PROSPECTUS
Dated March 18, 2021

Please read Section 32 of the Companies Act, 2013
100% Book Built Offer

avTOMATION

CRAFTSMAN AUTOMATION LIMITED

‘Our Company was incorporated as “Craftsman Automation Private Limited” on July 18, 1986, as a private limited company under the Companies Act 1956, pursuant to a certificate of incorporation

‘granted by the Registrar of Companies, Chennai, Tamil Nadu. Pursuant to the conversion of our Company to a public limited company and as approved by the Shareholders pursuant to a resolution

dated April 30, 2018, the name of our Company was changed to “Craftsman Automation Limited” and the Registrar of Companies, Coimbatore, Tamil Nadu (“RoC”) issued a fresh certificate of

incorporation dated May 4, 2018. For further information on changes in name and registered office of our Company, see “History and Certain Corporate Matters” on page 194

Corporate Identity Number: (28991TZ1986PLCO01816
Registered and Corporate Office: Senthel Towers, IV Floor, 1078, Avanashi Road, Coimbatore 641 018, Tamil Nadu, India; Tel: (91 422) 716 5000;
Contact Person: Shainshad Aduvanni, Company Secretary and Compliance Officer; Tel: (91 422) 716 5000;
E-mail: investor@craltsmanautomation.com; Website: www.craftsmanautomation.com
CN

INITIAL PUBLIC OFFERING OF 5,528,161* EQUITY SHARES OF FACE VALUE OF £5 FACH (THE “EQUITY SHARES") OF CRAFTSMAN AUTOMATION LIMITED (OUR "COMPANY" OR THE “COMPANY” OR
‘THE “ISSUER”) FOR CASH AT A PRICE OF @ 1,490 PER EQUITY SHARE (INCLUDING A SHARE PREMIUM OF 1,485 PER EQUITY SHARE) (THE “OFFER PRICE”) AGGREGATING TO 2 8,236,96* MILLION (THE
“OFFER”) COMPRISING A FRESH ISSUE OF 1,006,711 EQUITY SHARES AGGREGATING TO & 1,500,00* MILLION BY OUR COMPANY (THE “FRESH ISSUE”) AND AN OFFER FOR SALE OF 4521,450* EQUITY
‘SHARES COMPRISING 130,640* EQUITY SHARES BY SRINIVASAN RAVI (THE “PROMOTER SELLING SHAREHOLDER"), 1,559,260* EQUITY SHARES BY MARINA III (SINGAPORE) PTE LIMITED (“MARINA”)
AND 1,414,050* EQUITY SHARES BY INTERNATIONAL FINANCE CORPORATION (“IFC") (MARINA, TOGETHER WITH IFC, THE “INVESTOR SELLING SHAREHOLDERS”), AND 1,417,500" EQUITY SHARES BY
K. GOMATHESWARAN (THE “INDIVIDUAL SELLING SHAREHOLDER”) (THE PROMOTER SELLING SHAREHOLDER, THE INVESTOR SELLING SHAREHOLDERS AND THE INDIVIDUAL SELLING
SHAREHOLDER, TOGETHER, THE “SELLING SHAREHOLDERS” AND SUCH EQUITY SHARES OFFERED BY THE SELLING SHAREHOLDERS, THE “OFFERED SHARES") AGGREGATING TO 6,736.96" MILLION
(THE “OFFER FOR SALE).

 

 

 

 

 

 

 

"Subject to finalization ofthe Basis of Allorment
This Offer was made in terms of Rule 192)(b) of the Securities Contracts (Regulation) Rules, 1957, as amended (Ihe “SCRI") read wih Regilaion 31 of the SEBTICDR Regulations. The Offer was made through the Book Bullding Process, i
‘compliance with Regulation 6(2) of the SEBI [CDR Regulations, wherein not more than 50% ofthe Offer was allocated on a proportionate basis to Qualified Institutional Buyers (the “QHBs”) (the “QUB Category’), of which our Company and the
Investor Selling Shareholders in consultation withthe BRLMS, allocated up to 60% of the QUB Category to Anchor Investors, ona diseretionary basis (the “Anchor Investor Portion’), One-third ofthe Anchor Investor Porton was reserved for
domestic Mutual Funds, subject to valid Bids having been received from domestic Mutual Funds at or above the price at which allocation is made to Anchor Investors (the “Anchor Investor Allocation Price”). Post allocation to the Anchor
Investors, the QIB Category was reduced by such number of Equity Shares. 5% ofthe QIB Category (excluding the Anchor Investor Portion) was made available for allocation on a proportionate basis to Mutual Funds only, and the remainder of
‘the QIB Category was made available for allocation on a proportionate basis to all QIBs, including Mutual Funds, subject to valid Bids being received from them at or above the Offer Price. Further, not less than 15% ofthe Ofer was made available
for allocation on a proportionate basis to Non-lnsttuional Investors and not less than 25% of the Offer was made avalable for allocation to Reta Individual Investors, in accordance with the SEBL ICDR Regulations, subject to valid Bids being
received at or above the Offer Price. All Bidders, other than the Anchor Investors, were mandatorily required to participate in this Offer only through Application Supported by Blocked Amount (“ASBA") process, providing details of their respective
bank accounts (Including UPI ID for Retail Individual Investors using UPI Mechanism) in which the Bid amount was blocked by the SCSBs or the Sponsor Bank. The Anchor Investors were not permitted to participate in the Anchor Investor
Portion through the ASBA process. For further information, see “Offer Procedure” on page 350,

 

 

   

     

 

   

“Subject fo finalization ofthe Basis of Allotment

 

PSN
This belng the ist public issue of the Equity Shares, here has been no formal market for the Equity Shares. The Floor Price, the Cap Price andthe Offer Price (as determined by our Company and the Investor Selling Shareholders, wt consulation wih
the BRLMs, in accordance with the SEBI ICDR Rey asi for Offer Price” on page 87) should not be taken to be indicative of the market price ofthe Equity Shares after dhe Equity Shares a listed. No assurance can be given

garding an active and/or sustained a Inthe Equity Shares oe at the co which the Equity Shares will be waded ater listing

Tavestments inequity and eqully-related securtes involve a degree of risk and investors should not invest any funds in the Oller unless they can alford(o (ake the risk of losing thelr entre investment, Investors are advised (o read the risk factors

‘carefully before taking an investment decision in the Offer. For taking an investment decision, investors must rely on their own examination of our Company and the Offer including the risks involved. The Equity Shares in the Offer have not been

recommended ot approved by the Securities and Exchange Board of India (“SEBI"), nor does SEBI guarantee the accuracy or adequacy ofthe contents ofthis Prospectus. Specific atention ofthe investors is invited to “Risk Factors” on page 22.
ISSUER'S AND SELLING SHAREHOLDERS” ABSOLUTE RESPONSIBILITY

‘Our Company, having made al reasonable inquiries, accepts responsibility for and confirms that this Prospectus contains all information with regard to our Company and the Offer, which is material in the context of the Offer, thatthe information

‘contained in this Prospectus is true and correct in all material aspects and is not misleading in any material respect, that the opinions and intentions expressed herein are honestly held and that there are no other facts, the omission of which makes

this Prospectus asa whole or any of such information or the expression of ay such opinions or intetions, misleading in any material respect.

 

 

lations, and as stated in“

   

   

 

 

 

Further, each Selling Shareholder severally and not jointly accepts responsibility for and confirms only the information given expressly by such Selling Shareholder relating to itself and its respective portion of Offered Shares contained in this
Prospectus as tue and correct in all material aspects and not misleading in any material respec. Each Selling Sharcholde, severally and not joinly, does not assume any responsibility for any other statements, inluding without Limitation, any and

ail of the statements made by or in relation to our Company or the oes an Shareholders in this Pros =

“The Equity Shares issued through the Red Herring Prospectus and this Prospectus are proposed tobe iste on the Stock Exchanges, We have received in-principe approvals from BSE and NSE forthe listing of the Equity Shares pursuant to letters
dated January 4, 2021 and January 5, 2021, respectively. For the purposes of this Offer, BSE isthe Designated Stock Exchange. A copy of the Red Herring Prospectus and this Prospectus shall be delivered for filing withthe RoC in accordance
With Section 26(4) of and Section 32 the Companies Act 2013, For further information on the material contracts and documents that were made available for inspection from the date of the Red Herring Prospectus up tothe Bid/Offer Closing Date,
ve “Material Contracts and Documents for Inspection” on page 438,

 

 

 

 

 

 

 

 

 

 

BeP'S CAPITAL @31IFL securities LINK Intime
!
‘1 Floor, Axis House 10" Floor, IIFL Centre C-101, 1* floor, 247 Park

 

 

BID/OFFER PERIOD"

Peas ko NR NEYO VATU te BEE! Pest Kem o TNR Nee

 

(@) The Anchor Investor Bidding Date was one Working Day prior tothe Bid/Offer Opening Dawe i. Friday, March 12, 2021
(This page is intentionally left blank)
TABLE OF CONTENTS

SECTION I - GENERAL 2
DEFINITIONS AND ABBREVIATIONS
CERTAIN CONVENTIONS, USE OF FINANCIAL INFORMATION AND MARKET DATA AN!
CURRENCY OF PRESENTATION.
FORWARD-LOOKING STATEMEN
SUMMARY OF THE OFFER DOCUME

SECTION II - RISK FACTORS...

SECTION III - INTRODUCTION.

 
 
  
   
 
 
  
    
 
 
 
  
  
 
  
 

BASIS FOR OFFER PRICE
STATEMENT OF TAX BENEFIT:
SECTION IV: ABOUT THE COMPAN
INDUSTRY OVERVIEW..
BUSINESS
KEY REGULATIONS AND POLICIES IN INDIA.
HISTORY AND CERTAIN CORPORATE MATTER!
MANAGEMENT ..
PROMOTER, PROMOTER GROUP
DIVIDEND POLICY......
SECTION V — FINANCIAL INFORMATIO!
FINANCIAL STATEMENT:
OTHER FINANCIAL INFORMATIO!
CAPITALIZATION STATEMENT.

ID GROUP COMPANIES

  
 
 
 
 
 
 
    
  
    
 
  
  
  
 
 
 
 
  
 
 

OF OPERATIONS
FINANCIAL INDEBTEDNESS.

SECTION VI- LEGAL AND OTHER ‘ORMATIO!
OUTSTANDING LITIGATION AND OTHER MATERIAL DEVELOPM
GOVERNMENT AND OTHER APPROVALS.
OTHER REGULATORY AND STATUTORY DISCLOSURE!

SECTION VII - OFFER RELATED INFORMATION
TERMS OF THE OFFER..
OFFER STRUCTURE
OFFER PROCEDURE
RESTRICTION ON FOREIGN OWNERSHIP OF INDIAN SECURITIES

SECTION VIII - MAIN PROVISIONS OF ARTICLES OF ASSOCIATION

SECTION IX - OTHER INFORMATION.
MATERIAL CONTRACTS AND DOCUME!
DECLARATION
SECTION I - GENERAL
DEFINITIONS AND ABBREVIATIONS

Unless the context otherwise indicates or implies, the following terms shall have the meanings provided below in
this Prospectus, and references to any statute or regulations or policies will include any amendments or re-
enactments thereto, from time to time.

Notwithstanding the Foregoing, terms in the chapters/sections “Statement of Tax Benefits”, ‘Industry
Overview ”, “Key Regulations and Policies in India”, “Financial Information”, “Outstanding Litigation and
Other Material Developments” and “Main Provisions of Articles of Association” will have the meaning
ascribed to such terms in these respective chapters/sections.

In case of any inconsistency between the definitions given below and the definitions contained in the General
Information Document (as defined below), the definitions given below shall prevail.

The words and expressions used but not defined in this Prospectus will have the same meaning as assigned to
such terms under the Companies Act 2013, the SEBI Act, the SEBI ICDR Regulations, the SCRA, the Depositories
Act and the rules and regulations made thereunder.

General Terms

 

 

Term Description

“the Company”/“our Craftsman Automation Limited, a company incorporated in India under the Companies Act

Company’/“the Issuer” 1956 with its registered and corporate office at Senthel Towers, IV Floor, 1078, Avanashi
Road, Coimbatore 641 018, Tamil Nadu, India

“we"/us”/“our” Unless the context otherwise requires, our Company together with our Subsidiaries and Joint
Venture

Joint Venture The joint venture entered into by our Company, namely, Carl Stahl Craftsman Enterprises
Private Limited as disclosed “History and Certain Corporate Matters — Joint Venture” on
page 201

Subsidiaries The subsidiaries of our Company, namely, Craftsman Europe B.V. (formerly known as

Craftsman Marine B.V.) and Craftsman Automation Singapore Pte. Ltd.*, as disclosed in
“History and Certain Corporate Matters - Subsidiaries of our Company” on page 200

*Craftsman Automation Singapore Pte. Ltd. has filed a declaration of solvency with the
Accounting and Corporate Regulatory Authority, Singapore dated September 30, 2020. The
winding up of Craftsman Automation Singapore Pte. Ltd. is currently under process. As on
December 31, 2020, Craftsman Automation Singapore Pte. Ltd. was not operational.

 

Company Related Terms
Term Description

AoA/Articles of The articles of association of our Company, as amended

Association/Articles

Audit Committee The audit committee of our Board

Board/Board of Directors The board of directors of our Company, or a duly constituted committee thereof

Chief Financial Officer/CFO __ The chief financial officer of our Company

Chief Operating Officer - The chief operating officer — automotive, of our Company

Automotive/COO -

Automotive

Compliance Officer The company secretary and compliance officer of our Company

CRISIL Report The report titled “Studying the Automotive and Industrial Engineering Business in India”
dated December 2020, prepared by CRISIL Research

CSR Committee The corporate social responsibility committee of our Board

Director(s) The director(s) on our Board

Equity Shares The equity shares of our Company of face value of 5 each

Group Companies In terms of SEBI ICDR Regulations, the term “group companies” includes companies (other
than our Promoter and Subsidiaries) with which there were related party transactions as
disclosed in the Restated Financial Information as covered under the applicable accounting
standards and such other companies as considered material by our Board, as identified in
“Promoter, Promoter Group and Group Companies” on page 219

IFC International Finance Corporation

 
 

Term
Independent
Director
Individual
Shareholder
Investor Selling Shareholders
IPO Committee
KMP/Key
Personnel

Selling

Managerial

Marina
Materiality Policy

MoA/Memorandum

of Association

Nomination and
Remuneration Committee
Nominee Director

Previous Auditors

Promoter

Promoter Group

Promoter Selling
Shareholder
Registered Office /

Registered and Corporate
Office
Registrar of Companies/RoC

Restated Financial
Information

Selling Shareholders
Shareholders

Stakeholders Relationship
Committee

Statutory Auditors
Whole-time Director

Description
An independent Director as per the Companies Act 2013 and the SEBI Listing Regulations

K. Gomatheswaran

IFC and Marina

The IPO committee of our Board

Key managerial personnel of our Company in terms of Regulation 2(1)(bb) of the SEBI ICDR
Regulations and Section 2(51) of the Companies Act 2013 and as described in “Management
- Key Managerial Personnel” on page 216

Marina III (Singapore) Pte Limited

The policy adopted by our Board in its meeting dated December 5, 2020, for determining:
(i) Group Companies; (ii) outstanding material litigation involving our Company,
Subsidiaries, Directors, Promoter and Group Companies; and (iii) outstanding dues to
creditors in respect of our Company, in terms of the SEBI ICDR Regulations for the
purposes of disclosure in the offer documents. Further, the IPO Committee, in its meeting
dated February 25, 2021, has not considered any company, other than the Group Companies
disclosed in this Prospectus, which are considered material to be indentified as ‘group
companies’ in terms of the SEBI ICDR Regulations, with respect to the Restated Financial
Information. For further information, see “Promoter, Promoter Group and Group
Companies” and “Outstanding Litigation and Other Material Developments” on pages
219 and 325, respectively

The memorandum of association of our Company, as amended

The nomination and remuneration committee of our Board

Udai Dhawan

The erstwhile statutory auditors of our Company, PKF Sridhar & Santhanam LLP,
Chartered Accountants

The promoter of our Company, namely Srinivasan Ravi. For further information, see
“Promoter, Promoter Group and Group Companies” on page 219

Persons and entities constituting the promoter group of our Company, pursuant to Regulation
2(1)(pp) of the SEBI ICDR Regulations. For further information, see “Promoter, Promoter
Group and Group Companies” on page 219

Srinivasan Ravi

The office of our Company located at Senthel Towers, IV Floor, 1078, Avanashi Road,
Coimbatore 641 018, Tamil Nadu, India

Registrar of Companies, Coimbatore, Tamil Nadu. For further information, see “General
Information” on page 62

The restated consolidated financial information of our Company, our Subsidiaries and Joint
Venture, which comprise the restated consolidated summary statement of assets and
liabilities as at December 31, 2020, March 31, 2020, March 31, 2019 and March 31, 2018
and the restated consolidated summary statement of profit and loss (including other
comprehensive income), the restated consolidated summary statement of changes in equity
and the restated consolidated summary statement of cash flows for the nine months ended
December 31, 2020 and for the years ended March 31, 2020, March 31, 2019 and March
31, 2018 and the summary of significant accounting policies, read together with the
annexures and notes thereto, which have been prepared in accordance with the Companies
Act 2013 and Ind AS, as applicable, and restated in accordance with the SEBI ICDR
Regulations

The Investor Selling Shareholders, the Promoter Selling Shareholder and the Individual
Selling Shareholder

The holders of the Equity Shares from time to time

The stakeholders relationship committee of our Board

The statutory auditors of our Company, being Sharp & Tannan, Chartered Accountants
The whole-time director of our Company, Ravi Gauthamram

 

 

Wilful Defaulter(s) Wilful defaulter(s) as defined under Regulation 2(1)(Ill) of the SEBIICDR Regulations
Offer Related Terms
Term Description

Abridged Prospectus

Abridged prospectus means a memorandum containing such salient features of a prospectus as
may be specified by SEBI in this behalf

 
 

Term
Acknowledgement Slip

Allotment Advice
Allotted/Allotment/Allot
Allottee

Anchor Escrow Accounts

Anchor Investor

Anchor Investor Allocation
Price

Anchor Investor Application
Form
Anchor Investor Bidding

Date

Anchor Investor Offer Price

Anchor Investor Portion

Application Supported by
Blocked AmounASBA

ASBA Account

ASBA Bidders
ASBA Form

Axis
Bankers to the Offer

Basis of Allotment

Bid

Bid Amount

Description
The slip or document issued by a Designated Intermediary to a Bidder as proof of registration of
the Bid cum Application Form

The note or advice or intimation of Allotment, to be sent to each Bidder who has been or is to be
Allotted the Equity Shares after approval of the Basis of Allotment by the Designated Stock
Exchange

Unless the context otherwise requires, the issue, allotment of the Equity Shares pursuant to the
Fresh Issue and transfer of the Offered Shares pursuant to the Offer for Sale to successful Bidders
‘A successful Bidder to whom the Equity Shares are Allotted

Accounts opened with Escrow Collection Bank and in whose favour the Anchor Investors
transferred money through direct credit, NEFT, RTGS or NACH in respect of the Bid Amount
when submitting a Bid

‘A QIB, who applied under the Anchor Investor Portion in accordance with the requirements
specified in the SEBI ICDR Regulations and the Red Herring Prospectus and who had Bid for
an amount of at least = 100 million

The price at which allocation of the Equity Shares was done to the Anchor Investors in terms
of the Red Herring Prospectus. The Anchor Investor Allocation Price was determined by our
Company and the Investor Selling Shareholders, in consultation with the BRLMs during the
Anchor Investor Bidding Date.

Form used by an Anchor Investor to make a Bid in the Anchor Investor Portion and which
was considered as an application for Allotment in terms of the Red Herring Prospectus and
this Prospectus

The date one Working Day prior to the Bid/Offer Opening Date on which Bids by Anchor
Investors were submitted prior to and after which the BRLMs did not accept any bids from
Anchor Investors, and allocation to the Anchor Investors was completed, being March 12,
2021

The final price at which the Equity Shares will be Allotted to Anchor Investors in terms of the
Red Herring Prospectus and this Prospectus, being % 1,490. The Anchor Investor Offer Price
was decided by our Company and the Investor Selling Shareholders, in consultation with the
BRLMs

60% of the QIB Category, consisting of 1,658,447* Equity Shares, which was allocated by our
Company and the Investor Selling Shareholders, in consultation with the BRLMs, to Anchor
Investors, on a discretionary basis, in accordance with SEBI ICDR Regulations. One-third of
the Anchor Investor Portion was reserved for domestic Mutual Funds, subject to valid Bids
being received from 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 was added to the QIB Category

*Subject to finalization of the Basis of Allotment

‘An application (whether physical or electronic) by a Bidder (other than Anchor Investors) to
make a Bid authorizing the relevant SCSB to block the Bid Amount in the relevant ASBA
Account and included applications made by RIls using the UPI Mechanism where the Bid
Amount was blocked by SCSB upon acceptance of UPI Mandate Request

‘A bank account maintained with an SCSB and specified in the Bid cum Application Form
which was blocked by such SCSB to the extent of the appropriate Bid Amount in relation to a
Bid by a Bidder (other than a Bid by an Anchor Investor) and included amounts blocked by
SCSB upon acceptance of UPI Mandate Request by RIIs using the UPI Mechanism

All Bidders except Anchor Investors

‘An application form, whether physical or electronic, used by Bidders Bidding through the
SBA process, which was considered as the application for Allotment in terms of the Red
Herring Prospectus and this Prospectus

Axis Capital Limited

The Escrow Collection Bank, Refund Bank, Public Offer Account Banks and the Sponsor
Bank, as the case may be

The basis on which the Equity Shares will be Allotted to successful Bidders under the Offer, as
described in “Offer Procedure” on page 350

An indication to make an offer during the Bid/Offer Period by a Bidder (other than an Anchor
Investor), or on the Anchor Investor Bidding Date by an Anchor Investor, pursuant to submission
of a Bid cum Application Form, to subscribe for or purchase our Equity Shares at a price within
the Price Band, to the extent permissible under the SEBI ICDR Regulations, in terms of the Red
Herring Prospectus and the Bid cum Application Form. The term “Bidding” shall be construed
accordingly

The highest value of the optional Bids as indicated in the Bid cum Application Form and
payable by the Bidder or as blocked in the ASBA Account of the Bidder, as the case may be,
upon submission of the Bid in the Offer

 
 

Term
Bid cum Application Form

Bid Lot
Bid/Offer Closing Date

Bid/Offer Opening Date

Bid/Offer Period

Bidder

Bidding Centres

Book Building Process

Book Running Lead
Managers/BRLMs

Broker Centres

CAN/Confirmation ol!
Allocation Note
Cap Price

Cash Escrow and Sponsor
Bank Agreement

Client ID
Collecting
Participants/CDPs

Depository

Cut-off Price

Demographic Details

Designated Branches

Designated CDP Locations

Designated Date

Description
The form in terms of which the Bidder made a Bid, including ASBA Form, and which was
considered as the application for the Allotment pursuant to the terms of the Red Herring
Prospectus and this Prospectus

10 Equity Shares

Except in relation to Anchor Investors, the date after which the Designated Intermediaries were
required to not accept any Bids for the Offer, which was published in all editions of Financial
Express (a widely circulated English national daily newspaper), all editions of Jansatta (a widely
circulated Hindi national daily newspaper) and all editions of Makkal Kural (a widely circulated
Tamil regional daily newspaper, Tamil being the regional language in Coimbatore where our
Registered Office is located)

Except in relation to Anchor Investors, the date on which the Designated Intermediaries were
required to start accepting Bids for the Offer, which was published in all editions of Financial
Express (a widely circulated English national daily newspaper), all editions of Jansatta (a widely
circulated Hindi national daily newspaper) and all editions of Makkal Kural (a widely circulated
Tamil regional daily newspaper, Tamil being the regional language in Coimbatore where our
Registered Office is located)

Except in relation to Bids received from Anchor Investors, the period between the Bid/Offer
Opening Date and the Bid/Offer Closing Date, inclusive of both days during which prospective
Bidders (excluding Anchor Investors) could submit their Bids, in accordance with the SEBI
ICDR Regulations and the terms of the Red Herring Prospectus. Provided, however, that the
Bidding was kept open for a minimum of three Working Days for all categories of Bidders, other
than Anchor Investors.

‘Any investor who made a Bid pursuant to the terms of the Red Herring Prospectus and the Bid
cum Application Form and unless otherwise stated or implied, includes an Anchor Investor
Centres at which the Designated Intermediaries accepted the Bid cum Application Forms, being
the Designated SCSB Branch for SCSBs, Specified Locations for the Syndicate, Broker Centres
for Registered Brokers, Designated RTA Locations for RTAs and Designated CDP Locations
for CDPs

The book building process as described in Part A of Schedule XIII of the SEBI ICDR
Regulations, in terms of which the Offer was being made

Axis Capital Limited and IIFL Securities Limited

Broker centres of the Registered Brokers, where Bidders (other than Anchor Investors) could
submit the Bid cum Application Forms. The details of such Broker Centres, along with the names
and contact details of the Registered Brokers are available on the respective websites of the Stock
Exchanges

Notice or intimation of allocation of the Equity Shares sent to Anchor Investors, who have been
allocated the Equity Shares, after the Anchor Investor Bidding Date

The higher end of the Price Band, being % 1,490 per Equity Share, above which the Offer Price
and Anchor Investor Offer Price could not be finalized and above which no Bids were accepted
The agreement dated March 1, 2021 entered into among our Company, the Selling Shareholders,
the Registrar to the Offer, the BRLMs, the Syndicate Member, the Bankers to the Offer and the
Sponsor Bank for collection of the Bid Amounts, and where applicable remitting refunds, if any,
to the Anchor Investors, on the terms and conditions thereof

Client identification number of the Bidder’s beneficiary account

The depository participants, as defined under the Depositories Act, 1996 and registered under
Section 12 (1A) of the SEBI Act and who are eligible to procure Bids at the Designated CDP
Locations in terms of circular no. CIR/CFD/POLICYCELL/11/2015 dated November 10, 2015
and the SEBI UPI Circulars, issued by SEBI

The Offer Price, being %1,490 per Equity Share, finalized by our Company and the Investor
Selling Shareholders, in consultation with the BRLMs, which was a price within the Price Band.
Only Retail Individual Investors were entitled to Bid at the Cut-off Price. QIBs (including
Anchor Investors) and Non-Institutional Investors were not entitled to Bid at the Cut-off Price
The details of the Bidders including the Bidders’ address, names of the Bidders’ father/husband,
investor status, occupation, PAN, bank account details and UPI ID, wherever applicable

Such branches of the SCSBs which could collect the Bid cum Application Form used by Bidders
(other than Anchor Investors), a list of which is available at the website of the SEBI
(www.sebi.gov.in/sebiweb/other/OtherAction.do?doRecognised=yes) and updated from time to
time

Such centres of the Collecting Depository Participants where Bidders (other than Anchor
Investors) could submit the Bid cum Application Forms. The details of such Designated CDP
Locations, along with the names and contact details of the CDPs are available on the respective
websites of the Stock Exchanges and updated from time to time

The date on which the funds from the Anchor Escrow Accounts are transferred to the Public
Offer Accounts or the Refund Account, as appropriate, and the relevant amounts blocked by

 
 

Term

Designated Intermediaries

Designated RTA Locations

Designated Stock Exchange
Draft Red Herring
Prospectus/DRHP

Eligible NRI

Escrow Collection Bank

First Bidder

Floor Price

Fresh Issue

General Information
Document

TFL
IPO
Maximum RII Allottees

Minimum Promoter's
Contribution

Monitoring Agency
Monitoring Agency
Agreement

Mutual Fund Portion

Net Proceeds

Non-Institutional Category

Non-Institutional
Investors/NIIs

Offer

Description
the SCSBs are transferred from the ASBA Accounts, to the Public Offer Accounts and/or are
unblocked, as applicable, in terms of the Red Herring Prospectus and this Prospectus, after
finalization of Basis of Allotment with the Designated Stock Exchange

Collectively, the members of the Syndicate, sub-syndicate/agents, SCSBs, Registered
Brokers, CDPs and RTAs, who were authorized to collect Bid cum Application Forms from
the Bidders (other than Anchor Investors), in relation to the Offer

Such centres of the RTAs where Bidders (other than Anchor Investors) could submit the Bid
cum Application Forms. The details of such Designated RTA Locations, along with the names
and contact details of the RTAs are available on the respective websites of the Stock Exchanges
(www.nseindia.com and www.bseindia.com) and updated from time to time

BSE

The draft red herring prospectus dated December 9, 2020, issued in accordance with the SEBI
ICDR Regulations

A non-resident Indian, resident in a jurisdiction outside India where it is not unlawful to make an
offer or invitation under the Offer and in relation to whom the Red Herring Prospectus constituted
an invitation to subscribe for the Equity Shares

The bank which is a clearing member and is registered with SEBI as an escrow bank, with
whom the Anchor Escrow Accounts in relation to the Offer for Bids by Anchor Investors were
opened, in this case being Axis Bank Limited

The Bidder whose name appears first in the Bid cum Application Form or the Revision Form
and in case of joint Bidders, whose name appears as the first holder of the beneficiary account
held in joint names

The lower end of the Price Band being & 1,488 per Equity Shares, at or above which the Offer
Price and the Anchor Investor Offer Price were finalized and below which no Bids were accepted
Fresh issue of 1,006,711* Equity Shares aggregating to & 1,500.00* million by our Company
as part of the Offer, in terms of the Red Herring Prospectus and this Prospectus

*Subject to finalization of the Basis of Allotment

The General Information Document for investing in public issues prepared and issued in
accordance with the circular no. SEBI / HO / CFD / DIL1/ CIR / P / 2020 / 37 dated March
17, 2020 and the circular no. SEBI / HO / CFD / DIL2 / CIR / P / 2020 / 50 dated March 30,
2020, as amended by SEBI from time to time

The General Information Document shall be available on the websites of the Stock Exchanges
and the BRLMs

IIFL Securities Limited

Initial public offering

The maximum number of RIIs who can be allotted the minimum Bid Lot. This is computed
by dividing the total number of Equity Shares available for Allotment to RIls by the minimum
Bid Lot

‘Aggregate of 20% of the fully diluted post-Offer Equity Share capital of our Company held
by our Promoter which shall be provided towards minimum promoter’s contribution and
locked-in for a period of at least three years from the date of Allotment

Axis Bank Limited

The agreement dated March 1, 2021 entered into between our Company and the Monitoring
Agency

5% of the QIB Category (other than the Anchor Investor Portion) or 55,282* Equity Shares
which was made available for allocation to Mutual Funds only, on a proportionate basis, subject
to valid Bids having been received at or above the Offer Price

* Subject to finalization of the Basis of Allotment

Proceeds of the Offer that will be available to our Company, i.e. gross proceeds of the Fresh
Issue, less Offer Expenses to the extent applicable to the Fresh Issue

The portion of the Offer, being not less than 15% of the Offer or 829,225* Equity Shares, made
available for allocation on a proportionate basis to Non-Institutional Investors subject to valid
Bids having been received at or above the Offer Price

* Subject to finalization of the Basis of Allotment

All Bidders that were not QIBs (including Anchor Investors) and Retail Individual Investors who
had Bid for Equity Shares for an amount of more than & 200,000 (but not including NRIs other
than Eligible NRIs)

Public issue of 5,528,161* Equity Shares of face value 2 5 each for cash at a price of % 1,490
including a premium of @ 1,485 per Equity Share, aggregating to 8,236.96 million comprising
Fresh Issue and Offer for Sale

 
 

Term

Offer Agreement

Offer for Sale

Offer Price

Offered Shares

Price Band

Pricing Date

Prospectus

Public Offer Accounts

Public Offer Account Banks

QIB Category

Qualified Institutional
Buyers/QIBs

Red Herring Prospectus/RHP
Refund Account

Refund Bank

Registered Brokers

Registrar Agreement
Registrar and Share Transfer
Agents/RTAS

Registrar to the Offer

Description

* Subject to finalization of the Basis of Allotment

The agreement dated December 9, 2020, entered into amongst our Company, the Selling
Shareholders and the BRLMs, pursuant to which certain arrangements are agreed to in relation
to the Offer

Offer of 4,521,450" Equity Shares offered for sale by the Selling Shareholders pursuant to the
Offer in terms of the Red Herring Prospectus and this Prospectus. For further information, see
“The Offer” on page 56

% 1,490 per Equity Share, being the final price at which Equity Shares will be Allotted to the
successful Bidders (other than Anchor Investors), as determined in accordance with the Book
Building Process and determined by our Company and the Investor Selling Shareholders, in
consultation with the BRLMs in terms of the Red Herring Prospectus and the Prospectus on
the Pricing Date. Equity Shares will be Allotted to Anchor Investors at the Anchor Investor
Offer Price in terms of the Red Herring Prospectus and this Prospectus.

4,521,450* Equity Shares, offered for sale pursuant to the Offer for Sale, comprising 130,640*
Equity Shares by Srinivasan Ravi, 1,559,260* Equity Shares by Marina, 1,414,050* Equity
Shares by IFC and 1,417,500* Equity Shares by K. Gomatheswaran

* Subject to finalization of the Basis of Allotment

Price band of the Floor Price of = 1,488 and a Cap Price of % 1,490. The Price Band and the
minimum Bid Lot size for the Offer were decided by our Company and the Investor Selling
Shareholders, in consultation with the BRLMs, and were advertised in all editions of Financial
Express (a widely circulated English national daily newspaper), all editions of Jansatta (a widely
circulated Hindi national daily newspaper) and all editions of Makkal Kural (a widely circulated
Tamil regional daily newspaper, Tamil being the regional language in Coimbatore where our
Registered Office is located) at least two Working Days prior to the Bid/Offer Opening Date,
with the relevant financial ratios calculated at the Floor Price and at the Cap Price and were made
available to the Stock Exchanges for the purpose of uploading on their websites

The date on which our Company and the Investor Selling Shareholders, in consultation with the
BRLMs, finalized the Offer Price, being March 18, 2021

This prospectus dated March 18, 2021 filed with the RoC for the Offer on or after the Pricing
Date in accordance with the provisions of Section 26 of the Companies Act 2013 and the SEBI
ICDR Regulations, containing the Offer Price, the size of the Offer and certain other information,
including any addenda or corrigenda thereto

The accounts opened with the Public Offer Account Banks under Section 40(3) of the Companies
Act 2013 to receive monies from the Anchor Escrow Accounts and the ASBA Accounts on the
Designated Date

The banks with which the Public Offer Accounts is maintained, in this case being, Axis Bank
Limited and HDFC Bank Limited

The portion of the Offer, being not more than 50% of the Offer or 2,764,079* Equity Shares to
be Allotted to QIBs on a proportionate basis, including the Anchor Investor Portion (in which
allocation was on a discretionary basis, as determined by our Company and the Investor Selling
Shareholders, in consultation with the BRLMs, subject to valid Bids having been received at or
above the Offer Price)

* Subject to finalization of the Basis of Allotment

A qualified institutional buyer as defined under Regulation 2(1)(ss) of the SEBI ICDR
Regulations

The red herring prospectus dated March 5, 2021 read with the addendum dated March 11, 2021
published on March 12, 2021, issued in accordance with Section 32 of the Companies Act 2013
and the SEBI ICDR Regulations

The account opened with the Refund Bank from which refunds, if any, of the whole or part of
the Bid Amount shall be made to Anchor Investors

The bank with whom the Refund Account is be opened, in this case being, Axis Bank Limited
Stock brokers registered with the stock exchanges having nationwide terminals, other than the
members of the Syndicate and who are eligible to procure Bids in terms of circular number
CIR/CFD/14/2012 dated October 4, 2012 and the SEBI UPI Circulars, issued by SEBL

The agreement dated December 9, 2020, entered into amongst our Company, the Selling
Shareholders and the Registrar to the Offer in relation to the responsibilities and obligations of
the Registrar to the Offer pertaining to the Offer

Registrar and share transfer agents registered with SEBI and eligible to procure Bids at the
Designated RTA Locations in terms of circular no. CIR/CFD/POLICYCELL/11/2015 dated
November 10, 2015 and the SEBI UPI Circulars, issued by SEBL

Link Intime India Private Limited

 
 

Term
Retail Category

Retail Individual

Investors/RIIs

Revision Form

SEBI UPI Circulars

Self-Certified Syndicate

Banks/SCSBs

Share Escrow Agreement

Specified Locations

Sponsor Bank

Stock Exchanges
Syndicate Agreement

Syndicate Member

Syndicate/members of
Syndicate

Underwriters
Underwriting Agreement

UPI
UPIID

UPI Mandate Request

the

Description
‘The portion of the Offer, being not less than 35% of the Offer or 1,934,857" Equity Shares, which
was made available for allocation to Retail Individual Investors, which was not less than the
minimum Bid Lot, subject to availability in the Retail Category

* Subject to finalization of the Basis of Allotment

Bidders (including HUFs and Eligible NRIs) whose Bid Amount for Equity Shares in the Offer
is not more than & 200,000 in any of the Bidding options in the Offer (including HUFs applying
through their karta and Eligible NRIs and does not include NRIs other than Eligible NRIs)

The form used by the Bidders to modify the quantity of Equity Shares or the Bid Amount in any
of their Bid cum Application Forms or any previous Revision Form(s), as applicable.

QIBs Bidding in the QIB Category and Non-Institutional Investors Bidding in the Non-
Institutional Category were not permitted to withdraw their Bid(s) or lower the size of their Bid(s)
(in terms of quantity of Equity Shares or the Bid Amount) at any stage. Retail Individual
Investors could revise their Bids during the Bid/Offer Period and withdraw their Bids until
Bid/Offer Closing Date

The SEBI circular no. SEBI/HO/CFD/DIL2/CIR/P/2018/138 dated November 1, 2018, the SEBI
circular no. SEBI/HO/CFD/DIL2/CIR/P/2019/50 dated April 3, 2019 and the SEBI circular no.
SEBI/HO/CFD/DIL2/CIR/P/2019/76 dated June 28, 2019, SEBI circular no.
SEBI/HO/CFD/DIL2/CIR/P/2019/85 dated July 26, 2019, SEBI circular no.
SEBI/HO/CFD/DCR2/CIR/P/2019/133 dated November 8, 2019, the SEBI circular no.
SEBI/HO/CFD/DIL2/CIR/P/2020/50 dated March 30, 2020 and any subsequent circulars or
notifications issued by SEBI in this regard

The banks registered with SEBI, which offer the facility of ASBA services, (i) in relation to
ASBA, where the Bid Amount will be blocked by authorising an SCSB, a list of which is
available on the website of SEBI at
www.sebi.gov.in/sebiweb/other/OtherAction.do?doRecognisedFpi=yes&intmld=34 and
updated from time to time and at such other websites as may be prescribed by SEBI from time
to time, (ii) in relation to Rlls using the UPI Mechanism, a list of which is available on the website
of SEBI at https://sebi.gov.in/sebiweb/other/OtherAction.do?doRecognisedFpi=yes&intmId=40
or such other website as updated from time to time

Applications through UPI in the Offer could be made only through the SCSBs mobile
applications (apps) whose name appears on the SEBI website. A list of SCSBs and mobile
application, which, are live for applying in public issues using UPI Mechanism is appearing
in the “list of mobile applications for using UPI in public issues” displayed on the SEBI
website. The said list shall be updated on the SEBI website

The agreement dated March 1, 2021 entered into amongst the Selling Shareholders, our
Company and a share escrow agent, in connection with the transfer of the respective portion
of Offered Shares and credit of such Equity Shares to the demat account of the Allottees
Bidding centres where the Syndicate could accept Bid cum Application Forms from the Bidders,
a list of which is which is available on the website of SEBI (www.sebi.gov.in) and updated from
time to time

The Banker to the Offer registered with SEBI appointed by our Company to act as a conduit
between the Stock Exchanges and NPCI in order to make the mandate collect requests and /
or payment instructions of the RIls into the UPI and carry out any other responsibilities, in
terms of the SEBI circular no. SEBI/HO/CFD/DIL2/CIR/P/2018/138) dated November 1,
2018, in this case being, HDFC Bank Limited

Collectively, BSE Limited and National Stock Exchange of India Limited

The agreement dated March 1, 2021 entered into amongst the members of the Syndicate, our
Company, the Selling Shareholders and the Registrar to the Offer in relation to the collection of
Bid cum Application Forms by the Syndicate

Intermediary registered with SEBI and permitted to carry out activities as an underwriter, in this
case being, IIFL Securities Limited

Collectively, the BRLMs and the Syndicate Member

Collectively, the BRLMs and the Syndicate Member

The agreement dated March 18, 2021 entered into amongst our Company, the Selling
Shareholders and the Underwriters

Unified payments interface which is an instant payment mechanism, developed by NPCI
Identity document created on UPI for single-window mobile payment system developed by
the NPCI

A request (intimating the RII by way of a notification on the UPI application and by way of a
SMS directing the RII to such UPI application) to the RII initiated by the Sponsor Bank to

 
 

Term

UPI Mechanism

UPI PIN
Working Day(s)

Description
authorize blocking of funds in the relevant ASBA Account through the UPI application
equivalent to Bid Amount and subsequent debit of funds in case of Allotment

The Bidding mechanism that was used by an RII to make a Bid in the Offer in accordance
with the SEBI UPI Circulars

Password to authenticate UPI transaction

All days on which commercial banks in Mumbai are open for business; provided however,
with reference to (a) announcement of Price Band; and (b) Bid/Offer Period, the term Working
Day shall mean all days, excluding Saturdays, Sundays and public holidays, on which
commercial banks in Mumbai are open for business; and (c) the time period between the
Bid/Offer Closing Date and the listing of the Equity Shares on the Stock Exchanges, “Working
Day” shall mean all trading days of the Stock Exchanges, excluding Sundays and bank
holidays, as per circulars issued by SEBI, including the SEBI UPI Circulars

 

Conventional and General Terms and Abbreviations

 

Term
AIF(s)

API

BSE

CDSL.

Central Government
CIN

Companies Act

Companies Act 1956
Companies Act 2013
Consolidated FDI Policy

CRISIL

CSR
Depositories Act
Depository

DP ID
DPUT

EGM
EPS
Euro

FCNR Account
FDI

FEMA

FEMA Rules

Financial Year/Fiscal/Fiscal
Year
FPIs
FVCI

GDP
Gross Block
GST

HUF()

ICAL

IDC(s)

IFRS

Income Tax Act
Ind AS

Indian GAAP

Description
Alternative Investment Fund(s) as defined in and registered with SEBI under the SEBI AIF
Regulations

Application performing interface

BSE Limited

Central Depository Services (India) Limited

Government of India

Corporate Identity Number

Companies Act 1956 and the Companies Act 2013, read with the rules, regulations,
clarifications and modifications thereunder

The erstwhile Companies Act, 1956 read with the rules, regulations, clarifications and
modifications thereunder

Companies Act, 2013 read with the rules, regulations, clarifications and modifications
thereunder

The consolidated FDI Policy, effective from October 15, 2020, issued by the DPIIT, and any
modifications thereto or substitutions thereof, issued from time to time

CRISIL Limited

Corporate social responsibility

Depositories Act, 1996

A depository registered with the SEBI under the Securities and Exchange Board of India
(Depositories and Participants) Regulations, 1996

Depository Participant’s identity number

Department of Promotion of Industry and Internal Trade, Ministry of Commerce and
Industry, Government of India

Extraordinary general meeting

Earnings per share

Euro, the official single currency of the participating member states of the European
Economic and Monetary Union of the Treaty establishing the European Community
Foreign Currency Non Resident (Bank) account established in accordance with the FEMA
Foreign direct investment

Foreign Exchange Management Act, 1999 read with rules and regulations thereunder

Foreign Exchange Management (Non-debt Instruments) Rules, 2019 issued by the Ministry
of Finance, Government of India

The period of 12 months commencing on April 1 of the immediately preceding calendar year
and ending on March 31 of that particular calendar year

A foreign portfolio investor as defined under the SEBI FPI Regulations

Foreign Venture Capital Investors (as defined under the Securities and Exchange Board of
India (Foreign Venture Capital Investors) Regulations, 2000) registered with SEBI

Gross Domestic Product

Property, plant and equipment, intangibles and capital work-in-progress

Goods and services tax

Hindu Undivided Family(ies)

Institute of Chartered Accountants of India

Industrial Development Corporation(s)

International Financial Reporting Standards

Income-tax Act, 1961

Indian Accounting Standards referred to in the Companies (Indian Accounting Standard) Rules,
2015

Generally Accepted Accounting Principles in India

 
 

 

 

 

 

 

 

 

Term Description
INB/Indian Rupee/3/Rs. Indian Rupee, the official currency of the Republic of India
It Information Technology
MCA inistry of Corporate Affairs, Government of India
Mn
~ Mutual Funds Mutual funds registered with the SEBI under the Securities and Exchange Board of India

(Mutual Funds) Regulations, 1996

 

National Automated Clearing House

 

 

Non-banking financial company

 

 

 

 

 

 

 

 

 

 

 

 

 

_NEFT National Electronic Funds Transfer

NPCI National Payments Corporation of India
-NR/Non-resident A person resident outside India, as defined under the FEMA and includes an NRI

NRI Non-Resident Indian

NSDL National Securities Depository Limited
NSE National Stock Exchange of India Limited

P/E Ratio Price/Earnings Ratio

PAN Permanent account number

PAT Profit after tax

RBI Reserve Bank of India
“Regulation S Regulation S under the U.S. Securities Act
~ROCE Return on Capital Employed

 

Return on Equity

Return on Net Worth

 

Securities Contract (Regulation) Act, 1956

 

Securities Contracts (Regulation) Rules, 1957

 

Securities and Exchange Board of India constituted under the SEBI Act

 

 

Securities and Exchange Board of India Act, 1992

 

 

 

 

 

 

 

 

 

 
 

 

 

 

SEBI AIF Regulations Securities and Exchange Board of India (Alternative Investment Funds) Regulations, 2012
SEBI FPI Regulations Securities and Exchange Board of India (Foreign Portfolio Investors) Regulations, 2019
SEBI FVCI Regulations Securities and Exchange Board of India (Foreign Venture Capital Investors) Regulations,

2000
~ SEBI ICDR Regulations Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements)
Regulations, 2018
SEBI Listing Regulations SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015
SEBI VCF Regulations Securities and Exchange Board of India (Venture Capital Fund) Regulations, 1996

“SGD Singapore dollar, the official currency of the country of Singapore
STT
Systemically Important Systemically important non-banking financial company as defined under Regulation 2(1)(iii)
NBEC of the SEBI ICDR Regulations

 

Takeover Regulations

Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers)
Regulations, 2011

 

 

 

 

 

 

 

_US. GAAP Generally Accepted Accounting Principles in the United State of America
USS. Securities Act United States Securities Act of 1933
USS/USD/US Dollar United States Dollar, the official currency of the United States of America
USA/U.S/US United States of America, its territories and possessions, any state of the United States of

America and the District of Columbia

 

Value Added Tax

 

 

Venture capital funds as defined in and registered with the SEBI under the SEBI VCF
Regulations

 

Industry Related Terms/Abbreviations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Term Description
Air Insulated Switchgears
Automated Storage and Retrieval System
“BS VI Bharat Stage emission norms VI
CAD Computer Aided Design
CAGR Compound Annual Growth Rate
CNC Computer Numerical Control
COINDIA, Coimbatore Industrial Infrastructure Association
DFC Dedicated Freight Corridor
EBIT Earnings before Interest and Taxes
EBITDA Earnings before Interest, Taxes, Depreciation and Amortization
EBITDA Margin EBITDA divided by Revenue from Operations

 

10
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Term Description
EDM Electrical Discharge Machine
EPCG Export Promotion Capital Goods
“ERP Enterprise Resource Planning
FMCG Fast Moving Consumer Goods
GIs Gas Insulated Switchgears
HCVs Heavy Commercial Vehicles
HPDC High Pressure Die Casting
1SO International Organization for Standardization
LCVs Light Commercial Vehicles
LIBOR London Interbank Offered Rate
LPDC Low Pressure Die Casting
LTMLR Long Term Minimum Lending Rate
MCLR Marginal Cost of funds based Lending Rate
MCVs Medium Commercial Vehicles
MEI Scheme Merchandise Exports from India Scheme
OEM Original Equipment Manufacturer
SPM Special Purpose Machine

 

11
CERTAIN CONVENTIONS, USE OF FINANCIAL INFORMATION AND MARKET DATA AND
CURRENCY OF PRESENTATION

This Prospectus has been prepared in accordance with provisions and disclosure requirements of the SEBI ICDR
Regulations except that the offer procedure including in relation to Bid/Offer Period, submission of Bid Cum
Application Forms, payment of Bid Amount, allocation, Allotment, refund of Bid Amount, if any and listing of the
Equity Shares as described in the section “Offer Procedure” on page 350 (each read with “Definition and
Abbreviations” on page 2) has been prepared in accordance with SEBI ICDR Regulations.

Certain Conventions

All references in this Prospectus to “India” are to the Republic of India, together with its territories and
possessions. All references to the “U.S.”, the “USA” or the “United States” are to the United States of America,
together with its territories and possessions.

Unless stated otherwise, all references to page numbers in this Prospectus are to the page numbers of this.
Prospectus.

Financial Data

Unless indicated otherwise, the financial information in this Prospectus is derived from our Restated Financial
Information, and the respective notes, schedules and annexures thereto, prepared in accordance with the
Companies Act 2013, Ind AS and the guidance notes issued by ICAI and restated in accordance with the SEBI
ICDR Regulations. For further information, see “Summary Financial Information” and “Financial Statements”
on pages 58 and 225, respectively.

Our Company’s financial year commences on April 1 of the immediately preceding calendar year and ends on
March 31 of that particular calendar year, so all references to a particular financial year are to the 12 month period
commencing on April 1 of the immediately preceding calendar year and ending on March 31 of that particular
calendar year.

The audited consolidated financial statements for Fiscals 2020, 2019 and 2018 have been audited by PKF Sridhar
& Santhanam LLP, Chartered Accountants, our Previous Auditors. The audited consolidated interim financial
statements for the nine months ended December 31, 2020 have been audited by Sharp & Tannan, Chartered
Accountants, our Statutory Auditors.

Our Restated Financial Information have been prepared in accordance with Ind AS. There are significant
differences between Indian GAAP, International Financial Reporting Standards (“IFRS”) and Generally Accepted
Accounting Principles in the United States of America (“U.S. GAAP”). Accordingly, the degree to which the
financial information included in this Prospectus will provide meaningful information is entirely dependent on
the reader’s level of familiarity with Indian accounting policies and practices, Ind AS, the Companies Act 2013
and the SEBI ICDR Regulations. Any reliance by persons not familiar with Ind AS, the Companies Act 2013, the
SEBIICDR Regulations and practices on the financial disclosures presented in this Prospectus should accordingly
be limited. We have not attempted to quantify the impact of IFRS or U.S. GAAP on the financial information
included in this Prospectus, nor do we provide a reconciliation of our financial information to those under U.S.
GAAP or IFRS and we urge you to consult your own advisors regarding such differences and their impact on our
financial information. For details in connection with risks involving differences between Ind AS, U.S. GAAP and
IFRS see “Risk Factors - Our Company has prepared financial statements under Ind AS. Significant
differences exist between Ind AS and other accounting principles.” on page 53.

Certain figures contained in this Prospectus, including financial information, have been subject to rounding
adjustments. All decimals have been rounded off to two decimal points. In certain instances, (i) the sum or
percentage change of such numbers may not conform exactly to the total figure given; and (ii) the sum of the
numbers in a column or row in certain tables may not conform exactly to the total figure given for that column or
row. However, where any figures that may have been sourced from third-party industry sources are rounded off
to other than two decimal points in their respective sources, such figures appear in this Prospectus as rounded off
to such number of decimal points as provided in their respective sources.

Unless the context otherwise indicates, any percentage or amounts, as set forth in “Risk Factors”, “Business”,
“Management's Discussion and Analysis of Financial Condition and Results of Operations” on page 22, 168,

12
and 288, respectively, and elsewhere in this Prospectus have been calculated on the basis of the Restated Financial
Information of our Company.

Industry and Market Data

We have commissioned a report titled “Studying the Automotive and Industrial Engineering Business in India”
dated December 2020, prepared by CRISIL Research, for the purpose of confirming our understanding of the
industry in connection with the Offer. Further, in this regard, CRISIL Research has issued the following
disclaimer:

“CRISIL Research, a division of CRISIL Limited (CRISIL) has taken due care and caution in preparing this report
(Report) based on the Information obtained by CRISIL from sources which it considers reliable (Data). However,
CRISIL does not guarantee the accuracy, adequacy or completeness of the Data / Report and is not responsible
for any errors or omissions or for the results obtained from the use of Data / Report. This Report is not a
recommendation to invest / disinvest in any entity covered in the Report and no part of this Report should be
construed as an expert advice or investment advice or any form of investment banking within the meaning of any
law or regulation. CRISIL especially states that it has no liability whatsoever to the subscribers / users /
transmitters/ distributors of this Report. Without limiting the generality of the foregoing, nothing in the Report is
to be construed as CRISIL providing or intending to provide any services in jurisdictions where CRISIL does not
have the necessary permission and/or registration to carry out its business activities in this regard. Craftsman
Automation Limited will be responsible for ensuring compliances and consequences of non-complainces for use
of the Report or part thereof outside India. CRISIL Research operates independently of, and does not have access
to information obtained by CRISIL’s Ratings Division / CRISIL Risk and Infrastructure Solutions Ltd (CRIS),
which may, in their regular operations, obtain information of a confidential nature. The views expressed in this
Report are that of CRISIL Research and not of CRISIL’s Ratings Division / CRIS. No part of this Report may be
published/reproduced in any form without CRISIL’s prior written approval.”

 

Industry publications generally state that the information contained in such publications has been obtained from
sources generally considered reliable, but their accuracy, adequacy or completeness and underlying assumptions
are not guaranteed and their reliability cannot be assured. Accordingly, no investment decisions should be made
based on such information. Although we consider that the industry and market data used in this Prospectus to be
reliable, it has not been independently verified by us, the Selling Shareholders, the BRLMs, or any of our or their
respective affiliates or advisors, and none of these parties makes any representation as to the accuracy of this
information. The data used in these sources may have been reclassified by us for the purposes of presentation.
Data from these sources may also not be comparable. The extent to which the industry and market data presented
in this Prospectus is meaningful depends upon the reader’s familiarity with and understanding of the
methodologies used in compiling such data. There are no standard data gathering methodologies in the industry
in which we conduct our business and methodologies and assumptions may vary widely among different market
and industry sources.

Such data involves risks, uncertainties and numerous assumptions and is subject to change based on various
factors, including those discussed in “Risk Factors - This Prospectus contains information from industry
sources including the industry report commissioned from CRISIL Research. Investors are advised not to place
undue reliance on such information.” on page 50.

Currency and Units of Presentation

All references to “Indian Rupees” or “” or “Rs.” are to Indian Rupees, the official currency of the Republic of
India. All references to “US$”, “U.S. Dollar”, “USD” or “U.S. Dollars” are to United States Dollars, the official
currency of the United States of America.

In this Prospectus, our Company has presented certain numerical information. All figures have been expressed in
millions. One million represents “10 lakhs” or 1,000,000. However, where any figures that may have been sourced
from third-party industry sources are expressed in denominations other than millions in their respective sources,
such figures appear in this Prospectus expressed in such denominations as provided in such respective sources.

Exchange Rates

This Prospectus contains conversions of U.S. Dollars and other currency amounts into Indian Rupees that have
been presented solely to comply with the requirements of the SEBI ICDR Regulations. These conversions should

13
not be construed as a representation that such currency amounts could have been, or can be converted into Indian
Rupees, at any particular rate, or at all.

The exchange rates of certain currencies used in this Prospectus into Indian Rupees are provided below.

 

(in)
Currency Exchange rate ason Exchange rate ason Exchange rateason Exchange rate as on
December 31, 2020 March 31, 2020 March 28, 2019* March 30, 2018*
1USD 73.05 75.39 69.17 65.04
1 Euro 89.79 83.05 77.70 80.62
1SGD 55.24 53.01 51.13 49.76
JPY 0.71 0.70 0.63 0.62

 

Source: USD, Euro and JPY = RBI Reference Rate and www.fbil.org.in
SGD = www.xe.com

* In the event that March 31 of any of the respective years is a public holiday, the previous calendar day not being a public holiday has been
considered

Note: Exchange rate is rounded off to two decimal places.

14
FORWARD-LOOKING STATEMENTS

This Prospectus contains certain “forward-looking statements”. These forward-looking statements include
statements which can generally be identified by words or phrases such as “aim”, “anticipate”, “believe”, “expect”,
“estimate”, “intend”, “likely to”, “objective”, “plan”, “propose”, “will continue”, “seek to”, “will pursue” or
other words or phrases of similar import. Statements that describe our strategies are also forward-looking

statements.

  

 

All forward-looking statements are based on our current plans, estimates and expectations and actual results may
differ materially from those suggested by such forward-looking statements. All forward-looking statements are
subject to risks, uncertainties and assumptions about us that could cause actual results to differ materially from
those contemplated by the relevant forward-looking statement. This may be due to risks or uncertainties associated
with our expectations with respect to, but not limited to, regulatory changes pertaining to the industries in India
in which we have our businesses and our ability to respond to them, our ability to successfully implement our
strategy, our growth and expansion, technological changes, our exposure to market risks, general economic and
political conditions in India, which have an impact on our business activities or investments, the monetary and
fiscal policies of India, inflation, deflation, unanticipated turbulence in interest rates, foreign exchange rates,
equity prices or other rates or prices, the performance of the financial markets in India and globally, changes in
domestic laws, regulations and taxes, changes in competition in our industry and incidence of any natural
calamities and/or acts of violence. Important factors that would cause actual results to differ materially include,
but not limited to:

© uncertainty in relation to the continuing effect of the COVID-19 pandemic on our business and operations;
¢ — significant decline in automobile sales prior to COVID-19;

¢ — inability to meet obligations under debt financing arrangements;

¢ — losses incurred/to be incurred by our group companies;

¢ emphases of matter and other remarks on the financial statements;

© competitive business environment;

¢ — loss of any key customers or significant reduction in production and sales of or demand for our production;
¢ — disruption of supply of raw material;

© — uncertainties and risk pertaining to joint ventures and strategic investments; and

¢ enforcement of the security in the event of failure to service debt obligations.

For a further discussion of factors that could cause our actual results to differ, see “Risk Factors’, “Business” and
“Management’s Discussion and Analysis of Financial Condition and Results of Operations” on pages 22, 168
and 288, respectively. By their nature, certain market risk disclosures are only estimates and could be materially
different from what actually occurs in the future. As a result, actual future gains or losses could be materially
different from those that have been estimated. Forward-looking statements reflect our current views as of the date
of this Prospectus and are not a guarantee of future performance. Although we consider that the assumptions on
which such statements are based to be reasonable, any such assumptions as well as the statement based on them
could prove to be inaccurate.

Neither our Company, nor the Directors, nor the Selling Shareholders nor the Syndicate, nor any of their respective
affiliates have any obligation to update or otherwise revise any statements reflecting circumstances arising after
the date hereof or to reflect the occurrence of underlying events, even if the underlying assumptions do not come
to fruition. In accordance with SEBI requirements, our Company and the BRLMs will ensure that investors in
India are informed of material developments until the receipt of final listing and trading approvals for the Equity

Shares pursuant to the Offer.

In accordance with SEBI ICDR Regulations, the Selling Shareholders severally and not jointly will ensure that
Bidders in India are informed of material developments in relation to statements and undertakings specifically

15
made by the respective Selling Shareholders in relation to themselves and their respective portion of the Offered
Shares in this Prospectus until the time of the grant of listing and trading permission by the Stock Exchanges.
Only statements and undertakings which are specifically “confirmed” or “undertaken” by the Selling
Shareholders, as the case may be, in this Prospectus shall, severally and not jointly, deemed to be statements and
undertakings made by such Selling Shareholders.

16
SUMMARY OF THE OFFER DOCUMENT

The following is a general summary of the terms of the Offer and is not exhaustive, nor does it purport to contain
a summary of all the disclosures in this Prospectus or all details relevant to investors. This summary should be
read in conjunction with, and is qualified in its entirety by, the more detailed information appearing elsewhere in
this Prospectus, including in the sections entitled “Risk Factors”, “The Offer”, “Capital Structure”, “Objects
of the Offer”, “Industry Overview”, “Business”, “Outstanding Litigation and Material Developments”, “Offer
Procedure” and ‘Main Provisions of Articles of Association” on pages 22, 56, 71, 80, 96, 168, 325, 350 and
368, respectively.

Summary of Business

We are a diversified engineering company with vertically integrated manufacturing capabilities, engaged in three
business segments, namely powertrain and other products for the automotive segment, aluminium products for
the automotive segment and industrial and engineering products segment. We are the largest player involved in
the machining of cylinder blocks and cylinder heads in the intermediate, medium and heavy commercial vehicles
segment as well as in the construction equipment industry in India. We are among the top three-four component
players with respect to machining of cylinder block for the tractor segment in India. (Source: CRISIL Report). We
are present across the entire value chain in the Automotive-Aluminium Products segment, providing diverse
products and solutions. For further details, see “Business” on page 168.

Summary of Industry

The Indian auto components industry clocked a CAGR of 6% in production over Fiscals 2015 to 2020, led by
growth in replacement and exports demand. Domestic demand is forecast to log a CAGR of 6% to 8% to
approximately = 4,225 billion, driven by demand from OEMs at 7% to 9%, whereas exports are set to grow at 3%
to 5% over Fiscals 2020 to 2024 to reach approximately = 2,772 billion on the back of healthy growth in the OEM
segment on a low base of Fiscals 2020 and 2021 due to BS-VI norms and the COVID-19 pandemic, respectively.
In the long term, CRISIL Research expects the domestic consumption to grow at a pace of 5 to 7% CAGR between
Fiscals 2020-2024. For further details, see “Industry Overview” on page 96.

Promoter

Our Promoter is Srinivasan Ravi.

 

 

 

 

 

 

Offer Size

Offer 5,528,161" Equity Shares, aggregating to & 8,236.96"
million

which consists of:

~ Fresh Issue 1,006,711* Equity Shares, aggregating to % 1,500.00*
million

- Offer for Sale® 4,521,450* Equity Shares, aggregating to % 6,736.96"
million by the Selling Shareholders

 

 

* Subject to finalization of the Basis of Allotment

(1) The Offer has been authorized by a resolution of our Board dated December 5, 2020 and the Fresh Issue has been authorized by a special
resolution of our Shareholders, dated December 7, 2020.

(2) The Equity Shares being offered by the Selling Shareholders have been held for a period of at least one year immediately preceding the
date of filing of the Draft Red Herring Prospectus with SEBI, and are eligible for being offered for sale pursuant to the Offer in terms of

the SEBI ICDR Regulations. The Selling Shareholders, severally and not jointly, have confirmed and authorized their respective
participation in the Offer for Sale. For further information, see “Other Regulatory and Statutory Disclosures ” on page 332.

For further details, see “The Offer” on page 56.
Objects of the Offer

The Net Proceeds are proposed to be used in accordance with the details provided in the following table:

 

Particulars ‘Amount
(in million)
Repayment/pre-payment, in full or part, of certain borrowings availed of by our Company 1,200.00

 

17
 

General corporate purposes” 208.41
Net Proceeds 1,408.41

* ‘The amount utilized for general corporate purposes shall not exceed 25% of the gross proceeds of the Fresh Issue.

Aggregate pre-Offer Shareholding of Promoter, Promoter Group and Selling Shareholders

The aggregate pre-Offer shareholding of Promoter, Promoter Group and Selling Shareholders as on the date of
this Prospectus is as follows:

 

Category of Shareholders No. of Equity Shares held ‘% of total paid up pre-Offer Equity
Share capital

Promoter 10,630,640 52.83
Promoter Group 2,126,860 10.57
Selling Shareholders

- Srinivasan Ravi 10,630,640 52.83
- Marina 2,716,068 13.50
- IEC 2,425,668 12.06
-__K. Gomatheswaran 1,417,500 7.04

 

Summary of Financial Information

A summary of the financial information of our Company as per the Restated Financial Information is as follows:

(in & million except otherwise stated)

 

 

Particulars Nine months Fiscal
ended 2020 2019 2018
December 31,

2020
Share capital 100.61 100.61 100.61 100.61
Net worth 7,161.88 6,634.75 6,278.36 5,412.34
Revenue (total income) 10,299.08 -15,010.57—:18,316.43 ‘15,228.62
Profit after tax 506.60 410.73 973.67 315.34
Earnings per share (basic and diluted)
- Basic (in 2) 25.18 20.41 48.39 15.67
- Diluted (in 2) 25.18 20.41 48,39 15.67
Net asset value per Equity Share (in 2) 355.93 329.73 268.98
Total borrowings 8,901.12 10,406.49 8,466.83

 

 

Qualifications of the Statutory Auditors

The Restated Financial Information do not contain any qualification which have not been given effect to in the
Restated Financial Information.

Summary of Outstanding Litigation

A summary of outstanding litigation proceedings involving our Company, our Promoter, our Directors, our
Subsidiaries and litigation involving our Group Companies which have a material impact on the Company, as on
the date of this Prospectus is as follows:

 

Type of Litigation Number of cases ‘Amount*
(in million)
Litigation involving our Company
Criminal proceedings 3s -

Material civil litigation 2 15.07
Actions by statutory or regulatory authorities 2 7.62
Direct and indirect tax proceedings 24 193.28
Total 28 215.97

Litigation involving our Promoter
Criminal proceedings s 5
Material civil litigation = -

18
 

Type of Litigation

Actions by statutory or regulatory authorities
Direct and indirect tax proceedings
Total

Litigation involving our Subsidiaries
Criminal proceedings
Material civil litigation
Actions by statutory or regulatory authorities
Direct and indirect tax proceedings
Total

Litigation involving our Directors

Criminal proceedings

Material civil litigation

Actions by statutory or regulatory authorities

Direct and indirect tax proceedings

Total

Litigation involving our Group Companies
Outstanding litigation which may have a material impact on the
Company

Number of cases Amount*

(in million)

0.10

 

* To the extent quantifiable.

For further details of the outstanding litigation proceedings,

Developments” on page 325.

Risk Factors

Please see “Risk Factors” beginning on page 22.
Summary of Contingent Liabilities of our Company

A summary of our contingent liabilities as on December
Information is as follows:

see “Outstanding Litigation and Other Material

31, 2020 as indicated in our Restated Financial

(in million)

 

Particulars

Claims against the company not acknowledged as debt:
- Excise
- VAT*
- Service tax
- GST*
- Income tax
- Stamp duty
Sales Bill Discounting

As of December 31,
2020

0.69
ol
6.72
4.33
176.79
5.62

 

* includes € 0.68 million of Joint Venture
# includes & 0.78 million of Joint Venture

For details, see “Financial Statements — Note 44 - Contingent Liabilities and Capital Commitments” on page

279.

Summary of Related Party Transactions

A summary of related party transactions entered into by our Company with related parties are as follows:

(in million)

 

Transactions during Nature of Relationship Nine months Fiscal
the period / year ended 2020 2019 2018
ended December 31,
2020
Purchase of Goods & Subsidiaries 4.00 16.91 24.42 20.79
Services Carl Stahl Craftsman 8.76 15.13 18.93 31.40
Enterprises Private Limited
MC Craftsman Machinery 4.18 11.08 14.84 10.34

Private Limited

 

19
 

Transactions during Nature of Relationship Nine months Fiscal
the period / year ended 2020 2019 2018
ended December 31,
2020
Sale of Goods & Subsidiaries 26.99 75.58 82.83 64.59
Services Carl Stahl Craftsman 119.04 197.66 207.68 187.92
Enterprises Private Limited
MC Craftsman Machinery - 0.02 0.18 1.15
Private Limited
Sales Commission Carl Stahl Craftsman 0.01 1.54 - -
expenses Enterprises Private Limited
Reimbursement of Subsidiaries 0.16 10.20 8.93 2.81
Expenditure to
Reimbursement of Carl Stahl Craftsman 0.35 - - -
Expenditure from Enterprises Private Limited
MC Craftsman Machinery 0.19 = - si
Private Limited
Unwinding effect of Subsidiaries 29,97 5.60 9.16 8.76
deemed equity
Dividend payments Key management personnel 2 26.58 5.32 3.04
Remuneration to key Key management personnel 41.45 68.68 66.30 52.41
management personnel
Commission Key management personnel 36.00 8.64 72.84 22.84
Sitting Fee Key management personnel 1.38 2.27 1.64 0.68
Interest Income Subsidiaries - - 0.10 0.07
Loans given Subsidiaries 7 = - *
Loans recovered Subsidiaries 15.50 3.02 28.20 13.71
Conversion of Loan to Subsidiaries - 255.41 - -
Equity
Rental Income Carl Stahl Craftsman 0.14 0.18 0.18 0.21
Enterprises Private Limited
MC Craftsman Machinery 1.95 2.79 2.69 2.53
Private Limited
Trade Receivables Subsidiaries 5.33 26.57 40.87 59.29
Carl Stahl Craftsman 24.91 57.43 66.86 84.26
Enterprises Private Limited
MC Craftsman Machinery 0.20 - - -
Private Limited
Trade Payables Subsidiaries 15.86 18.25 2.40 3.36
Carl Stahl Craftsman. - 0.32 1.61 7.59
Enterprises Private Limited
MC Craftsman Machinery 2.78 2.62 5.37 2.23
Private Limited
Loans - Receivable Subsidiaries 23.17 43.28 243.30 262.80
Interest receivable Subsidiaries 0.33 0.30 0.30 0.20
Remuneration payable Key management personnel 2.03 0.20 1.80 32.90
Rent advance received MC Craftsman Machinery 0.20 0.20 0.20 0.20

Private Limited

 

For details of the related party transactions and as reported in the Restated Financial Information, see “Financial
Statements” beginning on page 225.

Financing Arrangements

There have been no financing arrangements whereby our Promoter, members of the Promoter Group, our
Directors and their relatives (as defined in Companies Act 2013) have financed the purchase by any other person
of securities of our Company during a period of six months immediately preceding the date of the Draft Red

Herring Prospectus, the Red Herring Prospectus and this Prospectus.

Weighted average price at which the Equity Shares were acquired by our Promoter and the Selling
Shareholders in the one year preceding the date of this Prospectus

Our Promoter and the Selling Shareholders have not acquired any Equity Shares in the one year preceding the
date of this Prospectus.

20
Average Cost of Acquisition of Equity Shares

The average cost of acquisition per Equity Share to our Promoter and the Selling Shareholders as at the date of
this Prospectus is:

 

Name Number of Equity Sharesheld Average cost of Acquisition
per Equity Share (in 2)*

Promoter (also a Selling Shareholder)

Srinivasan Ravi 10,630,640 1.06
Selling Shareholders

IFC 2,425,668 186.42
Marina 2,716,068 417.66
K. Gomatheswaran 1,417,500 1.27

 

* As per certificate issued by our Previous Auditors dated March 18, 2021.
Details of pre-Offer Placement

Our Company does not contemplate any issuance or placement of Equity Shares from the date of this Prospectus.
till the listing of the Equity Shares.

Issue of Equity Shares for consideration other than cash in the last one year

Our Company has not issued any Equity Shares for consideration other than cash in the one year preceding the
date of this Prospectus.

Split / Consolidation of Equity Shares in the last one year

Our Company has not undertaken a split or consolidation of the Equity Shares in the one year preceding the date
of this Prospectus.

21
SECTION II - RISK FACTORS

An investment in Equity Shares involves a high degree of risk. You should carefully consider all the information
in this Prospectus, including the risks and uncertainties described below, before making an investment in the
Equity Shares. If one, or a combination of any of the following risks occurs, our business, prospects, financial
condition and results of operations could suffer, the trading price of the Equity Shares could decline, and you may
lose all, or part of your investment. In addition, the risks set out in this section are not exhaustive, and additional
risks and uncertainties not presently known to us, or which we currently deem to be immaterial, may arise or may
become material in the future.

Unless specified in the relevant risk factors below, we are not in a position to quantify the financial implication
of any of the risks mentioned below. To the extent the COVID-19 pandemic adversely affects our business and
financial results, it may also have the effect of heightening many of the other risks described in this section. Any
potential investor in, and purchaser of the Equity Shares should pay attention to the fact that we are governed in
India, by a legal and regulatory environment which may be different from that which prevails in other countries
in material respects.

Unless otherwise stated, the financial information in this section is derived from our Restated Financial
Information. Further, unless the context otherwise requires, references to “our Company” are to Craftsman

Automation Limited on a standalone basis, while references to “we”, “us” or “our” are to Craftsman Automation
Limited on a consolidated basis.

