
from 1985 to 1993.
Mr. Roberto Chemello
Mr. Claudio Del
Vecchio
Head of Group 1985
Operations and
Director
Director
1986
Degree in
Business
Administration
and Economics
-
24
Mr. Chemello joined Via Cantù,
the Luxottica group 2, Milano, Italy
in 1979 and is
currently a Director
of Luxottica. He is
also the chief
executive officer of
Luxottica S.r.l.,
Luxottica's principal
operating subsidiary.
Prior to 1985,
Mr. Chemello was
chief financial officer
of Luxottica. He
was also the chief
executive officer of
Luxottica until July 27,
2004.
Mr. Del Vecchio
Via Cantù,
joined Luxottica in 2, Milano, Italy
the 1978 and has
been a Director
since 1981. He
also serves as a
director of Luxottica
U.S. Holdings, a
key subsidiary in
North America.
From 1979 to 1982,
he managed
Luxottica's Italian
and German
distribution operations.
From 1982 until
1997 he was
responsible of all
business operation
of Luxottica in North
America. Mr. Del
Vecchio is chairman
and chief executive
officer of Retail Brand
Alliance, the owner of
Brooks Brothers Inc.
and other clothing
apparel companies.
Name
Title
Director
Since
Qualification
Experience
Mr. Sergio Erede
Director
2004
Ms. Sabina Grossi
Director
2003
Degree in
jurisprudence
LL.M. from Harvard
Law School in 1964.
Bachelor's degree
in Business
Administration C.P.A.
in Italy.
25
Address
Mr. Erede has been Piazza
a Director of
Eleonora Duse,
Luxottica since 2004. Milan, Italy
He worked as the
head of the legal
department of IBM
Italia S.p.A. Mr. Erede
was an attorney at
the law firm of
Sullivan & Cromwell
between 1964 to
1965, and the law
firm of Hale & Dorr
between 1963 to
1964. In 1999
Mr. Erede founded
the law firm,
Bonelli, Erede &
Pappalardo (which
is the successor by
merger of the
firm of Erede e
Associati).
Mr. Erede is also
the Vice Chairman
of Banca Nazionale
del Lavoro S.p.A.
and a member of
the board of
directors of
prominent Italian
companies including
Manifatture Lane
Gaetano Marzotto
& Figli S.p.A.,
Interpump S.p.A.,
Autogrill S.p.A.,
Carraro S.p.A,
Valentino Fashion
Group S.p.A. and,
Gruppo Editoriale
l'Espresso S.p.A,,
Manuli Rubber
Industries S.p.A,
Ms. Grossi has been Via Cantù,
a Director of Luxottica 2, Milano, Italy
since 2003. She
joined Luxottica in
1996 and was
head of investor
relations from 1996
to 2004.
Prior to joining
Luxottica, she was a
financial analyst
with Caboto Sim
Name
Title
Director
Since
Qualification
Experience
Address
S.p.A. from 1994 to
1996. From 1991 to
1993, Ms. Grossi
was an associate
professor in the
school of engineering of the La
Sapienza University
in Rome, where she
taught undergraduate
courses as well as
published papers
on mathematics
and statistics.
Mr. Gianni Mion
Director
2004
Degree in Business
Administration
Certified Public
Accountant.
26
Ms. Grossi is currently
a member of the
board of directors of
Molecular Medicine
S.p.A. and of the
Oliver Twist Foundation.
Director of Luxottica Viale
since 2004. He is
Monfenera
the chief executive 2, Treviso, Italy
officer of Edizione
Holding S.p.A. (the
investment company
of the Benetton
family) since 1986.
Mr. Mion was also
the chief financial
officer of Marzotto
S.p.A. from 1985 to
1986, managing
director of Fintermica
S.p.A. from 1983
to 1985, vice
president of Gepi
S.p.A. from 1974 to
1982, controller of
Mc Quay Europa
S.p.A. from 1972
to 1974 and an
auditor at the accounting firm of KPMG
from 1967 to 1972.
Mr. Mion is currently
a member of the
board of directors
of several public
companies, including
Benetton Group S.p.A.,
Autogrill S.p.A.,
Autostrade S.p.A.,
Olimpia S.p.A,
Telecom Italia S.p.A.
Name
Title
Director
Since
Qualification
Experience
Mr. Lucio Rondelli
Director
1990
Mr. Rondelli has
Via Mario
been a Director of Alberto
Luxottica since 1990. 68, Milan, Italy
Mr. Rondelli was
the chairman of
UniCredito Italiano
S.p.A until 2001,
having held various
positions with the
bank since 1947.
Mr. Rondelli is
currently chairman
of Assiparos GPA
and banca Italease
and director of
Spafid.
In 1976
Mr. Rondelli
received the honor
of Cavaliere di Gran
Croce dell'Ordine
(Knight of the Great
Cross Order) for
merit to the
Republic of Italy
and in 1988 the
President of the
Republic of Italy
conferred on him
the honor of
Cavaliere dell'Ordine
al "Merito del Lavoro"
(Knight of the Order
for Labor Merit).
Mr. Roger Abravanel
Director
2006
Degree in
Economics
Address
Degree in
Engineering
Mr. Abravanel worked Via Besana
with McKinsey from Enrico,
1972 until June 2006 9, Milan, Italy
Master Business
Administration
from Insead in
Fontainebleau
(with High
Distinction).
Mr. Abravanel is also
involved in projects
of international
consulting for the
high direction on
strategic,
organizational and
operational development issues.
Mr. Abravanel is
author of several
studies and articles
on business
organization and a
director in
companies such as
as Marazzi S.p.A.,
Valentino Fashion
Group S.p.a., Teva
S.p.A. and Banca
Nazionale del Lavoro
S.pa.
27
Name
Title
Director
Since
Qualification
Experience
Mr. Claudio
Costamagna
Director
2006
Mr. Costamanga held 32 Carlyle
important offices in Square,
major companies
London, UK
such as Montedison,
Citigroup and
Goldman Sachs.
Mr. Costamanga is
currently
Chairman of ALUB
(Association of
graduated from
Bocconi) and
director of Value
Partners.
4.1.13
4.1.14
4.1.15
4.1.16
4.1.17
4.1.18
4.1.19
4.1.20
4.1.21
4.1.22
4.1.23
Degree in Business
Administration and
Economics
Address
As on the date of this Letter of Offer, except for Mr. Luigi Francavilla who is on the board of
directors of Luxottica, none of the directors of Luxottica are on the board of directors of the
Target Company. Mr. Luigi Francavilla has not participated in any matters concerning or relating
to this Offer including any preparatory steps leading to the Offer.
None of the directors of Luxottica have acquired any Equity Shares of the Target Company in
the twelve month period prior to April 28, 1999. Further, none of the directors of Luxottica have
acquired any Equity Shares of the Target Company since April 28, 1999 and upto the date of
this Letter of Offer.
Luxottica received a letter dated January 31, 2003 from the Adjudication and Enquiry Officer of
SEBI requesting them to show cause as to why an inquiry should not be held against them
under Rule 4 of SEBI (Procedure for holding Inquiry and Imposing Penalties by Adjudicating
Officer) Rules, 1995 and why a penalty should not be imposed on them under Section 15H (ii)
of the SEBI Act for alleged violations of Regulations 10 and 12 read with Regulations 14 (1)
and 14 (3) of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997,
pursuant to the alleged acquisition of shares of and control in RSIL by Luxottica on April 28,
1999. Luxottica has filed its written arguments in this regard, with the Adjudication and Inquiry
Officer of SEBI on February 7, 2007. The matter is currently pending before the Adjudication
and Inquiry Officer of SEBI.
Luxottica does not directly hold a stake in the Target Company and has not acquired any Equity
Shares of the Target Company except for the indirect acquisition of 10,808,083 Equity Shares
constituting 44.152% of the equity share capital of RSIL consequent to the global purchase
agreement dated April 28, 1999 between Luxottica and B&L Inc. and amendment thereof, and
subsequent overseas merger of Bausch & Lomb South Asia Holdings Inc. with RayBan Holdings
Inc. on October 27, 2000 as described under paragraph 3.1.2 above. This Offer is being made
by the Acquirers consequent to a merger agreement dated October 27, 2000 as described
under paragraph 3.1.2 above and pursuant to the order of the Honourable Supreme Court of
India dated December 12, 2006,and in compliance with Regulation 10 & 12 of Chapter III of the
Regulations.
Luxottica does not directly hold a stake in the Target Company and therefore the provisions of
Chapter II of the Regulations are not applicable.
Luxottica has not promoted any companies in India in the last three years.
Currently, Luxottica, directly or indirectly, plans to set up a wholly owned subsidiary in India for
undertaking wholesale cash and carry business in luxury brand eye wear excluding the RayBan
brand. In this regard, Luxottica plans to take effective steps in order to obtain approvals, if any,
required under applicable law.
There have been no mergers or spin-offs directly involving Luxottica in the last three years.
Luxottica has complied with all corporate governance requirements as are applicable under the
laws of incorporation, i.e., Italy.
Mr. Luca Biondolillo is the investor relations officer of Luxottica. He can be contacted at Via
Cantù 2, Milano 20123, Italy (Tel. No.: +39 02 863341; Fax No. +39 02 86334636).
There are no material pending litigation matters relating to Luxottica other than the following:
4.1.23.1 In March 2002, in Snow v. LensCrafter, Inc.s et al. (Case. No. CGC-02-405544), an individual
commenced an action in the California Superior Court for the County of San Francisco
against Luxottica Group S.p.A. and certain of its subsidiaries, including LensCrafters, Inc.
and EYEXAM of California, Inc. The plaintiff, along with a second plaintiff named in an
28
amended complaint, seeks to certify this case as a class action. The claims have been
partially dismissed. The remaining claims, against LensCrafters and EYEXAM, allege various
statutory violations relating to the confidentiality of medical information and the operation
of LensCrafters' stores in California, including violations of California laws governing
relationships among opticians, optical retailers, manufacturers of frames and lenses and
optometrists, and other unlawful or unfair business practices. The action seeks unspecified
damages, statutory damages of $1,000 per class member, disgorgement, restitution of
allegedly unjustly obtained sums, punitive damages and injunctive relief, including an
injunction that would prohibit defendants from providing eye examinations or other
optometric services at LensCrafters stores in California.
The ultimate outcomes of two other disputes pending in other California courts are expected
to have an impact on the outcome of the Snow case.. First, on June 12, 2006, the California
Supreme Court decided People v. Cole, a case involving Cole and its subsidiaries
(discussed below). The Supreme Court held that optical stores must comply with various
business practice restrictions on their relationships with optometrists, including optometrists
employed by Knox-Keene plans, such as EYEXAM and Pearle VisionCare. The matter has
been sent back to the trial court for further proceedings to determine if, in fact, Pearle
Vision's operations in California comply with those restrictions.
Second, on December 6, 2006, the United States District Court for the Eastern District of
California decided NAOO v. Lockyer. In that case, LensCrafters had challenged the
California regulatory scheme governing relationships between optical retailers and
optometrists under which LensCrafters and EYEXAM had been sued. The district court
found that statutory scheme to be unconstitutional under the "commerce clause" of the
United States Constitution. The Attorney General of the State of California has since
appealed that decision, which, if ultimately upheld, should increase the likelihood of
favorable outcomes for Luxottica Group in both the Snow case and People v. Cole litigation.
Although Luxottica believes that the group's operational practices and advertising in
California comply with California law, an adverse decision in Snow or in the suit against
Cole might cause LensCrafters and EYEXAM to modify or cease their activities in California.
In addition, LensCrafters and EYEXAM might be required to pay damages and/or restitution,
the amount of which might have a material adverse effect on Luxottica's consolidated
financial statements.
4.1.23.2 In February 2002, in People v. Cole the State of California commenced an action in the
California Superior Court for the County of San Diego against Cole and certain of its
subsidiaries, including Pearle Vision, Inc. and Pearle Vision Care, Inc. The claims allege
various statutory violations related to the operation of Pearle Vision Centers in California,
including violations of California laws governing relationships among opticians, optical
retailers, manufacturers of frames and lenses and optometrists, false advertising and other
unlawful or unfair business practices. The action seeks unspecified damages, disgorgement
and restitution of allegedly unjustly obtained sums, civil penalties and injunctive relief,
including an injunction that would prohibit defendants from providing eye examinations or
other optometric services at Pearle Vision Centers in California. In July 2002, the trial
court entered a preliminary injunction to enjoin defendants from certain business and
advertising practices. Both Cole and the State of California appealed that decision. On
November 26, 2003, the appellate court issued an opinion in which it stated that, because
California law prohibited defendants from providing eye examinations and other optometric
services at Pearle Vision Centers, the trial court should have enjoined defendants from
advertising the availability of eye examinations at Pearle Vision Centers. However, the
appellate court ruled in Cole's favor with respect to charging dilation fees, which ruling
partially lifted the preliminary injunction with respect to these fees that had been imposed
in July 2002. On March 3, 2004, the California Supreme Court granted Cole's petition for
review of the portion of the appellate court's decision stating that California law prohibited
defendants from providing eye examinations and other optometric services at Pearle Vision
Centers. The appellate court's decision directing the trial court to enjoin defendants from
advertising these activities was stayed pending the Court's resolution of the issue. A final
decision was rendered on June 12, 2006, which upheld the appellate court's November
26, 2003 decision and remanded the case to the lower court for further proceedings.
Although Luxottica believes that Cole's operational practices and advertising in California
comply with California law, Cole and its subsidiaries may be compelled to modify or
cease their activities in California. In addition, Cole and its subsidiaries might be required
to pay civil penalties, damages and/or restitution, the amount of which might have a
material adverse effect on the Luxottica's consolidated financial statements. As with the
other California litigation, the ultimate outcome of this case may depend upon whether the
federal district court's ruling on the unconstitutionality of the California law itself in NAOO
v. Lockyer is upheld on appeal.
29
4.1.24
4.2
4.1.23.3 In June 2006, in Seiken v. Pearle Vision, Inc. et al. (Case No. GIC 867529), Cole and its
subsidiaries were sued by a consumer in a purported class action which alleges various
statutory violations related to the operation of Pearle Vision and its affiliated HMO, Pearle
VisionCare in California. The claims and remedies sought are similar to those asserted in
the LensCrafters and EYEXAM case. In December 2006, the court granted defendants'
motion to dismiss the complaint but allowed plaintiff an opportunity to replead. Defendants
moved to dismiss the amended complaint in February 2006. The motion was denied at a
hearing in March 2007. Although Luxottica believes that the group's operational practices
in California comply with California law, an adverse decision in this action might cause
Pearle Vision or Pearle VisionCare to modify or cease their activities in California. In
addition, the Cole subsidiaries might be required to pay damages and/or restitution, the
amount of which might have a material adverse effect on the Luxottica's consolidated
financial statements.
4.1.23.4 With respect to the matters specifically disclosed above which management has indicated
could result in a material adverse impact on Luxottica's consolidated financial statements,
management believes, based in part on the advice from counsel, that no estimate of the
range of possible losses can be made at this time.
Luxottica Group is a defendant in various other lawsuits arising in the ordinary course of
business. It is the opinion of the management of Luxottica that it has meritorious defenses
against all such outstanding claims, which Luxottica Group will vigorously pursue, and
that the outcome of such claims, individually or in the aggregate, will not have a material
adverse effect on Luxottica's consolidated financial position or results of operations.
