JG Chemicals IPO Basis of Allotment

J.G.CHEMICALS LIMITED

Our Company was initially formed as a partnership firm on March 15.1975 under the name ‘J.G.Chemicals" at West Bengal as a partnership at will which was registered under the Indian Partnership Act, 1932 with the Registrar of Firms, West Bengal in 1983. Subsequently, the partnership firm was converted into a joint stock company and was registered as a private limited company in the name and style 'J .G.Chemicals Private Limited' pursuant to a certificate of incorporation dated June 28,2001, issued by RoC, in accordance with provisions of the Companies Act. 1956. Thereafter, pursuant to a resolution passed at the meeting of the Board of Directors held on March 16, 202, and a special resolution of the Shareholders at the EGM held on Apnl 30,2022, the name of our Company was changed to J.G.Chemicals Limited, pursuant to its conversion into a public limited company. A fresh certificate of incorporation dated May 24,2022. consequent upon conversion, was issued by the RoC. For details relating to changes in the name and registered office of our Company, please see section titled 'History and Certain Corporate Matters" on page 203 of the Prospectus dated March 8,2024 filed with RoC ("Prospectus'').

Our Company has filed the Prospectus dated March 08, 2024 with the ROC. and the Equity shares are proposed to be listed on the BSE Limited ("BSE") and National Stock Exchange of India Limited ("NSE") and trading is expected to commence on Wednesday. March 13, 2024

INITIAL PUBLIC OFFER OF 1,13,66,063 EQUITY SHARES OF FACE VALUE OF Rs. 10 EACH ("EQUITY SHARES") OF J.G.CHEMICALS LIMITED ("COMPANY" OR "ISSUER") FOR CASH AT A PRICE OF Rs. 221 PER EQUITY SHARE (INCLUDING A SHARE PREMIUM OF Rs. 211 PER EQUITY SHARE) ("OFFER PRICE") AGGREGATING TO Rs. 2,511.90 MILLION ("OFFER") COMPRISING A FRESH ISSUE OF Rs. 4,66,063 EQUITY SHARES AGGREGATING TO Rs. 1,650.00 MILLION BY OUR COMPANY (THE "FRESH ISSUE") AND AN OFFER FOR SALE OF 3,900,000 EQUITY SHARES AGGREGATING TO Rs. 861.90 BY THE SELLING SHAREHOLDERS ("OFFER FOR SALE") COMPRISING 2,028,900 EQUITY SHARES AGGREGATING TO Rs. 448.39 MILLION BY VISION PROJECTS & FINVEST PRIVATE LIMITED, 1,100 EQUITY SHARES AGGREGATING TO 70.24 MILLION BY JAYANTI COMMERCIAL LIMITED, 1,260,000 EQUITY SHARES AGGREGATING TO Rs. 278.46 MILLION BY SURESH KUMAR JHUNJHUNWALA (HUF), AND 610,000 EQUITY SHARES AGGREGATING TO Rs. 134.81 MILLION BY ANIRUDH JHUNJHUNWALA (HUF) (COLLECTIVELY, THE "SELLING SHAREHOLDERS' AND SUCH EQUITY SHARES, THE "OFFERED SHARES"). THE OFFER SHALL CONSTITUTE 29.01% OF THE POST-OFFER PAID-UP EQUITY SHARE CAPITAL OF OUR COMPANY.

1. Complete Dependence on sale of single product, i.e. zinc oxide: Our business is almost completely dependent on the sale of one principal product i.e. zinc oxide (in various grades) and any reduction in the demand of the same may have an adverse effect on our business and financial performance. Our revenue from operations contributed by the sale of all types/ grades of zinc oxide was Rs. 4,863.22 million, Rs. 7,842.31 million, Rs. 6,125.07 million and Rs. 4,339.90 million for the nine months period ended December 31, 2023 and Fiscals 2023, Fiscal 2022 and Fiscal 2021, which translates to 99.03%, 98.75%, 98.30% and 98.54%, of our total income, respectively.

2. Significant Dependence on Material Subsidiary: We are significantly dependent on the business operations of our material subsidiary i.e. BDJ Oxides Private Limited and any deterioration in the performance of our material subsidiary may adversely affect our business, financial condition and results of operations. Our Material Subsidiary contributes 63.83%, 57.60%, 58.20% and 57.63% for the nine months period ended December 31, 2023 and Fiscals 2023, Fiscal 2022 and Fiscal 2021, respectively to our Revenue from Operations on a consolidated basis.