 

The industry data in this section has been extracted from a report titled “Studying the Automotive and Industrial
Engineering Business in India” dated December 2020, prepared by CRISIL Research. Neither we nor any other
person connected with the Offer has independently verified this information. Industry sources and publications
generally state that the information contained therein has been obtained from sources generally considered to be
reliable, but their accuracy, completeness and underlying assumptions are not guaranteed and their reliability
cannot be assured. Industry publications are also prepared based on information as of specific dates and may no
longer be current. For further information, see “Industry Overview” on page 96.

In making an investment decision, investors must rely on their own examination of us on a consolidated and
standalone basis and the terms of the Offer including the merits and the risks involved. To obtain a complete
understanding of our business, see “Business”, “Financial Statements” and “Management's Discussion and
Analysis of Financial Condition and Result of Operations” on pages 168, 225 and 288, respectively. If our
business, results of operations or financial condition suffer, the price of our Equity Shares and the value of your
investments in the Equity Shares could decline. This Prospectus also contains forward-looking statements that
involve risks and uncertainties. Our results could differ materially from those anticipated in these forward-looking
statements as a result of certain factors, including the considerations described below and elsewhere in this
Prospectus.

Internal risk factors
Risks relating to business and operations

1. The extent to which the coronavirus disease (COVID-19) affects our business, results of operations
and financial condition will depend on future developments, which are uncertain and cannot be
predicted.

An outbreak of a novel strain of coronavirus (COVID-19) was recognized by the World Health
Organization as a public health emergency of international concern on January 30, 2020, and as a
pandemic on March 11, 2020. The outbreak of COVID-19 has significantly and adversely impacted and
will likely continue to impact economic activity and has contributed to significant volatility in global
financial markets and led to operational challenges. It is possible that the outbreak of COVID-19 will
cause a prolonged global economic crisis, stagnation, recession or depression, despite monetary and fiscal
interventions by governments and central banks globally. In particular, a number of governments and
organizations have revised GDP growth forecasts for 2020 downwards in response to the economic
slowdown caused by the spread of COVID-19, and it is possible that the COVID-19 pandemic will cause
a prolonged global economic crisis or recession.

22
In response to the COVID-19 outbreak, the governments of many countries, including India have taken
preventive or protective actions, such as issuing advisories and imposing country or state wide
lockdowns, including restrictions on travel and temporary closure of business operations and increased
remote working protocols, which have significantly slowed down economic activity. On March 14, 2020,
India declared COVID-19 as a “notified disaster” and imposed a nationwide lockdown announced on
March 24, 2020. While there have been progressive relaxations and calibrated easing of lockdown
measures by the Government, we cannot predict if stricter lockdowns will not be re-introduced or
extended in the future. The COVID-19 pandemic and resulting government actions may affect our
business, results of operations and financial condition, in the future, in a number of ways such as
requiring a complete or partial closure of our operations, disruptions or restrictions on our ability to
conduct our business, our manufacturing operations and pursue partnerships and other business
opportunities, and delay shipments of our products; result in inability to source key raw materials as a
result of the temporary or permanent closure of the facilities of suppliers of our key raw materials; lead
to non-availability of labour, which could result in a slowdown in our operations; adversely impact our
ability to access debt and equity capital on acceptable terms, or at all; the effects of the COVID-19
pandemic on our future results of operations, cash flows and financial condition could adversely impact
our compliance with the covenants in our credit facilities and other financing agreements and could result
in events of default and the acceleration of indebtedness; uncertainty as to what conditions must be
satisfied before government authorities completely lift lockdown orders; and the potential negative
impact on the health of our employees, particularly if a significant number of them are afflicted by
COVID-19, could result in a deterioration in our ability to ensure business continuity during this
disruption.

 

On account of the government imposed lockdown in India, operations at all of our manufacturing
facilities were temporarily shut down with effect from March 24, 2020 and resumed operations in
accordance with permissions from the local authorities. Such disruptions in operations impacted our
business performance during the first quarter of Fiscal 2021 and had caused us to postpone the delivery
terms for certain orders. Further, the automotive industry has been significantly impacted, which may
have an impact on our revenues as a majority of our customers are from this sector. The pandemic may
affect production, create supply chain and market disruption and may result in financial impact. Events
beyond our control may unfold in the future, which makes it difficult for us to predict the impact that
COVID-19 will have on us, our customers or suppliers in the future and this may affect the underlying
assumptions and estimates with respect to demand for our products in future.

The COVID-19 pandemic may cause additional disruptions to operations if our employees or staff
become sick, are quarantined, or are otherwise limited in their ability to travel or work. To contain the
spread of the virus, we may be required to implement staggered shifts and other social distancing efforts
at manufacturing facilities, which could result in labour shortages and decreased productivity. This may
negatively affect our ability to meet consumer demand and may increase our costs of production and
sales. We cannot assure you that we will be able to generate sufficient revenue to meet our working
capital requirements. All of the foregoing developments may have a significant effect on our results of
operations and on our financial results.

We cannot predict the degree to, or the time period over, which our business will be affected by the
COVID-19 outbreak. The COVID-19 pandemic may intensify and events beyond our control may unfold
in future which could necessitate further lockdowns, resulting in significant additional effects on our
revenue, financial condition and results of operations. There are numerous uncertainties associated with
the COVID-19 outbreak, including the number of individuals who will become infected, availability of
a vaccine or a cure that mitigates the effect of the virus, the extent of the protective and preventative
measures imposed by governments and whether the virus’ impact will be seasonal, among others.
Consequently, there may be adverse effects of this pandemic on our short-term business operations and
our financial results may be impacted.

There has been a significant decline in automobile sales even prior to COVID-19 and we are not
certain that the sales will recover even after the impact of COVID-19 is over.

Substantially all of our business is directly related to vehicle sales and production by our customers, who
consist primarily of large automotive OEMs, and demand for our products is largely dependent on the
industrial output of the automotive industry. The sales, volumes and prices for vehicles are influenced
by the cyclicality and seasonality of demand for these products. The automotive industry has been

23
cyclical in the past and we expect this cyclicality to continue. Our operations and performance are directly
related to levels of global vehicle production and are therefore affected by factors that generally affect
the automotive industry. The automotive industry is sensitive to factors such as consumer demand,
consumer confidence, disposable income levels, employment levels, fuel prices and general economic
conditions.

Even before COVID-19 related slowdown and disruptions, automobile sales in India had been de-
growing. We believe that the de-growth was on account of slow-down in the overall economy, higher
insurance costs and the scheduled adoption of BS-VI norms and are not certain that even after the impact
of COVID-19 is over automobile sales will recover. Weak automobile sales will impact demand for auto-
components manufactured and supplied by our Company to our OEM customers and will materially
impact our business outlook, result of operations and financial condition.

Our inability to meet our obligations under our debt financing arrangements could adversely affect
our business, results of operations and cash flows.

As of December 31, 2020, we had total secured borrowings (long term and short term) of = 8,901.12
million.

Our substantial indebtedness could:

. require us to dedicate a substantial portion of our cash flow from operations to payments in
respect of our indebtedness, thereby reducing the availability of our cash flow to fund working
capital, capital expenditures and other general corporate expenditures;

. increase our vulnerability to adverse general economic or industry conditions;

. limit our flexibility in planning for, or reacting to, competition and/or changes in our business
or our industry;

. limit our ability to borrow additional funds;

. restrict us from making strategic acquisitions, introducing new products or services or
exploiting business opportunities; and

. place us at a competitive disadvantage relative to competitors that have less debt or greater
financial resources.

We cannot guarantee that we will be able to generate enough cash flow from operations or that we will
be able to obtain enough capital to service our debt or fund our planned capital expenditures. In addition,
adverse changes in the business conditions affecting us could cause the amount of refinancing proceeds
to be insufficient to meet our interest payments or fully repay any existing debt upon maturity and we
may be unable to fund the payment of such shortfalls. If we cannot obtain alternative sources of financing
or our costs of borrowings become significantly more expensive, then our financial condition and results
of operations will be adversely affected.

Moreover, the agreements governing certain of our debt obligations include terms that, in addition to
certain financial covenants, restrict our ability to invest any funds by way of deposit, extending loan or
advance to or place deposit with other companies, declare or pay any dividend or any other distribution
to any of the Shareholders, effect a merger, amalgamation or scheme of arrangement or compromise,
amend our Memorandum of Association and Articles of Association, incur further indebtedness of any
nature and create any charge, mortgage, pledge, hypothecation, lien or other encumbrance over assets
constituting security, undertake any new project, diversify, modernise or substantial expand our projects,
change our management, transfer or dispose of the Equity Shares held by our Promoter and change our
capital structure. As on date of this Prospectus, we have obtained necessary consents from our lenders as
required under our loan documentation, for undertaking the Offer and related actions. Any failure on our
part to comply with these terms in our loan agreements would generally result in events of default under
these loan agreements. In such a case, the lenders under each of these respective loan agreements may,
at their discretion, accelerate payment and declare the entire outstanding amounts under these loans due
and payable, and in certain instances, enforce their security which has been constituted over our various

24
assets and take possession of those assets, which could adversely affect our liquidity and materially and
adversely affect our business and operations. Further, under certain of our loan agreements, the lenders
have a right to appoint a nominee director on our Board in case there is an event of default. In addition,
to the extent that we cannot make payments on accelerated amounts, such non-payment could result in
cross-acceleration of some or all of our other outstanding indebtedness, and payment of penalty interest,
which could likewise adversely affect our liquidity and materially and adversely affect our business and
operations. For instance, in the past we have sought waivers from one of our lenders in relation to certain
non-compliances with financial covenants such as maintaining current ratio and liabilities to tangible net
worth. Though we have received waivers in relation to such non-compliances for Fiscals 2020 and 2019,
we cannot assure you that we will not breach these covenants in the future or be able to procure
corresponding waivers. In another instance, while we have sought a waiver from one of our lenders in
relation to non-compliance with the current ratio required to be maintained by us, we have not yet
received a waiver in this regard. We cannot assure that the lender will not accelerate payment and declare
the entire outstanding amounts under these loans due and payable, and enforce their security, which has
been constituted over our various assets. We cannot assure you that we will not breach such covenants
in the future which are required to be complied with under our financing arrangements or be able to
procure corresponding waivers.

Fluctuations in market interest rates may also affect the cost of our borrowings. Since the interest rates
on certain of our borrowings may be subject to changes based on the prime lending rate of the respective
bank lenders, such borrowings may be subject to renegotiation and/or escalation on a periodic basis and
may not be covered by interest rate hedge agreements.

Our Group Companies have incurred losses in the last three Fiscals.

Our Group Company, MC Craftsman Machinery Private Limited, in which we have 10.00% equity stake,
has incurred losses in Fiscals 2020, 2019 and 2018 and our Group Company, Carl Stahl Craftsman
Enterprises Private Limited, in which we have 30.00% equity stake, have incurred loss in Fiscal 2020.
Details of profits (or losses) after tax of our Group Company in Fiscals 2020, 2019 and 2018 are provided
in “Promoter, Promoter Group and Group Company — Details of loss-making Group Companies” on
page 223. There is no assurance that our Group Companies will not incur losses in future periods or that
there will not be an adverse effect on our Company’s reputation or business as a result of such losses.

The audit reports on our audited financial statements as at and for Fiscals 2020, 2019 and 2018, the
nine months ended December 31, 2020, and the examination report on the Restated Financial
Information contain certain emphases of matter and other remarks, which may affect our future
financial results.

Under Indian Auditing Standards, statutory auditors may include an emphasis of matter in their audit
opinion under certain circumstances, including when a company's financial records have not been
maintained in accordance with Ind AS.

The examination report issued by the Statutory Auditors on the Restated Financial Information contains
an emphasis of matter on description of the impact assessment due to the COVID-19 pandemic and have
stated that the impact of the global health pandemic may be different from those estimated as on date of
the approval of the Restated Financial Information. The Previous Auditors for our Company had also
drawn attention in this regard in their audit report on the audited financial statements of our Company
for Fiscal 2020.

Further, the audit reports on the audited standalone financial statements of our Company for Fiscals 2020,
2019 and 2018 issued by the Previous Auditors contain an emphasis of matter regarding non-impairment
of investments in and loans to one of its Subsidiary, Craftsman Europe B.V. (formerly known as
Craftsman Marine B.V.) in view of its future business plan and profitability. Craftsman Europe B.V.
(formerly known as Craftsman Marine B.V.) is not a material subsidiary in terms of the SEBI Listing
Regulations. The Previous Auditors, under the section ‘Other Matters’ in the audit reports, also placed
reliance on an expert appointed by the Company in respect of mark to market valuation of derivative
instruments, namely, principal only swaps, call option, interest rate swaps and interest rate collar. These
matters were included in the audit reports issued by the Previous Auditors on the audited standalone
financial statements for Fiscals 2020, 2019 and 2018. However, these matters were not included in the
audit report issued by the Statutory Auditors on the audited standalone financial statements for the six

25
months ended September 30, 2020, and the examination reports on the restated financial information
issued by the Statutory Auditors included in the Draft Red Herring Prospectus, the Red Herring
Prospectus and this Prospectus.

The opinions of the Statutory Auditors and the Previous Auditors were not modified in respect of the
matters mentioned above. There can be no assurance that our Statutory Auditors will not include such
matters of emphasis or other similar comments in the audit reports to our audited financial statements in
the future, or that such modification will not affect our financial results in future fiscal periods. Investors
should consider these matters of emphasis and related remarks in evaluating our financial condition and
results of operations. Any such matters of emphasis or other matters or any modification in the auditors’
report on our financial statements in the future may also adversely affect the trading price of the Equity
Shares.

We operate in a competitive business environment. If we cannot respond adequately to the increased
competition and consequent pricing pressures that we expect to face from existing players and new
entrants, we will lose market share and our profits will decline, which will adversely affect our
business, results of operations and financial condition.

We operate in a competitive business environment, particularly in certain business segments such as the
manufacture and sale of aluminium castings in the Automotive - Aluminium Products segment, material
handling systems in the Material handling sub-segment and storage systems in the Storage solutions sub-
segment. Growing competition in the domestic and/or international markets may subject us to pricing
pressures and require us to reduce the prices of our products in order to retain or attract customers, which
may have an adverse effect on our revenues and margins. While we are focused in the development of
customer-centric products, and to broaden our product range, in the event our competitors harness better
process technology or improved process yield or are able to source raw materials at more competitive
prices, we may not be able to maintain our growth rate and our revenues and profitability may decline.
Some of our competitors may be increasing their capacities and targeting the same products or
applications as us. Some of our competitors are global companies that have larger technical and financial
resources and broad customer bases needed to bring competitive solutions to the market. Such companies
may use these advantages to offer solutions that are perceived to be as effective or more effective as ours
at the same or at a lower price. They may also develop different products to compete with our current
solutions and respond more quickly and effectively than we do to new or changing opportunities,
applications, technologies, standards, or client requirements. Our competitors may also adopt
competitive strategies for various products which may have a corresponding adverse impact on our
revenues and margins. There can be no assurance that we can continue to effectively compete with our
competitors in the future, and failure to compete effectively may have an adverse effect on our business,
financial condition and results of operations. Also, see “Business - Competition” on page 187.

The loss of any of our key customers or significant reduction in production and sales of, or demand
for our production from our significant customers may adversely affect our business, results of
operations and financial condition.

Sales to our top four customers (based on the revenue from operations as on December 31, 2020)
represented 43.14%, 33.91%, 34.14% and 31.73% of our revenue from operations for the nine months
ended December 31, 2020, Fiscals 2020, 2019 and 2018, respectively, and sales to our top 10 customers
(based on the revenue from operations as on December 31, 2020) represented 59.15%, 52.37%, 51.75%
and 48.46% of our revenue from operations for the nine months ended December 31, 2020, Fiscals 2020,
2019 and 2018, respectively.

It is difficult to forecast the success or sustainability of any strategies undertaken by any of our key
customers in response to the current economic or industry environment. Unfavourable industry
conditions can also result in an increase in commercial disputes and other risks of supply disruption. A
sustained decline in the demand for products produced by our OEM customers could prompt them to cut
their production volumes, directly affecting the demand from OEM customers for our products. In
addition to decline in demand for existing products, insufficient demand for new products launched by
our OEM customers may also prevent growth in demand for our products from such OEM customers.
Further, the volume and timing of sales to our customers may vary due to variation in demand for our
customers’ products, our customers’ attempts to manage their inventory, design changes, changes in their

26
product mix, manufacturing strategy and growth strategy, and macroeconomic factors affecting the
economy in general, and our customers in particular.

Our growth depends on the growth of our key customers. If our key customers do not successfully enter
into and retain market share in high-growth segments, we may be prevented from capitalizing on new
growth opportunities. Since we are significantly dependent on certain key customers for a significant
portion of our sales, the loss of any one of our key customers, a significant reduction in demand from
such customers or the downturn in business by such customers could have an adverse effect on our
business, results of operations and financial condition. We may continue to remain dependent upon our
key customers for a substantial portion of our revenues. In the event of our failure to retain one or more
of our key customers, it will have an adverse effect on our financial performance and result of operations.

Additionally, as our orders are linked to specific vehicles/models and are not generally interchangeable
with other models/vehicles, therefore, the discontinuation of, loss of business with respect to, or a lack
of commercial success of, a particular vehicle model for which we are a significant supplier could lead
to cancellation of orders or loss of business and consequently reduce our sales and affect our estimates
of anticipated sales, which could have an adverse effect on our business and results of operations. Further,
our future growth is also linked to the addition of new customers and failure to do so may cause
significant damage to our future growth, which could have an adverse effect on our business.

We do not have long term contracts or exclusive arrangements with any of our suppliers, and any
major disruption to the timely and adequate supplies of our raw materials for any of our segments
could adversely affect our business, results of operations and financial condition.

We do not currently have long term contracts or exclusive supply arrangements with any of our suppliers
and we purchase the raw materials on spot order basis. The failure of our suppliers to deliver raw material
in the necessary quantities or as per the required schedule, of a specified quality/standard/specification,
may adversely affect our production processes thereby giving rise to contractual penalties or liabilities,
loss of customers and/or an adverse effect on our reputation, which may in turn result in an adverse effect
on our business, financial condition and results of operations. Additionally, a material shortage in supply
of raw material could result in the failure to meet our sales obligations, which may in turn result in a loss
of revenue and cash flows. Although we have not encountered any significant disruptions in the sourcing
and/or supply of our raw materials, we cannot assure you that such disruptions will not occur and/or we
shall continue to be able to source raw materials in a cost effective manner.

We have undertaken joint ventures and strategic investments in the past and may continue to
undertake joint ventures, strategic investments, alliances as well as inorganic growth through strategic
acquisitions, in the future, which may be difficult to integrate and manage. These may expose us to
uncertainties and risks, any of which could adversely affect our business, financial conditions and
result of operations.

We have pursued and may continue to pursue joint ventures, strategic investments and alliances in India
as well as overseas as a mode of expanding our operations. Going forward, we may undertake further
joint ventures, investments and expansions to enhance our operations and technological capabilities.
Further, we intend to explore opportunities, including selectively evaluating targets for strategic
acquisitions in the powertrain business. Further, acquisitions and joint ventures may require us to incur
or assume new debt, expose us to future funding obligations or integration risks and we cannot assure
you that such acquisitions or joint ventures will contribute to our profitability. For instance, in June 2007,
we entered into a joint venture with Carl Stahl Hebetechnik GmbH (previously known as Carl Stahl
International GmbH) forming Carl Stahl Craftsman Enterprises Private Limited for engaging in
marketing, installation, commissioning and rendering after-sales services of material handling
equipment, such as chain hoists, rope hoists and cranes kits, manufactured by us and sold under the name
“Carl Stahl Craftsman”. Further, we have made a strategic investment along with Mitsubishi Corporation
in forming MC Craftsman Machinery Private Limited for engaging in the marketing and after-sales
service of CNC, EDM and LASER manufactured by Mitsubishi Corporation, Japan. Both these
arrangements have enabled us to gain access to new customers and geographies. There are no guarantees
that we will be able to successfully integrate any companies or assets we acquire, or that we will realize
the strategic and/or operational benefits that we expect. Moreover, we may expend significant
management attention trying to do so, but may not see the desired results. In addition, there can be no
assurance that we will be able to consummate our expansions, acquisitions, mergers or alliances in the

27
10.

11.

12.

future on terms acceptable to us, or at all. Further, in the future if such arrangements are severed or
disrupted, it would impair our investments and impact our business, financial condition and results of
operations.

A substantial portion of our assets are hypothecated or mortgaged in favour of lenders as security for
some of our borrowings. Our lenders may enforce the security in the event of our failure to service
our debt obligations which may affect our business, financial condition, and results of operations.

As of December 31, 2020, we had total secured borrowings (long term and short term) of = 8,901.12
million. These borrowings are secured, inter alia, through a charge by way of hypothecation on our
present and future current assets and fixed assets as well as through mortgage on our land and building
in favour of the lenders. See “Financial Indebtedness” on page 322.

As these assets are hypothecated or mortgaged in favour of lenders, our rights in respect of transferring
or disposing of these assets are restricted. Further, in the event we fail to service our debt obligations, the
lenders have the right to enforce the security created in respect of our secured borrowings. If the lenders
choose to enforce security and dispose our assets to recover the amounts due from us, our business,
financial condition and results of operations may be adversely affected.

We are subject to risks arising from interest rate fluctuations, which could adversely affect our results
of operations planned expenditures and cash flows.

As of December 31, 2020, 71.54% of our indebtedness was at floating interest rates while 28.46% of our
indebtedness was at fixed interest rate or hedged against interest rate risks. If the interest rates of our
existing or future borrowings increase significantly, our cost of funds will increase. A further increase in
interest rates may have an adverse effect on our results of operations and financial condition. While we
could consider refinancing the loan or hedging interest rate risks in appropriate cases, there can be no
assurance that we will be able to do so on commercially reasonable terms or at all, that our counterparties
will perform their obligations, or that these agreements, if entered into, will protect us adequately against
interest rate risks. Further, if such arrangements do not protect us adequately against interest rate risks,
they would result in higher costs. Further, some of our indebtedness that we have availed are in foreign
currencies and are therefore, exposed to foreign exchange risk between the Indian Rupee and U.S. Dollars
and other foreign currencies. There can be no assurance that we will be able to avoid the effect of any
adverse fluctuations in the value of the Indian Rupee against other relevant foreign currencies. Any
significant fluctuation in the value of the Indian Rupee against such currencies including as noticed
recently in the case of the U.S. Dollar, may adversely affect our results of operations. Any appreciation
of foreign currencies against the Indian Rupee may result in increase in our debt obligations and
consequently, have an adverse effect on our cash flows and results of operations. Also, see
“Management’s Discussion and Analysis of Financial Condition and Results of Operations -
Quantitative and Qualitative Disclosure about Market Risks — Foreign exchange rate risk” on page
319.

We export our products to various countries including, USA and Japan. Any adverse events affecting
these countries could have an adverse impact on our results from operations.

We generated % 1,006.86 million, = 1,393.23 million, = 1,619.62 million and % 1,275.09 million export
sales as on December 31, 2020 and in Fiscals 2020, 2019 and 2018, respectively, which represented
9.84%, 9.34%, 8.91% and 8.44% of our revenue from operations for the respective periods. During such
periods, we exported our products to over 20 countries across North America, South America, Europe
and Asia. These export destination countries impose varying duties on our products. There can be no
assurance that the duties imposed by such countries will not increase. Any change or increase in such
duties may adversely affect our business, financial condition and results of operations.

Additionally, export destination countries may also enter into free trade agreements or regional trade
agreements with countries other than India. Such agreements and alteration of existing tax treaties may
lead to increased competition or may even place us at a competitive disadvantage compared to
manufacturers in other countries and could adversely affect our business, financial condition and results
of operations. Further, changes in import policies or an economic slowdown in countries to which we
export our products may have a significant adverse impact on our business, financial condition and results
of operations. India is also a party to, and is currently negotiating, free trade agreements with several

28
13.

14.

15.

countries and if we export our products to such countries, any revocation or alteration of those bilateral
agreements may also adversely affect our ability to export, and consequently, our business, financial
condition and results of operations.

Additionally, we will be required to procure certifications in addition to other quality standards which
could be necessary for the products to be accepted by customers and the markets in which we export our
products. As such, we may need to obtain and maintain the relevant certifications so that our customers
are able to sell their products, which include components that are manufactured by us, in these countries.
Our inability to secure such license, or any other licenses, certification, registrations and permits in other
jurisdictions in a timely manner or at all, could result in operational delays or suspensions and/or
administrative fines and penalties, which could have a material adverse effect on the overall business,
results of operations and financial condition.

In the event we are unable to meet our export obligations in full, we may be liable to pay duty
proportionate to unfulfilled obligations along with interest. We currently avail benefits under the
EPGG licenses. In order to continuously avail the benefits we are required to export goods of a defined
amount. Any failure in meeting the obligations, may result in adversely affect our business operations
and our financial condition.

Pursuant to our EPCG licenses, we are required to export goods of a defined amount, failing which we
may have to pay the Government, a sum equivalent to the duty benefit enjoyed by us under the EPCG
licenses along with interest. As of December 31, 2020, our pending obligation against the EPCG license
is = 142.69 million. Any reduction or withdrawal of benefits or our inability to meet any of the conditions
prescribed under any of the schemes would adversely affect our business, financial condition, results of
operations and prospects.

We have been unable to locate certain of our corporate records.

We are unable to locate certain of our corporate records with respect to certain transfer of equity shares
to our Promoter in the past, and certain forms filed with the RoC, in respect of increase in the authorized
share capital of our Company. These corporate records include share transfer forms in relation to
acquisition of certain Equity Shares by our Promoter on March 20, 2007, share transfer forms in relation
to acquisition of certain Equity Shares by one of the Selling Shareholders, Form 5 for the increase in the
authorized share capital of our Company during Fiscal 1990 and the Form 23s for the Shareholders’
resolution for increase in the authorized share capital of our Company during Fiscal 1990 and Fiscal
1991. See “Capital Structure — History of Equity Share Capital Build-up, Contribution and Lock-in
of Promoter’s Shareholding” and “History and Certain Corporate Matters - Amendments to our
Memorandum of Association’’on pages 72 and 195, respectively. While we have conducted a search of
our records, at our Company’s offices as well as that of the RoC, we have not been able to trace
the aforementioned corporate records. Accordingly, reliance has been placed on opinions obtained from
third party independent source and confirmations provided by our Company and our Promoter in respect
of the missing corporate records and appropriate disclosures have been made in this Prospectus pursuant
to the due diligence of the other relevant corporate records available with our Company to ascertain the
information sought from the missing corporate records. However, owing to the absence of such corporate
records, we cannot assure that we will not be subject to risks arising from the unavailability of such
corporate records. Although no legal proceedings or regulatory actions have been initiated or pending
against us in relation to such untraceable secretarial and other corporate records and documents, we
cannot assure you that such legal proceedings or regulatory actions will not be initiated against our
Company in future or we will not be subject to penalties imposed by regulatory authorities in this respect.

 

We are exposed to credit risk on account of interest free loans given by our Company to our Subsidiary.

Our Company has given interest free loans to our Subsidiary, Craftsman Europe B.V. Further, a portion
of the loan granted to Craftsman Europe B.V. has been converted into equity by way of investment in
the equity capital pursuant to a resolution passed by our Board of Directors on August 20, 2019. There
is no assurance that we will be able to fully recover such loans from our Subsidiary or that they will settle
such loans in a timely manner or at all. In the event, or to the extent, that any such impairment is realized,
it could have an adverse effect on our business, financial condition, results of operations, and prospects.
See “Financial Statements” on page 225. Also, see “Management’s Discussion and Analysis of
Financial Condition and Results of Operations - Quantitative and Qualitative Disclosure about

29
16.

17.

18.

19.

 

Market Risks — Foreign exchange rate risk” and “Management’s Discussion and Analysis of
Financial Condition and Results of Operations - Quantitative and Qualitative Disclosure about
Market Risks — Credit risk” on pages 319 and 320, respectively.

Our Company is in the process of winding down its Singapore operations which may adversely affect
our business and results of operations.

The board of directors of our subsidiary, Craftsman Automation Singapore Pte. Ltd. at their meeting held
on September 30, 2020 approved the declaration of solvency of Craftsman Automation Singapore Pte.
Ltd. Accordingly, Craftsman Automation Singapore Pte. Ltd. has filed a declaration of solvency with the
Accounting and Corporate Regulatory Authority, Singapore dated September 30, 2020. The winding up
of Craftsman Automation Singapore Pte. Ltd. is currently under process. As on December 31, 2020,
Craftsman Automation Singapore Pte. Ltd. was not operational. Craftsman Automation Singapore Pte.
Ltd. was established in 2008 and was set up as a strategic overseas sourcing hub in Singapore, primarily
for the procurement of aluminium, which is one of our key raw materials. However, for operational
efficiencies, the Subsidiary was proposed to be wound up. We cannot assure you that winding down of
our subsidiary, Craftsman Automation Singapore Pte. Ltd., will not adversely affect our business and
results of operations and that in future, similar reasons or other reasons may lead to winding up of our
other subsidiary in Netherlands.

Our Company has made investments in Bhatia Coke & Energy Limited and such investments may not
be recovered.

Our Company had made investments of 2 11.00 million in Bhatia Coke & Energy Limited, which is
under the “Corporate Insolvency resolution process”. Further, the management of Bhatia Coke & Energy
Limited has been taken over by an insolvency professional appointed by the National Company Law
Tribunal, Division bench, Chennai, with effect from May 22, 2019. We have valued the investment made
in Bhatia Coke & Energy Limited to 2 Nil as of December 31, 2020. The fair value loss of = 11.00 million
has been recognised in the other comprehensive income for the period ended December 31, 2020. Any
such instances where we are unable to recover our investments made by us will cause losses.

Our Promoter has provided personal guarantees to certain loan facilities availed of by us, which if
revoked may require alternative guarantees, repayment of amounts due or termination of the facilities,
which in turn may adversely impact our cash flow, business and result of operations.

As on December 31, 2020, our Promoter has provided personal guarantees as security to secure some of
our existing borrowings and may continue to provide such guarantees post consummation of the Offer.
In case of a default under our loan agreements, any of the personal guarantees provided by our Promoter
may be invoked and/or the security may also be enforced, which could negatively impact the reputation
and net worth of our Promoter. In addition, our Promoter may be required to liquidate his shareholding
in our Company to settle the claims of the lenders, thereby diluting his shareholding in our Company.
Lenders for such facilities may require alternate guarantees, repayment of amounts outstanding under
such facilities, or may even terminate such facilities. We may not be successful in procuring alternative
guarantees satisfactory to the lenders, and as a result may need to repay outstanding amounts under such
facilities or seek additional sources of capital, which may not be available on acceptable terms or at all
and any such failure to raise additional capital could affect our operations and our financial condition.

We have not incurred certain allocated portions of our profits towards corporate social responsibility
(“CSR”) requirements under the Companies Act 2013.

The Companies Act 2013 stipulates the requirement of formulation of a corporate social responsibility
policy and mandates our Board of Directors to ensure that our Company spends, in each Fiscal, at least
two percent of the average net profits of our Company during the three immediately preceding Fiscals,
in accordance with its CSR policy. For Fiscals 2020, 2019 and 2018, while our Company has made
profits and accordingly allocated certain portion of such profits towards CSR activities formulated under
our CSR policy, our Company has not incurred the requisite portion of the expenditure towards such
activities in Fiscals 2020 and 2018. The details with respect to the amount allocated towards CSR
activities and our actual expenditure, during Fiscals 2020, 2019 and 2018 are set out below:

30
20.

21.

 

Fiscal Total amount allocated Actual expenditure

(in Z million) (in 2 million)
2020 13.40 8.90
2019 8.00 8.20
2018 9.40 9.20

 

We endeavour to spend the amount allocated towards CSR activities and are in the process of identifying
suitable projects for implementation of our CSR spending. During Fiscal, 2020, we could not spend the
total amount allocated as certain amounts were allocated for promotion of education and preventive
health care activities, construction of class rooms in the schools, etc. and the schools were closed due to
COVID-19 lockdown.

Further, in order to strengthen the enforcement framework in relation to the CSR spends made by the
companies, certain amendments have been proposed to be included in the Companies Act 2013, which,
once notified, will provide for, among other things, manner of dealing with the funds which remain
unspent out of the total funds mandated to be spent towards CSR activities. The proposed amendment
states that any unspent CSR spends is required to be transferred by our Company to a special account
and such amount will be required to be spent by our Company in pursuance of its CSR policy within a
period of three financial years from the date of such transfer. If our Company fails to do so, our Company
is required to transfer the unspent CSR spends to a fund specified under and within the in the time
stipulated under the Companies Act 2013.

We may be subject to imposition of notices or penalties under the Companies Act 2013 from the Ministry
of Corporates Affairs, Government of India for non-compliance with the requirement to incur prescribed
expenditure towards CSR activities in previous Fiscals, which could adversely affect our reputation and
business.

Our contingent liabilities could adversely affect our financial condition if they materialise.

As per our Restated Financial Information, as at December 31, 2020, our contingent liabilities, as per Ind
AS 37 - provisions, contingent liabilities and contingent assets, that have not been provided for are as set
out in the table below:

(in & million)

 

Particulars As of December 31,
2020

Claims against the company not acknowledged as debt:
- Excise 0.69
- VAT* 6.21
- Service tax 6.72
- GST# 4.33
- Income tax 176.79

- Stamp duty 5.62
Sales Bill Discounting *

 

* includes € 0.68 million of Joint Venture
# includes & 0.78 million of Joint Venture

If any of these contingent liabilities materialises, our results of operations and financial condition may
be adversely affected. See “Financial Statements” on page 225.

Our Company and one of our Director is involved in certain legal proceedings, and an adverse
outcome in any such proceedings may adversely affect our business, financial condition and growth
strategy.

Our Company and one of our Director is involved in certain legal proceedings, in the ordinary course of
business, which are pending at varying levels of adjudication at different fora, from time to time. All
pending litigation involving our Company, Directors, Promoters and Subsidiaries, other than criminal
proceedings, statutory or regulatory actions and taxation matters, are considered “material” if the
monetary amount of claim by or against the entity or person, in any such pending litigation exceeds
3.00% of the consolidated profit after tax of our Company, as per the Restated Financial Information, for
the latest fiscal i.e. Fiscal 2020, amounting to = 12.32 million, or any such litigation, an adverse outcome
of which would materially and adversely affect our Company’s business, prospects, operations, financial

31
22.

condition or reputation, irrespective of the amount involved in such litigation. The summary of the
outstanding litigations involving the aforementioned persons/entities are as follows:

 

Type of Litigation ‘Number of cases ‘Amount*
(in million)
Litigation involving our Company
Material civil litigation 2 15.07
Actions by statutory or regulatory authorities 2 7.62
Direct and indirect tax proceedings 24 193.28
Total 28 215.97
Litigation involving our Directors
Actions by statutory or regulatory authorities 1. 0.10
Total 1 0.10

 

*to the extent quantifiable

Involvement in such proceedings could divert our management’s time and attention, and consume
financial resources. Further, an adverse judgment in these proceedings could have an adverse impact on
our business, results of operations and financial condition. See “Outstanding Litigation and Other
Material Developments” on page 325.

We cannot assure you that any of such proceedings will be settled in our favour or in favour of our
Company or Directors, as applicable, or that no additional liability will arise out of these proceedings.

If we are unable to accurately forecast demand for our products and plan production schedules in
advance, our business, cash flows, financial condition, results of operations, and prospects may be
adversely affected.

Our inability to forecast the level of customer demand for our products, process innovation, and value
engineering costs as well as our inability to accurately schedule our raw material purchases and
production and manage our inventory may adversely affect our business and cash flows from operations.
In particular, our inability to accurately forecast demand for products in our emerging product segments
such as storage solutions and material handling may hinder our planned growth in these segments.

For some of our customers, we have long term purchase agreements, which define the terms and
conditions of purchases by the customers. These are supplemented by specific open purchase orders
which do not have any validity in respect of time period and only specify the price at which the products
are to be supplied with no mention of any specific quantity. The quantities supplied are typically based
on monthly delivery schedules provided by the customers based on their own demand and supply
situation. Further, for our long term contracts, there is a term for product life cycle, which in turn may
be phased out or halted. Although our customers provide us with forecasts of annual business volumes,
which enable us to predict our income for a portion of our business, the actual orders are only placed by
way of on-going purchase orders. Product quantities are typically based on delivery schedules received
from the customers in short intervals and multiple times in a day, in certain cases. Our customers do not
provide a firm commitment for any specific product quantity and purchase orders may be amended or
cancelled prior to finalization, as a result of which, we do not hold a significant order book at any time,
making it difficult for us to forecast revenue, production or sales and plan our inventory in advance.

Actual production volumes may vary from these estimates due to variations in consumer demand for the
related vehicles leading to underutilized capacity or incurring additional expenditure to deploy additional
resources to meet delivery timelines. In addition, in the event of significant cuts in production schedules
announced by customers with little advance notice, we may be unable to respond with corresponding
production and inventory reductions. Significant reduction in demand for our products from a major
customer may have an adverse effect on our business, financial condition, results of operations, and
prospects. While some of our customers share annual forecasts with us, we do not have any recourse
against our customers in the event of a reduction in the forecasted volume. Further, we have certain
manufacturing facilities which are either dedicated, or predominantly catering to some of our OEM
customers and are in such localities to serve such customers efficiently. Any reduction in forecasted
volume from customers for whom we run dedicated facilities, would materially and adversely affect our
business, results of operations and financial condition.

32
23.

Our customers have high and exacting standards for product quantity and quality as well as delivery
schedules and any failure to meet our customers’ expectations could result in the cancellation of orders.
There are also a number of factors other than our performance that are beyond our control and that could
cause the loss of a customer. Moreover, as many of our operating expenses are relatively fixed, an
unanticipated change in customer demand may adversely affect our liquidity and financial condition. We
typically commit to order raw materials and bought-out components from our own suppliers based on
customer forecasts and orders. Cancellation by customers or delay or reduction in their orders or
instances where anticipated orders fail to materialize can result in mismatch between our inventories of
raw materials and bought-out components and of manufactured products, thereby increasing our costs
relating to maintaining our inventory and reduction of our margins, which may adversely affect our
profitability and liquidity.

In addition, we may incur significant expense in preparing to meet anticipated customer requirements
that may not be recovered. Further, in the event large OEM customers change their outsourcing strategy
by moving more work in-house, or replace their existing products with alternative products, it may have
an adverse effect on our business, results of operations and financial condition.

Any shortfall in the supply of our raw materials or an increase in our raw material costs, or other
input costs for any of our segments, may adversely affect the pricing and supply of our products and
have an adverse effect on our business, results of operations and financial condition.

We are dependent on third party suppliers for our raw materials. Discontinuation of production by these
suppliers or a failure of these suppliers to adhere to any delivery schedule or the required quality or
quantity could hamper our production schedule and therefore affect our business and results of operations.
This dependence may also adversely affect the availability of key materials at reasonable prices thus
affecting our margins and may have an adverse effect on our business, results of operations and financial
condition. There can be no assurance that strong demand, capacity limitations or other problems
experienced by our suppliers will not result in shortages or delays in their supply of raw materials to us.
If we were to experience a significant or prolonged shortage of raw materials from any of our suppliers,
and we cannot procure similar raw materials from other sources at comparable costs and of comparable
quality, in a timely manner, we would be unable to meet our production schedules for some of our key
products and to deliver such products to our customers in timely fashion, which would adversely affect
our sales, margins, reputation and customer relations. We cannot assure you that a particular supplier
will continue to supply the required components or raw materials to us in the future. Any change in the
supplying pattern of our raw materials can adversely affect our business and profits. We also rely on
transporters for transport and logistics. Our reliance on third parties for certain outsourced job works and
on transporters for transport and logistics may affect our timelines for making delivery to our customers.

Our business, financial condition and results of operations are significantly impacted by the prices of raw
materials purchased or imported by us, particularly aluminium ingots, steel and sheet metal parts.

We rely significantly on five suppliers for procurement of steel, aluminium ingots required for
manufacturing aluminium castings used in Automotive - Aluminium Products and Industrial and
Engineering segments, which supplied 24.32% of our cost of raw material and components consumed
for Fiscal 2020.

Raw material pricing can be volatile due to a number of factors beyond our control, including global
demand and supply, general economic and political conditions, transportation and labour costs, labour
unrest, natural disasters, pandemic, competition, import duties, tariffs and currency exchange rates, and
there are uncertainties inherent in estimating such variables, regardless of the methodologies and
assumptions that we may use. This volatility in commodity prices can significantly affect our raw
material costs. Further, volatility in fuel prices can also affect commodity prices worldwide which may
significantly increase our raw material costs.

Further, our Automotive - Powertrain and Others, Automotive - Aluminium Products and Industrial and
Engineering segments have experienced significant volatility with respect to raw materials prices in the
recent past, primarily in ferrous and non-ferrous metals. Increasing raw material costs may also lead to
reduction in demand for our OEM customers’ end products, which in turn can affect our operations.
Further, our contracts with our customers provide for pass through of any variation in the raw material
costs. However, our cash flows may still be adversely affected because of any gap in time between the

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date of procurement of those primary raw materials and date on which we can reset the component prices
for our customers, to account for the increase in the prices of such raw materials. In addition, if we are
not able to pass our entire raw material price increases to our customers for our operations, as we sell
integrated systems rather than individual components, our results of operations may get affected
adversely. The inability to pass fluctuations in raw material prices on to our customers may adversely
affect our profits and profit margins. Our need to maintain a continued supply of raw materials may make
it difficult to resist price increases and surcharges imposed by our suppliers, which may have an adverse
effect on our business and results of operations.

Our operational flexibility may be limited in certain respects on account of our obligations under some
of our major long-term customer agreements.

We have entered into long-term customer agreements with some of our customers. Our pricing terms,
payment cycles and permitted adjustments are generally set out in advance in our customer contracts or
purchase orders and only allow adjustments at specific intervals and in the event of significant
unanticipated changes in, for instance, raw material prices or currency exchange rate fluctuation. Due to
committed delivery schedules at a pre-agreed price, we may not be able to adequately adjust our
inventory and raw material costs in the event of an unanticipated change or cancellation in orders from
our customers and we may, therefore, in certain events, incur additional costs that we are unable to pass
through to our customers or be required to write off certain expenses.

While various terms of our long-term customer agreements with customers generally allow us a right of
consultation as to difficulties faced by us or provide for certain decisions or adjustments to be made as
per mutual agreement, our customers are generally permitted under the terms of such agreements to
exercise a high level of discretion. For instance, our customers reserve the right at any time to direct
changes, or cause us to make changes, to drawings and specifications of the goods or to otherwise change
the scope of the work covered by our long term contract. Price and time for performance resulting from
such changes are equitably adjusted by our customers based on supply of documentation in such form
and detail as required by our customer. Consequently, we are exposed to the risk that our submissions or
requests as to price adjustments or delivery schedules or otherwise may not be agreed to by our customers
or our customers may not accede to provide consents sought by us. Any such significant operational
constraint may adversely affect our business, financial condition, results of operations and cash flows.

We extend significant credit terms to our customers and are subject to counterparty credit risk. Any
deterioration in such customers’ financial position and their ability to pay or our inability to extend
credit in line with market practice may adversely impact our profitability.

Due to the nature of agreements and arrangements that we enter into, we are subject to counterparty
credit risk and any delay in receiving payments or non-receipt of payments may adversely impact our
results of operations. Our operations involve extending credit, ranging typically from 7 to 90 days, to our
customers in respect of our products and services. Consequently, we face the risk of the uncertainty
regarding the receipt of these outstanding amounts. There is no guarantee that we will accurately assess
the creditworthiness of our customers. Macroeconomic conditions, such as a potential credit crisis in the
global financial system, could also result in financial difficulties for our customers, including limited
access to the credit markets. Such conditions could cause our customers to delay payment, request
modifications of their payment terms, or default on their payment obligations to us, all of which could
increase our receivables. Timely collection of dues from customers also depends on our ability to
complete our contractual commitments and subsequently bill for and collect from our clients. If we are
unable to meet our contractual obligations, we might experience delays in the collection of, or be unable
to collect, our customer balances, and if this occurs, our results of operations and cash flows could be
adversely affected. We have experienced delays in billing and collection for our products and services in
the past and we cannot assure you that we will not experience any such delays in the future. If we
experience delays in billing and collection for our products and services, our cash flows could be
adversely affected.

Accordingly, we had and may continue to have high levels of outstanding receivables. As of December
31, 2020 and Fiscals 2020, 2019 and 2018, our trade receivables were 2 2,142.00 million, = 1,943.19
million, = 2,100.32 million and % 2,016.86 million, respectively, which constituted 20.94%, 13.02%,
11.55% and 13.34% of our revenue from operations for the respective periods. Our operations involve
extending credit, ranging typically from 7 to 90 days, to our customers in respect of our products and

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services. Our trade receivables as of December 31, 2020, as a percentage of the revenue from operations
for the nine months ended December 31, 2020, were higher on account of increase in our sales during
the months of November and December 2020 and the longer period of credit extended to our customers.
The trade receivables that were pending beyond the normal period of credit aggregated to approximately
18% to the outstanding trade receivables as of December 31, 2020. Also, see “Financial Statements —
Note 42 Financial Instruments - Market Risk — Credit risk” on page 272.

If our customers delay or default in making these payments, our profits margins and cash flows could be
adversely affected.

We may be subject to liquidity risks, which may adversely impact our cash flows, financial condition
and results of operations.

We may be subject to liquidity risks and cash flows mismatches due to repayment of borrowings and the
interest thereon, payment towards our lease liabilities, payment to our creditors and outflows on our
derivative liabilities.

The repayment of our borrowings in certain years may give rise to a temporary mismatch. This may
potentially give rise to a liquidity risk and interest rate risk when we are required to refinance our loans
and other borrowings. If we are unable to refinance our borrowings on favourable terms, it could
adversely affect our business, financial condition and results of operations. Our cash flows may also be
impacted by payment of our lease liabilities. While our Company has sufficient current assets to meet
the obligations related to lease liabilities as and when they fall due, we cannot assure that such obligations
will not impact our cash flows in the future. Further, our Company generates significant cash flows from
our operating activities, however such cash flows are primarily used towards payment of purchase of
property, plant and equipment and repayment of our borrowings, which may result in substantial decrease
in our cash flows and may impact our operations.

Further, we extend defined benefit plan in the form of gratuity to our employees. The Company makes
annual contribution to gratuity fund. The employees with high salaries and long durations or those higher
in hierarchy, accumulate significant level of such benefits. If some of such employees resign / retire from
our Company, there can be strain on the cash flows.

For further information, see “Financial Statements - Financial Statements — Note 42 Financial
Instruments — Financial risk management - Liquidity Risk” on page 273.

Information relating to the installed capacity, actual production and capacity utilization of our
manufacturing facilities included in this Prospectus are based on various assumptions and estimates
and future production and capacity may vary.

Information relating to the installed capacity, actual production and capacity utilization of our
manufacturing facilities included in this Prospectus are based on various assumptions and estimates of
our management that have been taken into account by the chartered engineer in the calculation of our
installed capacity, actual production and capacity utilization. Actual production levels and future capacity
utilization rates may vary significantly from the estimated production capacities of our manufacturing
facilities and historical capacity utilization rates. In addition, capacity utilization is calculated differently
in different countries, industries and for the different kinds of products we manufacture. Undue reliance
should therefore not be placed on our historical installed capacity, actual production and capacity
utilization for our existing manufacturing facilities included in this Prospectus. See “Business — Our
Business Segments” on page 177.

We may face difficulties in executing our strategies including our expansion plans.

Our growth strategy includes expanding our existing business in our Automotive - Powertrain and Others
segment and our product portfolio in our Automotive - Aluminium Products and Industrial and
Engineering segments. As a part of our growth strategy, we also seek to pursue emerging opportunities,
including storage solutions and material handling, which are growing market opportunities. We cannot
assure you that our growth strategies will be successful in a timely manner or at all or that we will be
able to continue to expand further or diversify our product portfolio.

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We may not be able to sustain our rates of growth, due to a variety of reasons including a decline in the
demand for our products and services in the Automotive - Powertrain and Others, Automotive -
Aluminium Products and Industrial and Engineering segments, increased price competition, non-
availability of raw materials, lack of management availability or a general slowdown in the economy. A
failure to sustain our growth may have an adverse effect on our business, results of operations and
financial condition.

Our growth strategy will place significant demands on our management as well as our financial,
accounting and operating systems. If we are unable to increase our production capacity in line with our
customer requirements, we may not be able to successfully execute our growth strategy. Further, as we
scale-up and diversify our operations, we may not be able to execute our operations efficiently, which
may result in delays, increased costs and lower quality products. We cannot assure you that our future
performance or growth strategy will be successful. Any of our current or future horizontal and/or vertical
integration related strategies may not be executed as planned on account of factors such as lack of
adequate experience, increase in competition from peers, amongst others.

We have incurred significant capital expenditures in the past and there can be no assurance that our
past or planned capital expenditures will result in growth and/or additional profitability for our
Company.

We have already incurred significant capital expenditure in the past few years, including setting up an
entire range of facilities such as no-bake sand foundry, high pressure, low pressure and gravity die casting
capabilities for production of various types of aluminium castings for different applications for our
customers, allowing us to offer a diverse product suite, reduce operating costs and drive our productivity.
For the nine months ended December 31, 2020 and Fiscals 2020, 2019 and 2018, our capital expenditure
was % 507.29 million, = 1,206.01 million, = 4,559.86 million and % 1,811.24 million, respectively.

To compete effectively, we must be able to develop and produce new products to meet our customers’
demand in a timely manner, which requires a significant capital expenditure. We may also be required
to make substantial investments to adapt to the expansions plans made by our existing OEM customers
to ensure continuity in business from such OEM customers, however there is no assurance that such
investments will be as profitable as our existing business and investments, or at all. Further, we may
incur significant costs in supplying OEM products from such locations to other customers. Further, we
may not be able to take on new opportunities from our existing OEM customers if such opportunities do
not offer attractive value proposition or commercial viability. We cannot assure you that we will be able
to successfully convert these capital expenditures profitable in the future. Our capital expenditures may
also lead to unsuccessful projects which may cause loss to our business. Additionally, we incur certain
bare minimum capital expenditure for maintenance irrespective of the business or revenue, such as for
upgradation and modernization of our manufacturing facilities, infrastructure, machines, equipment and
technology to allow us to offer a diverse product suite, reduce operating costs and drive productivity and
in the event of any negative impact of the business, such capital expenditure may result in negative cash
flows. Our failure to manage our growth effectively may have an adverse effect on our business, results
of operations and financial condition. Further, expansion and acquisitions may require us to incur or
assume new debt, expose us to future funding obligations or integration risks and we cannot assure you
that such expansion or acquisition will contribute to our profitability.

Our failure to identify and understand evolving industry trends and preferences to develop new
products to meet our customers’ demands or our limitation including on account of knowledge of new
segments into which we are expanding may adversely affect our business.

We expect to continue to dedicate significant financial and other resources to our product development
efforts in order to maintain our competitive position. Investing in product development, including
developing new products and enhancing existing products, is expensive and time consuming, and there
is no assurance that such activities will result in significant new marketable products or enhancements to
our products, design improvements, cost savings, revenues or other expected benefits. If we spend
significant time and effort on research and development, and are unable to generate an adequate return
on our investment, our business and results of operations may be materially and adversely affected.

In the past, as part of our growth and expansion plan, we have diversified into new segments. Any
inability to do such diversification in the future to expand our business will cause adverse effect on

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business. Further, changes in consumer preferences, regulatory or industry requirements or in
competitive technologies may render certain of our products obsolete or less attractive. Our ability to
anticipate changes in technology and regulatory standards and to successfully develop and introduce new
and enhanced products on a timely basis is a significant factor in our ability to remain competitive.
However, there can be no assurance that we will be able to develop or secure the necessary technological
knowledge that will allow us to develop our product portfolio in this manner. If we are unable to obtain
such knowledge in a timely manner, or at all, we may be unable to effectively implement our strategies,
and our business and results of operations may be adversely affected. Moreover, we cannot assure you
that we will be able to achieve the technological advancements that may be necessary for us to remain
competitive or that certain of our products will not become obsolete.

We are also subject to the risks generally associated with new product introductions and applications,
including lack of market acceptance, delays in product development and failure of products to operate
properly. For instance, our product development to meet the BS VI emission norms may not be accepted
by our customers. Our failure to successfully develop and produce new products, or a failure by our
customers to successfully launch new programs, could materially adversely affect our prospects and
results of operations.

Our manufacturing facilities are subject to various operating risks and any shutdown of our
manufacturing facilities may have an adverse effect on our business, results of operations and
financial condition.

Our manufacturing facilities are subject to various operating risks, such as:

. breakdown or failure of equipment, power supply or processes;

. performance below expected levels of efficiency;

° natural disasters and pandemic;

. industrial accidents; and

. need to comply with the directives of relevant government authorities.

Any such events may cause an unplanned shutdown or temporary or sustained slowdown in our
production, or may require us to incur significant compliance or remediation costs, which we may not be
able to completely or sufficiently or at all pass on to customers or recover through insurance in all events.
For example, as part of cost control and optimization measures, our Company decided to shut its
manufacturing facility located in Malumichampatti in August 2019 and shifted the same to our facility
located in Arasur village. Further, in December 2016, the cyclonic storm Vardah disrupted operations at
our Sriperumbudur facility for a day. However, there was no financial impact on our Company due to
such shifting of facility or disruption of operations. Recently, on account of the government imposed
lockdown in India due to COVID-19 pandemic, operations at all of our manufacturing facilities were
temporarily shut down and we were required to follow protocols as suggested by regulatory authorities
which impacted our ability to operate our manufacturing facilities at optimum utilizations. For details on
the impact on our business operations due to COVID-19, see “Business - Impact of COVID-19 on our
business operations” on page 187.

Our foundry related operations are inherently risky and requires individuals to work under potentially
high risk circumstances. For example, if improperly handled, molten metal can cause personal injury or
loss of life of employees or other persons, and cause damage to our properties and the properties of others
and the imposition of civil or criminal liabilities. We could also face claims and litigation filed on behalf
of persons alleging injury as a result of occupational exposure to hazards at our facilities.

 

Further, the assembly lines of our customers rely significantly on the timely delivery of our components
and our ability to provide an uninterrupted supply of our products is critical to our business. Certain of
our customers may terminate their relationships with us or seek to impose penalties on component
manufacturers like us, or may initiate arbitration or legal proceedings against us, for stoppage in any of
their critical operations or assembly lines and damages sought, potentially or allegedly on account of
delayed delivery or a defect or deficiency in the products or services delivered by us.

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Our business, results of operations and financial condition may be adversely affected by any of the factors
mentioned above, in particular, on account of any such events affecting our flagship manufacturing
facilities in Coimbatore.

Changes in technology may render our current technologies obsolete or require us to make substantial
capital investments. Further, our failure to keep our technical knowledge confidential could erode our
competitive advantage.

Our business is continually changing due to technological advances and scientific discoveries. These
changes result in the frequent introduction of new products and services and significant price
competition. If our products and technologies become obsolete for various factors, our business and
results of operations could be adversely affected. Although we strive to maintain and upgrade our
technologies, facilities and machinery consistent with current national and international standards, the
technologies, facilities and machinery we currently use may become obsolete. The cost of implementing
new technologies and upgrading our manufacturing facilities could be significant, which could adversely
affect our business, results of operations and financial condition. Any failure on our part to effectively
address such situations, innovate and keep up with technological advancements or to successfully
introduce new products and services in these areas, could adversely affect our business, results of
operations, financial condition and cash flows.

Further, with the expected increase in growth of electric vehicles in future, we will need to adapt with
the technological advances which will require us to make substantial capital investments. Our customers
may shift to other manufacturers if we do not meet their changing needs as per the requirement of the
automobile industry. Further, our already existing technologies may become redundant. All these factors
could adversely affect our business, results of operations, financial condition and cash flows.

We are susceptible to product liability claims that may not be adequately covered by our insurance
coverage or by warranties and assurances from our equipment suppliers, and which, if successful,
could require us to pay substantial sums, adversely affecting our business, results of operations and
financial condition.

We face an inherent business risk of exposure to product liability or recall claims, in the event that any
of our products fail to perform as expected or such failure results or is alleged to result, in bodily injury
or property damage or both. Consequently, we cannot assure you that we will not experience any material
product liability losses in the future or that we will not incur significant costs to defend any such claims.

The provision for warranty and rejection is done based on past experiences, product lifecycle maturity,
reprocessing or repair cost. The provisions for expected cost of warranty obligations are recognized based
on our management’s best estimate of the expenditure required to settle the obligation, which takes into
account the empirical data on the nature frequency and average cost of warranty claims and regarding
possible future incidences. For details, see “Financial Statements” on page 225.

Whilst we maintain insurance for product liability and recall for our exports, we do not maintain these
for sales in India. As a result of product liability legislation, civil claims may be brought against our
OEM customers, and we may be made parties to such claims where damages may have been caused by
any faulty products that we produced. We cannot assure you that such claims will not be brought against
us in the future, and any adverse determination may have an adverse effect on our business, results of
operations and financial condition and reputation.

If we are unable to continue to implement our brand building and marketing initiatives, for each of
our brands, our business and prospects may be adversely affected. Moreover, any deterioration in the
reputation and market perception of our brands may have an adverse effect on our sales, profitability
and the implementation of our growth strategy.

We operate under our brands “V-Store”, “Carl Stahl Craftsman” and “Craftsman Marine” in our
Industrial and Engineering segment. Our brand and reputation are among our important assets. The
performance and quality of products are critical to the success of our business. The success of these
products depend significantly on the effectiveness of the product design, quality of the raw materials and
bought out components, quality control systems, installation and after sales service, which in turn, depend

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on skills and experience of our personnel, the quality of our training program, and our ability to ensure
that such personnel adhere to our policies and guidelines. Any adverse change in the quality of products
rendered by us including due to reasons beyond our control, or allegations of defects, even when false,
at any of our manufacturing facilities could tarnish the image of our brands, result in negative reviews
and feedback from our customers.

Further, our brand building would also depend on the effectiveness of sales and promotional activities
and choice of channel partners. There can be no assurance that our efforts in these areas would always
be effective. Any adverse development or decline in our brand value and reputation may adversely affect
our business, results of operations and financial condition.

Delay in schedule of implementation may subject us to risks related to time and cost overrun which
may have an adverse effect on our business, results of operations and financial condition.

We have in the past faced time and cost overrun and have sought time extensions to commence
production for a planned manufacturing facility at Sriperumbudur, near Chennai. Further, in relation to
our proposed manufacturing facility at Perundurai in Tamil Nadu, we have now surrendered the lease
and are no longer seeking to develop as we don’t envisage further expansion of our manufacturing
capacity due to the current COVID-19 pandemic. In relation to the surrender of lease for our
manufacturing facility at Perundurai in Tamil Nadu, an amount equal to one percent of the total amount
paid by us was deducted by the State Industries Promotion Corporation of Tamil Nadu Limited from the
refund amount. For further information, see “- Some of our manufacturing facilities are operated on
industrial land allotted to us by industrial development corporations. Failure to comply with the
conditions of use of such land could result in an adverse impact on our business and financial
condition.” and “History and Certain Corporate Matters” on pages 40 and 194, respectively.

Further, for our future projects, we may face risks relating to commissioning including delays in
construction, failure of our contractors and suppliers to adhere to our specifications and timeline, among
other things. We have limited control over the timing and quality of services, equipment or other supplies
from third party contractors appointed by us, and we may be required to incur additional unanticipated
costs to remedy any defect or default in their services or products to ensure that the planned timelines
are adhered to.

We have substantial capital expenditure and working capital requirements and may require additional
capital to meet those requirements, which could have an adverse effect on our results of operations
and financial condition.

Our business is capital intensive as we have expanded and upgraded our existing production facilities.
For the nine months ended December 31, 2020 and Fiscals 2020, 2019 and 2018, our capital expenditure
was % 507.29 million, = 1,206.01 million, = 4,559.86 million and % 1,811.24 million, respectively, which
represented 5.32%, 8.39%, 26.95% and 12.24% of our total expenditure for the respective periods. The
actual amount and timing of our future capital requirements may differ from estimates as a result of,
among other factors, unforeseen delays or cost overruns, unanticipated expenses, regulatory changes,
economic conditions, engineering design changes, weather related delays, technological changes and
additional market developments and new opportunities in the Automotive - Powertrain and Others,
Automotive - Aluminium Products and Industrial and Engineering segments. Our sources of additional
capital, where required to meet our capital expenditure plans, may include the incurrence of debt or the
issue of equity or debt securities or a combination of both. Further, our budgeted resources may prove
insufficient to meet our requirements which could drain our internal accruals or compel us to raise
additional capital. If we are required to raise additional funds through the incurrence of debt, our interest
and debt repayment obligations will increase, and could have a significant effect on our profitability and
cash flows and we may be subject to additional covenants, which could limit our ability to access cash
flows from operations. If we are unable to successfully utilise the facilities for which we have raised
additional funds, it will have adverse effect on our business. Further, any issuance of equity, on the other
hand, would result in a dilution of your shareholding.

In many cases, a significant amount of our working capital is required to finance the purchase of materials
and the performance of manufacturing and other work before payment is received from customers. Our
working capital requirements may increase if the payment terms in our agreements include reduced
advance payments or longer payment schedules. These factors may result, or have resulted, in increases

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in the amount of, our receivables, short-term borrowings and the cost of availing such working capital
funding. Additionally, our inability to obtain adequate amount of working capital at such terms which
are favourable to us and in a timely manner or at all may also have an adverse effect on our financial
condition. Continued increases in our working capital requirements may have an adverse effect on our
financial condition and results of operations.

Our joint venture partner may not perform its obligations satisfactorily and its interests may differ
from ours, which could have an adverse effect on our business and results of operations.

We currently have a joint venture and may continue to pursue strategic alliances in the future. See
“Business” and “History and Certain Corporate Matters” on pages 168 and 194, respectively. The
success of our business collaborations depends significantly on the satisfactory performance by our joint
venture partner of its contractual and other obligations. As we do not control our joint venture partner,
we face the risk that it may not perform its obligations. If it fails to perform its obligations satisfactorily,
we may be unable to successfully carry out our operations. In such a circumstance, we may be required
to make additional investments or become liable for our partner’s obligations, which could result in
reduced profits or, in some cases, significant losses. Our collaborations may face difficulties in its
operations due to a variety of circumstances, which could have an adverse effect on our business, results
of operations and financial condition. If the interests of our partner conflict with our interests, this, and
other factors may cause our joint venture partner to act in a manner that is contrary to our interests, or
otherwise be unwilling to fulfil their obligations under our arrangements with them. Any of the foregoing
could have an adverse effect on our business, results of operations, financial condition, and reputation.

Some of our manufacturing facilities are operated on industrial land allotted to us by industrial
development corporations. Failure to comply with the conditions of use of such land could result in
an adverse impact on our business and financial condition.

We own and operate 12 strategically located manufacturing facilities across seven cities in India, out of
which three facilities are operated on industrial land allotted by the state-owned Industrial Development
Corporations (“IDCs”). Under the terms of allotment of such lands, we are required to comply with
certain ongoing conditions, including achieving the investment commitment set out in the project report,
adhering to the timelines for completion of setting up of the manufacturing facility, and commencement
of manufacturing activity. If we fail to meet any such conditions, we may be required to incur additional
liability. Further, according to the statutory rules under which the IDCs function, IDCs also retain the
power to cancel allotment of land in the event of breach of any rules of allotment. Though none of the
leases that we have entered into with IDCs are expiring in the next five years from the date of this
Prospectus, we cannot assure you that we will be able to renew such leases as and when they expire.

We have in the past sought time extensions to commence production for one of our manufacturing
facilities at Sriperumbudur, near Chennai, for which the extension was granted.

As we are constantly looking to expand our business, we will be required to enter into arrangements with
IDCs and other third parties to secure land for setting up new manufacturing facilities or expanding
existing ones. However, there are several factors and variables such as delay in receipt of confirmed
orders from our customers, inability to arrange for manpower, inability to raise debt for unforeseen
increases in project outlays and delay in securing requisite licenses and approvals which could delay the
completion of the manufacturing facility beyond the timeline agreed upon with the IDC or other third
parties. In such an event, we are subject to the risk of paying a premium or, even, the cancellation of land
allotment. Cancellation of land allotment could have an impact on our financial condition on account of
the capital invested on a facility being blocked without any returns while we continue to service the cost
of the capital raised which could adversely impact our results of operations and financial condition.

Certain of our immovable properties, including our registered and corporate office and where some
of our manufacturing facilities are located, are leased. If we are unable to renew existing leases or
relocate our operations on commercially reasonable terms, there may be an adverse effect on our
business, financial condition and operations.

Our registered and corporate office and certain of our manufacturing facilities are on leasehold basis

from certain third parties. For details of our registered and corporate office and our manufacturing
facilities, see “Business — Property” on page 187. The leases for some of these premises such as our

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satellite facilities located at Sriperumbudur, Pithampur and Jamshedpur are long-term lease agreements.
ranging from 30 years to 99 years and provide us a substantial time period to ensure alternative
arrangement for these facilities. However, the lease arrangements for our integrated facilities and our
other satellite facilities at other locations are entered for a medium-term period ranging from five years
to 20 years. Further, the premises for our Registered and Corporate Office is leased by us for a short-
term period of three years. While we have, in the past, renewed such short-term and medium-term lease
arrangements for our facilities and offices from time to time, if we are unable to renew certain or all of
these leases on commercially reasonable terms, we may suffer a disruption in our operations or be unable
to continue to operate from those locations in the future (and may, to that extent, need to revise our raw
material sourcing, product manufacturing and raw material and product inventory schedules and/or incur
significant costs to relocate or expand our operations elsewhere in order to continue to honour our
commitments to our customers). In addition, the terms of certain of our leases require us to obtain the
lessor's prior consent for certain actions (including making significant structural alterations to the factory
building, which may be required if we were to undertake a significant expansion in the future, or for
undertaking a corporate restructuring or to sublet, transfer, assign, charge or mortgage such properties).
In the event that any lease agreement is not renewed, we will be required to expend time and financial
resources to locate suitable land or premises to set up new warehouses and offices, which may adversely
affect our financial condition. Further, if the vacated property or premises is leased or sold to a
competitor, we may also face increased competition in that geographic area which could adversely affect
our market share and revenues.

We are dependent on third party transportation for the delivery of raw materials and finished products
and any disruption in their operations or a decrease in the quality of their services could adversely
affect our business and results of operations.

Our success depends on the smooth supply and transportation of the various raw materials required for
our various manufacturing facilities which is subject to various uncertainties and risks and finished
products. We use third party transportation providers for the supply of most of our raw materials.
Transportation strikes have had in the past and could again have in the future, an adverse effect on
supplies from our suppliers. In addition, raw materials and finished products maybe lost or damaged in
transit for various reasons including occurrence of accidents or natural disasters. There may also be delay
in delivery of raw materials and finished products which may also affect our business and results of
operation negatively. A failure to maintain a continuous supply of raw materials could have a material
and adverse effect on our business, financial condition and results of operations.

Additionally, if we lose one or more of our transportation providers, we may not be able to obtain terms
as favourable as those we receive from the third party transportation providers that we currently use,
which in turn would increase our costs and thereby adversely affect our operating results. Further, if our
transportation providers do not carry sufficient insurance coverage, any losses that may arise during the
transportation process will have to be claimed under our insurance policies. There can be no assurance
that we will receive compensation for any such claims in a timely manner or at all, and consequently,
any such loss may adversely affect our business, financial condition, results of operations and cash flows.

Disruptions of transportation services because of weather-related problems, strikes, inadequacies in the
road or rail infrastructure, or other events could impair the ability of the third-party transportation
providers to deliver us the raw materials and our finished products to our customers in a timely manner
orat all. Asa result, in the event there is any disruption in the supply of our raw materials and our finished
products, performance of our business, results of operations and cash flows may be adversely affected.

Our sustained growth depends on our ability to attract and retain skilled and qualified manpower.
Failure to attract and retain skilled and qualified manpower or to effectively manage our growth could
adversely affect our business, and increased employee compensation costs could adversely affect our
financial condition. Our operations are labour intensive and our manufacturing operations may be
materially adversely affected by strikes, work stoppages or increased wage demands by our employees
or those of our suppliers.

Our ability to provide high-quality products and services and to manage the complexity of our business
depends, in part, on our ability to retain and attract semi-skilled and skilled and qualified manpower in
the areas of management, product engineering, design, manufacture, servicing, sales, information
technology, and finance. Competition for such personnel is intense and the cost of retaining or replacing

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such personnel may affect our profitability. In addition, our strategies for growth have placed, and are
expected to continue to place, increased demands on our management’s and employees’ skills and
resources.

Further, our manufacturing activities are labour intensive, requiring our management to undertake
significant labour interface, and expose us to the risk of industrial action. As on December 31, 2020, we
had a large workforce of 259 management staff, 1,372 permanent workmen, 755 apprentices and 1,214
contract workmen.

As on December 31, 2020, our employee benefit expenses was % 1,105.91 million, constituting 10.81%
of our revenue from operations.

As on the date of this Prospectus, we have no labour unions in any of our manufacturing facilities.
However, there is no assurance that our employees will not unionize in the future. Further, while we have
not experienced any strikes or labour unrest at any of our manufacturing facilities in the past, we cannot
assure you that we will not experience work disruptions in the future due to disputes or other problems
with our work force. Any such event, at our current facilities or at any new facilities that we may
commission or acquire in the future, may adversely affect our ability to operate our business and serve
our customers, and impair our relationships with key customers and suppliers, which may adversely
impact our business and financial condition. Any changes in the existing labour laws of the countries in
which we operate may increase our labour cost and may also increase time spent by our management in
labour related matters, which could impact our business and results of operations. If labour laws become
more stringent or are more strictly enforced, it may become difficult for us to maintain flexible human
resource policies, discharge employees or downsize, any of which could have an adverse effect on our
business, results of operations, financial condition and cash flows.

We depend on our senior management, Key Managerial Personnel, persons with technical expertise
and other permanent employees for our business and future growth. If we are unable to attract or
retain key executives, Key Managerial Personnel or permanent employees, our operations may be
adversely affected.

Our future performance would depend on the continued service of our senior management, Key
Managerial Personnel, persons with technical expertise, and the loss of any senior employee and the
inability to find an adequate replacement may impair our relationship with key customers and our level
of technical expertise, which may adversely affect our business, financial condition, results of operations
and prospects. In particular, we rely on the experience and business relationships of our Promoter,
Chairman and Managing Director, Srinivasan Ravi, our Key Managerial Personnel, and other business
heads, unit heads and functional heads. Should their involvement in our business reduce, or should our
relationship with these persons deteriorate for any reason in the future, our business, financial condition,
results of operations and prospects may be adversely affected. For details of our management and Key
Managerial Personnel, see “Management — Key Managerial Personnel” on page 216.

Failure to hire or retain key managerial personnel could adversely affect our business and result of
operations.

The continued operations and growth of our business is also dependent upon our ability to attract and
retain personnel who have the necessary and required experience and expertise. We cannot assure you
that we will be able to retain these employees or find adequate replacements in a timely manner, or at
all. Our Company’s performance depends largely on the efforts and abilities of these employees. The
attrition rate for permanent employees was 23.33%, 17.51%, 11.55% and 10.74% for the nine months
ended December 31, 2020 and Fiscals 2020, 2019 and 2018, respectively. We may require a long period
of time to hire and train replacement personnel when skilled personnel terminate their employment with
us. We may also be required to increase our levels of employee compensation and benefits more rapidly
than in the past to remain competitive in attracting skilled personnel, or to address any breaches on parts
of our respective contractors and subcontractors, where we have been the principal employers. Loss of
the services of our permanent employees could adversely affect our business, financial condition and
results of operations.

 

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If we inadvertently infringe on the intellectual property rights of others, our business and results of
operations may be adversely affected.

While we take care to ensure that we comply with the intellectual property rights of others, we cannot
determine with certainty as to whether we are infringing on any existing third-party intellectual property
rights, which may force us to alter our technologies, obtain licences or cease some of our operations. We
may also be susceptible to claims from third parties asserting infringement and other related claims. If
claims or actions are asserted against us, we may be required to obtain a licence, modify our existing
technology or cease the use of such technology and design a new non-infringing technology. Such
licences or design modifications can be extremely costly. Further, necessary licences may not be
available to us on satisfactory terms, if at all. In addition, we may decide to settle a claim or action against
us, which settlement could be costly. We may also be liable for any past infringement. Any of the
foregoing could adversely affect our business, results of operations and financial condition.

In addition, in certain cases, our customers share their intellectual property rights in the course of the
product development process that we carry out for them. We are bound by confidentiality obligations
under our non-disclosure agreements with our customers to protect their intellectual property, including
in relation to technical data such as product designs and drawings that may have been shared with us by
our customers. An inadvertent breach or any misuse of intellectual property or proprietary data by any
of our employees or sub-contractors may expose us to expensive infringement claims and may diminish
our goodwill and reputation among our customers, suppliers, lenders, investors and the public, making
it difficult for us to operate our business and compete effectively.

