Krystal Integrated Services IPO Basis of Allotment

KRYSTAL INTEGRATED SERVICES LIMITED

Our Company was incorporated as ‘Sea King Enterprises Private Limited' at Mumbai as a private limited company under the Companies Act, 1956 pursuant to a certificate of incorporation dated December 1,2000 issued by the Registrar of Companies, Maharashtra at Mumbai ("RoC"). The name of our Company was changed to 'Krystal Tradecom Private Limited'and a fresh certificate of incorporation dated February 6,2001 was issued by the RoC. Subsequently, our Company diversified its activities and the nameofourCompanywas changed from ‘Krystal Tradecom Private Limited' to 'Krystal Integrated Services Private Limited', and a fresh certificate of incorporation dated May 19,2009 was issued by the RoC. Pursuant to a resolution of our Board dated June 30,2023 and a resolution of our shareholders dated July 4,2023, our Company was converted into a public limited company under the Companies Act, and consequently, the name of our Company was changed to 'Krystal Integrated Services Limited' and a fresh certificate of incorporation dated August4,2023 was issued by the RoC. For further details, see ‘ H istory a nd Certain Corporate Matters!' on page 225 of the Prospectus.

Our Company has filed the Prospectus dated March 19,2024 with the RoC (the "Prospectus") and the Equity Shares (as defined below) are proposed to be listed on the Main Board platform of Stock Exchanges and the trading is expected to commence on March 21,2024.

INITIAL PUBLIC OFFERING OF 41,97,552 EQUITY SHARES OF FACE VALUE OFRs. 10 EACH (THE "EQUITY SHARES") OF KRYSTAL INTEGRATED SERVICES LIMITED (OUR "COMPANY" OR THE "COMPANY" OR THE "ISSUER") FOR CASH AT A PRICE OF Rs. 715 PER EQUITY SHARE (INCLUDING A PREMIUM OF Rs. 705 PER EQUITY SHARE) (THE "OFFER PRICE") AGGREGATING TO Rs. 3,001.25 MILLION COMRISING OF A FRESH ISSUE OF 2,447,552 EQUITY SHARES AGGREGATING TO Rs. 1,750 MILLION (THE "FRESH ISSUE") AND AN OFFER FOR SALE OF 1,750,000 EQUITY SHARES AGGREGATING TO Rs. 1,251.25 MILLION (THE "OFFERED SHARES") BY KRYSTAL FAMILY HOLDINGS PRIVATE LIMITED (THE ‘PROMOTER SELLING SHAREHOLDER') (THE "OFFER FOR SALE") (THE"OFFER FOR SALE", TOGETHER WITH THE FRESH ISSUE, THE"OFFER")"). THE FACE VALUE OF THE EQUITY SHARES IS Rs.10 EACH AND THE OFFER PRICE IS 71.50 TIMES THE FACE VALUE OF THE EQUITY SHARES.

1. Dependence on Government Contract: In the six months ended September 30,2023, Fiscal 2023, Fiscal 2022 and Fiscal 2021 our percentage of revenue from operations from government customers are 76.27%, 73.66%, 73.30% and 69.41% respectively. Seven of our top 10 customers, including our largest customer, based on revenue generated for Fiscal 2023, are government entities. The performance of our services for public sector undertakings or governmental customers may be affected by political and administrative decisions concerning levels of public spending and public opinion on outsourcing in general. Any adverse change in the policies adopted by the government regarding award of its contracts or our existing relationship with the government may adversely affect our ability to win such contracts.

2. Customer concentration risk: In the six months ended September 30,2023, Fiscal 2023, Fiscal 2022 and Fiscal 2021 our percentage of revenue from operations from our top five customers were 54.07%, 59.19%, 57.84% and 68.36% respectively. In the event of our failure to retain one or more of our key customers, it will have an adverse effect on ourfinancial performance and result of operations.

3. Geographic concentration risk: In the six months ended September 30, 2023, Fiscal 2023, Fiscal 2022 and Fiscal 2021 our percentage of revenue from operations from our services offered in Maharashtra were 34.87%, 43.28%, 41.91% and 47.41% and in Tamil Nadu were 30.68%, 37.60%, 37.01% and 32.40% respectively. We cannot assure you that we will be able to address our reliance on these few geographical regions, in the future.

4. Concentration on Integrated Facility Management Services: For the six months ended September

30,2023 and Fiscals 2023,2022 and 2021, our revenue from integrated facility management services has contributed to 56.62%, 60.38%, 58.46% and 71.04% of our revenue from operations, respectively. Any decrease in revenue from any specific segment may have an adverse effect on our business, cash flows, results of operation and financial condition.

