Aeroflex Industries IPO Basis of Allotment

AEROFLEX INDUSTRIES LIMITED

Aeroflex Industries Limited ('Company" or "Issuer") was originally incorporated as 'Suyog Intermediates Private Limited' as a private limited company under the Companies Act, 1956 with the Registrar of Companies, Maharashtra, Mumbai vide certificate of incorporation dated October19,1993. Pursuant to special resolution passed by shareholders of our Company in extra-ordinary general meeting dated October 03,1998, the name of our Company was changed to 'Aeroflex Industries Private Limited' and a fresh certificate of incorporation dated October 28,1998was issued by Registrar of Companies Maharashtra, Mumbai. Subsequently, pursuantto a special resolution passed by shareholders of our Company in the extra-ordinary general meeting dated July25,2006 our Company was converted from a private limited company to a public limited company and consequently the name of our Company was changed to ‘Aeroflex Industries Limited', and a fresh certificate of incorporation dated August 23,2006 was issued to our Company by the Registrar of Companies, Maharashtra, Mumbai. For details of change in the name of our Company and Registered Office of our Company, please refer to chapter titled "History and Certain Corporate Matters 'on page183 of the Prospectus dated August25,2023 ('Prospectus').

Our Company has filed the Prospectus dated August25, 2023with the RoC, and the Equity Shares are proposed to be listed on the National Stock Exchange of India Limited ("NSE") and BSE Limited ("BSE" ) and trading is expected to commence on or about August 31,2023.

INITIAL PUBLIC OFFER OF 32,500,000 EQUITY SHARES OF FACE VALUE Rs. 2/- EACH (" EQUITY SHARES") OF AEROFLEX INDUSTRIES LIMITED FOR CASH AT A PRICE OFRs. 108/-PER EQUITYSHARE (INCLUDING ASHARE PREMIUM OFRs. 106/-PER EQUITYSHARE) (THE "OFFER PRICE" ), AGGREGATING Rs.3,510.00 MILLION ("OFFER") COMPRISING OFAFRESH ISSUE OF15,000,000 EQUITY SHARES AGGREGATINGRs.1,620.00 MILLION BY OUR COMPANY (" FRESH ISSUE" ) AND AN OFFER FOR SALE OF 17,500,000 EQUITY SHARES AGGREGATING TO Rs. 1,890.00 MILLION COMPRISING OF 17,500,000 EQUITY SHARES BY SAT INDUSTRIES LIMITED (" PROMOTER SELLING SHAREHOLDER") ("THE OFFER FOR SALE"). THE OFFER CONSTITUTE 25.13 % OF THE POST-OFFER PAID-UP EQUITY SHARE CAPITAL OF OUR COMPANY. THE OFFER INCLUDES A RESERVATION OF 500,000 EQUITY SHARES, AGGREGATING Rs. 54.00 MILLION (CONSTITUTING 0.39% OF THE POST-OFFER PAID-UP EQUITY SHARE CAPITAL), FOR SUBSCRIPTION BY HOLDING COMPANY ELIGIBLE SHAREHOLDER.THE OFFER LESS THE RESERVATION PORTION OF HOLDING COMPANY ELIGIBLE SHAREHOLDER IS HEREINAFTER REFERRED TO AS THE NET OFFER. THE OFFER AND THE NET OFFER CONSTITUTE 25.13% AND 24.74% OF OUR POSTZ OFFER PAID-UP EQUITY SHARE CAPITAL.

1. Our Promoter has entered into certain secondary transactions with respect to 86,95,207 Equity Shares o f the Company on May 15,2023 and June 13,2023 for a purchase consideration of Rs. 87.56 per Equity Share in all such secondary transaction which is lower than the Floor Price o f the Offer i.e.,Rs.102/-and Cap Price of the offer i.e., Rs. 108/- per Equity Share.

Business Risks:

2. Our Company requires significant amounts of working capital and significant portion o f our working capital is consumed in trade receivables and inventories. Our inability to meet our working capital requirements including failure to realise receivables and inventories may have an adverse effect on our results of operations and overall business.

3. We derive revenue from sale of number of products viz. sale o f stainless steel corrugated flexible hoses (with and without braiding), stainless steel braiding, stainless steel interlock hoses, assemblies, and others and significant revenue from stainless steel corrugated flexible hoses (with and without braiding). Any decrease in the sales o f our key products will adversely affect our business, cash flows, financial condition and results of operations. Our inability to successfully further diversify our products may adversely affect our growth and negatively impact our profitability.

Concentration Risk:

4. We export our products to various countries and the export operations of our Company contribute more than 80% o f Revenue from Operations, out of which export to USA constitutes 28% and 32% o f the revenue from operations for the Fiscals March 31,2023 and March 31,2022. On account o f the aforesaid, we may be subject to significant import duties or restrictions of the relevant jurisdictions. Our inability to comply with related requirements may have an adverse effect on our business and results o f operations.