3. Customer Concentration: We derive a significant part of our revenue from select customers. If one or more of such customers choose not to source their requirements from us, our business, financial condition and results of operations may be adversely affected. Our top 10 customers contributed Rs. 3,745.72 million, Rs. 5,969.78 million, Rs. 4,634.99 million and ^ 3,337.20 million constituting 77.02%, 76.09%, 75.63% and 76.67% of our revenue from operations, as on nine months period ended December 31, 2023 and in Fiscal 2023, Fiscal 2022 and Fiscal 2021, respectively

4. Unregistered Trademark: Our logo is not registered as a trademark. If we are unable to protect our intellectual property rights, our business, financial condition and results of operations may be adversely affected.

5. Competition Risk: We operate in a competitive industry with a few organised manufacturers that produce competing products, both in India and internationally. Any inability to compete effectively may lead to a lower market share or reduced operating margins. Our foreign competitors may be able to supply similar products at lower prices due to proximity to our customers, larger scale of operations and export benefits provided in their respective countries.

6. Dependence on Application Industries: Rubber (tyre & other rubber products) contributes to 90.50%, 90.46%, 90.10% and 89.20% to our revenue from operations on a consolidated basis for the nine months period ended December 31,2023 and Fiscals 2023, Fiscal 2022 and Fiscal 2021 respectively. Our operations are heavily dependent on the rubber and tyre industry and there is a lack of diversification in our business across other Application Industries.

7. Dependence on Overseas Suppliers: Our business is heavily dependent on procurement of raw materials from overseas suppliers. Since we do not usually enter into long-term supply contracts with our suppliers of Zinc Dross and typically, we source Zinc Dross from domestic and international third-party suppliers, including steel galvanizers by way of issuing purchase orders or by participating in online auctions and our business is heavily dependent on procurement of raw materials from overseas suppliers. The terms and production volumes of our raw material supplies are negotiated at the time of issuance of purchase order and the pricing is either determined on a spot basis or linked to a formula basis the LME pricing of zinc. Shortage of raw materials would lead to our estimates being adversely affected, resulting in loss of our business and an adverse impact on our results of operations, cash flows and financial condition.

8. Risk from use of Hazardous Substance: We are subject to certain risks consequent to our operations involving the manufacture, usage and storage of various hazardous substances.

9. No prior experience in operating a R&D facility: As a part of our Objects of the Offer, we intend to set up an R&D center at our Naidupeta Facility. Our Company has not incurred any identifiable expenses towards R&D in Fiscal 2023, Fiscal 2022 and Fiscal 2021 and the nine months period ended December 31,2023.

10. New Product Risk: In accordance with our strategy to diversify our product offerings and enter into new verticals, we intend to gradually increase the production of pharmaceutical grade zinc oxide and also intend to cater to the demand for active zinc oxide grade, which is extensively used in electronics, high-end specialty chemicals and other niche applications, petroleum and environmental protection industries as well as other zinc based chemicals and nutrients which find application in agriculture, micro-nutrients and zinc based feeds & additives. If any new products that we may produce are not as successful as we anticipate, our business, cash flows, results of operations and financial conditions may be adversely affected.

11. No Longterm agreements: We do not have long term agreements with our customers and rely on purchase orders for delivery of our products. Loss ofone or more of our customers or a reduction in their demand for our products could adversely affect our business, results of operations and financial condition.

12. The Price/Earnings ratio based on diluted EPS for latest full financial year 2023 for the issuer at the upper end of the Price band is as high as 12.76 as compared to the average industry peer group PE ratio of 31.48.

13. Average cost of acquisition of equity shares for the selling shareholders in IPO is 0.38 and offer price at upper end of the price band is Rs. 221.

14. Weighted Average Return on Net Worth for Fiscal 2023,2022 and 2021 is 26.38%.

15. Weighted average cost of acquisition of all shares transacted (i) in the preceding three years, (ii) in the preceding one year, and (iii) in the preceding 18 months preceding the date of the Red Herring Prospectus:

'There was only 1 transaction during the last 1 year and 18 months. Accordingly, the range of acquisition price has not been provided.

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

'Pursuant to a scheme of merger u/s 230 & 232 of the Companies Act, 2013, approved by Hon'ble National Company Law Tribunal dated. June 19,2023, Alkan Fiscal Services Private Limited, BDJ Chemicals Private Limited, Prestige Towers Private Limited, Swarnim Complex Private Limited, Eeshwar Fiscal Services Private Limited, BDJ Speciality Chemicals Private Limited, (collectively, "Transferor Companies") has merged with Vision Projects & Finvest Private Limited ("Transferee Company") with effect from July 14, 2023, appointed date being April 01,2021.

17. The three Book Running Lead Managers associated with the Offer have handled 3 public Issue in the past three Financial Years, out of which 1 Issue closed below the IPO price on the listing date.