Our ability to access capital depends on our credit ratings. Any downgrade of our credit ratings may
restrict our access to capital and thereby adversely affect our business and results of operations.

The cost and availability of capital is dependent, among other factors, on our short-term and long-term
credit ratings. Ratings reflect a rating agency’s opinion of our financial strength, operating performance,
strategic position, and ability to meet our obligations. In March 2018, CRISIL upgraded our long term
loan rating to BBB+/ stable from BBB/Stable and our short term loan rating to A2 from A3+. Our loan
facilities are currently rated by CRISIL as BBB +/Stable (Reaffirmed) for long term loans, which are
considered to have moderate degree of safety regarding timely servicing of financial obligations and
carry moderate credit risk, and A2 (Reaffirmed) for short term loans, which are considered to have strong
degree of safety regarding timely payment of financial obligations and carry low credit risk. Any future
performance issues by us or the industry may result in a downgrade of our credit ratings, which may in
turn lead to an increase in our borrowing costs and constrain our access to funds and debt markets and,
as a result, may adversely affect our business growth. In addition, any downgrade of our credit ratings
could result in default under our financing arrangements or lenders imposing additional terms and
conditions in any future financing or refinancing arrangements in the future. Any such adverse
development may adversely affect our business operations, future financial performance and the price of
our Equity Shares.

We are subject to various risks associated with the overseas markets in which we may operate,
including but not limited to foreign currency and tax. These risks may have an adverse effect on our
business, prospects, results of operations and financial condition.

We have substantial exports, currently across 10 countries, including USA and Japan. We generated 2
1,006.86 million, = 1,393.23 million, = 1,619.62 million and 2 1,275.09 million, as export sales as on
December 31, 2020 and for Fiscals 2020, 2019 and 2018, respectively, which represented 9.84%, 9.34%,
8.91% and 8.44% of our revenue from operations for the respective periods. Our international operations,
including in any markets in which we may operate, are subject to risks that are specific to each country
and region in which we operate as well as risks associated with international operations in general. Our
international procurements and exports are subject to, among other risks and uncertainties, the following:

. Adverse weather conditions, social, economic and geopolitical conditions, such as natural
disasters, civil disturbance, terrorist attacks, war or other military action would affect our

business and operations.

. Compliance with local laws, including legal constraints on ownership and corporate structure,
environmental, health, safety, labour and accounting laws, may impose onerous and expensive

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obligations on our Subsidiary. If we are unable to comply with such laws, our business, results
of operations and financial condition could be adversely affected.

. Changes in foreign laws, regulations and policies, including restrictions on trade, import and
export licence requirements, and tariffs and taxes, intellectual property enforcement issues as
well as changes in policies relating to foreign trade and investment, may affect our ability to
operate and the way in which we manage our business in the countries in which we operate.

. Fluctuations in foreign currency exchange rates against the Indian Rupee, which can affect our
results of operations, the value of our foreign assets, the relative prices at which we and foreign
competitors sell products in the same markets and the cost of certain inventory and non-
inventory items required in our operations. For instance, fluctuation of the Indian Rupee, USD,
Euros, JPY and SGD would have an impact on the export revenues and profits of our operations.

Any of these risks could have an adverse effect on our business, prospects, results of operations and
financial condition.

Our quarterly results may fluctuate significantly, which could have a negative effect on the price of
our Equity Shares.

Our quarterly results of operations may fluctuate significantly as a result of a variety of factors, including
the seasonal nature of the segments in which we operate. For instance, our sales, operating profit and
cash flows have historically declined during the third quarter of each Fiscal, primarily due to a reduction
in sales on account of reduced number of working days due to festivities and holidays in India, and a
reduction in export sales due to festivities and holidays in such jurisdictions. As a result, our financial
statements for consecutive quarters may not be directly comparable with each other. Moreover, any
significant disruption in our operations or other factors that result in a significant shortfall compared with
our expectations for the first or fourth quarter could, consequently, result in a significant shortfall in sales
and operating cash flows for the full year.

Our manufacturing facilities are subject to disruptions in or lack of basic infrastructure such as fuel
and electricity, which could increase our manufacturing costs or interrupt our operations, which in
turn may adversely impact our results of operations.

We own and operate 12 strategically located manufacturing facilities across seven cities in India. For a
description of our manufacturing facilities, see “Business - Manufacturing Facilities” on page 183. Any
disruptions at any or all of such manufacturing facilities would significantly impact our ability to
manufacture certain products and may consequently delay production or require us to shut down our
manufacturing facilities. We may be subject to manufacturing disruptions due to contraventions by us of
any of the conditions of our regulatory approvals such as any norms prescribed by pollution control
authorities.

We require substantial power and fuel for our manufacturing facilities, and energy costs represent a
significant portion of the production costs for our operations. For the nine months ended December 31,
2020 and Fiscals 2020, 2019 and 2018, our power and fuel costs was = 547.20 million, = 850.87 million,
% 966.38 million and 2 855.95 million, constituting 5.35%, 5.70%, 5.32% and 5.66%, respectively, of
our revenue from operations. If power or fuel costs were to rise, or if their supply arrangements were
disrupted, our profitability could decline.

We source most of our electricity requirements for our manufacturing facilities from state electricity
grids, power exchange and to a lesser extent from our group captive power arrangements in the State of
Tamil Nadu and diesel generating sets for standby supply. If supply is not available for any reason, we
will need to rely on diesel generating sets, which may not be able to consistently meet our requirements.
The cost of electricity from diesel generating sets could be significantly higher, thereby adversely
affecting our cost of production and profitability. Further, if for any reason such electricity is not
available or we are unable to switch to alternate power source in a short time, we may need to shut down
our plants until an adequate supply of electricity is restored. Interruptions of electricity supply can also
result in production shutdowns, increased costs associated with restarting production, the loss of
production in progress and delays in delivery schedules.
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Further, certain of our facilities are located near our OEM customers’ plants. In the event of a shutdown
of the OEM plants, our cost of relocation or supply may adversely impact our business, financial
condition and results of operations.

We may incur costs on account of relocating our manufacturing facilities in close proximity to the
facilities of our OEM customers

To serve our OEM customers effectively, we currently have certain manufacturing facilities which are
located in close proximity to our customers’ facilities. Each of these facilities is located near the plants
of the respective OEM customers that it caters to. If any of our customers’ facilities are moved from their
current locations or shut down, we would incur costs associated with relocating our manufacturing
facilities. Our contracts with our customers do not provide for compensation upon the occurrence of such
events. In addition, expansion to meet our growth requirements is limited by availability of land and
other location issues in certain of our existing manufacturing facilities. We are, and will continue to
evaluate various location options for our expansion plans. We may also have to incur capital expenditure
to meet such requirements. Costs associated with such changes may have an adverse effect on our
business, cash flows, financial condition, and results of operations.

We have entered into transactions with related parties. These or any future related party transactions
may potentially involve conflicts of interest and there can be no assurance that we could not have
achieved better terms, had such arrangements been entered into with unrelated parties.

We have entered into various transactions with related parties, including for purchase of goods and
services, sale of goods and services, from time to time. We cannot assure you that we could not have
achieved more favourable terms had such transactions been entered into with unrelated parties. It is likely
that we may enter into related party transactions in the future. Although going forward, all material
related party transactions that we may enter into, will be subject to the Board’s or Shareholders’ approval,
as necessary under the Companies Act 2013 and the SEBI Listing Regulations, there can be no assurance
that such transactions, individually or in the aggregate, will not have an adverse effect on our financial
condition and results of operations or that we could not have achieved more favourable terms if such
transactions had not been entered into with related parties. Such related party transactions may potentially
involve conflicts of interest. See “Financial Statements — Restated Financial Information — Annexure
VII —Note No. 43 — Related Party Transactions” on page 276. These related party transactions entered
into by us, were in compliance with the Companies Act.

We assure that all related party transactions of our Company shall be conducted in compliance with the
applicable accounting standards, provisions of Companies Act, 2013, as amended, provisions of the SEBI
Listing Regulations and other applicable law. Further, while we shall endeavour to not enter into related
party transactions which are against our interests and the interests of minority Shareholders, we cannot
assure you that such transactions, if undertaken, individually or in the aggregate, will not have an adverse
effect on our business, results of operations, financial condition and cash flows. We cannot assure you
that related party transactions could not have been made on more favourable terms with unrelated parties.
Further, there is no assurance that our related party transactions in future would be on terms favourable
to us when compared to similar transactions with unrelated or third parties or that our related party
transactions, individually or in the aggregate, will not have an adverse effect on our financial condition.

Our insurance coverage may not be adequate to protect us against all material risks. In the event of
the occurrence of such events, our insurance coverage may not adequately protect us against a
possible risk of loss.

Our principal types of coverage include among others, protection from fire, marine protection, special
perils, burglary, product liability and employee insurance policies such as group personal accident policy.
We cannot assure you that any claim under the insurance policies maintained by us will be honoured
fully, in part or on time, or that we have taken out sufficient insurance to cover all our losses. In addition,
our insurance coverage expires from time to time. We apply for the renewal of our insurance coverage
in the normal course of our business, but we cannot assure you that such renewals will be granted in a
timely manner, at acceptable cost or at all. Additionally, in future, we may be required to bear increased
premiums for our insurance to provide coverage for pandemics such as COVID-19. Our total insurance
coverage was % 29,064.88 million, which covers 100% of our total assets, as of December 31, 2020.

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To the extent that we suffer loss or damage, or successful assertion of one or more large claims against
us for events for which we are not insured, or for which we did not obtain or maintain insurance, or which
is not covered by insurance, exceeds our insurance coverage or where our insurance claims are rejected,
the loss would have to be borne by us and our results of operations, financial performance and cash flows
could be adversely affected. See “Business - Insurance” on page 186.

Fraud, theft, employee negligence or similar incidents may adversely affect our results of operations
and financial condition.

Our operations may be subject to incidents of theft or damage to inventory in transit and prior to or during
godown stocking. The business may also encounter some inventory loss on account of employee theft,
vendor fraud and general administrative error. While we have never experienced any such instance in the
past, there can be no assurance that we will not experience any fraud, theft, employee negligence, security
lapse, loss in transit or similar incidents in the future, which could adversely affect our results of
operations and financial condition. Additionally, losses due to theft, fire, breakage or damage caused by
other casualties, could adversely affect our results of operations and financial condition.

Any failure to protect our intellectual property rights could adversely affect our competitive position,
business, financial condition and results of operation.

We have applied for the registrations for a number of trademarks in India, including certain key
trademarks, which have been objected to, or rejected. See “Business — Intellectual Property” and
“Government and Other Approvals” on pages 187 and 330, respectively. The use of our trademarks or
logos by third parties could adversely affect our reputation, which could in turn adversely affect our
business and results of operations. We may not be able to prevent infringement of our trademarks and a
passing off action may not provide sufficient protection until such time that this registration is granted.

If our trademarks or other intellectual property are improperly used, the value and reputation of our
brands could be harmed. The measures we take to protect our intellectual property may not be adequate
to prevent unauthorized use of our intellectual property by third parties. Notwithstanding the precautions
we take to protect our intellectual property rights, it is possible that third parties may copy or otherwise
infringe upon our rights, which may have an adverse effect on our business, results of operations and
financial condition.

We are still awaiting certain approvals from various regulatory agencies and the delay or refusal of
the grant of such approvals in future may significantly impact our business and strategy.

We require certain approvals, licences, registrations and permissions for operating our business, some of
which may have expired and for which we may have either made, or are in the process of making, an
application for obtaining the approval for its renewal. If we fail to obtain or retain any of these approvals
or licences, or renewals thereof, in a timely manner, our business may be adversely affected. Further, our
government approvals and licences are subject to numerous conditions, some of which are onerous and
require us to make substantial compliance-related expenditure. Further, we cannot assure you that the
approvals, licenses, registrations or permits issued to us will not be suspended or revoked in the event of
non-compliance or alleged non-compliance with any terms or conditions thereof, or pursuant to any
regulatory action. If we fail to comply or a regulator claims that we have not complied with these
conditions, our business, prospects, financial condition and results of operations may be adversely
affected. See “Government and Other Approvals” on page 330.

Compliance with, and changes in, safety, health and environmental laws and various labour,
workplace and related laws and regulations including terms of approvals granted to us, may increase
our compliance costs and as such adversely affect our business, results of operations and financial
condition.

We are subject to a broad range of safety, health, environmental, labour, workplace and related laws and
regulations in the jurisdictions in which we operate, which impose controls on the disposal and storage
of raw materials, noise emissions, air and water discharges on the storage, handling, discharge and
disposal of chemicals, employee exposure to hazardous substances and other aspects of our operations.
For example, the laws in India limit the amount of hazardous and pollutant discharge that our
manufacturing facilities may release into the air and water. The discharge of substances that are chemical

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in nature or of other hazardous substances into the air, soil or water beyond these limits may cause us to
be liable to regulatory bodies and incur costs to remedy the damage caused by such discharges. Any of
the foregoing could subject us to litigation, which may increase our expenses in the event we are found
liable, and could adversely affect our reputation. The Draft Environment Impact Assessment 2020 (“EIA
2020”) has been issued by the Ministry of Forest, Environment and Climate Change, which when
notified, will supersede the Environment Impact Assessment 2006. The EIA 2020, among other things,
also aims to strengthen the monitoring mechanism for compliance of conditions for prior environment
clearance. We may be subject to stricter compliance requirements under the EIA 2020 for the facilities
that we may setup in future and any such increased compliance may lead to increase in compliance cost
and may adversely affect our business and financial conditions.

The adoption of stricter health and safety laws and regulations, stricter interpretations of existing laws,
increased governmental enforcement of laws or other developments in the future than that are prevailing
as of now may require that we make additional capital expenditures, incur additional expenses or take
other actions in order to remain compliant and maintain our current operations. Complying with, and
changes in, these laws and regulations or terms of approval may increase our compliance costs and
adversely affect our business, prospects, results of operations and financial condition.

We are also subject to the laws and regulations governing relationships with employees in such areas as
minimum wage and maximum working hours, overtime, working conditions, hiring and termination of
employees, contract labour and work permits. Our business is also subject to, among other things, the
receipt of all required licenses, permits and authorizations including local land use permits,
manufacturing permits, building and zoning permits, and environmental, health and safety permits. There
is a risk that we may inadvertently fail to comply with such regulations, which could lead to enforced
shutdowns and other sanctions imposed by the relevant authorities, as well as the withholding or delay
in receipt of regulatory approvals for our new products.

We are subject to stringent labour laws or other industry standards and any strike, work stoppage or
increased wage demand by our employees or any other kind of disputes with our employees could
adversely affect our business, financial condition, results of operations and cash flows.

We are subject to a number of stringent labour laws. India has stringent labour legislation that protects
the interests of workers, including legislation that sets forth detailed procedures for dispute resolution
and employee removal and legislation that imposes financial obligations on employers upon
retrenchment. We are also subject to international, federal, state and local laws and regulations, in all
jurisdictions where we have operations, governing our relationships with our employees, including those
relating to minimum wage, overtime, working conditions, hiring and firing, non-discrimination, work
permits and employee benefits. Further, in order to retain flexibility and control costs, we appoint
independent contractors who, in turn, engage on-site contract labour to perform certain operations.
Although we do not engage these labourers directly, in the event of default by any independent
contractor, we may be held responsible for providing statutory benefits, including wages to these
labourers if the independent contractors fail to do so. If we are required to pay the wages of the contracted
employees, our results of operations and financial condition could be adversely affected. In addition,
under the Contract Labour (Regulation and Abolition) Act, 1970, as amended, we may be required to
absorb a number of such contract labourers as permanent employees. Thus, any such order from a
regulatory body or court may have an adverse effect on our business, results of operations and financial
condition.

Further, the Occupational Safety, Health and Working Conditions Code, 2020 (enacted by the parliament
of India and assented to by the President of India on September 28, 2020) will come into force on such
date as may be notified in the official gazette. Once effective, it will subsume various legislations
including the Factories Act, 1948 and the Contract Labour (Regulation and Abolition) Act, 1970. If there
is any failure by us to comply with the new regime, we may incur increased costs, be subject to penalties,
have our approvals and permits revoked or suffer a disruption in our operations, any of which could
adversely affect our business.

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Failure or disruption of our IT systems may adversely affect our business, financial condition, results
of operations and prospects.

We have implemented various IT systems which covers key areas of our operations, procurement,
inventory, sales and dispatch and accounting. For instance, we implemented Oracle E Business Suite in
2013 which encompasses all materials management, including procurement, bill of material, inventory
finance and accounts and sales order and invoicing management. We significantly rely on our IT systems
for the timely supply of our products to customers.

These systems are potentially vulnerable to damage or interruption from a variety of sources, which could
result in an adverse effect on our operations. A large-scale IT malfunction could disrupt our business or
lead to disclosure of, and unauthorised access to, sensitive Company information. Our ability to keep our
business operating depends on the proper and efficient operation and functioning and upgradation of
various IT systems, which are susceptible to malfunctions, disruptions and interruptions (including those
due to equipment damage, power outages, computer viruses and a range of other hardware, software and
network upgrade problems). For instance, due to implementation of Enterprise Resource Planning (ERP)
system in the year 2014, the annual general meeting in the year 2014 was held after the due date, after
seeking an approval from the RoC. However, there was no financial impact on our Company due to such
implementation. Such malfunction or disruptions could cause economic losses for which we could be
held liable. A failure of our information technology systems could also cause damage our reputation
which could harm our business. Any of these developments, alone or in combination, could have an
adverse effect on our business, financial condition and results of operations.

Further, unavailability of, or failure to retain, well trained employees capable of constantly servicing our
IT systems may lead to inefficiency or disruption of IT systems thereby adversely affecting our ability
to operate efficiently.

Any failure or disruption in the operation of these systems or the loss of data due to such failure or
disruption (including due to human error or sabotage) may affect our ability to plan, track, record and
analyse work in progress and sales, process financial information, meet business objectives based on IT
initiatives such as product life cycle management, manage our creditors, debtors, manage payables and
inventory or otherwise conduct our normal business operations, which may increase our costs and
otherwise materially adversely affect our business, financial condition, results of operations and
prospects.

Any unsecured loans, including the working capital loans taken by our Company and Subsidiary may
be recalled at any time.

In case we avail of any unsecured loans, including working capital loans, some of them may be recalled
at any time at the option of the lender. There can be no assurance that the lenders will not recall such
borrowings or if we will be able to repay loans advanced to us in a timely manner or at all. In the event
that any lender seeks a repayment of any such loan, we would need to find alternative sources of financing,
which may not be available on commercially reasonable terms, or at all. As a result, if such unsecured
loans are recalled at any time, it may impact our business, results of operations and financial condition.

Our ability to pay dividends in the future will depend on our future earnings, financial condition, cash
flows, working capital requirements, capital expenditure and restrictive covenants in our financing
arrangements.

Our ability to pay dividends in the future will depend on our future earnings, cash flows, financial
condition, working capital requirements, capital expenditure, applicable Indian legal restrictions and
other factors. Our Company does not have a formal dividend policy. The declaration and payment of
dividends, if any, will be recommended by our Board and approved by the Shareholders, at their
discretion, subject to the provisions of the Articles of Association and applicable law, including the
Companies Act 2013. There can be no assurance that we will pay dividends. We may decide to retain all
of our earnings to finance the development and expansion of our business or conserve cash to cope with
the disruption in our business operations due to COVID-19 pandemic and, therefore, may not declare
dividends on our Equity Shares. Additionally, in the future, we may be restricted by the terms of our
financing agreements in making dividend payments unless otherwise agreed with our lenders. See
“Dividend Policy” and “Financial Indebtedness” on pages 224 and 322, respectively.

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Our Promoter and Promoter Group will continue to retain control over our Company after completion
of the Offer, which will allow them to influence the outcome of matters submitted for approval of our
Shareholders.

The aggregate pre-Offer shareholding of our Promoter and Promoter Group, as on the date of this
Prospectus is 63.40% of the issued, subscribed and paid-up Equity Shares. Consequently, our Promoter
and Promoter Group will continue to exercise significant control over us after completion of the Offer,
including being able to control the composition of our Board of Directors and determine matters requiring
Shareholders’ approval or approval of our Board of Directors. Our Promoter and Promoter Group may
take or block actions with respect to our business, which may conflict with our interests or the interests
of our minority Shareholders. By exercising their control, our Promoter and Promoter Group could delay,
defer or cause a change of our control or a change in our capital structure, delay, defer or cause a merger,
consolidation, takeover or other business combination involving us, discourage or encourage a potential
acquirer from making a tender offer or otherwise attempting to obtain control of us even if such actions
may be beneficial for the Company. See “Capital Structure” on page 71.

Our Promoter, Chairman and Managing Director, Srinivasan Ravi, holds Equity Shares in our
Company and is therefore interested in our Company's performance in addition to his remuneration
and reimbursement of expenses.

Our Promoter, Chairman and Managing Director, Srinivasan Ravi is interested in our Company to the
extent of his shareholding in our Company and the dividend entitlement received from our Company, in
addition to the normal remuneration or benefits and reimbursement of expenses by our Company. We
cannot assure you that our Promoter, Chairman and Managing Director, Srinivasan Ravi or any other
interested Director in the future, would always exercise their rights as Shareholders to the benefit and
best interest of our Company. As a result, Srinivasan Ravi or any other interested Director in the future
will continue to exercise significant control over our Company, including being able to control the
composition of our Board of Directors and determine decisions requiring simple or special majority
voting, and our other Shareholders may be unable to affect the outcome of such voting. Srinivasan Ravi
or any other interested Director in the future may take or block actions with respect to our business,
which may conflict with our best interests or the interests of other minority Shareholders, such as actions
with respect to future capital raising or acquisitions. We cannot assure you that Srinivasan Ravi or any
other interested Director in the future will always act to resolve any conflicts of interest in our favour,
thereby adversely affecting our business and results of operations and prospects. See “Capital Structure”
on page 71.

This Prospectus contains certain non-GAAP financial measures and certain other selected statistical
information related to our operations and financial performance. These non-GAAP measures and
statistical information may vary from any standard methodology that is applicable across the
manufacturing industry, and therefore may not be comparable with financial or statistical information
of similar nomenclature computed and presented by other manufacturing companies.

Certain non-GAAP financial measures and certain other statistical information relating to our operations
and financial performance have been included in this Prospectus. We compute and disclose such non-
GAAP financial measures and such other statistical information relating to our operations and financial
performance as we consider such information to be useful measures of our business and financial
performance, and because such measures are frequently used by securities analysts, investors and others
to evaluate the operational performance of manufacturing companies, many of which provide such non-
GAAP financial measures and other statistical and operational information when reporting their financial
results. These non-GAAP financial measures and other statistical and other information relating to our
operations and financial performance may not be comparable to financial measures and statistical
information of similar nomenclature that may be computed and presented by other manufacturing
companies.

49
62.

63.

64.

This Prospectus contains information from industry sources including the industry report
commissioned from CRISIL Research. Investors are advised not to place undue reliance on such
information.

This Prospectus includes information derived from third party industry sources and from a report dated
December 2020, titled “Studying the Automotive and Industrial Engineering Business in India” prepared
by CRISIL Research (the “CRISIL Report”) pursuant to an engagement with our Company. We
commissioned the CRISIL Report. Neither we, nor the Promoter, nor Directors, nor any of the BRLMs,
nor any other person connected with the Offer has verified the information in the CRISIL Report and
other information under “Industry Overview” on page 96, and we cannot guarantee the accuracy,
adequacy or completeness of any such information. Moreover, the industry sources including the CRISIL
Report contains certain industry and market data, based on certain assumptions.

Further, the reports use certain methodologies for market sizing and forecasting. There are no standard
data gathering methodologies in the markets in which we operate, and methodologies and assumptions
vary widely among different industry sources. Such assumptions may change based on various factors.
We cannot assure you that such assumptions are correct or will not change and, accordingly, our position
in the market may differ from that presented in this Prospectus. Further, the CRISIL Report or any other
industry data or sources are not recommendations to invest in our Company. Investors are advised not to
place undue reliance on the CRISIL Report or extracts thereof as included in this Prospectus, when
making their investment decisions. See “Certain Conventions, Use of Financial Information and
Market Data and Currency of Presentation” and “Industry Overview” on pages 12 and 96, respectively.

Our Company will not receive any proceeds from the Offer for Sale.

The Offer includes an Offer for Sale of 4,521,450 Equity Shares, in the aggregate, by the Selling
Shareholders, subject to finalisation of the Basis of Allotment. Our Company will not receive any
proceeds of the Offer for Sale by the Selling Shareholders. However, in the event that the Offer is
withdrawn or not completed for any reason whatsoever, all the Offer related expenses will be exclusively
borne by our Company. The expenses of the Selling Shareholders will, at the outset, be borne by our
Company and each Selling Shareholder will reimburse our Company for such expenses incurred by our
Company on behalf of such Selling Shareholders, in relation to the Offer, upon successful completion of
the Offer in the manner as prescribed under applicable law and agreed amongst the Company and the
Selling Shareholders. See “Objects of the Offer” on page 80.

We cannot assure you that the deployment of the Net Proceeds in the manner intended by us will result
in an increase in the value of your investment.

We intend to utilize the Net Proceeds as set forth in “Objects of the Offer” on page 80.

The fund requirement mentioned as a part of the objects of the Offer is based on our internal management
estimates based on the terms of our current financing documents and has not been appraised by any bank
or financial institution. This is based on current conditions and is subject to change in light of changes in
external circumstances, costs, other financial conditions or business strategies.

Any changes in the objects or variation in the terms of contract related to the objects of the Offer,
including due to factors or circumstances including competitive and dynamic market conditions,
variation in cost structures, changes in estimates due to cost overruns or delays, which may be beyond
our control, any such variation in the objects of the Offer would require a special resolution of our
Shareholders and in terms of Regulation 59 of the SEBI ICDR Regulations, our Promoter or controlling
Shareholders will be required to provide an exit opportunity to our Shareholders who do not agree to
such change or variation, pursuant to Section 27 of the Companies Act 2013. If our Shareholders exercise
such an exit option, the price of the Equity Shares may be adversely affected, which may affect the value
of your investment.

50
External risk factors

65.

66.

The cyclical and seasonal nature of automotive sales and production can adversely affect our business.

The automobile industry has witnessed substantial changes in recent years, including, among others,
continued consolidation, outsourcing, decreasing profit margins in certain segments, regulatory, shifts in
production to low-cost manufacturing centres and technological changes.

Our Automotive - Powertrain and Others and Automotive - Aluminium Products segments are directly
related to our customers’ vehicle sales and production levels across various segments. Automotive sales
and production are highly cyclical and depend on general economic conditions and other factors,
including consumer spending and preferences as well as changes in interest rate levels, consumer
confidence and fuel costs. For example, the recent growth in sales of electric vehicles, which is currently
more prevalent for personal vehicles, may shift towards commercial vehicles as well, thereby directly
impacting our Automotive - Powertrain and Others and Automotive - Aluminium Products segments.
Our sales are also affected by inventory levels and production levels of automotive manufacturers. We
cannot predict when manufacturers will decide to either build or reduce inventory levels or whether new
inventory levels will approximate historical inventory levels. This may result in variability in our sales
and financial condition. Uncertainty regarding inventory levels may be exacerbated by favourable
consumer financing programs initiated by manufacturers, which may accelerate sales that would
otherwise occur in future periods. In the past, we have experienced sales declines during the
manufacturers’ scheduled shutdowns or shutdowns resulting from unforeseen events. As we have high
fixed production costs, even relatively modest declines in our customers’ production levels and thus, our
production volumes, can have a significant adverse impact on our profitability. In addition, lower global
automotive sales during the global financial crisis resulted in substantially all automotive manufacturers
lowering vehicle production schedules. There is no assurance that global automotive sales will continue
to recover or not decrease further. Continued uncertainty and other unexpected fluctuations could have
an adverse effect on our business, results of operations and financial condition.

The automobile industry is also subject to seasonal characteristics. Generally, demand for our products
and aftermarket services increases during the automotive industry’s spring selling season and decreases
during the third quarter of each year due to the impact of scheduled OEM customer plant shutdowns in
the summer for vacations and changeovers in production lines for new model years. Our customers may
also suddenly increase their request for component volumes, which could cause lead time problems and
lead to loss of revenue for our customers if we are unable to meet their demands. As a result our
relationship with our customers may be impacted and our projects’ sales may be adversely affected and
result in loss of revenue and reduced margins. Any cancellation or delay in production could have an
adverse effect on our sales projections and profitability.

In addition, the automotive component industry is sensitive to other factors beyond our control such as
technological changes, cyclicality and unforeseen events, including political instability, recession,
inflation, further volatility in fuel prices and other adverse occurrences. Any such event that results in
decreased demand in the automotive industry, or increased pressure on automobile manufacturers to
develop, implement and maintain in-house automotive component facilities, could have an adverse effect
on our business, results of operations and financial condition.

Political, economic or other factors including but not limited to any changes in laws, rules and
regulations and legal uncertainties that are beyond our control may have an adverse impact on our
business, financial condition, results of operations and cash flows.

The following external risks may have an adverse impact on our business, financial condition, results of
operations and cash flows, should any of them materialize:

. increase in interest rates may adversely impact our access to capital and increase our borrowing
costs, which may constrain our ability to grow our business and operate profitably;

. the Indian economy has had sustained periods of high inflation in the recent past. High rates of

inflation may increase our employee costs and decrease demand for our products and services,
which may have an adverse effect on our profitability and competitive advantage, to the extent

51
67.

that we are unable to pass on increased employee costs by increasing cost of our products and
services;

. a downgrade of India’s sovereign rating by international credit rating agencies may adversely
impact our access to capital and increase our borrowing costs, which may constrain our ability
to grow our business and operate profitably;

° a change in the trade policies, in terms of tariff and non-tariff barriers, in the countries from
which we import raw materials and to which we export our products, may have an adverse effect
on our profitability;

. a decline in India’s foreign exchange reserves may affect liquidity and interest rates in the Indian
economy as well as the valuation of the Indian Rupee, which may adversely impact our financial
condition;

. political instability, resulting from a change in government or in economic and fiscal policies,

may adversely affect economic conditions in India;

. the occurrence of natural or man-made disaster or epidemic or pandemic such as COVID-19
may adversely affect economic conditions in India;

. civil unrest, acts of violence, terrorist attacks, regional conflicts or situations or war may
adversely affect the financial markets, which may impact our business, financial condition,
results of operations and cash flows; and

. changing laws, rules and regulations and legal uncertainties, including adverse application of
corporate and tax laws, which may adversely affect our business, financial condition, results of
operations and prospects. For example, the Government of India implemented a comprehensive
national goods and services tax (“GST”) regime with effect from July 1, 2017 that combines
multiple taxes and levies by the Central and State Governments into a unified tax structure.

Further, the Government of India has announced the union budget for Fiscal 2021, pursuant to which the
Finance Bill, 2021, has introduced various amendments. The Finance Bill, 2021 is yet to receive assent
from the President of India. As such, there is no certainty on the impact that the Finance Bill, 2021 may
have on our business and operations or on the industry in which we operate.

We are exposed to foreign currency exchange rate fluctuations which may have an adverse effect on
our results of operations and the value of the Equity Shares, independent of our operating results.

While our principal revenues are in the Indian Rupee, we are exposed to exchange rate fluctuations,
particularly in USD, Euro, SGD and JPY owing to our import of some raw materials such as aluminium
ingots and export sales. Such foreign currency risk in relation to our raw material imports and export
sales may be hedged, however, there can be no assurance that our aforesaid measures will enable us to
avoid the effect of any adverse fluctuations in the value of the Indian Rupee against other relevant foreign
currencies. Further, depreciation in the value of the Indian Rupee against such other currencies could
increase the Indian Rupee cost of purchasing raw materials or equipment.

Further, on listing, our Equity Shares will be quoted in Indian Rupees on the Stock Exchanges. Any
dividends in respect of our Equity Shares will also be paid in Indian Rupees and subsequently converted
into the relevant foreign currency for repatriation, if required. Any adverse movement in currency
exchange rates during the time that it takes to undertake such conversion may reduce the net dividend to
foreign investors. In addition, any adverse movement in currency exchange rates during a delay in
repatriating outside India the proceeds from a sale of Equity Shares, for example, because of a delay in
regulatory approvals that may be required for the sale of Equity Shares may reduce the proceeds received
by Equity Shareholders. For example, the exchange rate between the Rupee and the U.S. dollar has
fluctuated substantially in recent years and may continue to fluctuate substantially in the future, which
may have an adverse effect on the trading price of our Equity Shares and returns on our Equity Shares,
independent of our operating results.

52
68.

69.

Our Company has prepared financial statements under Ind AS. Significant differences exist between
Ind AS and other accounting principles.

Our financial statements, including the financial statements provided in this Prospectus, have been
prepared in accordance with Ind AS (including the Ind AS 116) and the Companies Act 2013 and restated
in accordance with SEBI ICDR Regulations. We have not attempted to quantify the impact of IFRS, U.S.
GAAP or any other system of accounting principles on the financial data included in this Prospectus, nor
do we provide a reconciliation of our financial statements to those of IFRS, U.S. GAAP or any other
accounting principles. IFRS and U.S. GAAP differ in certain respects from Ind AS. Accordingly, the
degree to which the Ind AS financial statements included in this Prospectus will provide meaningful
information is entirely dependent on the reader’s level of familiarity with Ind AS. Any reliance by
persons not familiar with Indian accounting practices on the financial disclosures presented in this
Prospectus should accordingly be limited. In addition, some of our competitors may not present their
financial statements in accordance with Ind AS and their financial statements may not be directly
comparable to ours, and therefore reliance should accordingly be limited.

EBITDA presented in this Prospectus is not in accordance with Ind AS.

EBITDA presented in this Prospectus is a supplemental measure of our performance and liquidity that is
not required by, or presented in accordance with Ind AS. Furthermore, EBITDA is not a measurement of
our financial performance or liquidity and should not be considered as an alternative to net profit/ loss,
revenue from operations or any other performance measures or as an alternative to cash flow from
Operations or as a measure of our liquidity. In addition, EBITDA is not a standardised term, hence a
direct comparison of EBITDA between companies may not be possible. Other companies may calculate
EBITDA differently from us, limiting its usefulness as a comparative measure.

Risks related to the Offer and the Equity Shares

70.

71.

72.

The Offer Price of the Equity Shares may not be indicative of the market price of the Equity Shares
after the Offer.

The Offer Price of the Equity Shares was determined by our Company and the Investor Selling
Shareholders, in consultation with the BRLMs, and through the Book Building Process. This price was
based on numerous factors, as described under “Basis for Offer Price” on page 87 and may not be
indicative of the market price for the Equity Shares after the Offer. The market price of the Equity Shares
could be subject to significant fluctuations after the Offer, and may decline below the Offer Price. We
cannot assure you that you will be able to resell their Equity Shares at or above the Offer Price.

QIBs and Non-Institutional Investors were not permitted to withdraw or lower their Bids (in terms of
quantity of Equity Shares or the Bid Amount) at any stage after submitting a Bid, and Retail Individual
Investors were not permitted to withdraw their Bids after Bid/Offer Closing Date.

Pursuant to the SEBI ICDR Regulations, QIBs and Non-Institutional Investors were required to pay the
Bid Amount on submission of the Bid and were not permitted to withdraw or lower their Bids (in terms
of quantity of Equity Shares or the Bid Amount) at any stage after submitting a Bid. Similarly, Retail
Individual Investors could revise or withdraw their Bids at any time during the Bid/Offer Period and until
the Bid/Offer Closing Date, but not thereafter. Therefore, QIBs and Non-Institutional Investors were not
permitted to withdraw or lower their Bids following adverse developments in international or national
monetary policy, financial, political or economic conditions, our business, results of operations or
otherwise at any stage after the submission of their Bids.

After the Offer, the Equity Shares may experience price and volume fluctuations and an active trading
market for the Equity Shares may not develop, which may mean you may be unable to resell your
Equity Shares at or above the Offer Price, or at all.

The price of the Equity Shares may fluctuate after this Offer as a result of several factors, including
volatility in the Indian and global securities markets, the results of our operations, the performance of
our competitors, developments in the Automotive - Powertrain and Others, Automotive - Aluminium
Products and Industrial and Engineering segments and changing perceptions in the market about

53
73.

74.

75.

76.

investments in general and our Company in particular, adverse media reports on us or in the Automotive
- Powertrain and Others, Automotive - Aluminium Products and Industrial and Engineering segments,
changes in the estimates of our performance or recommendations by financial analysts, significant
developments in economic liberalisation and deregulation policies and significant developments in fiscal
regulations.

There has been no public market for the Equity Shares of our Company prior to this Offer and an active
trading market for the Equity Shares may not develop or be sustained after this Offer. Further, the price
at which the Equity Shares are initially traded may not correspond to the prices at which the Equity
Shares will trade in the market subsequent to this Offer.

You may be subject to Indian taxes arising out of capital gains on the sale of the Equity Shares.

Under current Indian tax laws, unless specifically exempted, capital gains arising from the sale of equity
shares in an Indian company is generally taxable in India. A securities transaction tax (“STT”) is levied
on and collected by an Indian stock exchange on which equity shares are sold. Any gain realized on the
sale of listed equity shares held for more than 12 months may be subject to long term capital gains tax in
India at the specified rates depending on certain factors, such as STT is paid, the quantum of gains and
any available treaty exemptions. Accordingly, you may be subject to payment of long term capital gains
tax in India, in addition to payment of STT, on the sale of any Equity Shares held for more than 12
months. STT will be levied on and collected by a domestic stock exchange on which the Equity Shares
are sold.

Further, any gain realized on the sale of listed equity shares held for a period of 12 months or less will
be subject to short term capital gains tax in India. Capital gains arising from the sale of the Equity Shares
will be exempt from taxation in India in cases where the exemption from taxation in India is provided
under a treaty between India and the country of which the seller is resident. Generally, Indian tax treaties
do not limit India’s ability to impose tax on capital gains. As a result, residents of other countries may
be liable for tax in India as well as in their own jurisdiction on a gain upon the sale of the Equity Shares.

Any future issuance of Equity Shares may dilute your shareholding, and significant sales of Equity
Shares by our major Shareholders, may adversely affect the trading price of the Equity Shares.

Any future equity issuances by us, including a primary offering, may lead to the dilution of investors’
shareholdings in our Company. Any future equity issuances by us or sales of our Equity Shares by our
Promoter or other major Shareholders may adversely affect the trading price of the Equity Shares, which
may lead to other adverse consequences for us including difficulty in raising debt-financing. In addition,
any perception by investors that such issuances or sales might occur may also affect the trading price of
our Equity Shares.

You will not be able to sell any of the Equity Shares you purchase in the Offer on the Stock Exchanges
until the Offer receives the appropriate trading approvals.

The Equity Shares will be listed on BSE and NSE. Pursuant to Indian regulations, certain actions must
be completed before the Equity Shares can be listed and trading in the Equity Shares may commence.
The Allotment of Equity Shares in this Offer and the credit of such Equity Shares to the applicant’s demat
account with depository participant and listing is expected to commence within the period as may be
prescribed under applicable law. We cannot assure that the Equity Shares will be credited to investors’
demat accounts, or that trading in the Equity Shares will commence, within the time periods prescribed
under law.

The requirements of being a listed company may strain our resources.

The requirements of being a listed company may strain our resources. We are not a listed company and
have not, historically, been subjected to the increased scrutiny of our affairs by shareholders, regulators
and the public at large that is associated with being a listed company. As a listed company, we will incur
significant legal, accounting, corporate governance and other expenses that we did not incur as an
unlisted company. We will be subject to the SEBI Listing Regulations which will require us to file

54
77.

78.

audited annual and unaudited quarterly reports with respect to our business and financial condition. If
we experience any delays, we may fail to satisfy our reporting obligations and/or we may not be able to
readily determine and accordingly report any changes in our results of operations as promptly as other
listed companies. Further, as a listed company, we will need to maintain and improve the effectiveness
of our disclosure controls and procedures and internal control over financial reporting, including keeping
adequate records of daily transactions. In order to maintain and improve the effectiveness of our
disclosure controls and procedures and internal control over financial reporting, significant resources and
management attention will be required. As a result, our management’s attention may be diverted from
our business concerns, which may adversely affect our business, prospects, financial condition and
results of operations. In addition, we may need to hire additional legal and accounting staff with
appropriate experience and technical accounting knowledge, but we cannot assure you that we will be
able to do so in a timely and efficient manner.

Foreign investors are subject to foreign investment restrictions under Indian law, which may adversely
affect the market price of the Equity Shares.

Under the exchange control regulations currently in force in India, transfers of shares between non-
residents and residents are freely permitted (subject to certain restrictions) if they comply with the pricing
guidelines and reporting requirements specified by the RBI. If the transfer of shares is not in compliance
with such requirements or falls under any of the exceptions specified by the RBI, then the approval of
the RBI will be required for such transaction to be valid. Additionally, shareholders who seek to convert
the Indian Rupee proceeds from a sale of shares in India into foreign currency and repatriate that foreign
currency from India will require a no objection/tax clearance certificate from the Indian income tax
authority. We cannot assure investors that any required approval from the RBI or any other Indian
government agency can be obtained on any particular terms, or at all.

Foreign investors may have difficulty enforcing judgments against us or our management.

We are a limited liability company incorporated under the laws of India. All of our Directors and officers
are Indian nationals and all or a significant portion of the assets of all of the Directors and officers and a
substantial portion of our assets are located in India. As a result, it may be difficult for investors to effect
service of process outside India on us or on such directors or officers or to enforce judgments against
them obtained from courts outside India, including judgments predicated on the civil liability provisions
of foreign securities laws.

U.S. and India do not currently have a treaty providing for reciprocal recognition and enforcement of
judgments, other than arbitration awards, in civil and commercial matters. Therefore, a final judgment
for the payment of money rendered by any federal or state court in the U.S. on civil liability, whether or
not predicated solely upon the federal securities laws of the U.S., would not be enforceable in India.
However, the party in whose favour such final judgment is rendered may bring a new suit in a competent
court in India based on a final judgment that has been obtained in the U.S. The suit must be brought in
India within three years from the date of the judgment in the same manner as any other suit filed to
enforce a civil liability in India. It is unlikely that a court in India would award damages on the same
basis as a foreign court if an action is brought in India. Further, it is unlikely that an Indian court would
enforce a foreign judgment if it viewed the amount of damages awarded as excessive or inconsistent with
Indian practice. A party seeking to enforce a foreign judgment in India is required to obtain approval
from the Reserve Bank of India under the Foreign Exchange Management Act, 1999, to execute such a
judgment or to repatriate any amount recovered.

55
SECTION III - INTRODUCTION

THE OFFER

The following table summarizes details of the Offer:

 

“Offer 5,528,161* Equity Shares aggregating to € 8,236.96" million

 

The Offer consists of:

 

 

“(Fresh Issue® 1,006,711* Equity Shares aggregating to % 1,500.00* million

 
 

 

i) Offer for Sale? 4,521,450* Equity Shares aggregating to 2 6,736.96* million

 

 

 

 

 

 

 

 

 

 

 

 

~ Of which:

_QIB Category Not more than 2,764,079" Equity Shares _
Of which:
Anchor Investor Portion : - Not more than 1,658,447* Equity Shares
Balance of QIB Category available for allocation to 1,105,632* Equity Shares
QIBs (assuming the Anchor Investor Portion is fully
subscribed)
Of whic! - -
‘Available for allocation to Mutual Funds only (5% of 55,282* Equity Shares
the QIB Category (excluding the Anchor Investor
Portion)
Balance of QIB Category for all QIBs including 1,050,350* Equity Shares
Mutual Funds

 

~Non-Institutional Category

 

 

 

 

 

 

 

 

 

Retail Category® Not less than 1,934,857* Equity Shares
Equity Shares outstanding before the Offer 20,121,600* Equity Shares
~ Equity Shares outstanding after the Offer 21,128,311* Equity Shares
“Use of proceeds of the Oller For further information, see “Objects of the Offer” on page 80.

Our Company will not receive any portion of the proceeds from
the Offer for Sale.

 

@

(2)

@)

(4)

* Subject to finalization of the Basis of Allotment

The Offer has been authorized by a resolution of our Board dated December 5, 2020 and the Fresh Issue has been authorized by a
special resolution of our Shareholders, dated December 7, 2020.

The Equity Shares being offered by the Selling Shareholders have been held for a period of at least one year immediately preceding the
date of the filing of the Draft Red Herring Prospectus with SEBI, and are eligible for being offered for sale pursuant to the Offer in terms
of the SEBI ICDR Regulations.The Selling Shareholders, severally and not jointly, have confirmed and authorized their respective
participation in the Offer for Sale. For further information, see “Other Regulatory and Statutory Disclosures" on page 332.

Subject to valid bids being received at or above the Offer Price, undersubscription, if any, in any category, except in the QIB Category,
was allowed to be met with spill-over from any other category or combination of categories of Bidders at the discretion of our Company
and the Investor Selling Shareholders, in consultation with the BRLMs and the Designated Stock Exchange, subject to applicable laws
Under-subscription, if any, in the QIB Category (excluding the Anchor Investor Portion) was not allowed to be met with spill-over from
other categories or a combination of categories. In case of an under subscription in the Offer; after meeting the minimum subscription
requirement of 90% of the Fresh Issue, the balance subscription in the Offer will be first met through the Equity Shares offered pursuant
to the Offer for Sale on a pro-rata basis in a manner proportionate to the respective portion of the Offered Shares of each Selling
Shareholder and subsequently, the balance part of the Fresh Issue.

 

 

Our Company and the Investor Selling Shareholders, in consultation with the BRLMs, allocated up to 60% of the QIB Category to
Anchor Investors on a discretionary basis in accordance with the SEBI ICDR Regulations. One-third of the Anchor Investor Portion
was reserved for domestic Mutual Funds, subject to valid Bids being received from domestic Mutual Funds at or above the Anchor
Investor Allocation Price. For further information, see “Offer Procedure” on page 350.

56
Notes:

@

(ii)

(iii)

(iv)

(vy)

(vi)

The Offer has been made in terms of Rule 19(2)(b) of the SCRR read with Regulation 31 of the SEBI
ICDR Regulations.

The Offered Shares are eligible to be offered for sale in accordance with Regulation 8 of the SEBI ICDR
Regulations. For further information, see “Capital Structure” on page 71.

Allocation to all categories, other than Anchor Investors, if any, and Retail Individual Investors, was
made on a proportionate basis. The allocation to each Retail Individual Investor was not less than the
minimum Bid Lot, subject to availability of Equity Shares in the Retail Category and the remaining
available Equity Shares, if any, was allocated on a proportionate basis. For further information, see
“Offer Procedure” on page 350.

Subject to valid Bids being received at or above the Offer Price, under-subscription, in any category other
than QIB Category was allowed to be met with spill-over from other categories or a combination of
categories at the discretion of our Company and the Investor Selling Shareholders, in consultation with
the BRLMs and the Designated Stock Exchange in accordance with applicable law. For further
information, including grounds for rejection of Bids, refer to “Offer Structure” and “Offer Procedure”
on pages 347 and 350, respectively. For further information on the terms of the Offer, see “Terms of the
Offer” on page 342.

Each of the Selling Shareholders have, severally and not jointly, approved the transfer of their respective
Offered Shares pursuant to the Offer for Sale, as set out below:

 

S.No. Name of the Selling Shareholder Date of Consent Letter Maximum number of
Offered Shares
1. Srinivasan Ravi October 29, 2020 130,640
2. Marina November 19, 2020 1,559,260
3. IEC November 25, 2020 1,414,050
4. K. Gomatheswaran November 2, 2020 1,417,500
Total 4,521,450

 

The total number of Equity Shares held by the Selling Shareholders in our Company as on the date of
this Prospectus is as follows:

 

S. Name of Shareholder Pre-Offer Post-Offer

No. No. of Equity Shares Percentage No. of Equity _ Percentage of

of issued Shares* issued Equity

Equity Share capital

Share (%)*
capital (%)

1. Srinivasan Ravi 10,630,640 52.83 10,500,000 49.70
2. Marina 2,716,068 13.50 1,156,808 5.48
3. IEC 2,425,668 12.06 1,011,618 4.79
4. __K. Gomatheswaran 1,417,500 7.04 Nil Nil
Total 17,189,876 85.43 12,668,426 59.96

 

* Assuming all Offered Shares are transferred/sold pursuant to the Offer for Sale.

57
SUMMARY FINANCIAL INFORMATION

The following tables set forth summary financial information derived from the Restated Financial Information.
The Restated Financial Information has been prepared, based on financial statements as at and for the nine months
ended December 31, 2020 and the Fiscals 2020, 2019 and 2018. The Restated Financial Information have been
prepared in accordance with Ind AS and the Companies Act 2013, restated in accordance with the SEBI ICDR
Regulations and are presented in the section “Financial Statements” on page 225. The summary financial
information presented below should be read in conjunction with the Restated Financial Information, the notes and
annexures thereto and the sections “Financial Statements” and “Management’s Discussion and Analysis of
Financial Condition and Results of Operations” on pages 225 and 288, respectively.

[REMAINDER OF THE PAGE HAS BEEN INTENTIONALLY LEFT BLANK]

58
Craftsman Automation Limited

Annexure I: Restated Consolidated Statement of Assets and Liabilities
(All amounts are in INR Millions unless otherwise stated)

 

 

 

 

 

 

 

 

  

 

 
   

 

 

   

 

Note
actinaliars No.ot | AsatDecember31| AsatMarch31 | AsatMarch31 | AsatMarch31
ieee 2020 2020 2019 2018
‘ASSETS
Non-current assets
[Property, Plant and Equipment 1 14,130.70 14,267.00 14,764.54 12,447.44
(capital Work in progress 2 27431 888.17 906.14 243.12
Intangible assets 3 78.66 106.25, 143.42 149.63,
Right-of-use Asset 4 847.15, 1,043.10 977.90 637.61
Investments accounted for using equity method 5 18.82 17.93 18.06 13.97
Financial assets
Investments 6 299 13.99 23.53 24.79
Security Deposits 7 201.74 219.30 217.04 180.90
Other Financial assets 8 17.62 105.69 5.85 14.11
|Current tax assets (Net) 9 - 1099 : 44.44
lOther non-currentassets 10 112.88 93.28 110.27 266.66
15,684.87 16,765.70 17,166.75 14,022.67
current assets
Inventories u 3,399.23 3,256.15 3,233.08 3,004.61
Financial assets
‘Trade receivables 2 2,142.00 1,943.19 2,10032 2,016.86
Cash and cash equivalents 1B 310.49 597.61 194.97 367.19
Other bank balances 14 211.20 118.81 70.84 119.58
Security Deposits 15 6.71 692 8.17 5.60
Other Financial assets 16 35.00 19.16 3.32 1.26
7 673.43 323.82 476.53 456.57
6,778.06 6,265.66 6,087.23 5,971.67
[Total Assets 22,462.93 23,031.36 23,253.98 19,994.34
EQUITY AND LIABILITIES
EQUITY
lEquity Share capital 18 100.61 100.61 100.61 100.61
Other Equity 19 7,615.50 7,088.37 6,731.98 5,865.96
7,716.11 7,188.98 6,832.59 5,966.57
LIABILITIES
Non-current liabilities
[Financial liabil
Borrowings 20 5,350.82 6,682.82 6,932.01 4,303.30
Other Financial Liabilities 21 987.68 1,083.62 912.53 557.02
Provisions 2 2.09 682 - -
Deferred tax liabilities (Net) 23 465.06 370.85 355.26 319.73
6,805.65 8144.11 8,199.80 5,180.05
Current liabilities
Financial Liabilities
Borrowings 24 1,566.91 2,442.73 1,350.14 2,720.85
‘Trade payables
(a) total outstanding dues of micro enterprises & small
enterprises 25 133.20 207.62 241.90 49.49
(b) total outstanding dues of creditors other than micro
enterprises & small enterprises 2,882.95 2,610.16 3,070.19 3,577.83
Other Financial Liabilities 26 2518.55 1,792.00 2,647.08 2,168.30
(Current tax labilities (Net) 27 69.27 : 50.11 :
Other current liabilities 28 74157 627.43, 810.64 290.38
Provisions 29 28.72 18.33 51.53 40.87
7,941.17 7,698.27 8,221.59 8,847.72
|Total Equity and Liabi 22,462.93 23,031.36 23,253.98 19,994.34

 

 

 

 

 

 

 

 

 

 

 

‘The accompanying notes form an integral part of the restated consolidated financial information

This is the restated consolidated statement of assets and liabilities referred to in our report of even date

For Sharp & Tannan

Chartered Accountants For and on behalf of the Board
Firm Registration No. 0037925

   

 

V. Viswanathan RGauthamram Savi
Partner Whole Time Director Chairman and Managing Director
Membership No. 215565, DIN : 06789004 DIN: 01257716
Place : Chennai Shainshad Aduvanni C.B. Chandrasekar

   

Date : 25-Jan-2021 Company Secretary M.No.A27895 Chief Financial Office

 

Place : Coimbatore
Date : 25-Jan-2021

59
Craftsman Automation Limited

Annexure Il: Restated Consolidated Statement of Profit and Loss

(All amounts are in INR Millions unless otherwise stated)

 

 

 

 

 

 

  

 

 

 

= as Year ended
Period Aprit 12020 to
Noval
parsicotars Annesurev {| Pecember31 2020 | March312020 | March312019 | March 312018
INCOME
Revenue from Operations 30 10,227.87 14,924.65 18,180.07 15,115.31
other Income 31 7121 85.92 136.36 113.31
[Total Income 10,299.08 15,010.57 18,316.43 15,228.62
EXPENSES
Cost of materials consumed 32 4,387.28 5,717.04 7,104.88 591688
Changes in inventories of finished goods and work-in-progress 33 (48.08) 150.73 (70.15) (159.15)
Excise duty on sale of goods z e 5 32444
Employee benefits expense 34 1,105.91 1,709.86 2,168.31 1,986.29
Depreciation, amortization and impairment expense 35 1414.73 1,949.88 1,761.48 1491.53
other expenses 36 1,908.40 3367.27 4550.62 411082
Finance costs 37 72.40 1,484.00 1,405.49 1,124.83
[Total expenses 9,540.64 14,378.78 16,920.63 14,795.64
Profit before share of profit from JV & exceptional items 758.44 631.79 1,395.80 432.98
Share of profit from JV 5 082 (016) 403 247
Profit before exceptional items 759.26 631.63 1,399.83 435.45
Exceptional items 49 z (67.73) 5 :
Profit before tax 759.26 573.90 1,399.83 435.45
Hrax expense:
Net Current Tax 40 321.10 168.35 73.39 e
Deferred tax (68.44) (6.18) 34777 120.11
Profit for the period / year 506.60 410.73 973.67 315.34
lother Comprehensive Income
‘A (i) Items that will not be redassified to Statement of Profit
land Loss
~ Remeasurement of defined benefit plans (22.43) 41.29 (8.00) (11.62)
~ Equity Instruments through OCI (11.00) (11.63) (165) (158)
~ Share of OCI of Joint Venture accounted for using equity
method 0.07 0.03 0.06 0.07
(i) Income tax relating to items that will not be
reclassified to Statement of Profit and Loss 7.84 (44a) 280 4.06
B (i) Items that will be reclassified to Statement of Profit and
- Exchange differences in translating the financial
statements of foreign operations 12.33 4.83 (531) (1336)
~ The effective portion of gains or loss on hedging
instruments in a cash flow hedge 5185 (21.20) (128.27) (56.64)
(ii) Income tax relating to items that will be reclassified to
Statement of Profit and Loss (1.12) TAL 44.82 1979
Jother Comprehensive Income for the period / year, net of
tax 20.54 630 (05.55) (59.28)
Total Comprehensive Income for the period / year (Comprising 527.14 417.03 978.12 256.06
Profit and Other Comprehensive Income for the period / year)
Earnings per equity share (Face value of Rs. 5/-) "not
| ase 20a 49.39 1567
L_ Rs. 50 25.18 2041 48.39 1567
Earnings (before exceptional item) J
per equity share 25.18 22.28 48.39 1567

 

 

 

 

 

 

The accompanying notes form an integral part of the restated consolidated financial information

This
For Sharp & Tannan
Chartered Accountants

Firm Registration No, 003792

 

V. Viswanathan
Partner
Membership No. 215565

Place: Chennai
Date : 25-Jan-2021

the restated consolidated statement of profit and loss referred to in our report of even date

RGauthamram
Whole Time Director
DIN: 06789004

Shainshad Aduvanni

Company Secretary M.No.A27895

Place : Coimbatore
Date : 25-Jan-2021

60

For and on behalf of the Board

S.Ravi

Chairman and Managing Director

DIN: 01257716

CB. Chandrasekar

Chief Financial Officer

 
Craftsman Automation Limited

Annexure III: Restated Consolidated Statement of Cash Flows
(Allamounts are in INR Millions unless otherwise stated)

 

Year ended

 

 

 

 

(Refer to note: 20 to Annexure VII for Net Debt Reconciliation)

 

 

 

 

 

 

 

 

 

 

 

 

Period April 12020 0
; December312020 | March 312020 | March312019 | March 312018
[Cash flows from operating activities
Profit before tax 759.26 573.90 139983 435.45
Adjustments to reconcile PBT to net cash flows:
Depreciation and amortization expense 1414.73 1,949.88 1,761.48 1,491.53
Gain on sale of assets (5.79) (0.28) (4.38) 0.04
Exchange difference on transaction /translation (oss/(gain)) (94.22) 34.00 (37.56) (55.59)
Share of Profit of Joint Venture (0.82) 0.16 (4.03) (247)
MTM Gain / (Loss) -Derivative-( Net) 0.16 3.25 1.56 (45.15)
Allowance for ECL on Advances 0.34 (0.09) - 285
Allowance for ECL on Doubtful debts 16.85 15.44 (5.42) 0.03
Projection for Warranty & Rejection (231) 0.95 9.85 7.00
Interest income (including fair value changes in financial instruments) (15.15) (21.63) (20.93) (2250)
Government grant income (188.02) (284.42) (31156) (24750)
Liabilities no longer required written back (1.68) (6.18) (35.62) (8.92)
Assets no longer receivable written off (including exceptional item) 13.82 69.72 57.70 47.04
Interest expense (including fair value changes in financial instruments) 819.96 1,395.88, 1,369.00 1,146.48
Operating cash flow before changes in working capital ZT7.13 3,730.58 4179.92 2,748.29
Adjustments for:
Increase/ (Decrease) in provisions (4.46) 13.96 (7.19) 3.16
Increase/ (Decrease) in other financial liabilities (35.65) (26.83) 27.41 53.90
Increase/ (Decrease) in other current liabilities 251.46 (75.43) 162.65 (25.68)
Increase/ (Decrease) in Trade Payables and other Payables, 211.05 (483.97) (283.89) 614.23
(Increase}/ Decrease in other non-current assets 25.59 (25.59) - 3
(Increase}/ Decrease in other financial assets (9.33) (17358) 8.01 (31.03)
(Increase}/ Decrease in other currentassets (31067) 143.54 16.46 580.25
(Increase}/ Decrease in trade and other receivables (18298) 189,79 (56.40) (274.68)
(Increase}/ Decrease in inventories (143.08) (23.07) (228.47) (721.46)
Cash generated from operations 2,509.05 3269.41 3,848.50 2,946.99
Direct taxes paid (88.47) (215.70) (248.46) (120.00)
INet cash generated / (used) from operating activities -A ZA20.59 3,053.70 3,600.04 2,826.99
[cash flows from investing activities
Purchase of property, plant and equipment (495.02) (1,386.91) (3,558.07) (2,038.63)
Purchase of Intangible assets (6.66) (17.43) (5267) (8259)
Proceeds from sale of property, plant and equipment 31.87 14.15 oil 283
Purchase of ungoutted shares 0.00 (2.09) (0.39) (tsi)
Interest received 15,15 21.63 20.93 2250
INet cash generated / (used) in investing activities - B 54.66) 370.65) (584.09) (@,107.40)}
[cash flows from financing activities
Proceeds from long-term borrowings 539.80 1,438.95 421587 4,444.97
Repayment of long term borrowings (1,045.34) (219854) (1555.39) (4,291.10)
Proceeds from/ (repayments to) short-term borrowings (850.41) 1,094.51 (141153) 469.45
Principal repayments towards lease liability (57.50) (167.31) (121.70) (86.33)
Interest paid (ind. interest on lease liability) (84056) (1,386.29) (1.29750) (1,133.15)
Dividend Paid (incl. Addditional tax on dividend paid) - (60.64) (12.10) (6.96)
INet cash generated / (used) in financing activities- C (254.01) 279.32) (182.34) 1603.12)|
Net increase in cash and cash equivalents - (A+B+C) (28808) 403.73 (166.39) 116.47
cash and cash equivalents at beginning of period / year 597.61 193.05 360.43 240.31
Effect of exchange rate changes on cash and cash equivalents 0.96 0.83 (0.99) 3.65
Cash and cash equivalents.at end of period / year 310.49 597.61 193.05 360.43
Reconciliation of Cash & Cash equivalents
Cash & cash equivalents consists of:
cash in hand 0.25 1at 0.76 1.02
Balances with banks
(i) in current accounts 31024 59650 194.21 36617
(ii) Overdraft (refer note: 24 to Annexure VIN) (1.92) (6.76)
Hrotal 31049 597.61 193.05 36043

 

 

‘The accompanying notes form an Integral part of the restated consolidated financial information
‘This is the restated consolidated statement of cash flows referred to in our report of even date

For Sharp & Tannan
Chartered Accountants
Firm Registration No, 0037925

V.Viswanathan
Partner
Membership No, 215565

Place: Chennai
Date : 25-Jan-2021

RGauthamram
Whole Time Director
DIN: 06789004

Shainshad Aduvanni

Company Secretary M.No.A27895

Place: Coimbatore
Date : 25-Jan-2021

61

For and on behalf of the Board

S.Ravi

Chairman and Managing Director

DIN: 01257716

CB. Chandrasekar

Chief Financial Officer
GENERAL INFORMATION

Our Company was incorporated as “Craftsman Automation Private Limited” on July 18, 1986, as a private limited
company under the Companies Act 1956, pursuant to a certificate of incorporation granted by the Registrar of
Companies, Chennai, Tamil Nadu. Pursuant to the conversion of our Company to a public limited company and
as approved by our Shareholders pursuant to a resolution dated April 30, 2018, the name of our Company was.
changed to “Craftsman Automation Limited” and the RoC issued a fresh certificate of incorporation dated May
4, 2018. For further information on changes in name and registered office of our Company, see “History and
Certain Corporate Matters” on page 194.

Company Registration Number: 001816

Corporate Identity Number: U28991TZ1986PLC001816
Registered and Corporate Office

Senthel Towers

IV Floor, 1078, Avanashi Road

Coimbatore 641 018

Tamil Nadu, India

Address of the Registrar of Companies

Our Company is currently registered with the Registrar of Companies located at the following address:
Registrar of Companies, Coimbatore

No.7, AGT Business Park, I Floor, Phase IT

Avinashi Road, Civil Aerodrome Post

Coimbatore 641 014

Tamil Nadu, India

Board of Directors

The following table sets out the details regarding our Board as on the date of this Prospectus:

 

‘Name and Designation DIN Address

Srinivasan Ravi 01257716 Old No. 153, New No. 209, Tea Estate
Compound, Race Course, Coimbatore 641 018,

Designation: Chairman and Managing Director Tamil Nadu, India.

Ravi Gauthamram 06789004 Old No. 153, New No. 209, Tea Estate
Compound, Race Course, Coimbatore 641 018,

Designation: Whole-time Director Tamil Nadu, India.

Udai Dhawan 03048040 46, 2™ Floor, Poorvi Marg, Vasant Vihar, New

Delhi 110 057, India.
Designation: Nominee Director

Chandrashekhar Madhukar Bhide 00027967 104, Ajay Apartments, T. H. Kataria Marg,
Mahim, Mumbai 400 016, Maharashtra, India.
Designation: Independent Director

Sundararaman Kalyanaraman 01252878 S-31,  Kirloskar Colony, 3” — Stage,
Basaveshwara Nagar, Bengaluru 560 079,

Designation: Independent Director Karnataka, India.

Vijaya Sampath 00641110 Flat No - 403, Block -14, Mehrauli Gurgaon
Road, Heritage City, Gurgaon 122 002,

Designation: Independent Director Haryana, India.

 

For further information on our Directors, see “Management” on page 202.

62
Company Secretary and Compliance Officer

Shainshad Aduvanni is our Company Secretary and Compliance Officer. His contact details are as follows:

Senthel Towers

IV Floor, 1078, Avanashi Road

Coimbatore 641 018

Tamil Nadu, India

Tel: (91 422) 716 5000

E-mail: investor@craftsmanautomation.com

Book Running Lead Managers

Axis Capital Limited IIFL Securities Limited

1* Floor, Axis House 10" Floor, IIFL Centre

C-2, Wadia International Centre Kamala City, Senapati Bapat Marg

P. B. Marg, Worli Lower Parel (West)

Mumbai 400 025 Mumbai 400 013

Maharashtra, India Maharashtra, India

Tel: (91 22) 4325 2183 Tel: (91 22) 4646 4600

E-mail: cal.ipo@axiscap.in E-mail: craftsman.ipo@iiflcap.com

Investor grievance E-mail: complaints@axiscap.in Investor grievance E-mail: ig.ib@iiflcap.com
Website: www.axiscapital.co.in Website: www.iiflcap.com

Contact Person: Sagar Jatakiya / Akash Aggarwal Contact Person: Aditya Agarwal / Shubham Tantia
SEBI Registration No: INM000012029 SEBI Registration No: INM000010940

Statement of inter se allocation of responsibilities among the BRLMs

The responsibilities and co-ordination by the BRLMs for various activities in this Offer are as follows:

 

S.No

4,

&

Activity Responsibility Co-
ordination

Capital structuring with the relative components and formalities such as Axis and IIFL Axis
composition of debt and equity, type of instruments, and positioning
strategy
Due diligence of the Company including its operations / management / Axis and IIFL Axis
business plans / legal etc., drafting and design of the Draft Red Herring
Prospectus, the Red Herring Prospectus and the Prospectus. Ensure
compliance and completion of prescribed formalities with the Stock
Exchanges, SEBI and RoC including finalization of the Red Herring
Prospectus, the Prospectus, the Offer Agreement, the Syndicate Agreement
and Underwriting Agreement and RoC filing
Drafting and approval of all statutory advertisements Axis and IIFL Axis
Drafting and approval of all publicity material other than statutory Axis and IIFL TFL
advertisements as mentioned in point 3 above, including corporate
advertising and brochures
Appointment of intermediaries (including coordination of all agreements) Axis and IIFL HEL,
and filing of media compliance report with SEBI
Preparation of road show presentation and frequently asked questions for Axis and IIFL ‘Axis
the road show team
International institutional marketing of the Offer, which will cover, inter Axis and IIFL Axis
alia:
¢ Institutional marketing strategy
« — Finalising the list and division of international investors for one-to-

‘one meetings
 _ Finalising international road show and investor meeting schedules
Domestic institutional marketing of the Offer, which will cover, inter alia: Axis and IIFL. TFL
e  Finalising the list and division of domestic investors for one-to-one

meetings
 _ Finalising domestic road show and investor meeting schedules
Conduct non-institutional marketing of the Offer Axis and IIFL. TFL

 

63
Legal Counsel to the Investor Selling Shareholders

AZB & Partners

Onyx Towers, 1101-B 11th Floor
North Main Road,

Koregaon Park

Pune 411 001

Maharashtra, India

Tel: (91 20) 6725 6666

and

AZB House

Plot No. A8, Sector-4
Noida 201 301

Uttar Pradesh, India
Tel: (91 120) 417 9999

Special Purpose International Legal Counsel to the BRLMs

Squire Patton Boggs (MEA) LLP

Dubai International FinancialCentre (DIFC)
Burj Daman OfficeTower, Level 10

P.O. BOX111713

Dubai, United Arab Emirates

Tel: +971 4 447 8700

Registrar to the Offer

Link Intime India Private Limited
C-101, 1% Floor

247 Park, L. B. S. Marg

Vikhroli West

Mumbai 400 083

Maharashtra, India

Tel: (91 22) 4918 6200

E-mail: craftsman.ipo@linkintime.co.in
Investor Grievance E-mail: craftsman.ipo@linkintime.co.in
Website: www.linkintime.co.in
Contact Person: Shanti Gopalkrishnan
SEBI Registration No.: INR000004058

Bankers to the Offer
Escrow Collection Bank, Public Offer Account Bank and Refund Bank

Axis Bank Limited

No. 1133/1135, Avinashi Road Pappanaickenpalayam
Coimbatore — 641 037

Tamil Nadu, India

Tel: (91) 80986 00901

E-mail: Coimbatore.branchhead@axisbank.com
Website: www.axisbank.com

Contact Person: R. Santhanakrishnan

SEBI Registration No.: INBI00000017

65
 

S.No

10.

11.

12.

14,

‘Activity

Conduct retail marketing of the Offer, which will cover, inter alia:

e  Finalising media, marketing, public relations strategy and publicity
budget

*  Finalising collection centres

Finalising centres for holding conferences for brokers, etc.
Follow-up on distribution of publicity and Offer material including
form, Red Herring Prospectus/Prospectus and deciding on the
quantum of the Offer material

Coordination with the Stock Exchanges for book building software,

bidding terminals and mock trading

Deposit of 1% security deposit with the Designated Stock Exchange

Managing the book and finalization of pricing in consultation with

Company and Selling Shareholders

Post-Offer activities — managing anchor book related activities and

submission of letters to regulators post completion of anchor allocation,

management of escrow accounts, finalization of the Basis Of Allotment

based on technical rejections, post Offer stationery and preparation of CAN

for Anchor Investors, essential follow-up steps including follow-up with

bankers to the Offer and SCSBs and coordination with various agencies

connected with the post-Offer activity such as Registrar to the Offer,

bankers to the Offer, SCSBs, etc. listing of instruments, demat credit and

refunds/ unblocking of funds, announcement of allocation and dispatch of

refunds to Bidders, etc., payment of the applicable securities transaction

tax on behalf of the Selling Shareholders, coordination for investor

complaints related to the Offer, submission of final post issue report and

coordination with SEBI and the Stock Exchanges for refund of 1% security

deposit.

Responsibility

Axis and IIFL

Axis and IIFL

Axis and IIFL
Axis and IIFL

Axis and IIFL

Co-
ordination
Axis

TFL

Axis
TFL

HIFL

 

Syndicate Member

IIFL Securities Limited

6" & 7 Floor, Ackruti Centre Point, Central Road
MIDG, Andheri (E)

Mumbai 400093

Maharashtra, India

Tel: (91 22) 3929 4000/ 4103 5000

E-mail: cs@indiainfoline.com

Website: www.indiainfoline.com

Contact Person: Prasad Umarale

SEBI Registration No: INZ000164132

Legal Counsel to the Company as to Indian Law

Shardul Amarchand Mangaldas & Co
24" Floor, Express Towers

Nariman Point

Mumbai 400 021

Maharashtra, India

Tel: (91 22) 4933 5555

Legal Counsel to the BRLMs as to Indian Law

J. Sagar Associates

Vakils House

18, Sprott Road, Ballard Estate
Mumbai 400 001

Maharashtra, India

Tel: (91 22) 4341 8600

64
Public Offer Account Bank and Sponsor Bank

HDFC Bank Limited

FIG-OPS Department — Lodha

I Think Techno Campus O-3 Level

Next to Kanjurmarg Railway Station, Kanjurmarg
(East)

Mumbai — 400 042

Tel: (91 22) 3075 2927/28/2914

E-mail: tushar.gavankar@hdfcbank.com /
Siddharth.jadhav@hdfcbank.com /
prasanna.uchil@hdfcbank.com /
neerav.desai@hdfcbank.com

Website: www.hdfcbank.com

Contact Person: Tushar Gavankar/ Siddharth Jadhav
/ Prasanna Uchil

SEBI Registration No: INBI00000063

Self Certified Syndicate Banks

The list of SCSBs is available at www.sebi.gov.in/sebiweb/other/OtherAction.do?doRecognised=yes on the SEBI
website, or at such other website as may be prescribed by SEBI from time to time. A list of the Designated
Branches of the SCSBs with which a Bidder (other than an Anchor Investor), not Bidding through Syndicate/Sub
Syndicate or through a Registered Broker, RTA or CDP may submit the Bid cum Application Forms is available
at www.sebi.gov.in/sebiweb/other/OtherAction.do?doRecognisedFpi=yes&intmld=34 on the SEBI
website, and at such other websites as may be prescribed by SEBI from time to time.

Syndicate SCSB Branches

In relation to Bids (other than Bids by Anchor Investor) submitted to a member of the Syndicate, the list of
branches of the SCSBs at the Specified Locations named by the respective SCSBs to receive deposits of Bid cum
Application Forms from the members of the Syndicate is available on the website of the SEBI
(www.sebi.gov.in/sebiweb/other/OtherAction.do?doRecognised=yes) and updated from time to time. For more
information on such branches collecting Bid cum Application Forms from the Syndicate at Specified Locations,
see the website of the SEBI (www.sebi.gov.in/sebiweb/other/OtherAction.do?doRecognised=yes).