5. We derive significant portion o f our revenues from our top five (05) customers located in India and globally to whom we sell our product offerings.

(amount in Rs. million)

Other risk:

6. Our Company is not a wilful defaulter however, we went into settlement process and our Company was categorized as willful defaulter in the past, before the takeover of our Company by the present management.

7. The industry segments in which we operate being fragmented and diversified, we face competition from other large and small global and domestic players, which may affect our business operations and financial conditions.

8. Our funding requirements and proposed deployment of the Net Proceeds are based on management estimates and we have not entered into any definitive arrangements to utilize certain portions of the Net Proceeds o f the Issue and have not been independently appraised by a bank or a financial institution. Any variation in the utilisation o f the Net Proceeds would be subject to certain compliance requirements, including prior shareholders' approval.

9. Average Cost of Acquisition of Equity Shares for our Promoter Selling Shareholder.

The average cost of acquisition o f Equity Shares for the Promoter Selling Shareholder is as follows:

*As certified by M/s Shweta Jain & Co., Chartered Accountants the statutory auditors o four Company pursuant to their certificate dated August 11,2023.

10. Weighted average cost o f acquisition at which all Equity shares were transacted in last 1 year, 18 months and3years preceding the date o f the Prospectus:

"As certified by M/s Shweta Jain & Co., Chartered Accountants the statutory auditorsof our Company pursuant to their certificate dated August11,2023.

Note- We have considered the transaction pertaining to sales by promoter and other shareholders.

11. Weighted average cost of acquisition, floor price and cap price

*As certified by M/s Shweta Jain & Co., Chartered Accountants the statutory auditors of our Company pursuant to their certificate dated August 11,2023.

Note-we have considered secondary sales by our promoter. Details for secondary transaction is disclosed on page 119 of the Prospectus.

12. Our Company will not receive any proceeds from the Offerfor Sale portion of the Offer and the same will be received by the0PromoterSelling Shareholder.

13. The BRLM associated with the Offer have handled 5 public issues in the past three Fiscal Years, none of issues closed below the Offer price on the listing date.

14. The Offer Price, price to earnings ratio market capitalization to total income ratio, market capitalization to earnings multiple, and Weighted Average return on net worth, may not be indicative of the market price of the Equity Shares on listing, for the years indicated.

a. Price to Earning (P/E)ratio on Based on basic and diluted EPS for fiscal 2023 for our company at upper end of the price band is 40.91 times.

b. WeightedAveragereturnonnetworthforfiscals2023, 2022 and 2021 is 25.56%.

c. Our market capitalization at lower end and higher end of price band to total income for fiscal 2023 is 4.89timesand 5.18 times respectively.

The Offer w as m ade through the Book Building Process in accordance with Regulation 6(1) of the S E B I IC D R Regulations wherein not more than 5 0% of the Offer w as available for Allocation on a proportionate basis to Qualified Institutional Buyers (‘QIBs1) (the "QIB Portion'), provided that our Com pany and Prom oter Selling Shareholder in consultation with the BRLM allocated up to 60% of the Q IB Portion to Anchor Investors and the basis of such allocation on a discretionary basis by our Com pany and Prom oter Selling Shareholder, in consultation with the BRLM , in accordance with the S EB I IC D R Regulations (the ‘Anchor Investor Portion'), of which one-third w as reserved for dom estic Mutual Funds, subject to valid Bids being received from the dom estic Mutual Funds at or above the price at which allocation is m ade to Anchor Investors ("Anchor Investor Allocation Price'). In the event of undersubscription or non-allocation in the Anchor Investor Portion, the balance Equity Shares of face value Rs. 21- each w as added to the Q IB Portion (other than the Anchor Investor Portion) (the "Net QIB Portion'). Further, 5% of the N et Q IB Portion w as available for allocation on a proportionate basis to Mutual Funds only, subject to valid Bids being received at or above the Offer Price, and the rem ainder of the N et Q IB Portion w as available for allocation on a proportionate basis to all Q IBs, including Mutual Funds, subject to valid Bids being received at or above the O ffer Price. Further, not less than 15% of the O ffer shall be available for allocation to Non-lnstitutional Investors (‘Non-lnstitutional Category") of which one- third of the Non-lnstitutional Category w as available tor allocation to Bidders with an application size of more than Rs. 200 ,00 0 and up to Rs. 1 ,000,000 and two-thirds of the Non- lnstitutional Category w as available tor allocation to Bidders with an application size of more than Rs. 1,000,000 and under-subscription in either of these two sub-categories o f the Non- lnstitutional Category m ay be allocated to Bidders in the other sub-category of the Non-lnstitutional Category in accordance with the SEB I IC D R Regulations, subject to valid Bids being received at or above the O ffer Price. Further, not less than 35% of the O ffer w as available tor allocation to Retail Individual Investors (‘ Retail Category'), in accordance with the SEBI IC D R Regulations, subject to valid Bids being received from them at or above the O ffer Price. All Bidders (except Anchor Investors) w ere mandatorily required to participate in the Offer only through the Application Supported by Blocked Am ount (‘ASBA') process and w ere mandatorily required to provide details of their respective bank account (including U P I ID in case of U PI Bidders in which the Bid Am ount will be blocked b yth e S elf Certified Syndicate Banks ("SCSBs") or pursuant to the U PI M echanism , as the case m ay be. Anchor Investors w ere not permitted to participate in the Anchor Investor Portion through the A S B A process.