As required under Regulation 16 (ix)(a) of the Regulations, Luxottica undertakes that it does not
currently have any plans to dispose of or otherwise encumber any assets of the Target Company
in the two year period from the date of the closing of this Offer except in the ordinary course of
business of the Target Company and except to the extent required for the purpose of restructuring
or rationalizing the existing lines of business, assets, investments, liabilities or otherwise of
RSIL. Luxottica shall not sell, dispose of or otherwise encumber any asset of the Target Company
without the prior approval of the shareholders of the Target Company to the extent required by
the Regulations and applicable laws. For future plans of Luxottica for setting up a wholly owned
subsidiary in India and entering into a five year exclusive license agreement with RSIL, please
refer to paragraph 3.3.3 and 3.3.4 of this Letter of Offer.
Ray Ban Indian Holdings Inc. ("RI Holdings")
4.2.1
RI Holdings (formerly known as Bausch & Lomb Indian Holdings Inc.) was incorporated on
February 16, 2000 under the laws of the State of Delaware, USA and is an unlisted holding
company. RI Holdings has its registered office at 1209 Orange Street, Wilmington, Delaware
19801, USA. (Tel. No.: +302 777 0247; Fax No.: + 516 918 3151).
4.2.2
A brief history of RI Holdings is as follows:
February 16, 2000
March 24, 2000
October 27, 2003
4.2.3
4.2.4
4.2.5
4.2.6
Incorporated under the laws of the State of Delaware, USA.
Acquisition of 44.152 % of the shareholding of the Target Company
Changed its name from Bausch & Lomb Indian Holdings Inc. to Ray
Ban Indian Holdings Inc.
RI Holdings is a 100% subsidiary of Ray Ban Holdings Inc., a company incorporated under the
laws of State of Delaware, USA.
Currently, Luxottica has, directly and indirectly, a 100% shareholding in its subsidiary Luxottica
U.S. Holdings Corp., a company incorporated under the laws of the State of Delaware, USA.
Luxottica U.S. Holdings Corp. holds a 100% interest in Ray Ban Holdings Inc., which, in turn,
holds a 100% interest in RI Holdings. RI Holdings currently holds 10,808,083 Equity Shares
representing 44.152% of the equity share capital of the Target Company.
The paid capital of RI Holdings as on December 31, 2006 is US$ 10,956,187 (Rs. 4,839.35
lacs) consisting of 100 shares each of face value of US$ 0.01 (Rs. 0.44) per equity share and
capital contribution from the shareholders amounting to US$ 10,956,186 (approx. Rs. 4,839.35
lacs).
There are no specific laws or other statutory requirements that require RI Holdings to prepare
annual audited financial statements in accordance with U.S. GAAP, and as such, RI Holdings
did not prepare separate audited financial statements. All financial information of RI Holdings is
consolidated in the financial statements of its ultimate parent company, Luxottica Group S.p.A.
The highlights of the financials of RI Holdings, for the years ended December 31, 2003, 2004
and 2005, and for the nine months ended September 30, 2006, extracted from the audited
consolidated accounts of Luxottica Group S.p.A. for the years ended December 31, 2003, 2004
and 2005 and unaudited consolidated accounts of Luxottica Group S.p.A. for the nine months
ended September 30, 2006, Certified by Deloitte & Touche, S.p.A., Italy (signing through Mr.
Righetti) based on US GAAP, are as follows:
30
Profit and Loss Statement
For the year
ended December
31, 2003
For the year
ended December
31, 2004
For the year
ended December
31, 2005
For the Nine
months ended
September 30, 2006
US $ Lacs
Rs. Lacs
US $ Lacs
Rs. Lacs
US $ Lacs
Net Sales
Other Income (1)
Total Income
Total Expenditure (2)
Profit Before Depreciation
Interest and Tax
Depreciation
Interest
Profit Before Tax
Provision for Tax
3.21
3.21
0.74
2.47
141.98
141.98
32.85
109.14
5.17
5.17
0.00
5.17
228.54
228.54
0.00
228.54
10.09
10.09
2.19
7.90
Rs. Lacs US $ Lacs
445.78
445.78
96.67
349.11
8.40
8.40
0.96
7.44
Rs. Lacs
371.10
371.10
42.37
328.73
2.47
0.26
109.14
11.54
5.17
0.00
228.54
0.00
7.90
0.81
349.11
35.78
7.44
0.00
328.73
0.00
Profit After Tax
2.73
120.68
5.17
228.54
8.71
384.89
7.44
328.73
Balance Sheet
As on
December 31,
2003
As on
December 31,
2004
As on
December 31,
2005
As on
September 30,
2006
US $ Lacs
Rs. Lacs
US $ Lacs
Rs. Lacs
US $ Lacs
Rs. Lacs US $ Lacs
Rs. Lacs
103.80
4,585.04
106.02
4,682.91
109.56
4,839.35
109.56
4,839.35
2.52
111.25
7.69
339.80
16.41
724.68
23.85
1,053.41
106.32
106.32
4,696.29
4,696.29
113.71
113.71
5,022.71
5,022.71
125.97
125.97
5,564.03
5,564.03
133.41
133.41
5,892.76
5,892.76
56.81
49.52
-
2,509.09
2,187.20
-
64.20
49.52
-
2,835.51
2,187.20
-
75.64
50.33
-
3,341.06
2,222.98
-
84.00
49.41
-
3,710.34
2,182.42
-
106.32
4,696.29
113.71
5,022.71
125.97
5,564.03
133.41
5,892.76
Sources of funds
Paid up share capital
Reserves and Surplus
(excluding revaluation
reserves)
Net worth
Secured loans
Unsecured loans
Total
Uses of funds
Net fixed assets
Investments (3)
Net current assets
Total miscellaneous
expenditure not written off
Total
Other Financial Data
Dividend (%)
For the year
ended December
31, 2004
For the year
ended December
31, 2005
US $
US $
US $
Rs.
Rs.
For the Nine
months ended
September 30, 2006
Rs.
US $
Rs.
0
0
0
0
0
0
0
0
Earnings per Share (diluted)
2,732.14
120,678.62
5,174.15
228,542.21
8,713.77
384,887.22
7,442.36
328,729.04
Return on Net Worth (%)
2.57%
2.57%
4.55%
4.55%
6.92%
6.92% 5.58% (4)
5.58% (4)
Book Value per Share
1.
2.
3.
4.
For the year
ended December
31, 2003
106,323.13 4,696,292.65 113,713.17 5,022,710.72 125,968.57 5,564,031.74 133,410.93 5,892,760.78
Interest income and other - net
Cost of sales and operating expenses (excluding depreciation)
Includes goodwill, investments and other long term assets
Not annualized
Notes:
a)
b)
Detailed consolidated financial statements of Luxottica, audited for the years ended December 31, 2003, 2004 and 2005, and unaudited for the nine
months ended September 30, 2006 are available on the website of Luxottica: www.luxottica.com
Please refer to the section titled "Definitions" for the definition of accounting ratios and of the term "Certified".
31
4.2.7
RI Holdings does not have any contingent liabilities.
4.2.8
Reasons for the fall/ rise in the total income and profit after tax:
RI Holdings is a holdings company whose sole purpose is to own shares. As such, RI Holdings
does not have any business operations and consequently, income represents the proportional
shares of the net income on the investments under the equity method accounting.
4.2.9
The Significant Accounting Policies of RI Holdings are as follows:
4.2.9.1 The investments made by RI Holdings are accounted for under the equity method.
4.2.9.2 The key significant accounting policies of RI Holdings are the same as those of Luxottica
as described under paragraph 4.2.11 of this Letter of Offer where applicable.
4.2.10
The Board of Directors of RI Holdings as on the date of the Third PA was as follows:
Name
Title
Director
Since
Qualification
Experience
Address
Mr. Michael Boxer
Director
June 8, 2006
Degree in Law
Mr. Boxer has been
501 Cold Spring
Road, Laurel
Hollow, New York
11791, USA
the Senior Vice
President and
General Counsel of
Luxottica North
America since
September 2005.
Mr. Boxer is responsible
for overseeing all
legal matters for
Luxottica's North
American retail and
wholesale operations.
Mr. Boxer has held
various other executive
roles since joining
Luxottica's US group
in 1993. Prior to joining
Luxottica in 1993,
Mr. Boxer served as
a corporate attorney
with the law firm of
Winston & Strawn in
New York.
Mr. Vito Giannola
Director
June 8, 2006
Degree in
Accounting
Mr. Giannola is the
Treasurer of the
Luxottica group in
North America.
Mr. Giannola is
responsible for
overseeing all
treasury matters for
Luxottica's North
American retail and
wholesale operations.
Mr. Giannola has
held various financial
roles since joining
Luxottica's US group
in 1986.
32
273 Bridle Path
Lane, Mill Neck,
New York 11765,
USA
Name
Title
Director
Since
Qualification
Experience
Address
Mr. Luca Tait
Director
November 3,
2006
Degree in Business
Mr. Tait joined
Via Mauro
Macchi 73, Milan
20124, Italy
Administration and
Economics
Luxottica in 1998.,
Since 2006 Mr. Tait
has held the
position of wholesale
coordinator and
emerging markets
area director.
Before he joined
Luxottica, Mr. Tait
worked for 2 years
in a local bank
dealing with foreign
currencies and
trading.
4.2.11
As on the date of this Letter of Offer, except for Mr. Luca Tait who is on the board of directors of
RI Holdings, none of the directors of RI Holdings are on the board of directors of the Target
Company. Mr. Luca Tait has not participated in any matters concerning or relating to this Offer
including any preparatory steps leading to the Offer.
4.2.12
None of the directors of RI Holdings have acquired any Equity Shares of the Target Company
in the twelve month period prior to April 28, 1999. Further, none of the directors of RI Holdings
have acquired any Equity Shares of the Target Company since April 28, 1999 and upto the date
of this Letter of Offer.
4.2.13
RI Holdings has been complying with applicable provisions of Chapter II of the Regulations
except for the following:
There was a delay in compliance with Regulation 8(1) and 8(2) of the Regulations of 6
days in 2001 and 3 days in 2002. With respect to compliance with Regulation 8(1) and
8(2) of the Regulations in 2000, the relevant records are not available with RI Holdings.
SEBI may initiate appropriate action under the SEBI Act/ the Regulations in relation to the
above.
4.2.14
Pursuant to the global purchase agreement, dated April 28, 1999, between Luxotica and B&L
Inc. as amended, RI Holdings acquired 10,808,083 Equity Shares constituting 44.152% of the
equity share capital of RSIL on March 24, 2000 from Bausch & Lomb South Asia Inc. pursuant
to inter-se transfer of equity shares among the B&L Inc. companies as described under
paragraphs 3.1.2 above. This Offer is being made by the Acquirers consequent to a merger
agreement dated October 27, 2000 and pursuant to the order of the Honourable Supreme
Court of India dated December 12, 2006, and in compliance with Regulation 10 & 12 of Chapter
III of the Regulations. Except for the above, RI Holdings has not acquired any Equity Shares of
the Target Company.
4.2.15
RI Holdings has not promoted any companies in India in the last three years.
4.2.16
As required under Regulation 16 (ix)(a) of the Regulations, RI Holdings undertakes that it does
not currently have any plans to dispose of or otherwise encumber any assets of the Target
Company in the two year period from the date of the closing of this Offer except in the ordinary
course of business of the Target Company and except to the extent required for the purpose of
restructuring or rationalizing the existing lines of business, assets, investments, liabilities or
otherwise of RSIL. RI Holdings shall not sell, dispose of or otherwise encumber any asset of the
Target Company without the prior approval of the shareholders of the Target Company to the
extent required by the Regulations and applicable laws. Please refer to "Object of the Offer and
Future Plans" for object and purpose of the acquisition of the Equity Shares and future plans of
the Acquirers for the Target Company. For future plans of Luxottica for setting up a wholly
owned subsidiary in India and entering into a five year exclusive license agreement with RSIL,
please refer to paragraph 3.3.3 and 3.3.4 of this Letter of Offer.
33
5.
6.
DISCLOSURE IN TERMS OF REGULATION 21(3)
5.1
As per the listing agreement with the BSE, the Target Company is required to maintain at least 25% public
shareholding for listing on a continuous basis.
5.2
Pursuant to acquisition of Equity Shares of Target Company under this Offer, the public shareholding in the
Target Company would not fall below the levels stipulated by the listing agreement.
BACKGROUND OF RAYBAN SUN OPTICS INDIA LIMITED ("RSIL" or the "Target Company")
6.1
RSIL is a public limited company incorporated under the Indian Companies Act, 1956 and having its registered
office at SP 810-811, RIICO Industrial Area, Phase-II, Bhiwadi - 301 019, Distt. Alwar, Rajasthan, India (Tel.
No.: +91 (0)1493 221006/ 221012/ 222328; Fax No.: +91 (0)1493 221057).
6.2
RSIL was incorporated as Bausch & Lomb India Private Limited under the Companies Act, 1956 on May 28,
1990. The word 'Private' was deleted from the Company's name under 44(2)(b) of the Companies Act, 1956
with effect from March 25, 1991. The name of the Target Company was changed to its present name i.e.
RayBan Sun Optics India Limited with effect from March 30, 2001.
6.3
RSIL was originally promoted as a joint venture between B&L Inc. and Montari Industries Limited alongwith
its associates with a view to set up a project for the manufacture of soft contact lenses, cleaning solutions,
de-proteinising tablets, and metallic frames for sunglasses. B&L Inc. had an initial interest of 39.9% in the
joint venture through one of its 100% subsidiaries, i.e. Bausch & Lomb South Asia Inc., which, over the
years, increased to 44.152%. Consequent to the purchase of B&L Inc.'s Eyewear Business by Luxottica as
described under paragraph 1.2 above, this shareholding in the Target Company is currently held by RI Holdings,
which is a 100% subsidiary of Ray Ban Holdings Inc. Ray Ban Holdings Inc., in turn, is a 100% subsidiary of
Luxottica U.S. Holdings Corp. which is a 100% subsidiary of Luxottica.
6.4
The principal activity of RSIL is manufacturing, marketing, import and export of, and dealing in eyewear
products consisting of sunglasses and prescription frames, predominantly under RayBan trademarks. The
current arrangement between Luxottica and RSIL for manufacture of eyewear under the RayBan trademark is
an 'at will' arrangement and there is no binding written trademark license agreement between the parties.
There is no binding agreement between Luxottica and RSIL for purposes of import and distribution of RayBan
and other luxury brand eyewear on a wholesale cash and carry basis.
6.5
RSIL has one manufacturing plant which is located in the state of Rajasthan. The details of this plant are
given below:
6.6
S. No.
Plant Location
Capacity
(in Nos.)
Year of
Commissioning
1.
SP-810-811,
RIICO Industrial Area,
Phase - II, Bhiwadi - 301 019,
Distt. Alwar, Rajasthan
529,200
1992-93
Products
Produced
Metallic Frames/
Sunglasses
As on the date of this Letter of Offer, the issued, subscribed and paid up capital of RSIL comprised of
24,479,187 equity shares of Rs. 10/- each fully called up. However, there are calls-in-arrears in respect of
8,065 equity shares. The share capital structure of RSIL as on the date of this Letter of Offer is as follows:
Particulars
Equity Shares
No. of Equity
Shares
Fully paid up Equity Shares
Calls-in-arrears *
Total Equity Shares
Voting Rights
%
Voting
Rights
%
24,471,122
99.97%
24,471,122
100%
8,065
0.03%
-
-
24,479,187
100.00%
24,471,122
100%
* In terms of Article 109 of the Articles of Association of the Target Company, shares in respect of which calls are in arrears do not carry
voting rights.