5. Negative cash flows from operating, investing and financing activities: We have experienced

negative operating cash flow ofRs. (368.80) millions in six months ended September 30,2023. The details of cash flow in six months period ended September 30,2023, Fiscal 2023, Fiscal 2022 and Fiscal 2021 are as setforth below: (Rs. in millions)

We may experience negative cash flows in the future as well. Negative cash flows over extended periods, or significant negative cash flows in the shortterm, could materially impact our ability to operate our business and implement our growth plans.

6. Substantial Working Capital Requirements: Our working capital requirements, on a consolidated basis, as on September 30,2023 and March 31,2023,2022 and 2021 amounted to Rs.1228.49 million, Rs.385.37 million, Rs.1,174.08 million and Rs.1,057.72 million, respectively. Consequently, there could be situations where the total funds available to us may not be sufficient to fulfil our commitments, and hence we may need to incur additional indebtedness in the future, or utilize internal accruals to satisfy our working capital needs.

7. Operational risks: Certain operational risks are inherent in our business as we render various business services at customer premises in a number of challenging environments. Our business operations are subject to hazards inherent in providing such services, including risk of equipment failure, production loss to customers, work accidents etc, Such risks and other unanticipated operational hazards could also lead to additional regulatory scrutiny and potential liability to third party claims, which could have a material adverse effect on our business growth prospects, cash flows, results of operations and financial condition.

8. Growth of our Focus Sectors: The following table sets forth certain information relating to the revenue from operations from focus sectors in the last three Fiscals and six months ended September 30,2023

Further, the deterioration in the business prospects of these sectors could reduce their requirement of our services and result in a significant decrease in the revenues we derive from these sectors.

9. Employee Related risk: We hire a considerable number of personnel every year to sustain our growth. As on March 31,2021, March 31,2022, March 31,2023 and September 30,2023, the number of our onRs. site employees was 26,999, 29,103,31,881 and 39,900, respectively. Our attrition rate for Fiscals 2021,

2022 and 2023 and six months ended September 30,2023 was 22.00% 35.88% 31.38% and 12.98%

respectively. Further, higher attrition rates lead to an increase in our training and recruitment costs, which may have an adverse impact on our profitability and financial conditions. There can be no assurance that skilled manpower will continue to be available in sufficient numbers and at wages suitable to our requirements.

10. Risk related to acquisition of new customer or Renewal of Contracts: We typically enter into shortRs.

term work orders/ contracts for one-year periods, and our longer-term contracts do not exceed a period of three years. Within the duration of these contracts, the scope of services can vary depending upon the requirements of our customers. Therefore, we need to seek new requirements or cross-sell our service offerings when our current services are completed or terminated with existing customers, and secure new customers in orderto expand our business.

11 . Observations under the Companies (Auditors Report) Order. 2020 : Our Statutory Auditors have

included the observations for Fiscals 2021, 2022 and 2023 in their reporting under the Companies (Auditors' Report) Order, 2020 for our Company and our Subsidiaries. For further details, refer Risk Factor No. 13 on page 46 of the RHP.

12. Delay or defaults to collect our receivables: Our trade receivables outstanding for over six months were Rs.253.80 million, Rs. 295.65 million, f. 314.05 million, and Rs. 310.59 million, representing 11.67%,

19.76%, 13.02% and 15.51 % of our total trade receivables as on September 30,2023, March 31,2023, 2022 and 2021, respectively. Our balance write-offs from trade receivables were Nil, Rs. 0.04 million, Rs. 0.03 million and Rs. 0.76 million as on September 30,2023, March 31,2023,2022 and 2021 respectively. Our business depends on our ability to successfully obtain payment from our customers for services provided in a timely manner.

13. Competition risk: As an integrated business services company providing a wide range of business services including integrated facility management services, private security and manned guarding and staffing solutions, we compete with a range of organized and unorganized competitors, depending on the nature and location of services provided. We expect that the level of competition will remain high, which could directly impact the size of our workforce and availability of cost-effective labour options, and therefore potentially limit our ability to maintain or increase our market share or profitability.

14. Proceeds from Offer for sale: The Offer includes an offer for sale of Equity Shares by the Promoter Selling Shareholder. The entire proceeds from the Offer for Sale will be paid to the Promoter Selling Shareholder, and we will not receive any such proceeds from the Offer for Sale.

15. The Offer Price of our Equity Shares, our market capitalization to revenue from operations for FY 2023 and our price-to-earnings (P/E) ratio at Offer Price may not be indicative of the market price of our Equity Shares afterthe Offer.