The bidding tor Anchor Investors opened and closed on Monday, August 2 1 ,2 0 2 3 . T h e Com pany received 15 applications from 9 Anchor Investors tor 11,297,260 Equity Shares. The Anchor Investor O ffer Price w as finalized at Rs. 108/- per Equity Share. A total of 9,5 9 9,98 0 Equity Shares w ere allocated under the Anchor Investor Portion aggregating to Rs. 108. The O ffer received 2,3 9 4,86 7 applications fo r2 ,2 7 0,29 6 ,4 7 0 Equity Shares resulting in 69.8 6 tim es subscription as disclosed in the Prospectus.

The details of the applications received in the O ffer from Retail Individual Bidders, Non-lnstitutional Bidders and Q IB s are as under (before rejections):

Final Demand

A summary of the final demand as per BSE and NSE as on the Bid/Offer Closing Date at different Bid prices is as under:

The Basis of Allotment was finalized in consultation with the Designated Stock Exchange, being BSE on August 29,2023.

A. Allotment to Retail Individual Bidders (After Rejections) (including ASBAApplications)

The Basis of Allotment to the Retail Individual Bidders, who have bid at cut-off or at the Offer Price of ^ 108/- per Equity, was finalized in consultation with BSE. This category has been subscribed to the extent of 34.54 times. The total number of Equity Shares Allotted in Retail Individual Bidders category is 11,200,000 Equity Shares to 86,153 successful applicants. The category^wise details of the Basis of Allotment are as under:

B. Allotment to Non-lnstitutional Bidders (more than Rs.2.00 lakhs and upto Rs. 10.00 lakhs) (After Rejections) (including ASBA Applications)

The Basis of Allotment to the Non-lnstitutional Bidders (more than T 2.00 lakhs and upto Rs. 10.00 lakhs), who have bid at the Offer Price of Rs. 108/- per Equity Share or above, was finalized in consultation with BSE. This category has been subscribed to the extent of 131.17 times. The total number of Equity Shares allotted in this category is 1,600,000 Equity Shares to 820 successful applicants. The category-wise details of the Basis of Allotment are as under: (Sample)

C. Allotment to Non-lnstitutional Bidders (more than Rs. 10.00 lakhs) (After Rejections) (including ASBAApplications)

The Basis of Allotm ent to the Non-lnstitutional Bidders (m ore than Rs. 10.00 lakhs), who have bid at the O ffer Price of Rs. 108/- per Equity Share or above, w as finalized in consultation with B SE. This category has been subscribed to the extent of 128.00 tim es. The total num ber of Equity S hares allotted in this category is 3,2 0 0,00 0 Equity S hares to 1,641 successful applicants. T h e category-wise details of the Basis ofAllotment are as under: (Sample)

D. Allotment to Shareholders (After Rejections)

The Basis of Allotment to the Shareholders, w ho have bid at the Offer Price of Rs. 108/- per Equity Share or above, w as finalized in consultation with B SE. This category has been subscribed to the extent of 12.40 times. The total number of Equity Shares allotted in this category is 5,00,000 Equity Shares to 702 successful applicants. The category-wise details of the Basis of Allotment are as under: (Sample)

E. AllotmenttoQIBs(AfterRejections)

Allotment to QIBs, who have bid at the Offer Price of Rs. 108/- per Equity Share or above, has been done on a proportionate basis in consultation with BSE. This category has been subscribed lo the extent of 190.47 times of Net QIB portion. As per the SE8IICDR Regulations, Mutual Funds were allotted 5%of the Equity Shares of Net QIB portion available i.e. 320,001 Equity Shares and other QIBs and unsatisfied demand of Mutual Funds were allotted the remaining available Equity Shares i.e. 6,080,019 Equity Shares on a proportionate basis. The total number of Equity Shares allotted in the QIB category is6,400,020 EquityShares, which were allottedto 119suceessfulApplicants.