6.7
As of the date of this Letter of Offer, RSIL has no outstanding stock options or warrants which, when converted
or exercised, would result in an increase in the equity share capital of RSIL.
6.8
The build-up of the current share capital of RSIL and status of compliance with applicable provisions of the
Regulations/ other applicable regulations under the SEBI Act, 1992 and other statutory requirements as
applicable, is given as under:
34
Date of
allotment
No. of
Equity
Shares
allotted
June 21,
1990
Equity
Shares
allotted
as a %age
`of equity
share
capital
Face value
per Equity
Share (Rs.)
Cumulative
paid up
capital
(No. of
Equity
Shares)
Mode of
allotment
Identity of allottees
(promoters /
ex-promoters /
others)
Status of
compliance
with the
Regulations
200
100.00%
10/-
200 Subscription to the Ex- Promoters
Memorandum of
Association
Not Applicable
5
2.44%
10/-
205
Allotment on
conversion from a
private limited
company to a
public limited
company
Others
Not Applicable
10,375,695
100.00%
10/-
10,375,900
Public Issue (IPO)
Ex - Promoters
and others
Not Applicable
December 1,
1993
5,202,200
33.39%
10/-
15,578,100
Right Issue
Ex- Promoters
and others
Not Applicable
March 12,
1998
8,901,087
36.36%
10/-
24,479,187
Right Issue
Ex- Promoters
and others
Not Applicable
January 15,
1991
January 6,
1992
6.9
There has been no suspension of trading of the Equity Shares of RSIL in any stock exchange(s), as applicable.
6.10
The Equity Shares of RSIL have not undergone any non-listing in any stock exchange(s), as applicable,
except for voluntary delisting from the DSE, JSE, ASE and CSE with effect from October 13, 2004, December
20, 2004, January 28, 2005 and July 1, 2005, respectively, pursuant to a special resolution adopted by the
shareholders in the annual general meeting held on May 20, 2004. The Equity Shares of RSIL were also
traded under the permitted category on the NSE till March 31, 2003.
6.11
RSIL is in compliance with the listing agreement as on the date of this Letter of Offer and no punitive action
has been initiated against RSIL by the stock exchange(s) where its Equity Shares are listed.
6.12
The Board of Directors of RSIL as on the date of the Third PA was as follows:
Name
Title
Director Since Qualification
Mr. Luigi Francavilla
Chairman
September 25,
2002
Honorary degree in
Business Administration
from Constantinian
University
Experience
Residential Address
Mr. Francavilla
Via Paganini 46, 32021
Agordo, Belluno, Italy
joined the Luxottica
group in 1968 and
has been Deputy
Chairman of
Luxottica since
1981. Mr.
Francavilla is also
the Chairman of
Luxottica S.r.l.,
Luxottica's principal
operating subsidiary.
From 1972 to 1977,
Mr. Francavilla was
general manager of
Luxottica S.r.l. and,
from 1969 to 1971,
he served as
technical general
manager of
Luxottica S.r.l.
35
Name
Title
Director Since Qualification
Mr. Enrico Mistron
Director
September 25,
2002
Business Administration
Mr. Mistron has been
Mr. Luca Tait
Additional
Director
July 21, 2006
Degree in Business
Joined Luxottica in
Mr. Rabindra Nath
Ghosh
Director
December 19,
2001
Chartered Accountant
Mr. Kewal Krishan
Khanna
Additional
Director
January 17,
2007
M.Tech (Radiophysi s &
Mr. Harsh Veer
Chopra
Managing
Director
October 29,
2000
B-Tech (Chemical
Administration and
Economics
Experience
Via Alpago, Novello associated with the
11, 32100 Belluno, Italy
Luxottica group since
1995 as a financial
analyst. He has
handled various
assignments in the
finance department
including mergers
and acquisitions.
1998., Since 2006
Mr. Tait has held the
position of wholesale
coordinator and
emerging markets
area director.
Before he joined
Luxottica, Mr. Tait
worked for 2 years
in a local bank on
foreign currencies
and trading.
Mr. Ghosh has 39
years of experience
in finance and
accounting. He has
held various key
management
positions.
Electronics)
Engineering)
Residential Address
Mr. Khanna has 38
years of experience in
general management,
marketing, sales and
service in relation
to professional
electronics products
and systems.
Via Mauro Macchi 73,
Milan 20124, Italy
Flat No. 203,
Dakshinayan
Plot No. 19, Sector - 4,
Dwarka, Phase - I,
New Delhi - 110075
1148, Sector 14,
Faridabad - 121007
Mr. Chopra has 28
K-7/48, DLF, Phase - II,
years experience in
Gurgaon - 122002
supply chain management, sourcing,
manufacturing,
logistics and exports.
He has held various
key management
positions.
6.13
As on the date of the Third PA, except for Mr. Luigi Francavilla who is on the board of directors of Luxottica
and Mr. Luca Tait who is on the board of directors of RI Holdings, none of the directors of the Acquirers are
on the board of directors of the Target Company. Mr. Luigi Francavilla was appointed as director by the
shareholders at the annual general meeting held on September 25, 2002 and Mr. Luca Tait was appointed
as an additional director in the meeting of the board of directors of RSIL held on July 21, 2006. Mr. Luigi
Francavilla and Mr. Luca Tait have not participated in any matters concerning or relating to this Offer
including any preparatory steps leading to the Offer. Furthermore, the Acquirers have not appointed any
director representing them on the board of directors of the Target Company since the Third PA.
6.14
Except as disclosed under paragraphs 3.1.2 above, there have been no spin-offs or mergers involving
RSIL.
36
6.15
The financial highlights of RSIL, audited for the years ended December 31, 2003, 2004 and 2005, and with
limited review for the nine months ended September 30, 2006, Certified by Deloitte Haskins and Sells
(signing through Mr. Deepak Roy), the statutory auditors of the Target Company, based on Indian GAAP, are
as follows:
Profit and Loss Statement
For the year
ended December
31, 2003
For the year
ended December
31, 2004
For the year
For the Nine
ended December months ended
31, 2005
September 30,
2006
Rs. Lacs
Income from operations
3,941.55
4,228.61
5,168.13
280.73
245.11
433.76
394.48
Total Income
4,222.28
4,473.72
5,601.89
5,216.07
Total Expenditure
(excluding depreciation,
interest and tax)
3,486.88
3,524.44
3,910.08
3,796.29
Profit Before Depreciation
Interest and Tax
735.40
949.28
1,691.81
1,419.78
Depreciation
141.45
152.95
148.96
96.04
-
-
-
-
Profit Before Tax
593.95
796.33
1,542.85
1,323.74
Provision for Tax
223.20
269.34
528.09
461.86
Profit After Tax
370.75
526.99
1,014.76
861.88
Other Income
Interest
4,821.59
Balance Sheet
As on
December 31,
2003
As on
December 31,
2004
Rs. Lacs
As on
December 31,
2005
As on
September 30,
2006
Sources of funds
Paid up share capital
2,447.60
2,447.66
2,447.66
2,447.66
Reserves and Surplus
(excluding revaluation
reserves)
4,554.62
5,081.76
6,096.53
6,958.41
Net worth
Secured loans
Unsecured loans
Total
Uses of funds
Net fixed assets
Deferred Tax Asset
Investments
Net current assets
Total miscellaneous
expenditure not written off
Total
7,002.22
0.00
0.00
7,002.22
7,529.42
0.00
0.00
7,529.42
8,544.19
0.00
0.00
8,544.19
9,406.07
0.00
0.00
9,406.07
1,232.38
1,097.93
951.27
900.72
68.11
89.03
96.98
145.26
1,400.00
900.00
0.00
0.00
4,301.73
5,442.46
7,495.94
8,360.09
0.00
0.00
0.00
0.00
7,002.22
7,529.42
8,544.19
9,406.07
37
Other Financial Data
For the year
ended December
31, 2003
For the year
ended December
31, 2004
For the year
ended December
31, 2005
For the Nine
months ended
September 30,
2006
Rs.
Dividend (%)
Earnings per share
(diluted)
0
0
0
0
1.51
2.15
4.15
3.52
Return on Net Worth (%)
5.29
7
11.88
9.16 (1)
Book Value per Share
28.6
30.76
34.9
38.42
1. Not annualised
Notes:
6.16
a)
Detailed financial results of RSIL, audited for the years ended December 31, 2003, 2004 and 2005, and with limited review for the
nine months ended September 30, 2006 are available on the website of RSIL: www.raybansunopticsindia.com
b)
Please refer to the section titled "Definitions" for the definition of accounting ratios and of the term "Certified".
Reasons for the fall/ rise in the total income and profit after tax:
Year ended December 31, 2004 compared with December 31, 2003
The total income of RSIL as given under paragraph 6.15 above consists of income from operations and
other income. The reasons for the rise in the income from operations and other income are given below:
Income from operations increased from Rs. 3,941.55 lacs in 2003 to Rs. 4,228.61 lacs in 2004 primarily due
to steady sales growth in premium brands such as Vogue, the introduction of new models during 2004 such
as Predator Plastics and new models of Predator Sports Metals in RSIL's flagship brand - RayBan and good
growth in exports of raw unplated frames to Luxottica.
Other income declined from Rs. 280.73 lacs in 2003 to Rs. 245.11 lacs in 2004 primarily due to a decrease
in interest income from Rs. 246.45 lacs in 2003 to Rs. 180.68 lacs in 2004.
Profit after tax increased from Rs. 370.75 lacs in 2003 to Rs. 526.99 lacs on 2004 primarily due to a decline
in the provision for contingency from Rs. 107.34 lacs in 2003 to Rs. 6.77 lacs in 2004, and a reduction in
administrative and other Expenses, personnel expenses and selling expenses.
Year ended December 31, 2005 compared with December 31, 2004
The total income of RSIL as given under paragraph 6.15 above consists of income from operations and
other income. The reasons for the rise in the income from operations and other income are given below:
Income from operations increased from Rs. 4,228.61 lacs in 2004 to Rs. 5,168.13 lacs in 2005 primarily due
to growth in sales. RSIL launched designer brands such as Prada, Prada Sport, Dolce & Gabbana and D&G,
and a mid premium sports brand Arnette during 2005.
Other income increased from Rs. 245.11 lacs in 2004 to Rs. 433.76 lacs in 2005 primarily due to an
increase in interest income from Rs. 180.68 lacs to Rs. 295.38 lacs, an increase in the net gain from mutual
fund investments from Rs. 1.75 lacs in 2004 to Rs. 56.80 lacs in 2005 and an increase in provision /
liabilities no longer required written back from Rs. 16.27 lacs in 2004 to Rs. 60.73 lacs in 2005.
Profit after tax increased from Rs. 526.99 lacs in 2004 to Rs. 1,014.76 lacs on 2005 primarily due to
increased overall sales and growth in the sale of premium/ mid premium models.
38
6.17
Shareholding pattern of RSIL prior to and after the Offer is given below:
Shareholding prior
to the Offer (on
February 1, 2007)
Shareholding
to be acquired
in the Offer
(assuming full
acceptance)
Shareholding
after the Offer
(A)
(B)
C = A + B
No.
(1)
%
No.
%
No.
%
Promoter group
(1.A) Acquirers
a.
RI Holdings
10,808,083
44.152%
4,895,900
20.000%
15,703,983
64.152%
b.
Luxottica
0
0.000%
0
0.000%
0
0.000%
10,808,083
44.152%
4,895,900
20.000%
15,703,983
64.152%
0
0.000%
0
0.000%
0
0.000%
10,808,083
44.152%
4,895,900
20.000%
15,703,983
64.152%
a.1) Financial Institutions
0
0.000%
a.2) Insurance Companies
0
0.000%
1,537,744
6.282%
-4,895,900
-20.000%
8,775,204
35.848%
53,500
0.219%
1,900
0.008%
a.6) OCBs/NRI
161,067
0.658%
Sub Total (2.a)
1,754,211
7.166%
2b. Others
11,916,893
48.682%
Total 2 (2a+2b)
13,671,104
55.848%
Grand Total (1+2)
24,479,187
100.000%
24,479,187
100.000%
Sub Total (1.A)
(1.B) Promoters other
than 1.A above
Total 1 (1.A + 1.B)
(2) Public (Other than 1)
a.
FIs/ ICs/ MF/ FIIs/
Banks/ SFIs/ OCBs
a.3) Mutual Funds & UTI
a.4) FIIs
a.5) Banks
* In terms of Article 109 of the Articles of Association of the Target Company, 8,065 shares in respect of which there are calls-in-arrears
do not carry voting rights.
There were 26,340 shareholders of RSIL as on the Specified Date.
6.18
RSIL has been complying with applicable provisions of Chapter II of the Regulations except for the following:
There was a delay in compliance with Regulation 8(3) of the Regulations of 77 days in 1998 and 7
days in 1999 with respect to the BSE, DSE, JSE, ASE and CSE. With respect to compliance with
Regulation 8(3) of the Regulations in 2000, the relevant records are not available with the Target
Company and the same was intimated by the Target Company to the BSE vide letter dated February
9, 2004.
SEBI may initiate appropriate action under the SEBI Act/ the Regulations in relation to the above.
39
6.19
Other than the instances highlighted under point 6.18 above, RSIL has complied with applicable provisions
of the Regulations relating to the changes in the shareholding of its promoters. The details of such changes
in the shareholding of the promoters of RSIL is given below:
Year
Acquirer/
Promoter
Equity
Shares
acquired/
sold
Transaction
Acquirer/ Promoter
shareholding
consequent to
transaction
No.
No.
Compliance by
RSIL under
chapter II of
Regulations
%
January 6,
1992
Bausch & Lomb
South Asia Inc.
Firm
allotment
under Public
Issue
4,140,000
4,140,000
39.900
Not Applicable
December
1, 1993
Bausch & Lomb
South Asia Inc.
Rights Issue
2,070,000
6,210,000
39.863
Not Applicable
September
5, 1997
Bausch & Lomb
South Asia Inc.
Inter-se
transfer from
Montari
Industries
Limited
335,650
6,545,650
42.018
Complied
March 12,
1998
Bausch & Lomb
South Asia Inc.
Right Issue
4,262,433 10,808,083
44.152
Complied
(77 days delay in
compliance with
Regulation 8(3))
March 24,
2000
Bausch & Lomb
Indian Holdings
Inc.*
Inter-se
10,808,083 10,808,083
transfer from
Bausch &
Lomb South
Asia Inc.
44.152
Complied under
Regulation 7(3)
For compliance
under Regulation
8(3) the relevant
records are not
available.
* name changed to Ray Ban Indian Holdings Inc. with effect from October 27, 2003
There is no change in the shareholding of acquirer/promoter namely Ray Ban Indian Holdings Inc. since
2000 onwards and RSIL has complied with the chapter II of the Regulations till date.
6.20
RSIL is in full compliance with clause 49 of the listing agreement on corporate governance.