Registered Brokers

The list of the Registered Brokers eligible to accept ASBA forms, including details such as postal address,
telephone number and e-mail address, is provided on the websites of the Stock Exchanges at www.bseindia.com
and www.nseindia.com, as updated from time to time.

Registrar and Share Transfer Agents

The list of the RTAs eligible to accept ASBA Forms at the Designated RTA Locations, including details such as
address, telephone number and e-mail address, is provided on the websites of the Stock Exchanges at
www.bseindia.com/Static/Markets/PublicIssues/RtaDp.aspx? and
www.nseindia.com/products/content/equities/ipos/asba_procedures.htm respectively, as updated from time to
time.

Collecting Depository Participants

The list of the CDPs eligible to accept ASBA Forms at the Designated CDP Locations, including details such as
their name and contact details, is provided on the websites of the Stock Exchanges at
www.bseindia.com/Static/Markets/PublicIssues/RtaDp.aspx? and
‘www.nseindia.com/products/content/equities/ipos/asba_procedures.htm, respectively, as updated from time to
time.

66
Auditors of our Company

Sharp & Tannan

Chartered Accountants

A4 III Floor, Parsn Manare

602 Anna Salai

Chennai 600 006

Tamil Nadu, India

Tel: (91 44) 2827 4368

E-mail: chennai@sharpandtannan.com
ICAI Registration Number: 003792S
Peer Review Number: 011708

Changes in the Statutory Auditors

Except as stated below, there has been no change in the statutory auditors of our Company during the three years

immediately preceding the date of this Prospectus:

 

Particulars Date of change Reason for change
Sharp & Tannan, Chartered May 20, 2020 Appointment as the Statutory Auditors
Accountants
PKF Sridhar & Santhanam LLP, May 20, 2020 ‘Completion of term of appointment

Chartered Accountants

 

Bankers to our Company

HDFC Bank Limited

Corporate Banking

9" Floor, No. 115

Dr. Radhakrishnan Salai, Mylapore

Chennai - 600 004

Tamil Nadu, India

Tel: (91 44) 2847 7249

E-mail: prasanna.ranganathan@hdfcbank.com
Website: www.hdfcbank.com

Contact Person: Prasanna Ranganathan, Relationship
Manager

State Bank of India
Commercial Branch

No. 1087/A-F, Krishna Towers
Avinashi Road

Coimbatore — 641 037

Tamil Nadu, India

Tel: (91 422) 266 3304
E-mail: rm4.cbcbe@sbi.co.in
Website: www.sbi.co.in
Contact Person: K. Sekar

Indian Bank

31, Variety Hall Road

Coimbatore

Tamil Nadu, India

Tel: (91 422) 239 9266

E-mail: mcb.coimbatore@indianbank.co.in
Website: www. indianbank.co.in

Contact Person: Y.P. Mishra

IDBI Bank Limited

IDBI Bank — Specialised Corporate Branch
No. 72, Mayflower, “E” Castle

Sr. Balasundaram Road, Off. Avinashi Road
Coimbatore — 641 018

Tamil Nadu, India

Tel: (91 422) 429 9031 / 34

E-mail: vijaya.sekhar@idbi.co.in

Website: www. idbibank.in

Contact Person: M Vijaya Sekhar Babu, Deputy
General Manager

RBL Bank Limited

Coimbatore branch, R.G Chambers
726, Avinashi Road

New T.S No. 1/1396/#B
Coimbatore — 641 018

Tamil Nadu, India

Tel: (91 422) 444 2132

E-mail: sivamani.s@rblbank.com
Website: www.rblbank.com
Contact Person: Sivamani.S

Standard Chartered Bank

No. 19, Rajaji Salai

Chennai — 600 001

Tamil Nadu, India

Tel: (91 422) 420 0394

E-mail: joseph.samragland@sc.com
Website: www.standardchartered.co.in
Contact Person: Joseph Sam Ragland

67
Axis Bank Limited

No. 1133/1135, Avinashi Road Pappanaickenpalayam
Coimbatore — 641 037

Tamil Nadu, India

Tel: (91) 80986 00901

E-mail: Coimbatore.branchhead@axisbank.com
Website: www.axisbank.com

Contact Person: R. Santhanakrishnan

Grading of the Offer

No credit agency registered with SEBI has been appointed in respect of obtaining grading for the Offer.
Appraising Entity

None of the objects for which the Net Proceeds will be utilized has been appraised by any agency.
Monitoring Agency

Our Company has appointed Axis Bank Limited as the Monitoring Agency for monitoring the utilisation of the
Net Proceeds from the Fresh Issue in accordance with Regulation 41 the SEBI ICDR Regulations.

Axis Bank Limited

No. 1133/1135, Avinashi Road Pappanaickenpalayam
Coimbatore — 641 037

Tamil Nadu, India

Tel: (91) 80986 00901

E-mail: Coimbatore.branchhead@axisbank.com
Website: www.axisbank.com

Contact Person: R. Santhanakrishnan

SEBI Registration No.: INBI00000017

As required under the SEBI Listing Regulations, the Audit Committee appointed by the Board shall monitor the
utilization of the proceeds of the Offer. We will disclose the utilization of the proceeds of the Offer under a
separate head along with details, if any, in relation to all such proceeds of the Offer that have not been utilized
thereby also indicating investments, if any, of such unutilized proceeds of the Offer in our balance sheet for the
relevant Fiscals.

Credit Rating

As the Offer is of Equity Shares, credit rating is not required.

Trustees

As the Offer is of Equity Shares, the appointment of trustees is not required.

Filing

A copy of the Draft Red Herring Prospectus has been filed at Corporation Finance Department, Division of Issues
and Listing, SEBI Bhavan, Plot No. C4 A, ‘G’ Block, Bandra Kurla Complex, Bandra (East), Mumbai 400 051,
India and electronically on the SEBI’s online portal and at cfddil@sebi.gov.in, in accordance with the instructions
issued by SEBI on March 27, 2020, in relation to “Easing of Operational Procedure —Division of Issues and Listing
—CFD”

A copy of the Red Herring Prospectus, along with the documents required to be filed, have been delivered to the
RoC in accordance with Section 32 of the Companies Act 2013, and a copy of this Prospectus required to be filed

under Section 26 of the Companies Act 2013 will be delivered to the RoC situated at the address mentioned below
/ through the electronic portal at http://www.mca.gov.in/mcafoportal/loginvalidateuser.do:

68
Registrar of Companies, Coimbatore

No.7, AGT Business Park, I Floor, Phase IT
Avinashi Road, Civil Aerodrome Post
Coimbatore 641 014

Tamil Nadu, India

Book Building Process

Book building, in the context of the Offer, refers to the process of collection of Bids from investors on the basis
of the Red Herring Prospectus and the Bid cum Application Forms and the Revision Forms within the Price Band,
which was decided by our Company and the Investor Selling Shareholders, in consultation with the BRLMs and
advertised in all editions of Financial Express (a widely circulated English national daily newspaper), all editions
of Jansatta (a widely circulated Hindi national daily newspaper) and all editions of Makkal Kural (a widely
circulated Tamil regional daily newspaper, Tamil being the regional language in Coimbatore where our Registered
Office is located), at least two Working Days prior to the Bid/Offer Opening Date and was made available to the
Stock Exchanges for the purposes of uploading on their respective websites. The Offer Price was determined by
our Company and the Investor Selling Shareholders, in consultation with the BRLMs after the Bid/Offer Closing
Date. For details, see “Offer Procedure” on page 350.

All Bidders, except Anchor Investors, were mandatorily required to use the ASBA process for participating
in the Offer by providing details of their respective ASBA Account in which the corresponding Bid Amount
was blocked by SCSBs. In addition to this, the Retail Individual Investors were required to participate
through the ASBA process by either (a) providing the details of their respective ASBA Account in which
the corresponding Bid Amount was blocked by SCSBs; or (b) through the UPI Mechanism. Anchor
Investors were not permitted to participate in the Offer through the ASBA process.

In accordance with the SEBI ICDR Regulations, QIBs and Non-Institutional Investors were not allowed to
withdraw or lower the size of their Bids (in terms of the quantity of the Equity Shares or the Bid Amount)
at any stage. Retail Individual Investors (subject to the Bid Amount being up to = 200,000) could revise
their Bids during the Bid/Offer Period and withdraw their Bids on or before the Bid/Offer Closing Date.
Further, Anchor Investors could not withdraw their Bids after the Anchor Investor Bidding Date.
Allocation to the Anchor Investors was made on a discretionary basis.

For further details on the method and procedure for Bidding and book building procedure, see “Offer Structure”
and “Offer Procedure” on pages 347 and 350, respectively.

The Book Building Process under the SEBI ICDR Regulations and the Bidding process are subject to
change from time to time. Investors are advised to make their own judgment about an investment through
this process prior to submitting a Bid.

Investors should note the Offer is also subject to: (i) obtaining final listing and trading approvals of the Stock
Exchanges, which our Company shall apply for after Allotment; and (ii) filing of this Prospectus with the RoC.

Underwriting Agreement

Our Company and the Selling Shareholders have entered into the Underwriting Agreement with the Underwriters
for the Equity Shares proposed to be offered/issued through the Offer. It is proposed that pursuant to the terms of
the Underwriting Agreement, each of the BRLMs will be severally responsible for bringing in the amount
devolved, in the event their respective Syndicate Member do not fulfill their underwriting obligations. Pursuant
to the terms of the Underwriting Agreement, the obligations of the Underwriters will be several and will be subject
to certain conditions to closing, as specified therein.

The Underwriting Agreement is dated March 18, 2021. The Underwriters have indicated their intention to
underwrite the following number of Equity Shares:

 

Name, address, telephone and e-mail of the Underwriters Indicative Number of ‘Amount
Equity Shares to be Underwritten
Underwritten (in & million)
Axis Capital Limited 2,764,081 4,118.48

1st Floor, Axis House
C-2, Wadia International Centre

 

69
 

Name, address, telephone and e-mail of the Underwriters Indicative Number of ‘Amount
Equity Shares to be Underwritten
Underwritten (in million)

P.B. Marg, Worli

Mumbai 400 025

Maharashtra, India

Tel: (91 22) 4325 2183

E-mail: cal.ipo@axiscap.in

IIFL Securities Limited 2,764,080 4,118.48

10th Floor, IIFL Centre, Kamala City

Senapati Bapat Marg, Lower Parel (West)

Mumbai 400 013

Maharashtra, India

Tel: (91 22) 4646 4600

E-mail: craftsman.ipo@iifleap.com

Total 5,528,161 8,236.96

 

The abovementioned amounts are provided for indicative purposes only and would be finalized after finalization
of the Basis of Allotment and actual allocation and subject to the provisions of the SEBI ICDR Regulations.

In the opinion of our Board of Directors (based on representations made to our Company by the Underwriters),
the resources of the Underwriters are sufficient to enable them to discharge their respective underwriting
obligations in full. The Underwriters are registered with SEBI under Section 12(1) of the SEBI Act or registered
as brokers with the Stock Exchange(s). Our Board of Directors, at its meeting held on March 18, 2021, has
accepted and entered into the Underwriting Agreement mentioned above on behalf of our Company.

Allocation among the Underwriters may not necessarily be in proportion to their underwriting commitments set
forth in the table above. Notwithstanding the above table, the Underwriters shall be severally responsible for
ensuring payment with respect to Equity Shares allocated to investors procured by them. In the event of any
default in payment, the respective Underwriter, in addition to other obligations defined in the Underwriting
Agreement, will also be required to procure subscriptions for/subscribe to Equity Shares to the extent of the
defaulted amount in accordance with the Underwriting Agreement.

70
CAPITAL STRUCTURE

The share capital of our Company, as of the date of this Prospectus, is set forth below:

 

Particulars Aggregate Aggregate value
nominal value at Offer Price
(in 2 million) (in Z million)

A) AUTHORIZED SHARE CAPITAL
40,000,000 Equity Shares of face value of 2 5 each 200.00 -

B) ISSUED, SUBSCRIBED AND PAID-UP SHARE CAPITAL BEFORE THE OFFER
20,121,600 Equity Shares of face value of 7 5 each 100.61 -

C) PRESENT OFFER IN TERMS OF THIS PROSPECTUS

5,528,161* Equity Shares of face value of 2 5 each: 27.64* 8,236.96"
(i Fresh Issue of 1,006,711* Equity Shares of face value of 2 5 each” 5.03* 1,500.00*
Gi) Offer for Sale of 4,521,450* Equity Shares of face value of 5 each® 22.61* 6,736.96"

D) ISSUED, SUBSCRIBED AND PAID-UP SHARE CAPITAL AFTER THE OFFER
2,11,28,311* Equity Shares of face value of % 5 each 105.64 =

E) SECURITIES PREMIUM ACCOUNT
Before the Offer 1,379.53
After the Offer 2,874.50"
* Subject to finalization of the Basis of Allotment

 

(1) The Offer has been authorized by our Board pursuant to resolutions passed at its meeting held on December 5, 2020 and the Shareholders
pursuant to a resolution passed at their meeting held on December 7, 2020.

(2) The Selling Shareholders have confirmed and authorized their respective participation in the Offer for Sale. For further information,
see “The Offer” and “Other Regulatory and Statutory Disclosures” on pages 56 and 332, respectively.

Notes to Capital Structure
1; Share Capital History

The following table sets forth the history of the Equity Share capital of our Company.

 

Date of allotment Number Face Issue price Nature of Reason/
ofequity value _per equity consideration nature of allotment
shares _ per share

equity (in?)

share

(ind
July 18, 1986 303 100 100 Cash Subscription to the MoA
March 29, 1989 1,697 100 100 Cash Further issue®)
March 31, 1992 3,000 100 100 Cash Further issue®
March 31, 1997 20,000 100 100 Cash Further issue
March 31, 2000 35,000 100 100 Cash Further issue®
March 31, 2004 25,000 100 100 Cash Further issue
March 26, 2007 95,000 100 100 Cash Further issue
March 26, 2007 225,000 100 N.A. NA. Bonus issue®
September 20,2010 66,263 100 6,791.12 Cash Further issue
August 2, 2012 89,100 100 9,548.80 Cash Further issue
August 21, 2012 14,540 100 9,548.80 Cash Further issue)
December 21,2017 431,177 100 N.A. NA. Bonus issue)

Pursuant to the resolutions passed by our Board of Directors on March 30, 2018 and our Shareholders on April
30, 2018, the face value of the Equity Shares was sub-divided from & 100 per equity share to 2 5 per Equity Share.
Accordingly, the issued, subscribed and paid-up Equity Share capital of our Company being 1,006,080 equity
shares of 100 each was sub-divided into 20,121,600 Equity Shares of @ 5 each.

Total 20,121,600

 

(Subscription of 101 equity shares by Srinivasan Ravi, 101 equity shares by Ramesh Muthuramalingam and 101 equity shares
by Sridhar Kumarasamy, being the initial subscribers to the MoA.

71
(2) Allotment of 247 equity shares to Srinivasan Ravi, 300 equity shares to S. Manoranjitham, 250 equity shares to S. Murali,
300 equity shares to Chithra Ravi, 300 equity shares to Chitra Murali and 300 equity shares to S. Santhiavalliammal.

(3) Allotment of 1,150 equity shares to Ramesh Muthuramalingam, 250 equity shares to Chithra Ravi, 250 equity shares to Chitra
Murali, 900 equity shares to K. Gomatheswaran, 250 equity shares to Anandhi Ramesh and 200 equity shares to.
Thulasiammal.

(4) Allotment of 4,550 equity shares to Srinivasan Ravi, 3,250 equity shares to Govinda Swamy Srinivasan, 2000 equity shares
to S. Manoranjitham, 4,850 equity shares to S. Murali, 700 equity shares to Chithra Ravi, 400 equity shares to Chitra Murali,
3,250 equity shares to K. Gomatheswaran and 1,000 equity shares to S. Santhiavalliammal.

(8) Allotment of 16,100 equity shares to Srinivasan Ravi, 4,000 equity shares to Govinda Swamy Srinivasan, 5,250 equity shares
to S. Manoranjitham, 7,500 equity shares to S. Murali, 500 equity shares to Chitra Murali, 1,000 equity shares to K.
Gomatheswaran and 650 equity shares to Chithra Ravi.

(6) Allotment of 8,600 equity shares to Srinivasan Ravi, 875 equity shares to Ramesh Muthuramalingam, 1,735 equity shares to
Govinda Swamy Srinivasan, 2,135 equity shares to S. Manoranjitham, 7,860 equity shares to S. Murali, 690 equity shares to
Chithra Ravi, 495 equity shares to Chitra Murali, 2,435 equity shares to K. Gomatheswaran and 175 equity shares to Anandhi
Ramesh.

  

(7) Allotment of 78,245 equity shares to Srinivasan Ravi, 6,540 equity shares to S. Murali and 10,215 equity shares to K.
Gomatheswaran.

(8) Bonus issue to all existing shareholders of our Company in the ratio of five equity shares for every four equity shares held,
by way of capitalization of a portion of existing reserves, authorized by our Shareholders through a resolution passed at the
EGM dated March 7, 2007. 168,750 equity shares allotted to Srinivasan Ravi, 33,750 equity shares allotted to S. Murali and
22,500 equity shares allotted to K. Gomatheswaran.

(9) Allotment of 66,263 equity shares to IFC.

(10) Allotment of 89,100 equity shares to Standard Chartered Private Equity (Mauritius) II Limited. Subsequently, the equity
shares were transferred to Marina, pursuant to a deed of adherence dated March 17, 2017. For further information, see
“History and Certain Corporate Matters — Shareholders’ Agreements and Other Agreements" on page 198.

(11) Allotment of 14,540 equity shares to IFC.

(12) Bonus issue to all existing shareholders of our Company in the ratio of three equity shares for every four equity shares held,
by way of capitalization of a portion of existing reserves, authorized by our Shareholders through a resolution passed at the
EGM dated December 11, 2017. 227,812 equity shares allotted to Srinivasan Ravi, 45,563 equity shares allotted to S. Murali,

30,375 equity shares allotted to K. Gomatheswaran, 60,602 equity shares allotted to IFC and 66,825 equity shares allotted
to Marina.

As on date of this Prospectus, our Company has not issued Equity Shares for consideration other than
cash or out of revaluation reserves at any time since incorporation.

As on the date of this Prospectus, our Company has not allotted any Equity Shares pursuant to any scheme
approved under Sections 391 to 394 of the Companies Act 1956 or such equivalent provisions under of
the Companies Act 2013.

As on date of this Prospectus, our Company does not have any employee stock option scheme or plan.

Our Company has not issued Equity Shares at a price lower than the Offer Price in one year immediately
preceding the date of this Prospectus.

History of Equity Share Capital Build-up, Contribution and Lock-in of Promoter’s Shareholding
Build-up of Promoter’s shareholding in our Company

As on the date of this Prospectus, our Promoter holds 10,630,640 Equity Shares aggregating to 52.83%
of the issued, subscribed and paid-up Equity Share capital of our Company.

Set forth below is the build-up of the equity shareholding of our Promoter, since incorporation of our
Company:

72
 

Date of allotment) Number of Facevalue  Issue/acquis Natureof  Natureof Percentage Percentage
transfer/acquisitio equity _—per equity _ition/transfe consideratio transaction of pre-Offer _of post-

 

nof equity shares shares share(%) _rprice per n Equity Share Offer
equity share capital (%) Equity
3) Share
capital
(%)*
Srinivasan Ravi
July 18, 1986 101 100 100 Cash ‘Subscription 0.01 0.01
to the MoA
March 29, 1989 247 100 100 Cash ‘Further Issue 0.02 0.02
March 31, 1997 4,550 100 100 Cash Further Issue 0.45, 0.43
March 31, 2000 16,100 100 100 Cash ‘Further Issue 1.60 1.52
March 31, 2004 8,600 100 100 Cash ‘Further Issue 0.81
March 20, 2007 2,126 100 100 Cash Acquisition 0.21 0.20
from
Ramesh
Muthuramali
ngam
March 20, 2007 101 100 100 Cash Acquisition 0.01 0.01
from Sridhar
Kumarasamy
March 20, 2007 8,985 100 Nil NA. Acquisition 0.89 0.85
by way of
gift from
Govinda
Swamy
Srinivasan
March 20, 2007 9,685 100 Nil NA. Acquisition 0.96 0.92
by way of
gift from S.
Manoranjith
am
March 20, 2007 2,590 100 Nil NA. Acquisition 0.26 0.25
by way of
gift from
Chithra Ravi
March 20, 2007 1,945 100 100 Cash Acquisition 0.19 0.18
from Chitra
Murali
March 20, 2007 425 100 100 Cash Acquisition 0.04 0.04
from
Anandhi
Ramesh
March 20, 2007 1,300 100 Nil NA. Acquisition 0.13 0.12
by way of
transmission
from S.
Santhiavallia
mmal
March 26, 2007 78,245 100 100 Cash Further Issue 7.78 741
March 26, 2007 168,750 100 NA NA. Bonus Issue 16.77 15.97
December 21, 2017 227,812 100 NA NA. Bonus Issue 22.64 21.56
February 12, 2018 (10) 100 Nil NA. Transferto ‘Negligible Negligible
Chithra
Ravi
February 12, 2018 (10) 100 Nil NA. Transferto ‘Negligible Negligible
Ravi
Gauthamram
w
February 12, 2018 (10) 100 Nil NA. Transferto ‘Negligible Negligible
R.
Mirthula‘”
Total 531,532 52.83 50.32

Pursuant to the resolutions passed by our Board of Directors on March 30, 2018 and our Shareholders on April 30, 2018, the face
value of the Equity Shares was sub-divided from % 100 per equity share to % 5 per Equity Share. Accordingly, Srinivasan Ravi
holds 10,630,640 Equity Shares of % 5 each.

Total 10,630,640 52.83 50.32
* Assuming full subscription of the Offer.
(2) Pursuant to gift deeds dated February 12, 2018.

 

All the Equity Shares held by our Promoter were fully paid-up on the respective dates of acquisition of
such Equity Shares.

73
(b)

As on the date of this Prospectus, none of the Equity Shares held by our Promoter is pledged.

Details of Minimum Promoter’s contribution and lock-in for three years

Pursuant to Regulations 14 and 16 of the SEBI ICDR Regulations, an aggregate of 20% of the fully
diluted post-Offer Equity Share capital of our Company held by our Promoter shall be provided towards
Minimum Promoter’s Contribution and locked-in for a period of at least three years from the date of
Allotment.

Set forth below are the details of the Equity Shares that will be locked-in as Minimum Promoter’s
Contribution from the date of Allotment:

 

No. of Date of Natureof Face Issue/Acquis__% of pre- % of the fully
Equity _allotment/acquisition of Transaction value _—itionPrice Offer Equity _ diluted post-
Shares equity shares per perequity © Sharecapital Offer Equity

locked-in equity share (@) Share capital*

share*
®
14,436 March 31, 2000 Further Issue 100 100 1.43 1.37
8,600 March 31, 2004 Further Issue 100 100 0.85 0.81
2,126 March 20, 2007 Acquisition 100 100

from Ramesh
Muthuramalin
gam
101 March 20, 2007 Acquisition 100 100
from Sridhar 0.01 0.01
Kumarasamy
8,985 March 20, 2007 ‘Acquisition 100 Nil
by way of gift
from Govinda 0.89 0.85
Swamy
Srinivasan
9,685 March 20, 2007 Acquisition 100 Nil
by way of gift
from S. 0.96 0.92
Manoranjitha
m
2,590 March 20, 2007 Acquisition 100 Nil
by way of gift
from Chithra
Ravi
1,945 March 20, 2007 ‘Acquisition 100 100
from Chitra 0.19 0.18
Murali
425 March 20, 2007 Acquisition 100 100
from Anandhi 0.04 0.04
_ Ramesh
1,300 March 20, 2007 Acquisition 100 Nil
by way of
transmission
from S.
Santhiavallia
mmal
78,245, March 26, 2007 Further Issue 100 100 7.78 7Al
82,859 March 26, 2007 Bonus Issue 100 NA. 8.24 7.84
211,297
Pursuant to the resolutions passed by our Board of Directors on March 30, 2018 and our Shareholders on April 30, 2018, the
face value of the Equity Shares was sub-divided from % 100 per equity share to % 5 per Equity Share. Accordingly, 211,297
equity shares of 2 100 each have been sub-divided into 4,225,940 Equity Shares of % 5 each for the purpose of Minimum
Promoter’s Contribution.
4,225,940 21.00 20.00
* Assuming full subscription of the Offer.

0.21 0.20

0.26 0.25

0.13 0.12

 

For further information on the build-up of the Equity Share capital of our Company held by our Promoter,
see “- History of Equity Share Capital Build-up, Contribution and Lock-in of Promoter’s
Shareholding” on page 72.

Our Promoter has given consent to include such number of Equity Shares held by him as may constitute

20% of the fully diluted post-Offer Equity Share capital of our Company as Minimum Promoter’s
Contribution. Our Promoter has agreed not to sell, transfer, charge, pledge or otherwise encumber in any

74
©

@

(@

manner the Minimum Promoter’s Contribution from the date of this Prospectus, until the expiry of the
lock-in period specified above, or for such other time as required under SEBI ICDR Regulations, except
as may be permitted, in accordance with the SEBI ICDR Regulations.

The Equity Shares that are being locked-in are not, and will not be, ineligible for computation of
Minimum Promoter’s Contribution under Regulation 15 of the SEBI ICDR Regulations. In this regard,
we confirm that:

@ the Equity Shares offered as part of the Minimum Promoter’s Contribution do not comprise
Equity Shares acquired during the three years immediately preceding the date of this Prospectus
for consideration other than cash and wherein revaluation of assets or capitalization of intangible
assets was involved or bonus issue out of revaluations reserves or unrealized profits of the
Company or against Equity Shares that are otherwise ineligible for computation of Minimum
Promoter’s Contribution;

(ii) the Minimum Promoter’s Contribution does not include Equity Shares acquired during the one
year immediately preceding the date of this Prospectus at a price lower than the price at which
the Equity Shares are being offered to the public in the Offer;

(iii) our Company has not been formed by conversion of a partnership firm into a company and
hence, no Equity Shares have been issued in the one year immediately preceding the date of this
Prospectus pursuant to conversion of a partnership firm; and

(iv) the Equity Shares held by our Promoter and offered as part of the Minimum Promoter’s
Contribution are not subject to any pledge.

All Equity Shares held by our Promoter are in dematerialized form.
Details of Equity Shares locked-in for one year

In terms of Regulation 17 of the SEBI ICDR Regulations, the entire pre-Offer Equity Share capital of
our Company will be locked-in for a period of one year from the date of Allotment in the Offer, except
(a) the Minimum Promoter’s Contribution which shall be locked in as above; and (b) Offered Shares,
which are successfully transferred as part of the Offer for Sale. Further, pursuant to Regulation 17(c) of
the SEBI ICDR Regulations, the entire pre-Offer shareholding of Volrado Venture Partners Fund-II shall
be locked-in for a period of one year from the date of purchase of the Equity Shares by them, being
March 9, 2021.

Any unsubscribed portion of the Offered Shares would also be locked in as required under the SEBI
ICDR Regulations.

Lock-in of Equity Shares Allotted to Anchor Investors

Any Equity Shares Allotted to Anchor Investors in the Anchor Investor Portion shall be locked in for a
period of 30 days from the date of Allotment.

Other requirements in respect of lock-in

Pursuant to Regulation 21 of the SEBI ICDR Regulations, the Equity Shares held by our Promoter and
locked-in for one year may be pledged only with scheduled commercial banks or public financial
institutions or a Systemically Important NBFC or a housing finance company as collateral security for
loans granted by such entities, provided that such pledge of the Equity Shares is one of the terms of the
sanction of the loan. Equity Shares locked-in as Minimum Promoter’s Contribution for three years can
be pledged only if in addition to fulfilling the aforementioned requirements, such loans have been granted
by such banks or financial institutions for the purpose of financing one or more of the objects of the
Offer. However, such lock-in will continue pursuant to any invocation of the pledge and the transferee
of the Equity Shares pursuant to such invocation shall not be eligible to transfer the Equity Shares until
the expiry of the lock-in period stipulated above.

75
In terms of Regulation 22 of the SEBI ICDR Regulations, the Equity Shares held by our Promoter and
lock-in pursuant to Regulation 16 of the SEBI ICDR Regulations for a period of three years, may be
transferred amongst our Promoter and any member of the Promoter Group or a new promoter, subject to
continuation of lock-in applicable to the transferee for the remaining period and compliance with
provisions of the Securities and Exchange Board of India (Substantial Acquisition of Shares and
Takeovers) Regulations, 2011, as amended (the “Takeover Regulations”).

Further, in terms of Regulation 22 of the SEBI ICDR Regulations, the Equity Shares held by persons
other than our Promoter and locked-in pursuant to Regulation 17 of the SEBI ICDR Regulations for a
period of one year, may be transferred to any other person holding Equity Shares which are locked in
along with the Equity Shares proposed to be transferred, subject to the continuation of the lock in
applicable to the transferee and compliance with the provisions of the Takeover Regulations.

Shareholding of our Promoter and Promoter Group
Our Promoter holds 52.83% of the pre-Offer Equity Share capital of our Company. Except as stated

below, the members of our Promoter Group do not hold any Equity Shares in our Company as on date
of this Prospectus:

 

S. Name of the member of the Pre-Offer Post-Offer
No. Promoter Group Number of % of the Number of % of the
Equity Shares total Equity Shares total

held shareholding held shareholding
1. _S. Murali 2,126,260 10.57 2,126,260 10.06
2. Chithra Ravi 200 _ Negligible 200 Negligible
3. Ravi Gauthamram 200 Negligible 200 Negligible
4. R. Mirthula 200 Negligible 200 Negligible
Total 2,126,860 10.57 2,126,860 10.07

 

None of the Equity Shares held by the members of our Promoter Group is pledged or otherwise
encumbered.

None of the members of our Promoter Group, nor our Directors and their relatives has purchased or sold
Equity Shares, during the six months immediately preceding the date of this Prospectus.

There are no financing arrangements whereby the members of our Promoter Group, our Directors and
their relatives have financed the purchase of the Equity Shares by any other person other than in the
normal course of business of the financing entity, during the six months immediately preceding the date
of the Draft Red Herring Prospectus, the Red Herring Prospectus and this Prospectus.

(REMAINDER OF THE PAGE KEPT INTENTIONALLY BLANK]

76
10.

Set forth below is the shareholding pattern of our Company as on the date of this Prospectus:

Our shareholding pattern

 

Category Category of the

No. of

No. of

No. of

No. of

Total No,

 

 

Shareholding ___ No. of Voting Rights held in each class of No.of Shareholding Number of Number of __ Number of
o Shareholder (11) Shareholders fully paid- partly shares shares asa % of ‘securities (IX) shares asa% Locked in shares equity shares
a up equity paid underlying held (VII)__—_total no. of, assuming full shares (XII) pledged or held in
shares up Depository = shares Outstanding conversion of otherwise _dematerialized
held (IV) equity Receipts. (IV)*(V)+ (calculated convertible convertible encumbered from (XIV)
shares (VI) vo as per securities securities (as x,
held SCRR, 1957) sai (including a %of
w) ‘Asa %of No. of Voting Rights Total Warrants) diluted share No. Asa_—No.— Asa
(A+B+C2) Class Total «= 88% « capital (a) %of a) of
vu, eg Y Be (xD=(VID+ total total
coal (asa % of shares shares
voting (ABC) held held
rights (b) (b)
@ Promoter & 5 12,757,500 0 012,757,500 63.40 12,757,500 012,757,500 63.40 0 400 o 0 0 12,757,500
Promoter Group
® Public 97,364,100 0 07,364,100 36.60 7,364,100 07,364,100 36.60 0 36600 oo 0 7,364,100
© Non Promoter-Non 0 0 0 0 0 0 0 0 0 0 0 00 00 0
Public
@ Shares underlying 0 0 0 0 0 0 0 0 0 0 0 00 00 0 0
Custodian/Depository
Receipts
@ Shares held by 0 0 0 0 0 0 0 0 0 0 0 00 oo 0 0
Employee Trusts
‘Total (A)+(B) HC) 14 20,121,600 0 020,121,600 100.00 20,121,600 0 20,121,600 100.00 0 100.000 of o 20,121, 600

 

77
11.

(a)

(b)
(©)

12.

13.

14.

15.

16.

Other details of Shareholding of our Company

Except for Srinivasan Ravi, our Chairman and Managing Director and Ravi Gauthamram, our Whole-
time Director, who hold 10,630,640 Equity Shares and 200 Equity Shares, respectively, none of our
Directors or Key Managerial Personnel holds any Equity Shares in our Company.

As on the date of this Prospectus, our Company has 14 Shareholders.

The details of our Shareholders holding 1% or more of the paid-up Share Capital of our Company, on a
fully diluted basis as on the date of this Prospectus.

 

Ss. Shareholder Number of Equity Percentage Number of Percentage of

No. Shares held ofthepre-  EquityShares __the pre-Offer

Offer ona fully Equity Share

Equity diluted basis Capital ona

Share fully diluted

Capital (%) basis (%)
1. Srinivasan Ravi 10,630,640 52.83 10,630,640 52.83
2. Marina 2,716,068 13.50 2,716,068 13.50
3. IFC 2,425,668 12.06 2,425,668 12.06
4. S. Murali 2,126,260 10.57 2,126,260 10.57
5. _K. Gomatheswaran 1,417,500 7.04 1,417,500 7.04
6. Volrado Venture 402,432 2.00 402,432 2.00
Partners Fund-II

Total 19,718,568 98.00 19,718,568 98.00

 

The details of our Shareholders holding 1% or more of the paid-up Share Capital of our Company, on a
fully diluted basis; (i) as of 10 days prior to the date of this Prospectus; (ii) as of one year prior to the
date of this Prospectus; and (iii) as of two years prior to the date of this Prospectus, are set out below:

 

s. Shareholder Number of Percentageof. Numberof Percentage of

No. Equity Shares __the pre-Offer Equity the pre-Offer

held Equity Share Sharesona _—_- Equity Share

Capital (%) fully diluted Capital ona

basis fully diluted

basis (%)

L. Srinivasan Ravi 10,630,640 52.83 10,630,640 52.83
2. Marina 3,118,500 15.50 3,118,500 15.50
3. IFC 2,828,100 14,06 2,828,100 14,06
4. S. Murali 2,126,260 10.57 2,126,260 10.57
5. K. Gomatheswaran 1,417,500 7.04 1,417,500 7.04
Total 20,121,000 99.99 20,121,000 99.99

 

The Company presently does not intend or propose to alter the capital structure for a period of six months
from the Bid/Offer Opening Date, by way of split or consolidation of the denomination of Equity Shares,
or further issue of Equity Shares (including issue of securities convertible into or exchangeable for,
directly or indirectly into Equity Shares), whether on a preferential basis or issue of bonus or rights issue
or further public issue of Equity Shares or otherwise. However, if our Company enters into acquisitions,
joint ventures or other arrangements, our Company may, subject to necessary approvals, consider raising
additional capital to fund such activity or use Equity Shares as currency for acquisitions or participation
in such joint ventures.

Our Company, our Directors and the BRLMs have not entered into any buy-back arrangements for the
purchase of Equity Shares being offered through this Offer.

For further information relating to the cost of acquisition of Equity Shares by our Promoter, see the
“Summary of the Offer Document” on page 17.

The Equity Shares are fully paid-up and there are no partly paid-up Equity Shares as on the date of this

Prospectus. The Equity Shares to be issued or transferred pursuant to the Offer shall be fully paid up at
the time of Allotment.

78
17.

18.

19.

20.

21.

22.

The BRLMs and their respective associates (as defined under the Securities and Exchange Board of India
(Merchant Bankers) Regulations, 1992) do not hold any Equity Shares as on the date of this Prospectus.
The BRLMs and their respective associates may engage in transactions with, and perform services for
our Company, the Selling Shareholders and their respective affiliates or associates in the ordinary course
of business, and have engaged, or may in the future engage in commercial banking and investment
banking transactions with our Company or the Selling Shareholders or their respective affiliates or
associates for which they have received, and may in future receive compensation.

No person connected with the Offer, including, but not limited to, our Company, the members of the
Syndicate, our Directors, Promoter or the members of our Promoter Group, shall offer in any manner
whatsoever any incentive, whether direct or indirect, in cash, in kind or in services or otherwise to any
Bidder for making a Bid. Further, no payment, direct or indirect benefit in the nature of discount,
commission and allowance or otherwise shall be offered or paid either by our Company or our Promoter
to any person in connection with making an application for or receiving any Equity Shares pursuant to
this Offer.

There are no outstanding warrants, options or rights to convert debentures, loans or other convertible
instruments into Equity Shares as on the date of this Prospectus.

There will be no further issue of Equity Shares whether by way of issue of bonus shares, preferential
allotment, rights issue or in any other manner during the period commencing from the date of this
Prospectus with SEBI until the Equity Shares have been listed on the Stock Exchanges or all application
monies have been refunded, as the case may be.

Neither our Promoter nor our Promoter Group will participate in the Offer except to the extent of the
participation by our Promoter in the Offer for Sale.

Our Company shall ensure that any transactions in the Equity Shares by our Promoter and the Promoter
Group during the period between the date of filing the Draft Red Herring Prospectus in relation to this
Offer and the date of closure of the Offer shall be reported to the Stock Exchanges within 24 hours of the
transactions.

79
OBJECTS OF THE OFFER

The Offer comprises a Fresh Issue of 5,528,161 Equity Shares, aggregating to = 1,500.00 million by our Company
and an Offer for Sale of 4,521,450 Equity Shares, aggregating to = 6,736.96 million by the Selling Shareholders,
subject to finalization of the Basis of Allotment.

The Offer for Sale

Our Company will not receive any proceeds of the Offer for Sale by the Selling Shareholders. Each of the Selling
Shareholders will be entitled to the respective proportion of the proceeds of the Offer for Sale after deducting their
portion of the Offer related expenses. Other than the listing fees for the Offer and expense on account of corporate
advertisements (which shall be exclusively borne by our Company), all cost, fees and expenses in respect of the
Offer will be shared among our Company and the Selling Shareholders, respectively, in proportion of the proceeds
received for the Fresh Issue and their respective portion of Offered Shares, as may be applicable, upon the
successful completion of the Offer. However, in the event that the Offer is withdrawn or not completed for any
reason whatsoever, all the Offer related expenses will be borne exclusively by our Company. Further, for ease of
operations, expenses of the Selling Shareholders may at the outset be borne by our Company and each Selling
Shareholder shall reimburse our Company for such expenses incurred by our Company on behalf of such Selling
Shareholders, in relation to the Offer, upon successful completion of the Offer in the manner as prescribed under
applicable law and agreed amongst the Company and the Selling Shareholders.

The Fresh Issue

Our Company proposes to utilize the funds which are being raised through the Fresh Issue, to = 1,500.00 million
(subject to finalization of the Basis of Allotment), after deducting the Offer related expenses to the extent payable
by our Company with respect to the Fresh Issue, towards funding the following objects (collectively, referred to
herein as the “Objects”):

1. repayment/pre-payment, in full or part, of certain borrowings availed of by our Company; and

2. general corporate purposes.

In addition to the aforementioned Objects, our Company expects to receive the benefits of listing of the Equity
Shares on the Stock Exchanges.

The main objects clause as set out in the MoA enables our Company to undertake our existing activities and the
activities for which funds are being raised by our Company through the Fresh Issue. The activities which have
been carried out until now by our Company are valid in terms of the objects clause of our MoA.

In addition, the listing of our Equity Shares is intended to enhance our visibility and brand name among existing
and potential customers.

Net Proceeds

The details of the Net Proceeds are summarized in the table below:

 

 

 

(in million)
Particulars Estimated Amount
Gross proceeds of the Fresh Issue 1,500.00*
(Less) Offer expenses to the extent applicable to the Fresh Issue 91.59
Net Proceeds 1,408.41*
* Subject to finalization of the Basis of Allotment
Requirement of funds and Utilization of Net Proceeds
The proposed utilization of the Net Proceeds is set forth in the table below:
(in million)
Particulars Estimated Amount
Repayment/pre-payment, in full or part, of certain borrowings availed of by our Company 1,200.00
General corporate purposes* 208.41
Net Proceeds 1,408.41

 

* The amount utilized for general corporate purposes shall not exceed 25% of the gross proceeds of the Fresh Issue.

80
Proposed Schedule of Implementation and Deployment of Net Proceeds

The Net Proceeds are to be deployed in accordance with the schedule set forth below:

 

(in million)
Particulars ‘Amount proposed to be Estimated Utilization of Net
financed from Net Proceeds Proceeds

Fiscal

2022
Repayment/pre-payment, in full or part, of 1,200.00 1,200.00
certain borrowings availed of by our
Company
General corporate purposes” 208.41 208.41
Total 1,408.41 1,408.41

 

* The amount utilized for general corporate purposes shall not exceed 25% of the gross proceeds of the Fresh Issue.

Means of Finance

The fund requirements for the Objects are proposed to be entirely funded from the Net Proceeds. In case of a
shortfall in raising requisite capital from the Net Proceeds, business considerations may require us to explore a
range of options including utilising our internal accruals. We expect that such alternate arrangements to be
available to fund any such shortfalls.

The above fund requirements are based on internal management estimates of amounts outstanding under certain
borrowings availed of by our Company, interest rates and other charges, and the financing and other agreements
entered into by our Company and have not been appraised by any bank or financial institution or independent
agency or verified by the BRLMs. These are based on current conditions and are subject to revisions in light of
changes in external circumstances or costs, or our financial condition, business or strategy. For further information
on factors that may affect these estimates, see “Risk Factors - We cannot assure you that the deployment of the
Net Proceeds in the manner intended by us will result in an increase in the value of your investment.” on page
50.

As the entire requirement of funds for the Objects of the Fresh Issue are proposed to be met from the Net Proceeds,
we confirm that there is no requirement to make firm arrangements of finance towards at least 75% of the stated
means of finance through verifiable means, excluding the amount to be raised through the Fresh Issue.

Details of the Objects of the Fresh Issue
1. Repayment/pre-payment, in full or part, of certain borrowings availed of by our Company

We avail majority of our fund based and non-fund based facilities in the ordinary course of business from
various banks and financial institutions. For further information on the financial indebtedness availed of
by our Company, see “Financial Indebtedness” on page 322.

As of December 31, 2020, we had total secured borrowings (long term and short term) of % 8,901.12
million. Our Company proposes to utilize an aggregate amount of = 1,200.00 million from the Net
Proceeds towards repayment/pre-payment, in full or in part, of certain borrowings availed of by our
Company. The selection and extent of loans proposed to be prepaid and/or repaid by our Company as
mentioned below is based on various commercial considerations including, among others, the interest
rate of the relevant loan, prepayment charges, the amount of the loan outstanding and the remaining tenor
of the loan. Given the nature of these borrowings, the terms of prepayment and the terms of repayment,
the aggregate outstanding amounts under these loans may vary from time to time and our Company may,
in accordance with the relevant repayment schedule, repay or refinance some of its existing borrowings
prior to receipt of proceeds from the Fresh Issue. Accordingly, our Company may utilize the Net Proceeds
for prepayment or repayment of any such refinanced loans or additional loan facilities obtained by it.
However, the aggregate amount to be utilized from the Net Proceeds towards prepayment or scheduled
repayment of loans (including refinanced or additional loans availed, if any), in part or full, would not
exceed % 1,200.00 million. The prepayment or scheduled repayment will help us reduce our outstanding
indebtedness and debt servicing costs, assist us in maintaining a favourable debt to equity ratio and enable
utilization of our internal accruals for further investment in business growth and expansion. In addition,
the improvement in the debt to equity ratio of our Company is intended to enable us to raise further
resources in the future to fund potential business development opportunities and plans to grow and

81
expand our business in the future.

The following table provides details of outstanding loans (excluding operating lease, sales bill
discounting, sales/purchase invoice bill discounting, buyer’s credit, bank guarantee and letter of credit
facilities availed by our Company) availed of by our Company as on December 31, 2020, which we
propose to prepay or repay, in full or in part, from the Net Proceeds for an aggregate amount of = 1,200.00
million without any obligation to any banks/financial institutions:

 

Lender Nature
and
purpose
of loan
facility Curre
availed ney
State Term INR
Bank of — loan
India facility
~ Capital
expendit
ure
ICIcl Term INR
Bank Joan
Limited facility
~ Capital
expendit
ure
Long INR
term
working
capital
IDBI Term INR
Bank Joan
Limited facility
~ Capital
expendit
ure
Indian ‘Term INR
Bank oan
Limited facility
Long
term
working
capital
IDFC Term INR
First Joan
Bank facility
- Long
term
working
capital
Mahindr — Term INR
a & loan
Mahindr facility
a ~ Capital
Financia expendit
1 ure
Services
Lid
CSB Tem INR
Bank Joan
Limited facility
~ Capital
expendit

ure

Sanctioned Amount
Amount Amount
(inrelevant (in?
foreign million)
currency)
(in?
million)
720.00 720.00
250.00 250.00
500.00 500.00
320.00 320.00
750.00 750.00
250.00 250.00
400.00 400.00
250.00 250.00

Rate of
interest as
on.
December
31, 2020

(pa)

2.60% above
MCLR rate

1.70% above
the MCLR
rate

1.70% above
the MCLR
rate

2.45% above
one year
MCLR

1.75% above

one year
MCLR

1.40% above
IDEC First
Bank MCLR

1.70% above
SBI base rate

0.60% above
1 year
MCLR

Repayment
Schedule

72 monthly
instalments

‘Sub-limit of
% 500.00
million
repayable in
15 quarterly
instalments

Sub-limit of
2 250.00
repayable in
25 quarterly
instalments
20 quarterly
instalments

48 monthly
instalments

16 quarterly
instalments

48 equal
monthly
instalments

60 monthly
instalments

Prepayment
Penalty

2.00% of the
amount to be
prepaid

1.00% of the
amount to be
prepaid

2.00% on the
balance
amount of
Joan and for
the residual
period of
prepayment
2.00% of the
drawing limit
or
outstanding,
whichever is
higher

1.00% on
amount
outstanding

2% on the
difference
between ideal
balance and
balance
outstanding

Amount
outstand
ing as
on
Decemb
er31,
2020*
(ine
million)

342.12

296.34

111.96

750.00

150.00

358.13

191.67

 

82
 

Tata Term INR 400.00 400.00 7.75% below Principal 3.00 % on the 202.50

 

Capital Joan theLTLR 20 quarterly entire
Finance facility subjecttoa instalments outstanding
Services Long minimum of dues
Limited — term 10.75% p.a. Interest ~ 60
working monthly
capital instalments
Total 3,840.00 2,402.72
Notes:

1. Excluding operating lease, sales bill discounting, sales/purchase invoice bill discounting and letter of credit facilities availed
by our Company and interest accrued but not due as at December 31, 2020.

2. Unamortized portion of upfront fee of ® 10.62 million has been deducted pertaining to the above loans.
* As per certificate issued by our Statutory Auditors dated February 25, 2021.

As per the certificate dated February 25, 2021 issued by our Statutory Auditors, the amounts drawn down
under above-mentioned loans have been utilized towards purposes for which such loans have been
availed. For further information on the terms and conditions of these financing arrangements, see
“Financial Indebtedness” on page 322.

Our Company will approach the lenders after completion of this Offer for repayment/prepayment of the
above loans. The amounts under our loan facilities may be dependent on various factors and may include
intermediate repayments and drawdowns. Accordingly, it may be possible that amount outstanding under
our loan facilities may vary from time to time. We may, from time to time, repay, refinance, enter into
further financing arrangements or draw down funds from any such existing term loan facilities. In such
event, we may utilize the Net Proceeds towards repayment/pre-payment of any existing or additional
indebtedness which will be selected based on various commercial considerations including, among
others, the interest rate on the loan facility, the amount of the loan outstanding and the remaining tenor
of the loan, any conditions attached to the borrowings restricting our ability to pre-pay/repay the
borrowings, receipt of consents for pre-payment from the respective lenders and applicable law
governing such borrowings. However, the aggregate amount to be utilized from the Net Proceeds towards
repayment/prepayment of loans, in part or full, availed of by our Company will not exceed = 1,200.00
million.

We may be required to obtain the prior consent of or notify certain of our lenders prior to the repayment.
Further, we may be subject to the levy of pre-payment penalties or premiums, depending on the facility
being repaid/prepaid, the conditions specified in the relevant documents governing such credit facility
and the amount outstanding/being pre-paid/repaid, as applicable. Payment of pre-payment penalty or
premium, if any, shall be made by our Company from the Net Proceeds. If the Net Proceeds are
insufficient to the extent required for making payments for such pre-payment penalties or premiums,
such excessive amount shall be met from our internal accruals.

General corporate purposes

The Net Proceeds will first be utilized for repayment/pre-payment, in full or part, of certain borrowings
availed of by our Company, as set out above. Subject to this, our Company intends to deploy any balance
left out of the Net Proceeds towards general corporate purposes and the business requirements of our
Company and our Subsidiaries, as approved by our Board, from time to time, subject to such utilization
for general corporate purposes not exceeding 25% of the gross proceeds of the Fresh Issue, in compliance
with the SEBI ICDR Regulations.

Such general corporate purposes may include capital expenditure, strategic initiatives, partnerships, joint
ventures and acquisitions, meeting fund requirements which our Company may face in the ordinary
course of business, investments into our Subsidiaries, part or full repayment/prepayment of debt of our
Company or any of our Subsidiaries, and meeting working capital requirements incurred in the ordinary
course of business towards salaries and wages, rent, administration expenses, insurance related expenses,
repairs and maintenance and the payment of taxes and duties and any other purpose as may be approved
by the Board or a duly appointed committee from time to time, subject to compliance with the necessary
provisions of the Companies Act 2013. Our management will have the flexibility in utilizing surplus
amounts, if any, as may be approved by the Board or a duly appointed committee from time to time. In
case of variation in the actual utilization of funds designated for the purposes set forth above, increased

83
fund requirements for a particular purpose may be financed by surplus funds, if any, which are not applied
to the other purposes, set out above.

Offer Related Expenses

The total expenses of the Offer are estimated to be approximately = 467.92 million. The expenses of this Offer
include, among others, listing fees, underwriting fees, selling commission, fees payable to the BRLMs, fees
payable to legal counsels, fees payable to the Registrar to the Offer, the Bankers to the Offer and Sponsor Bank
to the Offer, processing fee to the SCSBs for processing ASBA Forms, brokerage and selling commission payable
to Registered Brokers, Collecting RTAs and CDPs, printing and stationery expenses, advertising and marketing
expenses and all other incidental and miscellaneous expenses for listing the Equity Shares on the Stock Exchanges.
The estimated Offer expenses are as follows:

 

Ss. Activity Estimated Asa%oftotal Asa % of
No amount” estimated offer Offer Size”
(in 2 million) Expenses”
1. Fees payable to the BRLMs (including underwriting 244.47 52.25% 2.97%

commission, brokerage and selling commission payable to
members of the syndicate)

2. Selling commission and processing fees for SCSBs and 65.85 14.07% 0.80%
bidding/ uploading charges for Members of the
Syndicate, Registered Brokers, RTAs and CDPs

3. Fees payable to the Registrar to the Offer 2.16 0.46% 0.03%
4, Other expenses:
(i) Listing fees, SEBI filing fees, book building software 44.92 9.60% 0.55%
fees and other regulatory expenses
(i) Printing and stationery expenses, advertising and 52.54 11.23% 0.64%

marketing expenses for the Offer and fees payable to the
legal counsels

(iii) Other advisors to the Offer 19.84 4.24% 0.24%
(iv) Miscellaneous 38.12 8.15% 0.46%
Total Estimated Offer Expenses 467.92 100.00% 5.68%

 

* Inclusive of all applicable taxes.

(J) Selling commission payable to the SCSBs on the portion for Retail Individual Investors and portion for Non-Institutional Investors, which
are directly procured and uploaded by them would be as follows:

 

Portion for Retail Individual Investors” 0.35% of the Amount Allotted (plus applicable taxes)
Portion for Non-Institutional Investors” 0.20% of the Amount Allotted (plus applicable taxes)
* Amount Allotted is the product of the number of Equity Shares Allotted and the Offer Price

 

 

 

 

 

Note: No additional processing/uploading charges shall be payable by our Company to the SCSBs on the applications directly procured by
them. The Selling Commission payable to the SCSBs will be determined on the basis of the bidding terminal id as captured in the bid book of
BSE or NSE.

(2) Processing fees payable to the SCSBs on the portion for Retail Individual Investors and portion for Non-Institutional Investors, which are
procured by the Syndicate/Sub-Syndicate/Registered Brokers/RTAs/CDPs and submitted to SCSBs for blocking would be as follows:

 

 

Portion for Retail Individual Investors <. pe valid Bid cum Application Forms* (plus applicable
Portion for Non-instinlonal Tavestors @ 10 per valid Bid cum Application Forms* (plus applicable

 

 

 

 

“Based on valid Bid cum Application Forms

(3) Brokerages, selling commission and processing / uploading charges on the portion for Retail Individual Investors (using the UPI
merchanism) and the portion for Non-Institutional Investors which are procured by members of the Syndicate (including its sub-syndicate
members), RTAs and CDPs or for using 3-in-1 type accounts- linked online trading, demat & bank account provided by some of the brokers
which are members of the Syndicate (including their sub-syndicate members) would be as follows:

 

Portion for Retail Individual Investors* 0.35% of the Amount Allotted (plus applicable taxes)
Portion for Non-Institutional Investors* 0.20% of the Amount Allotted (plus applicable taxes)
* Amount allotted is the product of the number of Equity Shares Allotted and the Offer Price.

 

 

 

 

 

Note: The selling commission payable to the Syndicate /sub-syndicate members will be determined on the basis of the application form number
/ series, provided that the application is also bid by the respective Syndicate / sub-syndicate member. For clarification, if a Syndicate ASBA
application on the application form number / series of a Syndicate / sub-syndicate member, is bid by an SCSB, the selling commission will be
payable to the SCSB and not the Syndicate / sub-syndicate member. The payment of selling commission payable to the sub-brokers / agents of
sub-syndicate members are to be handled directly by the respective sub-syndicate member. The selling commission payable to the RTAs and
CDP will be determined on the basis of the bidding terminal id as captured in the bid book of BSE or NSE.

84
Uploading charges/ processing charges of ® 30/- valid application (plus applicable taxes) are applicable only in case of Bid uploaded by the
members of the Syndicate, RTAs and CDPs:

* for applications made by Retail Individual Investors using the UPI Mechanism.

Uploading charges/ processing charges of ® 10/- valid application (plus applicable taxes) are applicable only in case of Bid uploaded by the
members of the Syndicate, RTAs and CDPs:

* for applications made by Retail Individual Investors using 3-in-1 type accounts.
* for Non-Institutional investors Bids using Syndicate ASBA mechanism / using 3- in -1 type accounts.

The Bidding/uploading charges payable to the Syndicate / sub-syndicate members, RTAs and CDPs will be determined on the basis of the
bidding terminal id as captured in the bid book of BSE or NSE.

(A) Selling commission payable to the Registered Brokers on the portion for Non-Institutional Investors which are directly procured by the
Registered Broker and submitted to SCSB for processing, would be as follows:

 

Portion for Retail Individual Investors 210 per valid Bid cum Application Form* (plus applicable taxes)
Portion for Non-Institutional Investors 210 per valid Bid cum Application Form* (plus applicable taxes)
* Based on valid Bid cum Application Forms

 

 

 

 

 

Processing fees payble to the Sponsor Bank for applications made by Retail Individual Investors using the UPI mechanism will be % 8/- per
valid Bid cum Application Form (plus applicable taxes). The Sponsor Bank shall be responsible for making payments to the third parties such
as remitter bank, NPCI and such other parties as required in connection with the performance of its duties under the SEBI circulars, the
Syndicate Agreement and other applicable laws.

Interim Use of Funds

Pending utilization for the purposes described above, we undertake to temporarily invest the funds from the Net
Proceeds only with the scheduled commercial banks for the necessary duration. Such deposits will be approved
by our Board from time to time. Our Company confirms that, pending utilization of the Net Proceeds for the
purposes described above, it shall not use the funds for any investment in any other equity or equity linked
securities.

Bridge Loan
Our Company has not raised any bridge loans which are required to be repaid from the Net Proceeds.
Monitoring of Utilization of Funds

Our Company has appointed Axis Bank Limited as the monitoring agency for monitoring the utilization of Net
Proceeds, as the proposed Fresh Issue exceeds = 1,000.00 million in accordance with Regulation 41 of the SEBI
ICDR Regulations. Our Company undertakes to place the report(s) of the Monitoring Agency on receipt before
the Audit Committee without any delay. Our Company will disclose the utilization of the Net Proceeds, including
interim use under a separate head in its balance sheet for such fiscal periods as required under the SEB] ICDR
Regulations, the SEBI Listing Regulations and any other applicable laws or regulations, clearly specifying the
purposes for which the Net Proceeds have been utilized. Our Company will disclose and continue to disclose
details of all monies utilized out of the Fresh Issue till the time any part of the Fresh Issue proceeds remain
unutilized, under an appropriate head in the balance sheet of our Company. Our Company will also, in its balance
sheet for the applicable fiscal periods, provide details, if any, in relation to all such Net Proceeds that have not
been utilized, if any, of such currently unutilized Net Proceeds.

Pursuant to Regulation 18(3) of the SEBI Listing Regulations, our Company shall on a quarterly basis disclose to
the Audit Committee the uses and application of the Net Proceeds. The Audit Committee shall make
recommendations to our Board for further action, if appropriate. Our Company shall, on an annual basis, prepare
a statement of funds utilized for purposes other than those stated in this Prospectus and place it before our Audit
Committee. Such disclosure shall be made only until such time that all the Net Proceeds have been utilized in full.
The statement shall be certified by the Statutory Auditors. Further, in accordance with the Regulation 32 of the
SEBI Listing Regulations, our Company shall furnish to the Stock Exchanges on a quarterly basis, a statement
indicating (i) deviations, if any, in the utilization of the Net proceeds from the objects of the Offer as stated above;
and (ii) details of category wise variations in the utilization of the Net Proceeds from the objects of the Offer as
stated above. This information will also be published in newspapers simultaneously with the interim or annual
financial results of our Company, after review by our Audit Committee and its explanation in the directors’ report
in the annual report.

85
Variation in Objects of the Fresh Issue

In accordance with Sections 13(8) and 27 of the Companies Act 2013 and the SEBI ICDR Regulations, our
Company shall not vary the Objects of the Fresh Issue unless our Company is authorized to do so by way of a
special resolution of its Shareholders. In addition, the notice issued to the Shareholders in relation to the passing
of such special resolution shall specify the prescribed details and be published in accordance with the Companies
Act 2013. Pursuant to the Companies Act 2013, the Promoter or controlling Shareholders will be required to
provide an exit opportunity to the Shareholders who do not agree to such proposal to vary the objects, subject to
the provisions of the Companies Act 2013 and in accordance with such terms and conditions, including in respect
of pricing of the Equity Shares, in accordance with the Companies Act 2013 and provisions of the SEBI ICDR
Regulations.

Appraising Agency

None of the Objects of the Offer for which the Net Proceeds will be utilized has been appraised by any agency.
Other Confirmations

There are no material existing or anticipated transactions in relation to the utilization of the Net Proceeds with our
Promoter, members of the Promoter Group, Directors, Group Companies or Key Managerial Personnel. No part
of the Net Proceeds will be utilized by our Company as consideration to our Promoter, members of the Promoter
Group, Directors, Group Companies or Key Managerial Personnel. Our Company has not entered into and is not

planning to enter into any arrangement/agreements with Promoter, Directors, Key Managerial Personnel or our
Group Companies in relation to the utilization of the Net Proceeds.

86
BASIS FOR OFFER PRICE

The Offer Price has been determined by our Company and the Investor Selling Shareholders, in consultation with
the BRLMs, on the basis of assessment of market demand for the Equity Shares offered through the Book Building
Process and on the basis of qualitative and quantitative factors as described below. The face value of the Equity
Shares is = 5 and the Offer Price is 297.60 times the face value at the lower end of the Price Band and 298.00
times the face value at the higher end of the Price Band.

Investors should also refer to “Risk Factors”, “Business” and “Financial Statements” on pages 22, 168 and 225,
respectively, to have an informed view before making an investment decision.

Qualitative Factors

Some of the qualitative factors which form the basis for the Offer Price are:

1.

6.

Diversified engineering company with a focus on providing comprehensive solutions and
manufacturing high quality, intricate and critical products, components and parts.

Strong in-house process and product design capabilities with the ability to interchange capacity and
product mix.

Long term and well established relationships with marquee domestic and global OEMs.

Extensive manufacturing footprint, with strategically located manufacturing facilities.

Experienced management team supported by motivated and skilled work force.

Robust financial performance in challenging business environment.

For further information, see “Business - Strengths” on page 171.

Quantitative Factors

Some of the information presented in this chapter is derived from the Restated Financial Information. For further
information, see “Financial Information” on page 225.

Some of the quantitative factors which may form the basis for computing the Offer Price are as follows:

1.

Basic and Diluted Earnings per Share

 

Fiscal / period ended Basic EPS** (@) Diluted EPS** (@) Weight

March 31, 2020 20.41 20.41 3
March 31, 2019 48.39 48.39 4
March 31, 2018 15.67 15.67 1
Weighted Average 28.95 28.95

December 31, 2020* 25.18 25.18 :

 

* Not annualized
* Adjusted for bonus issue of equity shares and sub-division of equity shares

Note

1.

2.

Earnings per share calculations are done in accordance with Ind AS 33 ‘Earnings per Share’ issued by MCA.
The face value of each equity share is 2 5.

Basic Earnings per share = Net profit attributable to equity shareholders/Weighted average number of shares outstanding
during the period or Fiscal

Diluted Earnings per share = Net profit attributable to equity shareholders/Weighted average number of diluted Equity
Shares outstanding during the period or Fiscal

Weighted average number of Equity Shares is the number of Equity Shares outstanding at the beginning of the Fiscal, adjusted

by the number of Equity Shares issued during the Fiscal multiplied by the time-weighting factor. The time-weighting factor
is the number of days for which the specific shares are outstanding as a proportion of the total number of days during the

87
2s

Fiscal.

6. Weighted average = Aggregate of year-wise weighted EPS divided by the aggregate of weights i.e. ((EPS x Weight) for each
fiscaly(Total of weights)

Price/Earning (“P/E”) Ratio in relation to the Price Band of 1,488 to = 1,490 per Equity Share:

 

Particulars P/E at Floor Price__P/E at Cap Price
(no. of times) (no. of times)

Based on basic EPS of % 20.41 as per the Restated Financial 72.91 73.00

Information for the year ended March 31, 2020

Based on diluted EPS of = 20.41 as per the Restated Financial 72.91 73.00

Information for the year ended March 31, 2020

 

Industry P/E ratio*

 

Particulars PIE
Highest 181.89
Lowest 17.40
Average 72.76

 

*Source: The highest, lowest and average Industry P/E shown above is based on the industry peer set provided below under “=
Comparison with Industry Peers” on page 88.

Return on Net Worth (““RoNW”)

 

 

Fiscal ended RoNW (%) Weight
March 31, 2020 6.19 3
March 31, 2019 15.51 2
March 31, 2018 5.83 1
Weighted Average 9.24
December 31, 2020* 7.07 P

* Not annualized

Note:

1. Net worth = Paid-up share capital + other equity (excluding revaluation reserves).

2. Return on net worth (%) = Net profit attributable to equity shareholders/Net worth at the end of the year/period

3. Weighted average RoNW is aggregate of year-wise weighted RoNW divided by the aggregate of weights i.e. ((RONW x
weight) for each year)/(total of weights)

Net Asset Value (“NAV”)

 

 

Net Asset Value per Equity Share @
As on December 31, 2020 355.93,
After the Offer
- At the Floor Price 409.93
- At the Cap Price 409.96
Offer Price 409.96

Notes:

1. Net worth = Paid-up share capital + Other Equity (excluding revaluation reserves).

2. Restated net asset value per equity share (2) = Net worth as at the end of the period or Fiscal/Total number of equity shares
outstanding at the end of the period or Fiscal.

3. Issue Price per Equity Share will be determined on conclusion of the Book Building Process.
Comparison with Listed Industry Peers

Following is the comparison with our peer group companies listed in India and in the same line of
business as our Company:

88
 

Nameofthe Consolidated Face Closing ‘Total EPS @) NAV®  P/E® RoNW

company value priceon Revenue Basic_Diluted” + (& per 5)

(per Februa (int share)

share) ry5, million)

2021 @)

Company* Consolidated 5 - 14,924.65 20.41 20.41 329.73 - 6.19%
PEER GROUP
Bharat Consolidated 2 61790 80,558.44 7.51 751 112.80 82.28 6.65%
Forge
Limited*
Endurance Consolidated 10 1469.00 69,177.07 40.2 40.2 21371 36.54 18.81%
Technologie
s Limited*
Jamna Auto Consolidated 1 70.50 11,289.51 1.2 12 1297 5875 9.27%
Industries
Limited*
Mahindra Consolidated 10 162.35 79,078 9.34 933 122.26 17.40 7.64%
CIE
Automotive
Limited*
Minda Consolidated 2 55190 5465140 5.91 5.91 80.03 93.38 8.94%
Industries
Limited*
Sundram Consolidated 1 604.55 37,232.30 15.46 297 95.39 39.10 16.29%
Fasteners
Limited*
Ramkrishna Consolidated 10 540.20 121,64.72 2.97 15.46 268.28 18189 1.11%
Forgings
Limited*

 

Note: # Based on Restated Financial Information for the year ended March 31, 2020
* Based on Annual Reports for the year ended March 31, 2020 as submitted to the Stock Exchanges

(1) _ Diluted EPS refers to the diluted earnings per share of the respective company

(2) NAVis computed as the net worth including non-controlling interest at the end of the year divided by the closing outstanding
number of equity shares.

(3) P/E Ratio has been computed based on the closing market price of the equity shares (Source: NSE) on February 5, 2021,
divided by the diluted EPS provided under Note (1).

(4) RoNWis computed as net profit attributable to equity shareholders divided by net worth including non-controlling interest
at the end of the year.

The trading price of the Equity Shares could decline due to the factors mentioned in the section titled
“Risk Factors” on page 22 and any other factors that may arise in the future and you may lose all or part
of your investments.

The Offer Price of = 1,490 has been determined by our Company and Investor Selling Shareholders, in
consultation with the BRLMs, on the basis of the demand from investors for the Equity Shares through
the Book-Building Process. Our Company and the Investor Selling Shareholders, in consultation with
the BRLMs, are justified of the Offer Price in view of the above qualitative and quantitative parameters.
Investors should read the abovementioned information along with “Risk Factors”, “Business” and
“Financial Statements” on pages 22, 168 and 225, respectively, to have a more informed view. The
trading price of the Equity Shares could decline due to the factors mentioned in “Risk Factors” or any
other factors that may arise in the future and you may lose all or part of your investments.

89
STATEMENT OF TAX BENEFITS

STATEMENT OF POSSIBLE SPECIAL TAX BENEFITS AVAILABLE TO CRAFTSMAN
AUTOMATION LIMITED (“THE COMPANY”) AND ITS SHAREHOLDERS UNDER THE
APPLICABLE DIRECT AND INDIRECT TAX LAWS IN INDIA

To

The Board of Directors
Craftsman Automation Limited
Senthel Towers, IV Floor,
1078, Avinashi Road,
Coimbatore — 641 018,

Tamil Nadu, India.

Re: Proposed initial public offering of equity shares of face value of = 5 each (the “Equity Shares”) of

Craftsman Automation Limited (the “Company” and such offering, the “Fresh Issue”) and an offer
for sale of Equity Shares by certain existing shareholders of the Company (the “Offer for Sale”, and
together with the Fresh Issue, the “Offer”)

This report is issued in accordance with the terms of our engagement letter dated
25 January 2021.

The accompanying Statement of Possible Special Tax Benefits available to the Company and its
Shareholders (hereinafter referred to as the “Statement”) under the direct tax laws (including the Income-
tax Act, 1961, as amended) and indirect tax laws read with respective rules, regulations, circulars,
notifications, orders, etc., presently in force in India as on the date of this report has been prepared by the
management of the Company (“the Management”) in connection with the proposed Offer for purposes of
disclosure in the Red Herring Prospectus and Prospectus of the Company pursuant to the Securities and
Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018, as amended
(the “SEBI ICDR Regulations”). We have initialed and sealed the Statement for identification purposes
only.

Management’s Responsibility

3.

4,

The preparation of the Statement is the responsibility of the Management. The Management’s
responsibility includes designing, implementing and maintaining internal control relevant to the
preparation and presentation of the Statement, and applying an appropriate basis of preparation and making
estimates that are reasonable in the circumstances. The Management is also responsible for identifying and
ensuring that the Company complies with the direct and indirect tax laws and regulations applicable to its
activities.

There are no material subsidiaries identified by the Company on the date of this report.

Auditor’s Responsibility

5.

Pursuant to the SEBI ICDR Regulations, it is our responsibility to report whether the Statement prepared
by the Management, presents, in all material respects, the possible special tax benefits available to the
Company and its shareholders as identified by the Management in accordance with direct tax laws
(including the Income Tax Act, 1961, as amended) and indirect tax laws, presently in force in India as on
the date of this report.

We have conducted our verification of the Statement in accordance with the Guidance Note on Reports or
Certificates for Special Purposes (Revised 2016), as revised from time to time, issued by the Institute of
Chartered Accountants of India (“the Guidance Note”). This Guidance Note requires that we comply with
the ethical requirements of the Code of Ethics issued by the Institute of Chartered Accountants of India, as
revised from time to time.

It is imperative to note that we have relied upon a representation from the Management of the Company.

90
Certificate No: C/CAL/13953
Place: Chennai
Date: 25 February 2021

92

For Sharp & Tannan
Chartered Accountant
Firm Registration No: 003792S

V Viswanathan

Partner

Membership No. 215565

UDIN: 21215565AAAAA06714
We have complied with the relevant applicable requirements of the Standard on Quality Control (SQC) 1,
“Quality Control for Firms that Perform Audits and Reviews of Historical Financial Information, and Other
Assurance and Related Services Engagements’

Inherent Limitations

9:

We draw attention to the fact that the Statement includes certain inherent limitations that can influence the
reliability of the information.

Several of the benefits mentioned in the accompanying statement are dependent on the Company or its
shareholders fulfilling the conditions prescribed under the relevant provisions of the respective tax laws.
Hence, the ability of the Company or its shareholders to derive the tax benefits is dependent upon
fulfilling such conditions, which may or may not be fulfilled. The benefits discussed in the
accompanying statement are not exhaustive and conclusive. Further, any benefits available under any
other laws within or outside India have not been examined and covered by this Statement.

The contents stated in the Statement are based on the information and explanations obtained from the
Management. The Statement is only intended to provide general information to guide the investors and is
neither designed nor intended to be a substitute for a professional tax advice. In view of the individual
nature of the tax consequences and the changing tax laws, each investor is advised to consult his or her
own tax consultant with respect to the specific tax implications arising out of their participation in the
issue. We are neither suggesting nor are we advising the investor to invest money or not to invest money
based on this statement.

Further, we give no assurance whether

. the Company or its Shareholders will continue to obtain these benefits in future;
. the conditions prescribed for availing the benefits have been/would be met;
. the revenue authorities / courts will concur with our views expressed herein.

Our views are based on the existing provisions of the direct tax laws (including Indian Income Tax Act,
1961, as amended) and indirect tax laws, presently in force in India and its interpretation, which are
subject to change from time to time. We do not assume responsibility to update the views consequent to
such changes. Nothing in this para shall limit our liability to any person which cannot be lawfully
limited.

Our views expressed in the statement enclosed are based on the facts and assumptions indicated above.
Our view is based on the information, explanations and representations obtained from the Company and
on the basis of our understanding of the business activities and operations of the Company and the
interpretation of the existing tax laws in force in India and its interpretation, which are subject to change
from time to time. We do not assume responsibility to update the views consequent to such changes.
Reliance on the statement is on the express understanding that we do not assume responsibility towards
the investors who may or may not invest in the proposed issue relying on the statement.

Opinion

10.

In our opinion, the Statement prepared by the Management presents, in all material respects, the possible
special tax benefits available as on the date of this report to the Company and its shareholders as identified
by the Management in accordance with the direct tax laws (including the Income Tax Act, 1961, as
amended) and indirect tax laws, presently in force in India.

Restriction on Use

11.

