Jyoti CNC Automation IPO Basis of Allotment

JYOTI CNC AUTOMATION LIMITED

Our Company was originally incorporated as AMB Engineering Company Private Limited^-, at Gujarat as a private limited company under the Companies Act, 1956 and received a certificate of incorporation issued by the RoC. on January 17,1991. Thereafter, pursuant to a special resolution passed by the Shareholders of our Company on April 19, 2002, Our Company's name was changed to ‘ Jyoti CNC Automations Private Limited', and a fresh certificate of incorporation dated May 08, 2002, was issued to our Company by the RoC. Subsequently, pursuant to a special resolution passed by the Shareholders of our Company on April 04, 2008, our Company's name was changed to Jyoti CNC Automation Private Limited", and a fresh certificate for incorporation dated April 28, 2008 was issued to our Company by the RoC. Thereafter, our Company was converted into a public limited company pursuant to a special resolution passed by the Shareholders of our Company on September 17, 2012 and the name of our Company was changed to its present name, 'Jyoti CNC Limited', pursuant to a fresh certificate of incorporation issued by the RoC on November 30, 2012. For details of changes in the name and registered office of our Company, see 'History and Certain Corporate Matters' on page 249 of the Prospectus

Our Company has filed the Prospectus dated January 11,2024 with the RoC (the "Prospectus") and the Equity Shares (as defined below) are proposed to be listed on the Main Board platform of National Stock Exchange of India Limited ("NSE") and BSE Limited ("BSE") and the trading is expected to commence on January 16, 2024.

INITIAL PUBLIC OFFERING OF 30.218,649 EQUITY SHARES OF FACE VALUE OF Rs. 2 EACH (EQUITY SHARES) OF JYOTI CNC AUTOMATION LIMITED (OUR COMPANY) FOR CASH AT A PRICE OF Rs. 331 PER EQUITY SHARE (INCLUDINGA SHARE PREMIUM OF Rs. 329 PER EQUITY SHARE) (ISSUE PRICE) AGGREGATING Rs. 10,000.00 MILLION (ISSUE). THE ISSUE INCLUDED A RESERVATION OF 158,227 EQUITY SHARES OF FACE VALUE OF Rs. 2 EACH AGGREGATING Rs. 50.00 MILLION (CONSTITUTING 0.07% OFOUR POST-ISSUE EQUITY SHARE CAPITAL), FOR SUBSCRIPTION BY ELIGIBLE EMPLOYEES (EMPLOYEE RESERVATION PORTION). OUR COMPANY, IN CONSULTATION WITH THE BRLMS, OFFERED A DISCOUNT OF Rs.15 OF THE ISSUE PRICE TO THE ELIGIBLEEMPLOYEES BIDDING IN THE EMPLOYEE RESERVATION PORTION (EMPLOYEE DISCOUNT). THE ISSUE LESS THE EMPLOYEE RESERVATION PORTION IS HEREINAFTER REFERRED TO AS THE ‘NET ISSUE'. THE ISSUE AND THE NET ISSUE CONSTITUTE 13.29% ANDAND 13.22% OF OUR POST-ISSUE PAID-UP EQUITY SHARE CAPITAL OF OUR COMPANY, RESPECTIVELY.

THE FACE VALUE OF THE EQUITY SHARES IS Rs. 2 EACH AND THE ISSUE PRICE IS 165.50 TIMES THE FACE VALUE OF THE EQUITY SHARES.

1. Highly Leveraged: We have incurred significant indebtedness which exposes us to various risks which may have an adverse effect on our business. As of September 30, 2023, our total sanctioned and outstanding indebtedness was ^ 12,805.40 million and Rs. 9,768.88 million, respectively.

Consequently, we have high debt equity ratio and a low debt service coverage ratio. If we do not generate sufficient amount of cash flows from operations, our liquidity and our ability to service our indebtedness could be adversely affected. Set out below are our Debt to Equity Ratio, and Debt Service Coverage Ratio:

2. Losses incurred by Company: We have incurred losses and consequently, had a negative return on equity in the past, as set out below. Losses in future could have an adverse impact on our growth prospectus.