6.21
Except as stated below, there are no outstanding litigations, suits, criminal or civil prosecutions, regulatory
proceedings, potential disputes, labour disputes, bargains and damages, investigations, Central / State
Government claims or inquiries proceedings or tax liabilities, overdue to banks/ financial institutions, defaults
against banks/financial institutions, proceedings initiated for economic / civil / any other offences pending in
relation to RSIL:
6.21.1
Monetary Claims
S. No. Parties
Adjudicating
Authority/ Forum
Brief
Particulars
1.
Recovery suits against
various dealers across
the country.
Kishangarh Bas,
Dist.: Alwar
Recovery of
outstanding amount
2.
Suit u/s 138 of
Negotiable Instruments
Act, against various
dealers across the
country
Patiala House,
New Delhi
Cases u/s 138
for cheque bouncing.
6.15
3.
Piccadily
Tis Hazari, Delhi
Recovery of Security
Deposit
7.13
40
Amount
(Rs. Lacs)
29.09
6.21.2
6.22
7.
S. No. Parties
Adjudicating
Authority/ Forum
Brief
Particulars
Amount
(Rs. Lacs)
1.
RayBan Sun Optics
India Limited
CESTAT, Delhi and
Excise Department,
Bhiwadi, Supreme
Court
CENVAT Reversal
and finalisation of
various assessments
earlier provisionally
assessed under
Central Excise Act
for the period
1992-93 to 1997-98.
347.57
2.
RayBan Sun Optics
India Limited
Commercial tax offices
and tribunal court at
various locations in
India.
Various Sales tax
cases under Sales
Tax Act for the period
1992-93 to 2000-01.
106.67
3.
RayBan Sun Optics
India Limited
Commissioner (Appeals)
and Assessing Officer,
Circle 15, Delhi.
Income Tax
Assessment under
Income Tax Act for
the assessment
year 1998-99 to
2005-06.
104.00
Non-Monetary Claims
S. No. Parties
Adjudicating Authority/
Forum
1.
Registrar of Companies
Tis Hazari, Delhi
Case filed by ROC in
1992, for alleged delay
in dispatch of refund
orders and certificates.
2.
Atul Sharma
Labour Court, Alwar
Case filed by a worker
for reinstating of
services.
3.
Bimal Kumar Barua V/s
RayBan Sun Optics
India Limited
Court of District Judge,
Allahabad
Infringement of
Trademark.
Brief Particulars
The compliance officer of RSIL is Mr. Harvinder Singh, Company Secretary. He can be contacted at 404,
Tower A, Signature Towers, South City I, Gurgaon 122001 (Telephone No.: +91 (0)124 4545600; Fax No.: +91
(0)124 4545607; E-Mail: harvindersingh@in.luxottica.com).
OFFER PRICE AND FINANCIAL ARRANGEMENTS
7.1
Justification of the Offer Price
7.1.1
As per the Supreme Court Order, the reference date for calculation of the Offer Price is April 28,
1999.
7.1.2
The Equity Shares of the Target Company are currently listed on the BSE. The Equity Shares of
Target Company were formerly listed on the DSE, JSE, ASE and CSE from where they were
voluntarily delisted with effect from October 13, 2004, December 20, 2004, January 28, 2005 and
July 1, 2005, respectively, pursuant to a special resolution adopted by the shareholders in the
annual general meeting held on May 20, 2004. The Equity Shares of the Target Company were
also traded under the permitted category on the NSE till March 31, 2003.
7.1.3
Based on the information below, the Equity Shares of the Target Company were "frequently traded"
on the BSE, NSE and DSE for the six calendar months preceding April 28, 1999, within the
meaning of explanation (i) to Regulation 20 (5) of the Regulations as applicable on April 28, 1999
and "most frequently traded" on the NSE.
41
Name of the
Stock Exchange
Total number of
Equity Shares
traded* during
the 6 calender
months proceding
April 28, 1999
turnover (in terms
of % of total listed
Total number
of listed
Equity
Shares
Annualised
trading
turnover (in
terms of %
of total listed
Equity Shares)
Trading Status
terms of the
Regulations
NSE
20,625,600
24,479,187
168.52%
Frequently traded
BSE
8,269,805
24,479,187
67.57%
Frequently traded
DSE
476,100
24,479,187
3.89%
Frequently traded
JSE
Not traded
24,479,187
Nil
Not traded
ASE
Not traded
24,479,187
Nil
Not traded
CSE
40,970
24,479,187
0.33%
Infrequently
traded
* This is an aggregate of daily trading volume during six calendar months preceding April 28, 1999
(Source: NSE data from www.nseindia.com; BSE date from www.bseindia.com; Data for DSE, JSE, and ASE has been provided
by the respective stock exchanges vide their letters dated February 6, 2007,February 7, 2007 and February 6, 2007. Data for
CSE has been provided by the stock exchange vide its letters dated November 11, 2003 and November 21, 2003)
The Equity Shares of the Target Company were "infrequently traded" on the JSE, ASE and CSE
for the six month period preceding April 28, 1999 within the meaning of explanation (i) to Regulation
20(5) of the Regulations as applicable on April 28, 1999.
7.1.4
The weekly high and low of the closing prices of the Equity Shares of RSIL, during the 26 weeks
period prior to April 28, 1999 on the stock exchange where the Equity Shares of the Target
Company are most frequently traded, i.e. the NSE are given below:
Week
No.
Date
Weekly
High
Weekly
Low
Average
Weekly
Volume
1
Tuesday, November 03, 1998
141.25
137.20
139.23
249,700
2
Tuesday, November 10, 1998
159.55
150.65
155.10
475,300
3
Tuesday, November 17, 1998
156.90
150.15
153.53
301,700
4
Tuesday, November 24, 1998
154.00
108.70
131.35
828,200
5
Tuesday, December 01, 1998
100.00
77.35
88.68
912,300
6
Tuesday, December 08, 1998
90.90
84.05
87.48
1,131,700
7
Tuesday, December 15, 1998
85.40
81.70
83.55
334,300
8
Tuesday, December 22, 1998
92.25
88.35
90.30
649,000
9
Tuesday, December 29, 1998
89.00
84.95
86.98
172,500
10
Tuesday, January 05, 1999
91.00
86.20
88.60
262,000
11
Tuesday, January 12, 1999
106.20
90.20
98.20
881,400
12
Tuesday, January 19, 1999
86.75
77.05
81.90
363,000
13
Tuesday, January 26, 1999
90.10
83.25
86.68
365,200
14
Tuesday, February 02, 1999
92.90
80.00
86.45
345,400
15
Tuesday, February 09, 1999
77.00
73.50
75.25
383,600
16
Tuesday, February 16, 1999
108.15
79.40
93.78
1,087,500
17
Tuesday, February 23, 1999
116.80
102.00
109.40
1,493,400
18
Tuesday, March 02, 1999
106.00
98.00
102.00
581,900
19
Tuesday, March 09, 1999
108.90
100.60
104.75
764,500
20
Tuesday, March 16, 1999
104.20
93.00
98.60
635,100
21
Tuesday, March 23, 1999
114.15
102.00
108.08
1,308,000
42
7.1.5
Week
No.
Date
Weekly
High
Weekly
Low
Average
Weekly
Volume
22
Tuesday, March 30, 1999
133.45
110.20
121.83
2,361,100
23
Tuesday, April 06, 1999
142.95
119.50
131.23
1,486,000
24
Tuesday, April 13, 1999
112.80
104.25
108.53
1,150,100
25
Tuesday, April 20, 1999
106.40
97.90
102.15
1,079,300
26
Tuesday, April 27, 1999
104.85
91.10
97.98
537,200
Average
104.30
The Acquirers have not acquired any Equity Shares in the Target Company during the 12
month period prior to April 28, 1999 nor subsequently up to the date of the Third PA including
by way of allotment in a public or rights or preferential issue, except as follows:
Acquisition of 10,808,083 Equity Shares constituting 44.152% of the equity share capital
of RSIL by RI Holdings (previously known as Bausch & Lomb Indian Holdings Inc.) on
March 24, 2000 from Bausch & Lomb South Asia Inc. pursuant to inter-se transfer of
equity shares among the Bausch & Lomb Group companies as described under paragraph
3.1.2 above.
Indirect acquisition of the aforesaid 10,808,083 Equity Shares constituting 44.152% of the
equity share capital of RSIL by Luxottica consequent to the overseas merger of Bausch &
Lomb South Asia Holdings Inc. with RayBan Holdings Inc. on October 27, 2000 as described
under paragraph 3.1.2 above.
In addition, the Acquirers have not acquired any Equity Shares of the Target Company from the
date of the Third PA up to the date of this Letter of Offer.
7.1.6
No price was attributed to the Equity Shares of RSIL in the Purchase Agreement for acquisition
of the Eyewear Business of B&L Inc. by Luxottica.
7.1.7
The Offer Price of Rs. 104.30 per Equity Share is justified in terms of Regulation 20 of the
Regulations as follows:
7.1.7.1 Except as disclosed under paragraph 7.1.4 above, the Acquirers have not acquired any
Equity Shares in the Target Company during the 12 month period prior to April 28, 1999
nor subsequently up to the date of the Third PA including by way of allotment in a public or
rights or preferential issue.
7.1.7.2 No price was attributed to the Equity Shares of RSIL in the Purchase Agreement for
acquisition of the Eyewear Business by Luxottica.
7.1.7.3 The average of the weekly high and low of the closing prices of the Equity Shares of RSIL,
during the 26 weeks period prior to April 28, 1999 on the stock exchange where the Equity
Shares of the Target Company are most frequently traded, i.e. the NSE is Rs.104.30 as
tabulated under paragraph 7.1.3 above.
7.1.7.4 Other parameters with reference to the Target Company for the year ending March 31,
1999 are as follows:
1.
Return on Net Worth:
20.88%
2.
Book Value per Share:
Rs. 26.64
3.
Earnings Per Share:
Rs. 5.56
4.
Price to Earnings (PE) Multiple based on Offer Price:
18.8
Notes:
1.
Please refer to the section titled "Definitions" for the definition of accounting ratios.
7.1.8
Lodha &Co., Chartered Accountants have conducted valuation of equity shares of the Target
Company in terms of the provisions of Regulation 20(4) and 20(5) of the Regulations and have
arrived at the same value per Equity Share in their valuation report dated April 5, 2007 as the
Offer Price of Rs. 104.30 per Equity Share as justified above.
7.1.9
For Equity Shares in respect of which calls are in arrears/ unpaid, the offer price shall be calculated
as the difference between the aforesaid Offer Price and the amount due towards calls-in-arrears
or calls remaining unpaid together with interest, if any, payable on the amount called up but
remaining unpaid.
43
7.2
7.1.10
If the Acquirers acquire Equity Shares after the date of Third PA up to 7 (seven) working days
prior to the closing of the Offer in accordance with the Regulations at a price higher than the
Offer Price, then the highest price paid for such acquisition shall be payable for all the valid
acceptances received under the Offer. Such acquisition of shares shall be in compliance with the
continuous listing requirements of the Target Company.
7.1.11
The Manager to the Offer does not hold any Equity Shares of the Target Company as of the
date hereof.
Financial Arrangements
7.2.1
Based on the Target Company's estimate of the Equity Shares held by the Continuing
Shareholders as at February 1, 2007, and assuming full acceptance by the Continuing
Shareholders, the total amount payable to the Continuing Shareholders, including the interest
payable to such shareholders calculated at the rate of 10% per annum from August 27, 1999 till
May 29, 2007, i.e. the scheduled date of payment of consideration, in accordance with the
Supreme Court Order, is Rs. 2,037.43 lacs (the interest amount is subject to change depending
upon the actual date of payment). The maximum purchase consideration payable by RI Holdings
in the event of full acceptance of the Offer would be Rs. 5,996.73 lacs (which includes the
interest amount payable to the Continuing Shareholders and consideration payable based on
the Offer Price) as indicated in the table below:
Size of Offer
No. of Equity Shares
4,895,900
Equity Shares held by Continuing
(1)
Shareholders as on Feb. 1, 2007
No. of Equity Shares
1,099,826
Offer Price
Rs. Per Equity Share
104.30
Offer Price for Continuing Shareholders
Rs. Per Equity Share
185.25
Total consideration payable to Continuing
(2)
Shareholders
Rs. Lacs
2,037.43
Total consideration payable to other
(3)
shareholders
Rs. Lacs
3,959.31
Rs. Lacs
5,996.73
Total consideration for the Offer
(1)
(2)
(3)
(3)
Based on the Target Company's estimate of the Equity Shares held by the Continuing Shareholders as at February
1, 2007.
Assuming full acceptance by the Continuing Shareholders
Assuming full acceptance of the Offer.
7.2.2
Pursuant to the escrow agreement dated October 29, 2003 and an amendment to the escrow
agreement dated January 23, 2007 (together referred to as the "Escrow Agreement"), the Acquirers
made a cash deposit of US$ 5,000,000 with Citibank N.A., a banking company having its office
at Citigroup Centre, Canada Square, Canary Wharf, London, E 14 5LB (hereinafter referred to as
the "Citibank, London"), which is in excess of the minimum amount stipulated in the Regulations.
As per the Escrow Agreement, Citibank, London would transfer this cash deposit to the Escrow
Bank upon the request of Manager to the Offer.
7.2.3
Subsequent to the receipt of the approval from the RBI vide letter dated March 3, 2007 and in
accordance with Regulation 28 of the Regulations, the Acquirers established an escrow account
under the name and title of "Luxottica/Rayban - Open Offer Escrow" ("Escrow Account") in favour
of the Manager to the Offer for an amount of Rs. 2,156.50 lacs, being not less than 25% of the
maximum purchase consideration payable under the Offer ("Escrow Amount"), with the Escrow
Bank, which was remitted out of the bank account maintained with Citibank, London. In accordance
with the terms of the Escrow Agreement, the Acquirers have authorised the Manager to the Offer
to realize the value of the Escrow Account as required under the Regulations.
7.2.4
Luxottica has given an undertaking to RI Holdings and the Manager to the Offer to provide RI
Holdings with the necessary funds for payment of the purchase consideration to the shareholders
of RSIL, whose Equity Shares are acquired pursuant to this Offer. Further, Luxottica's Bank in
Italy, UniCredit Banca d'Impresa S.p.A., has confirmed that the Acquirers have sufficient means
to allow them to fulfill their payment obligations in full under the Offer.
7.2.5
Based on the above, the Manager to the Offer is satisfied that the Acquirers have the financial
resources to implement the Offer in accordance with the Regulations.
44
8.
9.
STATUTORY APPROVALS
8.1
The Reserve Bank of India (hereinafter referred to as the "RBI"), vide letter dated March 3, 2007, has given
its no objection for effecting the transfer of the Equity Shares purchased from the shareholders of the Target
Company by way of the Offer as per the instructions contained in A.P. (DIR Series) Circular No.16 dated
October 4, 2004 through the authorized dealer. In addition, the RBI, vide letter dated March 3, 2007, has
given its permission for opening of escrow account, and opening and operation of a special account for
purposes of the Offer.
8.2
To the best of the knowledge of the Acquirers, no other statutory or regulatory approval is required for it to
proceed with this Offer. If any other approvals are required subsequently, the Offer would be subject to such
additional approvals. The Acquirers will have a right not to proceed with the Offer in the event the approvals
indicated above are refused in terms of Regulation 27(b) of the Regulations. The Acquirers shall complete all
procedures relating to the Offer within a period of 15 days from the date of closing of the Offer. In case of a
delay in receipt of the aforementioned approvals, SEBI has the power to grant an extension of time to the
Acquirers for payment of consideration to the tendering shareholders, subject to the Acquirers agreeing to
pay interest for the delayed period as directed by SEBI in terms of Regulation 22(12) of the Regulations.