This report is addressed to and provided to the Board of Directors of the Company solely for the purposes
of the disclosure in Red Herring Prospectus and the Prospectus, in connection with the Offer, pursuant to
the SEBI ICDR Regulations. This report should not be used by any other person or for any other purpose.
Accordingly, we do not accept or assume any liability or any duty of care for any other purpose or to any
other person to whom this report is shown or into whose hands it may come without our prior consent in
writing.

91
The information outlined below sets out the possible special tax benefits available to the Company and its
shareholders in a summary manner only and is not a complete analysis or listing of all potential tax consequences
of the subscription, ownership and disposal of equity shares, under the Indian direct tax laws (including the Income
Tax Act) and rules currently in force in India (i.e., applicable for the financial year 2020-21 relevant to the
assessment year 2021-22) and current provisions of the indirect tax laws and the rules, regulations, orders,
circulars, etc., thereunder. The legislations, their judicial interpretation and the policies of the regulatory
authorities are subject to change from time to time, and these may have a bearing on the implications listed below.
Accordingly, any change or amendments in the law or relevant regulations would necessitate a review of the
below. Several of these benefits are dependent on the Company or its shareholders fulfilling the conditions
prescribed under the relevant tax laws. Hence, the ability of the Company or its shareholders to derive the possible
tax benefits is dependent upon fulfilling such conditions, which based on business imperatives it faces in the
future, it may or may not choose to fulfil. This Statement does not discuss any tax consequences in the country
outside India of an investment in the shares. The shareholders / investors in the country outside India are advised
to consult their own professional advisors regarding possible Income tax consequences that apply to them

A. DIRECT TAXATION:
L Special Tax Benefits available to the Company:
a) Additional depreciation under section 32(1)(iia) of the Act

The Company is entitled to avail the benefit of additional deduction @ 20% of the actual cost of investment
in Plant and Machinery acquired.

b) Deduction under section 80G

Under this section, 100% or 50% deduction is allowed of donation made to specified funds/ Charitable
trust. The Company is availing deduction on donation made to the eligible specified funds.

° Deduction Under section 80JJAA

The Company can avail deduction under section 80JJAA of Act in respect of employment of new employee
(who have been employed for a minimum period of 240 days during the year) @ 30% of additional
employee cost incurred in the course of such business in the previous year, for three assessment years
including the assessment year relevant to the previous year in which such employment is provided.

d) Deduction Under section 80M

As per the provisions of Section 80M of the Act, dividend received by the Company from any other
domestic company or a foreign company shall be eligible for deduction while computing its total income
for the relevant year. A deduction of an amount equal to so much of the amount of income by way of
dividends received from such other domestic company or foreign company or business trust as does not
exceed the amount of dividend distributed by it on or before the due date. Since the Company has
investments in Indian companies and foreign subsidiaries, it can avail the above-mentioned benefit under
Section 80M of the Act

e) Carry forward and set off of losses

As per the provisions of Section 72(1) of the Act, if the net result of the computation of income from
business is a loss to the Company, not being a loss sustained in a speculation business, such loss can be set
off against any other income and the balance loss, if any, can be carried forward for eight consecutive
assessment years immediately succeeding the assessment year for which the loss was first computed and
shall be set off against business income.

f) Concessional tax rate under section 115BAA
The Company is eligible to opt for the beneficial tax rate of 22% (plus applicable surcharge and cess) as
provided under Section 115BAA of the Act, subject to the condition that going forward it does not claim

the deductions as specified in Section 115BAA(2) of the Act and computes total income as per the
provisions of Section 115BAA(2) of the Act. Proviso to Section 115BAA(5) provides that once the

93
a)

b)

a)

b)

9

qd)

e)

Company opts for paying tax as per Section 115BAA of the Act, such option cannot be subsequently
withdrawn for the same or any other Previous Year.

Further, the provisions of Section 115JB i.e. MAT provisions shall not apply to the Company on exercise
of the option under section 115BAA. And the MAT Credit available, if any, would become unutilizable
upon exercise of the option. Hence the company has not opted for this benefit for the AY 2020-21 and
would avail the benefit only after utilization of the MAT Credit available.

Special Tax Benefits available to the Shareholders under the Act:

Section 112A

As per Section 112A, long-term capital gains arising from transfer of an equity share, or a unit of an equity-
oriented fund or a unit of a business trust shall be taxed at 10% (without indexation) of such capital gains.

The tax on capital gains shall be levied in excess of Indian Rupees One lakh.

There are no other special tax benefits available for the shareholders of the Company under the provisions
of the Act.

INDIRECT TAXATION

Special Tax Benefits available to the Company:

The Company is availing the following benefits under certain Indian indirect Tax Laws

Export rebate on payment of IGST

In accordance with provisions under Rule 96 of the Central Goods and Services Tax (CGST) Rules, 2017
relating to “Refund of IGST on Exported Goods/ Services”, the Company is entitled for refund on GST
paid on export of goods.

Export under Letter of Undertaking without payment of IGST

As per rule 96A of the CGST Rules, 2017 and vide CBEC Circular No. 8-08-2017- GST dated 4 October
2017, the Company is entitled to avail input tax credit on exports made under Letter of Undertaking without
payment of output tax.

Export to SEZ unit

As per Section 16 of IGST Act, the Company is eligible to claim input tax credit on sale of goods to units
in Special Economic Zones SEZ even though such sales are not taxable.

Remission of Duties and Taxes on Exported Products (RoDTEP) and Services Exports from India
Scheme (SEIS) scrips:

The Company is entitled for RODTEP and SEIS scrips under Foreign Trade Policy towards export of goods
and services, respectively. These scrips can either be used towards payment of customs duty on import or
be sold in the market.

Export Promotion Capital Goods (EPCG):

This scheme allows the Company to import capital goods at zero rates of customs duty. The scheme is
subject to an export value equivalent to 6 times of duty saved on the importation of such capital goods
within six years from the date of issuance of the authorization.

Duty Drawback:

The Company avails Duty Drawback which are made to grant rebate of duty or tax chargeable on any
imported / excisable materials and input services used in the manufacture of export goods. The duties and

94
taxes neutralized under the scheme are (i) Customs and Union Excise Duties in respect of inputs and (ii)
Service Tax in respect of input services.

Duty Drawback is of two types: (i) All Industry Rate and (ii) Brand Rate. The legal framework is provided
under Section 75 and Section 76 of the Customs Act, 1962 and the Customs and Central Excise Duties and
Service Tax Drawback Rules, 1995 (Drawback Rules, 1995) issued under the provisions of Section 75 of
the Customs Act, 1962, Section 37 of the Central Excise Act, 1944 and Section 93A read with section 94
of the Finance Act, 1994.

Il. Special Tax Benefits available to the Shareholders under the Act:

There are no special tax benefits available for the shareholders of the Company under the provisions of
indirect tax laws.

For Craftsman Automation Limited

Authorised Signatory
Name: C.B. Chandrasekar
Designation: Chief Financial Officer

Place: Coimbatore
Date: 25 February 2021

95
SECTION IV: ABOUT THE COMPANY
INDUSTRY OVERVIEW

Except as otherwise indicated, the information contained in this section is derived from a report titled “Studying
the Automotive and Industrial Engineering Business in India” dated December 2020, prepared by CRISIL
Research. Neither we nor any other person connected with the Offer has independently verified this information.
Industry sources and publications generally state that the information contained therein has been obtained from
sources generally believed to be reliable, but their accuracy, completeness and underlying assumptions are not
guaranteed and their reliability cannot be assured. Industry publications are also prepared based on information
as of specific dates and may no longer be current.

GLOBAL ECONOMY

The global economy has been under turmoil ever since the first wave of the Covid-19 pandemic at the start of the
calendar year. Succeeding waves of Covid-19 infections are leaving the global economy gasping for air when it
resurfaces from the depths, as seen in April 2020. Economic activity has normalised faster than anticipated,
according to the International Monetary Fund (IMF), with support from government investment (China) and
transfers supporting household incomes as in the United States (US) and Europe. However, the global economy
continues to reel under the pandemic.

Reinfections in several regions, particularly Europe, have meant reinstated partial lockdowns or countries slowing
down their opening. Moreover, the recovery has not been uniform, with advanced economies generally doing
better than developing economies, where results have been mixed, as per S&P Global (October 2020). A strong
rebound, albeit partly mechanical, was seen in the third quarter, but the momentum has slowed in the fourth
quarter. Purchasing managers’ indices (PMI) showed firms in the US, euro area (EA) and China expanded output
in July and August. However, in September 2020, these indicators point to stronger activity in manufacturing, but
some slowdown in services, reflecting the increase in infections, stated the IMF.

GDP growth (q-o-q, annualised, %)

Q1-19 Q2-19 Q3-19 Q4-19 Q3-20
us | 31 21 21 5 33.1
UK* 06 y 0.3 ; : 8 NA
EArt 05 0.3 ; f 12.7
Japan 28 NA
China* 64 49

 

inpovenest ET ncaa

Note: #q-o-q, not annualised; *y-o-y; Years represent calendar year
Source: Statistical bureau, respective countries

The IMF expects the world gross domestic product (GDP) to drop 4.7% in 2020 from 2.42% rise in 2019. S&P
Global has kept its global GDP forecast for 2020 relatively unchanged at -4.1%, while raising forecasts for the
US and euro zone on the back of a stronger than expected rebound in the third quarter, and for China (where the
rebound took place in the second quarter). These improvements have been offset by a lower forecast for India as
well as for the United Kingdom (UK) and Japan.

 

GDP growth (%)
aE) | 2021P
US 22 39
Euro zone 1.3 6.1
India 4.2 10
China 6.1 : 6.9
Japan 07 (6.4) 33
World 2.4 (4.1) 5.3

Note: India outlook is for fiscal year, i.e., 2019 ~ FY20, 2020 ~ FY21 and 2021 ~ FY22
Source: S&P Global

96
INDIAN ECONOMY

Consumption and investment are the major drivers of any economy. In recent years, India has grown primarily on
the engine of consumption. The other engine — of investment — has been decelerating. Gross domestic product, or
GDP (at constant fiscal 2012 prices) grew at 6.7% CAGR between fiscals 2015 and 2012.From fiscal 2014 to
2017, improvement in GDP growth was on account of improving industrial activity, lower crude oil prices, and
supportive policies. However, demonetization and rollout of the GST put the brakes on growth, on top of
dwindling private investment and slower global growth since fiscal 2017.

   

Real GDP growth in India
160 Next 3 yrs CAGR 8.3% 15.0%
10%
150 7.4% 8.0% 83% 7 oy, 10.0%
55% 6.4% I
120 "
5.0%
0.0%
-5.0%
2 -10.0%

FYy13 Fy14 FY15 FY16 FY17 FY18 FY19 FY20 FY21EFY22P FY24P.
mmm GDP (Rs. Trillion) ———GDP Growth RHS

Source: Central Statistics Office (CSO), International Monetary Fund (IMF), CRISIL Research

During fiscal 2021, the Covid-19 pandemic necessitated a 61-day complete nationwide lockdown followed by an
‘unlock’ phase characterized by intermittent regional lockdowns and curbs. This, coupled with the effects of a
troubled global economy, resulted in the worst ever real GDP contraction on record of 23.9% on-year in the first
quarter.

On the demand side, government spending (on schemes to support rural employment, food security and farm
incomes) helped partially to stem the fall, if it is excluded, GDP contraction in the first quarter would have
amounted to ~30% on-year. On the supply side, agriculture, with contraction in the non-agriculture sector alone
at ~27%. Agriculture remains the bright spot for India. There was bumper production in the rabi crop and kharif
output also promises to be good. Kharif sowing has covered 5% more area than the previous year. The reservoir
position is healthy and this, together with the good groundwater situation, is expected to support the upcoming
rabi season. Significantly, production is estimated to be high, especially in pulses and oilseeds, which have seen
stubbornly high food inflation. This augurs well for inflation control in food items which re-entered double-digit
territory in September.

There are three key learnings from the first quarter data:
e India’s trough is deepest among peers, as it saw one of the largest number of reported cases and also
experienced the most stringent lockdown in the world (see table below):

India’s GDP growth has fared worst among peers in the first quarter of fiscal 2021

South
Africa

GOP(%,y-oy) 239 165 9-114 85 53 3200074

Covid-19 cases

 

Apento Ju India Philippines Brazil Russia Indonesia China

(in lakh period- 57 04 13.4 65 06 09 14
end)
Stringency
Index (average) 86 92 78 80 70 72 83

 

Source: Hale, Thomas, Sam Webster, Anna Petherick, Toby Phillips, and Beatriz Kira (2020). Oxford Covid-19
Government Response Tracker, Blavatnik School of Government, CEIC, CRISIL.

97
e There is a bigger dent to industry which collapsed 38.1% on-year, mainly led by construction (completely
crippled during the lockdown) and manufacturing (related to discretionary consumption and exports). Within
services, which contracted 20.6%, wholesale, retail trade and transport together saw a ~47% drop as activity
in these sectors came to a complete standstill. The big worry is that not only are these sectors huge employers,
but also house a large proportion of micro, small and medium enterprises (MSMEs), some of which may
succumb to the hit.

« However, in the midst of all this, the Covid-19 curve appears to be flattening in India with recovery rates
continuing to surpass new cases. High frequency data in September also shows economic conditions have
been improving. Exports turned positive in the month, the purchasing managers’ index for manufacturing
was at an eight-year high, and power consumption and GST collections grew on-year. However, this recovery
is fragile and largely led by pent-up demand. The ongoing festive season will remain a key monitorable since
a resurgence of cases can prove spoilsport.

Outlook

CRISIL expects India’s real GDP growth at -9% in fiscal 2021, as the economy learns to live with the pandemic.
While it is true that economic indicators have improved in the past few months, S&P Global points out in its
recent assessment that the recovery is uneven and fragile. As a result of the pandemic resurging, recovery is losing
steam in the United States (US), Europe and emerging markets. Asia-Pacific research at S&P shows that even
recovery in China, which saw an early exit from the pandemic and is now posting positive growth, is neither self-
sustaining nor balanced as yet.

As for the Indian economy as a whole, the Reserve Bank of India (RBI) too, has forecast GDP growth for the
current fiscal at -9.6%, confirming that the economy will witness its deepest contraction since Independence. Short
of cutting interest rates, the central bank has taken comprehensive steps to support growth and assured markets of
an accommodative monetary stance through the next fiscal, if needed. Clearly, Mint Road also sees the current
spike in inflation as transitory. Enhanced open market operations for government securities and extending the
window to state development loans should keep borrowing costs for governments under check.

Auto Finance

Rates on a downtrend

Overall yields in the auto finance segment are declining since 2-3 years led by softening of retail inflation and
reduction in G-Sec yields. Also, with the implementation of marginal cost of funds based lending rate (MCLR)
regime from April 1, 2016, auto finance rates have remained subdued, as banks are forced to pass on interest rate
benefits to end consumers. This has helped to bring the yields down by 100-130 bps since fiscal 2015.

After a continued drop in repo rates since fiscal 2020, auto finance rates are on a downward trend. In fiscal 2021,
amidst the pandemic, passenger vehicles (PV) and commercial vehicles (CV) finance rates have softened

significantly while two wheeler financing rates have dropped by a lesser extent given the relatively humble credit
profile of the customers.

Average auto finance rates offered by banks (%)
15.0
13.0 6 12.0
11.0 ‘ 10.6
oo sroctereccceneneecreneeeeeeeeteeeee nl es Tet eeee

7.0

Feb-18
Jun-18
Oct-18
Dec-18
Feb-19
Jun-19
Oct-19

—8=—PV =—®=—CV —®Two Wheelers

Source: Industry, CRISIL Research

98
CRISIL Research expects auto finance rates to remain subdued in fiscal 2021. Some uptick is expected in fiscal
2022 from a low base.

Slowdown in underlying demand impacted financing growth in fiscal 2020

Financing growth (disbursement) contracted by -9% in fiscal 2020 v/s a 9-10% growth in fiscal 2019, driven by
a contraction in underlying asset sales of -18% v/s growth of 3% in fiscal 2019, amid rise in PV prices - they rose
~3% in fiscal 2020 on top of a ~5% rise the previous fiscal, owing to rising insurance costs and increasing fuel
prices. Apart from the demand side, supply side fundamentals were impacted due to credit crunch faced by a few
non-banking financial companies (NBFCs), with rising cost of funds for NBFC players post IL&FS' default and
restricted lending by them.

The pandemic-induced economic slowdown is expected to hurt vehicle finance disbursements hard, with asset
demand likely to fall, even as average prices increase on account of Bharat Stage-VI (BS-VI) implementation.
However, rural demand is likely to support disbursements to an extent. CRISIL Research expects the loan-to-
value (LTV) ratio to continue to be subdued since the purchasing power of borrowers will be hit in the weakening
economic environment. Since finance penetration is expected to remain range-bound, disbursements in the overall
vehicle segment will plummet to -25% over this fiscal. However, the intensity of the decline would differ from
one sub-segment to another. In terms of asset quality, NBFCs may restructure 20-23% of total outstanding credit
to manage the disruption caused by the pandemic.

MARKET SIZE OF THE INDIAN AUTOMOBILE SECTOR

The two-wheelers dominate the Indian auto industry (~80% by volume) and primarily dictates the tone for the
sector. Over fiscals 2015-2020, two-wheeler sales registered 1.7% CAGR, passenger vehicles (PVs) 1.3%,
commercial vehicles (CVs) by 3.2% and tractors ~5.2%. In fiscal 2020, all segments saw a decline in sales due to
slowdown in economy and transition to BS-VI norms. The decline in two-wheelers and PVs was 18%, commercial
vehicles (CVs) 29% and tractors 10%.

Automobile segments (domestic sales volumes)

ECA

         
     
        

 

“Commercial vehicles 3.2%  (26)-(28) %

Passenger vehicles 1.3% | (11)-(13) % .

|"Two-wheelers | 17% 5)-(17)% 18.8

Tractors 5.2% 18-20% 0.86 |

[Oden Enwayivelticles maa 10 E203) 25m) Oi -

Note: ‘Projected domestic sales as on FY 22.
Source: The Society of Indian Automobile Manufacturers (SIAM), CRISIL Research.

Review of the Indian Automobile Industry
Commercial vehicles

Domestic industry

Between fiscals 2015 and fiscal 2020, domestic CV sales logged 3.2% CAGR. In fact, over fiscals 2015-2019,
the CAGR was 13% due to a sharp 16% CAGR in medium and heavy commercial vehicles (M&HCV) segment
and 14% in light commercial vehicle (LCV). Over the last five years, sales of buses, on the other hand, saw a tepid
3.1% CAGR. Sales volume in the past have been volatile due to various factors such as government policies,
lower industrial production, fall in agricultural output, declining share of road in goods transportation that
increased transporters’ cost of operations and profitability.

M&HCYV volume declined during economic slowdowns of fiscals 2009 and 2014, after which there was a gradual
recovery, in line with economic growth. In fiscal 2017, CV sales saw a 7% on-year rise over April-October.
However, after demonetization (November 2016), cash crunch in the economy negatively impacted industrial
output and slowed sales growth. However, in fiscal 2018, commercial vehicle sales witnessed strong recovery and
grew a healthy 20%. The growth continued in fiscal 2019 supported by a sharp rise in LCV sales and continued
growth in M&HCVs. In fiscal 2020, the industry witnessed a sharp decline on a high base due to inventory
adjustment on account of BS-VI transition.

99
Review of commercial vehicles (cargo) domestic sales

600 564
mLCV mM&HCV
500 467 448

®

2400 338 334 =. 351

s 305

$300 258 255

3 195

00 185

3

2100

E

0
FY15 FY16 FY17 FY18 FY19 FY20
Source: SIAM, CRISIL Research

M&HCV

MHCV recorded a decline of 1% CAGR between fiscals 2015-2020. Sales of medium and heavy commercial
vehicles (MHCV) in fiscal 2020 fell by ~47% over a high base due to:

. COVID-19 impact in the month of March

. Weak freight demand as GDP growth for the fiscal was 4.2% in FY20

. CV dealers closed fiscal 2020 at near zero inventory levels due to COVID-19 outbreak
. Higher freight capacity due to revised axle norm lowering demand for new trucks

. Weak finance availability via lower LTVs due to NBFC liquidity crunch

Segment wise sales of MHCV

 

400 32% 40%
350 30%
00 20%
10%
gy 250 0%
oS
= 200 -10%
> 150 -20%
= 100 “30%
g -40%
2 50 -50%
-= oo -60%
FY16 FY17 FY18 FY19 FY20
me ICV ma MCV me MAV ma TT 0 =—=y-o-y-growth
Source: SIAM, CRISIL Research
LCV

LCV registered a growth of 6% CAGR between fiscal 2015-2020. LCV goods sales fell by ~21% in fiscal 2020
due to slowing private consumption, lesser availability of market load and lower loan-to-value now being offered
to transporters amidst the ongoing NBFC liquidity crunch

100
Segment wise sales of LCVs

600 40%
a as 30%
§ 500 6
x 46 9
= 400 20%
2 10%
300
§ 1% oe
8
g 200 -10%
2
i 100 -20%

0 -30%
FY15 FY16 FY17 FY18 FY19 FY20

mmm SCV mmm UpperLCV =—<y-o-y- growth

Source: SIAM, CRISIL Research

Bus segment

During fiscal 2015-2020, bus segment recorded a slow growth pace of 1%. The growth was led by the MHCV
segment which grew at 2% CAGR while LCV sales remained flat. Demand for buses in fiscal 2020 was impacted
due to safety regulations (emergency exit doors, fire detection and suppression, escape hatches and emergency
lighting) that led to an increase in cost of ownership of ~Rs. 50,000. This after a price hike of ~Rs. 15,000 due to
mandatory installation of vehicle tracking system and panic buttons in January 2019. After the price rise, demand
for buses in fiscal 2020, was also hit by weakening private consumption hampering demand from tourist bus.
operators and intercity travel operators. Weak corporate hiring and production cuts in manufacturing has also
impacted demand for corporate staff buses. However, schools and route permit buses have shown some resilience
in FY20. Demand from state transport undertakings (STU) ramped up in H2FY20 as STUs look to replace much
of their older fleet before the BS-VI price rise.

Segment wise sales of buses

120 20%
15%
05 15%
10%
80
£ 5%
2 60 39
oi 0%
g
§ 40
3 5%
=
28 -10%
0 -15%

 

FY14 FY15 FY16 FY17 FY18 Fy19 FY20

mmm LCV buses mam MHCV buses =<y-o-y growth

 

Source: SIAM, CRISIL Research

101
CV sales fell by 85% in Q1 FY21, sequential growth in Q2 FY21

 

300 0%
-10%
250
-20% -20%
200 -30%
a -40%
® 150
o -50%
100 -60%
=
-70%
2 50 -80%
g 0 -90%
3 Qu Q2 Q3 Q4 Qu Q2
r FY 20 FY21
=m MHCV mLCV mmm Buses Total ==——=y-o-y growth (%)

Source: SIAM, CRISIL Research
Key OEMs in domestic commercial vehicle market

Tata Motors occupies the largest share in the pie, followed by Mahindra, Ashok Leyland and Volvo Eicher.

Domestic CV sales, FY 2020 - 0.72 million vehicles

—_ Volvo
Eicher, 6%

 

Note: Daimler India occupies a share of 1-3% of the domestic CV industry as on FY2020. SIAM doesn’t report Daimler
India sales figures. CV figures considered for automotive market size are ex-Daimler.
Source: Society of Indian Automobile Manufacturers, Daimler India, CRISIL Research
Passenger vehicles

The passenger vehicle industry registered 1.3% CAGR over fiscal 2015-2020. In fiscal 2020, the industry saw a
decline of 18% on account of inventory adjustment due to BS-VI norms and decline in consumer sentiment.

Review of passenger vehicle domestic sales

Insurance regulation that came into effect in September 2018 led to higher cost of ownership coupled with lower
private consumption, which, led to a sluggish growth of 3% in fiscal 2019.

102
 

 

As ow 15%
35 ™% 8% 10%
A%

4 5%
gs 0%
22
=
Sis “%
S14 -10%
S05 -15%

0 -20%

FY 15 ey 16 FY 17 FY 18 FY19 aah 022
mmm Small Cars mmm Large cars mmm UV+ Vans 'Y-O-Y Gro\
Source: SIAM, CRISIL Research
Positive sentiments in festive led to positive growth in Q2 FY21
1.0 0.7 0.8 0.7. - 50%
0.6 0.7 7% oo
go 05— % 0.2 -50%
£3 8%
2s 0.0 -100%
=$ Qu Q2 Q3 Q4 Qu Q2
FY 20 FY21
=a Small cars mmmmLarge cars mam UV+Vans Total —=y-o-y growth (%)

Source: SIAM, CRISIL Research

Key OEMs in domestic PV market

Kia, 3% FY20
\ Olners: 5%
Renault, 3%
\
Toyota, 4%

   
  
    
 

 

Honda, 4%
Tata Motors, 5% RIN

Mahindra & Mahindra
Ltd., 7%

Source: SIAM, CRISIL Research

Maruti maintains its leadership position with 51% market share, followed by Hyundai (18%), Mahindra (7%),
Tata Motors (5%) and Honda and Toyota (4% each), Kia and Renault (3% each) followed by other players.

103
Two-wheelers

Review of domestic two-wheeler sales

 

25 20.0%
15.0%
20
10.0%
a
$15 5.0%
o 0.0%
g
510 -5.0%
= -10.0%
5
-15.0%
0 -20.0%

FY 15 FY 16 FY 17 FY 18 FY19 FY20
=mm= Motorcycles mmmmScooters mmm Mopeds = Y-O-Y Growth

Source: SIAM, CRISIL Research

Over fiscals 2015-2020, the two-wheeler industry registered 1.7% CAGR. Lower CAGR growth is due to 18%
decline of the industry in FY20 due to weak rural sentiments which accounts for majority of motorcycle demand
and high inventory levels with the dealers which were rationalized due to transition from BS IV to BS VI.

Domestic sales of two-wheeler recorded a flattish growth in Q2 FY21 after de-growing by 74% in QI FY21 due
to lockdown followed by supply constraints.

  

8.0 20%
B60 5.0 47 :70% - 0%
8 40 -20%
= 4 -40%
> 2.0 -60%
§ 0.0 -80%
= Qi Q2 Q3 Q4 Qu Q2

FY 20 Fy21
=== Motorcycles mam Scooters mami Mopeds Total ——y-o-y growth (%)

Segment-wise domestic two-wheeler sales growth on year

30% 25%
23%
20%
20% 15%
ob 12%1.1% 3%
7%
10% 94, 4% 4% 206 an, 5%
0% i I o% a 2 ol i
0% a 7
-10% -3% -3%
“2038 -18% 17% -18%
seme -28%
-40%
MOR MRAOH OR AAOH OR DAAOH OR MRO
SEP SRR SREP RRS E RE aa e eee
RErereacatiprreteoaalsrerercoerergraace
Motorcycle Scooter Mopeds Total

Source: SIAM, CRISIL Research

104
Two-wheeler records a flattish growth in Q2 FY21 after de-growing by 74% in Q1 FY21

 

8.0 10%
o 0%
2
° -10%
= 6.0 =
2 -20%
< -30%
2 4.0 40%
= 2
-50%
2.0 -60%
-70%
0.0 -80%
Qu Q2 Q3 Q4 Qu Q2
FY 20 Fy21
m= Motorcycles mmmmScooters mam Mopeds Total ===y-o-y growth (%)

Source: SIAM, CRISIL Research

e Domestic sales plunged by 74% in Q1 of fiscal 2021 due to lockdown followed by supply constraints.

e However, the situation slightly eased in Q2 of fiscal 2021 and OEMs registered on-year increase in
domestic sales in August and September 2020. A few OEMs recovered faster than others and focused on
building inventory at dealer level for the upcoming festival season.

e — Sales in Q2 of fiscal 2021 was led by 8% growth in motorcycle category on-year due to demand from
rural region, whereas scooters recorded a decline of 16% yoy, since urban centres were largely under
restrictions due to Covid-19.

Key OEMs in domestic two-wheeler market

FY20

  
  
  

Da Royal Enfield,

~~ 4%
~~ Suzuki, 4%

Others, 3%

Hero leads two-wheeler industry with 51% market share, followed by Honda (27%), TVS (14%), Bajaj (12%)
and Suzuki and Royal Enfield (4% each).
Exports

Two-wheeler exports from India grew 7% in fiscal 2020 over a high base of 16% growth in fiscal 2019 due to
strong demand from African markets, primarily Nigeria and Uganda. The efforts of original equipment
manufacturers (OEMs) to diversify into more promising geographies aided exports.

Most of the export markets such as African nations are crude oil-driven and commodity-linked economies. With
crude oil prices hitting multi-decade low in fiscal 2021, demand from these markets remains a key monitorable.

105
Review of two-wheeler exports

 

FY 15 FY 16 FY 17 FY 18 FY19 FY20

mmm Motorcycles mmm Scooters mmm Mopeds Total =—®=Y-O-Y Growth

Source: SIAM, CRISIL Research
Segment-wise two-wheeler exports growth on-year

120% 108%

100%
80%

60% 48%

38%
40%

22%
20%

6%
-20%
“14% 17%
-40%
men MAOH ECR MAOH OCR MAOH OR
ASH AAN AHH RANK AHS AA AAAS
> > > > > > >> >
aia aig zie aa zrare aa tia a
Motorcycle Scooter Mopeds Total

Source: SIAM, CRISIL Research

Key OEMs in two-wheeler exports

FY20

    
  
 

Yamaha, 8%

) an Hero, 5%
arn Suzuki, 3%

— Others, 2%

106

32% = 36%
14% 15% oy, 14% 4, 18% ee
I | I i La I l 1% I l a
0% a
i a I " 7
: 2% 0% 7% aah

, 25%

20%
15%
10%

Fy19
FY20
Share of motorcycle in exports from India is at 89%, scooters occupy remaining share (11%) with mopeds
occupying minimal share as on fiscal 2020. Bajaj leads exports of two-wheeler from India with a share of 53%,
followed by TVS at 19%, Honda at 9%, Yamaha at 8%, Hero at 5% and Suzuki at 3%.

Tractors

Tractor sales are highly dependent on agriculture incomes, which is dependent on the monsoons. Hence,
fluctuation in sales is higher than other automobile segments.

Over fiscals 2015-2020, domestic tractor sales logged 5.2% CAGR. In fiscals 2015 and 2016, weak monsoon
restricted tractor demand.

The sales revived in fiscals 2017 and 2018, rising 19% and 22% on-year, respectively, on the back of a normal
monsoon with good spatial and temporal distribution. In fiscal 2019, the pace tapered to 10% and in fiscal 2020,
the sales de-grew 10% on a very high base of fiscal 2019.

The government announces food grain procurement prices, also known as minimum support price (MSP), to
protect farmers from price volatility in the market. This ensures steady income for them. The government has
consistently raised the MSP for major crops such as wheat, rice, sugarcane and cotton from fiscal 2007. This, too,
supported the tractor segment.

Review of domestic tractor sales

 

1000 mmm Tractor domestic sales —@®=y-o-y Growth 22% - 25%
19%
20%
800
8 15%
3S 600 10%
3 5%
Z 400 0%
-5Y
3 200 Si
2 -10%
e
0 -15%
Fy15 FY16 FY17 FY18 FY19 FY20
Source: CRISIL Research
Tractor industry records a bumper growth of 41% in Q2 FY21
250 50%
~ 40%
200 -
8 30%
5 150 20%
s
> 100 10%
3
§ 0%
2 50
3 -10%
=
Fr O ~ -20%
Qi Q2 Q3 Q4 Qu Q2
FY 20 Fy21

smma Tractors ==

-y growth (%)

 

Source: CRISIL Research

107
e Agricultural activities were considered under essential during lockdown. However, due to supply constraints,
tractor industry recorded a decline of 14% in Q1 of fiscal 2021; and

« Due to positive farm sentiments on account of better crop profitability, higher government support through
income support schemes, higher procurement of field crops and higher rural expenditure, tractor industry
recorded a growth of 41% in Q2 of fiscal 2021.

Key OEMs in domestic tractor sales

FY20

Others, 9%
Johndeere, 10%
ok Mahindra, 41%
Escorts, 12% >
ITL, 12%
TAFE, 17%

Tractor industry is dominated by players like Mahindra with 41% market share, followed by TAFE at 17%, ITL
and Escorts by 12%, John Deere by 10%, followed by other players.
Exports

Tractor exports recorded a flat growth from fiscal 2015 till fiscal 2020 mainly due to a decline of 17% in fiscal
2020 due to strict emission norms in North America and also due to political tension in some African countries.
Demand from Europe also declined on the back of global economic slowdown.

Asia, North America and Africa together contribute major proportion of exports sales from India. Tractors are
mainly exported to countries like USA, Asian countries like Malaysia, Nepal, Sri Lanka, Bangladesh, etc.

Review of tractor exports

100 mums Tractor exports —®=y-o-y Growth 40%
3
2 20%
=
S 50
3 0%
§
5
3 0 -20%
e FY15 FY16 FY17 FY18 FY19 FY20

Key OEMs in tractor exports

FY20

Others, 13%

ITL, 24%
New Holland
India, 12%
Mahindra, W
13% Johndeere,

21%
TAFE, 17%

108
Players have been focusing on exports due to insulate themselves from the cyclic domestic market demand. ITL
(International Tractors Ltd.) occupies major proportion in exports pie at 24%, followed by John Deere at 21%,
TAFE by 17%, Mahindra by 13% and New Holland India by 12%.

Off-highway vehicles

Volume sales for the construction equipment (CE) industry surged from fiscal 2017 onwards because of an
upsurge in the renting of backhoes and excavators. Typically, ~85% of purchased backhoes are given out on rent,
while this figure stands at ~50% for excavators.

An uptick in execution of road projects has also been a key contributor to growth in the EME industry, with the
National Highways Authority of India (NHAI) construction touching an all-time high in fiscal 2020. By the time
the nationwide lockdown was announced, highway construction under the NHAI in fiscal 2020 was already at
3,979 km, 18% higher than the 3,380 km constructed in fiscal 2019. A shift in focus to swifter execution has paid
off for NHAI, recording the highest-ever construction in the past decade, at 10.9 km per day, in line with CRISIL
Research’s estimate of 10-11 km per day. The roads sector is a major contributor to total EME volumes in India.

Decline in demand in FY20 is reflected in loans disbursed by equipment finance companies. 85-90% of the
equipment are financed in the industry with institutional and cash purchase accounting for the rest.

Off-highway sales logged growth till fiscal 2019

100
80 2 a
60
£ 53
oa 40 36
©
8
g 20
3
Ee oO
FY15 FY16 FY17 FY18 FY19 FY20
= Backhoe Loaders = Excavator ™ Wheeled Loader = Compaction equipment
= Motor graders = Skid Steer loaders m Bull Dozers Total

Source: CRISIL Research
KEY TRENDS IN AUTOMOBILE SECTOR

Evolution of electric vehicles in India

Expansion on phase I; April 19 to March 22;

Rs. 10,000 Gr outlay ptanned for demand
Incentives, charging infrastructure &
romeon e Ea
| 2015 | To incentivize production and promotion of eoo-
e friendly vehicles; April 15 ~ March 19; Rs 895

Cr planned outiay; Utiization of the scheme was
about 55%

Ew 6 To achieve 6-7 million sales of hybrid & EVs
y-0-y from 2020 onwards
e ‘Scheme proposed incentives up to 20% of ex tactory
prices; Was withdrawn in March 2012

109
Electric vehicle sales in India

         
    
  
   
 

  

 

 

200 oy reaerreeeeerrarr Tae” | 100
MNRE subsidy FAME subsidy [Fame t_|
of 20% of ex- scheme, Mar FAME. Il 90
150 factory price 2015 - Mar
(Nov 2010 - NEMP Policy was announced in | 2018 80
Mar 2011) Aug 2012, but subsidy was not
100 70
60
50
I ‘
° || a oe | oe | | 0
FY11 Fy12 FY13 FY14 Fy15 FY16 FY17 Fy18_|FY19E FY20E

 

 

 

mmm EV sales(‘000)-LHS mmm 2 W EV sales('000)-LHS 1——=Petrol prices (Delhi, INR/It)-RHS
Source: Society of Manufacturers of Electric Vehicles (SMEV), Industry, Government of India
Nascent EV industry has transitioned through several phases

Upswing (fiscals 2011 to 2012): EV sales picked up in fiscal 2012 on the Gol’s subsidy scheme launched in the
second half of fiscal 2011. This also coincided with rising petrol prices and the launch of new EV models.
Downswing (fiscals 2013 to 2015): Sales lost momentum in fiscal 2013 as subsidy got exhausted and cases of
consumer dissatisfaction with products surfaced. Fiscals 2014 and 2015 saw sales falling further as subsidies were
not available and the industry (number of players, distributors) shrank. Recovery (fiscal 2016 - ongoing): Gol
notified FAME-I (Faster Adoption and Manufacturing of Hybrid & Electric Vehicles) benefits in March 2015.
This helped the industry recover and SMEV members also rose from 7 to 12 over fiscals 2015 to 2017. There
were new model launches as well. Fiscal 2018 saw better Li-ion-based products and there was also greater
awareness and publicity around EVs. EV volumes as reported by SMEV over the years are represented largely by
scooters. SMEV does not report volumes of e-rickshaws (Toto) whose population as per some estimates could be
as high as a million. Both scooters and e-rickshaws are powered largely by lead acid batteries and they have a
speed limit of 25 kmph, allowing them to skip vehicle registration.

Government policies

The government has formulated various schemes and policies to support the expansion of the electric vehicle (EV)
ecosystem in India. They are:

Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles in India (FAME)
e Phased Manufacturing Programme (PMP)
e Charging Infrastructure for Electrical Vehicles - Guidelines and Standards

FAME

e Interest in EVs is seeing a unprecedented increase globally as countries take steps to cut fossil fuel usage and
carbon emission and curb pollution. India, too, has put in place policies and schemes to encourage adoption
of EVs. FAME is one such scheme.

¢ FAME Phase-I was introduced on April 1, 2015, and was initially meant to be in force for 2 years. This was
extended up to March 31, 2019. The total outlay for the scheme was enhanced from the initial Rs 798 crore
to Rs 895 crore.

e The Phase-II, with a significantly higher outlay of Rs 10,000 crore, was announced by the Department of
Heavy Industry (DHI) for 3 years effective April 1, 2019. Till September 10,2020 the, government has also
sanctioned about 5,600 buses amounting to Rs. 2,800 crore and 2,900 EV charging stations amounting to
about Rs.500 crores to be setup in major cities. As of 31* August 2020, a total of Rs. 610.7 crores have been
spent under FAME II scheme since April 1, 2019.

The outlay for the scheme is broken into three major areas:

¢ Demand incentives
« Establishment of network of charging stations

110
e Administration of the scheme, including publicity and IEC (information, education & communication)
activities

Demand incentives:

Year-wise breakup of fund allocation for FAME Phase-II (INR crore):

Head

  

 

 

 

‘Demand incentives 822 4,587 3,187 8596

Charging infrastructure 300 400 300 1000

Admin (publicity/ ICE) 12 i \13 38 |
| Total for FAME-II 1,134 5,000 3,500 (9,634 |
‘Committed expenditure of Phase-I 366 0 o 366

‘Total 1,500 |5,000 (3,500 |10,000

 

 

Source: DHI, CRISIL Research

While bulk of the outlay is planned as demand incentives, these will be largely limited to passenger vehicles
including buses. The categories eligible for demand incentives are:

e Buses (only EV technology)

e  Four-wheelers (EV, plug-in hybrid or PHEV and strong hybrid or SHEV)

e  Three-wheeler (electric) including registered e-rickshaws

e¢ Two-wheelers (electric)

GST rate for EVs is 5% compared with 28-50% for conventional vehicles. However, with higher prices in most
categories, the absolute amount of tax is not sharply lower. The inverted duty structure on batteries drawing 28%
GST is offset by GST credits when sold with the vehicle. Some states offer lower vehicle registration charges for
EVs. Cities can also access funds from the Green Mobility Fund and Smart City Missions to promote green

transportation.

Demand incentives under FAME II:

 

 

 

ire) E Post subsi

| Tata Tigor EV 12,16,175 / 1,62,000 10,54,175
Mahindra Treo 3,32,000 64,200 2,67,800

| Ather 450 1,33,658 | 26,732 1,06,926

 

 

Source: FAME, CRISIL Research estimates

Charging infrastructure:

The scheme seeks to support setting up of adequate public charging infrastructure to instill confidence among EV
users. The infrastructure will be established through active participation of various stakeholders including
government agencies, industries, and public sector enterprises (PSEs). Of the total outlay for FAME Phase-II,
10% is for setting charging infrastructure as per norms specified by the Ministry of Power. Private companies can
partner with PSEs to bid for projects to install chargers.

In addition, for electric buses, it is proposed the buyer will be provided one slow charger per vehicle and one fast
charger for every 10 buses funded under the scheme.

In Phase-I, the government had sanctioned 520 charging stations. Under Phase-II, the number is about 2,900.
These will be installed in major cities and the estimated cost is a little over Rs 500 crore. Of the total, about 1,800
will be fast charging stations and 1,100 will be slow charging stations. About 1,000 of these are to be set up in
metros with 4 million-plus population and majority of the balance proposed stations will be in about 62 cities with
million-plus population. Slow chargers are suited for two-wheelers, three-wheelers and four-wheelers with smaller

111
batteries. For commercial vehicles, which have much larger batteries, slow chargers are not suitable as they will
take too long to charge, impacting their commercial viability due to reduced utilization.

PMP

While the FAME scheme is aimed at boosting the EV ecosystem by way of subsidy as incentives for buyers and
for setting up charging infrastructure, it also seeks to boost the manufacture of products required to support the
EV ecosystem. Initially basic customs duty and GST on EVs, their assemblies/ sub-assemblies and parts were
reduced and rationalized. As volume of EVs has increased and cost is starting to come down, the government has
introduced a phased manufacturing roadmap to provide further impetus to the EV ecosystem and promote
indigenous development of such vehicles. Aimed at increasing value addition and building capacity within the
country, the roadmap has a graded duty structure for specific parts. The duty varies from 0% to 25%. For instance,
parts such as motors, inverters and power control units used in the manufacture of EVs attract 0% basic customs
duty (BCD) while battery cells and packs attract 5%. From January 2019, basic customs duty (BCD) on completely
built EVs has been 25%. BCD on the 0% category is proposed to be increased to 15% by April 2021. The duty on
battery cells and packs would increase from 5% to 10-15% based on application. Meanwhile, the duty on
completely built vehicles will be increased to 50% in the same period. The proposed changes could vary from
time to time and be notified through official channels. As per the latest notification in September 2020, the
effective date for localization of multiple parts across segments have been extended to 1* April 2021. For
commercial vehicles, the buses segment has been provided extension for all parts except body panels and various
lighting fixtures till 1 April 2021.

EV Penetration

The current penetration of electric vehicles in India is negligible at <1% of annual sales. The focus on the FAME-
II scheme is on promoting eco-friendly vehicles including hybrid and electric vehicles. Considering this, over the
next five years, CRISIL Research expects electric vehicle adoption in three-wheeler and public transport buses to
pick up first, largely driven by government subsidies. EV penetration in three-wheelers will also be supported by
favourable cost economics for lead acid-based electric vehicles vis-a-vis internal combustion vehicles. In the
personal mobility segment (two-wheelers and passenger vehicles), EV penetration is not expected to pick up
significantly over the next five years on account of lack of clarity on technology, charging infrastructure and
higher cost of ownership. Within two-wheelers, EV penetration in scooters is expected to pick up first due to
fewer model launches in the motorcycles segment.

   

Avtar its EV penetration
FY 20 FY 25P
Passenger vehicle 0.1% (~3,400) 3-5% (1,35,000)
Two-wheeler 0.9% (~1,52,000) 8-12% (20,35,000)
E-auto 0.01% (~700) 43-48% (3,00,000)
LCVA 20 1-3% (10,000)
E-buses’ ~440 2-4% (2,650)

NOTE: Figures in brackets refers to sales and % refers to EV penetration
A EV penetration projected till FY24
Source: FAME, CRISIL Research estimate

EV Penetration — Commercial Vehicles
Total cost of ownership

A comparison of total cost of ownership of various types of commercial vehicles will provide a view as to how
much a vehicle costs to own and operate over the period. Commercial operation of any vehicle will be successful
only if the cost of operating it is below the revenue earning. A vehicle with a significantly higher cost of operation
will not be viable due to competition from other vehicle categories and varying powertrains.

TCO over 4 year period at FY20 and FY24 prices for various sub-segments:
LCV (2T GVW)

ICV (11T GVW)

MCV bus (16T GVW)

HCV (40T GVW)

112
LCV

In the current scenario, CNG comes across as the cheapest alternative powertrain due to the prohibitively high
initial cost of electric LCVs.

In case of LCVs (at Mumbai prices), operating cost of an EV is ~50% less than that of a comparable diesel vehicle.
In the sixth year both electric and diesel versions are likely to break even for FY24 prices.

However, with respect to CNG the difference in operating costs of an electric vehicle is <30%, due to which the
break-even period of an electric vehicle with respect to a comparable CNG vehicle is relatively higher at <15
years.

With respect to cost of ownership, while EVs may be able to match the cost of diesel LCVs by FY24, they will
still be considerably costlier than CNG LCVs. This when looked at in conjunction with the focus of the

government on improving the natural gas grid in India, is expected to keep the overall adoption levels of EVs in
LCVs at 1-3% even by FY24.

TCO period (years) 4 6 8 TCO period (years) 4 6 8

Diesel 3.8 43 4.0 Diesel 47 5.1 46
CNG 35 37 34 CNG 4.0 4.0 37
Electric 73 5.2 48 Electric 6.6 51 47

Note: Numbers denote total cost of ownership in Rs per km, TCO period units in years

ICV

In case of electric intermediate commercial vehicles (ICVs) both initial cost and operating cost (including battery
replacement) are prohibitively high as of now. By fiscal 2024, the cost difference between diesel and electric IC Vs
is expected to remain high with electric ICV costing more and CNG versions will be relatively cheaper to own
compared to electric versions

Some short haul applications are likely to move to CNG (if CNG fuel cost remains low) to take advantage of the
cost benefit. CNG ICVs have lower operating cost in comparison to diesel and also electric vehicles.

Thus the substantially low cost of ownership of CNG vehicles could limit the penetration of the electric
powertrains in the ICV segment to near negligible levels.

    

Y20
TCO period (years) 4 6 8 TCO period (years) 4 6 8
Diesel 12.6 111 10.4 Diesel 14.6 12.7 TL
CNG 99 8.6 8.1 CNG 108 93 86
Electric 26.0 23.0 © 213 Electric 252 224 © 209

Note: Numbers denote total cost of ownership in Rs per km, TCO period units in years

MCV

Cost of ownership of an electric bus is ~1.5X that of a standard diesel bus, primarily due to high purchase cost.
Owning CNG buses is Rs 1.3-1.4 crore cheaper than electric ones. While this cost gap would reduce going
forward, electric buses are still expected to need capital of Rs 1-1.2 crore by fiscal 2024.

In the bus segment, owing to the excessively high battery cost, there is 4-5X difference in the initial purchase cost
between a diesel/cng and an electric bus

As a result of this high differential, the breakeven period is more than 20 years between electric and diesel
powertrains despite a 30-35% lower operating cost for electric vehicles.

113
And thus, due to this high differential, we expect that capital subsidy would still be needed to make electric buses
viable compared to conventional buses by FY24, which in turn may limit its penetration largely to the public
transport (STU-State transport undertaking) segment.

TCO period (years) 8 10 12 TCO period (years) 8 10 12

Diesel 20.3 192 18.1 Diesel 239 «224 = 209
CNG 16.7 158 149 CNG 193 181 169
Electric 33.7 329 310 Electric 340 33.2 0314

Note: Numbers denote total cost of ownership in Rs per km, TCO period units in years

HCV

Due to higher battery cost, initial cost of an electric truck can be 5-6 times higher than a diesel one. As a result of
this, there is a differential of Rs. >1 Crore in ownership cost between diesel and electric trucks at present.

As the lead distances and GVW (gross vehicle weight) of heavy commercial vehicles (HCVs) are fairly higher
than ICVs and MCVs, they require a large battery. This makes electric HCVs prohibitively pricey.

In addition to excessively high battery costs, the incremental weight of these batteries further decreases the
payload capacity of HCVs. Due to these factors, adoption of EVs in the HCV segment is expected to be fairly low
over the next five years.

Thus due to prohibitively high initial costs resulting in a considerably higher total cost of ownership, adoption of
EVs in HCV may be near negligible levels even by FY24.

 

20

 

TCO period (years) 4 6 8 TCO period (years) 4 6 8

Diesel 30.7 276 © 25.7 Diesel 36.2 321 29.7
LNG 33.1 29.2 © 273 LNG 35.7 304 29.2
Electric 40.4 364 32.4 Electric 405 369 331

Note: Numbers denote total cost of ownership in Rs per km, TCO period units in years

Electric Vehicles Forecast

LCV Goods - Electric

Ex jf

9,000 - 11,000

556
7 18

Fy19 FY20 FY24

m=LCV Goods @ EV Penetration

Source: CRISIL Research
Note: N.M = Not meaningful

Currently, most EVs used in the commercial segment as goods carries are three-wheelers. However, as the cost
differential between electric and diesel vehicles start reducing, CRISIL Research expect new models to be
launched, which will drive sales in the segment as the third-mile logistics and local distribution of goods are well
suited applications for electric vehicles.

Consequently, EV sales in the LCV goods segment can rise to 9,000-11,000 vehicles by fiscal 2024, which would

be about 1-3% of the total light commercial goods vehicle market as CNG offers better total cost of ownership in
the near future and be preferred over electric variants.

114
HCV goods

EV adoption in the HCV segment is expected to be negligible in the near future as operational profile makes them
prohibitively expensive. Also, the current charging infrastructure is not suitable for larger batteries of HCVs,
which will render electric adoption unviable for some time.

Passenger vehicles (buses)

Due to the government support through FAME and focus on quicker adoption of EVs in public transport, there
has been significant increase in electric bus sales in the last couple of years. Operational profile of buses with
fixed routes and regular stops make them suitable for charging at pre-determined intervals and specific locations.
However, the electric bus sale is unlikely to meet the target in fiscal 2021 due to the Covid-19 pandemic and hence
CRISIL Research expect the subsidy amount to get carried over to coming years. With other incentives from the
central and state governments, the sales of electric buses is expected to reach 2,500-2,800 units (2-4% of total bus
sales volume) by fiscal 2024.

Electric buses forecast

Buses - Electric

FY19 FY20 FY24
=Bus ® EV Penetration
Source: CRISIL Research
Note: N.M = Not meaningful

There could be some minor penetration in ICVs going forward; however with respect to MCVs and MAVs CRISIL.
Research expect the dominance of diesel fuel to continue with LNG making some inroads.

Regulations in the CV industry
Modalities and timeline of new scrappage policy is not known yet

Recent regulations such as the axle norm, bus body code, mandatory anti-lock braking system, speed governors,
enforcement of BS-IV norms, and mandatory cabin ventilation system on new commercial vehicles (CVs) have
already impacted the industry. We expect the effects of newer fuel-efficiency norms, the proposed BS-VI norms,
the truck body code, and the new scrappage policy, to play out in the long run.

The Ministry of Road Transport and Highways, in August 2018, considered providing incentive for scrapping
vehicles sold before April 2005 (15-year-old). After deliberations on the modalities of the implementation of the
norm, currently, the government aims to promote vehicle scrapping by exempting registration charges for truck
purchases made after scrapping an older truck. As the current registration charges are low (below Rs. ~5,000),
simultaneously, the government also aims to increase renewal of registration for older vehicles (to Rs. 40,000).
Trucks older than 15 years are also expected to get fitness certificate every six month vs. every twelve months
currently. However, we believe Rs. ~40,000 benefit on scrappage of 15 year and older trucks will not be enough
to promote scrapping such trucks as the current resale value of a 15-year-old truck is higher than the current scrap
value and the registration benefit. The move can only aid in scrapping of vehicles which are around 20 years and
above since their resale value will be near the scrap value of the truck; the number of such trucks will however be
limited at ~10,000-20,000.

As seen above, resale value of trucks tends to be above the sum of scrappage value and the registration benefit.

Thus, the scrappage norm at the current level of benefits will lead to scrappage of trucks only older than 20 years.
Through higher incentives from the government and OEMs, if transporters are able to be incentivized for

115
scrapping of vehicles older than 15 years, then we expect ~600,000 MHCVs to be available for scrapping. We
understand incentive of Rs. >90,000 for 16T MCV and >1,00,000 would be needed to scrap for trucks older than
15 years.

While vehicles are scrapped in addition to the scrap value direct cash incentive can be provided to a transporter
that scraps his vehicle. In case direct cash incentive is not provided and benefit on purchase of new vehicles are
to be provided, it is important to note that the transporter scrapping a vehicle is not the buyer of a new vehicle.
Hence any benefit for buying new vehicles, such as waiver on registration charge etc. needs to be provided in the
form of a tradeable certificate. This would aid the person scrapping his old vehicle to trade the certificate to the
buyer of a new vehicle who can avail the benefits. These are some of the modalities to be considered for successful
implementation of scrappage policy.

Moreover, vehicle tracking system and panic buttons has been made mandatory on buses from January 2019
increasing prices by ~Rs. 10,000-15,000.

Attractive incentives needed to scrap

20 year old truck (current

Incentives needed to scrap . ; 15 year old truck
incentive)

16T MCV 0.4 lac > 0.9 lac

25T MAV 0.4 lac > 1 lac

Number of vehicles available 10,000.20,000 ~600,000

for scrapping

 

Source: CRISIL Research
Implementation of the scrappage policy in low demand scenario of fiscal 2021 may be fraught with peril

Trucks aged below 10 years generally ply on trunk routes as they are generally more fuel efficient and less prone
to breakdown. Older trucks, on the other hand, ply over shorter lead distances typically under market load.

Due to the COVID-19 outbreak, the government allowed for loan moratorium between March and August.
However, the moratorium was not applicable for the delinquent customer (i.e. 90 DPD and above) as on 29th Feb
2020. Thus, repossession of trucks from such delinquent customers rose in QIFY21. In fact, repossession
increased 2.2 times than normal levels in QIFY21. To add to this, more transporters (especially small fleet
operators) who had purchased trucks in 2017, 2018 and 2019 had put their trucks for sale as they were unable to
pay EMIs owing to low fleet utilization at the same time availing moratorium. Medium commercial vehicles,
Multi axle vehicles and T-Trailers were the categories of vehicles that were majorly repossessed or put up for sale
in the secondary market. Because of the increased supply of trucks in the second hand market and lower demand
for trucks, resale values expected to have plummeted ~20-25%.

If the scrappage policy is implemented under these circumstances and leads to incremental CV sales, then the
number of trucks in the trunk routes would increase lowering fleet utilization of transporters in trunk routes further
in this low demand environment.

It is to be noted that given that there is no clarity on the benefits of the proposed scrappage policy or its
implementation schedule. We have not factored this in our current forecast as and when there is more clarity on
this, we will accordingly update our forecasts if required.

Axle norm lowers demand from LFOs transporting bulk goods at rated load as SFOs lose incentive to
overload

The Ministry of Road Transport and Highways had notified new axle load norms for commercial vehicles, which

allow for an increase in the load-bearing capacity of trucks. The new axle norms will be applicable to the entire
fleet of freight-moving trucks — called the ‘population parc’.

116
New payloads stipulated in MHCVs

{in Tonnes) | Mcv | Mav | T-Trailer

Previous GVW EG es xy 7 | 36 40 49
Previous Payload | 5 1 16.5 21 26 | 23 27 35
Kerb weight | 7 1 85 10 1 | 12 13 14
GVW as per new norm | 185 1! 28 35 42 | 395 45.5 55
New Payload | 445 | 195 25 31. «| «275 32.5 44

————

% increase in rated payload! 28% | 18% 19% 19% | 20% 20% 17%

 

Source: CRISIL Research
Truck demand from bulk goods transporters to remain low due to axle norm in the coming fiscals as well

Although axle norms increased freight carrying capacity of trucks by ~20%, the benefit would only be availed by
transporters ferrying bulk goods which constitute 35-40% of the truck movement. Movement of bulk goods in
billion tonne-kilometers (BTKM) terms via road fell marginally in fiscal 2020 amidst the ~20% rise in capacity
for bulk goods transporters. Therefore, bulk goods transportation via roads would continue to face overcapacity
in the coming fiscals hampering new truck purchases.

However, transportation of voluminous non-bulk goods (60-65% of truck movement) which, while being
unaffected by axle norm, were impacted by slowing consumption demand in FY20. Moreover as some bulk
transporters already were overloading near or moderately above the new payload levels, the impact of axle norms
for such transporters would be lesser.

Shift from T-Trailers to higher tonnage MAVs: After implementation of the axle norm, the payload of the
erstwhile 37T would increase to 31T which would be similar to the erstwhile payload of a 40T T-Trailer. Also,
erstwhile 49T T-trailer’s payload has now increased from 35T to 41T. Rated load availability at the 41T mark is
expected to be lesser than at 35T. Moreover, issues like driver availability and lower maneuverability plague T-
Trailers. Because of these reasons, higher tonnage MAVs are likely to be more desirable than T-Trailers.

Truck body code to lead to ~5% rise in cost of ownership; norm likely to have been postponed

All goods vehicles (>3.5T GVW), manufactured either by a vehicle manufacturer or a body builder on drive-way
chassis vehicles, will have to comply with the provisions of AIS-093 (Rev. 1) in two stages - the first level of
compliance in October 2018 and the second stage in October 2019. We believe compliance with this code is
expected lead to a cumulative price rise of ~5%. However, we expect implementation of this code to have been
differed.

With standardization in truck body building, we expect consolidation among truck body builders as small players
may not be able to meet testing requirements. With standardization, financiers are expected to be more willing to
fund the generally unsupported body building cost. This will reduce the initial down payment, minimizing the
impact of the 5% rise in cost of ownership.

Fuel efficiency norm likely to be enforced by fiscal 2023

To make heavy duty trucks and buses more fuel efficient, the Ministry of Petroleum and Natural Gas, MoRTH,
and the Ministry of Heavy Industries are in talks to notify fuel efficiency norms. We expect the norm to be
enforced by fiscal 2023. Based on talks with various stakeholders, BS-IV-compliant diesel vehicles of categories
M3 and N3, with GVW of 12T and above, will have to comply with these norms. Vehicles are expected to meet
the ‘target diesel fuel consumption' value for a specific set of speeds, which is dependent on the vehicle’s GVW,
axle configuration, and category (N3/M3).

Outlook on Indian automobile industry

Commercial vehicle

117
Commercial vehicle domestic sales outlook FY 2020- FY 2024

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Source: SIAM, CRISIL Research
MHCYV segment to log moderate growth on a low base

MHCYV sales are likely to rise by 8-10% compound annual growth rate (CAGR), over a low base, from fiscal 2020
to 2024 (four-year CAGR), as compared to the previous five-year (FY15-20) fall in CAGR of ~1%. Moreover,
tonnage addition is expected to improve by 9-11% CAGR due to a better product mix (higher growth in MAV
and T-Trailer demand despite a shift to lower tonnage vehicles due to axle norm). Long term growth to appear
higher over a low base after a ~47% drop in sales in FY20. The four-year growth will be despite an expected fall
of ~26-28% in fiscal 2021 due to the COVID-19 outbreak.

Factors driving long-term MHCV sales will be the improving industrial activity in the country, steady agricultural
output, and the government's focus on infrastructure. However, volume growth will be limited due to efficiencies
achieved from the goods and services tax (GST), better road infrastructure along with the commissioning of the
dedicated freight corridor (DFC).

Segment wise projections of MHCV cargo

Par)

 
 

ue)

 

Warehouse consolidation translating into higher demand for
ICVs for movement of goods from warehouses to
consumption centres. Demand to be aided by e-commerce
industry purchases and improvement in consumption

 

expenditure
MCVs | 12.0-16.2 a) % 4-6% MCVs to be cannibalised by ICVs at spokes and MAVs at
(ex- hubs.
tippers) Consumption sectors, such as FMCG/FMCD and e-

commerce, to be key for next 1-2 years, Auto carrier segment

may start gradually inching up post fiscal 2022. MAV tippers

__ — _to grow ata higher pace than MCV tipper |
a@y% 15-17% Increasing popularity of hub and spoke model, and improved

 

 

 

 

 

 

 

 

 

 

 

 

 

MAVs

(ex road infrastructure to drive demand for higher tonnage MAVs;

tippers) owing to shift to higher tonnage MAVs and efficiency gains
[eiue'to removal of check posts/and higheravermpe speed

Tippers >12.5 5% 10-12% | Improvement in mining and construction over the long term
to prop up sales. Growth to appear higher due to low base in
FY20

“T-trailers  >16.2 5% 4.6% Increasing need for higher tonnage vehicles along with better

| road infrastructure is expected to boost demand. However,

|. - _ | DECs, once commissioned, would impact sales

Total | >75 ()% 8-10%

MNCs |

 

 

LCV sales to grow at a modest pace in the long run

Light commercial vehicle (LCV) demand is expected to expand at 4-6% CAGR from fiscal 2020 to 2024, due to
higher private consumption, lower penetration, greater availability of redistribution freight and improved finance
availability post FY21. Long term growth appears to be sluggish after an expected 9-11% drop in sales in FY21,
post which demand to rise at a healthy pace. Within LCVs, the shift towards pick-ups (which carry higher loads)

118
from sub-one tonne vehicles will curb sharper growth in sales volume, as fewer trucks will now be required to
transport the same quantity of material.

Upper-end light commercial vehicles (ULCVs) offer the transporter lower returns, as compared with ICVs, and
are most suited for captive use. Entry restriction on ICV trucks and higher tonnage MHCVs is expected to keep
demand from this segment buoyant. However, higher toll on ULCV trucks vs. pickups will limit growth in the
segment.

Three-wheeler segment to grow at a tepid pace in long term

In the past five years, SCVs, especially sub-one tonne models (0.75 tonne payload), were substituting large three-
wheelers of similar payload capacity, given the SCVs' ability to carry loads beyond payload capacity, run on
longer routes, maintain better balance, and be more cost-efficient. This pace of substitution is expected to slow
down as much of the shift has already taken place. Rural areas still prefer use of three-wheelers because of a lack
of infrastructure. Consequently, goods three-wheeler sales are expected to record a growth 2-4% CAGR between
fiscals 2020 and 2024 after declining by 22-24% in fiscal 2020.

Bus demand to grow moderately in the long run

CRISIL Research projects domestic bus sales to expand on an abysmal base of fiscal 2021 (decline expected in
fiscal 2021 at 80-85%) due to increasing demand for inter-city/state travel, aided by better road infrastructure, and
higher personal disposable incomes. The unregulated segment, which primarily caters to demand from schools,
companies and inter-city travel by private operators, will remain the largest end-user. However, further expansion
in bus sales would be impacted by the implementation of metro-rail and monorail in several cities. Due to a decline
in fiscal 2021, bus demand is expected to grow by 2-4% CAGR between fiscals 2020-2024.

Passenger vehicle

Industry growth to be slower than GDP growth

CRISIL Research projects domestic sales of cars and utility vehicles (UVs) to increase at a compound annual
growth rate (CAGR) of 5-7% over fiscals 2020-2024, better than 1.3% CAGR logged between fiscals 2015 and
2020. The growth is expected to be better (post fiscal 2021) as consecutive years of double-digit decline would
lead to a very low base in fiscal 2021. Post fiscal 2021, healthy growth expected over this low base due to moderate
macroeconomic growth, increasing disposable incomes, relatively stable cost of vehicle ownership and lower fuel
prices. Other factors that would aid demand are increasing urbanization, government support to farm incomes,
and improved availability of finance. However, increasing congestion in metro cities and rising popularity of
shared mobility services are likely to restrict car sales in the long term.

Passenger vehicle domestic sales outlook FY 2020- FY 2024

   

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=Small cars @Large cars #UV+Vans

Note: Small car segment includes Mini, Micro, Compact segment of passenger vehicles, Large car segment includes Super
Compact, Mid-size, Executive, Premium of passenger vehicles
Source: Society of Indian Automobile Manufacturers, CRISIL Research

Post significant decline, both small cars and UVs to witness healthy growth in long term

After a sharp decline in fiscal 2020 and 2021, sales of car as well as UV segment to grow at a healthy pace.
Hyundai and Tata are expected to open a larger number of outlets in rural and semi-rural areas as well as estimated
higher farm profitability are expected to boost sales. Moreover, the increase is cost of ownership is likely to be

119
moderate, because of lower interest rates and increase in fuel efficiency. Large-car sales are expected to decline
by 10-12% CAGR in fiscal 2020-24 because the UV segment is expected to continue cannibalize the large-car
segment and put pressure on its growth. Post 7-9% decline in fiscal 2021, UV and van sales will grow faster at 7-
9% CAGR during the period fiscal 2020-24, driven by a continued shift in consumer preferences and multiple
model launches by manufacturers in this segment. The entry of new players in the UV segment is also expected
to aid traction. Replacement demand is also likely to rise, as car owners opt for newer models due to higher
affordability, competitively priced launches, and easy availability of finance. Overall, the cars and UV segment
are expected to sustain growth at 5-7% CAGR during fiscal 2020 to 2024 post consecutive two years of double-
digit decline.

Two wheelers

Rural markets to steer long-term growth

CRISIL Research expects domestic two-wheeler sales to record a compound annual growth rate (CAGR) of 1-3%
from fiscal 2020 to fiscal 2024 because of a low base of 2021. However, need for personal mobility has provided
cushion to two-wheeler industry. The two-wheeler industry recorded a 2% CAGR from fiscal 2015 to fiscal 2020.
In the near term, CRISIL Research expect the two-wheeler industry to be negatively impacted by the disruption
caused by COVID-19, high inventory levels and high cost of ownership owing to BS VI emission norms resulting
in higher vehicles prices in fiscal 2021.

Two-wheeler domestic sales outlook FY 2020- FY 2024

  

FY18 FY19 FY20 FY21E FY24P.

=Motorcycles =Scooters =Mopeds Total

Source: Society of Indian Automobile Manufacturers, CRISIL Research

Exports to decline in fiscal 2021 and then improve in fiscal 2022

In fiscal 2021, CRISIL Research projects export demand to decline by 15-20% as economies are grappling with
COVID-19 leading to weak demand and trade restrictions. Two wheelers exports to top 20 COVID-19 affected
nations account for ~30% of the total exports. However, major markets in Asia and Africa are likely to be impacted
by trade disruptions and plummeting crude oil prices. Going ahead, exports are expected to recover in fiscal 2022
as CRISIL Research expect the impact of COVID-19 to dissipate with availability of vaccines / medicines and
development of herd immunity. In fiscal 2022, CRISIL Research expect the two-wheeler exports to grow at a rate
of 8-13%.

Tractors
Domestic demand to grow 4-6% in a long run

Domestic tractor sales are expected to grow 18-20% on-year in fiscal 2021 due to better crop production on
account of a normal monsoon.

CRISIL Research projects domestic tractor sales to expand at 4-6% compound annual growth rate (CAGR) during
fiscals 2020 to 2024, on account of low tractor penetration in India (3 tractors per 100-hectare area); government's
focus on improving farm incomes through various schemes, promoting farm mechanization; and investments to
improve rural infrastructure. The projected growth rate factors in one-two years of deficient rainfall.

120
Tractor domestic sales outlook FY 2020- FY 2024

786 840
711 j 709 ;

Fy18 FY19 FY20 FY21E FY24P
P: Projected
Source: CRISIL Research

862

Thousand Vehicles

The following impediments will crimp growth, relative to past 6-7 years:

¢ — States such as Haryana, Punjab and Gujarat have already reached high horsepower (hp) penetration; growth
here will be restricted unless tractors penetrate small and marginal farmholds

¢ Going forward, high growth in minimum support prices is unlikely to continue in view of the central
government's fiscal constraints and fixing of inflation control emerging as the central pillar of economic
policy. Moreover, the cost of agricultural inputs such as seeds, fertilisers, and farm labour is rising, affecting
farmers' profitability

Over next four years (fiscals 2020 to 2024), the following structural factors will support 4-6% growth:

« The government's objective of doubling farm income by 2022 via initiatives such as e-NAM (National
Agriculture Market), expansion of crop insurance coverage, direct income support and improvement in land
productivity via soil health cards. These measures should improve farmers’ crop yields and affordability, and
boost tractor penetration

e The government's renewed thrust on enhancing irrigation intensity and making the nation more drought-proof
is expected to support agriculture growth and increase mechanisation. Irrigation investments to increase by a
CAGR of 4-6% in a long run.

¢  Custom-hiring centres are being promoted through government incentives. The trend is catching up in
Karnataka, Madhya Pradesh, Andhra Pradesh, Telangana, and Orissa and encouraging farmers to lease
tractors. States such as Karnataka, Madhya Pradesh, Andhra Pradesh and Punjab are promoting such hiring
centres through training, demonstrations and financial incentives

e Tractor rental services made available on mobile applications by manufacturers -- such as Jfarm by TAFE
and Trringo by Mahindra -- to prop up demand for tractors in long term. Global companies such as Hello
Tractors in association with Aeris, a California-based technology company, is also planning to launch a pay-
as-you-use tractor service for Indian farmers

Tractor exports to continue to decline in fiscal 2021 after drop in fiscal 2020; Recover on a low base in fiscal
2022

Exports are expected to contract by 10-12% in FY21 as 28% of tractor exports are to top 20 COVID impacted
countries where demand is expected to be impacted. After a fall in exports in fiscal 2020 and 2021, CRISIL
Research expect the exports to rebound and grow at 14-16% in fiscal 2022.

Off-highway vehicles

Construction equipment demand to shrink due to ripple effect of Covid-19 and consequent economic
slowdown in fiscal 2021

The construction equipment (CE) sector is expected to take a mighty blow from the nationwide extended
lockdown to curb the spread of the Covid-19 pandemic, which has pushed back a much-anticipated economic
recovery this fiscal by bringing movement of people and goods and all major industries to a standstill.

121
While CRISIL Research witnessed a muted impact of the lockdown in fiscal 2020, the entire brunt will be felt in
fiscal 2021. Given this, CE volumes declined by ~20% in fiscal 2020 with the fourth quarter being a complete
washout. CRISIL Research expect volumes to plunge further by 21-23% in fiscal 2021. Further, government funds
will be diverted towards healthcare facilities, resulting in lower investments in the infrastructure segment
translating to low demand for equipment. In fiscal 2022, volumes are expected to increase 14-16% on two years
of lower base effect.

CE domestic sales outlook FY 2021- FY 2022

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2 2
0
FY18 FY19 FY20 FY21E FY22P
= Backhoe Loaders mw Excavator = Wheeled Loader = Compaction equipment
= Motor graders Skid Steer loaders m Bull Dozers Total

Source: CRISIL Research

Rental and leasing business to grow in the long term

The equipment rental and leasing business in India is small, compared with the developed markets. However, it
possesses high growth potential and an uptrend has been visible over past few years. Earlier, rented equipment
were only used for complex projects such as wind energy, thermal power, port construction, and mega industrial
projects. However, interactions with industry experts indicate that now rented equipment is used even for smaller
projects. CRISIL Research expect these projects to aid equipment sales. This comes with the caveat that
the industry is still at a very nascent stage and has a long way to go in order to become organized as in the
developed markets of Europe and the US.

The construction equipment leasing business in India lost momentum on account of the multiple taxes levied on
equipment from 2001. Since then, the industry has shifted towards the financial lending model from equipment
leasing, as the former provided tax benefits. However, with GST coming into play, the leasing business is expected
to pick up.

Disbursements dip, NPAs rise in CE industry

The decline in CE demand is reflected in the quantum of loans disbursed by equipment finance companies. Close
to 85-90% of the equipment are financed with institutional credit whereas cash purchases account for the rest.
Also, the ratio between new and used equipment financing is 70:30.

NBFCs saw a decline in disbursements in fiscal 2020. For SREI Equipment Finance, one of the major equipment
financiers in the country, disbursements dipped by 21% in the first half of fiscal 2020, compared with the first
half of 2019.

Gross non-performing assets (GNPAs) of equipment financiers stood at 4.6% (as of September 2019), against
3.3% (as of September 2018). Equipment financing has seen an upswing since October 2015, primarily driven by
the roads sector. Going further, demand is expected mainly from road and mining equipment.

AUTOMOTIVE COMPONENTS INDUSTRY IN INDIA.

The Indian auto components industry clocked a CAGR of 6% in production over fiscals 2015 to 2020, led by
growth in replacement and exports demand. Domestic demand is forecast to log a CAGR of 6-8%, driven by
demand from OEM at 7-9%, whereas exports are set to grow at 3-5% over fiscals 2020 to 2024.

122
Growth trajectory of auto components sector

20% Domestic Production
15% 10)-(12)%
10% 8% 7% ™% roe

5% 5% rr 5yo5%

5% aa 13%
wa) | | Dam?

