SRS Limited (RHP) - Karvy

SRS Limited29. The deployment of the Issue proceeds is entirely at the discretion of the Issuer and is not subjectto any monitoring by an independent agency.The Company has not appointed any independent monitoring agency to monitor the utilization of theproceeds raised from this Issue. The Issue proceeds will be utilized at the sole discretion of the Boardof Directors of the Company. Pursuant to Clause 49 of the listing agreement, the Board has empoweredthe Audit Committee to monitor the utilization of the proceeds of the Issue. For further details pleaserefer to “Objects of the Issue” on page 39 of this Red Herring Prospectus.30.30. Some of the Promoter Group Companies have objects conflicting with the business of theCompany.Some of the Promoter Group Companies have objects similar to that of the Company and areconflicting in nature. Out of the Promoter Group companies, following eight Companies have mainobjects which conflict with the present business activities of the Company.Cinema ExhibitionSRS Movies Pvt. Ltd. and SRS Entertainment Ltd. have Cinema exhibition business as one of its mainobjects. Presently, these Companies are not carrying out any business activities.Food & BeveragesSRS Seven Dayz Restaurants Ltd. has Food & Beverages business as one of its main objects. Presently,this Company is not carrying out any business activity.Retail and Cash & CarrySRS Commercial Company Ltd., SRS Superb Marktrade Ltd., SRS Value Bazaar Ltd. and SRS RetailLtd. have retail business as one of their main objects. SRS Commercial Company Ltd. is only receivingrental income from its business activities and other three Companies are not carrying out any businessactivity.SRS Modern Sales Ltd. has Retail and Cash & Carry business as one of its main objects which is inconflict with the business of SRS Limited. However, presently, this Company has major incomecoming from trading of building material like steel, cement etc. This Company also operates eightKissan Bazaars where products like: (a) Fertilizer, Manures & Cattle feed; and (b) Kirana items likeSugar, Flour etc. are sold.The Promoter Group Companies may compete in the same industries, businesses and locations inwhich the Company operates. There cannot be assurance that conflict of interest between the Companyand its Promoter Group Companies would not arise. Such conflict could adversely affect the prospects,business, results of operations and financial condition of the Company.The Company has executed, Non-Compete Agreement(s) on October 1, 2010 with the aforesaid eightpromoter group companies. Further, the Company has executed Addendum to aforesaid Non-CompeteAgreement(s) on May 25, 2011, wherein the Company has agreed to pay a non-compete fee of Rs.100,000 per annum to each company.For details on the businesses carried on by the Promoter Group Companies, please refer section titled"Promoters and Promoter Group" on page 152 of the RHP.31. Any future issuance of Equity Shares may dilute prospective investors’ shareholding and sales ofEquity Shares by Promoters or other major shareholders may adversely affect the trading priceof the Equity Shares.Any future equity issuances by the Company may lead to the dilution of Investors’ shareholdings in theCompany. Any future equity issuances by the Company or sales of Equity Shares by the Promoters orother major shareholders may adversely affect the trading price of the Equity Shares. In addition, anyperception by investors that such issuances or sales might occur could also affect the trading price ofthe Equity Shares of the Company.xxiv