Further, if a delay occurs on account of wilful default or neglect or inaction or non-action by the Acquirers in
obtaining the requisite approvals, Regulation 22(13) of the Regulations will become applicable. As provided
under Regulation 27 of the Regulations, the Acquirers will not proceed with the Offer in the event the statutory
approval indicated above is refused.
8.3
The Acquirers do not require any approvals from their financial institutions or banks for the Offer.
INTEREST PAYMENT AND CONTINUING SHAREHOLDERS
9.1
As per paragraph 3.2 above, the Offer Price of Rs. 185.25 per Equity Share (comprising of the Offer Price of
Rs. 104.30 per Equity Share and Interest of Rs. 80.95 per Equity Share) is payable to Continuing
Shareholders, whose Equity Shares are tendered and accepted under the Offer. The interest of Rs. 80.95
per Equity Share, calculated at the rate of 10% per annum from August 27, 1999 till May 29, 2007, i.e. the
scheduled date of payment of consideration, in accordance with the Supreme Court Order, is payable in
cash (the interest amount is subject to change depending upon the actual date of payment). Such interest
is payable only to Continuing Shareholders, i.e., those persons who were shareholders of the Target
Company as on August 27, 1999 and continue to be shareholders of the Target Company till the date
of the closing of the Offer (such shareholders are referred to as the "Continuing Shareholders"), and
will be calculated on the payment consideration due on such of those shares accepted under this
offer which are determined as forming part of their holdings as on August 27, 1999.
Equity Shares which are continuing in nature are only the number of Equity Shares held for a continuing
period from August 27, 1999 upto the date of closing of the Offer and which are tendered and accepted
under the Offer (e.g., A shareholder who held 200 Equity Shares on August 27, 1999 and on September
12, 2003 sold 50 Equity Shares will receive interest as a Continuing Shareholder only for 150 Equity
Shares provided that such Equity Shares are tendered and accepted under the Offer; a shareholder
who held 200 Equity Shares on August 27, 1999 and on September 12, 2003 purchased 50 Equity
Shares will receive interest as a Continuing Shareholder only for 200 Equity Shares provided that
such Equity Shares are tendered and accepted under the Offer).
9.2
As described above, only Continuing Shareholders whose Equity Shares (which are determined as forming
part of their holdings as on August 27, 1999) are tendered and accepted in the Offer will be eligible for
interest under the Offer. Such interest will be payable only on those Equity Shares which are held by the
Continuing Shareholders from August 27, 1999 upto the date of closing of the Offer. Such eligibility for
interest will be determined on basis of the Register of Members/ Register of Beneficial Owners as maintained
by the current Registrars and Share Transfer Agents to the Company M/s MAS Services Limited and as
provided by the Depositories i.e. NSDL and CDSL in the following manner:
Register of Members of the Target Company as on August 27, 1999.
Details of all the transfers / transmissions/deletions/transpositions that have taken place since August
27,1999 till date of closing of the offer
Beneficiary position data as downloaded by the Registrar & Share Transfer Agent from time to time
since August 27, 1999 till date of closing of the offer
Details of changes, if any, of name of the continuing shareholder
In the case of shares held in physical form, the endorsement(s) on the face or back of the relevant
share certificate(s)
Register of Members and Register of Beneficiary Owners.
45
9.3
Details of dematerialization and rematerialisation requests that have been confirmed to the depositories
on the date of closing of the Offer, i.e., Monday, May 14, 2007.
Details of the changes , if any, on account of consolidation of holdings in one or more folios and split
of holdings
Furthermore those shareholders who deems to be eligible for interest should also submit the following
documents to enable the Registrar to the Offer to determine their eligibility for interest under the Offer, alongwith
and within the same term of, other documents mentioned under paragraphs 10 and 11 of this Letter of Offer
including the Form of Acceptance:
Continuing Shareholders holding Equity Shares in physical form will be eligible for interest if no transfers
have been registered in the "Memorandum of transfers" in the share certificate submitted in original
after August 27, 1999 provided as per paragraph 11.1 below.
Continuing Shareholders holding Equity Shares in demat form must submit:
(i)
Details of folio(s) in which Equity Shares were held in physical form OR a photocopy of share
certificate, if available
(ii)
Transaction/ holding statement obtained from Depository Participant ("DP") since the date of
dematerialization /purchase till the date of submission of the Form of Acceptance along with the
delivery instruction for transferring shares to the demat escrow account opened for this open
offer.
Change of Name: Those Continuing Shareholders who have changed their names at any time between
August 27, 1999 till the date of closing of the Offer, are advised to submit the evidence of change of
name, to enable the Registrar to the Offer to determine the eligibility of such shareholders to receive
interest.
Transmission: Those Continuing Shareholders who have acquired title to the Equity Shares either by
transmission, due to death of the sole / any of the joint holders, or through operation of law are
advised to submit documentary evidence in support of such transmission including the details of the
original holder's name, number of Equity Shares held at the time of transmission, the date of application
for transmission, and in case Equity Shares held in physical form, the folio number and in case of
beneficial owners, the DP name, DP ID, beneficiary account number, to enable the Registrar to the
Offer to determine the eligibility of such shareholders to receive interest.
Transposition: Those Continuing Shareholders who are joint holders of Equity Shares and have
transposed their names i.e. changed the order in which their names are recorded in the share
certificates or in the record maintained by the depository are advised to submit documentary evidence
in support of such transportation including the details of the original holder's name, number of Equity
Shares held at the time of transportation, the date of application for transportation and the folio
number to enable the Registrar to the Offer to determine the eligibility of such shareholders to receive
interest.
In the event the Acquirers do not receive the above mentioned documentation from shareholders who
deem to be eligible for interests, Acquirers are entitled to rely on the list of Continuing Shareholders
determined on basis of the register of members/ shareholders register/ beneficial records as provided by
the Depository(s) i.e. NSDL and CDSL described in paragraph 9.2 above.
Furthermore, the shareholders who are not registered on the register of members/ shareholders register/
beneficial records as provided by the Depository(s) i.e. NSDL and CDSL ("Unregistered Shareholders") and
held shares in physical form who deem to be eligible for interests, are required to provide the above mentioned
documentation in order to be eligible for interests, failing to provide such documentation, they will not be
considered Continuing Shareholders for the purpose of the Offer.
9.4
The Acquirers have appointed BSR & Co., Chartered Accountants having their office at KPMG House Kamala
Mills Compound, 448, Senapati Bapat Marg, Lower Parel, Mumbai, India, to review the process of determining
the eligibility of shareholders as per the methodology outlined above. Continuing Shareholders of RSIL, who
intend to avail interest amounts payable under the Offer should tender their Equity Shares, along with the
relevant documents mentioned in paragraph 9.3 of the Letter of Offer, on or before the date of closing of
the Offer (i.e., Monday, May 14, 2007).
9.5
In the event the Equity Shares tendered in the Offer by the shareholders of RSIL are more than the Equity
Shares to be acquired under the Offer,
46
10.
the acquisition of Equity Shares from each shareholder will be as per provisions of Regulation 21(6)
of the Regulations on a proportionate basis, irrespective of whether the Equity Shares are held in
physical or dematerialised form.
Equity Shares validly tendered by the Continuing Shareholders shall be treated at par with the Equity
Shares validly tendered by the other shareholders of RSIL for the purposes of acceptance.
TERMS AND CONDITIONS OF THE OFFER
10.1
The Letter of Offer together with the Form of Acceptance and Form of Withdrawal will be mailed to the
shareholders of RSIL, whose names appear on the register of members of RSIL and to the beneficial owners
of the Equity Shares of RSIL whose names appear on the beneficial records of the respective depositories at
the close of business on the Specified Date, i.e., Thursday, February 1, 2007.
10.2
All shareholders of RSIL, whose names appear in the register of members of RSIL as of the Specified Date,
i.e., Thursday, February 1, 2007 and also persons who acquire any Equity Shares of RSIL at any time prior
to the closing of the Offer, whether or not they are registered shareholders, are eligible to participate in the
Offer anytime before the closing of the Offer.
10.3
Shareholders of RSIL, who intend avail of this Offer should tender their shares on or before the date of
closing of the Offer (i.e., Monday, May 14, 2007). All Equity Shares validly tendered and accepted under
the Offer, will be acquired by the RI Holdings free of liens and encumbrances, subject to the terms and
conditions set out in this Letter of Offer. All necessary requirements for the valid transfer of the Equity Shares
to RI Holdings will be pre-conditions for acceptance of the tendered Equity Shares. RSIL does not have any
Equity Shares that are subject to lock-in.
10.4
The acceptance of the Offer made by Acquirers is entirely at the discretion of the shareholders of RSIL and
each shareholder of RSIL to whom this Offer is being made, is free to offer his shareholding in RSIL, in
whole or in part while accepting the Offer.
10.5
Applications in respect of Equity Shares that are the subject matter of litigation wherein the
shareholder(s) may be precluded from transferring the Equity Shares during the pendency of the said
litigation are liable to be rejected in case directions/ orders regarding these Equity Shares are not
received together with the Equity Shares tendered under the Offer. The Letter of Offer in some of
these cases, wherever possible, would be forwarded to the concerned statutory authorities for further
action at their end.
10.6
Accidental omission to dispatch this Letter of Offer or any further communication to any person to whom this
Letter of Offer is or should be made or the non-receipt of this Letter of Offer by any such person shall not
invalidate the Offer in any way.
10.7
The instructions, authorisations and provisions contained in the Form of Acceptance and Form of Withdrawal
constitute an integral part of the terms of this Offer.
10.8
Barring unforeseen circumstances and factors beyond their control, the Acquirers intend to complete all
formalities pertaining to the purchase of the Equity Shares, including dispatch payment of consideration to
the shareholders who have accepted the Offer, by Tuesday, May 29, 2007.
10.9
The acceptance of the Offer made by the Acquirers is entirely at the discretion of the shareholders of the
Target Company. The Acquirers will not be responsible in any manner for any loss of equity share certificate(s)
and offer acceptance documents during transit and the shareholders of the Target Company are advised to
adequately safeguard their interest in this regard.
10.10
As already mentioned under paragraph 3.2.4 of this Letter of Offer, the Offer is not subject to any minimum
level of acceptance from the shareholders. This Offer is being made by the Acquirers to the shareholders of
RSIL to acquire up to 4,895,900 Equity Shares, constituting 20.00% of the equity share capital of the Target
Company. RI Holdings will proceed with the Offer even if it is unable to obtain acceptance to the full extent
of the Equity Shares of RSIL for which this Offer is made.
10.11
Equity Shares that are subject to any charge, lien or encumbrance are liable to be rejected.
10.12
The Acquirers can revise the Offer Price or the Offer size upwards up to 7 (seven) working days prior to the
date of the closing of the Offer (i.e. Thursday, May 3, 2007). If there is any upward revision in the Offer Price
or Offer size before the last date of revision i.e. Thursday, May 3, 2007 or if the Offer is withdrawn, the same
would be communicated by way of a public announcement in the same newspapers where the Public
Announcements had appeared. The Acquirers would pay such revised Offer Price for all the Equity Shares
validly tendered any time during the Offer and accepted under the Offer.
47
11.
10.13
Shareholders of the Target Company who have sent their Equity Shares for dematerialization must ensure
that the process of getting such Equity Shares dematerialized is completed well in advance, so that the
credit to the special depository account of the Registrar takes place on or before the closing of the Offer,
i.e. Monday, May 14, 2007, otherwise the application will be rejected.
10.14
If the aggregate of the valid responses to the Offer exceeds the Offer size of 4,895,900 Equity Shares of the
Target Company (representing 20.00% of the equity share capital of the Target Company), then the Acquirers
shall accept the valid applications received on a proportionate basis in accordance with Regulation 21(6) of
the Regulations. It may be noted that Equity Shares validly tendered by the Continuing Shareholders shall be
treated at par with the Equity Shares validly tendered by the other shareholders of RSIL for purposes of
acceptance.
10.15
The instructions, authorisations and provisions contained in the Form of Acceptance constitute an integral
part of the terms of the Offer.
PROCEDURE FOR ACCEPTANCE AND SETTLEMENT OF THE OFFER
11.1
Shareholders of RSIL, who wish to avail this Offer should forward the under mentioned documents by hand
delivery or by registered post to the Registrar to the Offer at the collection centers given below so as to
reach the Registrar on or before the date of closing of the Offer (i.e., Monday, May 14, 2007) on their
working days during business hours indicated below. In case of demat shares, the Registrar is not bound to
accept Equity Shares which have not yet been credited to the Depository Escrow Account as on the date of
closing of the Offer, i.e. Monday, May 14, 2007. Please refer to paragraph 9 above for details of the
additional documents to be submitted by the Continuing Shareholders to enable the Registrar to the
Offer to determine their eligibility to receive interest.
For Equity Share held in physical form
Form of Acceptance duly completed and signed in accordance with the instructions contained therein,
by sole/ first shareholders whose names appear on the share certificates (in case of joint holdings) in
the same order in which their names appear in the register of members.
Original share certificate(s)
Valid share transfer deed(s) duly signed as transferors by all shareholders (in case of joint holdings) in
the same order and as per specimen signatures lodged with RSIL and duly witnessed at the appropriate
place. It is preferred that the transferor's signature(s) is attested by a Notary or Bank Manager or
Member of Stock Exchange under their seal of office and membership number. The transfer deed
should be left blank, excepting the signatures as mentioned above.
Documents mentioned in paragraph 11.6 for resident shareholders.
Documents mentioned in paragraph 11.5 and 11.6 for NRI/ OCB/ FII shareholders.
For Equity Share held in demat form
Form of Acceptance duly completed and signed in accordance with the instructions contained therein,
by sole/ all shareholders whose names (in case of joint holdings) in the same order in which their
names appear in their beneficiary account. The Form of Acceptance has to be tendered by the beneficial
holder of Equity Shares only.
A photocopy of the delivery instruction slip duly acknowledged by the Depository Participant (DP) filled
as per the instructions given hereunder:
-
The beneficial owners who hold Equity Shares in demat form are required to execute a trade by
tendering the delivery instruction for debiting their beneficiary account with the concerned DP and
crediting the Depository Escrow Account (as defined below). The credit for the delivered Equity
Shares should be received in the Depository Escrow Account on or before 4:00 p.m. as on the
date of closing of the Offer, i.e. Monday, May 14, 2007.
-
The delivery instructions to be given to the DP should be in "Off-Market" mode only. For each
delivery instruction the beneficial owner should submit a separate Form of Acceptance.
The Registrar to the Offer has opened a special depository account with the Central Depository Services
of India Limited ("CDSL"), named "KCPL Escrow A/c RSIL Open Offer". ("Depository Escrow Account)".