5% ~FY15to FY20 "7 I FY20-24P
-10%
(aS

-15% 9 OY (yo), Xu i (12)%
-20% 17%
=OEM mReplacement mExports mlmports

Source: CRISIL Research

Domestic market

Demand for automotive components (domestic consumption)

5000 ) 2 billion 20%
4500 9
15%
4000 5 ee : °
3500 10%
3000 me
2500
2000 0%
1500 5%
1000
500 (9)-(11)% -10%
0 -15%

 

FY15 FY16 FY17 FY18 FY19 FY20 FY21E FY24P

 

=m Domestic demand Growth (RHS)

Source: CRISIL Research

CRISIL Research projects domestic auto component consumption to decline by 9-11% in fiscal 2021 on account
of subdued demand across all automobile asset classes amid continued weakness in the economy and lower
demand from the replacement market owing to less movement of vehicles. However, higher component intensity
due to the BS-VI norm is expected to aid average realisations. In long term, CRISIL Research expects the domestic
consumption to grow at a pace of 5-7% CAGR between fiscals 2020-2024. In fiscal 2021, imports are expected
to decline by 10-12% owing to subdued demand from OEMs and the aftermarket. Besides, domestic auto
component manufacturers have also been operating at below-normal utilization levels owing to weak demand.
Imports declined by 33% on-year during the first quarter. Going ahead, with improving domestic production,
demand for imports is expected to pick up on a sequential basis. In the long term, i.e. between fiscals
2020 and 2024, CRISIL Research expects domestic auto component production to log a CAGR of 6-8% to ~%
4,225 billion. OEM demand is expected to clock a CAGR of 7-9% between fiscals 2020 and 2024 to reach ~Rs
2,772 billion, on the back of healthy growth in the OEM segment on a low base of fiscal 2020 and 2021 due to
BS-VI norms and the Covid-19 pandemic, respectively.

Replacement demand

As for the replacement market, demand weakened for the first time in over a decade owing to lower movement of
vehicles on the back of imposed nation-wide lockdowns, followed by state-wide lockdowns until August 2020.
The auto component replacement market is projected to grow at a steady rate of 3-5% CAGR between fiscals
2020and 2024. Replacement demand is expected to be lower as compared to the growth logged between fiscal
2015-2020 due to increased durability of components (better quality), better road infrastructure and increase in
service intervals leading to lower preventive maintenance is resulting in a slower growth rate in the long

123
term. Demand in the replacement market will grow due to increase in the utilization rate of CVs and increase in
penetration of cab aggregator services in the overall stock of passenger vehicles.

Imports

Imports are expected to grow at 1-3% CAGR in the long term. Greater focus of the Indian government on
indigenization is expected to reduce imports of components in the long run. With the government’s focus on
electric vehicles (EVs) and with no material supplier of battery management systems (BMS) in India, imports
from this segment are expected to drive growth, although limited by low EV penetration, in the medium term.
Growth in imports will, however, be restricted by the growing research and development (R&D) efforts of local
players, as well as anti-dumping and customs duties levied by the government.

Exports

Trend in auto component exports

 

 

900 8 billion 25%
800 20%
700 15% 15%
600 10%
500
400 Ses
300 02
200 5%,
100 -10%
-(14)9
0 12)-(14)% -15%
FY15 FY16 FY17 FY18 FY19 FY20 FY21E FY24P.
mms Exports ‘Growth (RHS)

 

Source: CRISIL Research

Exports have a high correlation with the global economic scenario. The major exports are to North America and
the EU. They account for almost half of the overall exports pie. Exports declined by 56% on-year in the first
quarter of fiscal 2021. Since there is a fear of further downside on account of the second wave of the pandemic in
the major importing nations, CRISIL Research expect exports to de-grow by 12-14% in fiscal 2021.

Penetration of Indian automotive components in major markets is minuscule -- India's exports stand at less than
1% of global exports. In the last five years, exports logged a CAGR of only ~7%, mainly because India’s exports
comprise low-value products such as chassis. However, this scenario is changing as India’s technological
capabilities are improving because of collaboration with foreign partners. In long term, CRISIL Research expect
the exports to grow at the CAGR of 3-5% between fiscals 2020-2024 to ~2 762 billion in fiscal 2024.

Asia has been gaining traction in India’s auto components market

1% 1% 6% 5% 6% 6%
5% 5% 5% 5% 1% 4%
FY16 FY19 FY20

FY15 FYI7 FY18
Africa S.America Middle East «== Asia. «= = N.America Europe

Note: UK, Germany, France and Italy constitute Europe.
Source: CRISIL Research

124
Exports to decline in fiscal 2021

For fiscal 2021, CRISIL Research expect India’s auto component exports to decline by 12-14% after declining by
6% in fiscal 2020. With the spread of Covid-19 in Europe, the US and South America, automobile production in
these key export destinations (Europe, the US and Brazil account for 27%, 24% and 5% share of India’s exports)
is expected to be lower than the preceding year. This is expected to hit India’s automotive component exports.
However, with the number of Covid-19 cases plateauing globally, demand is expected to recover on a sequential
basis. This is evident from the automobile industry showcasing signs of recovery in North America and Europe,
registering an on-year growth in sales. As consumers are adapting to the ongoing pandemic environment, leading
to an improving economic scenario, auto component demand from these countries is projected to witness a slight
uptick.

Exports to grow at a slightly slower pace in the long term

Auto component exports are projected to rise at 3-5% CAGR between fiscal 2020 and 2024 after seeing a two-
year consecutive decline in fiscal 2020 and 2021. As India is moving towards higher global standards in terms of
quality and safety measures. This helps players to expand into newer geographies and gives them an edge
compared with other low-cost countries. Currently, the penetration of Indian automotive components in major
markets is minuscule — comprising a little more than 1% of global exports - indicating considerable scope for
domestic manufacturers to expand their exports share in the coming years as they expand to new geographies and
widen their product offerings.

REVIEW AND OUTLOOK ON THE ALUMINIUM DIE CASTING MARKET IN INDIA

Review of aluminium casting market in India

40% of the metal castings in the automobiles industry use aluminium, with a majority of cast components made
for the two-wheeler and passenger vehicle segments. Some of the casting components used in the vehicles are
cylinder blocks and cylinder heads, transmission housing, pistons, crank covers, clutch parts, axles, chassis parts,
gear box and wheel parts. Demand for aluminium castings, which are used as part of alloy wheels, has picked up
due to an increase in penetration of alloy wheels in two-wheelers and passenger vehicles.

Non-ferrous/ aluminium casting forms nearly 70% of the overall casting market in value terms. Two-wheelers
account for ~70% of the aluminium die casting market, followed by passenger vehicles with 25% share and
commercial vehicles with a 4-5% share in value terms. Original equipment manufacturers account for 75-80% of
the offtake. Exports account for 15-20%, with the aftermarket comprising the remainder. Size of the aluminium
casting industry was about Rs 169 billion in fiscal 2020. Demand for aluminium die casted products stood at 0.44
million metric tonnes in fiscal 2020.

Revenue distribution (fiscal 2020)

Rs 169 billion market

ey Aftermarket,
4%

 

Source: CRISIL Research

Outlook on aluminium castings market in India

During fiscal 2020, amidst a slowdown in economic growth, regulatory price hike, weak rural demand and a loss
of March month’s sale due to Covid 19 lockdowns, underlying growth in the automotive industry (domestic+
exports) dropped nearly 15% y-o-y. The commercial vehicle segment contracted the most at 30%, while a major
contributor to the automotive industry, the two-wheeler segment, contracted 14%. This contraction trickled down
to the automotive aluminium casting industry with ~14% drop in volumes & 18% fall in value.

125
In fiscal 2021, the Covid19 pandemic put the brakes on automotive segment demand. CRISIL Research expects
a further drop of 14-16% on year in automotive demand (domestic+ exports) in fiscal 2021. The casting market,
in turn, is also expected to shrink by 18-20% in fiscal 2021. Automotive industry is expected to pick up pace from
fiscal 2022, supporting demand for the aluminium casting industry as well.

Aluminium die casting market volumes

 

0.49 Oot 3.5% 0.45-0.55
MH
0.44
| L 0.3-0.4
FY18 FY19 FY20 FY21E FY 24P

Source: CRISIL Research

+ Automotive industry demand is estimated to clock 2-4% CAGR during fiscal 2020 to 2024 with the expected
improvement in the economy, improvement in consumer sentiment, vehicle launches & support from
financiers. The subdued growth pace expectation is due to the sharp drop expected in fiscal 2021. From fiscal
2021-2024, industry is expected to register a healthy growth of 8-10% CAGR.

+ Inline with automotive demand, the aluminium castings market (in tonnage terms) is projected to grow 3-5%
to reach 0.45-0.55 million MT by fiscal 2024.

+ In value terms, the market is expected to touch Rs 220-225 billion, clocking 6-8% CAGR.

Aluminium die casting market in value terms

 

iggy, 225
| | f 135-140
FY18 FY19 FY20-FY21E FY 24P

Source: CRISIL Research
Key players

The aluminium die casting industry has a large number of players. Major organised players include Rockman
Industries, Sunbeam Auto Private, Alicon Castalloy, Sundaram Clayton,Endurance Technologies and Craftsman
Automation Limited.

Growth drivers

+ Growth in automobile sales;

+ Passenger vehicles and two-wheelers account for 95% offtake of non-ferrous/ aluminium castings;

+ India as an export hub;

* Global original equipment manufacturers (OEMs) are promoting localization in India due to its cost
effectiveness;

+ Movements like "Make in India" augur well for the domestic castings industry;

+ Lighter vehicles consume less fuel. Lesser weight helps minimize brake and tyre wear and tear;

+ Automakers are trying to reduce vehicular weight by using non-ferrous metals like aluminium to cut carbon
emissions;

+ Cost competitiveness;

126
+ Employee cost accounts fro10-12% of the total turnover. Lower labour cost helps in reducing the production
cost for casting players; and
+ However, stringent quality norms tend to weigh on the overall cost.

Challenges

+ Variation in raw material costs;

+ Raw material costs form a major proportion of the total cost (~60%);

+ Price movements in raw materials are determined by international supply and demand dynamics, due to which
they fluctuate widely;

+ Moreover, changes in prices of raw materials are passed on to the customer with a lag of one quarter;

+ Aslowdown in demand coupled with a significant variation in raw material prices badly affects the bottom-
line;

+ Threat from low-cost manufacturers abroad;

+ The industry faces competition from manufacturers in other countries, viz., Thailand, Bangladesh, China, and
other emerging markets;

* Countries such as China offer faster deliveries and work on lower cost models, attracting international and
domestic clients;

+ However, due to in-house R&D, adoption of new processes, and campaigns such as “Make in India,” such
countries pose low threat to the auto castings players;

* Technological changes;

+ The government’s thrust on e-vehicles, light weight vehicles will lead to a significant change in auto castings
products. For companies to remain relevant, they will need to quickly adapt designs and processes; and

+ Shift towards usage of material such as plastics and composites in place of aluminum or iron will also impact
castings players.

REVIEW AND OUTLOOK OF INDIA’S POWERTRAIN MARKET

Powertrain and transmission market to accelerate up to fiscal 2024

The power train market is expected to clock 12-14% CAGR during fiscals 2020 to 2024. Fiscal 2021, though, is
expected to be affected by a drop in domestic demand as well as subdued exports owing to disruptions in the
economies caused by the Covid-19 pandemic globally.
Powertrain market to grow at a stable pace post a dismal FY21

1000

+ ~~ >> - SSDP - =~ --- ,

0)
&
e00
®
N
2400
3
3
$200

0

2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24
Source: CRISIL Research

The cost of key raw materials such as aluminium, iron, and steel will also have a bearing on the cost of powertrain
components. After rising at 5-6% CAGR from fiscal 2016 to 2019, domestic ex-factory aluminium prices crashed
12-14 % in fiscal 2020 as demand from the automobile sector was subdued on account of poor vehicle sales. In
the year-to-date fiscal 2021 period, aluminium prices have remain largely similar to average levels seen last year.

In the case of iron ore fines, though, after rising at 14-16% CACR from fiscal 2016 to 2019, domestic iron ore
prices plummeted 8-10% on-year in fiscal 2020 as steel demand remained subdued from automobile as well as
construction related segments.

127
Power and transmission

In automobiles, a powertrain generates power and transmits it to the wheels. It can be broadly classified into four
components — (i) engine and engine parts, (ii) transmission, (iii) driveshaft, and (iv) rear axle. The engine burns
the fuel to produce mechanical power. It comprises several critical components, including cylinder block, cylinder
head, and crankshaft, pistons, camshaft, and engine valves.

Cylinder block

Cylinder block is the supporting structure of the engine on which all engine parts are mounted. It houses the
cylinder, which gives engine its power. The cylinder block for commercial vehicles (CVs), off-road vehicles,
sports/multi-utility vehicles (SUVs / MPVs), and tractors uses cast iron. In fact, cast iron accounts for 55-60% of
the manufacturing cost, which weighs on the revenue of companies. The market size of the cylinder block for
CVs, construction vehicles, MPV/SUVs, and tractors was Rs 27.9 billion in fiscal 2020, which is expected to
reach ~Rs 40.6 billion by fiscal 2024.

Market share of cylinder block by vehicle segment (fiscal 2020: Rs 27.9 billion)

    

= Commercial vehicles =Tractors =SUV_ = Off road vehicles
Source: CRISIL Research
Cylinder head

Cylinder head covers the cylinder and helps the head gasket seal the cylinders in order to build enough
compression for the engine operation. Similar to a cylinder block, cylinder heads are also manufactured by the
process of casting using ferro alloys.

The current market size of cylinder head for CVs, construction vehicles, SUVs, and tractors is Rs 14 billion, which
is expected to reach ~Rs 18.2 billion by fiscal 2024.

Market share of cylinder head by vehicle segment (fiscal 2020: Rs 14 billion)

 

= Commercial vehicles = Tractors =SUV_ = Off road vehicles
Source: CRISIL Research
Transmission

Transmission is commonly known as the gearbox, which transmits power to the wheels through the drive shaft
and rear axle. Auto-component companies are engaged in casting, forging and machining of engine parts,
transmission parts housing, drive shaft, rear axle housing, etc.

128
Transmission is a set of gears within a casing that allows controlled application of the power using different gear
ratios. The switching of gears can be done manually by the driver of the vehicle or automatically, depending on
the type of transmission used in the vehicle. In India, manual transmission is used for CVs and tractors, while
automatic transmission is used for SUVs.

The current market size of transmission for CVs, SUVs, and tractors is ~Rs. 280 billion, which is expected to
reach ~Rs. 385 billion by fiscal 2024.

Market share of transmission by vehicle segment (fiscal 2020: Rs 280 billion)

 

= Commercial vehicles = Tractors =SUV = Offroad vehicles
Source: CRISIL Research
Rear axle

Rear axle lies between the wheels and the differential gear that transmits power from the differential to the wheels.
The differential gear and rear axle are enclosed in a single housing that is connected to the drive shaft. Auto-
component manufacturers use the process of forging/ castings, post which heat treatment and machining is done
for the finished product. The current market size of rear axle for CVs, SUVs and off-road vehicles is Rs 73.8
billion, which is expected to reach ~Rs 90.3 billion by fiscal 2024.

Market share of rear axle by vehicle segment (fiscal 2020: Rs 73.8 billion)

 

= Commercial vehicles =SUV_ = Off road vehicles
Source: CRISIL Research

Key players in powertrain and transmission manufacturing and machining across segments

FOR a a ew eee mere re EMO a

 

 

 

 

 

 

 

 

 

 

 

ass ees Pe INC ee CU ore ol tne

Avtec Lid.

Endurance Ltd. v

Jaya Hind industries Ltd. v V V V I
‘Sundaram Clayton V v V [

Alicon cast Alloy v v |

Ashok Iron works v Vv
Continental Engines N | V
DCM engineering Products v V V | Vv
| Hinduja Foundaries V v Vv | v
Nelcast v v
Kirloskar Ferrous Industries V V V V

 

 

 

 

 

 

129
 

Craft Automation Limited |
Source: CRISIL Research

   

Craftsman amongst the leading cylinder head and cylinder block machining players

When compared with the market size of the vehicle segments considered for this assessment, in terms of
production volume, Craftsman Automation Limited is the largest component manufacturer engaged in machining
of cylinder heads and cylinder blocks in the construction equipment industry as well as in the IMHCV segment
of the commercial vehicle Industry

While in case of the tractor Industry Craftsman is among the top 3-4 component manufacturers with respect to
cylinder block machining.

Commercial vehicle industry
Moderate growth for CVs industry in the long term

CRISIL Research has categorized the CV industry into medium and heavy commercial vehicles (MHCVs), light
commercial vehicles (LCVs), and buses to better analyses the dynamics within each of these key segments.

CRISIL Research expects sales of MHCVs, LCVs and buses, the three major CV segments to grow a combined
5-7% CAGR between fiscals 2020 and 2025, compared to 3.2% between fiscals 2015 to 2020.

Healthy industrial growth from fiscal 2022 to upshift revival

The Indian industry's gross value add (GVA) had been growing tepidly, averaging 5% between fiscals 2015 and
2020. After a weak fiscal 2021 owing to the Covid-19 pandemic, CRISIL Research expect industrial GVA to rise
rapidly between fiscals 2022 and 2025, driven by the government's focus on 'Make in India’. Moreover,
improvement in infrastructure and higher expected corporate expenditure is likely to revitalise the capital
expenditure cycle, post fiscal 2021.

Focus on infrastructure and increased mining activity to bolster tipper demand
Highway execution by the National Highways Authority of India is expected to stabilise at 10-11 km per day by
fiscal 2024, as against 9 km per day in fiscal 2019, aided by the Bharatmala project. Projects such as Sagarmala

and investments in various irrigation projects will further drive MHCV demand.

CRISIL Research expect coal production to expand at 4-5% CAGR between fiscals 2020 and 2024, while iron
ore mining will likely grow at a healthy pace during this period, aiding tipper demand.

Market share of powertrain and transmission segment-wise — fiscal 2020: Rs 524 billion

 

= Total commercial vehicles = Tractors =SUV = Construction equipment

Source: CRISIL Research

130
Factors putting the brakes on MHCV growth

Commissioning of DFC to restrict road freight growth and hence CV sales

The DFC is intended to help the Indian Railways regain lost freight share by cutting turnaround times between
importing and consuming destinations, influencing several industries to realign their logistics strategies. The DFC
and associated logistics parks can significantly reduce plant-level inventory, enabling huge savings in working
capital. Not only will the DFC bring about faster freight movement, but it will aid the economy by decongesting
major highways owing to the increased shifting of freight to rail. It will also allow for faster evacuation of cargo
from ports, improving efficiency. Thus, roads, which have outperformed rail over the past decade, will lose some
share to rail once the DFC is commissioned.

Tractor trailers (T-trailers) will be the most vulnerable to competition from the railways, following completion of
the eastern and western DFCs. These routes account for over 20% of pan India primary freight in billion tonne
kilometre (BTKM) terms. Container traffic (~65% of the western corridor) and bulk commodities (~89% of the
eastern corridor), which dominate the freight carried on these routes, are expected to shift to railways, thus
impacting sales of MHCVs, especially T-trailers.

In fiscal 2022, partial commissioning of the western DFC will connect Gujarat to North India; complete
commissioning of the DFC is expected by fiscal 2023. Movement of fertiliser from Gujarat to north India would
drive rail share from fiscal 20Y 22, affecting T-trailer demand.

ICVs to drive MHCV demand after GST implementation

After implementation of the GST, companies are transporting goods directly from manufacturing units to
consumption centres to a greater extent as central sales tax for interstate movement is no longer levied. This is
expected to increase the demand for ICVs in the long run as the typical load for such movement favours the use
of ICVs.

 

Segment GVW FY15toFY FY 20toFY FUT er eS
(tonne 20 Py
s)___Growth(%)__ Growth (%)
ICVs 75- | 7% 5-7% Warehouse consolidation translating into higher demand for
12.0 ICVs for movement of goods from warehouses to consumption

centres. Demand to be aided by e-commerce industry
purchases and improvement in consumption expenditure

 

MCVs 12.0- | (1) % 46% MCVs to be cannibalised by ICVs at spokes and MAVs at
(ex- 16.2 hubs.
tippers) Consumption sectors, such as FMCG/FMCD and e-commerce,

to be key for next 1-2 years, Auto carrier segment may start
gradually inching up post fiscal 2022. MAV tippers to grow at
a higher pace than MCV tipper

 

 

 

MAVs S162 | Gi% 15-17% Increasing popularity of hub and spoke model, and improved

(ex- road infrastructure to drive demand for higher tonnage MAVs;

tippers) owing to shift to higher tonnage MAVs and efficiency gains
due to removal of check posts and higher average speed

Tippers. [>125 [5% 10-12% Improvement in mining and construction over the long term to
prop up sales. Growth to appear higher due to low base in
FY20

Turailers | >16.2 | 5% 5-6% Increasing need for higher tonnage vehicles along with better

road infrastructure is expected to boost demand. However,
DFCs, once commissioned, would impact sales

 

 

Total 575 | % 8-10%

MHCVs

MHCV [>75_ | 0.4% (-1% ‘The segment may need over two years to recoup the lost
buses volume in fiscal 2021. While short-term demand is currently

driven by STUs, bulk of the new demand over the long term is
expected to arise from private operators, as STUs are
financially constrained and customers prefer private buses
because of better quality of service

 

 

 

 

 

 

 

131
Tractor industry

Domestic demand to grow at subdued pace over next five years on high base

CRISIL Research projects domestic tractor sales to expand at 3-5% CAGR during fiscals 2020 to 2025, after
factoring in 1-2 years of below normal monsoon in the period along with a decline in investment in Pradhan
Mantri Gram Sadak Yojana by 10% over the next five years, owing to the lower targets impacting commercial
demand.

Over next five years, the following structural factors will support the 3-5% CAGR:

e The government's target of doubling farm income by 2022 via initiatives such as e-NAM (National
Agriculture Market), expansion of crop insurance coverage, direct income support, and improvement in land
productivity via soil health cards. These measures should improve farmers’ crop yields and affordability, and
boost tractor penetration

« The government's renewed thrust on enhancing irrigation intensity and making the country more drought-
proof is expected to support agriculture growth and increase mechanisation. Irrigation investments to increase
at 4-6% CAGR during fiscals 2020 to 2025

¢ Custom-hiring centres are being promoted through government incentives. The trend is gaining ground in
Andhra Pradesh, Karnataka, Madhya Pradesh, Orissa, and Telangana. To be sure, Andhra Pradesh, Karnataka,
Madhya Pradesh, and Punjab are promoting such hiring centres through training, demonstrations and financial
incentives

« Tractor rental services made available on mobile applications by manufacturers, such as Farm by TAFE and
Trringo by Mahindra, to prop up demand for tractors in the long term. Global companies such as Hello
Tractors, in association with Aeris, a California-based technology company, is also planning to launch a pay-
as-you-use tractor service for Indian farmers.

Nevertheless, the following will crimp growth, relative to the past 6-7 years:

© — States such as Gujarat, Haryana, and Punjab have already reached high horsepower (hp) penetration; hence,
growth here will be restricted unless tractors penetrate small and marginal farm holdings;

¢ Going forward, high growth in minimum support prices is unlikely to continue in view of the central
government's fiscal constraints and fixing of inflation control emerging as the central pillar of economic
policy. Moreover, the cost of agricultural inputs such as seeds, fertilizers, and farm labour is rising, affecting
farmers' profitability;

e — Tractor exports to grow at moderate pace over five years;

« Export CAGR between fiscals 2020 and 2025 is expected to be moderate at 4-6% compared to a flattish
trajectory between fiscals 2015 to 2020, with Africa and Asia likely to remain the focal regions. Also, with
India emerging as an export hub for relatively small tractors (30-75 hp), and major companies increasing
focus on international markets with the launch of 90-120 hp tractors, CRISIL Research expect sustainable
export growth over the next five years.

Utility vehicle industry

Post 14-19% on-year projected decline in fiscal 2021, UV and van sales are forecast to grow a faster 13-15%
CAGR between fiscals 2021 and 2025, driven by continued shift in consumer preferences and multiple model
launches by manufacturers in this segment. The entry of new players in the UV segment is also expected to support
traction. Replacement demand is likely to rise as well, as car owners opt for newer models because of higher
affordability, competitively-priced launches, and easy finance availability.

The growth trajectory of compact UVs gained momentum in the last five years with aggressive pricing, premium
features as well as launches of petrol variants. The proportion of replacement demand will rise as car owners
become inclined to opt for newer models on account of higher affordability, competitively-priced launches, and
easy availability of finance.

132
Segment-wise automobile sales trend

Small Cars Large Cars UVs and Vans. Overall
20%

15% 12to 14% 13to15% 1210 14%
10% 8%

= a_i -
0%

5% -1%

 

to -2%
-10%

-15%
-20%
-25%

-30%
-35% -32 to -30 %

-15%
-20 to -18 % -20 to -18 % -20 to -18 %

mFY15-FY20 mFY21P mFY21-FY25P

Source: CRISIL Research

Underpenetrated market provides huge potential for cars and UVs

India's car market is highly underpenetrated compared with most developed economies and some developing
countries. As of fiscal 2019, India had ~23 passenger vehicles per 1,000 people. This is significantly lower than
developed nations and even nations in the BRIC block (Brazil, Russia, and China) when compared to GDP per
capita. Thus, the country holds tremendous potential for automobile manufacturers. Also, on comparing the
penetration of cars and UVs with GDP per capita across countries, India lags behind most countries, and, as such,
CRISIL Research expect the gap to reduce gradually, post the decline in fiscal 2021

REVIEW AND OUTLOOK ON ALUMINIUM CASTINGS USED IN POWER TRANSMISSION IN
INDIA

Overview

Power transmission is the bulk movement of electrical energy from a generating site, such as a power plant, to an
electrical substation. The transmission segment plays a key role in transmitting power continuously to various.
distribution entities across the country. Further, the transmission sector needs concomitant capacity additions, in
line with the generation capacity addition to enable seamless flow of power.

A reliable transmission system is important for the proper and efficient transfer of power from generating stations
to load centres. A transmission and distribution (T&D) system comprises transmission lines, substations,
switching stations, transformers and distribution lines. To ensure reliable supply of power and optimal utilisation
of generating capacity, a T&D system is organised in a grid, which interconnects various generating stations and
Joad centres. This ensures uninterrupted power supply to a load centre, even if there is a failure at the local
generating station or a maintenance shutdown. In addition, power can be transmitted through an alternate route if
a particular section of the transmission line is unavailable.

Transmission system components
The transmission system can be divided into transmission line component and substation component. Both
components account for almost 50% of the total cost of setting up the system. The transmission line component

comprises transmission line towers and conductors. The main cost elements of the substation component are
transformers and switchgears.

133
Transmission system components (cost share of different components)

Transmission line Substaton component
(50-55%) (45-50%)
‘Transmission Line
Omers
towers (TLT)- 33%) 3%)

Note: The percentage share of components is only indicative; actual investment incurred may differ from project to project.
Source: CRISIL Research

Transformers

Transformer helps in changing the voltage level, while transmitting electrical energy over long distances, to avoid
energy loss during transmission and make the required power available to consumers. Step-up transformers are
used to increase the voltage, while decreasing the current during transmission, and step-down transformers are
used to decrease the voltage while increasing the current, whereas distribution transformers are used to transmit
power to the end consumer.

Production of transformers

187
i | J. [J

FY16 FY20
7 Distribution transformers am Power tfanstormers

Million KVA

Source: Indian Electrical & Electronics Manufacturers Association (IEEMA), CRISIL Research

In fiscal 2018, transformers witnessed a sharp growth of ~16% on-year, supported by PGCIL ordering, as
expansion in rural electrification and transmission system received a boost through centrally funded schemes,
such as DDUGJY and IPDS, coupled with steady exports, particularly to Europe, Africa, and South America.
PGCIL ordering has been on a downward trend since fiscal 2018, impacting transformer production, especially in
fiscal 2020.

Switchgear
Switchgear refers to the combination of electrical equipment such as fuses, low- and high-tension circuit breakers,

miniature circuit breakers, control panels, and switchboards. However, the main equipment includes fuse switch
units and low- and high-tension circuit breakers.

134
The basic function of switchgear is protection, which is an interruption of short circuit and overload fault current,
while maintaining service to unaffected circuits. Switchgear also provides isolation of circuits from power
supplies. Switchgear is also used to enhance system availability by allowing more than one source to feed a load.

Circuit breaker is one of the most important components of switchgear, whose function is current interruption.
The circuit breaker is designed to ‘trip’ in the event of an overload or any type of fault or abnormality in the
system. The circuit breaker ‘senses’ the fault through a protection relay and triggers before damage can occur.

Various types of circuit breakers used are oil, air, gas, hybrid, and vacuum. Each type performs essentially the
same function, with the key difference being their operating mechanism. For example, an oil circuit breaker uses.
oil as a dielectric or insulating medium for arc extinction, while an air-based circuit breaker uses compressed air
to break the arc.

Growth drivers and challenges
Power demand to decline in fiscal 2021 due to Covid-19; revival likely from fiscal 2022

Power demand fell off the cliff in April-May 2020, as economic activity skid to a halt, because of the Covid-19-
induced lockdown. Industrial and commercial demand nosedived during the period, due to a nationwide lockdown
that brought all activities, except essential services, to a standstill, even as domestic power consumption surged,
as most of the population was forced to stay indoors. Agricultural activities, deemed essential to the economy,
continued uninterrupted through the lockdown, thereby insulating demand from the agriculture sector.

Power demand started recovering from June, as the nationwide lockdown was lifted, with a decline of ~16%
registered for the first quarter of fiscal 2021 after a fall of ~23% and ~15% in April and May, respectively. Partial
lockdowns and area-specific restrictions have prevented a full recovery in power demand. Industrial consumption
has been slow to pick up, as weak demand, supply chain disruptions, and labour availability issues have made a
smoother recovery difficult. Commercial demand has been hampered by extended closure of offices and
commercial retail spaces, as well as weak consumer spending amid health concerns and job losses. Domestic
demand remained on the higher side, due to increased usage of electronic devices by residents at home, especially
in summer, whereas agricultural consumption remained largely unaffected.

As the economy slowly switches on amid partial relaxations to the lockdown, power demand is gradually starting
to pick up to near pre-Covid-19 levels. With factories slowly restarting, industrial demand is expected to gradually
revive, even as issues, such as supply chain disruption, labour shortage, and additional burden of safety measures
are slowly ironed out. Power demand from the commercial segment is likely to be on the lower side for a few
months, as employers remain cautious about reopening offices, whereas commercial activities, such as retail,
entertainment, travel, and hospitality are expected to remain closed or witness lower footfalls over the rest of the
fiscal. Domestic power demand is likely to remain slightly higher as people stay indoors, aided by enablers such
as work-from-home, online education, and e-commerce. Agricultural consumption is expected to remain stable
due to its essential status, with the recent influx of migrant population likely to contribute to higher power
consumption in rural areas. Consequently, power demand is expected to fall by (2-4) % in fiscal 2021, with
reduced economic activity acting as a major drag, although domestic and agricultural demand could provide some
cushion.

Power demand is likely to rebound 7-9% in fiscal 2022, as the economy picks up with return to normalcy in the
post-pandemic environment and trickle-down effect of economic relief measures. In the long term, power demand
is expected to be supported by economic growth recovery, expansion in reach via strengthening of transmission
and distribution (T&D) infrastructure, and improved power quality, thereby registering a 3-4% CAGR over the
next five years.

135
Power demand outlook

  

3-4% CAGR
1600 9.0%
8.0%
1200
4.0%
-1.0%
400
1375,
1450-1500
oO ~6.0%
Fy15 FY16 FY17 FY18 FY19 FY20 FY21E FY22P FY24P
mmm Energy Requirement —®—y-o-y growth
Source: CRISIL Research
Factors impacting power demand
GDP
growth Govt. push to
manufacturing (Make

Transformation in India) and large

cal e scale infra (Smart

s omens re ca cities, DFCs, etc)

& ra

 

Ea T&D loss reduction Reduced S
3 Captive and off-grid Electricity So
FI RE generation Intensity Fy

Energy efficiency

Source: CRISIL Research

Gradual pick-up in GDP growth and infrastructure development to support power demand

India’s economy is expected to recover slowly post fiscal 2021, with a gradual pick-up in industrial growth over
the subsequent four years. Trickle-down effect of the Aatma Nirbhar Bharat relief package, government spending
on infrastructure through the National Infrastructure Pipeline (NIP), dedicated freight corridor (DFC)
infrastructure, service industry expansion, rapid urbanisation, and increased farm income from agri-related
reforms are key macroeconomic factors, which will aid a pickup.

136
Snapshot of infrastructure development projects

Smartcities and Make in india and Infra. development -
housing for all capital goods policy DFCs and Metros

Source: Industry Publications, CRISIL Research

 
 

Various government initiatives, such as Make in India, Smart Cities Mission, dedicated freight corridors, metro
rail projects and railway track electrification, are expected to boost infrastructural development in the country,
albeit in the medium to long term.

T&D network augmentation to support demand growth

With the government’s focus on alleviating congestion, transmission capacities are expected to witness robust
growth. About 330-350 giga volt ampere (GVA) transformation capacity (above 220 kV level) is expected to be
added between fiscals 2021 and fiscal 2025 to reach cumulative transformation capacity of 1,300-1,350 GVA by
fiscal 2025.

In particular, CRISIL Research expect robust growth in high voltage (HV) lines of 400 kV and 765 kV, due to its
importance in inter-state transmission lines.

Ultra-high capacity green energy corridors with expected investments worth Rs 430 billion

Thus, higher investments are expected in the transmission segment over the next five years (fiscal 2021-2025) in
the range of Rs 3-4.0 trillion compared with Rs 3.0-3.2 trillion invested over the past five years. This would result
in the widening of the transmission network, higher grid availability and improved power supply to all regions.
Thus, the expected improvement in T&D infrastructure, coupled with agricultural feeder separation and extensive
rural electrification under the Deendayal Upadhyaya Gram Jyoti Yojana (DDUGJY) will drive power demand
upwards over the next five years (fiscal 2021-2025).

Per-capita consumption to rise due to improved access to electricity

Electricity consumption per person rose from 1,010 kWh in fiscal 2015 to 1,181 kWh in fiscal 2019, largely due
to strengthening of the T&D network along with large capacity additions over the period. However, per-capita
consumption dipped to 1,148 kWh in fiscal 2020, as power demand growth slowed down, registering a CAGR of
2.6% for the past five years. T&D network expansion reduced the deficit levels as well as added the hitherto
unconnected areas to the electricity grid, providing electricity to more households and commercial and industrial
establishments. India’s per-capita electricity consumption is expected to grow at a relatively lower CAGR of 2-
2.5% between fiscals 2021 and 2025, primarily due to the decline in power demand in fiscal 2021. Per-capita
consumption is expected to gradually improve in the long term, as power demand picks up, due to the improvement
in access to electricity in terms of quality and reliability because of intensive rural electrification and reduction in
cost of power supply, resulting in realisation of latent demand from the residential segment. Consequently,
CRISIL Research expects per-capita electricity consumption to reach 1,270-1,320 kWh by fiscal 2025.

137
Investments to be focused on the T&D segment

CRISIL Research projects investments of Rs 9.5-10 trillion in the power sector over the next five years (fiscal
2021-2025). The share of generation, transmission, and distributions segments over the forecast period is expected
to remain largely unchanged, with similar investments across the segments.

Investments in the generation segment are expected to remain stable in the 35-37% range, despite lower capacity
additions, majorly due to higher nuclear capacities likely to be commissioned over the next five years, which are
costlier on a per MW basis. Investments in distribution are likely to be subdued in the short-to-medium term
because of ongoing financial stress among state utilities.

Segment-wise break-up of total investments

FY16-FY20 E FY21-FY25 F
‘Distnbutian,
Distntubon
es mh
Rs~8.4 Rs95-10
trillion trillion

Source: CRISIL Research

In the 13" Five-Year Plan (fiscals 2018 to 2022), the Ministry of Power has increased its focus on the T&D
segments through higher budgetary allocations, coupled with targets set under the UDAY scheme (ended March
2019). Though UDAY has ended in March 2019, state utilities were able to bring down aggregate AT&C losses
from ~21% as of March 2016 to ~18-19% as on March 2020 (estimated). However, post-UDAY, it is estimated
that AT&C losses have again started to rise (~27% as of June 2020), though the government is looking at longer-
term structural measures to mitigate the same. As a result, investments in the T&D segments are expected to
witness healthy growth over the next five years.

Transmission segment investments to rise to Rs ~3.3 trillion over the next five years

To service a large generation installed base, the estimated investment in the transmission sector is expected to be
~Rs 3.3 trillion over the next five years. Investments in the sector are expected to be driven by the need for a
robust and reliable transmission system to support continued generation additions and the strong push to the
renewable energy sector as well as rural electrification. Also, strong execution capability, coupled with healthy
financials of PGCIL, will drive investments. Moreover, rising private sector participation with favourable risk-
return profile of transmission projects will also support growth in investments. Transmission investments could
slow down in fiscal 2021 due to Covid-19 pandemic, but are expected to rebound strongly in the subsequent years.

Expected investments in transmission sector (2016-20 to 2021-25P)

3.1 3.32

 

FY16-20 FY21-25

Source: CEA, Planning Commission, CRISIL Research

138
Casting in power transmission

Industry to witness a decline in fiscal 2021; gradual pick-up expected from fiscal 2022

Housing of transformer core, circuit breakers of switchgears and casings of GIS substation are casted using ferrous
and non-ferrous material. Aluminium casted housing/ bus bars in switchgears are preferred in GIS, due to
aluminium’s non-corrosive and light-weight properties.

Demand for industrial castings from the power transmission sector is driven by investments of the Central and
state government transmission companies and, to a smaller extent, from the private sector for the medium-voltage
segment. In the power-transmission segment, switchgears are expected to account for the major share of casting
demand.

Demand for industrial castings used in power transmission grew at 2-4% CAGR over fiscals 2016 to 2020 to Rs
15 billion. There was some drop in investments in fiscal 2020 amid the economic slowdown. During fiscal 2021,
pandemic decelerated overall economic growth and pulled investment levels further down. The drop in investment
is expected to impact demand in the casting industry for the year. CRISIL Research expects a ~20% drop in
industrial castings market in fiscal 2021 to Rs 11-13 billion.

However, investments are expected to rebound from fiscal 2022, supporting demand in the casting industry. The
Industry is expected to reach Rs 18-20 billion, clocking a 4-6% CAGR during fiscals 2020 to 2024.

Industrial castings used in power transmission — demand outlook

2-4% CAGR
——_ >
iy 4-6% CAGR 18-20
16 ee “"l
16 15
14
- 11-13
S
=
a
a
FY16 FY17 FY18 FY19 FY20 FY21 FY24

Source: CRISIL Research
Increasing preference for GIS switchgears

Currently around 20-25% of the transmission substation switchgears are gas-insulated. The share of GIS
switchgears is expected to rise further to ~30% by fiscal 2024. Although GIS equipment are costlier than AIS.
equipment, considering the overall life-cycle costs, including running and maintenance costs, GIS equipment are
less expensive than the alternatives. Moreover, these GIS switchgears offer much superior performance.

With the rapidly increasing urbanisation, rising per-capita power consumption and growing space constraints, GIS
switchgears would be the preferred option due to their compact size. Additionally, a rise in the contribution of
renewable energy in power consumption will provide an additional kicker to growing GIS demand.

GIS-based casting demand grew at a 6-8% CAGR over fiscals 2016 to 2020 to Rs 2.4 billion in value terms.
Demand for GIS based castings is expected to accelerate at a 10-12% CAGR to Rs 3-4 billion by fiscal 2024.
Demand for GIS in volume terms will be higher in the MV segment, driven by the private sector, while high-value
GIS substations in the HV and EHV segments will be driven by the Central and state government transmission
companies.

139
Casting for gas-insulated switchgears — demand outlook

 

B78, CAGR 10-12% CAGR
SSS =" p> 3-4
26 26
24
23
oe) | 15-25
FY16 FY17 FY18 FY19 FY20 FY21 FY24

Source: CRISIL Research
Key Players

Financial performance of select aluminium casting players

 

 

 

 

 

 

 

 

 

 

] ls rail / 9372171478
Alicon Castalloy Ltd Revenue Rs million 10835.2, |
(Standalone) PAT Re‘iillton: 495.9 361.7 233
Vee J Pee Aluminum Revenue Rs million NA | ets 233.6
Foundry Pvt Ltd (Standalone) pap Remittion NA (21.7) 1.77
itl 10.7 10.1 108
Amar Founders Pvt. Ltd. Revenne | Rs million
(Standalone) PAT Rs million 0.12 0.21 0.22
7 261.5 250.8 226
Daichi overseas private limited Revenue Rs million
(Standalone) PAT Rs million 3.52 5.78 4.96
‘al 271.9 238.8 178.6
Alutech Foundry India (P) Ltd Revenue Rs million
(Standalone) PAT © Rs million 9.02 | 15.7 | 77

 

 

 

 

 

 

Note: PAT — profit after tax, FY20 data for unlisted companies is not available
Source: Ministry of corporate affairs, CRISIL Research

REVIEW AND OUTLOOK ON MATERIAL HANDLING EQUIPMENT (CRANES AND HOISTS) IN
INDIA

Introduction

Material handling equipment (MHE) are machines that enable movement and storage of materials within a facility
or site. Based on the weight of the materials carried, MHE can be classified as:

@ Unit load — Handle materials packed into a compact unit for movement and storage ease (for e.g.,
forklifts, cranes used to store units of materials)
(ii) Transport loose bulk materials such as iron ore, coal and cereals

MHE include equipment such as feeders, conveyor belts, screens, crushers and gears, etc., used for sorting, moving
or positioning materials.

Industry structure — cranes (and hoists)

140
A crane is a large machine used to move, lift and lower objects through a projected arm. Cranes are generally
equipped with chain hoists, wires, ropes, beams, etc., for material handling requirement. Industrial cranes, which

are used in general material handling and manufacturing, comprise overhead (including electric) and mobile
cranes.

Industrial cranes can be used for various purposes and provide cost economies in material handling. Some of the
typical uses include: heaping, loading-unloading, shifting, repositioning and erecting material. Other large cranes,
such as rough terrain, crawler, and tower cranes, are used in heavy duty work.

A hoist is a critical component of cranes, which enables handling of freely suspended objects. Typically, cranes
are installed with a hoist depending upon the load requirements. A few industrial cranes are also installed with
two hoists (less than 5%), to enable broader load ranges. Regular hoists that are fitted to industrial cranes are
classified into chain hoists, which have lower load range (up to ~3 tonne), and rope hoists, which can handle
heavier loads. These hoists comprise more than 80% share of the industrial cranes market.

Classification of cranes (and hoists) industry

Chain hoists
Hoists

 

Rope hoists
lorretyT

 

Ready crane kits

 

Source: Industry, CRISIL Research

Market size

Industrial cranes are sold by crane makers who buy crane parts such hoist, wheel blocks, LT panels, etc. separately,
assemble them to form a complete structure and sell. Hoists cost 30-40% of the overall crane pricing. They are
sold through dealers, which include crane makers, annual maintenance contract /replacement dealers. The life of
a hoist is 3-5 years, after which it is generally replaced by the end users. This is facilitated by hoist dealers. Some
30-35% of annual sales of hoists is on account of replacement demand, while the rest is for manufacturing of new
cranes.

According to CRISIL estimates, the hoist market in India was Rs 6-8 billion as of fiscal 2020. Among hoists,
chain hoists account for ~Rs 1-2 billion (one-fourth, in value terms), while rope hoists account for ~Rs 5-6 billion
(three-fourths). Unit-wise requirement of chain hoists is higher as they have a lower replacement cycle (3-5 years),
compared with rope hoists (and ready crane kits), which are usually replaced after 5-7 years.

Market for cranes (and hoists)

 

5-7% 24-26
——$§$<$<$<$_ >’
20 20
18-19
FY19E FY20E FY21E FY24P.

Hoists Other crane parts

141
Source: Industry, CRISIL Research

Amid the economic slowdown during fiscal 2020, demand for the underlying industries were hit, impacting the
demand for cranes. Demand volumes dropped 2-4% on-year, restricting the growth in the overall market.

Furthermore, the Covid-19 pandemic has hit major end-user sectors hard during the first half of fiscal 2021. In
turn, CRISIL Research expect the demand for cranes to shrink 5-7% in fiscal 2021, pulling the industry down to
Rs 18-19 billion.

Going ahead, with an expected improvement in the economy, as well as gradual demand improvement in
underlying segments, CRISIL Research expect the industry to reach Rs 24-26 billion by fiscal 2024, growing at a
compound annual growth rate (CAGR) of 5-7% between fiscals 2020 and 2024. This growth is expected to be
fuelled by continued investments in the end user segments, and in turn, capacity expansion by players to cater to
the sustained demand growth in the underlying industries.

Growth drivers

Pick up in key end user sectors to support growth

  
   

 

 

 

 

 

 

 

 

 

 

 

  

Cars & utility vehicles ag Improvement in economy, new launches, and financier support to back
- : __ passenger vehicle growth
Commercial [5:7 althy industri focu /
‘Tractors 46 Normal monsoon and government support |
Rural/ Semi urban markets to steer long term growth, but Covid 19
[ Gygwnedes a _ disruption o pose a sped breaker in FY21
“Metals | |
a = Affordable housing and infrastructure projects to back steel demand
~ Growth in ferrous castings, driven by auto and pipes sector
‘9 ‘ Investments in power transmission and distribution sector and
Aluminium & alumina 23
automobile demand
‘Power 3-5 Economic growth recovery, expansion in reach |

 

 

 

Note: Growth rates are for domestic industry
Source: Industry, CRISIL Research

Key Players

Summary of financials for key players

 

 

 

 

 

 

 

 

Cerny Company Long
—_ 853. 848.
aes  GeS Gee Revenue Rs million 1119 : i
(Standalone) | PAT Rs million 128 98 80 |
a 458
Giip Rnglneers Pot bed | Revenue Rs million 517 sil 45% |
(Standalone) | PAT Rs million 07 37 53 |
} a 457
Spardine Ecuipment Pyelid Revenue Rs million 836 554 * |
(Gtancalone) PAT Rs million 78 29 3
| ill 217.2
MM Engineers Pvt Ltd “Revenue Rs million NA 284.7 |
(Standalone) | PAT Rs million NA 19 46 |

 

 

 

 

 

 

Note: PAT — profit after tax, FY20 data for unlisted companies is not available
Source: Ministry of corporate affairs, Rating rationales, Company website, CRISIL Research

REVIEW AND OUTLOOK ON STORAGE SOLUTIONS MARKET FOCUSING ON RACKS,
SHELVES AND PALLETS USED IN THE WAREHOUSING INDUSTRY

Introduction

The storage solutions industry broadly comprises pallets, racking solutions and shelving solutions.

142
Shelving solutions are ideal for storage of assorted materials that are handpicked. Palletised racking solutions are
ideal wherein huge volumes of standard-type products are produced, stored, retrieved and distributed in and out
of manufacturing units or warehouses. Pallet Racks provide for manual as well as automated Storage & Retrieval

On the other hand, slotted angle racking, multi-tier racking systems, etc, are suitable for manual retrieval of
assorted materials.

Storage solutions industry

Slee eres ees

Shelves

 

Source: Industry, CRISIL Research
Market size
Goods and Services Tax (GST) implementation and growth across end-user industries to provide a boost
to storage solutions market

Pallet racking is an essential component of modern warehousing, manufacturing, retailing and other storage
systems. Pallet racks enable storage of materials on pallets, which are easier to use vis-a-vis manual operations.
Usage of pallets also makes loading and unloading convenient through the use of forklifts, and other material
handling equipment, which reduces time and improves efficiency.

The market sizing of the organized storage solutions industry, comprising pallets, racking and shelving, is
estimated at = 22 billion as of fiscal 2020. The industry grew at a compound annual growth rate (CAGR) of 14-
16% over fiscals 2016 to 2020. CRISIL Research forecasts the industry to marginally decline in fiscal 2021 on
account of disruptions due to the Covid-19 pandemic and the resulting impact on the supply chains of Indian
industries. Although going ahead CRISIL Research expects the industry to log 19-21% CAGR over the next three
years to reach 2 38 billion in fiscal 2024 from 2 21 billion in fiscal 2021, on account of incremental ambient
warehouse addition and rise in the share of organised warehousing players due to GST implementation.

Market size and outlook of the organized storage solutions industry in India
billion:
a piven)
35 &

30 - BS
25

20 R a
GI
62% CA
15 tenes ——©
Pz)

10 5

FY16E FY20E FY21P. FY24P.

Source: Industry, CRISIL Research

143
In addition to ambient warehousing industry, the growth in storage solutions is defined by end-user industries
such as e-commerce, organised retailing, consumer durables, auto components and pharmaceuticals as well as
cold storage industries.

Increasing formalisation in warehousing to be a boon for Indian storage solution players

Use of pallet racks, coupled with mechanised retrieval equipment or systems, also allows in optimising space in
warehouses. For instance, standard forklifts can lift up to 10-15 ft, while turret trucks can lift more than 30-40 ft.
High pallet racks can be installed at warehouses along with these equipment, which can improve the space
utilisation in warehouses.

The pallet racking and shelving market is highly correlated with the level of organisation in the warehousing and
manufacturing industry. With increased formalisation, advent of third-party logistics (3PL) and entry of global
players in warehousing space, the pallet racking and shelving market will accordingly increase. Other enablers for
modern storage solutions such as mezzanine, compactors and goods lift, will also get a boost through the same.

Market characteristics
Provided below is the market breakup for the storage solutions industry across different parameters.
Organised vs unorganised

Share of organised players is expected to increase over the next three years on account of requirement of
customised products. However, the slotted angle racking and multi-tier racking systems witness intense
competition due to the large presence of unorganised players.

Different types of storage solutions are used across factories, warehouses, offices, hospitals, libraries, research
and development centres, banks, defence establishments and retail centres. Depending on the segment’s
requirement, various types of storage solutions such as automated storage and retrieval system (AS/RS) racking,
very narrow aisle racking, multi-deep radio shuttle racking, motorised mobile racking, gravity flow racking, drive
in racking, heavy duty pallet racking, mezzanine floor, long span shelving systems, slotted angle racking, mobile
compactors, cable drum racking and steel pallets are used.

Organised players’ share under storage solutions (FY20E)

   

% terms

Unorganised mix

beh ols (i)
Organised mix

Source: Industry, CRISIL Research
Usage: End users

Among the users of storage solutions, warehousing and 3PL players occupy the majority share. 3PL applications
typically comprise of ambient industrial warehouses, which exclude captive warehouses.

144
Share across end users (FY20E)

% terms

  

ES
alone
indu:

storages

50-60%
3PL

Source: Industry, CRISIL Research
Usage: Type of solutions

Shelving solutions are ideal for storage of assorted materials that are handpicked. The solutions can be customised
for light to medium weight materials that are voluminous in nature. Shelving solutions are used across engineering
and retail (supermarkets, apparels, etc) warehouses; in hospitals, hotels, banks, and financial institutions; and in
automobiles, logistics and record and data management sectors.

Typically, static shelving systems are used as they are inexpensive to purchase and install compared with mobile
shelving. But static shelving is less feasible in case of space constraints, while mobile shelving can be adapted to
customised requirements. Static shelves are usually very strong and have high load bearing capacity.

Palletised racking solutions are ideal wherein huge volumes of standard-type products are produced, stored,
retrieved, and distributed in and out of manufacturing units or warehouses, for instance, fast moving consumer
goods (FMCG) industries (like pharma, bulk drugs, beverages, foodstuff and electronic products). Hence, 3PL.
warehouses and regional distribution hubs for manufacturing industries are expected to drive growth for palletised
racking. Palletised racking is expected to lead growth on account of strong demand from 3PL warehouses and
regional distribution centres due to GST-led consolidation.

Slotted angle racking, multi-tier racking systems, etc, are suitable for manual retrieval of assorted materials such
as records, cartons, printed packing materials, stationery, pharma products, cosmetics, toiletries and other
consumables.

Shelving industry occupies higher share in volume terms (FY20E)

% terms

 

Note: Others include mezzanine flooring, wooden pallets, etc.
Source: Industry, CRISIL Research

145
AS/RS solutions
AS /RS racking is gaining prominence on account of the following:

« AS/RS can be used across consolidated and modernised warehouses. It is based on computer-controlled
methods for automatically placing and retrieving loads from specific storage locations

e AS/RS is typically used in applications involving moving very high volume of loads into and out of storage,
and storage density is important because of space constraints

Organised players have the capability to customise storage solutions according to client requirements, which
unorganised players are not capable of. Hence, organised players are growing faster on account of higher
realisation, better product and client mix, and larger volume.

Growth drivers
Warehousing industry
Warehousing industry to see high single-digit growth starting next year

Warehousing (captive and 3PL warehouses) occupies more than 50% share of the storage solutions industry. After
a sharp drop of (12) to (10) % in fiscal 2021 in industrial warehousing demand due to Covid-19 led disruptions,
CRISIL Research expects industrial warehousing to log 8-10% CAGR in volume terms over fiscals 2021 to 2024
and reach 1.7 billion sq. ft from 1.3 billion sq. ft. Organised industrial warehousing players are expected to grow
at a faster pace in value terms as end users capitalise on the synergies created by GST implementation.

Industrial warehousing to grow at 8-10% CAGR

2.0 Billion

46 saft ee Biovioy, eee

g-10% CAGR
5% CAGR
10

0.5
ied es} 1.3 ir

 

FY16 FY20E FY21P. FY24P.

 

Source: Industry, CRISIL Research
Palletised racking demand under storage solutions to lead growth

Going forward, over fiscals 2020 to 2024, CRISIL Research anticipate the mix between shelving and palletised
racking to remain broadly similar, as strong growth in end-user industries would drive growth in both these
segments.

Growth in shelving solutions will be predominantly driven by end-user industries namely e-retail and organised
retailing (physical platform), which is expected to grow at a healthy pace over the next three years. E-retail
industry is expected to clock 17-22% CAGR during fiscals 2020 to 2023, whereas the organised retailing industry
(physical platform) is likely to grow at 4-6% CAGR.

Growth in racking solutions is largely driven by 3PL players, which CRISIL Research estimates to have grown at
12-14% CAGR from fiscals 2017 to 2020.

End-user industries — Growth

   

ae fomityy
Puy
CRISIL Research projects the Indian e-commerce sector to clock 17-22% CAGR
E-retail ~30% between FY20 and FY23. Consumption slowdown following the Covid-19 pandemic

 

 

 

 

will impact demand in FY21, especially in the first quarter. While CRISIL Research

 

146
 

can witness slower growth in low single digit in FY21, CRISIL Research expect growth
to bounce back in the medium term

The organised retailing industry is expected to grow at a lower 8-10% during FY20 to

FY24 on account of a significant decline in FY21. However, post FY21, the sector will
~19% grow on the back of new store rollouts, increased penetration in Tier 2 and 3 cities and

increasing disposable income. GST implementation is also expected to bear fruit in the

long term to drive market share gain for organised players

Increasing formalisation in the logistics market, including warehousing and
3PL 12-14% transportation, is expected to aid this segment to grow at double digit levels in the near

to medium term

Organised retail
(physical)

 

 

Source: Industry, CRISIL Research —

Low rental rates and good connectivity to consumption centres to prevent any shift in key hubs post Covid-
19 in the near term

CRISIL Research’s analysis indicates that the GST implementation had led to consolidation of the warehousing
sector, driven by the consumer durables and FMCG industries. Post GST, companies are realigning their supply
chains for market efficiencies, and not for tax efficiencies anymore. Large format, technology-enabled warehouses
are preferred by corporates, leading to multi-user spaces with cost and scale efficiencies for 3PL players, who also
provide value-added services.

GST has triggered the consolidation of fragmented warehousing operations into fewer and larger warehouses.
Advances in technology, particularly automation, are pushing up the need for end-to-end logistics services. As a
result, the Indian warehousing segment is witnessing a favourable structural shift with a rise in demand for modern
warehousing.

CRISIL Research’s interactions with market participants indicate that GST-led consolidation has been adopted by
70-75% of consumer durable players, which led to a reduction of 15-20% in the number of warehouses required
with the smaller unorganised warehoused being hit harder. Players closed down captive warehouses/ distribution
centres in cities and now store products in mother hubs outside consumption centres. Lower rentals on the outskirts
have led to a 40-50% reduction in warehousing cost.

While some players have completely transformed their supply chain to benefit from the GST, some players are
executing it in phases and are yet to complete the transition and/or waiting to learn from other players who have
executed the same.

Consolidation of warehouses has occurred across the distribution leg of the value chain, where players have
decreased the number of small warehouses. Also, players in the consumer durables industry have started
incentivising large traders who take direct delivery from manufacturing, further reducing the need for warehousing
space.

Maximum consolidation has been estimated in the consumer durables space, followed by FMCG, owing to the
higher turnaround time (TAT) of ~48 hours for the former, in comparison with 24 hours for the latter.

In the FMCG sector, though, consolidation has been slower, as FMCG players continue to operate close to
consumption centres, as they did in the pre-GST era, due to the of need for on-shelf availability and lower TAT.
Industry participants indicated that FMCG players are maintaining close to 50% active inventory at their
distribution legs in order to service demand. Full potential of GST consolidation has not yet been realised due to
infrastructure bottlenecks.

Players across segments have witnessed a 15-20% reduction in inventory days and similar reduction in
transportation time post-GST.

147
Consumer durables witnessed bulk of the consolidation, followed by FACG

Reduction in no of

Parameters Reduction in cost warehousea
Consumer durables 40-50% 50-60%
FMCG 10-15% 15-20%

Source: CRISIL Research

However, with the economic slowdown caused by the pandemic and subsequent lockdowns resulting in lower
consumer discretionary spend, the consumer durables industry has been one of the hardest hit and is expected to
witness a decline of 15-17% in terms of volume, in turn pulling down warehousing demand from the same in
fiscal 2021.

Multi-modal logistics parks (MMLPs) — An opportunity for organised players

MMLP refers to a hub providing integrated logistics facilities with mechanised handling and inventory
management. However, there is no regulatory definition for MMLP in India yet.

MMLPs are being designed to act as one-stop solutions with facilities such as customs clearance services,
warehouses, cold storage, vehicle parking, and other value-added services.

At present, MMLPs are planned at numerous locations across the country by different ministries. The development
of MMLPs was initially proposed by the Ministry of Railways along dedicated freight corridors (DFCs) in 2009.
Following suit, 15 MMLPs were announced by the Ministry of Shipping under Sagarmala and 35 MMLPs by the
Ministry of Road Transport and Highways under Bharatmala in 2015.

However, on-ground execution of the project has been slow. MMLPs suffers from issues such as lack of standard
definition and involvement of multiple ministries.

To reduce the gap between planning and execution, the government has suggested creation of a MMLP authority
in its National Draft Logistics Policy. This centralised agency will oversee the planning and development of these
parks.

As per the project guidelines, the land to develop MMLPs is to be provided by the respective state governments,
while the connecting rail, port and railway connectivity will be ensured by the respective ministries. Private
players such as 3PL players or logistics service providers have been invited to develop and operate the
infrastructure, which could act as an opportunity for expansion of organised players.

Infrastructure and tax reforms

Government support for infrastructure and tax reforms among other growth drivers for industry

 
    
  
 
 
 
 
 
   
  

Infrastructure initiatives
Streamlined infrastructure loads to etficiency gains
and improves competitiveness. Intiatives as.
MMLPs, DFC, status of infrastructure to logistics,

food processing centres etc. This will improve
logistics compatitenss of the country

End user industries:
Consumption oriented sectors account for
Significant portion of demand, like FMCG, FMCD

ey)
Warehousing

 
  

st.
GST will result in warehouse consolidation, leading

to reduction in inventory and thus reduction in
overall logistics cost for players

EXIM growth:
EXIM traffic. particularly, for containers and non-
bulk goods §s also a major contributor

 

Source: Industry, CRISIL Research
Note: FMCD: Fast Moving Consumer Durables

148
e Many businesses have already been revisiting their supply chain decisions post-GST implementation. This
may give a major impetus to the logistics industry at the pan-India level. Many companies are expected to
migrate from the current strategy of ‘multiple warehousing’ to the ‘hub-and-spoke’ model as tax treatment
across India will be the same. It would lead to aggregation of state-based warehouses into large regional
warehouses that would offer cost and operational efficiency

e With the consolidation of warehouses, logistical inefficiency declines, the hub-and-spoke model (centralised
distribution system feeding smaller distribution centres) proliferates and service levels improve. From now
on, most business decisions will focus on supply chain efficiency, and not on state-wise tax arbitrage. This,
in turn, may lead to a major business opportunity for organised warehousing players operating large-sized
warehouses in key geographies. The share of organised industrial warehousing players is expected to increase
as they are in a position to leverage the demand for large warehouses that springs from the consolidation due
to GST implementation

e The government’s infrastructure initiatives such as DFCs and industrial corridors across India will support
the warehousing requirement across key locations.

- The development of various industrial corridors such Delhi-Mumbai, Bengaluru-Chennai, Mumbai-
Bengaluru, Amritsar-Kolkata and Vizag-Chennai will help build an efficient industrial infrastructure and
logistics ecosystem across key warehousing locations

- For instance, the development of a DFC from Vasai in Mumbai to Dadri in Uttar Pradesh will support
existing warehousing locations such as Mumbai and NCR. Dadri is within 50-100 km from Ghaziabad
and Gurgaon, key warehousing locations across NCR.

Intense competition, poor connectivity and lack of skilled manpower are major inhibitors for warehousing
industry across India

Warehousing industry is largely fragmented with unorganised players occupying majority share in volume terms.
However, GST implementation will increase the share of organised players in the medium term. Organised players
largely develop pre-engineered building warehouses and provide value-added services, which fetch higher rentals,
compared to the offerings by unorganised players.

Another issue is the lack of land availability with proper infrastructure connectivity. However, the government is
working on connecting key warehousing hubs across India by industrial corridors or DFCs to facilitate the cargo
movement across the country, as majority freight movement in the country is undertaken via road. Development
of industrial corridors is expected to enable proper road infrastructure such as four lanes and lanes to reduce the
transit time. Moreover, lack of skilled manpower in the industry poses a challenge as there are no additional
incentives for the labour.

E-retail to clock CAGR of 17-22% in medium term

CRISIL Research projects the Indian e-commerce sector to clock 17-22% CAGR between fiscals 2020 and 2023.
Consumption slowdown following the pandemic will impact demand in fiscal 2021, especially in the first quarter.
While the sector can witness slower growth in low single digit in fiscal 2021, CRISIL Research expect growth to
bounce back in the medium term.

Cold storage

TCW demand to propel over next 3-4 years

Going forward, the cold chain industry is expected to log 1-3% CAGR (in volume terms) to reach ~37 MT by
fiscal 2025, driven by 6-8% CAGR growth in multipurpose cold storage volume, which accounts for ~33% of the
total TCW volume, at present. In the long run, demand will be driven by dairy products, pharmaceuticals, fruits
and vegetables, and growth of quick service restaurants. Export of meat and seafood too will keep demand
buoyant. Within the multipurpose segment, organised players (accounting for less than 10% of the industry) are
expected to grow faster as key end-user segments prefer them owing to stringent quality requirements and
regulations.

149
Growth in TCW segment to dip in FY21 amid the pandemic; recovery to be gradual
(Million MT)
40
35 | eee
30 nl 43%
25 mee CAGR CAGR
20
15
10

5
0

 

FY15E FY20E FY21P FY25P.
Source: CRISIL Research

Key commodities stored in organised multipurpose cold storages (FY20E)

Were Varc tare oLo10 tay
27.50%

Seafood,
12.50%

   

Dairy products, 4%

Source: CRISIL Research

Dipping end user demand to result in fall in TCW (multipurpose) demand

@ meat

+

 

@ seafood
@ Fruits
@ others

 

<— Share in multipurpose cold storage

 

_———_ Impact of Covid on sectors. ———_>

150
Multi-commodity cold storages to gradually gain volume share

FY20E FY25P.
Others, 2% Others, 2%

  

Note: Multipurpose cold storages are where potatoes, fruits and vegetables, meat, fish, etc, can be stored at the same time.
Source: Industry, CRISIL Research

Key Players

Key players include Nilkamal BITO Storage Systems Pvt Ltd (NBSL), Godrej and Boyce Manufacturing
Company Ltd., Maximaa Systems Ltd., Mangal Industries Limited, and Armes Maini Storage Systems Pvt Ltd.

REVIEW AND OUTLOOK: DOMESTIC GEAR AND GEARBOX MARKET IN THE NON-
AUTOMOTIVE INDUSTRY

Introduction to gears and gearboxes

A gear set or gear pair is a mechanical device, commonly utilised to increase the output torque or change the speed
(measured as revolutions per minute or rpm) of a prime mover. A gearbox is an assembly of several such gear
pairs, counter shaft, main shaft and bearings enclosed in a metal housing. A geared motor is an assembly of a
gearbox and an electric motor.

A gearbox is attached with a prime mover on one end and equipment to be driven on the other end. Prime movers
are generally electric motors. Rotational speed as well as torque output of gearbox is a function of gear ratio. Gear
ratio is defined as the correlation between the numbers of teeth of two different gears forming a gear pair.

High output torque can be achieved with a design that has a higher gear ratio and vice versa. A high output speed
can be achieved with a design with a lower gear ratio and vice versa. Therefore, both torque and speed are inversely
proportional to each other.

Gears are manufactured typically through a three-stage process: hobbing, hardening and grinding. Hobbing is a
machining process for gear cutting, and cutting splines and sprockets on a hobbing machine. Hardening can be
either through hardening or surface/ case hardening. In case of hardening, the surface of the gear is harder than
the core. Hardening is done to increase wear resistance and durability of rotating parts. Grinding is a finishing
process to remove the distortion of tooth surface, after the heat treatment operation to obtain a predetermined
quality of the gear. Gear grinding is done to meet the exact requirements of form, dimension and surface texture.
This gives a very high degree of dimensional accuracy. Case hardened and profile ground gears, in particular,
have the ability to deliver higher torque and efficiency.

Domestic industrial gear and gearbox market

Demand was lackluster up to fiscal 2018; to accelerate up to fiscal 2022

CRISIL Research estimates the domestic market for industrial gears and gearboxes to have clocked a compound
annual growth rate (CAGR) of 4-5% from ~Rs 39 billion in fiscal 2015 to reach ~Rs 50 billion in 2020. CRISIL

Research forecasts the domestic industrial gear and gearboxes market to record 5-6% CAGR over fiscals 2020-
2024 to reach Rs 62-64 billion in fiscal 2024.

151
Domestic gears and gearboxes

90.0 Rs billion

 

 

80.0
70.0 62 to 64
- — CS - - - >
60.0 ” 49 2
50.0 45 40 to 44
39
40.0
30.0
20.0
10.0
0.0
FYIS FYI6 =-FY17»s-FY18. = FY19.—s FY20_—sFY21P. FY24P

Note: Includes gear boxes, geared motors, loose gears and other components such as gearbox housing, etc.
Source: CRISIL Research, industry

Wind power projects, conventional sectors such as cement and steel are key end-users

In the past, demand for gears and gearboxes was driven by the execution of 16.6 GW of wind projects as well as
Rs 2.04 trillion invested in the Indian Railways during fiscals 2015-2019. Demand from wind projects, in
particular, picked up significantly between fiscals 2015 and 2020, owing to 56% jump in wind capacity addition
in fiscal 2017.

Demand from conventional sectors such as power, steel, cement and mining remained low owing to lack of major
capital expenditure (capex) investments over fiscals 2015-2020. Demand from thermal power dropped because of
lack of new capacity additions because of a shift in the government’s focus towards renewable energy sources
such as wind and solar.

Contribution of wind power dropped in fiscals 2019 and 2020, due to slowdown in wind power capacity addition
compared with robust wind capacity addition in fiscals 2016 and 2017. The wind sector’s share in gear and
gearboxes dropped from 25% in fiscal 2017 to ~13% in fiscal 2019 and 15% in fiscal 2020.

Conventional sectors (cement, heavy metals, power, and mining) collectively constituted 55-60% share in fiscal
2020. Share of the conventional sector rose in fiscal 2019, as a result of capacity additions in cement, steel and
infrastructure segments. Other sectors such as railways, fertilizers, textiles, chemicals, printing, packaging, plastic,
cranes, defence, etc. contributed the rest. Gears used in elevators, plastic extrusion, printing machines are
estimated to account for 5-10% of the gear and gearboxes industry.

Intensity of gears and gearboxes differs across applications, depending on the processes and material handling
requirements. For a given application, gearbox requirement changes substantially as per the plant configuration
(capacity, plant design, etc.).

Indicative gear and gearbox intensity across applications

 

 

 

 

 

Cement ‘1 MTPA (48-535
Steel LMTPA 30-35 _
‘Thermal power 1 MW 0.4-0.45
Sugar 1 TPH 25-28
“Wind Jo MW 30-40

 

 

Source: CRISIL Research, industry

152
Application-wise domestic demand for gears and gearboxes in fiscal 2019 (Rs 48.5 billion)

      
    

Ve
a)

lm Wind power

@ Material handling

Bein Cement

m Conventional power

m= Metals

Note: Others include elevators, printing machines, plastic extruder, rubber, chemical, pharma, plastics, marine, crane,
packaging, etc.
Source: CRISIL Research, industry

Over the forecast period, wind power is expected to continue to drive demand for gearboxes over fiscals 2020-
2025. CRISIL Research expects wind power capacity additions over the period at 15-17 GW compared with 15
GW over fiscals 2014-2019.

Demand for gears is expected to be robust from the material handling equipment required for slew of infrastructure
projects including roads, metro construction, river-linking and railways over the forecast period. Demand from
these sectors is expected to increase at 4-5% CAGR. In addition, increased mining activity is expected to support
gear and gearbox demand over the forecast period.

Demand from new conventional power projects is expected to remain lackluster due to the shift in focus towards
renewable energy till fiscal 2023. Demand from new steel and cement plants is expected to remain benign due to
lesser pace of capacity additions over fiscals 2019-2023 compared with the past five years. However, investments
in long steel products capacity and orders from the defence sector are expected to support demand for gear and
gearboxes.

Geared motors outpace gearbox growth owing to convenience in commissioning

Gearboxes accounted for 54-56% of the total gears and gearboxes market in fiscal 2020, followed by geared
motors with 24-26% share. The balance 19-21% belonged to loose gears, gear box housings and coupling
products. Demand for geared motors increased at 8-10% CAGR and for gearboxes at 6-8% CAGR between fiscals
2015 and 2020. Geared motors have seen growing preference owing to plug-and-play design vis-a-vis gearboxes,
which requires installation of electric motors separately. Geared motors are particularly preferred in <125 kW
power output applications. Loose gears primarily find applications in railways and textile machinery, and as a
replacement product across all industrial applications.

Component-wise domestic demand for gears and gearboxes in fiscal 2020 (Rs 49.7 billion)

Gearbox,
54-56%

Geared
Titel olson
PAs

 

Source: CRISIL Research, industry

153
Helical/ bevel-helical gears dominate the market

Helical/ bevel-helical gears dominated demand for gears with 58-60% share in fiscal 2020, owing to its high
efficiency and maintenance-friendly operation. These gears clocked 7-8% CAGR in the past 5 years, replacing
worm gear applications.

Planetary gears account for 27-29% of demand, with wind, sugar, and material handling equipment as major
applications. These gears clocked 7-9% CAGR between fiscals 2015 and 2020. The sugar industry particularly
moved from helical to planetary gears for better crushing and power saving. Planetary gears are also preferred in
plants with space constraints.

Worm gears form 10-15% of the demand, with cranes, elevators, and escalators as major applications. This
category has been losing share, de-growing because of its lower efficiency.

Over the forecast period, the worm gear market is expected to continue to de-grow at negative 6-8% CAGR due
to higher efficiency of helical/ bevel helical and planetary gears. Helical/ bevel-helical gears are forecast to register
8-10% CAGR, whereas planetary gears are likely to post 11-13% CAGR, driven by growing acceptance of
planetary gears.

Competing gearless technologies such as direct drive systems, hydraulic, and electromagnetic drives are not likely
to be a threat to the gear and gearboxes industry over fiscals 2020-2024, due to factors such as lack of economic
viability, maintenance capability, durability and reliability.

Import substitution drives customised demand

Customised gears and gearboxes form 20-25% of demand, while standardised or catalogue products form the rest.
Customisations in terms of box housing, mounting, gearing train, and changes to shafts fall under the customised
gear and gearbox market. Substitution of imports by locally customised products has driven demand in this
segment. Wear and tear replacement of spares in imported machinery by industrial users is also a contributor. The
share of customised gears in the gear and gearboxes market is, however, likely to remain stable over fiscals 2019-
2023.

Imports form ~35% of demand

Foreign players are primarily engaged in import of components and local assembly of gearboxes and geared
motors. They dominate the geared motors segment, whereas domestic players dominate the gearboxes market.