^ Not annualised.

3. Substantial working capital requirements: Our Company has a high working capital requirement. Our Company's working capital requirements (i.e., sum of trade receivables and inventory, as reduced by trade payables) as on September 30, 2023, March 31, 2023, March 31, 2022 and March 31, 2021 was ^ 6,422.84 million, ^ 5,528.06 million, Rs. 5,338.70 million and Rs. 5,494.25 million, respectively. As on September 30, 2023, our Company had sanctioned working capital facilities aggregating to ^ 3,692.80 million. If our Company is unable to raise sufficient working capital, the operations of our Company will be adversely affected.

4. Outstanding unsecured loans, and unsecured loans converted into Equity Shares: We have availed unsecured loans which may be recalled by our lenders, at any time. We may also convert unsecured loan into Equity Shares subject to approval of shareholders, which may dilute your shareholding. As of September 30, 2023, our Company has availed unsecured loan(s) aggregating ^ 820.35 million from certain Promoters and third parties which may be recalled at any time. Further, during Fiscal 2023 and Fiscal 2024, our Company converted unsecured loans advanced by 2 of our Promoters i.e., Parakramsinh Ghanshyamsinh Jadeja and Jyoti International LLP, into Equity Shares (i.e. 3,450,000 Equity Shares on March 31,2023 at an issue price of Rs. 145 per Equity Share, and 5,840,000 Equity Shares on August 19, 2023 at an issue price of ^154 per Equity Share).

5. Delay in re-payment of loan and interest: Company, in the past, has rescheduled payments of its credit facilities from its lenders. Our Company has, in the past, also delayed in re-payment of principal amount and interest on loan availed by our Company, ranging up to 56 days.

6. Delay in payment of Statutory Dues: Company has in the past delayed in the payment of undisputed statutory dues such as provident fund, income tax, goods and services tax, cess to relevant authorities. These delays were all due to cash flow mismatch and lack of sufficient liquidity during these periods. In addition, our Company has also at disparate times in the past delayed in filing goods and services tax returns in compliance with applicable law.

7. Customer concentration risk: Our success is dependent on our relationship with our customers, and we do not, generally enter into long term purchase contracts. During the 6 months period ended September 30,2023, and Fiscal 2023, Fiscal 2022 and Fiscal 2021, our top 10 customers contributed 39.92%, 20.08%, 22.58% and 29.54% of our revenue from operations, respectively.

8. Dependence on Application Industries: Our business is dependent on the performance of the Application Industries with a large portion of revenue being derived from a select few of Application Industries such as (1) Aerospace and Defence; (2) Auto and Auto Components contributing 37.22% and 34.68% of revenue from sale of machinery respectively. Any downturn in the Application Industries can adversely impact our business, results of operations, cash flow and financial condition of our Company.

9. No long-term agreement with suppliers: Company does not have long-term agreements with suppliers for our input materials and a significant increase in the cost of, or a shortfall in the availability, or deterioration in the quality, of such input materials could have an adverse effect on our business.

10. Logistics risk: We are completely reliant on third-party logistics service providers for transport of input materials and finished products. If such third-party logistics service providers discontinue their services, our business operations could be adversely Impacted.

11. Failure to manage inventory: We are a manufacturing entity, and, at all points of time, a certain portion of assets comprise inventory of input materials and finished products. The total inventory of our various products during 6 months period ended September 30, 2023 and during Fiscals 2023, 2022, and 2021 was Rs. 8,683.49 million, Rs. 8,199.19 million, Rs. 6,340.41 million and ^ 6,447.06 million respectively. Any failure on our part to effectively manage our inventory may have an adverse effect on our business.

12. Dependence on machinery for our operations: We operate two manufacturing units on land leased from the Gujarat Industrial Development Corporation (GIDC), at Rajkot, in Gujarat. Any break-down of our machinery will have a significant impact on our business.