Beneficial owners and shareholders holding shares in the dematerialised form, will be required to send
their Form of Acceptance to the Registrar to the Offer either by hand delivery during normal business
hours, as specified in point 11.2 below, or by Registered Post on or before the closing of the Offer, i.e.,
Monday, May 14, 2007, along with a photocopy of the delivery instructions in "Off-market" mode or
counterfoil of the delivery instruction in "Off-market" mode, duly acknowledged by the Depository
Participant ("DP"), in favour of Depository Escrow Account (as mentioned above) filled in as per the
instructions given below:
48
Depository:
Central Depository Services of India Limited (CDSL)
DP Name:
CIL Securities Limited
Client ID Number:
1201350000051441
DP ID Number:
13500
For Equity Shares which are tendered in demat form, the bank account as obtained from the beneficiary
position provided by the Depository will be considered and the warrants/ bank drafts will be issued with the
said bank particulars.
Shareholders of RSIL having their beneficiary account in NSDL have to use inter-depository delivery instruction
slip for the purpose of crediting their equity shares in favour of the special depository account with CDSL.
11.2
Documents mentioned in paragraph 11.6 for resident shareholders
Documents mentioned in paragraph 11.5 and 11.6 for NRI/ OCB/ FII shareholders
In case of non-receipt of the aforesaid documents, but receipt of the Equity Shares in the Depository
Escrow Account, the Acquirers may deem the Offer to have been accepted by the shareholder.
The collection centres of the Registrar to the Offer, for the purpose of the Offer are as follows :
Name & Address of the
collection centre
Tel. No.
Fax No.
Contact Person
Mode of delivery
16-22, Bake House,
Maharashtra Chamber of
Commerce Lane
Opp. MSC Bank, KalaGhoda,
Fort Mumbai - 400 023
+91 (0)22
56382666
+91 (0)22
56331135
Ms. Shirke
Hand Delivery
49, Jatin Das Road,
Kolkatta - 700 029
+91 (0)33
24644891
+91 (0)33
24644866
Mr. Kundu /
Mr. Debnath
Hand Delivery
105-108, Arunachal Building,
19, Barakhamba Road,
Connaught Place,
New Delhi - 110 001
+91 (0)11
23324401
+91 (0)11
23324621
Mr. George
Hand Delivery
201-203, SHAIL,
Opp. Madhusudan House,
Near Navarangpura Tele
exchange, Off C.G. Road,
Ahmedabad - 380 006
+91 (0)79
26420422
+91 (0)79
26565551
Mr. Edward
Hand Delivery
TKN Complex, No. 51/2,
Vanivilas Road,
Opp. National College,
Basavangudi,
Bangalore - 560 004
+91 (0)80
26621184
+91 (0)80
26621169
Mr. Kishore
Hand Delivery
8-2-596, Road No.10,
Banjara Hills,
Hyderabad - 500 034.
+91 (0)40
23312454
+91 (0)40
23311968
Ms. Anis
Hand Delivery
Plot No. 17 to 24,
Vithalrao Nagar, Madhapur,
Hyderabad - 500 081
+91 (0)40
23420818
+91 (0)40
23420814
Ms. Sareen
Hand Delivery /
Registered post
Business Hours
: Monday to Saturday: 10.00 a.m. to 4.00 p.m.
Holidays
: Sundays and Bank Holidays
Applicants may send their documents only by registered post, at their own risk, if not hand delivered at the
designated collection centers, to the Registrar to the Offer at the addresses as mentioned hereinabove during
business hours indicated above other than on holidays.
49
Please note that the share certificates/ delivery instruction slip and other documents in relation to the
acceptance of the Offer should NOT be sent to the Acquirers or the Target Company or the Manager
to the Offer. Neither the Acquirers nor the Target Company nor the Manager to the Offer will be
responsible for any loss of such documents.
11.3
All shareholders registered or unregistered, who own the Equity Shares at any time prior to the closing of
the Offer are eligible to participate in the Offer.
Unregistered Shareholders can send their application in writing to the Registrar to the Offer. They are
required to submit, besides the documents as mentioned in paragraph 11.1 above, other documents to
prove their title to the Equity Shares offered for acceptance, such as:
a copy of the contract note issued by the broker through whom they acquired their Equity Shares on or
before the close of the Offer, i.e. Monday, May 14, 2007
transfer deed(s) executed by the registered holders of the Equity Shares. No indemnity is required from
the unregistered owners. Notwithstanding that the signature(s) of the transferor(s) have been witnessed
as aforesaid, if the signature(s) of the transferor(s) differs from the specimen signature(s) recorded with
RSIL or are not in the same order, such shares are liable to be rejected under this Offer even if the Offer
has been accepted by a bona fide owner of such Equity Shares.
Unregistered shareholders holding Equity Shares in physical form who claim eligibility for interest, should
refer to paragraph 9.3.
11.4
In case of non-receipt of the Letter of Offer, the shareholders may (i) download the same from the SEBI
website, (ii) obtain a copy of the same by writing to the Registrar to the Offer, or (iii) make an application to
the Registrar to the Offer, on a plain paper stating the name, address, number of equity shares held, distinctive
numbers, folio number, number of Equity Shares offered, along with documents as mentioned above, so as
to reach the Registrar to the Offer on or before the closing of the Offer, i.e., no later than Monday, May 14,
2007 or in case of beneficial owners, send the application in writing to the Registrar to the Offer, on a plain
paper stating the name, address, number of equity shares held, number of equity shares offered, DP name,
DP ID, beneficiary account number and a photocopy of the delivery instruction in "Off-market" mode or
counterfoil of the delivery instruction in "Off-market" mode, duly acknowledged by the DP, in favour of the
Depository Escrow Account, so as to reach the Registrar to the Offer, on or before the closing of the Offer,
i.e., no later than Monday, May 14, 2007. No indemnity is required in this regard. Shareholders who have
lodged their Equity Shares for transfer with RSIL must also send the acknowledgement, if any, received from
RSIL towards such lodging of Equity Shares.
11.5
While tendering shares under the Offer, NRI / OCB /Non-domestic companies / Other persons who are
not resident in India will be required to submit the previous RBI approvals (specific or general) that
they would have obtained for acquiring shares of RSIL, and a No Objection Certificate/ Tax Clearance
Certificate from the Income-Tax authorities under the Income-tax Act, 1961, indicating the rate at which
the tax is to be deducted by the Acquirers before remitting the consideration. In case such RBI
approvals are not submitted, the Acquirers reserve the right to reject the tendered Equity Shares. In
case the aforesaid No Objection Certificate/ Tax Clearance Certificate is not submitted, the Acquirers
will deduct tax at the currently prevailing rate as advised by their tax advisors on the entire
consideration amount (offer price as well as interest thereon) payable to such NRI / OCB /Non-domestic
companies / Other persons who are not resident in India.
11.6
The shareholders should also provide all relevant documents, which are necessary to ensure transferability
of the Equity Shares in respect of which the application is being sent. Such documents may include, but are
not limited to:
11.7
duly attested death certificate and succession certificate/ probate/ letter of administration (in case of
single shareholder) if the original shareholder is deceased;
duly attested Power of Attorney if any person apart from the shareholder has signed the application
form and/or transfer deed(s);
no objection certificates from the chargeholder/ lender, if the shares in respect of which the application
is sent, are under any charge, lien or encumbrance;
in case of companies, the necessary corporate authorisation (including Board Resolutions);
any other relevant documentation.
Payment of consideration will be made by crossed account payee cheques/ demand drafts and sent by
registered post and / or speed post in case of consideration amount exceeding Rs. 1,500/- (under Certificate
of Posting otherwise) to those shareholders whose share certificates and other documents are found in
50
order and accepted by the Acquirer. All cheques / demand drafts will be drawn in the name of the first
holder, in case of joint registered holders.
In case of the extension of time for payment of consideration and payment of interest, please refer to
paragraph 8.2 hereinabove.
11.8
In case of physical shares, the Registrar to the Offer will hold in trust the share certificates, Form of
Acceptance duly filled in and the transfer deed(s) on behalf of shareholders of RSIL who have accepted
the Offer, till the cheques/ drafts for the consideration and/ or the share certificates are posted.
11.9
In case of demat shares, the Equity Shares would reside in the Depository Escrow Account as mentioned
above. The Registrar to the Offer will debit the Depository Escrow Account to the extent of payment of
consideration made by the Acquirers and give instructions for credit to the beneficial account of the Acquirers.
11.10
Barring unforeseen circumstances and factors beyond their control, the Acquirers intend to complete all
formalities pertaining to the purchase of the Equity Shares, including dispatch payment of consideration to
the shareholders who have accepted the Offer, by Tuesday, May 29, 2007.
11.11
In case of physical shares, to the extent the Equity Shares are not accepted under the Offer, the rejected
share certificates, transfer deeds and other documents, if any, will be returned by registered post by the
Registrar to the Offer to the shareholders /unregistered owners. For the physical shares accepted under the
Offer, the Registrar shall take action for transferring the Equity Shares to Acquirer after the consideration
cheques are released to the shareholders concerned.
11.12
The Equity Shares held in demat form, to the extent not accepted under the Offer, will be credited back to
the same depository account from where the Equity Shares were tendered into the Depository Escrow Account,
at the sole risk of the beneficial owner. An intimation to that effect will be sent to the beneficial owner by
ordinary post.
11.13
Pursuant to Regulation 22(5A) of the Regulations, shareholders desirous of withdrawing their acceptances
tendered by them in the Offer, may do so up to three working days prior to the date of closing of the Offer.
The withdrawal option can be exercised by submitting the document as per the instructions below, so as to
reach the Registrar to the Offer at any of the collection centres mentioned above as per the mode of delivery
indicated therein on or before Wednesday, May 9, 2007
The withdrawal option can be exercised by submitting the Form of Withdrawal, as enclosed herewith.
The shareholders are advised to ensure that the Form of Withdrawal should reach the Registrar to the
Offer at any of the collection centres mentioned in the Letter of Offer or above as per the mode of
delivery indicated therein on or before the last date of withdrawal. i.e. Wednesday, May 9, 2007.
Shareholders should enclose the following:
For Equity Shares held in physical form
(i)
(ii)
Registered shareholders should enclose:
-
Duly signed and completed Form of Withdrawal.
-
Copy of the Form of Acceptance/ Plain paper application submitted and the Acknowledgement
slip.
-
In case of partial withdrawal, Valid Share Transfer form(s) duly signed as transferors by all
registered shareholders (in case of joint holdings) in the same order and as per specimen
signatures registered with RSIL and duly witnessed at the appropriate place.
Unregistered owners should enclose:
-
Duly signed and completed Form of Withdrawal.
-
Duly signed and completed Form of Withdrawal.
-
Copy of the Form of Acceptance/ Plain paper application submitted and the Acknowledgement
slip.
For Equity Shares held in demat form:
Beneficial owners should enclose:
-
Duly signed and completed Form of Withdrawal.
-
Copy of the Form of Acceptance/ Plain paper application submitted and the Acknowledgement
slip.
-
Photocopy of the delivery instruction slip in "Off-market" mode or counterfoil of the delivery
instruction slip in "Offmarket" mode, duly acknowledged by the DP.
51
12.
The withdrawal of Equity Shares will be available only for the share certificates/ Equity Shares that
have been received by the Registrar to the Offer or credited to the Depository Escrow Account.
The intimation of returned Equity Shares to the shareholders will be sent at the address as per the
records of RSIL/ Depository as the case may be.
The Form of Withdrawal alongwith enclosure should be sent to the Registrar to the Offer only.
In case of partial withdrawal of Equity Shares tendered in physical form, if the original share certificates
are required to be split, the same will be returned on receipt of share certificates from RSIL. The facility
of partial withdrawal is available only to Registered shareholders.
Shareholders holding Equity Shares in dematerialised form are requested to issue the necessary standing
instruction for receipt of the credit in their DP account.
In case of non-receipt of the Form of Withdrawal, the withdrawal option can be exercised by making an
application on plain paper along with the following details:
-
In case of physical shares: name, address, Distinctive Nos., Certificate Numbers., Folio Number,
number of Equity Shares tendered.
-
In case of demateralised shares: name, address, number of Equity Shares tendered, DP name, DP
ID, beneficiary account number and a photocopy of delivery instructions slip in "off market" mode
or counterfoil of the delivery instruction slip in "off market" mode, duly acknowledged by the DP, in
favour of the Depository Escrow Account.
TAX DEDUCTED AT SOURCE ("TDS")
12.1
TDS from the Offer Price
12.1.1
As per the provisions of Section 195(1) of the Income Tax Act, any person responsible for
paying to a non-resident any sum chargeable to tax is required to deduct tax at source (including
surcharge and education cess as applicable). Since the consideration payable under the Offer
would be chargeable to capital gains under section 45 of the Income-tax Act or as business
profits as the case may be, Acquirers will need to deduct tax at source (including surcharge
and education cess) at the applicable tax rate on the gross consideration payable to the following
categories of shareholders, as given below:
Non-resident Indians (NRIs): The Acquirers will deduct tax at source at the rate of 30% on
the Offer Price in case of short-term capital gains or business profits, and at the rate of
20% on the Offer Price in case of long-term capital gains. In the event that the aforesaid
amount of gross proceeds exceeds Rs.10,00,000/- the aforesaid rate will be increased by a
surcharge of 10% of the tax sum. The amount so arrived at will be further increased by an
education cess of 2% of the aggregate of the tax and surcharge to be deducted in all
cases.
Overseas Corporate Bodies (OCB) / Non-domestic companies: The Acquirers will deduct
tax at source at the rate of 40% on the Offer Price in the case of short-term capital gains
or business profits, and at the rate of 20% on the Offer Price in the case of long-term
capital gains. In the event that the aforesaid amount of gross proceeds exceeds
Rs.1,00,00,000/- the aforesaid rate will be increased by a surcharge of 2.50% of the tax
sum. The amount so arrived at will be further increased by an education cess of 3% of the
aggregate of the tax and surcharge to be deducted in all cases.
Other persons who are not resident in India ("Other Persons"): The Acquirers will deduct
tax at source at the rate of 30% on the Offer Price in the case of short-term capital gains
or business profits, and at the rate of 20% on the Offer Price in the case of long-term
capital gains In the event that the aforesaid amount exceeds Rs.1,00,00,000/- the aforesaid
rate will be increased by a surcharge of 10% of the sum. The amount so arrived at will be
further increased by an education cess of 3% of the aggregate of the tax and surcharge
to be deducted in all cases.
NRI / OCB / Non-domestic Companies / Other Persons should certify in the Form of Acceptance
whether the Equity Shares are held by them on investment / capital account or on trade account
and whether the investment are held as long-term capital asset or short-term capital asset. If the
NRI / OCB /Non-domestic companies / Other Persons fail to certify in the Form, then the Acquirer
will deduct tax at the rate applicable to business income.
For the purpose of determining as to whether the capital gains are short-term or long-term in
52
12.1.2
12.1.3
12.2
nature, the Acquirers shall take certification from the shareholders. In the case of any ambiguity,
incomplete or conflicting information or the information not being provided to the Acquirers, the
capital gain shall be assumed to be short-term in nature.
Foreign Institutional Investors ("FII"): As per the provisions of Section 196D(2) of the Income-tax
Act, 1961 ('the Act'), no deduction of tax at source shall be made from any income by way of
capital gains arising from the transfer of shares, payable to a FII.
FII should certify in the Form of Acceptance whether the Equity Shares are held by them on
investment / capital account or on trade account.