The market is fairly organised and competitive

The market for gears and gearboxes is fairly organised and competitive, with the top 15 players commanding
~70% share. The unorganised segment accounts for 8-10% of demand, largely catering to loose gears demand in
textiles and crane applications. Elecon Engineering, Premium Power Transmission, Shanthi Gears and New
Allenberry Works are key Indian players. Major foreign players include ZF Wind Power, Bonfiglioli
Transmission, Siemens, SEW and Nord Drive Systems. The windmills sector is particularly dominated by foreign
gearbox manufacturers.

Key drivers for Indian gear and gearbox markets

Steel sector demand to grow at subdued pace between fiscals 2020 and 2024

The domestic steel industry rose a moderate 1.4% on-year in fiscal 2020, supported by a 3.3% on-year rise in non-
alloy steel demand. In contrast, alloy steel demand plunged ~21% on-year on account of declining automobile
production. Also, demand for flat steel fell ~3% on-year, whereas that of long steel rose 5.5% on-year. The Covid-
19 has created the perfect storm for an economy that was anticipating a mild recovery in fiscal 2021. Along with
external factors, such as weak global demand, supply chain disruptions, and worldwide financial shocks, the
economy has been buffeted by lockdowns, factory shutdowns, reduced discretionary spending, and delayed capex
cycle. These are affecting construction activities and automobile production, and thereby, steel demand.

154
Year-wise steel demand trend

 

 

120 15.0%
8.0% 8.8%
100 is 10.0%
80 5.0%
0.0%
60
-5.0%
‘a -10.0%
20 (20)to(17)% FARR, -15.0%
0 -20.0%
Fy13. FY14 «FYIS «~FYI6.«FYI7«-FYI8. = FYI9.««FY20_—«FY2IP FY24P

mmm Steel Demand (MTPA) —=®=% growth y-o-y
Source: JPC, CRISIL Research

Construction to continue dominating steel’s end-use mix

Steel demand end-use mix

Steel demand from B&C accounts for 35-40% of the total steel demand. While, in the near term, B&C demand
will be weak, with affordable housing being the only saviour, over the medium term, the housing market will see
soft revival, led by rural housing, affordable housing, and commercialization of tier III/V cities. On the other hand,
the real estate sector is expected to remain weak amid the pandemic. Growth in the industrial segment is also
expected to be muted.

Share of steel Growth in Growthin Growth in

consumption FY20 FY2IP FY22P
Building & construction 36-40% (20% © (20-25)% © 8-10%
Infrastructure 25-30% 35% = (10-12% 12-14%
‘Automotive 10%  (16-18)% — (20-25)% 17-19%

 

Source: CRISIL Research

Over the long term, though, the prospects seem bright. The government has targeted 10-12 million urban and 29.5
million rural houses in seven years under the Pradhan Mantri Awas Yojana. Overall progress was 30% in urban
housing as of March 2020, with 3.3 million houses constructed. In rural housing, 10 million, i.e. 65% of the target
houses (second phase target of 16 million rural houses), have been completed.

Infrastructure segment to lead steel demand

The infrastructure segment is currently the second-largest segment, in terms of steel offtake, comprising 25-30%
share in overall end-use mix. However, within infrastructure, the roads and highways sector is expected to take a
mighty blow from the nationwide lockdown to contain the pandemic, which has pushed back a much-anticipated
economic recovery this fiscal by bringing to a standstill movement of people and goods, and all major industries
in the first quarter. While the government’s announcement to restart work on all national highways is a step in the
right direction, CRISIL Research’s interactions with stakeholders indicate it will be some time before normalcy
returns. Also, in fiscal 2021, execution is expected to decline on account of low awarding in fiscal 2020.

While fiscal 2021 will see declining progress in infrastructure activities, long term drivers remain intact.

155
Long term drivers intact

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Among large players, planned expansions include Tata Steel’s Kalinganagar plant by 5 MTPA as well as JSW
Steel’s Dolvi plant expansion of 5.7 MTPA along with Vijayanagar plant expansion of 6 MTPA by fiscal 2025.
Also, while the NMDC greenfield project at Nagarnar, Chhattisgarh has been facing delays on account of issue
with regard to statutory clearances, controversy on right use of water pipeline, skilled manpower availability, and
delay in a package due to non-completion of other linked activities. It is expected to come on-stream by in 2022.

Vedanta is expected to add 1 million tonne of steel capacity at Electrosteel Steels by fiscal 2023, as well. However,
there has been a delay in capex due to Covid-19. Further, several global steelmakers have been working with
PSUs and domestic private players to set up joint ventures. Additionally, land parcels have been allocated to JSW
for setting up a 12 MTPA steel plant. However, the project is in the planning stage and has not achieved significant
progress.

The mentioned capacity additions exclude SAIL’s RSP expansion of 6.8 MTPA, Kadapa Steel expansion,
Electrosteel Steels plan of expanding to 7 MTPA (only 2.5 MTPA considered above), and Am/NS addition of 2-
5 MTPA as these proposals are still in the planning stage.

Material handling equipment demand to stay near static till fiscal 2023

Demand for material handling equipment (MHE) is derived from capacity addition in key end-user segments,
including automobiles, cement, mining (coal), oil and gas, petrochemicals, ports, power generation (coal), steel
and warehousing, which comprise ~90% share.

MHE demand is estimated to remain range bound during fiscals 2020 to 2023, at Rs 1,100-1,150 billion, vis-a-vis
Rs 1,145 billion between fiscals 2016 and 2019. Among the major contributors to MHE demand, demand is
projected to slow down from the power generation, automobile and steel industries. In turn, capacity additions
and investments in the MHE space are expected to slow down. A further weakening will be truncated by
accelerating demand from the oil and gas, warehousing and cement industries.

Cement sector growth

Infra investments and affordable & rural housing to drive cement demand till fiscal 2023

Cement demand to GDP multiple dropped to (0.5) in fiscal 2020 and slipped into negative territories for the first
time because of demand falling 2% on-year coupled with the economic slowdown in fiscal 2020 with GDP growth
pegged at ~4.2%. In fiscal 2021 as well, the cement-to-GDP multiplier is expected to deteriorate to (2-4) on back
of pandemic-led demand slump, which is the lowest level in the last two decades. CRISIL sees India’s GDP
contracting 5% in fiscal 2021 due to the extended restrictions and lockdown, especially in states where Covid-19
cases are still rising; a normal monsoon that supports the kharif crop and agriculture incomes; softer crude oil
prices; and limited fiscal support to prop up an immediate growth revival. Overall, risks remain tilted to the
downside and will hinge on further extension in containment measures, slipping of economic growth and a sub-

156
normal monsoon. Going forward, CRISIL Research expect the cement demand multiplier to replenish as cement
demand revives from low levels.

In fiscal 2018, the cement demand to GDP multiplier rose to 1.4 post a subdued demand scenario during fiscals
2014 to 2017. In contrast, the cement industry was growing at a healthy rate of 1.2 times of GDP during fiscals
2007 to 2013 owing to healthy capital investments.

Cement demand - GDP growth trend

   

    

(%)
sucess 2 eee
400) Buoyant economy Healthy multiplier (sustained Structural shiftfrom Ecol 19%
360 (GDP growth: >9%) development accross sectors) manufacturingto followed by pandemic’
~ \ services economy led recession 10%
300 — a
5%
250
200 0%
150
5%
100 7
10%
50
» LSI [183] [202] i237] [24s] [257] [200] [2z4} [200} [225] [228] 295]/
5 8 2 = = e = 2 2 = 2 2 & =
§ § ¢ €£ &£ @ &£ 2 @#@ & &€ &@ @ G&G
= & : & & & & & & & 8 & & & 8
mms Cement Demand (Mn tonns) —>— Cement Demand Growth India GDP growth

Source: CRISIL Research

The cement industry, after witnessing a healthy demand growth of ~12% in fiscal 2019, exhibited slowdown with
decline of ~2% in fiscal 2020. Apart from the general economic slowdown, cement demand was sluggish during
the first half of fiscal 2020, post the general elections in April-May 2019. The second half of fiscal 2020 witnessed
extended monsoons, low capital expenditure on infrastructure and road activities, labour shortage owing to local
elections and water and sand unavailability in several states along with financial stress in the NBFC and housing
sectors. Though the demand started indicating some signs of improvement since December 2019, the momentum
could not be sustained due to the Covid-19 pandemic in the seasonally strong quarter of the fiscal. This severely
impacted construction activities, which consequently resulted in the industry witnessing decline in fiscal 2020,
the first time in the last two decades.

CRISIL Research expects cement demand to register 3.5-4.5% CAGR over fiscals 2021 to 2025 as against a robust
5.0% CAGR witnessed during fiscals 2016 to 2020, driven by a raft of infrastructure investments and moderate
revival in housing demand.

Cement demand outlook

 

400 15%
cu 10%
300
250 SH
200 0%
150 aR
100
50 “10%
- “15%

FY15 FY16 Fy17 Fy18 FY19 FY20 FY21P FY24P
mmm Cement Demand (mn tonnes) -——=% growth y-o-y

Source: CRISIL Research

157
Industry to potentially witness 95-105 mtpa capacity additions in the next five years; Covid-19 to slowdown
the momentum

The cement industry is estimated to have added ~22 MT of grinding capacity each in fiscals 2019 and 2020.
CRISIL Research estimates overall installed capacity at 520 mtpa (adjusted for period of commissioning, this
would be close to 500 mtpa on an effective basis) as of fiscal 2020.

Capacity additions are expected to remain robust with 95-105 MT to be added in over fiscals 2021-2025.

Capacity additions in cement sector

30
24 25
25 23 22 22
20
20 19 19
14 16
15
10
5
Fy15 FY16 FY17 FY18 FY19 FY20 FY21P FY24P
= Capacity addition (mn tonnes)
Source: CRISIL Research
Key Players

Key players in the gear and gearbox market include Elecon Engineering, Premium Transmission, Shanthi Gears,
New Allenberry Works, Siemens, Bonfiglioli Transmission, ZF Wind Power Coimbatore, and SEW Eurodrive
India.

REVIEW AND OUTLOOK ON SPECIAL PURPOSE MACHINES MANUFACUTING, CONTRACT
MANUFACTURING OF MACHINES/ SUB-ASSEMBLIES FOR DOMESTIC AND EXPORT
MARKETS

Introduction to special purpose machines (SPMs)

Cee mUCM UC CMU Cm ol omit lia

General
Pog Lon

Lice d

 

Note: CNC-Computer Numerical Control
Figures in bracket indicate percentage contribution by value
Source: Industry, CRISIL Research

SPMs are customised machines deployed to automate industrial processes to ensure high productivity. Based on
their usage, they are classified as general purpose machines or SPMs. Usage of SPMs reduces chances of human
error and decreases human fatigue when carrying out repetitive operations. It assures consistent quality and
interchangeability of parts by carrying out the same designed process every time without any shortcuts.

SPMs, designed to operate for 24 hours a day with minimum supervision, are mostly product-specific and need

to be designed and developed as per individual requirements. These SPMs are either cam-operated machines or
use hydraulics and pneumatics as actuating elements or a combination of all. Often, a dedicated programmable

158
logic controller is used in conjunction with positional sensors and transducers to give commands to the actuating
elements. Sometimes, different special motors such as stepper and servo motors are used as actuating elements.

Since SPM manufacturers are mostly machine tool manufacturers, SPMs are considered a part of the machine
tools industry. However, not all machine tool manufacturers possess the capability to produce SPMs since these
require strong design expertise, technical know-how, and industry knowledge. Demand for SPMs is cyclical in
nature and, hence, standalone players are very few.

Initially, the life of SPM machines used to be around five years, which demanded better quality raw materials as
well as design with high technical standards. But in recent years, the automobile industry has witnessed several
changes to meet increasing consumer expectations in terms of model designs, features, etc., thus making SPMs
non-usable in two-three years. Due to the faster replacement cycle, buyers look for low-cost machines that come
with less optimal design standards. Critical components for SPMs are mostly from imported from the United
States, Japan and Germany, where high quality standards are maintained. However, there has been a trend of
increasing imports from Taiwan and Korea, wherein various components based on design are imported and
assembled to make SPMs.

Major growth drivers for SPMs

Automobiles

Two-wheelers

CRISIL Research expects domestic two-wheeler sales to record a compound annual growth rate (CAGR) of 3-5%
from fiscal 2020 to 2024, dragged down by the decline in growth in fiscal 2021. The two-wheeler industry clocked
2% CAGR from fiscal 2015 to 2020. In the near term, CRISIL Research expect the two-wheeler industry to be
negatively impacted by the disruption caused by Covid-19 and the high cost of ownership owing to BS VI
emission norms, resulting in higher vehicles prices in fiscal 2021. Hence, in the long term, CRISIL Research
expect the industry to grow by low single-digit CAGR between fiscals 2020 and 2024. It is expected that growth
will pick up for the two-wheeler industry post fiscal 2021 and it will clock 8-10% CAGR between fiscals 2021
and 2024.

Two-wheeler production growth (7000 volume terms)

30,000 16% 20%
25,000 10% 15%
6% 10%
20,000 5%
15,000 0%
5Y
10,000 S26
-10%
5,000 14% -15%
- -20%

Fyis FY16 FY17 FY18 FY19 FY20 FY24P.
mmm Production - two wheelers ('000s) —#—% growth y-o-y

Source: SIAM, CRISIL Research

Three-wheelers

After a sharp drop of (50) to (45) % in FY21 the production of three wheelers in India is expected to grow at 25
to 30% in FY22 over a low base as passenger movement improves with the Indian as well as global economy
opening up gradually leading to improvement in domestic sales as well as exports. Following which, production
of three-wheelers is expected to recover to slightly over 2020 levels by fiscal 2024.

Growth in the passenger three-wheeler sub-segment will largely come from increasing mobility demand for last-
mile connectivity in metros and major cities with increasing urbanization. Further, the penetration could also be
influenced by the issuance of permits by the government. Demand for CNG three-wheelers is also expected to
grow because of the changing regulatory framework. Moreover, based on cost dynamics as well as usage patterns,

159
electric vehicles could have a maximum impact/threat to the three wheeler passenger segment among all
automotive segments.

Projected growth in three-wheeler production

1,400 som 2289 40%
o 1,134 1,147

   

1,200 CAGR :0- 30%
1,000
20%
800
10%
600 1,027
400 0%
200 -10%
- -20%

maby Boaudii6n®s whecldrs-cdrgdCo00g) *° emia Mtoduction -3 wheelers-passenger (ods)

Production -3 wheelers-total ('000s) —m% growth y-o-y

Source: CRISIL Research

Cars and UVs

CRISIL Research projects domestic sales of cars and utility vehicles (UVs) to increase at a compound annual
growth rate (CAGR) of 5-7% over fiscals 2020-2024, better than the 1.3% CAGR logged between fiscals 2015
and 2020. The growth is expected to be better (post-fiscal 2021) as consecutive years of double-digit decline
would lead to a very low base in fiscal 2021. Post fiscal 2021, healthy growth is expected over this low base due
to moderate macroeconomic growth, increasing disposable incomes, relatively stable cost of vehicle ownership
and lower fuel prices. Other factors that would aid demand are increasing urbanization, government support to
farm incomes, and improved availability of finance. However, increasing congestion in metro cities and rising
popularity of shared mobility services are likely to restrict car sales in the long term.

Projected growth in cars and UV production

5,000 10% 15%
7% .
4,000 4% 6% vee 10%
2 5%
3,000 0%
2,000 5%
-10%
1,000 Asc
“ -20%
FYI5 FY16 FY17 FY18 FY19 FY20 FY24P

mmm Production - Cars and UVs (000s) —#—% growth y-o-y

Source: CRISIL Research

After a sharp decline in fiscals 2020 and 2021, sales of car as well as UV segment to grow at a healthy pace.
Hyundai and Tata are expected to open a larger number of outlets in rural and semi-rural areas, as well as estimated
higher farm profitability, are expected to boost sales. Moreover, the increase in cost of ownership is likely to be
moderate, because of lower interest rates and increased fuel efficiency. Large-car sales are expected to decline by
10-12% CAGR in fiscal 2020-2024 because the UV segment is expected to continue cannibalizing the large-car
segment and put pressure on its growth. Post a 7-9% decline in fiscal 2021, UV and van sales will clock a faster
7-9% CAGR during fiscal 2020-2024, driven by a continued shift in consumer preferences and multiple model
launches by manufacturers in this segment. The entry of new players in the UV segment is also expected to aid
traction. Replacement demand is also likely to rise, as car owners opt for newer models due to higher affordability,

160
competitively priced launches, and easy availability of finance. Overall, the cars and UV segment is expected to
sustain growth at 5-7% CAGR during fiscal 2020 to 2024, post consecutive two years of double-digit decline.

CV industry
MHCYV segment to log moderate growth; tonnage growth to be marginally lower

CRISIL Research expects sales growth of MHCV, LCV and buses, the three major commercial vehicle segments
to grow by a combined 5-7% CAGR in the next five years, between fiscals 2020 and 2024. CRISIL Research has
categorized the CV industry into MHCVs, LCVs, and buses to better gauge and analyses the dynamics within
each of these key segments. The production for CVs is expected to grow at 2.5-3.5% CAGR over fiscal 2019 to
2023.

Projected growth in CVs production (‘000s in volume terms)

1,200

949

1,000 895
810

100

752

800 699
600

yAcK)

400

200

       

FY14 FY15 FY16 FYIToy MeV “ 19 FY20 FY24P.

Source: CRISIL Research
Tractor industry

Domestic demand to grow 4-6% till fiscal 2023

Domestic tractor sales are expected to grow 18-20% on-year in fiscal 2021 due to better crop production on
account of a normal monsoon. CRISIL Research projects domestic tractor sales to expand at 4-6% CAGR during
fiscal 2020 to 2024, on account of low tractor penetration in India (3 tractors per 100-hectare area); government's
focus on improving farm incomes through various schemes, promoting farm mechanization; and investments to
improve rural infrastructure. The projected growth rate factors in one-two years of deficient rainfall.

Projected growth in tractor production

 

1,000 30%
800 foie ee 20%
600 hae 10%
400 0%
200 13 119 10% -10%

: -20%

FY15 FY16 FY17 FY18 FY19 FY20 FY24P
mmm Production -Tractors (000s) = ==% growth y-o-y

Source: CRISIL Research

161
Investments in railways

Railway investments to touch Rs 8.0 trillion over fiscal 2020 to 2023. CRISIL Research expects a 13 to 15%
decline in investments in Railways in fiscal 2021 owing to the Covid-19 pandemic. Investments in fiscal 2022 are
seen rising by 10-15%, led by the dedicated freight corridor and deferral of fiscal 2021 capex. A construction
capex of Rs 3.3 trillion is seen over the next five years, compared with Rs 2.4 trillion over the past 5 years, led by
investments in network decongestion. CRISIL Research expects construction expenditure in railway projects to
increase 1.4 times (4-6% CAGR) between fiscals 2021 and 2025, compared with the previous five years.

Railway investments to grow 1.4X in next five years compared with past five years

Construction spends Capex investments
Rs. stn)
7 1660-1608
1600
1333
Rs. 2.4 tr. 1400
1099
1200 1019
1000
800
0
400
200
BFY1G-FY20E SFY2IP-FY25P G47 FYI8  FYIMRE) FYZO(RE) FY21(BE)
= Budgetary Support gIEBR

Source: Budget documents, CRISIL Research
Defence sector

India has the third largest military in the world and is the sixth biggest defence spender globally. India is also one
of the largest importers of conventional defence equipment and spends ~30% of its total defence budget on capital
acquisitions. 60% of defence related requirements are currently met through imports. The ‘Make in India’
initiative by the government focuses on increasing indigenous defence manufacturing and becoming self-reliant.
The opening up of the defence sector for private sector participation is helping foreign original equipment
manufacturers (OEMs) enter into strategic partnerships with Indian companies and leverage opportunities in the
domestic market, as well as globally.

India’s focus on indigenous manufacturing in the defence space is paying off as the Ministry of Defence, over the
last few years, has unveiled several products manufactured in India like HAL Tejas light combat aircraft,
composites sonar dome, a portable telemedicine system for the armed forces, penetration-cum-blast and
thermobaric ammunition specifically designed for Arjun tanks, a heavyweight torpedo called Varunastra
manufactured with 95% locally sourced parts, and medium range surface to air missiles.

Trend in India’s defence budget expenditure (Rs trillion)

5.0

35 a6 40 45
: ip
3.0 es 0.9 10 ay
° Or] -
1.0

-1.0 FY16A FY17A FY18A FY19A FY20RE FY21BE
=Capital Expenditure ™ Revenue Expenditure

Note: Includes defence pensions, A: Actuals, RE: Revised Estimates, BE: Budget Estimates
Source: Union Budget, CRISIL Research

162
REVIEW AND OUTLOOK OF TOOL ROOM AND MOULD BASE MARKET IN INDIA

Industry to gradually pick up pace from fiscal 2022, post decline in fiscals 2020 and 2021

A tool room is integral to the manufacturing sector, and, hence, its fortunes are closely linked to the trajectory of
the various industries.

The tool room industry is estimated to have grown at 6-7% CAGR between fiscals 2017 and 2019, supported by
a 10% CAGR in demand (domestic + exports) from its primary segment, i.e. automotive, and 6% CAGR from
consumer appliances. In fiscal 2020, though, demand from the automobile sector dropped ~15% on-year amid
slowing economic growth, weak rural demand, price hikes of vehicles because of Bharat Stage-VI upgradation,
increase in road tax in certain states, liquidity constraints resulting in lower loan-to-value, as well as the
nationwide lockdown in late March. Consequently, the tooling industry’s market size fell 8-10% on year, to Rs
150-155 billion. Continued growth in consumer appliances demand of 5-6% even in fiscal 2020 restricted a further
decline.

Consequently, the share of the automotive segment in the industry-wise demand pie shrunk from 64% in fiscal
2017 to 61% in fiscal 2020. On the other hand, the consumer appliances industry’s share rose from 7% to 9%,
with the plastic products industry maintaining its share of 12-14%.

Industry-wise demand share in fiscal 2020

Market size: Rs 150-155 billion
Plastic

processing,
13%

  
   

Automotive,

61% Consumer

appliances, 9%

Electricals, 6%

Packaging, 4%
Others, 7%

Note: Others include General engineering, medical equipment, railways, defence, mining equipment, etc.
Source: Tool and Gauge Manufacturers Association, CRISIL Research

In fiscal 2021, the Covid-19 pandemic severely affected the economy as well as the manufacturing industry. The
61-day nationwide lockdown and gradual unlocking impacted customer sentiment and, in turn, underlying demand
for the tooling industry. CRISIL Research expects the tooling industry to contract 12-14% on-year, to a decade
low of Rs 130-135 billion. However, over the next three years, the economy as well as demand for tools are
forecast to gradually pick, with the market size of the tooling industry reaching Rs 185-190 billion by fiscal 2024,
which is a 4-6% CAGR from fiscal 2020 levels; the automotive industry (domestic + exports) is projected to grow
at 2-4% CAGR from fiscals 2020 to 2024. Also, given the rising number of new vehicle launches as well as
increased frequency of launching latest modified versions of popular models, demand for newer tools and moulds
is expected to outpace the automobile industry’s demand, thus providing further thrust to the tooling industry.
Demand from opening up of industries such as defence and aerospace, with conditions for local sourcing of
components, is also expected to provide additional surge to tooling demand.

163
Domestic tool room and mould base demand trend

 

 

6-7% CAGR (10)- (8) % 4-6% CAGR 185-190
ee 150155 >
147 .
130-135
FY17 FY19E FY20E FY21P FY24P

Note: Includes tools, moulds, dies and fixtures
Source: CRISIL Research

Industry structure

As per the Tool and Gauge Manufacturers Association, there are more than 1,000 players in the tool room industry,
of which ~85% are small and unorganised.

The tooling requirement is met through three sources — (i) captive tool room, (ii) commercial tool room, and (iii)
imports. Many large manufacturing units have in-house tool room departments. Also, auto component and original
equipment manufacturers mostly have captive tool rooms, and account for 5% share of the industry units.
Commercial tool rooms (CTRs) are independent units that cater to the tool room requirement of several industries.
These players account for 50% of the units in the industry, and are mostly small to medium in size; there are
nearly 100 CTR medium-scale manufacturers. The Indian CTR industry is concentrated in Mumbai, Bengaluru,
Chennai, Hyderabad, Pune, and the National Capital Region, owing to the presence of industries such as
automobiles, auto components, plastics, and general engineering.

Nearly 45-50% of the tooling demand is met via CTR, while 30-35% tooling is done in captive units. The rest 15-
20% is met via imports.

Major growth drivers

Automobile sector

Growth drivers for the automobile industry are covered in ‘Market size of the Indian automobile sector’ chapter
under ‘Demand drivers for the automobile sector’ section.

 

 

 

 

Total sales volume (million units) TXT oy
Automobile segments FY20 Zi z FY20-FY24P
‘Commercial vehicles 0.72 0.54 0.9 5-7%
Passenger vehicles 35 [2.9 4.2 4-6%
‘Two-wheelers 20.9 [176 22.7 |1-3%

Tractors 0.78 (0.89 0.95 4-6%

 

 

 

 

 

Note: Total sales include domestic sales and exports
Source: Society of Indian Automobile Manufacturers, CRISIL Research

Plastic processing and products

Small and medium enterprises have a large presence in the processing industry, owing to its commoditized nature,
low entry barriers, adequate availability of raw material, and low capital intensity. Hence, the segment is highly
fragmented. There are ~30,000 registered plastic processing units, of which ~75% are in the small-scale sector.

164
Parameter Rationale

Plastic products are mostly used in industrial, agricultural and
Macroeconomic growth consumer applications. Hence, growth in demand for plastic
products directly depends on the overall macroeconomic growth.

In addition to the underlying economic growth, demand for plastics

Demand from end-user __will also be driven by higher penetration of plastic used in end-user

segments segments such as automobiles, agriculture, infrastructure and
packaging

Source: CRISIL Research

Meanwhile, the size of the plastic processing segment, which was ~Rs 1,500 billion in fiscal 2020, is expected to
drop ~10% on-year in volume terms (nearly 20% in value terms) in fiscal 2021 amid the sharp contraction in the
economy as well as falling demand from the underlying industries. However, recovery is expected from fiscal
2022. Demand for plastic products is expected to increase at 5-7% CAGR between fiscals 2020 and 2024, owing
to improving economic growth and revival in end-user segments.

Consumer durables

The household appliances industry, comprising room air conditioners (RACs), refrigerators, colour televisions
(CTVs), and washing machines, is expected to plunge 20-25% on-year in volume terms in fiscal 2021 vis-a-vis a
6% on-year rise in fiscal 2020. This is on account of demand slowdown owing to the fallout from the pandemic;
significant decline in first quarter sales will weigh on full year sales.

Key Players

Key players in the tool room and mould base industry are Godrej & Boyce Manufacturing Co. Ltd., Shapers India
Pvt. Ltd., Sridevi Tool Engineers Pvt. Ltd., CTM India Ltd., Karthigeya Moulds & Dies Pvt. Ltd., Devu Tools
Pvt. Ltd., Mastercraft Engineers, VEM Tooling India Pvt. Ltd., Abhijeet Dies & Tools Pvt. Ltd., and Classic
Moulds and Dies Ltd.

 

 

   

 

PEER COMPARISON
Revenue
(in million)
Reig FY19 FY20
‘Bharat Forge Limited 81,092
| d 14,925
69,266

 

 

 

 

 

Ramkrishna Forgings Limited

 

|Sandhar Technologies Limited
“Sundaram-Clayton Limited
|Sundram Fasteners Limited

Source: Audited annual reports and company filings with MCA, CRISIL Research

 

   

 

   

 

37.232

 

EBITDA-operating Profit before Depreciation Interest and Taxes

(in million)
FY20
0:

Re Ling 2 4et} [PSUs

|
Bharat Forge Limited [14457 | 12,742, |
|

Craftsman Automation Limited |
Endurance Technologies Limited
Jamna Auto Industries Limited
|Mahindra CIE Automotive Limited
Industries Limited

_MM Forgings Limited
Ramkrishna Forgings Limited
‘Sandhar Technologies Limited
Sundaram-Clayton Limi

 

 

 

 

    

 

 

 

  

 

 

 

 

    

 

 

 

 

 

 

165
(omen
Sundram Fasteners Limited

FY16
4,270

i evs
6,074

FY18
6,994

 

 

 

Source: Audited annual reports and company

Net income- Profit after Tax

 

6,441

filings with MCA, CRISIL Research

7,460

  
  

(in million)

 

 

 

 

  

 

 

 

 

 

 

 

 

 

 

 

 

 

aftsman Automation Limited 433 332_ 995 400
Endurance Technologies Limited 3,004 3,303 3,908 4,950 5,655,
Jamna Auto Industries Limited 715 1,050 1,253 1,375 479
Mahindra CIE Automotive Limited 872 1,690 3,584 4,981 3,538
‘Minda Industries Limited 1,226 1,851 3,256 3,395 1,877
MM Forgings Limited 501 434 606 655 417
Ramkrishna Forgings Limited 545 112 917 1,201 97
Sandhar Technologies Limited 367 416 507 952 570
| Sundaram-Clayton Limited 1,444 1,056 549° 1,197 687
Sundram Fasteners Limited 1,250 3,382 3,895 4,590 3,265

 

 

 

Source: Audited annual reports and company

EBITDA margin

filings with MCA, CRISIL Rese

arch

 

(in million)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bharat Forge Limited 21% 20% 21% 20% 15%
| Craftsman Automation Limited 25% 21% 19% 23% 27%
Endurance Technologies Limited 13% 14% 14% 15% 17%
Jamna Auto Industries Limited 13% 16% 14% 13% 11%
Mahindra CIE Automotive Limited 10% 10% 13% 13% 12%
Minda Industries Limited 10% 11% 12% 13% 11%
|MM Forgings Limited 22% 19% 20% 19% 17%
| Ramkrishna Forgings Limited 17% 18% 19% 20% 17%
Sandhar Technologies Limited 9% 9% 11% 11% 10%
Sundaram-Clayton Limited 10% 10% 1% 10% 11%
Sundram Fasteners Limited 13% 18% 18% 18% 16%
EBITDA margin = EBITDA/Revenue
Source: Audited annual reports and company filings with MCA, CRISIL Research
ROCE
(in million)
Company FY16 ne eu FY18 Pet) FY20
Bharat Forge Limited 14% 11% 16% 16% 6%
Craftsman Automation Limited 10% 9% 9% 15% 10%
Endurance Technologies Limited 20% 20% 21% 23% 20%
Jamna Auto Industries Limited 35% 37% 40% 44% 11%
Mahindra CIE Automotive Limited 15% 14% 24% 23% 21%
Minda Industries Limited 14% 14% 17% 17% 10%
MM Forgings Limited 14% 10% 11% 10% 7%
'Ramkrishna Forgings Limited 9% 6% 12% 14% 4%
Sandhar Technologies Limited 13% 11% 12% 16% 9%
Sundaram-Clayton Limited 8% 6% -3% 5% 3%
Sundram Fasteners Limited 18% 25% 25% 23% 14%

 

 

 

Note: ROCE = EBIT / (Total Assets — Total Current Liabilities)
Source: Audited annual reports and company filings with MCA, CRISIL Research

166
PAT margin

(in million)

 

 

 

 

 

 

 

 

 

 

Re tiny FY16 ia evs FY18 Fy19 FY20
Bharat Forge Limited 9% 11% 9% 10% 4%
Craftsman Automation Limited 5% 7% 2% 5% 3%
Endurance Technologies Limited 6% 6% 6% 7% 8%
Jamna Auto Industries Limited 6% 8% 7% 6% 4%
Mahindra CIE Automotive Limited 2% 3% 5% 6% 4%
Minda Industries Limited 5% 5% 7% 6% 3%
MM Forgings Limited 10% 9% 9% 7% 5%
Ramkrishna Forgings Limited 5% 1% 6% 6% 1%
Sandhar Technologies Limited 2% 3% 3% A% 3%
Sundaram-Clayton Limited 10% 8% 3% 7% 5%
Sundram Fasteners Limited 4% 10% 10% 10% 9%

 

 

 

 

 

 

 

 

EBITDA margin = Net Income / Revenue

Source: Audited annual reports and company filings with MCA, CRISIL Research

167
BUSINESS

To obtain a complete understanding of our business, investors should read this section in conjunction with “Risk
Factors”, “Industry Overview”, “Financial Information” and “Management’s Discussion and Analysis of
Financial Condition and Results of Operations” on pages 22, 96, 225 and 288, respectively, as well as the
financial, statistical and other information contained in this Prospectus. Some of the information in the following
section, especially information with respect to our plans and strategies, includes certain forward-looking
statements that involve risks and uncertainties. You should read “Forward-Looking Statements” on page 15 for
a discussion of the risks and uncertainties related to those statements, and also the “Risk Factors” on page 22
for a discussion of certain risks that may affect our business, financial condition, or results of operations. Our
actual results may differ materially from those expressed in, or implied by, forward-looking statements.

    

The industry data in this chapter has been extracted from the report titled “Studying the Automotive and Industrial
Engineering Business in India” dated December 2020, prepared by CRISIL Research (the “CRISIL Report”).
Neither we, nor the BRLMs, nor any other person connected with the Offer has independently verified this
information. Industry sources and publications generally state that the information contained therein has been
obtained from sources generally considered to be reliable, but their accuracy, completeness and underlying
assumptions are not guaranteed and their reliability cannot be assured. Industry publications are also prepared
based on information as of specific dates and may no longer be current. For further information, see “Certain
Conventions, Use of Financial Information and Market Data and Currency of Presentation - Industry and
Market Data” and “Industry Overview” on pages 12 and 96, respectively.

Unless the context otherwise requires, references to “our Company” are to Craftsman Automation Limited on a
standalone basi: * ”

while references to “we”, “us” or “our” are to Craftsman Automation Limited on a
consolidated basis.

 

Our Financial Year ends on March 31 of each year, and references to a particular Financial Year are to the
twelve-month period ended March 31 of that year. Unless otherwise stated, or the context otherwise requires, the
financial information used in this section is derived from our Restated Financial Information included on page
225.

Overview

We are a diversified engineering company with vertically integrated manufacturing capabilities, engaged in three
business segments, namely powertrain and other products for the automotive segment (“Automotive -
Powertrain and Others”), aluminium products for the automotive segment (“Automotive — Aluminium
Products”), and industrial and engineering products segment (“Industrial and Engineering”). We are the largest
player involved in the machining of cylinder blocks and cylinder heads in the intermediate, medium and heavy
commercial vehicles segment as well as in the construction equipment industry in India. We are among the top
three-four component players with respect to machining of cylinder block for the tractor segment in India.
(Source: CRISIL Report). We are present across the entire value chain in the Automotive-Aluminium Products
segment, providing diverse products and solutions. Our strong in-house engineering and design capabilities help
us offer comprehensive solutions and products to our long standing domestic and international customers in each
of the segments in which we operate.

Our comprehensive solutions include design, process engineering and manufacturing including foundry, heat
treatment, fabrication, machining and assembly facilities. Our core competence in machining and assembly of
industrial and engineering products has helped us to first establish ourselves as a significant player in the
Automotive - Powertrain and Others segment. Our key products in this segment are highly engineered and include
engine parts such as cylinder blocks and cylinder heads, camshafts, transmission parts, gear box housings, turbo
chargers and bearing caps. The end users for our products include OEMs producing commercial vehicles, special
utility vehicle, tractors and off-highway vehicles. Additionally, we also provide machining services within our
Automotive — Powertrain and Others segment. Over the years, we have been instrumental in import substitution
for critical powertrain parts.

 

We have leveraged our long-term presence in developing aluminium products for precision components to also
establish and grow the Automotive - Aluminium Products segment. Within our Automotive — Aluminium
Products segment, we are equipped with an array of processes including the high pressure die casting, low pressure
die casting and gravity die casting machines to manufacture components, machining tools for machining and
assembly lines. Our key products are highly engineered and include crank case and cylinder blocks for two

168
wheelers, engine and structural parts for passenger vehicles and gear box housing for heavy commercial vehicle.
Our sales volume, in terms of tonnage, from the Automotive - Aluminium Products segment was 9,339.32 tonnes,
12,596.22 tonnes, 18,863.83 tonnes and 11,819.04 tonnes for the nine months ended December 31, 2020 and
Fiscals 2020, 2019 and 2018, respectively.

Within the Industrial and Engineering segment, we have utilized our in-house engineering and design capabilities
and developed a diverse product portfolio across two sub-segments, namely, (i) the storage solutions sub-segment
under which we have the complete solution for conventional/automated storage; and (ii) the high end precision
products sub-segment under which we manufacture aluminium products for power transmission, high-end
precision products and undertake sub-assembly, material handling equipment such as hoists, crane kits and
industrial gears, manufacture gear and gear boxes, marine engines and accessories, special purpose machines
(“SPM”), which includes metal cutting and non-metal applications such as washing and leak testing solutions and
tool room, mould base and sheet metal. In our storage solutions business, we provide diverse products and
solutions such as pallets, racking, shelving, vertical storage solutions to several sectors such as FMCG, E-
commerce, food and beverages, logistics, pharmaceutical and electronics. According to the CRISIL Report, the
market sizing of storage solutions industry is estimated at 2 22 billion as of Fiscal 2020. The industry grew at a
CAGR of 15 to 16% over Fiscal 2016 to Fiscal 2020 and is expected to % 36 billion in Fiscal 2024 from % 21
billion in Fiscal 2021. Our storage solutions business has grown at a CAGR of 204.22% from Fiscal 2018 to Fiscal
2020 and has contributed 5.61%, 4.91%, 1.45% and 0.52% of our revenues from operations in the nine months
ended December 31, 2020 and Fiscals 2020, 2019 and 2018, respectively. We intend to leverage our strong product
development, designing, engineering and manufacturing capabilities, to create opportunities in increasing our
market share in the storage solutions business. We have commissioned new strategically located unit in Pune in
2019 for manufacturing storage solutions products which enables us to service the storage solutions market,
catering to customers across India.

We have long term relationships with several marquee domestic and global original equipment manufacturers
(“OEMs”) and component manufacturers across our three business segments. Within our Automotive —
Powertrain and Others segment, our key customers include Daimler India, Tata Motors, Tata Cummins, Mahindra
& Mahindra, Simpson & Co. Limited, TAFE Motors and Tractors, Escorts, Ashok Leyland, Perkins, Mitsubishi
Heavy Industries, John Deere and JCB India. Within our Automotive — Aluminium Products segment, our key
customers include Daimler India, TVS Motors, Royal Enfield, Perkins and Mahindra & Mahindra. Key customers
within our industrial and engineering segment include Siemens and Mitsubishi Heavy Industries. We are
considered as a strategic and preferred supplier by many of our OEM customers and are also the single source
supplier in certain product categories, for some of our key customers. Most of our business comprises direct supply
to our OEM customers, under long term agreements, which are renewed from time to time. With our track record
and wide product portfolio, we have been able to retain our existing customers and also been able to attract new
customers. We have a diversified client base with our top 10 customers accounting for 59.15%, 53.41%, 56.25%
and 52.59% of our revenue from operations, in the nine months ended December 31, 2020 and Fiscals 2020, 2019
and 2018, respectively.

We commenced operations in 1986 in Coimbatore, in the State of Tamil Nadu, India. We own and operate 12
strategically located manufacturing facilities across seven cities in India, with a total built up area of over 1.5
million sq. ft., close to some of our key customers to enable meeting our customers’ just-in-time delivery
schedules, allow economies of scale and logistical advantages for our customers, and to insulate them from local
supply or other disruptions. Our manufacturing facilities include state of the art equipment, engineered layout with
process controls and necessary automations for quality and productivity.

Our business is primarily operated from manufacturing facilities which are owned and operated directly by us.
We do not have any subsidiaries or joint ventures within or outside India manufacturing any of our products. This
allows us to keep our core competencies within our Company, allowing us to ensure strict quality control and
safety at each step of our manufacturing process. We have a wholly-owned overseas subsidiary, Craftsman Europe
B.V. (formerly known as Craftsman Marine B.V.), set up in 2008 in Netherlands, through which we are engaged
in marketing, sales and servicing of marine engines and other associated equipment used in yachts. These products
are manufactured and assembled by us in India and exported under the name “Craftsman Marine” and will help
us expand our footprint in Europe. We have a track record of growing through joint ventures and strategic
alliances, including by gaining access to new customers, business segments, geographies, knowhow and
technologies. We have a joint venture in India, Carl Stahl Craftsman Enterprises Private Limited, engaged in
marketing, installation, commissioning and rendering after-sales services of material handling equipment, such as
chain hoists, rope hoists and cranes kits, manufactured by us under the name “Carl Stahl Craftsman”. We also
have a strategic investment in MC Craftsman Machinery Private Limited, which is majority held by the Mitsubishi

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group, strengthening our two decades of business relationship with the Mitsubishi group and allowing us
recognition and access to customers based in or headquartered out of Japan and the East Asia region.

Our Promoter, Chairman and Managing Director, Srinivasan Ravi, is a mechanical engineer and a first-generation
entrepreneur with over 34 years of relevant industry experience. We have received funding from reputed global
investors, International Finance Corporation (“IFC”) in 2010 and 2012, and Standard Chartered Private Equity
(Mauritius) II Limited (“SCPE”) in 2012 (which transferred its stake to its Affiliate, Marina III Singapore Pte
Limited (“Marina”) in 2017). IFC and Marina presently have 12.06% and 13.50% shareholding, respectively, in
our Company.

Our total revenue was 2% 10,227.87 million, % 14,924.65 million, = 18,180.07 million and 2 15,115.31 million in
the nine months ended December 31, 2020 and Fiscals 2020, 2019 and 2018, respectively. Our net profit was =
506.60 million, = 410.73 million, = 973.67 million and % 315.34 million in the nine months ended December 31,
2020 and Fiscals 2020, 2019 and 2018, respectively.

Our EBITDA was % 2,946.39 million, = 4,065.51 million, = 4,566.80 million and = 3,051.81 million for the nine
months ended December 31, 2020 and Fiscals 2020, 2019 and 2018, having increased at a CAGR of 15.42%,
from Fiscal 2018 to Fiscal 2020. Our EBITDA Margin (EBITDA as a percentage of our total revenue) was
28.81%, 27.24%, 25.12% and 20.19%, respectively, in the same periods, having increased at a CAGR of 16.15%,
from Fiscal 2018 to Fiscal 2020.

The share of our three business segments within our revenue from operations has remained relatively stable during
this period, with the Automotive — Powertrain and Others, Automotive — Aluminium Products and Industrial and
Engineering segments accounting for 51.21%, 21.10% and 27.69% of our revenue from operations in the nine
months ended December 31, 2020 and 47.52%, 17.27% and 35.21% of our revenue from operations in Fiscal
2020, compared to these three segments accounting for 55.47%, 16.95% and 27.58% of our revenue from
operations in Fiscal 2019, and 57.62%, 15.57% and 26.82% of our revenue from operations in Fiscal 2018. In our
Automotive — Powertrain and Others segment and Industrial and Engineering segment, we undertake domestic
sales as well as exports to various customers. Our domestic sales in the Automotive — Powertrain and Others
segment contributed 49.58%, 45.35%, 53.55% and 55.05% of our revenue from operations for the nine months
ended December 31, 2020 and Fiscals 2020, 2019 and 2018, respectively, while export sales contributed 1.63%,
2.18%, 1.93% and 2.56%, respectively, in the same periods. In our Industrial and Engineering segment, domestic
sales contributed 17.63%, 26.14%, 18.88% and 19.46% of our revenue from operations for the nine months ended
December 31, 2020 and Fiscals 2020, 2019 and 2018, respectively, while export sales contributed 9.98%, 9.06%,
8.70% and 7.36%, respectively, in the same periods. We supply to various customers with global presence who
export our products to demand their business demand abroad.

We have also built-up a significant size of assets in our machining and manufacturing capacities to meet the
growing demand for products from our customers and to expand into new segments. As of the nine months ended
December 31, 2020 and Fiscals 2020, 2019 and 2018, the Gross Block was % 22,307.42 million, = 21,855.56
million, = 20,700.44 million and = 16,284.26 million. The significant capital expenditure in the earlier years have
positioned our Company well to take advantage of future growth opportunities. For the nine months ended
December 31, 2020 and Fiscals 2020, 2019 and 2018, our capital expenditure aggregated to = 507.29 million, =
1,206.01 million, = 4,559.86 million and 2 1,811.24 million, respectively, used to modernize and upgrade our
manufacturing facilities, infrastructure, machines, equipment and technology to allow us to offer a diverse product
suite, reduce operating costs and drive productivity. For the nine months ended December 31, 2020 and for Fiscals
2020, 2019 and 2018, our Return on Capital Employed (“ROCE”) (calculated as earnings before interest and tax
divided by the difference between our total assets and total current liabilities) was 10.55%, 13.80%, 18.66% and
14.00%. Our net worth was 2 7,161.88 million, 2 6,634.75 million, = 6,278.36 million and 2 5,412.34 million as
on December 31, 2020 and Fiscals 2020, 2019 and 2018, respectively, while our return on average net worth was
7.34%, 6.36%, 16.66% and 5.96% and our Return on Equity (“ROE”) was 7.07%, 6.19%, 15.51% and 5.83% for
the same periods.

We have been consistently recognized by customers for the high-quality of the products supplied by us. For further
details on our recent awards and accolades, see “~ Awards and Recognitions” on page 185. We are also certified
for international quality management systems ISO 9001:2008, ISO/TS 16949:2009, and SO 14001 2004 by TUV
Nord, and have implemented environmental management system ISO 14001:2004.

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Strengths

Diversified engineering company with a focus on providing comprehensive solutions and manufacturing high
quality, intricate and critical products, components and parts.

We are a diversified engineering company engaged in: (a) Automotive — Powertrain and Others, (b) Automotive
— Aluminium Products, and (c) Industrial and Engineering segments. We are the largest player involved in the
machining of cylinder blocks and cylinder heads in the intermediate, medium and heavy commercial vehicles
segment as well as the construction equipment industry and are also among the top 3-4 players in machining of
cylinder blocks for tractor segment in India. We are present across the entire value chain in the Automotive-
Aluminium Products segment, providing diverse products and solutions.

We offer comprehensive one-stop solutions to our customers including design, process engineering and
manufacturing including foundry, heat treatment, fabrication, machining and assembly facilities. We are
diversified across end-user industries and cater to commercial vehicles, two wheeler, tractor and other segments.
For instance, we manufacture cylinder blocks, cylinder heads and transmission parts which are required for
tractors and trucks as well as crank cases, which are required for two wheelers. We cater to a wide customer base
across various industry segments and offer a diverse suite of products to our customers. We actively pursue cross-
selling opportunities across segments to derive value for our existing and prospective customers. This not only
helps us in solving complex customer problems that require multi-domain expertise but also helps us in penetrating
customers’ different business segments and enhance our capabilities to collaborate with OEMs right from the
designing of their new products. Our diversified presence across various segments and design capability provides
us with the flexibility to operate successfully across business cycles and mitigate any fluctuations in the industry.

For instance, within our Automotive - Powertrain and Others and Automotive — Aluminium Products segments,
we have capabilities to collaborate with the OEMs in the design of new cylinder blocks and cylinder heads, design
and manufacture of requisite tooling for machining and manufacture of new engine components such as jigs,
fixtures, special tools and SPM. Similarly, in respect of aluminium components, we are equipped with high
pressure die casting, low pressure die casting and gravity die casting machines to manufacture components,
machining tools for machining and assembly lines. Our in-house tool room designs and manufactures dies for die
casting activity and takes care of maintenance of these dies. With our significant size of assets in our machining
and manufacturing capacities and capital expenditure undertaken by us in the earlier years of our business, we are
a one-stop-shop for our customers, manufacturing high quality, intricate and critical products and components,
which may be an entry barrier for other manufacturers and OEMs that do not currently have such similar in-house
engineering capabilities and production facilities. Thus, we are able to meet the demand and supply products to
our customers at a competitive pricing.

Our diversification of revenue across multiple customers allow us to prevent any possible customer concentration
in any of our business segments. With our track record and wide product portfolio, we have been able to retain
our existing customers and have also been able to attract new customers.

Strong in-house process and product design capabilities with the ability to interchange capacity and product
mix.

We are present across various levels of the component value chain, providing products and services that range
from product design, prototyping, tool development, manufacturing, assembly and production of integrated
components, reducing or minimizing our use of, or reliance on, externally sourced components. Over the years,
we have engaged with our customers from their early product design stage and have developed extensive process
and product design capabilities and domain knowledge, particularly for niche, intricate, complex and highly
critical automotive and non-automotive components, such as powertrain cylinder blocks and heads and camshafts,
enabling us to respond to customer specifications and provide quality products and service in a timely and cost-
effective manner. Our diversified presence across various levels of the component value chain and design
capability is unique across the competitive landscape.

We place a strong focus on research and development, with an emphasis on continuous improvement in product
performance, cost and reliability, to enhance our product range. We have also built a variety of automatic and
semi-automatic machines for assembly of parts. We continuously develop our own fail-safe control /monitoring
systems. Our manufacturing automation teams integrate robots and gantry systems, thereby assuring consistent
quality and dependability. Our engineering expertise and technology driven manufacturing processes have

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enabled us to deliver our products to our customers in accordance with their designs and specifications at a cost
competitive manner.

We have utilized our in-house engineering and design capabilities to developed a diverse product portfolio
including material handling equipment such as hoists, crane kits, industrial gears/ gear boxes, storage solutions,
marine engines and accessories, tool room, mould base products and SPM (which includes metal cutting and non-
metal applications such as washing/ leak testing solutions), which are available to us for our captive use and
application as well, and support our contract manufacturing operations, while also reducing the need for us to rely
on third party component manufacturers or suppliers.

Our plant configurations are flexible, allowing us to move our machinery from one location to another to
interchange capacity, product mix, including our ability to shift production lines between our various segments,
based on customer and operational requirements from time to time. This enables us to offer a diverse range of
products and services to our customers across a wide spectrum of industries in all three segments, thereby
optimizing our machine productivity, operational efficiency, time management and de-risking our business model.

Our delivery of consistent high quality of products has led to receive various awards and accolades including the
“Quality Excellence Award” at GE India Supplier Conference and the “Quality Excellence Award” at TATA
Motors Annual Supplier Conference 2019. For further details on our recent awards and accolades, see “~- Awards
and Recognitions” on page 185.

We are certified for international quality management systems ISO 9001:2008, ISO/TS 16949:2009, and SO
14001 2004 by TUV Nord, and have implemented environmental management system ISO 14001:2004.

Long term and well established relationships with marquee domestic and global OEMs.

We have strong and well established relationships with several marquee domestic and global OEMs as well as
component manufacturers, including certain of our key customers, to which we have been supplying our products
and solutions for over 10 years, such as Tata Motors and Tata Cummins. Our key customers include Daimler
India, Tata Motors, Tata Cummins, Mahindra & Mahindra, Royal Enfield, Mitsubishi Heavy Industries, Siemens
India, Escorts, Ashok Leyland, Simpson & Company, TAFE Motors and Tractors, Perkins India, John Deere and
JCB India. We have significant presence and customer relationships in each of our business segments and are
considered as a strategic and preferred supplier by many of our OEM customers. We are also the single source
supplier in certain product categories, for some of our key customers. Our success in leveraging our strong
customer relationships is illustrated in the growth of our business over the years.

With our track record and wide product portfolio, we have been able to retain our existing customers and have
also been able to attract new customers. Set forth below are the sales to our key customers, segregated on the basis
of the years of relationship with such customers:

The details of the sales to our key customers of our revenue from operations are as follows
(in & million)

 

Key customers Nine months ended Fiscal 2020 Fiscal 2019 Fiscal 2018
relationship December 31, 2020
Five years and less 1,662.60 2,410.78 2,374.71 1,379.84
More than five years but 692.16 1,097.97 1,117.87 1,077.31
less than 10 years
10 years and more 5,604.95, 7,909.46 10,248.70 8,872.41

 

We have a consistent track record of adding new customers to our portfolio and spreading across geographies. We
are diversified across customers with our top 10 customers accounting for 59.15%, 53.41%, 56.25% and 52.59%
of our revenue from operations in the nine months ended December 31, 2020 and Fiscals 2020, 2019 and 2018,
respectively. Our diversified engineering, comprehensive solutions and high quality, intricate and critical
products, components and parts, process and product design capabilities have been critical in sourcing new
customers and our ability to retain such customers and generate revenue from new customers. Our domestic and
global OEM customers have stringent selection procedures and product specifications for procurement from third
party suppliers such as us, including in terms of supplier audit, testing, trial runs, periodic reviews and inspections
of our procurement, manufacturing, logistical and other capabilities and performance. Our track record of having
established and maintained long term relationships with multiple such customers illustrates our commitment to
successfully serve and meet the requirements of our customers, through the supply of quality products and
solutions. We have significantly benefitted from our strong relationships with our customers, which has

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consistently been one of our key growth drivers. We have the ability to develop various products and solutions,
to meet their designs and specifications, as well as to cross sell multiple products to and thereby increase our
wallet share with our customers. Our long-standing relationship with our key customers provides us with a
significant advantage to effectively compete with our competitors.

Among the indicators of customer satisfaction and our commitment towards process and product excellence are
the awards and accolades we have received from certain of our customers. We have been consistently recognized
by customers for the high-quality of the products supplied by us. For further details on our recent awards and
accolades, see “— Awards and Recognitions” on page 185.

Extensive manufacturing footprint, with strategically located manufacturing facilities.

  

We own and operate 12 strategically located manufacturing facilities across seven cities in India, with a total built
up area of over 1.5 million sq. ft. Our facilities are equipped with advanced machinery and certain of our facilities
are located close to our key customers to enable meeting our customers’ just-in-time delivery schedules, allow
economies of scale and logistical advantages for our customers, and to insulate them from local supply or other
disruptions. Our in-house engineering and design capabilities allow us to offer comprehensive solutions including
design, process engineering and manufacturing including foundry, heat treatment, fabrication, machining and
assembly to our long standing domestic and international customers.

Two of our facilities, forming our flagship integrated facility, are located at the outskirts of Coimbatore in the
State of Tamil Nadu. We also have two integrated facilities for aluminium pressure die casting, machining and
SPM manufacturing at Bengaluru in the State of Karnataka. Our other manufacturing facilities are satellite
facilities located across automotive and engineering hubs in India and close to our key customers, including three
manufacturing facilities located at Pune in the State of Maharashtra, two manufacturing facilities located at
Ballabgarh near Faridabad in the State of Haryana, and one manufacturing facility each located at Sriperumbudur,
near Chennai in the State of Tamil Nadu, Jamshedpur in the State of Jharkhand, and Pithampur near Indore in the
State of Madhya Pradesh.

 

We have upgraded and continue to modernize, our manufacturing facilities, infrastructure, machines, equipment
and technology to allow us to offer a diverse product suite, reduce operating costs and drive productivity. For the
nine months ended December 31, 2020 and Fiscals 2020, 2019 and 2018, our capital expenditure aggregated to =
507.29 million, = 1,206.01 million, = 4,559.86 million and 2 1,811.24 million, respectively and the Gross Block
was % 22,307.42 million, = 21,855.56 million, = 20,700.44 million and 2 16,284.26 million for the same period.
These upgradations were undertaken to further enhance our machining and manufacturing capacities to meet the
growing demand for our Automotive - Powertrain and Others and Automotive — Aluminium Products from our
customers and to expand into new segments, based on revenue visibility.

We have recently set up a new unit in Pune with high end fully automated equipment from Italian and Swiss
manufacturers. This facility, which commenced operations in 2019, enables us to service the storage solutions
market, catering to customers across India.

Experienced management team supported by motivated and skilled work force.

We benefit significantly from our strong management and technical teams, which include individuals with
specialized training and/or substantial experience. In particular, our Promoter, Chairman and Managing Director,
Srinivasan Ravi, is a mechanical engineer and a first-generation entrepreneur with over 34 years of relevant
industry experience, and strong relationships with several key industry players. He has received various awards,
including “Outstanding Citizen of Coimbatore Award” by Rotary Club of Coimbatore in 2018, “Entrepreneur of
the Year 2015 Award” by Entrepreneurs’ Organization, Coimbatore, “Outstanding Entrepreneur Achiever Award
2012” by Bharathiar School of Management and Entrepreneur Development, Bharathiar University, Coimbatore
and “Best Entrepreneur Award” by Coimbatore Management Association in 2010.

In addition, we have an experienced Board of Directors, comprising Whole-time Directors and Independent
Directors, each with several years of relevant experience. Our senior management has extensive experience
including in operations, business development, quality assurance, customer relationships, finance and human
resource management. Our KMPs include Ravi Gauthamram, our Whole-time Director — Industrial and
Engineering products, who is engaged in building our product strategy in the Industrial and Engineering segment,
C.B. Chandrasekar, our CFO and Thiyagaraj Damodharaswamy, our COO - Automotive.

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Our Promoter’s vision, strategic guidance, industry relationships and entrepreneurial ability and our senior
management’s execution skills are supported by a large, motivated and skilled workforce. Our employees and
apprentices benefit from regular in-house training initiatives and we also engage external consultants from time
to time, to assist us in specific initiatives and functions. Our personnel policies are aimed towards recruiting
talented individuals, facilitating their integration, and promoting the development of their skills. As on December
31, 2020, we had a large workforce of 259 management staff, 1,372 permanent workmen, 755 apprentices and
1,214 contract workmen.

Robust financial performance in challenging business environment.

Our robust financial performance positions us for future growth and diversification. Our total income was 2
10,299.08 million, 15,010.57 million, 18,316.43 million and = 15,228.62 million for the nine months ended
December 31, 2020 and Fiscals 2020, 2019 and 2018 while our profit after tax was = 506.60 million, = 410.73
million, = 973.67 million and 2 315.34 million for the same period. Even though our total income declined in
Fiscal 2020 as compared to Fiscal 2019 due to the challenging business environment, our overall EBITDA
increased at a CAGR of 15.42% from 2 3,051.81 million in Fiscal 2018 to 2 4,065.51 million in Fiscal 2020. We
were able to achieve the margin improvement due to our strong process controls resulting in better operational
efficiency. Our profit after tax for the nine months ended December 31, 2020 and Fiscals 2020, 2019 and 2018
was % 506.60 million, = 410.73 million, = 973.67 million and 2 315.34 million, respectively. For the nine months
ended December 31, 2020 and Fiscals 2020, 2019 and 2018, our EBITDA Margin was 28.81%, 27.24%, 25.12%
and 20.19%, respectively. Our overall EBITDA margin increased at a CAGR of 16.15% ona restated consolidated
basis, from 20.19% in Fiscal 2018 to 27.24% in Fiscal 2020. During the same periods, our total debt to equity
ratio was 1.15, 1.44, 1.43 and 1.42, respectively.

Even though our revenues declined by 17.90% from % 18,180.07 million in Fiscal 2019 to 2 14,924.65 million in
Fiscal 2020 due to the challenging business environment, we have improved our EBITDA margin from 25.12%
in Fiscal 2019 to 27.24% in Fiscal 2020. We were able to achieve the margin improvement due to our strong
process controls resulting in better operational efficiencies. According to CRISIL Report, we had the highest
EBITDA margin for Fiscal 2019 and Fiscal 2020 across our peer group. For further details, see “Industry
Overview — Peer Comparison” on page 165.

For our segment wise revenue, percentage of growth in revenue compared to the previous Fiscals, percentage
contribution to our revenue by our segments, our EBITDA and EBITDA margins for nine months ended December
31, 2020 and Fiscals 2020, 2019 and 2018, see “Management’s Discussion and Analysis of Financial Conditions
and Results of Operations” on page 288.

We have already incurred significant capital expenditure in the past few years, including setting up an entire range
of facilities such as no-bake sand foundry, high pressure, low pressure and gravity die casting capabilities for
production of various types of aluminium castings for different applications for our customers, allowing us to
offer a diverse product suite, reduce operating costs and drive our productivity. For our capital expenditure in our
three business segments for Fiscals 2020, 2019 and 2018, see “~ Overview” on page 168. According to CRISIL
Report, despite incurring significant capital expenditure, we were one of the two companies in our peer set to
improve ROCE between Fiscal 2018 and Fiscal 2020. For further details, see “Industry Overview — Peer
Comparison” on page 165.

While the challenging business developments for us and our customers was impacted by slow-down in the overall
economy, the scheduled adoption of BS-VI norms and COVID-19 pandemic has affected the auto sector and our
revenues, we have maintained stable EBITDA and EBITDA margins. For details, see “Management’s Discussion
and Analysis of Financial Conditions and Results of Operations” on page 288. Our current long term loan rating
is BBB+/ stable and our short term loan rating is A2, last upgraded in March 2018 and reaffirmed in February
2020 and again in May 2020 by CRISIL. Strong ratings enable us to optimize our cost of funding and efficiently
plan our ongoing operations, capital expenditure plans and future growth. Going forward, as we propose to utilize
the major portion of the Net Proceeds towards repayment/prepayment of certain of our existing borrowings, the
resultant improvement in our debt-equity ratio should enable us to further optimize our cost of borrowings and
strengthen our balance sheet. This coupled with lower interest outgo due to reduction in borrowings will also
position us favourably for executing our future growth strategies.

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Strategies

Leverage vertically integrated manufacturing and engineering capabilities, to tap the growing opportunities
for aluminium usage in the Automotive — Aluminium Products and Industrial and Engineering segments.

Our vertically integrated manufacturing and engineering capabilities enable us to capitalize on the growing
opportunities and emerging trends in our industry, particularly in our Automotive — Aluminium Products segment,
where our focus is on multi utility vehicles, commercial vehicles and two wheelers, and in our Industrial and
Engineering segment, where our focus is on manufacturing certain critical power transmission components,
including, among others, castings for gas insulated switchgear.

Under the Government of India directives, the passenger, commercial vehicles and the two wheeler segments of
the automotive industry in India have migrated to BS-VI emission norms from April 2020. Similarly, the farm
equipment and construction equipment manufacturers are required to upgrade their products to BS-IV emission
norms from April 2021. In order to comply with these norms, the automobile manufacturers are, amongst other
things, exploring various possibilities of light-weighting their vehicles by using non-ferrous metals like aluminium
to reduce carbon emission. As we have an entire range of aluminium casting and product capabilities, we are
poised to offer various aluminium cast components in lieu of iron components. We have already successfully
developed aluminium cast components for an OEM. We have also developed an integral aluminium welding
technology, which would enable us to offer comprehensive solutions to manufacture structural parts for our
Automotive - Powertrain and Others and Automotive — Aluminium Products segments.

 

Increase our wallet share and acquire new business by leveraging existing OEM relationships and adding new
customers.

We intend to strengthen our relationships with our existing customers and explore opportunities to grow along the
value chain by expanding the array of our existing products and solutions that we supply to our customers across
geographies, and to win new customer contracts by developing products and solutions aligned with their needs.

We have been able to discern emerging trends and proactively identify new segments of business over the past
few years, enabling us to capitalize on an early mover advantage in certain segments, and also to harness synergies
through knowledge sharing between our cross-functional teams and horizontal and vertical integration across our
operations. Our engineering expertise and domain knowledge have enabled us to foray into certain niche areas
with high margin, high growth potential, including high-quality, intricate, complex and critical components
required by our customers. As part of our strategy, we have already expanded our business from providing
solutions to OEMs producing commercial vehicles to providing solutions to OEMs producing two wheelers.
Despite competition, we have been able to increase our customers’ contribution to our revenue.

We intend to achieve this by expanding the sale of each of our existing products to new or existing customers who
do not purchase such products from us presently. We see significant potential to increase the wallet share of our
existing OEM customers in the future, including an increase in our wallet share from export opportunities.

Within the Automotive - Powertrain and Others and Automotive — Aluminium Products segments, our continued
focus would be on the growing light and medium commercial vehicle, passenger vehicles and two wheeler sub-
segments. We intend to leverage our relationships with certain of our key customers, with some of whom we have
enjoyed long-term relationships for over 10 years, to grow our Automotive — Aluminium Products segment. In
particular, we seek to continue to explore opportunities that may arise from the Make in India initiative, fiscal and
tax reform and other regulatory and policy support initiatives in India, which the Central and State Governments
may announce and implement from time to time.

Growing opportunities in storage solutions.

As a part of our growth strategy, we seek to pursue emerging opportunities, including storage solutions and
material handling, which are growing market opportunities. According to the CRISIL Report, the market sizing
of storage solutions industry is estimated at 22 billion as of Fiscal 2020. The industry grew at a CAGR of 15 to
16% over Fiscal 2016 to Fiscal 2020 and is expected to 2 36 billion in Fiscal 2024 from % 21 billion in Fiscal
2021. We see opportunities in increasing our market share in the storage solutions business, where we intend to
leverage our strong product development, designing, engineering and manufacturing capabilities along with our
strong relationships with our existing customers.

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According to CRISIL Report, the market size of the organized storage solutions industry, comprising pallets,
racking and shelving, is estimated at % 21 billion as of Fiscal 2021 and the industry is expected to grow at 19-21%
CAGR over the next three years to reach 2 38 billion in Fiscal 2024. This would be driven by warehouse
consolidation due to GST implementation and the growth across end-user industries such as e-commerce,
organized retailing, consumer durables, auto components and pharmaceuticals as well as cold storage industries.

‘We commenced the storage solutions business in 2012 and have rolled out storage solutions for our customers in
the FMCG, E-commerce, food and beverages, third party logistics, pharmaceutical and electronics sectors. Our
storage solutions business has grown at a CAGR of 204.22% from Fiscal 2018 to Fiscal 2020 and has contributed
5.61%, 4.91%, 1.45% and 0.52% of our revenues from operations in the nine months ended December 31, 2020
and Fiscals 2020, 2019 and 2018, respectively. We expect the storage solutions business to continue its growth
trajectory and become an independent business segment over the next few years.

In order to backward integrate and enhance capabilities in this space, we have recently set up a new unit in Pune
in 2019, with high end fully automated equipment from Italian and Swiss manufacturers. This facility enables us
to service the storage solutions market, catering to customers across India. Our facility in Pune is strategically
located on a major national highway which connects Mumbai Metropolitan Region and will benefit from
initiatives undertaken by the Government of India such as the road and highways project ‘Bharatmala Pariyojna’.
We will benefit from being in close proximity from emerging distribution and warehousing hubs such as
Bhiwandi, which is a major warehousing location and our proximity to steel reprocessing centres which reduces
our inward freight and other transportation costs This will allow us to provide our storage solutions in a timely
and cost effective manner.

Using our design and engineering capabilities, we have developed a vertical storage system with tray extractor
arrangements operated by a console, marketed under the brand name “V-Store”. With increasing space constraints
in urban areas, V-Store, which improves the storage ratio and has substantial applications across various
industries, holds potential in the near future. We intend to focus on building brand visibility for V-Store through
various marketing and brand building initiatives through the print and digital media. We are also proposing to
enter into the automated storage systems, which is currently provided by only a few players in India. Automated
storage systems require high precision racking, which we are capable of providing from our facility in Pune. We
plan to leverage our special purpose mission building expertise and our automation expertise to expand our
presence in the automated storage system solutions.

Continue to reduce operating costs and improve operational efficiencies.

Offering quality products at attractive prices is a key aspect of maintaining and expanding our relationships with
our customers. We intend to continue enhancing our operational efficiencies, to increase economies of scale, better
absorb our fixed costs, reduce our other operating costs and strengthen our competitive position. We would focus
on improving capacity utilization at our production facilities, through increase in our overall production volumes.

We have, in the past and intend to in the future, continue using a variety of other manufacturing strategies and
cost reduction strategies to continue to improve our operational efficiencies. For example, to meet the growing
demand from our customers, we have invested in our manufacturing facilities, infrastructure, machines, equipment
and technology to allow us to offer a diverse product suite, reduce operating costs and drive productivity and scale
of our business without incurring significant incremental costs in the future. Our capital expenditure was = 507.29
million, = 1,206.01 million, = 4,559.86 million and 2 1,811.24 million for the nine months ended December 31,
2020 and Fiscals 2020, 2019 and 2018, respectively.

We intend to leverage our large size and scale to produce greater volumes of products from each of our plants and
spread our fixed costs, which relate primarily to the machinery and equipment required to produce components.
and to fixed labour costs, more widely to reduce our production costs on a per unit basis, allowing us to reduce
our unit sales price and increase our competitiveness.

We avail of a majority of our fund-based and non-fund based facilities in the ordinary course of business from
various banks and financial institutions. As part of our strategy, we intend to prepay/ repay, in full or part, of
certain our outstanding indebtedness. This will help reduce our outstanding indebtedness and debt servicing costs,
assist us in maintaining a favourable debt to equity ratio and enable utilisation of our internal accruals for further
investment in business growth and expansion. For further details, see “Objects of the Offer - Details of the Objects
of the Fresh Issue - Repayment/pre-payment, in full or part, of certain borrowings availed of by our Company”
on page 81.

176
Our Business Segments

We have three business segments, namely, our Automotive - Powertrain and Others segment, our Automotive —
Aluminium Products segment and our Industrial and Engineering segment. Our business segments are as set out
below:

 

Business Segments

 

 

 

 

 

 

 

 

 

 

Automotive - Powertrain Automotive — Aluminium Industrial and Engineerin
and Others Products e 8
t
ea Ee ee 1
+ 4
High End Sub-assembly, Contract
Menufacturing & Others
1 inium -Casting for power Storage Sehations&

   

Material Handling

smission

 

Toolroom & Mould tase

 

 

 

 

 

For our segment wise revenue, percentage of growth in revenue compared to the previous Fiscals, percentage
contribution to our revenue by our segments and EBIT for Fiscals 2020, 2019 and 2018, see “— Overview” on
page 168.

Automotive — Powertrain and Others

Our products in our Automotive — Powertrain and Others segment are highly engineered and require advanced
manufacturing processes to maximize end user performance, with end users including OEMs producing
commercial vehicles, special utility vehicle, tractors and off-highway vehicles. Our key products in our
Automotive — Powertrain and Others segment include engine parts such as cylinder block and cylinder head,
camshafts, transmission parts, gear box housings, turbo charges and bearing caps.

Growth drivers in the Automotive — Powertrain and Others segment include the implementation of BS VI emission
norms by the Government of India in April 2020, focus on infrastructure, commissioning of dedicated freight
corridors, implementation of GST and market potential for automobile manufacturers. Commercial vehicles,
tractors, small utility vehicles and construction equipment account for about 30%, 21%, 42% and 7% of the total
market share powertrain and transmission products. The domestic sales for commercial vehicles segment,
passenger vehicles segment and tractor segment are expected to grow at 5% to 7% CAGR, 5% to 7% CAGR and
4% to 6% CAGR, respectively, during Fiscal 2020 to Fiscal 2024, while the powertrain sector is expected to grow
at 12% to 14% CAGR during the same period. (Source: CRISIL Report)

The capabilities we use in our Automotive — Powertrain and Others segment include design and development,
precision machining and assembly (including CNC machining, laser heat treatment, assembly, testing, etc.),
finishing and others.

Within our Automotive — Powertrain and Others segment, we undertake machining services and product sales,
and cater directly to domestic and export markets, and our key customers include Daimler India, Tata Motors,
Tata Cummins, Mahindra & Mahindra, Simpson & Co. Limited, TAFE Motors and Tractors, Escorts, Ashok
Leyland, Perkins, Nelcast, Mitsubishi Heavy Industries, John Deere and JCB India.

177
Our revenue from this segment was 2 5,237.44 million, = 7,092.90 million, = 10,084.99 million and 2 8,708.82
million for the nine months ended December 31, 2020 and Fiscals 2020, 2019 and 2018, while our EBITDA from
this was = 1,969.52 million, = 2,533.24 million, = 3,392.88 million and % 2,438.85 million for the same period.

The following table sets forth certain information relating to our capacity utilization of our manufacturing facilities
for our Automotive — Powertrain and Others segment, calculated on the basis of total installed production capacity
and actual production as of/ for the periods indicated below:

Installed Production Capacity and Capacity Utilization as at and for

Fiscal 2020 Fiscal 2019 Fiscal 2018

% % we
i Capacity |Productic

3486000 3033105 3470000 3301220

315000 249323, 295000 263840 257500 231369 90%

 

615000 362114 5 875000 775220 89% | 755000 690105 91%

 

420000 310529 530000 480966. 255300 230314 90%

= 955000 640917 985000 883156. 854000 767387 | s0% |
‘Sriperumputhur] 759000 543589 749000 692500 669000 613673 | 92% |
7100000 6286339 6265800 5836787

As certified by Er. K. Sivakumar, Chartered Engineer, by certificate dated December 7, 2020.

 

* The key general purpose machine were influencing the production capacity and it can be interchangeable within above
segment.

* The installed capacity for the above have been arrived based on the past production mix in the respective segment/year.

* — Due to some share of revenue arrived from the sale of services like machining charges also, capacity may undergo
change according to the nature of business services and product.