The Offer is being made through Book Building Process in terms of Rule 19(2){b) of the Securities Contracts Regulation Rules, 1957, as amended ("SCRR"), read with Regulation 31 of the SEBIICOR Regulations and is being made through Book building Process, in compliance with Regulation 6(1) of the SEBIICDR Regulations, wherein not more than 50% of the Offer shall be allotted on a proportionate basis to Qualified Institutional Buyers ("QIBs") (the "QIB Portion"). provided that our Company in consultation with the BRLMs may allocate up to 60% of the QIB Portion to Anchor Investors on a discretionary basis ("Anchor Investor Portion"). One-third of the Anchor Investor Portion shall be reserved for domestic Mutual Funds, subject to valid Bids being received from the domestic Mutual Funds at or above the Anchor Investor Allocation Price. In the event of under-subscription or non-allocation in the Anchor Investor Portion, the balance Equity Shares shall be added to the QIB Portion (other than the Anchor Investor Portion) (the "Net QIB Portion"). Further. 5% of the Net QIB Portion shall be available for allocation on a proportionate basis to Mutual Funds only, and the remainder of the QIB Portion shall be available for allocation on a proportionate basis to all QIBs (other than Anchor Investors), including Mutual Funds, subject to valid Bids being received at or above the Offer Price. However, if the aggregate demand from Mutual Funds is less than 5% of the Net QIB Portion, the balance Equity Shares available for allocation in the Mutual Fund Portion will be added to the remaining Net QIB Portion for proportionate allocation to QIBs. Further, not less than 15% of the Offer shall be available for allocation to Non-institutional Bidders out of which (a) one third of such portion shall be reserved for applicants vrith application size of more than Rs. 0.20 million and up to Rs. 1.00 million and (b) two-third of such portion shall be reserved for applicants with application size of more than Rs. 1.00 million. provided that the unsubscribe portion m either of such sub-categories may be allocated to applicants in the other sub-category of Non-institutional Bidders and not less than 35% of the Offer shall be available for allocation to Retail Individual Bidders in accordance with the SEBI ICDR Regulations, subject to valid Bids being received from them at or above the Offer Price. AJl potential Bidders (except Anchor Investors) are required to mandatorily utilise the Application Supported by Blocked Amount ("ASBA") process providing details of their respective ASBA accounts, and UPI ID (in case of UPI Bidders) if applicable, in -which the corresponding Bid Amounts will be blocked by the SCSBs or under the UPl Mechanism, as applicable. Anchor Investors are not permitted to participate m the Offer through the ASBA process. For details, see "Offer Procedure" on page366 of the Prospectus. The bidding for Anchor Investor opened and closed on March 4 2024. Our Company received 4 applications from 4 Anchor Investors for 3,432,276 Equity Shares. The Anchor Investor Offer Price was finalized at Rs. 221 per Equity Share. A total of 3,409.818 Equity Shares were allocated under the Anchor Investor Portion aggregating to Rs. 753,569,778.

The Offer received 9,14,421 applications for 23,06,37,182 Equity Shares resulting in 20.29 times subscription as disclosed in the Prospectus. The details of the applications received in the Offer from Retail Individual Bidders. Non-institutional Bidders and QIBs are as under (before technical rejections):

Final Demand

A summary of the final demand as per NSE and BSE 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 March 11, 2024.

A. Allotment to Retail Individual Bidders (After Technical Rejections) (including ASBA Applications)

The Basis of Allotment to the Retail Individual Bidders, who have bid at cut-off or at the Offer Price of Rs. 221 per Equity, was finalized in consultation with BSE. This category has been subscribed to the extent of 17.58581 times. The total number of Equity Shares Allotted in Retail Individual Bidders category is 39,78,123 Equity Shares to 59,374 successful applicants The category-wise details of the Basis of Allotment are as under:

Note: 1 additional Share shall be allotted to 65 Allottees from amongst 4470 Successful Applicants from the categories 134 - 871 (i.e. Excluding successful applicants from Category 67) in the ratio of 13:894

B. Allotment to Non-institutional Bidders (more than 7 0.20 million and upto 71.00 million) (After Technical Rejections) (including ASBA Applications)

The Basis of Allotment to the Non-institutional Bidders (more than Rs. 0.20 million and upto Rs.1.00 million), who have bid at the Offer Price of Rs. 221 per Equity Share or above, was finalized in consultation with BSE The category has been subscribed to the extent of 42,92929. The total number of Equity Shares allotted in this category is 5,68,303 Equity Shares to 605 successful applicants. The category-wise details of the Basis of Allotment are as under:

Please Note: 20 additional Share shall be allotted to 39 Successful Allottees from Slno, 2 to Slno 50 (excluding successful applicants from Category 938) in the ratio of 1:01 Ptease Note: 1 additional Share shall be allotted to 39 Successful Allottees from Slno. 2 to Slno 50 (excluding successful applicants from Category 938) in the ratio of 11:13 C. Allotment to Non-lnstitutional Bidders (more thanRs.1.00 million) (After Technical Rejections) (including ASBA Applications)