F. Allotment to Anchor Investore (After Rejections)

The Company, the Promoter Selling Shareholder in consultation with the BRLM, have allocated 9,599,980 Equity Shares to 9 Anchor Investors (through 15 Anchor Investor Application Forms) (including 4 domestic Mutual Funds through 9 schemes) at an Anchor Investor Offer Price at Rs. 108/- per Equity Share in accordance with SEBIICDR Regulations. This represents 60% of the QIB portion.

The Board of Directors of our Company at its meeting held on August 29,2023 has taken on record the basis of allotment of Equity Shares approved by the Designated Stock Exchange, being BSE and has allotted the Equity Shares to various successful applicants. The Allotment Advice Cum Refund Intimation and/or notices have been dispatched to the address of the investors as registered with the depositories. Further, instructions to the SCSBs have been issued for unblocking of funds and transfer to the Public Offer Account on August 30,2023 and the payments to non-syndicate brokers have been issued on August 29.2023. In case the same is not received within ten days, investors may contact the Registrar to the Offer at the address given below. The Equity Shares allotted to the successful allottees have been uploaded on August 30,2023 for credit into the respective beneficiary accounts subject to validation of the account details with the depositories concerned. The Company has filed the Listing application with NSE and BSE on August 29,2023. The Company has received the listing and trading approval from NSE & BSE on August 30,2023 and trading will commence on August 31,2023.

NOTE: ALLCAPITAUZED TERMS USED AND NOT DEFINED HEREIN SHALL HAVE THE RESPECTIVE MEANINGS ASSIGNED TO THEM IN THE PROSPECTUS.

INVESTORS PLEASE NOTE

These details of the Allotment made shall be hosted on the website of Registrar to the Offer, Link Intime India Private Limited atfrww.linkintime.com

All future correspondence in this regard may kindly be addressed to the Registrar to the Offer quoting full name of the First/ Sole applicant, Serial number of the Bid cum Application form number, Bidders DP ID, Client ID, PAN, date of submission of Bid cum Application Form, address of the Bidder, number of Equity Shares bid for, name of the Member of the Syndicate, place where the bid was submitted and payment details at the address given below:

	LINK INTIME INDIA PRIVATE LIMITED
	C-101,247 Park, 1st Floor, L.B.S. Marg, Vikhroli West, Mumbai, 400 083, Maharashtra, India.
	Telephone: +9122 4918 6200; Email/ Investor grievance email: peroflexindustries.ipo@nnkintime.co.in;
	Website: www.linkintime.com Contact person: Shanti Gopalkrishnan; SEBI Registration No: INR000004058

THE LEVEL OF SUBSCRIPTION SHOULD NOT BE TAKEN TO BE INDICATIVE OF EITHER THE MARKET PRICE OF THE EQUITY SHARES ON LISTING OR THE BUSINESS PROSPECTS OF AEROFLEX INDUSTRIES LIMITED

AEROFLEX INDUSTRIES LIMITED has filed the Prospectus dated August 25,2023 with the RoC. The Prospectus shall be available on the website of SEBI at www.sebi.gov.int websites of the Stock Exchanges i.e., BSE at jww:t)5etndta:cern and NSE at www.rse'-.ra'corn and is available on the websites of the BRLM, i.e. Pantomath Capital Advisors Private Limited at wwwtgantiimattwrpngiiatTi and on the website of the Company, i.e. Aeroliex Industries Limited at wvroaerofteiandtgrcom Any potential investors should note that investment in equity shares involves a high degree of risk and for details relating to such risk, please see the section titled "Risk Factors"on page 37 of the RHP and Prospectus. Potential investors should not rely on the DRHP filed wth SEBI for making any investment decision. Specific attention of the investors isinvited to TOskFacfors'beginningonpage 37 of the RHP and Prospectus.

Investor should note that investments equity shares invo Ivesahighdeg ree of risk and for details relating to such risks, please see the section titled Wsk Facfors'beginning on page 37 of the RHP. Potential investors should not rely on the DRHP for making any investment decision. The Equity Shares have not been and will not be registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act") or any other applicable law of the United States and, unless so registered, may not be offered or sold within the United States exceptpursuanttoanexemption from, or Inatransactionnotsubject to, the registration: requirements of the U.S. Securities Act and applicable state securities laws. Accordingly, the Equity Shares are being offered and sold (a) only to persons reasonably believed to be (i) "qualified institutional buyers" (as defined in Rule 144Aunder the U.S. Securities Actand referred to as 'U.S. QIBs¹) in transactions exempt from the registration requirements of the U.S. Securities Act, and (li) Qualified Purchasers, as defined in Section 2(a)(51) of the U.S. investment Company Act of 1940, and (b) outside the United States in offshore transactions in compliance with Regulation S and the applicable laws of the juriscfict'on where those offers and sales are made. There will be no public offering of the Equity Shares in the United States.