Note:

1. The Market Capitalization to Revenue from Operations ratio is a financial metric that compares a company's market value to its revenue. It is calculated by dividing the market capitalization by the revenue from operations. Market Capitalization has been computed as the product of number of shares outstanding as on the date of RHP with Floor price or Cap Price, as applicable. Revenue from Operations are for the financial year ended March 31,2023.

2. The average Price-to-Earnings (P/E) ratio of industry peers is calculated by adding up their P/E ratios and dividing by the number of companies in the calculation

16. Average cost of acquisition of the Krystal Family Holdings Private Limited, Promoter Selling Shareholder in IPO is Rs.30. (As certified by T R Chadha & Co LLP, the Statutory Auditors pursuant to their certificate dated March 04,2024) 17. Handled Issue Data: The BRLM associated with the Issue has handled 1 Main board public Issue in the past three years and it was not closed below the issue price on the listing date.

18. Weighted Average Return on Networth for Fiscals 2021,2022 and 2023 is 19.17% and for the six months ended September 30,2023 is 11.21% (NotAnnualised).

19. The weighted average price for all Equity Shares acquired by the Promoters, members of the Promoter Group, the Promoter Selling Shareholder and other shareholders with rights to nominate Directors or any other rights in the last one year, 18 months and three years preceding the date of this Prospectus is as set out below:

% NotApplicable since the denominator is negligible

''As certified by Maheshwari&Co., Independent ChartredAccountant pursuant to their certificate dated March 09,2024

20. Weighted Average Cost of Acquisition, Floor Price and Cap Price

^ There were no p rim a ry /n e w issue o f shares (equity / convertible securities) transactions, other than equity shares issued pursuant to a Bonus Issue on September26,2023, in last 18 months prior to the date o f the Prospectus. AA There were no secondary sale/acquisitions o f shares equity equity/convertible securities) transactions in last 18 months prior to the date o f the Prospectus

# WACA has been mentioned as NA since there have been no transactions excluding bonus issuance

*Since there are no such transactions to report to under (a) and (b) above, the information has been disclosed for price p e r share o f our Company based on the last five primary o r secondary transactions where our Promoters/members o f our Promoter Group o r Shareholder(s) having the right to nominate directors) on the Board of our Company, are a party to the transaction, during the three years prior to the date of filing of the Prospectus.

The Offer was being made through the Book Building Process, in terms of Rule 19(2)(b) of the SCRR read with Regulation 31 of the SEBIICDR Regulations. This Offer was being made in compliance with Regulation 6(1) of the SEBI ICDR Regulations, wherein not more than 50% of the Offer was allocated on a proportionate basis to Qualified Institutional Buyers (“QIBs") ('QIB Portion'), provided that our Company and the Promoter Selling Shareholder, in consultation with the Lead Manager, allocated up to 60% of the QIB Portion to 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 domestic Mutual Funds at or above 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, subject to valid Bids having been received at or above the Offer Price, and the remainder of the Net QIB Portion was available for allocation on a proportionate basis to all QIBs, including Mutual Funds. Further, not less than 15% of the Offer was made available for allocation to Non-lnstitutional Investors and not less than 35% of the Offer was made available for allocation to Retail Individual Bidders in accordance with the SEBI ICDR Regulations, subject to valid Bids having been received at or above the Offer Price. One-third of the Non-lnstitutional Portion was made available for allocation to Non- lnstitutional Bidders with a Bid size of more than f0.2 million and u p to fl million and two-thirds of the Non-lnstitutional Portion was made available for allocation to Non-lnstitutional Bidders with a Bid size of more than Rs.1 million provided that under-subscription in either of these two sub Rs. categories of the Non-lnstitutional Portion was allowed to be allocated to Non-lnstitutional Bidders in the other sub-category of Non- Institutional Portion in accordance with the SEBI ICDR Regulations, subject to valid Bids having been received at or above the Offer Price. All potential Bidders (except Anchor Investors) were mandatorily required to participate in the Offer 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, as applicable, pursuant to which their corresponding Bid Amount was blocked by the Self Certified Syndicate Banks (“SCSBs”) or by the Sponsor Bank(s) under the UPI Mechanism, as the case may be, to the extent of the respective Bid Amounts. Anchor Investors were not permitted to participate in the Offer through the ASBA process.