The Basis of Allotment to the Non-lnstitutional Bidders (more than Rs.1.00 miHion). who have bid at the Offer Price of Rs. 221 per Equity Share or above, was finalized in consultation with BSE This category has been subscribed to the extent of 50.11358 times. The total number of Equity Shares allotted in this category is 11,36.607 Equity Shares to 1,211 successful applicants. The category-wise details of the Basis of Allotment are as under: (Sample)

Please Note: 1 (One) lot of 938 shares have been alloted to AB the Applicants from Serial No. 84 to 88 in the ratio of 1:5 (All these categories have been moved at the end for easy reference)

Please Note: 1 additional Share shall be allotted to 689 Allottees from amongst 1211 Successful Applicants from all the categories in the ratio of 33 58

D. Allotment to QIBs (After Technical Rejections)

Allotment to QIBs, who have bid at the Offer Price of Rs. 221 per Equity Share or above, has been done on a proportionate basis in consultation with BSE This category has been subscribed to the extent of 32.00919 times of Net QIB portion. As per the SEBI Regulations. Mutual Funds were allotted 5% of the Equity Shares of Net QIB portion available i.e. Nil Equity Shares and other QIBs and unsatisfied demand of Mutual Funds were allotted the remaining available Equity Shares i.e. 22,73,212 Equity Shares (i.e. including unsubscribed portion of 1,13,660 equity shares from QIBMF category) on a proportionate basis. The total number of Equity Shares allotted in the QIB category is 22,73,212 Equity Shares, which were allotted to 26 successful Applicants.

E. Allotment to Anchor Investors (After Technical Rejections)

Our Company, in consultation with the BRLMs, have allocated 34,09,818 Equity Shares to 4 Anchor Investors (through 4 Anchor Investor Application Forms) (including Nil domestic Mutual Funds through Nil schemes) at an Anchor Investor Offer Price at til 1 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 March 11, 2024 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 March 11, 2024 and the payments to non-syndicate brokers have been issued on March 12, 2024. 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 March 12, 2024 for credit into the respective beneficiary accounts subject to validation of the account details with the depositories concerned. Our Company has filed the Listing application with NSE and BSE on March 12,2024. Our Company has received the listing and trading approval from NSE & BSE. and trading will commence on March 13,2024.

Note: All capitalized terms used and not defined herein shad have the respective meanings assigned to them in the Prospectus

INVESTORS, PLEASE NOTE

These details of the Allotment made was hosted on the website of Registrar to the Offer, KFin Technologies Limited at www.kfintech.com.

AS 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:

KFin Technologies Limited

Selenium, Tower B, Plot No. 31 and 32 Financial District, Nanakramguda. Serilmgampally Hyderabad, Rangareddi 500 032, Telangana, India Telephone: +91 40 6716 2222;

Toll Free No.: 18003094001; E-mail: jgchemicals.ipo@kfintech.com ; Website: www.kfintech.com Investor grievance e-mail: einward.ris@kfintech.com;

Contact Person: M Murali Knshna; SEBI registration number.: INR000000221

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 J.G.CHEMICALS LIMITED

J.G.Chemicals Limited has Filed a Prospectus dated March 08,2024 with the RoC. The Prospectus is available on the website of the SEBI at www.sebi.gov.in as well as on the website of the BRIM i.e.. Centrum Capital Limited at www.centrum.co.in, Emkay Global Financial Services Limited at www.emkayglobal.com and Keynote Financial Services Limited at www.keynoteindia.net, the website of the NSE at www.nseindia.com and the website of the BSE at www.bseindia.com and the website of the Company at www.jgchem.com. Any investor should note that investment in equity shares involves a high degree of risk and for details relating to such risks, please see the section titled 'Risk Factors' beginning on page 33 of the Prospectus.

The Equity Shares in the issue have not been and will not be registered under the U .S Securities Act of 1933 as amended {"US. Securities Act") or any state securities laws in the United States, and unless so registered, may not be offered or sold within the United States, except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the U.S Securities Act and applicable U S state securities laws Accordingly, the Equity Shares were offered and sold only outside the United States to investors in "offshore transactions" as defined in and in reliance on Regulation S under the U.S. Securities Act and the applicable laws of each junsdiction where those offers and sales occurred. This announcement does not constitute an offer of securities for sale in any jurisdiction, including the United States, and any securities described in this announcement may not be offered or sold in the United States absent registration under the U.S. Securities Act or an exemption from such registration. Any public offering of securities to be made in the United States will be made by means of a prospectus that may be obtained from the issuer or the selling security holders and that will contain detailed information about the company and management, as well as financial statements. No public offering or sale of securities in the United States is contemplated.