13. Matters of Emphasis by Statutory Auditors: Our auditors have made certain comments in respect of our Company's standalone audited financial statements for 6 months period ended September 30,2023 and the Fiscals 2023,2022 and 2021. The comments indicate that our Material Subsidiaries had accumulated losses and their net worth were eroded.

14. Delay in submission of financials: Company has delayed in submission of our audited consolidated financial statements for Fiscal 2021 and Fiscal 2022 with the RoC, by around 5 months and 8 months, respectively due to delay on our foreign subsidiary (i.e. Jyoti SAS) to provide their financial statements to our Company during Fiscal 2022 and Fiscal 2021. We cannot assure you that no action will be taken against our Company.

15. Downgrade in Credit Rating: The credit rating of Company's borrowings for Fiscal 2024 as provided by Infomerics Valuation and Rating Private Limited is IVR BBB+ Stable for long term fund based facilities, and IVR A2 for short term fund based bank facilities and short term non-fund based bank facilities. Any downgrade in our credit ratings, may affect our Company's ability to avail of debt and could also impact the trading price of the Eguity Shares.

16. Foreign exchange fluctuation risk: The cost of imported raw material as percentage of total cost of material increased from 7.66% in Fiscal 2023 to 34.42% during the six months period ended September 30, 2023. Any adverse foreign exchange fluctuation could increase our cost of operations and affect our profitability.

17. Market Risk: Our total income and profit for Fiscal 2023 was ^ 9,526.00 million and Rs. 150.60 million, respectively. The Issue Price, market capitalization to total income multiple, price to earnings ratio and enterprise value to EBITDA ratio, may not be indicative of the market price of the Equity Shares on listing. Some of our select financial ratios are set out below:

18. Weighted average return on net worth for Fiscals 2023,2022 and 2021 is (40.35)% and as on September 30,2023 is 1.33% (not annualised).

19. Weighted average cost of acquisition of (i) all shares issued by our Company; and (ii) all shares acquired by our Promoters and Promoter Group, in the 3 years, 18 months and 1 year preceding the date of the Prospectus is set out below:

*As certified by our Statutory Auditors, G. K. Choksi & Co. pursuant to a certificate dated January 11,2024.

20. Set out below are the details of the weighted average cost of acquisition of the transactions undertaken during the 18 months preceding the date of the Prospectus, as compared to the Floor Price and the Cap Price:

21. The 3 BRLMs associated with the Issue have handled 75 public issues in the past 3 Fiscals, out of which 23 issues have closed below the offer price on the listing date.

*Issues handled where there were no common BRLMs.

The Issue was made through the Book Building Process, in terms of Rule 19(2) (b) of the SCRR read with Regulation 31 of the SEBI ICDR Regulations and in accordance with the Regulation 6(2) of the SEBI ICDR Regulations wherein not less than 75% of the Net Issue was made available for allocation on a proportionate basis to qualified institutional buyers (QIBs) (such portion referred as QIB Portion). Our Company, in consultation with the BRLMs, allocated 60% of the QIB Portion to the Anchor Investors on a discretionary basis in accordance with the SEBI ICDR Regulations (Anchor Investor Portion), of which one-third was reserved for domestic Mutual Funds, subject to valid Bids having been received from the domestic Mutual Funds at or above the price at which allocation was made to the Anchor Investor Allocation Price. Further. 5% of the Net QIB Portion was made available for allocation on a proportionate basis only to Mutual Funds (Mutual Fund Portion), and the remainder of the Net QIB Portion was made available for allocation on a proportionate basis to all QIB Bidders (other than Anchor Investors), including Mutual Funds, subject to valid Bids being received at or above the Issue Price. Further, not more than 15% of the Net Issue was made available for allocation on a proportionate basis to Non-lnstitutional Investors out of which (a) one-third of such portion was reserved for applicants with application size of more than Rs. 0.20 million and up to Rs. 1.00 million; and (b) two-third of such portion was reserved for applicants with application size of more than Rs. 1.00 million, and not more than 10% of the Net Issue shall was available for allocation to Retail Individual Investors in accordance with the SEBI ICDR Regulations, subject to valid Bids being received from them at or above the Issue Price. Further, 158.227 Equity Shares were allocated on a proportionate basis to Eligible Employees applying under the Employee Reservation Portion. All potential Bidders (except Anchor Investors) were mandatorily required to participate in the Issue through the Application Supported by Blocked Amount (ASBA) process by providing details of their respective ASBA accounts, and UPI ID in case of UPI Bidders using UPI Mechanism, as applicable, pursuant to which their corresponding Bid Amount would have been blocked by the Self Certified Syndicate Banks (SCSBs) or by the Sponsor Bank(s) under the UPI Mechanism, as the case may be. Anchor Investors were not permitted to participate in the Anchor Investor Portion through the ASBA process. For further details, see 'Issue Procedure' on page 460 of the Prospectus.