The bidding for Anchor Investor opened and closed on Wednesday, March 13, 2024. The company received 10 Applications forms from 10 Anchor investors for 15,66,600 Equity Shares. The Anchor investor price was finalized at \ 715 per Equity Share. A total of 12,59,265 shares were allocated under the Anchor Investor Portion aggregating to f 90,03,74,475.

The Issue received 2,52,496 applications fo r4,12,61,900 Equity Shares (prior to valid rejections) resulting in 9.83 times subscription. The details of the applications received in the Offer from various categories are as under: (before rejections):

Final Demand

A summary of the final demand as at different Bid prices is as under:

The Basis ofAllotment was finalized in consultation with the Designated Stock Exchange, being BSE on March 19,2024.

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 Offer Price of Rs.715 per Equity Share, was finalized in consultation with the BSE. This category has been subscribed to the extent of 3.32 times. The total number of Equity Shares Allotted in Retail Portion is 14,69,144 Equity Shares to 73,457 successful Retail Individual Bidders. 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 ASBAApplications)

The Basis of Allotment to the Non-lnstitutional Investors (more than 70.20 million Up to 71.00 million), who have bid at the Offer Price of 7 715 per Equity Share or above, was finalized in consultation with BSE. This category has been subscribed to the extent of 31.57 times. The total number of Equity Shares allotted in this category is 209,878 Equity Shares to 749 successful applicants. The category-wise details of the Basis of Allotment are as under:

C. Allotment to Non-lnstitutional Bidders (more than 71.00 million) (After Rejections) (including ASBA Applications)

The Basis of Allotment to the Non-lnstitutional Bidders (more than 71 million), who have bid at the Offer Price of 7 715 per Equity Share or above, was finalized in consultation with BSE. This category has been subscribed to the extent o f52.29 times. The total number of Equity Shares allotted in this category is 419,755 Equity Shares to 1,499 successful applicants. The category-wise details of the Basis of Allotment are as under: (Sample)

D. Allotment to QIBs (After Rejections)

Allotment to QIBs, who have Bid at the Offer Price of Rs. 715 per Equity Share or above, has been done on a proportionate basis in consultation with the BSE. This category has been subscribed to the extent of 6.97 times of QIB Portion. As per the SEBI Regulations, Mutual Funds were Allotted 5% of the Equity Shares of QIB Portion available i.e., 41,976 Equity Shares and other QIBs and unsatisfied demand of Mutual Funds were Allotted the remaining available Equity Shares i.e., 5,812,224 Equity Shares on a proportionate basis. The total number of Equity Shares Allotted in the QIB Portion is 5,854,200 Equity Shares which were allotted to 19 successful QIB Investors. The category-wise details of the Basis of Allotment are as under:

E. Allotment to Anchor Investors (After Rejections)

The Company, in consultation with the BRLMs, have allocated 1,259,265 Equity Shares to 10 Anchor Investors (through 10 Applications) at the Anchor Investor Offer Price of 7 715 per Equity Share in accordance with the SEBI Regulations. This represents 60% of the QIB Portion.

The IPO Committee of our Company on March 19, 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 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 March 19,2024 and payment to non-Syndicate brokers have been issued on March 20, 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 20, 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 March 20,2024. The Company has received listing and trading approval from BSE and NSE and the trading will commence on or about March March 21,2024.

Note: All capitalised terms used and not specifically defined herein shall have the same meaning as ascribed 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 Offer, 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 Offer 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, Lai Bahadur Shastri Marg, Vikhroli (West) Mumbai - 400 083, Maharashtra, India

Tel:+91 8108114949/+91 2249186200

E-mail: krystalintegrated.ipo@linkintime.co.in

Website: www.linkintime.co.in

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

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 KRYSTAL INTEGRATED SERVICES LIMITED.

KRYSTAL INTEGRATED SERVICES LIMITED has filed the Prospectus with the RoC on March 19, 2024 and thereafter with the Stock Exchanges. 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, on the website of the Company at https://krystal-group.com/ and on the website of the BRLM, i.e. Inga Ventures Private Limited at www.ingaventures.com. Any potential investors should note that investment in equity shares involves a high degree of risk and for details refer to the Prospectus, including the section titled "Risk Factors' on page 34 of the Prospectus. Potential investors should not rely on the DRHP filed with SEBI for making any investment decision, but can only rely on the information included in the Prospectus.

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. Accordingly, the Equity Shares are only being offered and sold outside the United States in ‘offshore transactions" as defined in and in reliance on Regulation S under the U.S. Securities Act and the applicable laws of the jurisdiction where those offers and sales occur. 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 holder and that will contain detailed information about the company and management, as well as financial statements. No offering or sale of securities in the United States is contemplated.