If the Equity Shares are held on trade account or if the FII fails to certify in the Form that equity
shares are held by it on investment / capital account, then the Acquirer will deduct tax at source
from the gross Offer Price at the currently prevailing rate of 41.20% in case of a non-resident
corporate FII shareholder where the payment to be made does not exceed Rs. 1,00,00,000 and
at the rate of 42.23% where the payment to be made exceeds Rs. 1,00,00,000/-; 33.99% in
case of non-resident individual or trust FII shareholder to whom the payment to be made
exceeds Rs. 10,00,000; or 30.90% in case of non-resident individual or trust FII shareholders to
whom the payment to be made does not exceeds Rs. 10,00,000.
No tax will be deducted at source on payment of offer price to Indian shareholders.
TDS from Interest component
12.2.1
Under Sections
withholding tax
their shares in
shareholder as
194A and Section 195 of the Income Tax Act, Acquirers are required to deduct
whilst making interest payments to the Continuing Shareholders who tender
the open offer. The rate of tax withheld will depend on the category of the
follows:-
S.No.
Category
1
Person resident in India who is an individual/HUF/AOP,
to whom the payment of interest does not exceed
Rs. 10,00,000
Person resident in India who is an individual/HUF/AOP,
to whom the payment of interest exceeds Rs. 10,00,000
Person resident in India which is a partnership firm
to whom the payment of interest does not exceed
Rs. 1,00,00,000
Person resident in India which is a partnership firm, to
whom the payment of interest exceeds Rs 1,00,00,000
Person resident in India which is a domestic company, to
whom the payment of interest does not exceed Rs 1,00,00,000
Person resident in India which is a domestic company, to
whom the payment of interest exceeds Rs 1,00,00,000
Person resident outside India which is a company, to
whom the payment of interest does not exceed Rs 1,00,00,000
Person resident outside India which is a company, to whom
the payment of interest exceeds Rs 1,00,00,000
Person resident outside India which is an individual/HUF/AOP,
to whom payment of income is up to Rs 10,00,000
Person resident outside India who is an individual/HUF/AOP,
to whom payment of income exceeds Rs 10,00,000
Person resident outside India which is a Partnership Firm, to
whom the payment of interest does not exceed Rs 1,00,00,000
Person resident outside India which is a Partnership Firm, to
whom the payment of interest exceeds Rs 1,00,00,000
2
3
4
5
6
7
8
9
10
11
12
Withholding
Rate of Tax
10.30%
11.33%
10.30%
11.33%
20.60%
22.66%
41.20%
42.23%
30.90%
33.99%
30.90%
33.99%
No tax needs to be withheld if the amount of interest payable to a person resident in India does
not exceed Rs. 5,000. No TDS is applicable for interest payments made to a banking company,
Life Insurance Corporation ("LIC"), Unit Trust of India ("UTI"), Insurance Company or any financial
corporation established in India.
The aforesaid tax rate is subject to benefits, if any, available under the concerned Double
Taxation Avoidance Agreement between the two countries.
In the event the aforementioned categories of shareholders require the Acquirers not to deduct
tax or to deduct tax at a lower rate or on a lower amount, they would need to obtain a
certificate from the Income Tax authorities either under section 195(3) or under section 197 of
the Income Tax Act, and submit the same to Acquirers. In the absence of any such certificate
53
from the Income Tax authorities, the Acquirers will deduct tax as aforesaid, and a certificate in
the prescribed form shall be issued to that effect. However, in certain specific cases, after taking
into account the tax advice obtained by the investor and / or Acquirer, the Acquirer may, at its
sole discretion, waive the aforesaid requirement or substitute the same with other documents.
Shareholders are advised to consult their tax advisors for the treatment that may be given by their
respective Assessing Officers in their case, and the appropriate course of action that they should
take. The Acquirers and the Manager to the Offer do not accept any responsibility for the accuracy or
otherwise of such advice.
* The tax rate and other provisions are as per the Finance Bill 2007 awaiting enactment and may undergo changes.
13.
DOCUMENTS FOR INSPECTION
The following documents will be available for inspection to the shareholders of RSIL at its corporate office at 404,
Tower A, Signature Towers, South City I, Gurgaon 122001 (Telephone No.: +91 (0)124 4545600; Fax No.: +91
(0)124 4545607 between 11 a.m. and 4 p.m. on all working days except (Saturdays and Sundays) from the date of
opening of the Offer till the date of closing of the Offer:
13.1
Certificate of incorporation and Articles of Association of Luxottica and RI Holdings alongwith certificate of
change of name of company from Bausch & Lomb Indian Holdings Inc. to Ray Ban Indian Holdings Inc.
13.2
Certificate of incorporation, Memorandum and Articles of Association of RSIL alongwith Certificate of change
of name of company from Bausch & Lomb India Ltd. to RayBan Sun Optics India Limited.
13.3
Copy of the relevant extract of Purchase Agreement dated April 28, 1999 whereby Luxottica purchased
from Bausch & Lomb Inc. USA, its global eyewear business.
13.4
Copy of the Merger Agreement dated October 27, 2000 between Bausch & Lomb South Asia Holding Inc.
with Ray Ban Holdings Inc.
13.5
Copy of the Show Cause Notice dated February 19, 2002 issued by the Chairman, SEBI to Luxottica.
13.6
Copy of the order dated August 5, 2002 issued by the Chairman, SEBI to Luxottica.
13.7
Copy of the appeal filed by Luxottica, Ray Ban Holdings Inc. and RI Holdings before the SAT.
13.8
Copy of the order dated August 29, 2003 issued by the SAT.
13.9
Copy of the appeal filed by Luxottica, Ray Ban Holdings Inc. and RI Holdings against the SAT Order before
the Honourable Supreme Court of India.
13.10
Copy of the order of the Honourable Supreme Court of India staying the operation of the SAT Order.
13.11
Copy of the order of the Honourable Supreme Court of India dated December 12, 2006.
13.12
Letter dated January 23, 2007 from Unicredit Banca d'Impresa S.p.A, certifying that the Acquirers have
sufficient means to allow them to fulfill their payment obligations in full under the Offer.
13.13
Copy of Power of Attorney from Luxottica authorising Mr. Shardul Shroff and Ms. Akila Agrawal to execute
and perform all acts in relation to the Offer, including signing of all papers on its behalf.
13.14
Copy of Power of Attorney from RI Holdings authorising Mr. Shardul Shroff and Ms. Akila Agrawal to
execute and perform all acts in relation to the Offer, including signing of all papers on its behalf.
13.15
Annual Reports containing the audited financials of the Target Company for the accounting years ended
March 31, 1999, December 31, 2003, December 31, 2004 and March 31, 2005.
13.16
Annual Reports containing the audited financials of Luxottica for the accounting years ended December 31,
2003, December 31, 2004 and March 31, 2005.
13.17
Letters dated October 23, 2003 and January 23, 2007 from Citibank, London confirming the cash deposit
of US$ 5,000,000 (equivalent to Rs. 2,208.50 lacs) by the Acquirers with Citibank, London with a lien in
favour of JM Morgan Stanley Private Limited, Manager to the Offer.
13.18
Published copies of First PA, Second PA, Third PA, public announcement dated April 4, 2007 and public
announcement dated April 14, 2007.
13.19
A copy of the agreement entered into with the Depository Participant for opening a special depository
account for the purpose of the offer.
13.20
Copy of valuation report dated April 5, 2007 from Lodha & Co., Chartered Accountant.
13.21
Copy of letter received from SEBI, Ref. No. CFD/DCR/TO/AG/89400/09 dated March 21, 2007 in terms of
proviso to Regulation 18(2) of the SEBI (SAST) Regulations.
13.22
Copy of letters received from the RBI dated March 3, 2007
54
14.
DECLARATION BY THE ACQUIRERS
The Acquirers accept full responsibility for the information contained in this Letter of Offer. The Acquirers shall be,
jointly and severally responsible for ensuring compliance with the Regulations and for their obligations under the
Regulations. Each of the Acquirers is responsible for their respective obligations in terms of the Regulations.
All information contained in this document is as of the date of the Third PA, unless stated otherwise.
Mr. Shardul S. Shroff and Ms. Akila Agrawal, legal counsels have been authorised by the Acquirers to sign the Letter
of Offer on their behalf.
For and on behalf of:
Luxottica Group S.p.A
Ray Ban Indian Holdings Inc.
Sd/-
Sd/-
Mr. Shardul Shroff
(Authorised Signatory)
Mr. Shardul Shroff
(Authorised Signatory)
Place: New Delhi
Date: April 14, 2007
Encl.:
1) Form of Acceptance-cum-Acknowledgement
2) Form of Withdrawal
3) Transfer Deed for Shareholders holding Shares in Physical Form
55
THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK
56
Page 1 of 4 (Please attach this page with page 3 of this Form to receive Acknowledgement Slip)
THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION
(Please send this Form with enclosures to the Registrars to the Offer at their address given overleaf.)
FORM OF ACCEPTANCE-CUM-ACKNOWLEDGEMENT
From:
Folio No./DP ID No./Client ID No.:
OPENS ON
Name:
CLOSES ON
Full Address:
Resident
OFFER SCHEDULE
Wednesday, April 25, 2007
Monday, May 14, 2007
Non-Resident ( ✓ whichever is applicable in your case)
Non-Resident Indians
Overseas Corporate Bodies
Tel No.:
FII
Fax No.:
Other persons who are not resident in India:
E-mail :
To,
Karvy Computershare Private Limited
Plot No.17 to 24, Vithalrao Nagar,
Madhapur, Hyderabad- 500 081
Sub: Offer to purchase equity shares of Rs 10/- each of RayBan Sun Optics India Limited by Luxottica Group S.p.A and Ray Ban Indian Holdings Inc. (hereinafter
referred to as the "Acquirers")
Dear Sir,
I/We refer to the Letter of Offer dated April 14, 2007 constituting an offer to acquire the Equity Shares held by me / us in RayBan Sun Optics India Limited. I/We the
undersigned, have read the Letter of Offer and accept unconditionally its contents including the terms and conditions as mentioned therein.
For Equity Shares held in Physical Form:
I/We, accept the Offer and enclose the original share certificate(s) and duly signed valid Transfer Deed(s) in respect of my/our Equity Shares as detailed below:
No of Equity
Shares
Distinctive Nos.
Certificate No.
S. No.
From
To
TEAR HERE
1
2
3
4
5
(In case the space provided is inadequate, please attach a separate sheet with details and authenticate the same.)
Total No. of Equity Shares
I/We note and understand that the original share certificate(s) and valid share transfer deed will be held in trust for me/us by the Registrar to the Offer until the time the
Acquirers pay the purchase consideration as mentioned in the Letter of Offer.
In addition to the original share certificate(s) and duly signed valid Transfer Deed(s), I/We have enclosed the following herewith:
No Objection Certificate / Tax Clearance Certificate from Income Tax Authorities
Self-declaration in Form 15G / 15H, in duplicate
Copy of Permanent Account Number (PAN) Letter / PAN Card
For Equity Shares held in Demat Form:
I/We hold Equity Shares in demat form, accept the Offer and enclose a photocopy of the Delivery Instruction Slip duly acknowledged by the DP in respect of my/our Equity
Shares as detailed below:
DP Name
DP ID
Client ID
No. of Equity Shares
Beneficiary Name
I/We have done an off market transaction for crediting the Equity Shares to the Depository Escrow Account named "KCPL Escrow A/c RSIL Open Offer" with the
following particulars:
Depository Participant Name: CIL Securities Limited
Depository: Central Depository Services of India Limited (CDSL)
Client ID Number: 1201350000051441
DP ID Number: 13500
Shareholders having their beneficiary Account in NSDL have to use an inter-depository delivery instruction slip for the purpose of crediting their Equity Shares in favour of
the Depositary Escrow Account with CDSL.
In case of non-receipt of the aforesaid documents, but receipt of the Equity Shares in the Depository Escrow Account, the Acquirers may deem the Offer to have been
accepted by me/us.
I/We note and understand that the Equity Shares would lie in the Depository Escrow Account until the time the Acquirers makes payment of the purchase consideration
(including interest) as mentioned in the Letter of Offer.
For NRIs/OCBs/FIIs/ Other persons who are not resident in India
I/we have enclosed the following documents:
No Objection Certificate / Tax Clearance Certificate from Income Tax Authorities.
Previous RBI approvals for holding the Equity Shares of RayBan Sun Optics India
Copy of Permanent Account Number (PAN) Letter / PAN Card
Limited hereby tendered in the Offer.
For NRIs/OCBs/ Other persons who are not resident in India
I/We certify that the Equity Shares of RayBan Sun Optics India Limited are held by me/us on
Investment/Capital Account OR
Trade Account. (3 whichever is
applicable in your case)
If the NRI / OCB / non-domestic companies / other persons who are not resident in India fail to certify in the form then the Acquirers will deduct tax at the rate applicable
to business income.
I/We certify that the Equity Shares of RayBan Sun Optics India Limited are held by me/us as
Long Term Capital Asset OR
Short Term Capital Asset. (3 whichever
is applicable in your case)
Page 2 of 4 (Please attach this page with page 3 of this Form to receive Acknowledgement Slip)
In the case of any ambiguity, incomplete or conflicting information or the information not being provided to the Acquirers, the capital gain shall be assumed to be short-term
in nature.
In case the Equity Shares are held on capital account or on trade account, kindly enclose a tax residence certificate issued by the tax authorities of the Country of
which shareholder is a tax resident and also a certificate stating that you are a tax resident of your country of residence and that you do not have a "permanent
establishment" in India in terms of the Double Taxation Avoidance Agreement (DTAA) entered into between India and your country of residence.
In order to avail the benefit of lower rate of tax deduction under the DTAA, if any at the sole discretion of the Acquirers, kindly enclose a tax residence certificate issued
by the tax authorities of the Country of which shareholder is a tax resident.
For FII Shareholders
Investment/Capital Account OR
Trade Account. ( 3 whichever is applicable
I/We certify that the Equity Shares of RayBan Sun Optics India Limited are held by me/us on
in your case)
In case the Equity Shares are held on trade account, kindly enclose a tax residence certificate issued by the tax authorities of the Country of which shareholder is
a tax resident and also a certificate stating that you are a tax resident of your country of residence and that you do not have a "permanent establishment" in India in
terms of the Double Taxation Avoidance Agreement (DTAA) entered into between India and your country of residence.
In order to avail the benefit of lower rate of tax deduction under the DTAA, if any at the sole discretion of the Acquirers, kindly enclose a tax residence certificate issued
by the tax authorities of the Country of which shareholder is a tax resident.
Transferability of the Equity Shares (If applicable)
I/We submit the following documents which are necessary to ensure transferability of the Equity Shares (Please refer to paragraph 11 of the Letter of Offer) ( 3 whichever
is applicable in your case):
duly attested death certificate and succession certificate/ probate/ letter of administration (in case of single shareholder) if the original shareholder is deceased;
duly attested Power of Attorney if any person apart from the shareholder has signed the application form and/or transfer deed(s);
no objection certificates from the shareholder/ lender, if the shares in respect of which the application is sent, are under any charge, lien or encumbrance;
in case of companies, the necessary corporate authorization (including Board Resolutions);
any other relevant documentation (Please specify below) :
(ii)
(iii)
(i)
Interest Payment and Continuing Shareholders:
In addition to the documents submitted above, I/We submit the following documents to enable the Registrar to the Offer to determine my/our eligibility for interest under the
Offer (Please refer to paragraph 9 of the Letter of Offer):
For Continuing Shareholders holding Equity Shares in physical form
"Memorandum of transfers" as given in the share certificate (s)
For Continuing Shareholders holding Equity Shares in demat form
Details of folio(s) in which Equity Shares were held in physical form OR
a photocopy of share certificate (3 whichever is applicable in your case)
Transaction/ holding statement obtained from the Depository Participant since the date of dematerialization /purchase till the date of submission of this Form of
Acceptance.