The bidding for Anchor Investor opened and closed on Monday, January 8, 2024. Our Company received 37 applications from 25 anchor investors for 1,36,47,105 equity shares. The Anchor investor price was finalized at Rs. 331 per Equity Share. A total of 1,35,27,190 shares were allocated under the Anchor Investor Portion aggregating to Rs. 4,47,74,99,890.00

The Issue received 14,76,535 applications for 69,03,91,215 Equity Shares (prior to rejections) resulting in 22.85 times subscription. The details of the applications received in the Issue from various categories are as under: (before rejections):

Final Demand

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

The Basis of Allotment was finalized in consultation with the Designated Stock Exchange, being the NSE. on January 12, 2024

A. Allotment to Retail Individual Bidders (after rejections) (including ASBA Applications)

The Basis of Allotment to the Retail Individual Bidders, who have bid at the Cut-Off Price or at the Issue Price of Rs. 331 per Equity Share, was finalized in consultation with the NSE. This category has been subscribed to the extent of 26.48 times. The total number of Equity Shares Allotted in the Retail Portion is 30.06,042 Equity Shares to 66,800 successful Retail Individual Investors.

The category-wise details of the Basis of Allotment are as under:

B. Allotment to Non-lnstitutional Investors (more than 70.20 million and up to 71.00 million) (After Rejections) (including ASBA Applications)

The Basis of Allotment to the Non-lnstitutional Investors (more than Rs. 0.20 million and up to Rs. 1.00 million), who have bid at the Issue Price of Rs.331 per Equity Share or above, was finalized in consultation with the NSE. This category has been subscribed to the extent of 29.35 times. The total number of Equity Shares Allotted in this category is 15.03.021 Equity Shares to 2.385 successful Non-lnstitutional Investors (more than Rs. 0.20 million and up to 11.00 million). The category-wise details of the Basis of Allotment are as under: (Sample)

C. Allotment to Non-lnstitutional Investors (more than Rs.1.00 million) (After Rejections) (including ASBA Applications)

The Basis of Allotment to the Non-lnstitutional Investors (more than Rs. 1.00 million), who have bid at the Issue Price of Rs. 331 per Equity Share or above, was finalized in consultation with the NSE. This category has been subscribed to the extent of 42.79 times. The total number of Equity Shares Allotted in this category is 30,06,042 Equity Shares to 4,771 successful Non-lnstitutional Investors (more than Rs. 1.00 million). The category-wise details of the Basis of Allotment are as under: (Sample)

D. Allotment to Employee Reservation (After Rejections) (including ASBA Applications)

The Basis of Allotment to the Eligible Employee Portion, who have bid at the Issue Price net of Employee Discount, i.e. Rs. 316 per Equity Share was finalized in consultation with NSE. This category has been subscribed to the extent of 2.25 times. The total number of Equity Shares allotted in this category is 1,58.227 Equity Shares to 1,127 successful applicants. The category-wise details of the Basis of Allotment are as under:

E. Allotment to QIBs (After Rejections)

Allotment to QIBs, who have Bid at the Issue Price of Rs. 331 per Equity Share or above, has been done on a proportionate basis in consultation with the NSE. This category has been subscribed to the extent of 46.18 times of QIB Portion. As per the SEBI Regulations, Mutual Funds were Allotted 5% of the Equity Shares of QIB Portion available i.e., 4.50.906 Equity Shares and other QIBs and unsatisfied demand of Mutual Funds were Allotted the remaining available Equity Shares i.e., 85,67,221 Equity Shares on a proportionate basis. The total number of Equity Shares Allotted in the QIB Portion is 90,18,127 Equity Shares, which were allotted to 106 successful QIB Investors. The category-wise details of the Basis of Allotment are as under:

F. Allotment to Anchor Investors (After Rejections)

The Company, in consultation with the BRLMs, have allocated 1,35,27,190 Equity Shares to 25 Anchor Investors (through 37 Applications) at the Anchor Investor Issue Price of Rs. 331 per Equity Share in accordance with the SEBI Regulations. This represents 60% of the QIB Portion.

The IPO Committee of our Company on January 12, 2024 has taken on record the Basis of Allotment of Equity Shares approved by the Designated Stock Exchange, being NSE and has allotted the Equity Shares to various successful Bidders. The Allotment Advice-cum- Intimations and/ or notices will be dispatched to the address of the investors as registered with the depositories. Further, the instructions to the Self Certified Syndicate Banks for unblocking of funds, transfer to Public Issue Account have been issued on January 12, 2024 and payment to non-Syndicate brokers have been issued on January 13, 2024. In case the same is not received within ten days, investors may contact the Registrar to the Issue at the address given below. The Equity Shares Allotted to the successful Allottees have been uploaded on January 15, 2024 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 BSE and NSE on January 15, 2024. Our Company has received listing and trading approval from BSE and NSE and the trading will commence on or about January 16,2024.

Note: All capitalised terms used and not specifically defined herein shall have the same meaning as ascnbed to them in the Prospectus.

INVESTORS PLEASE NOTE

The details of the Allotment made will be hosted on the website of the Registrar to the Issue. Link Intime India Private Limited at: www.linkintime.co.in

All future correspondence in this regard may kindly be addressed to the Registrar to the Issue quoting full name of the first/ sole Bidder, Bid cum Application Form number, Bidder DP ID, Client ID, PAN, date of submission of Bid cum Application Form, address of the Bidder, number of Equity Shares applied for, the name and address of the Designated Intermediary where the Bid cum Application Form was submitted by the Bidder and a copy of the Acknowledgment Slip received from the Designated Intermediary at the address given below:

Link Intime India Private Limited

C 101, 1st Floor, 247 Park. L.B.S. Marg, Vikhroli West, Mumbai - 400 083, Maharashtra. India

Tel: +91 810 811 4949; E-mail: jyoticnc.ipo@linkintime.co.in

Website: www.linkintime.co.in

Investor grievance e-mail: jyoticnc.ipo@linkintime.co.in

Contact Person: Shanti Gopalkrishnan

SEBI Registration Number: 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 JYOTI CNC AUTOMATION LIMITED.

JYOTI CNC AUTOMATION LIMITED has filed the Prospectus dated January 11, 2024 with RoC. The Prospectus is available on the website of SEBI at www.sebi.gov.in, websites of the Stock Exchanges i.e. BSE Limited and National Stock Exchange of India Limited at www.bseindia.com and www.nseindia.com, respectively, the website of the Company at www.jyoti.co.in and the websites of the BRLMs, i.e. Equirus Capital Private Limited. ICICI Securities Limited and SBI Capital Markets Limited at www.equinjs.com, www.icicisecurities.com, and www.sbicaps.com, respectively. 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 47 of the Prospectus. Potential investors should not rely on the DRHP filed with SEBI for making any investment decision instead potential Investors should rely on the Prospectus filed with ROC.

The Equity Shares have not been and will not be registered under the U.S. Secunties Act of 1933, as amended ("U.S. Securities Act") or any state securities laws in the United States, and unless so registered, and 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 are being offered and sold outside the United States in offshore transactions in reliance on Regulation S and the applicable laws of each jurisdictions where such offers and sales are made.