In addition to the above, I/We submit the following documentary evidence in support of Change of Name, Transmission and Transposition as required under paragraph 9 of
the Letter of Offer (only provide if applicable):
(ii)
(iii)
(i)
I/We note and understand that in the event the Acquirers do not receive the documentation mentioned under paragraph 9 of the Letter of Offer from shareholders who deem
to be eligible for interest, the Acquirers are entitled to rely on the list of Continuing Shareholders determined on basis of the register of members/ shareholders register/
beneficial records as provided by the Depository(s) i.e. NSDL and CDSL described in paragraph 9.2 of the Letter of Offer.
Furthermore, I/We note and understand that the shareholders who are not registered on the register of members/ shareholders register/ beneficial records as provided by
the Depository(s) i.e. NSDL and CDSL ("Unregistered Shareholders") and held shares in physical form who deem to be eligible for interests, are required to provide the
documentation mentioned under paragraph 9 of the Letter of Offer in order to be eligible for interest, failing to provide such documentation, they will not be considered
Continuing Shareholders for the purpose of the Offer.
I/We confirm that the Equity Shares of RayBan Sun Optics India Limited which are being tendered herewith by me/us under this Offer, are free from liens, charges and
encumbrances of any kind whatsoever.
I/We also note and understand that the Acquirers will pay the purchase consideration only after verification of the documents and signatures, and obtaining necessary
approvals, including approvals from the RBI as applicable.
I/We authorise the Acquirers to accept the Equity Shares so offered which it may decide to accept in consultation with the Manager to the Offer and in terms of the Letter
of Offer and to the extent that the Equity Shares tendered by me/us are not acquired (in terms of and subject to the Letter of Offer), I/We further authorise the Acquirers
to return to me/us, Equity Shares/share certificate(s) and in the case of dematerialised Equity Shares, to credit such Equity Shares to my/our depository account, in each
case at my/our sole risk and without specifying the reasons thereof.
I/We authorise the Acquirers or the Manager to the Offer or the Registrar to the Offer to send by registered post / speed post, the draft / cheque in settlement of the amount,
to the sole / first holder at the address mentioned below.
Yours faithfully,
Signed and Delivered:
FULL NAMES
SIGNATURE(S)
PAN No.
First / Sole Shareholder
Second Shareholder
Third Shareholder
Fourth Shareholder
Address of First/Sole Shareholder
Place:
Date:
Note: In case of joint holdings, all shareholders must sign. A body corporate must affix its company stamp.
So as to avoid fraudulent encashment in transit, the shareholder(s) holding Equity Shares in physical form should provide details of bank account of the first/sole shareholder
and the consideration cheque or demand draft will be drawn accordingly. For Equity Shares that are tendered in electronic form, the bank account as obtained from the
beneficiary position provided by the Depository will be considered and the warrants/ bank drafts will be issued with the said bank particulars
Name of the Bank__________________________________________Branch____________________________City___________________
Account Number____________________________Savings/Current/Others (please specify)______________________________________
Page 3 of 4 (Please attach this page with page 1 of this Form to receive Acknowledgement Slip)
Details of Collection Centres:
Name & Address of the
Collection Centre
Telephone
Number
Fax Number
16-22, Bake House, Maharashtra Chamber of Commerce
Lane, Opp. MSC Bank, KalaGhoda, Fort Mumbai - 400 023
+91 (0) 22 56382666
+91 (0) 22 56331135
Ms. Shirke
Hand Delivery
49, Jatin Das Road, Kolkatta - 700 029
+91 (0) 33 24644891
+91 (0) 33 24644866
Mr. Kundu / Mr. Debnath
Hand Delivery
105-108, Arunachal Building, 19, Barakhamba Road,
Connaught Place, New Delhi - 110 001
+91 (0) 11 23324401
+91 (0) 11 23324621
Mr. George
Hand Delivery
201-203, SHAIL, Opp. Madhusudan House,
Near Navarangpura Tele exchange, Off C.G. Road,
Ahmedabad - 380 006
+91 (0) 79 26420422
+91 (0) 79 26565551
Mr. Edward
Hand Delivery
TKN Complex, No. 51/2, Vanivilas Road,
Opp. National College, Basavangudi, Bangalore - 560 004
+91 (0) 80 26621184
+91 (0) 80 26621169
Mr. Kishore
Hand Delivery
8-2-596, Road No.10, Banjara Hills, Hyderabad - 500 034.
+91 (0) 40 23312454
+91 (0) 40 23311968
Ms. Anis
Hand Delivery
Plot No. 17 to 24, Vithalrao Nagar, Madhapur,
Hyderabad - 500 081
+91 (0) 40 23420818
+91 (0) 40 23420814
Ms. Sareen
Hand Delivery /
Registered post
Business Hours
:
Monday to Saturday: 10.00 a.m. to 4.00 p.m.
Holidays
:
Sundays and Bank Holidays
Contact Person
Mode of Delivery
TEAR ALONG THIS LINE
Folio No. :
Sr. No.
ACKNOWLEDGEMENT SLIP
Karvy Computershare Private Limited
Plot No.17 to 24, Vithalrao Nagar, Madhapur, Hyderabad- 500 081
Received from Mr./Ms.
Address
Form of Acceptance-cum-Acknowledgement, #
# Copy of Delivery instruction to (DP) for
Number of Share Certificates for
Equity Shares
(Delete whatsoever is not applicable)
Stamp of
Collection Centre:
Signature of
Official:
Date of
Receipt:
Equity Shares
Page 4 of 4 (Please attach this page with page 1 of this Form to receive Acknowledgement Slip)
TEAR ALONG THIS LINE
Note : All future correspondence, if any, should be addressed to the Registrar to the Offer at the following address:
Karvy Computershare Private Limited
Plot No.17 to 24, Vithalrao Nagar, Madhapur, Hyderabad- 500 081
Phone: +91 40 23420818
Fax: +91 40 23431551
Email: murali@karvy.com
Contact Person: Mr. Muralikrishna
Page 1 of 2
FORM OF WITHDRAWAL
OFFER SCHEDULE
Wednesday, April 25, 2007
OPENS ON
CLOSES ON
Monday, May 14, 2007
LAST DATE OF WITHDRAWAL
Wednesday, May 9, 2007
To,
Karvy Computershare Private Limited
Plot No.17 to 24, Vithalrao Nagar,
Madhapur, Hyderabad- 500 081
Re. :
Offer to purchase equity shares of Rs 10/- each of RayBan Sun Optics India Limited by Luxottica Group S.p.A and Ray Ban Indian Holdings Inc.
(hereinafter referred to as the "Acquirers")
Dear Sir
I/We refer to the Letter of Offer dated April 14, 2007 for acquiring the Equity Shares held by me/us in RayBan Sun Optics India Limited. I/We the undersigned have read
the Letter of Offer and accept unconditionally its contents including the terms and conditions and procedures as mentioned therein.
TEAR HERE
I/We have read the procedure for withdrawal of Equity Shares tendered by me/us in the Offer as mentioned in paragraph 11 of the Letter of Offer and unconditionally
agree to the terms and conditions mentioned therein.
I/We hereby consent unconditionally and irrevocably to withdraw my/our Equity Shares from the Offer and I/We further authorise the Acquirers to return to me/us, the
tendered Equity Share certificate(s)/ share(s) at my/our sole risk.
I/We note that upon withdrawal of my/our Equity Shares from the Offer, no claim or liability shall lie against the Acquirers/Manager to the Offer/Registrar to the Offer.
I/We note that this Form of Withdrawal should reach the Registrar to the Offer at any of the collection centres mentioned in the Letter of Offer or below as per the mode of
delivery indicated therein on or before the last date of withdrawal (i.e. Wednesday, May 9, 2007).
I/We note that the Acquirers/Manager to the Offer/Registrar to the Offer shall not be liable for any postal delay/loss in transit of the Equity Shares held in physical form and
also for the non receipt of Equity Shares held in the dematerialised form in the DP account due to inaccurate/incomplete particulars/instructions.
I/ We also note and understand that the Acquirers will return Original Share Certificate(s), Share Transfer Deed(s) and Equity Shares only on completion of verification of the
documents, signatures carried out by RayBan Sun Optics India Limited and/ or their R & T Agents and beneficiary position data as available from the Depository from time
to time, respectively.
The particulars of tendered original share certificate(s) and duly signed transfer deed(s) and wish to withdraw are detailed below:
Ledger Folio No.
S. No.
No. of Share Certificate(s)
No. of Equity Shares
Distinctive Nos.
Certificate No.
From
To
No of Equity
Shares
Tendered
1
2
3
Withdrawn
1
2
3
Total
(In case of insufficient space, please use an additional sheet and authenticate the same)
I/We hold the following Equity Shares in dematerialised form and tendered the Equity Shares in the Offer and had done an off-market transaction for crediting the Equity
Shares to the "KCPL Escrow A/c RSIL Open Offer" (Depositary Escrow Account) as per the following particulars:
Depository Participant Name: CIL Securities Limited
Depository: Central Depository Services of India Limited (CDSL)
Client ID Number: 1201350000051441
DP ID Number: 13500
Please find enclosed a photocopy of the Depository Delivery Instruction(s) duly acknowledged by DP.
TEAR ALONG THIS LINE
Folio No. :
ACKNOWLEDGEMENT SLIP
Sr. No.
Karvy Computershare Private Limited
Plot No.17 to 24, Vithalrao Nagar, Madhapur, Hyderabad- 500 081
Address
Received from Mr./Ms.
Form of Withdrawal
#
Number of Certificates for
(DP) for
Equity Shares/# Copy of the Delivery Instruction to
Equity Shares.
#Delete whichever is no applicable
Stamp of
Collection Centre:
Signature of
Official:
Date of
Receipt:
Page 2 of 2
The particulars of the account from which my/our Equity Shares have been tendered are as detailed below:
DP Name
DP ID
Client ID
Beneficiary Name
No. of Equity Shares
Address of First/Sole Shareholder:
Tel No.:
Fax No.
E-mail ID
I/We note that the Equity Shares will be credited back only to that Depository Account, from which the Equity Shares have been tendered and necessary standing instructions
have been issued in this regard.
I/We confirm that the particulars given above are true and correct.
In case of dematerialised Equity Shares, I/We confirm that the signatures of the beneficiary holders have been verified by the DP as per the records maintained at their end
and the same have also been duly attested by them under their seal.
Yours faithfully,
Signed and delivered
FULL NAME(S)
SIGNATURE(S)
VERIFIED AND ATTESTED BY US.
PLEASE AFFIX THE STAMP OF DP (IN
CASE OF DEMAT SHARES)/ BANK (IN
CASE OF PHYSICAL SHARES)
First/Sole Shareholder
Second Shareholder
Third Shareholder
Note: In case of joint holders all must sign. In case of body corporate, stamp of the company should be affixed and necessary Board resolution should be attached.
Place :
Date :
INSTRUCTIONS
1. The shareholders are advised to ensure that the Form of Withdrawal should
same order and as per specimen signatures registered with R&T Agent of
reach the Registrar to the Offer at any of the collection centres mentioned
RayBan Sun Optics India Limited and duly witnessed at the appropriate
in the Letter of Offer or below as per the mode of delivery indicated therein
place.
on or before the last date of withdrawal.
b. Unregistered owners should enclose:
2. Shareholders should enclose the following: Duly signed and completed Form of Withdrawal
i. For Equity Shares held in demat form:
Copy of the Form of Acceptance cum Acknowledgement/ Plain paper
Beneficial owners should enclose
application submitted and the Acknowledgement slip
Duly signed and completed Form of Withdrawal
3. The withdrawal of Shares will be available only for the Share certificates / Shares
that have been received by the Registrar to the Offer/ Special Depository Escrow
Copy of the Form of Acceptance cum Acknowledgement/ Plain paper
Account.
application submitted and the Acknowledgement slip
4.
The
intimation of returned shares to the Shareholders will be at the address as
Photocopy of the delivery instruction in "Off-market" mode or counterfoil
per the records of the Target Company/ Depository as the case may be.
of the delivery instruction in "Off-market" mode, duly acknowledged by
the DP
5. The Form of Withdrawal alongwith enclosure should be sent only to the Registrar
to the Offer.
ii. For Equity Shares held in physical form:
6. In case of partial withdrawal of Shares tendered in physical form, if the original
a. Registered Shareholders should enclose
share certificates are required to be split, the same will be returned on receipt of
Duly signed and completed Form of Withdrawal
share certificates from the Target. The facility of partial withdrawal is available
Copy of the Form of Acceptance cum Acknowledgement/ Plain paper
only to the Registered shareholders.
application submitted and the Acknowledgement slip
7.
Shareholders
holding Shares in dematerialised form are requested to issue
In case of partial withdrawal, Valid Share Transfer form(s) duly signed as
the necessary standing instruction for receipt of the credit in their DP actransferors by all registered shareholders (in case of joint holdings) in the
count.
Details of Collection Centres:
Name & Address of the
Collection Centre
16-22, Bake House, Maharashtra Chamber of Commerce
Lane, Opp. MSC Bank, KalaGhoda, Fort Mumbai - 400 023
Telephone
Number
+91 (0) 22 56382666
Fax Number
Contact Person
Mode of Delivery
+91 (0) 22 56331135
Ms. Shirke
Hand Delivery
49, Jatin Das Road, Kolkatta - 700 029
105-108, Arunachal Building, 19, Barakhamba Road,
Connaught Place, New Delhi - 110 001
201-203, SHAIL, Opp. Madhusudan House,Near Navarangpura
Tele exchange, Off C.G. Road, Ahmedabad - 380 006
TKN Complex, No. 51/2, Vanivilas Road,
Opp. National College, Basavangudi, Bangalore - 560 004
8-2-596, Road No.10, Banjara Hills, Hyderabad - 500 034.
Plot No. 17 to 24, Vithalrao Nagar, Madhapur,
Hyderabad - 500 081
Business Hours
:
Monday to Saturday: 10.00 a.m. to 4.00
Holidays
:
Sundays and Bank Holidays
+91 (0) 33 24644891
+91 (0) 11 23324401
+91 (0) 33 24644866
+91 (0) 11 23324621
Mr. Kundu / Mr. Debnath
Mr. George
Hand Delivery
Hand Delivery
+91 (0) 79 26420422
+91 (0) 79 26565551
Mr. Edward
Hand Delivery
+91 (0) 80 26621184
+91 (0) 80 26621169
Mr. Kishore
Hand Delivery
+91 (0) 40 23312454
+91 (0) 40 23420818
+91 (0) 40 23311968
+91 (0) 40 23420814
Ms. Anis
Ms. Sareen
Hand Delivery
Hand Delivery /
Registered post
p.m.
TEAR ALONG THIS LINE
Note : All future correspondence, if any, should be addressed to the Registrar to the Offer at the following address:
Karvy Computershare Private Limited
Plot No.17 to 24, Vithalrao Nagar, Madhapur, Hyderabad- 500 081
Phone: +91 40 23420818
Fax: +91 40 23431551
Email: murali@karvy.com
Contact Person: Mr. Muralikrishna
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