In our Automotive — Powertrain and Others segment, our capital expenditure for the nine months ended December
31, 2020 and Fiscals 2020, 2019 and 2018 were % 205.37 million, = 137.51 million, = 1,502.42 million and =
424.42 million, respectively, accounting for 3.92%, 1.94%, 14.90% and 4.87% of our total revenue from
Automotive — Powertrain and Others segment for those periods respectively.

Automotive — Aluminium Products

Our key products in our Automotive — Aluminium Products segment include highly engineered and include crank
case and cylinder blocks for two wheelers, engine and structural parts for passenger vehicles and gear box housing
for heavy commercial vehicle.

Growth drivers in the Automotive — Aluminium Products segment include the usage of non-ferrous metals like
aluminium to reduce the weight of vehicles, growth in automobile sales and cost competitiveness. In line with
automotive demand, the aluminium castings market is estimated to grow at a CAGR of 3-5% to reach 0.45-0.55
million MT by Fiscal 2024 in terms of tonnage. The aluminium casting market is expected to record a CAGR of
6-8% to reach % 220-225 billion by Fiscal 2024 in terms of value. (Source: CRISIL Report)

The capabilities we use in our Automotive — Aluminium Products segment include design and development,

foundry and casting, precision machining and assembly (including CNC machining, testing, etc.), finishing and
others.

178
Within our Automotive — Aluminium Products segment, we undertake product sales and machining services, and
cater directly to domestic and export markets, and our key customers include Daimler India, Royal Enfield,
Mahindra & Mahindra and TVS Motors.

Our revenue from this segment has increased at a CAGR of 4.65%, from & 2,353.15 million in Fiscal 2018 to
2,576.90 million in Fiscal 2020, while our EBITDA from this segment has increased at a CAGR of 33.61%, from
% 240.33 million in Fiscal 2018 to = 429.01 million in Fiscal 2020.

The following table sets forth certain information relating to our capacity utilization of our manufacturing facilities
for our Automotive — Aluminium Products segment, calculated on the basis of total installed production capacity
and actual production as of/ for the periods indicated below:

at

ae Fiscal 2020 Fiscal 2019 Fiscal 2018

Tnstalled | Actual y | Bstalled rn z

: , , A ; " %
Core ject ot I ctireton| ieee lee Utilization | C220 Production) ii ation
in Tons Tons in Tons in Tons in Tons in Tons

ae Re iia oe aut ae
11230 7995 1%

* — Ascertified by Er. K. Sivakumar, Chartered Engineer, by certificate dated December 7, 2020.

 

* The key general purpose machine were influencing the production capacity and it can be interchangeable within above
segment.

* The installed capacity for the above have been arrived based on the past production mix in the respective segment/year.

* — Due to some share of revenue arrived from the sale of services like machining charges also, capacity may undergo
change according to the nature of business services and product.

* — Ina die casting machine, the production part weight will be vary based on product and the die configuration.
Production part weight can also be changed based on customer demand.

In our Automotive — Aluminium Products segment, our capital expenditure for the nine months ended December
31, 2020 and Fiscals 2020, 2019 and 2018 was 2 178.11 million, = 792.23 million, = 1,728.40 million and % 834.90
million, respectively, accounting for 8.25%, 30.74%, 56.09% and 35.48% of our total revenue from Automotive
— Aluminium Products segment for those periods respectively.

Industrial & Engineering Segment

Our revenue across our two sub-segments under our Industrial and Engineering segment, for the nine months
ended December 31, 2020 and for Fiscals 2020, 2019 and 2018, is as follows:

(in million)

 

Sub-segments Nine months Fiscal 2020 Fiscal 2019 ‘Fiscal 2018
ended
December 31,
2020
Storage solutions 573.61 732.10 263.32 79.10
High-end precision products 2,258.60 4,522.75 4,750.26 3,974.24
Total 2,832.21 5,254.85 5,013.58 4,053.34

 

Our revenue from this segment has increased at a CAGR of 13.86%, from % 4,053.34 million in Fiscal 2018 to 2
5,254.85 million in Fiscal 2020, while our total EBITDA from this segment has increased at a CAGR of 68.83%,
from 2 461.25 million in Fiscal 2018 to = 1,314.71 million in Fiscal 2020.

179
The following table sets forth certain information relating to our capacity utilization of our manufacturing facilities
for our Industrial & Engineering segment, calculated on the basis of total installed production capacity and actual
production as of/ for the periods indicated below:

   
    
 
   
   
 

Installed Production Capacity and Capacity Utilization as at and for

    

Fiscal 2018

Actual — Actual ee Actual
Production Capacity | Production con

 

 

Gear & Gear Box
(in No’s)
Mouldbase
(in No's)

 
   
   
 
   
 
 
   
 
   

Toolroom
(m No’s)

SPM
(in No's)

  

Hoist
(in No's)
Pune unit +
\(in Tons)

  

  

  
 
 

Total (in Nos)

 

Total (in Tons)

 

*  Ascertified by Er. K. Sivakumar, Chartered Engineer, by certificate dated December 7, 2020.

* The key general purpose machine were influencing the production capacity and it can be interchangeable within above
segment.

* The installed capacity for the above have been arrived based on the past production mix in the respective segment/year.

* — Due to some share of revenue arrived from the sale of services like machining charges also, capacity may undergo change
according to the nature of business services and product.

* — Industrial and Engineering segment involves manufacture of components/parts for various segments and as such
production process can be arrived at only based on machine hours, which has been provided in the table above. The unit
/numbers are based on the item and related cycle time for processing that specific part.

In our Industrial & Engineering segment, our capital expenditure for the nine months ended December 31, 2020,
Fiscals 2020, 2019 and 2018 was 2 79.71 million, % 206.99 million, = 1,102.34 million and % 188.71 million,
respectively, accounting for 2.81%, 3.94%, 21.99% and 4.66% of our total revenue from Industrial & Engineering
segment for those periods respectively.

Storage solutions sub-segment

Our key products in our storage solutions sub-segment include stationary racking for warehouses, V-store, roll
form products and Automated Storage and Retrieval Systems (“ASRS”). Our products in this sub-segment cater
to warehousing and industrial sectors.

Growth drivers in the storage solutions segment include setting up of large regional warehouses by e-commerce,
organised retailing, consumer durables, auto components and pharmaceuticals as well as cold storage industries.
The market size of the organized storage solutions industry, comprising pallets, racking and shelving, is estimated
at % 22 billion as of Fiscal 2020. The storage solutions industry grew at a CAGR of 14-16% over Fiscals 2016 to

180
2020 and is estimated to record a CAGR of 19-21% over the next three years to reach 2 38 billion in Fiscal 2024
from 2 21 billion in Fiscal 2021, on account of incremental ambient warehouse addition and rise in the share of
organised warehousing players due to GST implementation by the Gol. (Source: CRISIL Report)

We have supplied our storage solutions to major customers in India. Some of the areas and applications to which
our storage solutions business would cater may include logistics, electronics, warehousing, manufacturing, retail
and healthcare, with solutions ranging from selective pallet, pushback pallet, pallet gravity flow, or drive-through
or cantilevered racking, mobile, sliding, multi-tiered, long-span, or boltless slotted shelving, mezzanine floors,
compactors or collapsible storage, goods lifts, cold storage racks and modular solutions.

Using our design and engineering capabilities, we have developed a vertical storage system with tray extractor
arrangements operated by a console, marketed under the brand name V-Store. With increasing space constraints
in urban areas, V-Store, which improves storage ratio and has substantial applications across various industries,
holds potential in the near future.

We have recently set up a new unit in Pune in 2019 with high end fully automated equipment from Italian and
Swiss manufacturers, which enables us to service the storage solutions market, catering to customers across India.

High-end precision products sub-segment

 

Under our high end precision products sub-segment, we manufacture aluminium products for power transmission,
high-end precision products and undertake sub-assembly, material handling equipment such as hoists, crane kits
and industrial gears, manufacture gear and gear boxes, marine engines and accessories.

High end precision products and sub-assembly manufactures tailor-made machines, sub-assembly and precision
components, designed for specific application to support high quality mass production. This involves high level
of design engineering and a complex production system which involves design and development, foundry and
casting, sheet metal fabrication, precision machining and assembly, finishing, testing and others.

In this sub-segment we undertake direct exports to various customers, including Mitsubishi Heavy Industries,
Rhein Getriebe and other global customers.

Aluminium products for power transmission

Our key products in our aluminium products for power transmission sub-segment include machined casting for
GIs.

Growth drivers in the aluminium products for power transmission sub-segment include the use of GIS instead of
air insulated switchgears (“AIS”), particularly in urban areas, as GIS is compact, occupies lesser space and has
lower maintenance as compared to AIS. Demand for industrial castings from the power transmission sector is
driven by investments of the central and state government transmission companies and, to a smaller extent, from
the private sector for the medium-voltage segment. Demand for industrial castings used in power transmission
grew at a CAGR of 2-4% over Fiscals 2016 to 2020 to = 15 billion. The decline in investment is expected to
impact demand in the casting industry for the year. According to CRISIL Report, a 20% decline in industrial
castings market is estimated in Fiscal 2021 to 2 11-13 billion. However, investments are expected to rebound from
Fiscal 2022, supporting demand in the casting industry. The industry is expected to reach = 18-20 billion,
recording a 4-6% CAGR during Fiscals 2020 to 2024. (Source: CRISIL Report)

The capabilities we use in our aluminium products for power transmission sub-segment include design and
development of castings, manufacturing of castings in our foundry facilities, precision machining and assembly
and testing and others.

Our products in this segment cater to power equipment manufacturers who in-turn supply to power transmission

and distribution utilities. In this sub-segment, we undertake direct domestic sales, and our key customers include
Siemens and others.

181
Material handling

Our key products in our material handling sub-segment include chain hoists, wire rope hoists, grab hoists, crane
kits, light crane systems and pallet trucks. Our products in this sub-segment are used by process industries,
automotive sector and foundries.

According to CRISIL Report, the hoist market in India was 2 6-8 billion as of Fiscal 2020. Among hoists, chain
hoists account for approximately % 1-2 billion, while rope hoists account for approximately % 5-6 billion. Unit-
wise requirement of chain hoists is higher as they have a lower replacement cycle (three to five years), compared
with rope hoists (and ready crane kits), which are usually replaced after five to seven years.

The crane industry is estimated to reach 2 24-26 billion by Fiscal 2024, growing at a CAGR of 5-7% between
Fiscals 2020 and 2024. This growth is expected to be fuelled by continued investments in the end user segments,
and in turn, capacity expansion by players to cater to the sustained demand growth in the underlying industries
such as automobiles, metal and power industries. (Source: CRISIL Report)

The capabilities we use in our material handling sub-segment include design and development, foundry and
casting, manufacture of gears, sheet metal fabrication and assembly, testing and others.

We have entered into a joint venture with Carl Stahl Hebetechnik GmbH (previously known as Carl Stahl
International GmbH) forming Carl Stahl Craftsman Enterprises Private Limited for engaging in marketing,
installation, commissioning and rendering after-sales services for our products in this sub-segment, manufactured
by us. These products are sold through Carl Stahl Craftsman Enterprises Private Limited under the brand “Carl
Stahl Craftsman”. Also see, “History and Certain Corporate Matters - Joint Venture” on page 201.

Gear and gear boxes

Our key products in our Gear and gear boxes sub-segment, include transmission and housing components. Our
products in this segment cater to elevators, metro transportation, compressor manufacturers, printing machines,
automobiles and steel rolling mills.

Growth drivers in the gear and gear boxes sub-segment include growth in steel products, material handling
equipment, elevators and wind power capacity additions. The domestic market for industrial gears and gearboxes
is estimated to have recorded a CAGR of 4-5% from % 39 billion in Fiscal 2015 to reach % 50 billion in Fiscal
2020 and is estimated to record 5-6% CAGR over Fiscals 2020-2024 to reach % 62-64 billion in Fiscal 2024.
(Source: CRISIL Report)

The capabilities we use in our gear and gear boxes sub-segment include design and development of gear and gear
boxes, heat treatment, hobbing, grinding, precision machining and assembly, testing and others.

In this sub-segment, we undertake domestic sales as well as exports to various customers. Our key customers
include Ashok Leyland, Elgi Equipments, Voith Turbo, Pricol, Siemens and others.

SPM

Our key products in our SPM sub-segment, include metal cutting machines, drilling machines, milling machines
and other SPMs like leak testing machines, nut runners, industrial washing machines and supply conveyors. Our
machines in this sub-segment are primarily used by automobile companies.

Growth drivers in the SPM sub-segment include the implementation of BS VI emission norms by the Gol, entry
of new players in the utility vehicles, rise in sale of medium and heavy commercial vehicles due to improvement
in industrial activity and the government’s focus on infrastructure. (Source: CRISIL Report)

The capabilities we use in our SPM sub-segment, include design and development of machines, vendor
development of casting, bought-out components and electronic sub-assemblies, sheet metal fabrication, heavy
duty and precision machining and assembly, testing and on-site installation.

In this sub-segment, we undertake direct domestic sales, and our key customers include Daimler India, Mahindra
& Mahindra, Tata Motors, TAFE Motors and Tractors, Simpson & Co, JCB and others.

182
Tool room, mould base and sheet metal

 

Our key products and services in our tool room, mould base and sheet metal sub-segment include mould base,
plastic moulding tools, dies, sheet metal casing and housings. Our products in this sub-segment cater to diversified
industries including engineering and automotive sector.

The tool room industry is estimated to have grown at a CAGR of around 6% to 7% between Fiscals 2017 and
Fiscal 2019, supported by a 10% CAGR in demand from its primary segment, i.e. automotive, and 6% CAGR
from consumer appliances. According to CRISIL Report, over the next three years, the demand for tools are
forecast to gradually pick, with the market size of the tooling industry estimated to reach between 2 185 billion to
% 190 billion by Fiscal 2024, which is approximately between 4-6% CAGR growth from Fiscal 2020.

The capabilities we use in our tool room, mould base and sheet metal sub-segment include design and
development, heavy duty precision machining and assembly (including CNC machining, laser heat treatment,

assembly, testing, etc.), sheet metal fabrication, welding, painting, finishing and others.

Manufacturing Facilities

 

o¢

Ballabgarh, Faridabad —1
Ballabgarh, Faridabad —II

Pithampur, Indore
rs Jamshedpur
©

@ Pimple Jagtap, Pune -IV
® Sanaswadi, Pune - Ill
® Sanaswadi, Pune - II

ee ?o Sriperumbudur, Chennai
Head Quarters A Marketing Office, Chennai
Arasur, Coimbatore Oo
Kuruchi, Coimbatore ®

{Flagship Facility
@ integrated Facilities
© Satellite Facilities
A Marketing Office

 

 

 

* Map not to scale

We own and operate 12 strategically located manufacturing facilities across seven cities in India, with a total built
up area of over 1.5 million sq. ft. Our facilities are equipped with advanced machinery, including imported state-
of-the-art CNC machine tools and die casting machines and certain of our facilities are located close to our key
customers to enable meeting our customers’ just-in-time delivery schedules, allow economies of scale and
logistical advantages for our customers, and to insulate them from local supply or other disruptions.

183
The following table sets out certain details of our manufacturing facilities:

 

S. Facility location Capabilities/ Divisions Leased/owned Year of
No. Commissioning
A Flagship Facility
1 Power train products; Owned 2003
Gears and gearboxes;

Tool room and mould base;

Special machines manufacturing;

Material lifting products;

High pressure die casting foundry

(high pressure die casting, low

pressure die casting and gravity die

casting);

Sand foundry

High end sub-assemblies;

Precision parts;

10. Storage products;

11. Jigs and fixtures;

12. Equipment (sheet metal fabrication
and storage);

13. Marine engines and products; and

14. Industrial aluminium _ products
(power transmission, railway, oil
and gas, etc. and other industrial

Arasur, Coimbatore

Pee he

rw

products)

B. Integrated Facilities
1. Pimple Jagtap, Pune-IV 1. _ Storage products; and Leased 2018

2. Machining and assembly
2. Bengaluru — II 1. Special machines manufacturing Leased 2019
3. Bengaluru —1 1. Pressure die casting foundry; and Leased 2015

2. Machining and assembly
Cc. Satellite Facilities
1. Kurichi, Coimbatore Aluminium foundry Owned/ 2001

Leased

2. Sanaswadi, Pune - II Machining and assembly Leased 2014
3. Sanaswadi, Pune - III Machining and assembly Leased 2011
4. Ballabgarh, Faridabad -1 Machining and assembly Leased 2011
5. Ballabgarh, Faridabad - II_ Machining and assembly Leased 2018
6. Sriperumbudur Machining and assembly Leased 2010
7. Jamshedpur Machining and assembly Leased 2007
8. Pithampur Machining and assembly Leased 2005

 

Quality Assurance

We are certified for international quality management systems such as ISO 9001:2008, ISO/TS 16949:2009, SO
14001 2004 by TUV Nord, and have implemented environmental management system ISO 14001:2004.

Manufacturing Processes and capabilities

Our plant configuration is flexible and our machinery are equipped for both individual and diversified processes,
and their fungibility enables us to deploy them in the most optimum manner to suit the customer’s preferences
and evolving requirements. Additionally, most of our machinery with change in attachments such as jigs, fixtures
and tools are capable of being used interchangeably for either of our segments, depending on the demand for
products under each segment. This enables us to optimize our machine tool productivity, operational efficiency,
time management and de-risking our business model. We have dedicated production lines from time to time, based
on the size and frequency of the orders of our customers. In case of items of mass production, we have installed
SPMs to increase productivity.

 
  

We have a state-of-the-art quality control laboratory, which monitors the raw material, process and the end product
quality. The quality control facility includes equipment like helium leak test machines for checking the quality of
aluminium castings. We also have facilities to regrind our tools, which aids in reducing the tooling costs.

184
Our manufacturing process is as set out below:

Machining, Metal
Manufacturing moners forming, Heat
Fasten Ra Process Design. toot Speciat Purpose Mca guamen ioe Treatment Assembly & Quatity
stand Pat || “taajanatinure |=) tana denge a = MENMEOU IO |_| Goasmanumacting, = Antutancn ond
~—_ design and Manutacturing oa Sheet metal Testing
manufacturing, ieee) fabrication and
powder costing

 

Raw Materials and Procurement

We do not typically enter into long-term contracts with our suppliers. We primarily purchase aluminium ingots,
as well as steel, castings and other raw materials at spot rates from our suppliers. For the product sales component
of our business, we procure the raw materials at our own cost, such as for most of our sub-segments under our
Industrial and Engineering segment. For the services sales component of our business, our customers supply the
raw material requirements for the product and we are only engaged in providing machining services.

Additionally, the risk of raw material cost fluctuations is limited, especially in powertrain machining as our
customers provide the castings, for which we only do the machining. For our customers with long term
arrangements, we are provided with forecasts of annual business volumes, which enable us to predict the volume
of raw materials that we need to procure.

Power

While we rely on the state electricity grids for meeting our power requirements, we also have group captive power
arrangements in the State of Tamil Nadu at negotiated rates, and diesel generation sets for standby supply. We
also entered into contracts for the purchase of interstate power from power exchange. We have backup facilities
to ensure transition between grid supply and diesel generation sets, to avoid production disruption due to power
outages.

Sales and Marketing

Sales and marketing for our Automotive — Powertrain and Others, Automotive — Aluminium Products segments
are business-to-business oriented and dependent on our long term relationships with OEMs and is primarily
handled by our senior management, who have extensive experience in understanding customer relationships.

For our Industrial and Engineering segment, which is a customer oriented business, we have a marketing and
business development team, comprising 30 full time employees as of December 31, 2020, who are responsible for
selling our industrial and engineering products.

Our sales teams and key account managers are responsible for growing our relationships with key customers and
developing strategies to ensure that we are engaging in projects and developing the right products in line with the
market trends and our business strategy.

Awards and Recognitions

Among the indicators of customer satisfaction and our commitment towards process and product excellence are
the awards and accolades we have received from certain of our customers. Our recent awards and accolades

185
include the “Quality Excellence Award” at GE India Supplier Conference, “Quality Excellence Award” at TATA
Motors Annual Supplier Conference 2019, “Best Product Development Performance - Marazzo” at Mahindra
Supplier Excellence Awards, “Best Product Development Performance - Furio” at Mahindra Supplier Excellence
Awards, “Certificate of Excellence in Partnership” from Daimler India, “Suppliers Excellence Award for New
Product Development” from Faiveley Transport, “Award for Quality” from Tata Motors at Annual Supplier
Conference 2018, “Certificate of Appreciation” from Ashok Leyland for persistent efforts in maintaining higher
levels of capability and performance for two consecutive quarters, “Certificate of Excellence in machining
category” award by BEML Limited in recognition of outstanding performance in supply of material during the
year 2015-16 and 2016-17 in Fiscal 2019, the “Annual Commodity Award in casting and forging for automotive
division” by Mahindra & Mahindra in recognition of superior performance for Fiscal 2018, the “Appreciation for
best overall performance award” in Fiscal 2018 by Siemens and “Recognition for Outstanding Business
Alignment for Defence Business” award in Fiscal 2018 by Ashok Leyland.

Human Resources
Our personnel policies are aimed towards recruiting talented individuals, facilitating their integration, and
promoting the development of their skills. Recruitment of personnel in different categories is carried out by our

human resources department.

As on December 31, 2020, we had a large workforce of 3,777 employees. The following table illustrates the
breakdown of the numbers of our employees by function:

 

S.No. Function As of December 31, 2020
1. Management staff 259

2. Permanent workmen 1,372

3. Apprentices 755

4. Contract workmen 1,214
Total 3,777

 

Information Technology

Our IT systems are vital to our business. We have implemented the Oracle E Business Suite in 2013, recently
upgraded in 2019, which covers key areas of our operations, procurement, inventory, sales and dispatch and
accounting. It encompasses all materials management, including procurement, bill of material, inventory finance
and accounts and sales order and invoicing management. We have developed in-house application software for
human resource management, drawing maintenance, calibration and exports documentation. We also have
installed Computer Aided Design (“CAD”) software which aid in design, development and prototyping. We have
made conscious efforts to consistently upgrade our systems to ensure efficiency and reduce redundancies. The
key functions of our IT team include establishing and maintaining enterprise information systems and
infrastructure services to support our business requirements. For network security, we maintain four levels of
protection for our data centre constructed by our service provider. We have taken necessary measures for ensuring
cyber security, data protection from virus attacks and hacking and disaster recovery servers and systems for data
retrieval and business continuity.

Insurance

We maintain insurance cover for our properties, including protection from business interruption (fire), burglary,
product liability, public liability and employee insurance policies such as group personal accident policy. We also
maintain a key man insurance policy for our Chairman and Managing Director and a directors’ and officers’
liability insurance policy for all our Directors.

Also see, “Risk Factors — Our insurance coverage may not be adequate to protect us against all material risks.

In the event of the occurrence of such events, our insurance coverage may not adequately protect us against a
possible risk of loss.” on page 45.

186
published and implemented preventive measures for COVID-19, including in terms of our interactions with
customers and suppliers.

The future impact of COVID-19 or any other severe communicable disease, lockdown or other such event on our
business and results of operations depends on several factors including those discussed in “Risk Factors - The
extent to which the coronavirus disease (COVID-19) affects our business, results of operations and financial
condition will depend on future developments, which are uncertain and cannot be predicted.” on page 22.

188
Property

Our Company’s registered and corporate office is located at Senthel Towers, IV Floor, 1078, Avinashi Road,
Coimbatore 641 018, Tamil Nadu, India, which is on lease, pursuant to a lease deed dated March 17, 2020. This
lease deed is valid for a period of three years.

Except our facilities at Arasur and Kurichi at Coimbatore, which are owned, and our facilities at Sriperumbudur
near Chennai in the State of Tamil Nadu, Pithampur near Indore in the State of Madhya Pradesh, and Jamshedpur
in the State of Jharkhand, which are under long term lease from the respective state industrial development
corporations, all of our manufacturing facilities are on leasehold basis. Also see, “- Manufacturing Facilities”
on page 183.

Further, we have a marketing and product development office at Chennai, which is on leasehold basis and we own
a land parcel near Faridabad.

Intellectual property

Us,

 

Our Company has registered oC
«. WWW, CRAFTSMANAUTOMATION. OM

under classes 6, 7 and 12 as our trademark. We own a registered

trademar! ” for our website under classes 6 and 12. Additionally, our Company
has also applied to the trademark registry for registration of certain trademarks under various classes, which are
currently pending approval.

Also see, “Government and Other Approvals” on page 330.
Corporate Social Responsibility (“CSR”)

Our CSR initiatives are aligned with the requirements under the Companies Act 2013 and the Companies
(Corporate Social Responsibility) Rules, 2014. We strive to meet our commitment towards the community by
committing our resources and energies to social development. Our focus areas include education, environment,
health and sports promotion.

Competition

We face competition from competitors both domestically and internationally, in relation to specific sectors,
segments, sub-segments or geographies. The key factors of competition may include quality, cost, delivery,
technical capability, level of vertical or horizontal integration, and quality of management. Consequently, we do
not have a single competitor across all our product ranges.

Also see, “Industry Overview” on page 96.
Impact of COVID-19 on our business operations

The current outbreak of the COVID-19 pandemic has adversely impacted the global economy. The World Health
Organization declared the outbreak of COVID-19 as a public health emergency of international concern on
January 30, 2020 and a pandemic on March 11, 2020. On March 14, 2020, India declared COVID-19 as a “notified
disaster” and imposed a nationwide lockdown announced on March 24, 2020 to control the spread of COVID-19.
According to the CRISIL Report, this, coupled with the effects of a troubled global economy, resulted in the worst
ever real GDP contraction on record of 23.9% on-year in the first quarter of Fiscal 2020. According to the CRISIL
Report, the COVID-19 curve appears to be flattening in India, with high frequency data in September evidencing
improving economic conditions.

Our business operations were temporarily disrupted on account of the temporary shutdown of our offices and our
manufacturing facilities pursuant to the directives from the central/ local authorities. The spread of COVID-19
caused us to modify some of our business practices, including implementation of a work from home regime for
certain executives, to the extent possible, and cancellation of physical participation in certain meetings, events
and conferences, or substitution of virtual participation. During the period of the lockdown, we continued paying
salaries/ wages to all employees and outsourced manpower. We resumed operations at our manufacturing facilities
in a phased manner as per the Government of India and state government’s directives after making arrangements
to meet the government’s requirements on sanitisation, people movement and social distancing. We have

187
KEY REGULATIONS AND POLICIES IN INDIA

The following description is a summary of certain sector specific laws and regulations in India, which are
applicable to our Company. The information detailed in this chapter has been obtained from various statutes,
regulations and/or local legislations and the bye laws of relevant authorities that are available in the public
domain. The description may not be exhaustive, and is only intended as a substitute to provide general information
to investors, and is neither designed, nor intended as a substitute for professional legal advice. Judicial and
administrative interpretations are subject to modification or clarification by subsequent legislative, judicial or
administrative decisions. For further information, see “Government and Other Approvals” on page 330.

Industry specific legislations
Bureau of Indian Standards Act, 2016

The Bureau of Indian Standards Act, 2016, as amended (the “Bureau of Indian Standards Act”), provides for
the establishment of bureau for the standardization, marking and quality certification of goods. The Bureau of
Indian Standards Act provides for the functions of the bureau which include, among others (a) recognize as an
Indian standard, any standard established for any goods, article, process, system or service by any other institution
in India or elsewhere; (b) specify a standard mark to be called the Bureau of Indian Standards Certification Mark
which shall be of such design and contain such particulars as may be prescribed to represent a particular Indian
standard; and (c) make such inspection and take such samples of any material or substance as may be necessary
to see whether any goods, article, process, system or service in relation to which the standard mark has been used
conforms to the Indian standard or whether the standard mark has been properly used in relation to any article or
process with or without a license.

Bureau of Indian Standards Rules, 2018

The Bureau of India Standards Rules, 2018 (the “Bureau of Indian Standards Rules”) have been notified, in
supersession of the Bureau of Indian Standards Rules, 1987, in so far as they relate to Chapter IV A of the said
rules relating to registration of the articles notified by the Central Government, and in supersession of the Bureau
of Indian Standards Rules, 2017 except in relation to things done or omitted to be done before such supersession.
Under the Bureau of Indian Standards Rules, the bureau is required to establish Indian standards in relation to any
goods, article, process, system or service and shall reaffirm, amend, revise or withdraw Indian standards so
established as may be necessary.

Steel and Steel Products (Quality Control) Order, 2020

The Steel and Steel Products (Quality Control) Order, 2020, as amended (the “Quality Control Order 2020”),
was notified by the Ministry of Steel, Government of India, to bring 120 steel products under mandatory BIS
certification. All manufacturers of steel and steel products are required to apply to the Bureau of Indian Standards
for certification and ensure compliance with the Quality Control Order 2020. The Quality Control Order 2020
further provides that every steel and steel products stated therein shall bear the standard mark under a license from
Bureau of Indian Standards as provided in Bureau of Indian Standards (Conformity Assessment) Regulations,
2018.

Legal Metrology Act, 2009

The Legal Metrology Act, 2009, as amended (the “Metrology Act”), was enacted with the objectives to establish
and enforce standards of weights and measures, regulate trade and commerce in weights, measures and other
goods which are sold or distributed by weight, measure or number and for matters connected therewith or
incidental thereto. The Metrology Act states that any transaction/contract relating to goods/class of goods or
undertakings shall be as per the weight/measurement/numbers prescribed by the Metrology Act. The
specifications with respect to the exact denomination of the weight of goods to be considered in transactions are
contained in rules by each state

Duty Drawback Scheme
The duty drawback scheme is an option available to exporters. Under this scheme, exporter of goods is allowed

to take back refund of money to compensate him for excise duty paid on the inputs used in the products exported
by him. It neutralizes the duty impact in the goods exported. Relief of customs and central excise duties suffered

189
on the inputs used in the manufacture of export product is allowed to exporters. The admissible duty drawback
amount is paid to exporters by depositing it into their nominated bank account. Section 75 of the Customs Act,
1962 and Section 37 of the Central Excise Act, 1944, empower the Central Government to grant such duty
drawback. Customs, Central Excise Duties and Service Tax Drawback Rules, 2017, as amended (the “Drawback
Rules”) have been framed outlining the procedure to be followed for the purpose of grant of duty drawback (for
both kinds of duties suffered) by the customs authorities processing export documentation. Under duty drawback
scheme, an exporter can opt for either all industry rate of duty drawback scheme or brand rate of duty drawback
scheme.

The all industry rate of duty drawback scheme essentially attempts to compensate exporters of various export
commodities for average incidence of customs and central excise duties suffered on the inputs used in their
manufacture. Brand rate of duty drawback is granted in terms of rules 6 and 7 of the Drawback Rules in cases
where the export product does not have any all industry rate or duty drawback rate, or where the all industry rate
duty drawback rate notified is considered by the exporter insufficient to compensate for the customs or central
excise duties suffered on inputs used in the manufacture of export products. For goods having an all industry rate,
the brand rate facility to particular exporters is available only if it is established that the compensation by all
industry rate is less than 80% of the actual duties suffered in the manufacture of the export goods.

Merchandise Exports from India Scheme

Pursuant to the Foreign Trade Policy (2015-2020), the Merchandise Exports from India Scheme, as amended, (the
“MEI Scheme”) was introduced to provide rewards to exporters to offset infrastructure inefficiencies and
associated costs in export of goods, especially those having high export intensity, employment potential and ability
to enhance India’s export competitiveness. Export of notified goods to notified markets are rewarded under the
MEI Scheme. The basis for calculation of the reward under the MEI Scheme is on the Free on Board (“FOB”)
value of exports realized in free foreign exchange or on the FOB value of exports mentioned in the shipping bill,
whichever is less, unless otherwise specified. With effect from June 1, 2015, the MEI Scheme mandatorily
requires a declaration of intent to be endorsed on the shipping bills (except free shipping bills) to be eligible to
claim any reward under the MEI Scheme. Due to the COVID-19 pandemic, the Government of India has continued
to grant relief under various export promotion schemes by granting extension of the existing Foreign Trade Policy
(2015-2020) by one year i.e. up to March 31, 2021.

Labour law legislations
Factories Act, 1948

The Factories Act, 1948, as amended (the “Factories Act”), defines a “factory” to cover any premises which
employs 10 or more workers on any day of the preceding 12 months and in which a manufacturing process is
carried on with the aid of power or any premises where at least twenty workers are employed, and where a
manufacturing process is carried on without the aid of power. Each state government has enacted rules in respect
of the prior submission of plans and their approval for the establishment of factories and registration and licensing
of factories. The Factories Act provides that an occupier of a factory i.e. the person who has ultimate control over
the affairs of the factory and in the case of a company, any one of the directors, must ensure the health, safety and
welfare of all workers. There is a prohibition on employing children below the age of fourteen years in a factory.
The Factories Act also provides for imposition of fines and imprisonment of the manager and occupier of the
factory in case of any contravention of the provisions of the Factories Act.

In addition to the Factories Act, the employment of workers, depending on the nature of activity, is regulated by
a wide variety of generally applicable labour laws. The following in an indicative list of labour laws which may
be applicable to our Company due to the nature of the business activities:

(i) Contract Labour (Regulation and Abolition) Act, 1970.

(ii) Employees’ Provident Funds and Miscellaneous Provisions Act, 1952.
(iii) Employees’ State Insurance Act, 1948.

(iv) Minimum Wages Act, 1948.

(v) Payment of Bonus Act, 1965.

(vi) Payment of Gratuity Act, 1972.

(vii) Payment of Wages Act, 1936.

(viii) Maternity Benefit Act, 1961.

(ix) Industrial Disputes Act, 1947.

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(x) | Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

(xi) The Inter-State Migrant Workmen (Regulation of Employment and Conditions of Service) Act, 1979.
(xii) The Industries (Development and Regulation) Act, 1951.

(xiii) Employees’ Compensation Act, 1923.

(xiv) The Industrial Employment Standing Orders Act, 1946.

(xv) The Child Labour (Prohibition and Regulation) Act, 1986.

(xvi) The Equal Remuneration Act, 1976.

(xvii) The Trade Unions Act, 1926 and the Trade Union (Amendment) Act, 2001.

(xviii)Building and Other Construction Workers Regulation of Employment and Conditions of Service Act, 1996.
(xix) The Code on Wages, 2019*.

(xx) The Occupational Safety, Health and Working Conditions Code, 2020**.

(xxi) The Industrial Relations Code, 2020***.

(xxii) The Code on Social Security, 2020****.

*The Government of India enacted ‘The Code on Wages, 2019’ which received the assent of the President of India
on August 8, 2019. The provisions of this code will be brought into force on a date to be notified by the Central
Government. It proposes to subsume four separate legislations, namely, the Payment of Wages Act, 1936, the
Minimum Wages Act, 1948, the Payment of Bonus Act, 1965 and the Equal Remuneration Act, 1976.

**The Government of India enacted ‘The Occupational Safety, Health and Working Conditions Code, 2020’
which received the assent of the President of India on September 28, 2020. The provisions of this code will be
brought into force on a date to be notified by the Central Government. It proposes to subsume several separate
legislations, including the Factories Act, 1948, the Contract Labour (Regulation and Abolition) Act, 1970, the
Inter-State Migrant Workmen (Regulation of Employment and Conditions of Service) Act, 1979 and the Building
and Other Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996.

***The Government of India enacted ‘The Industrial Relations Code, 2020’ which received the assent of the
President of India on September 28, 2020. The provisions of this code will be brought into force on a date to be
notified by the Central Government. It proposes to subsume three separate legislations, namely, the Industrial
Disputes Act, 1947, the Trade Unions Act, 1926 and the Industrial Employment (Standing Orders) Act, 1946.

“The Government of India enacted ‘The Code on Social Security, 2020 which received the assent of the
President of India on September 28, 2020. The provisions of this code will be brought into force on a date to be
notified by the Central Government. It proposes to subsume several separate legislations including the Employee's
Compensation Act, 1923, the Employees’ State Insurance Act, 1948, the Employees’ Provident Funds and
Miscellaneous Provisions Act, 1952, the Maternity Benefit Act, 1961, the Payment of Gratuity Act, 1972, the
Building and Other Construction Workers’ Welfare Cess Act, 1996 and the Unorganised Workers’ Social Security
Act, 2008.

Intellectual Property

Intellectual property rights refers to the general term for intangible, intellectual, industrial property rights through
patents, copyrights and trademarks and includes geographical indications, trade secrets, and confidential
information. These property rights allow the holder to exercise a monopoly on the use of the item for a specified
period.

The Trade Marks Act, 1999, as amended (the “Trade Marks Act”), provides for the registration of trademarks in
India, pursuant to which the registered owner of a trademark is granted exclusive rights to registered marks,
including brands, labels and headings, and to obtain relief in case of infringement for commercial purposes. The
Trade Marks Act prohibits registration of deceptively similar trademarks and provides for penalties for infringing,
falsifying and falsely applying trademarks.

Environmental Laws
The major statutes in India which seek to regulate, and protect the environment from, pollution related activities
in India include the Environment Protection Act, 1986, Hazardous Wastes (Management, Handling and

Transboundary Movement) Rules, 2016, Water (Prevention and Control of Pollution) Act, 1974 and the Air
(Prevention and Control of Pollution) Act, 1981. A brief description of these statutes are as follows:

191
The Environment Protection Act, 1986

The Environment Protection Act, 1986, as amended (the “Environment Act”) has been enacted for the protection
and improvement of the environment. The Environment Act empowers the Government of India to take measures
to protect and improve the environment such as by laying down standards for emission or discharge of pollutants,
providing for restrictions regarding areas where industries may operate and so on. The Government of India may
make rules for regulating environmental pollution.

Hazardous and Other Wastes (Management and Transboundary Movement) Rules, 2016

Hazardous and Other Wastes (Management and Transboundary Movement) Rules, 2016, as amended (the
“Hazardous Waste Rules”) are to be read with the Environment Act. The term “hazardous waste” has been
defined in the Hazardous Waste Rules and any person who has, control over the affairs of the factory or the
premises or any person in possession of the hazardous waste has been defined as an “occupier”. Furthermore, in
terms of the Hazardous Waste Rules, the occupier has been, inter alia, made responsible for safe and
environmentally sound handling of hazardous wastes generated in his establishment and shall require
license/authorization for generation, processing, treatment, package, storage, transportation, use, collection,
destruction, conversion, offering for sale, transfer or the like of the hazardous waste from the State Pollution
Control Board. However, an entity is exempted from obtaining an authorization under the Hazardous Waste Rules
if it has obtained consent to establish, or operate, under the Water (Prevention and Control of Pollution) Act, 1974
and Air (Prevention and Control of Pollution) Act, 1981.

Water (Prevention and Control of Pollution) Act, 1974 and Air (Prevention and Control of Pollution) Act, 1981

The basic purpose of these statutes is to control, abate and prevent pollution. In order to achieve these objectives,
Pollution Control Boards (the “PCBs”), which are vested with diverse powers to deal with water and air pollution,
have been set up in each State. The PCBs are responsible for setting the standards for maintenance of clean air
and water, directing the installation of pollution control devices in industries and undertaking inspection to ensure
that industries are functioning in compliance with the standards prescribed. These authorities also have the power
to carry out search, seizure and investigation if the authorities are aware of or suspect pollution that is not in
accordance with such regulations. All industries and factories are required to obtain consent orders from the PCBs,
which are indicative of the fact that the factory or industry in question is functioning in compliance with the
pollution control norms. These consent orders are required to be renewed annually.

Foreign Investment Regulations

Foreign investment in India is governed by the provisions of Foreign Exchange Management Act, 1999, as
amended, along with the rules, regulations and notifications made by the Reserve Bank of India thereunder, and
the consolidated FDI Policy, effective from October 15, 2020, issued by the DPIIT, and any modifications thereto
or substitutions thereof, issued from time to time (the “Consolidated FDI Policy”). Under the current
Consolidated FDI Policy, foreign direct investment in companies engaged in the manufacturing sector is permitted
up to 100% of the paid-up share capital of such company under the automatic route, i.e. without requiring prior
government approval, subject to compliance with certain prescribed pricing guidelines and reporting
requirements.

Foreign Trade Regulations

Imports and exports are governed by the Foreign Trade (Development and Regulation) Act, 1992, as amended
(the “FTDR”) and the Export and Import Policy (the “EXIM Policy”) formulated by the Central Government
from time to time. FTDR provides for an Importer Exporter Code (“IEC”) to be granted to those persons licensed
to carry out imports and exports, which may be suspended or cancelled in case of violation of the provisions of
FTDR or the EXIM Policy. No person is allowed to carry out imports and exports without a valid IEC. Failure to
mention IEC number attracts a penalty of not less than 2 10,000 and not more than five times the value of the
goods or services or technology in respect of which any contravention is made or is attempted to be made,
whichever is made.

Export Promotion Capital Goods Scheme

The Export Promotion Capital Goods Scheme (the “EPCG Scheme”) provides that importers can benefit from
reduced duties on the import of capital goods provided that they fulfil an export obligation to export a prescribed

192
amount of their goods manufactured or services rendered (such amount being a multiple of the duty saved) within
a specified period. Export obligations can be fulfilled by either through direct exports or through third parties. An
EPCG authorization holder shall be liable to pay custom duties along with interest custom in the event of non-
fulfillment of prescribed export obligations.

Laws Relating to Taxation

The Goods and Services Tax (“GST”) is levied on supply of goods or services or both jointly by the Central
Government and state governments. It is governed by the GST Council. GST provides for imposition of tax on
the supply of goods or services and will be levied by the Central Government on intra-state supply of goods or
services and by the state government including union territories. The GST law is enforced by various acts viz.
Central Goods and Services Act, 2017 (“CGST”), relevant state’s Goods and Services Act, 2017 (“SGST”),
Union Territory Goods and Services Act, 2017 (“UTGST”), Integrated Goods and Services Act, 2017 (“IGST”),
Goods and Services (Compensation to States) Act, 2017 and various rules made thereunder.

Further, the Income-tax Act, 1961 (the “Income Tax Act”) is applicable to every company, whether domestic or
foreign whose income is taxable under the provisions of this Act or Rules made there under depending upon its
“Residential Status” and “Type of Income” involved. The Income Tax Act provides for the taxation of persons
resident in India on global income and persons not resident in India on income received, accruing or arising in
India or deemed to have been received, accrued or arising in India. Every company assessable to income tax under
the Income Tax Act is required to comply with the provisions thereof, including those relating to tax deduction at
source, advance tax, minimum alternative tax, etc.

Other applicable laws
Shops & Establishments legislations in various states

Under the provisions of local shops and establishments legislations applicable in the states in which establishments
are set up, establishments are required to be registered under the respective legislations. These legislations regulate
the conditions of work and employment in shops and commercial establishments and generally prescribe
obligations in respect of inter alia registration, opening and closing hours, daily and weekly working hours,
holidays, leave, health and safety measures and wages for overtime work.

In addition to the above, our Company is subject to various laws and regulations such as the Petroleum Act, 1934,
fire acts of various states, state laws under the Industrial Establishments (National and Festival Holidays) Act,
1965 and the provisions of the Companies Act 2013 and rules framed thereunder, and other applicable statutes.
imposed by the Government of India or the state governments and authorities for our day-to-day business and
operations.

193
HISTORY AND CERTAIN CORPORATE MATTERS
Brief history of our Company

Our Company was incorporated as “Craftsman Automation Private Limited” on July 18, 1986, as a private limited
company under the Companies Act 1956, pursuant to a certificate of incorporation granted by the Registrar of
Companies, Chennai, Tamil Nadu. Pursuant to the conversion of our Company to a public limited company and
as approved by the Shareholders pursuant to a resolution dated April 30, 2018, the name of our Company was
changed to “Craftsman Automation Limited” and the RoC issued a fresh certificate of incorporation dated May
4, 2018.

Changes in Registered Office

 

Date of Details of change Reasons for change
Change
July 1, Change of registered office from 15, LML Colony, P.N. Palayam, Coimbatore Convenience and better
2014 641 037, Tamil Nadu, India to Senthel Towers, IV Floor, 1078, Avanashi Road, _ infrastructure and
Coimbatore 641 018, Tamil Nadu, India. accessibility

 

Our main objects
The main objects of our Company as contained in our Memorandum of Association are:

1. To establish and set up tool room and mould base facility and foundry for the manufacture of moulds,
jigs, fixtures and patterns and to design, manufacture, sell or lease machine tools, dies, moulds, jigs,
fixtures, patterns and the like.

2. To undertake the business of manufacture and machining of power train products for automobiles like
engine block, cylinder head, gear box, transmission assembly, cam shaft, crank shaft, bearing housing,
turbo charger, steering columns, machine castings of all types and also all kinds of aluminium parts for
automotive and other industrial applications.

3. To carry on the business of engineers, founders for ferrous and non- ferrous, sand, pepset, low pressure
die casting, high pressure die casting, gravity die casting and to manufacture castings of all types and for
all applications, undertake aluminium welding and manufacture of welded aluminium sections, sub
assemblies.

4. To establish and maintain sheet metal fabrication facility and to undertake all types of fabrication,
welding, manufacture of industrial storage products, cabinets, vertical lift modules, pallet trucks, roll
form products, verticals, uprights, cross beam and other items of storage products and to provide all kinds
of storage solutions.

5. To manufacture printing and packaging machinery.
6. To manufacture all kinds of high end sub-assembly, precision components, tools, accessories and parts.
Fe To manufacture railway products like engine components, cylinder liners, piston, piston pin, connecting

rod, railway bogies, base frames and other railway products.

8. To carry on the business as manufacturers, sellers, distributors, dealers, repairers, importers and exporters
of all types of machine-tools, conveyors, cranes, hoists, crane kits and all types of material handling
equipment and machinery and components and accessories thereof.

9. To carry on the business as manufacturers, sellers, dealers, importers and exporters of all types of gear,
gear boxes and transmission parts.

10. To carry on the business as manufacturers, dealers, importers and exporters of all types of marine engines
and accessories for marine applications.

11. To carry on all or any of the business of manufacturers and producers, importers and exporters, buyers,
sellers, stockist, suppliers and distributors, dealers, repairers and workers in electronic control systems,

194
12.

13.

14.

15.

16.

17.

18.

computer numerical control systems, numerically controlled machines, robots, automatic and semi-
automatic machines, special purpose machines, remote control systems and microprocessor based
systems, machines, robots using artificial intelligence, remote signaling systems, monitoring systems,
microcomputers and control panels for the automation of machinery, machine-tools and manufacturing
processes on the shop floor and production facilities.

To carry on business as manufacturers, buyers, sellers, agents and dealers of control system components
such as servo motors, stepper motors, power cylinders, solenoid and other types of valves, all types of
power drives, microprocessor systems, power supplies, rotary and linear transducers, digital co-ordinate
measuring and read-out systems.

To carry on the trade or business of manufactures of every kind of mining and other machinery including
air compressors, road rippers, pneumatic rock drills, pneumatic tools, component parts and other
accessories.

To carry on the business as manufacturers, buyers, sellers, and dealers in automobile ancillaries, vehicle
bodies, assemblies, sub-assemblies parts and accessories of passenger and commercial vehicles, tyre
treads, tyre retreading machinery and equipments, automobile maintenance and service equipments and
related machines and tools.

To carry on the business of manufacture of all types and of every description of electrical and electronic
equipment, appliances and apparatus and maintenance thereof, dealers in such equipment, appliances and
apparatus, electronic goods of every description and the manufacture of plants, machinery and tools for
application in all the business.

To undertake and execute all contracts for works including supply or use of machinery or components
of any kind and carry out any kind ancillary work connected with such works and contracts.

To carry on the business of manufacturers and dealers in electrical equipments, electrical motors
stamping dynamos, electrical instruments, sound equipments, conductors, appliances, apparatus,
accessories thereof, electrical wiring accessories, electrical fans and refrigerating apparatus and
appliances of all kinds.

To manufacture all types of plastic compounds and solutions and all types of plastic equipment and parts
such as pumps, fans, blowers, reinforced vessels and tank filters, special high temperature resisting tubes
and fitting and related parts and other plastic moulded articles, components, and raw materials.

The main objects clause as contained in the Memorandum of Association enable our Company to undertake its
existing activities.

Amendments to our Memorandum of Association

The following changes have been made to our Memorandum of Association in the last 10 years:

 

Date of Nature of amendment
change/Shareholders’
resolution
March 27,2012 The authorized share capital of our Company was increased from % 50,000,000 divided into

500,000 equity shares of = 100 each to 2 100,000,000 divided into 1,000,000 equity shares of
100 each

December 11, 2017 The authorized share capital of our Company was increased from 2 100,000,000 divided into

1,000,000 equity shares of 2 100 each to = 200,000,000 divided into 2,000,000 equity shares of
2 100 each.

April 30, 2018 Our Company was converted from a private limited company to a public limited company and
consequently the name of our Company was changed from Craftsman Automation Private
Limited to Craftsman Automation Limited.

April 30, 2018 The authorized share capital of our Company was reclassified from % 200,000,000 divided into
2,000,000 equity shares of 2 100 each to & 200,000,000 divided into 40,000,000 Equity Shares
of @S each.

April 30, 2018 The main objects of the Company was amended to reflect the present main objects of the MoA.

For further information, see “- Our Main Objects” on page 194.

 

195
Major events in the history of our Company

The table below sets forth some of the major events in the history of our Company:

 

Calendar
Year
1986
2001
2005

2007

2008
2010
2011
2012
2014
2015
2016

2017
2018

2019

2020

Details

Our Company was incorporated as Craftsman Automation Private Limited

Commissioned aluminium foundry unit at Kurichi, Coimbatore

Commissioned a satellite unit in Pithampur

Obtained ISO 9001: 2000 and ISO/TS 16949:2002 registration certification

Commissioned satellite unit in Chennai and Jamshedpur

Commenced joint ventures with Carl Stahl and Mitsubishi

Obtained “Star Export House” registration certificate

Incorporated our Subsidiaries i.e. Craftsman Europe B.V. (formerly known as Craftsman Marine
B.V.) and Craftsman Automation Singapore Pte. Ltd.

Commissioned satellite units Sriperumpudur near Chennai

Commissioned satellite units in Pune and Faridabad

Set up storage solutions in Arasur, Coimbatore

Commissioned second satellite unit in Pune

Set up technology division in Bengaluru

Commissioned aluminium sand foundry, HPDC and LPDC in Arasur, Coimbatore
Commissioned railway and camshaft business in Arasur, Coimbatore

Commissioned HPDC facility at Bengaluru

Commissioned machining services in Bengaluru

Our Company was converted into public limited company and the name of our Company was
changed to “Crafisman Automation Limited”

Commissioned third satellite unit in Pune and second satellite units in Bengaluru and Faridabad
Malumichampatti unit-5 shifted to Arasur unit-3

Initiated winding up process of our Subsidiary, Craftsman Automation Singapore Pte. Ltd.

 

Awards and Accreditations

 

Fiscal
2005

2009

2011

2012

2013
2014
2015

2016
2017

2018

2019

Details
Received the “Star Performer Award” in bearings, gears, gearing and driving elements & parts
(medium enterprise) from EEPC India
Received “Star Performer Award” in bearings, gears, gearing and driving elements & parts (large
enterprise) from EEPC India
Received “Star Performer Award” for miscellaneous general purpose machinery (large enterprise)
from EEPC India
Received “Best Quality Performance Award (Auto Division)” from Mahindra & Mahindra Limited
Received “Certificate of Recognition for Quality” from GE
Received “Sanjeevani Award in Farm Division” from Mahindra & Mahindra Limited
Received “Excellent Supplier Award” from Mitsubishi Heavy Industries Printing & Packaging
Machinery Limited
Received “President Award in Auto Division” from Mahindra & Mahindra Limited
Received “Certificate of Excellence” for “Best Supplier - Quality 2013” by GE
Received “Best Supplier Award” from Mitsubishi Heavy Industries — VST Diesel Engines Private
Limited
Received “Supply Chain Transformation Award” by Cummins
Received “Certificate of Appreciation” for outstanding support as strategic supplier partner from GE
Energy Connections
Received “1 Prize in Mould Base Category” from Godrej
Received “Suppliers Business Capability Building Award” from Mahindra & Mahindra Limited
Received “India Direct Supplier of the Year Award” from Cummins
Received “Category Partner” status from Cummins
Received “Recognition for long-standing association” by Royal Enfield
Received the “Suppliers Summit -2018” award in recognition of outstanding business alignment
for defense business from Ashok Leyland
Received “Appreciation for Best Overall Performance Award” by Siemens
Received “Certificate of Excellence in machining category Award” from BEML Limited in
recognition of outstanding performance in supply of material during the year 2015-16 and 2016-17

  

 

 

196
 

Fiscal

2020 .
.
.
.
.
.
.
.
.
2021 .

Details

Received “Annual Commodity Award in casting and forging for automotive division” by Mahindra
& Mahindra in recognition of superior performance for Fiscal 2018

Received “Suppliers Excellence Award for New Product Development” from Faiveley Transport
Received “Award for Quality” from Tata Motors at Annual Supplier Conference 2018
Received “Certificate of Appreciation” from Ashok Leyland for persistent efforts in maintaining
higher levels of capability and performance for two consecutive quarters
Received “Award for Best Quality” from Escorts group at Suppliers Meet 2018
Received “Recognition of Supply Chain Partnership” by Royal Enfield at Supplier Meet 2018
Received “Certificate of Appreciation” for persistent efforts in maintaining higher levels of
capability and performance and being in Quad A for quarter 2 of Fiscal 2019 by Ashok Leyland
Received “Certificate of Appreciation” for persistent efforts in maintaining higher levels of
capability and performance and being in Quad A for quarter 3 of Fiscal 2019 by Ashok Leyland
Received “Certificate of Excellence in Partnership” from Daimler India Commercial Vehicles
Private Limited
Received “Best Product Development Performance - Furio” at Mahindra Supplier Excellence
Awards
Received “Best Product Development Performance - Marazzo” at Mahindra Supplier Excellence
Awards
Received “Quality Excellence Award” at TATA Motors Annual Supplier Conference 2019
Received “Quality Excellence Award” at GE India Supplier Conference
Received “Annual Supplier Conference Award” by JCB
Received the status of “Self-Certified Supplier” for the cover rocker component being supplied to
Mitsubishi Heavy Industries — VST Diesel Engines Private Limited for the period between April 1,
2019 to March 31, 2020
Received recognition award from the Principal Commissioner of GST & Central Excise Coimbatore
Received “Star Performer for 2017-18” for miscellaneous transport equipment and parts (large
enterprise) from Engineering Export Promotion Council of India
Received “Certificate of Appreciation” from Siemens for zero defect quality culture and
qualification for “Gold” category for performance in Fiscal 2020

 

 

 

Time/cost overrun

Except as disclosed in “Risk Factors — Delay in schedule of implementation may subject us to risks related to
time and cost overrun which may have an adverse effect on our business, results of operations and financial
condition.” and “Risk Factors - Some of our manufacturing facilities are operated on industrial land allotted
to us by industrial development corporations. Failure to comply with the conditions of use of such land could
result in an adverse impact on our business and financial condition.” on pages 39 and 40, respectively, as on
the date of this Prospectus, there have been no time/cost overruns in setting up our projects.

Defaults, rescheduling or restructuring of borrowings with financial institutions/banks

As on the date of this Prospectus, there has been no default, rescheduling or restructuring of borrowings with
financial institutions or banks.

Significant strategic and financial partnerships

As on the date of this Prospectus, our Company does not have any significant strategic or financial partners.

Capacity/facility creation, location of plants

For details regarding capacity/facility creation and location of the plants of our Company, see “Business” and “-
Major events in the history of our Company” on pages 168 and 196, respectively.

Launch of key products or services, entry into new geographies or exit from existing markets

For details of key products or services launched by our Company, entry into new geographies or exit from existing
markets, see “Business” and “- Major events in the history of our Company” on pages 168 and 196, respectively.

197
Details regarding material acquisitions or divestments of business/undertakings, mergers, amalgamation,
revaluation of assets, etc. in the last 10 years

Our Company has not made any material acquisitions or divestments of any business or undertaking. Except as
stated below, our Company has not undertaken any mergers, amalgamation or revaluation of assets in the last ten
years preceding the date of this Prospectus. Pursuant to the adoption of Ind AS by our Company with effect from
April 1, 2015, a revaluation reserve aggregating to = 554.23 million was created due to land revaluation on
transition date to Ind AS, being April 1, 2015 and such reserve will not be available for distribution of profits. For
more details, see “Financial Statements” on page 225.

Shareholders’ Agreements and Other Agreements

Key terms of subsisting shareholders’ agreements

de

Shareholders’ agreement dated July 3, 2012 (the “SHA”) by and among our Company, our Promoter,
S. Murali, K. Gomatheswaran, IFC and Standard Chartered Private Equity (Mauritius) II Limited
(“SCPE” and together with IFC, the “Investors”), as amended and deed of adherence dated March
17, 2017 executed by and among our Company, our Promoter, the Investors, K. Gomatheswaran and
Marina (the “Deed of Adherence”).

Our Promoter, K. Gomatheswaran, S. Murali, the Investors and our Company entered into the SHA to
set out the terms and conditions of the relationship of the shareholders of our Company and certain
matters connected therewith. The key provisions of the SHA are summarized below:

(a) Board of directors: In terms of the SHA, the Investors have the right to nominate one director
each on the Board of our Company or committee provided the Investors hold at least 30.00% of
the equity shares allotted to them pursuant to the respective share subscription agreements
entered into by them with our Company;

(b) Transfer of equity shares: The SHA contains certain transfer restrictions vis-a-vis the Equity
Shares. For example, our Promoter and K. Gomatheswaran are together required to hold at least
55.00% of the Equity Shares, of which at least 51.00% shareholding is required to be maintained
by our Promoter. Further, our Promoter, K. Gomatheswaran and S. Murali are restricted from
transferring the Equity Shares, unless a prior written consent is sought from the Investors, and
are restricted from creating an encumbrance on the Equity Shares held by them;

() Pre-emptive and anti-dilution rights: The SHA contains certain preferential rights for the
Investors, including pre-emptive and anti-dilution rights in the event our Company issues equity
shares (except for equity shares issued pursuant to any employee stock option plan of our
Company or listing of equity shares on stock exchanges);

(d) Consent rights: As per the SHA, there are certain corporate matters pertaining to our Company
in respect of which our Company is required to obtain a prior written consent from the Investors
before proceedings with them, such as (i) amending or repealing our Company’s charter; (ii)
creating, authorising or issuing Company’s shares; (iii) authorising or undertaking listing or any
offering of the Equity Shares; (iv) authorising or undertaking any change of capital structure of
our Company; and (v) declaration or payment of dividend;

(e) Exit rights: As per the SHA, our Company is mandated to undertake an initial public offering
within a stipulated time to provide an exit for the Investors, the terms of which require prior
written consent of the Investors. In the event our Company fails to complete the initial public
offering, our Company is required to either: (i) buy-back all or part of the Equity Shares held
by the Investors; or (ii) identify an investor to purchase the Equity Shares held by the Investors
at either the fair market value price or at a specified internal rate of return on the subscription
amount, whichever is higher.

In accordance with the terms of the SHA, SCPE transferred its entire shareholding of 89,100 equity
shares in our Company to Marina, an affiliate of SCPE, for which the Deed of Adherence was executed.
Further, pursuant to the Deed of Adherence, all rights and obligations of SCPE under the SHA were
transferred to Marina.

198
Further, in order to facilitate the Offer in accordance with applicable laws, the Investors and the Company
have recorded certain waivers and acknowledgments in respect of the Offer to the extent provided in the
waiver letter dated March 29, 2018 read with supplementary letter to the waiver letter dated November
30, 2020 and the second supplementary letter to the waiver letter dated March 10, 2021 (the “Waiver
Letters”).

In terms of Part A of our Articles of Association (which will become effective from the date of listing of
our Equity Shares on the Stock Exchanges pursuant to this Offer), Part B of our Articles of Association
(which is applicable until the listing and commencement of trading of Equity Shares on the Stock
Exchanges pursuant to the Offer) and the terms of the Waiver Letters, each of the two Investors are
entitled to nominate one director each on our Board, so long as they individually hold at least 30.00% of
their respective equity shares subscribed to and held by each of IFC and Marina (originally subscribed
by SCPE) prior to the Offer pursuant to the respective share subscription agreements entered into by
them with our Company on a fully diluted basis taking into account equity shares arising from bonus,
split or sub-division of the equity shares (excluding any acquisition of equity shares by the Investors post
listing of the Equity Shares on the Stock Exchanges), subject to the approval by the members of our
Company through a special resolution at the first general meeting of our Company held post completion
of this Offer. To the extent of the SHA, the indemnity and miscellaneous provisions of the SHA will
survive post listing of the Equity Shares on Stock Exchanges. The other terms and conditions stipulated
in the SHA read with the Deed of Adherence will, ipso facto, automatically terminate upon the listing of
the Equity Shares on the Stock Exchanges pursuant to the Offer, without requiring any further action by
our Company or the Investors. For further information, see “Main Provisions of the Articles of
Association — Part A” on page 368.

Agreements with Key Managerial Personnel, Directors, Promoter or any other employees

There are no agreements entered into by Key Managerial Personnel, our Directors, our Promoter or any
other employee of our Company, either by them or on behalf of any other person, with any Shareholder
or any other third party with regard to compensation or profit sharing in connection with dealings in the
securities of our Company.

Guarantees provided by our Promoter

As of the date of this Prospectus, our Promoter has issued guarantees to third parties. These guarantees
are in the nature of personal guarantees and have been issued towards contractual obligations in terms of
the borrowing arrangements entered into by our Company with its lenders.

These guarantees are typically effective for a period the underlining loan is repaid by the respective
borrower. The financial implications in case of default by the relevant borrower would entitle the lenders
to invoke the personal guarantee given by our Promoter to the extent of outstanding loan amount. For
further information, see “Objects of the Offer” and “Financial Indebtedness” on pages 80 and 322,
respectively.

Key terms of other subsisting material agreements

Except as stated below, our Company has not entered into any other subsisting material agreements
including with strategic partners, joint venture partners, and/or financial partners other than in the
ordinary course of business of our Company:

Put option agreement dated July 3, 2012 amongst our Company, our Promoter, S. Murali, K.
Gomatheswaran and IFC (the “Put Option Agreement”), as amended

In terms of the Put Option Agreement, IFC has been granted an option to sell its equity shares to our
Promoter, S. Murali and K. Gomatheswaran, who are obligated to proportionately purchase such equity
shares from IFC in accordance with the terms set out in the Put Option Agreement. The right of IFC to
exercise the put option shall terminate in the event our Company, our Promoter, S. Murali and K.
Gomatheswaran provide an exit to IFC in terms of the Shareholders’ Agreement dated July 3, 2012, with
respect to 66,263 equity shares (equivalent to 1,325,260 Equity Shares) subscribed by IFC pursuant to a

199
share subscription agreement dated June 28, 2010 amongst our Company, our Promoter, S. Murali, K.
Gomatheswaran and IFC.

De Joint venture agreement dated June 21, 2007 between our Company and Carl Stahl Hebetechnik
GmbH (previously known as Carl Stahl International GmbH) (the “Carl Stahl JV Agreement”)

Pursuant to the Carl Stahl JV Agreement, Carl Stahl Craftsman Enterprises Private Limited was
incorporated in India on June 22, 2007, as a private limited company under the Companies Act 1956 for
the purpose of carrying on the business of trading in lifting gear and material handling equipment and
other equipment and accessories relating to mechanical and/or electrical segment of engineering and
marketing them in India. Presently, our Company holds 600,000 equity shares aggregating to 30.00% of
the total equity share capital of Carl Stahl Craftsman Enterprises Private Limited.

3. Joint venture agreement dated October 22, 2007 between our Company, Mitsubishi Corporation,
Mitsubishi Corporation India Private Limited and Mitsubishi Corporation Technos (the “Mitsubishi
Shareholders”) (the “MC JV Agreement”)

Pursuant to the MC JV Agreement, MC Craftsman Machinery Private Limited was incorporated in India
on November 6, 2007 as a private limited company under the Companies Act 1956 with the primary
objective of selling electric discharge machine and laser cutting machine produced by Mitsubishi Electric
Corporation as well as related spare parts. MC Craftsman Machinery Private Limited is no longer a joint
venture of our Company. Presently, our Company holds 209,999 equity shares aggregating to 10.00% of
the total equity share capital of MC Craftsman Machinery Private Limited.

Holding company of our Company
As on date of this Prospectus, our Company does not have a holding company.
Subsidiaries of our Company

As on the date of this Prospectus, our Company has two Subsidiaries i.e. Craftsman Europe B.V. (formerly known
as Craftsman Marine B.V.) and Craftsman Automation Singapore Pte. Ltd. The Board of Directors passed a
resolution on August 20, 2019 to wind up Craftsman Automation Singapore Pte. Ltd. However, the process of
winding up could not be initiated due to the outbreak of COVID-19 pandemic. Subsequently, Craftsman
Automation Singapore Pte. Ltd. filed a declaration of solvency dated September 30, 2020 with the Accounting
and Corporate Regulatory Authority, Singapore on October 6, 2020. The winding up of Craftsman Automation
Singapore Pte. Ltd. is currently under process. As on December 31, 2020, Craftsman Automation Singapore Pte.
Ltd. was not operational.

1. Craftsman Europe B.V. (formerly known as Craftsman Marine B.V.)
Corporate Information
Craftsman Europe B.V. was incorporated on June 3, 2008 under the laws of the Kingdom of the Netherlands
as Craftsman Marine B.V. The name was changed from Craftsman Marine B.V to Craftsman Europe B.V.
with effect from October 28, 2019. The registered office of Craftsman Europe B.V. is located at Pascalstraat
88, 3316 GR, Dordrecht, The Netherlands.
Nature of Business
Craftsman Europe B.V. is currently permitted to carry on the business of engineering and other technical
design and consultancy, as well as wholesale of articles for ships and for fishing (no sport fishing) in
accordance with applicable rules and regulations.

Capital Structure

The issued and subscribed share capital of Craftsman Europe B.V. is € 28,90,000.00 divided into 28,900
shares of nominal value of € 100 each.

200
Shareholding

The following table sets forth the details of the shareholding of Craftsman Europe B.V.:

 

s. Name of the shareholder Number of shares Percentage of total
No. shareholding
1. Craftsman Automation Limited 28,900 100.00

 

Accumulated profits or losses not accounted for by our Company
There are no accumulated profits or losses of Craftsman Europe B.V. not accounted for by our Company.

2. Craftsman Automation Singapore Pte. Ltd.
Corporate Information
Craftsman Automation Singapore Pte. Ltd. was incorporated on February 15, 2008 under the laws of
Singapore. The registered office of Craftsman Automation Singapore Pte. Ltd. is located at 151 Chin Swee
Road #14-13 Manhattan House, Singapore 169876. Craftsman Automation Singapore Pte. Ltd. has filed a
declaration of solvency dated September 30, 2020 with the Accounting and Corporate Regulatory Authority,
Singapore on October 6, 2020. The winding up of Craftsman Automation Singapore Pte. Ltd. is currently
under process. As on December 31, 2020, Craftsman Automation Singapore Pte. Ltd. was not operational.

Nature of Business

Craftsman Automation Singapore Pte. Ltd. was engaged in the business of trading and operating as a sourcing
agent for our Company.

Capital Structure

The total share capital and the issued share capital is SGD 100,000 divided into 767,000 equity shares with
the value of SGD 1 each.

Shareholding

The following table sets forth the details of the shareholding of Craftsman Automation Singapore Pte. Ltd.:

 

Ss. Name of the shareholder Number of equity shares Percentage of total
No. shareholding
1. Craftsman Automation Limited 767,000 100.00

 

Accumulated profits or losses not accounted for by our Company

There are no accumulated profits or losses of Craftsman Automation Singapore Pte. Ltd. not accounted for
by our Company.

Joint Venture

As on the date of this Prospectus, our Company has one joint venture i.e. Carl Stahl Craftsman Enterprises Private
Limited. For more details see “Promoter, Promoter Group and Group Companies” on page 219.

Confirmations
Listing
As on the date of this Prospectus, none of our Subsidiaries is listed in India or abroad. Accordingly, none of our

Subsidiaries has been refused listing during the last 10 years or failed to meet listing requirements by any stock
exchanges in India or abroad.

201
Common Pursuits

Except as disclosed in “Business” and “Financial Statements” on pages 168 and 225, respectively, as on the date
of this Prospectus, none of our Subsidiaries has:

i. any business interest in our Company;
ii. common pursuits with our Company; and
iii. related business transactions with our Company.

As on the date of this Prospectus, there are no unsecured loans taken by our Subsidiaries that can be recalled by
the lenders at any time.

As on the date of this Prospectus, there has been no default in repayment of deposits or payment of interest or
rollover of liability by our Subsidiaries.

202
MANAGEMENT

In terms of our Articles of Association, our Company is required to have not less than three and not more than 15
Directors. As on the date of this Prospectus, our Board comprises six Directors.

Our Board

The following table sets forth details regarding our Board as on the date of this Prospectus.

 

Name, date of birth, designation, address, occupation, Age
(in years)

nationality, term, period of directorship and DIN
Srinivasan Ravi 58

Date of birth: March 18, 1963
Designation: Chairman and Managing Director

Address: Old No. 153, New No. 209, Tea Estate Compound,
Race Course, Coimbatore 641 018, Tamil Nadu, India.

Occupation: Business
Term: Five years with effect from October 1, 2016
Period of directorship: Since incorporation of our Company

DIN: 01257716

Ravi Gauthamram 32
Date of birth: April 13, 1988
Designation: Whole-time Director

Address: Old No. 153, New No. 209, Tea Estate Compound,
Race Course, Coimbatore 641 018, Tamil Nadu, India.

Occupation: Business
Term: Five years with effect from October 1, 2016

Period of directorship: Since February 20, 2014

DIN: 06789004

Udai Dhawan 48
Date of birth: January 17, 1973

Designation: Nominee Director

Address: 46, 2 Floor, Poorvi Marg, Vasant Vihar, New
Delhi 110 057, India.

Occupation: Service

Term: Appointed with effect from April 28, 2017. Not liable
to retire by rotation

Period of directorship: Since November 25, 2016

DIN: 03048040

Other Directorships

Indian private companies

1. MC Craftsman Machinery Private
Limited; and

2. Carl Stahl Craftsman Enterprises
Private Limited.

Indian public companies
Nil
Foreign companies

1. Craftsman Automation Singapore Pte.
Limited; and

2. Craftsman Europe B.V. (formerly
known as Craftsman Marine B.V.)

Indian private companies

1. MC Craftsman Machinery Private
Limited.

Indian public companies
Nil
Foreign companies

Nil

Indian private companies
1. Tek Travels Private Limited;

a, Affirma Capital Investment Adviser
India Private Limited; and

3 Prodapt Solutions Private Limited.
Indian public companies

1. Redington (India) Limited;

2. Prime Focus Limited; and

z Tirupati Medicare Limited.

 

203
 

‘Name, date of birth, designation, address, occupation, ‘Age
nationality, term, period of directorship and DIN (in years)
Chandrashekhar Madhukar Bhide 72
Date of birth: July 12, 1948
Designation: Independent Director
Address: 104, Ajay Apartments, T. H. Kataria Marg,
Mahim, Mumbai 400 016, Maharashtra, India.
Occupation: Business
Term: Five years with effect from May 24, 2018
Period of directorship: Since January 31, 2011
DIN: 00027967
Sundararaman Kalyanaraman 70
Date of birth: March 25, 1950
Designation: Independent Director
Address: S-31, Kirloskar Colony, 3" Stage, Basaveshwara
Nagar, Bengaluru 560 079, Karnataka, India.
Occupation: Professional
Term: Five years with effect from May 24, 2018
Period of directorship: Since June 30, 2017
DIN: 01252878
Vijaya Sampath 67

Date of birth: May 26, 1953
Designation: Independent Director

Address: Flat No - 403, Block -14, Mehrauli Gurgaon Road,
Heritage City, Gurgaon 122 002, Haryana, India.

Occupation: Advocate
Term: Five years with effect from April 30, 2018
Period of directorship: Since April 30, 2018

DIN: 00641110

Other Directorships

Foreign companies

1. Affirma Capital Limited
Indian private companies

Nil

Indian public companies
Nil

Foreign companies

Nil

Indian private companies
Nil

Indian public companies
Nil

Foreign companies

Nil

Indian private companies

1. _GVS Envicon Technologies Private
Limited;

2. L&T—MHPS Turbine Generators
Private Limited; and

3. L&T—MHPS Boilers Private Limited.
Indian public companies
4, Nabha Power Limited;

5, Safari Industries (India) Limited;

6. Eris Lifesciences Limited;

7. Intellect Design Arena Limited;
8. Ingersoll Rand India Limited;
9. VA Tech Wabag Limited; and

10. _Varroc Engineering Limited.

 

204
 

Name, date of birth, designation, address, occupation, ‘Age Other Directorships
nationality, term, period of directorship and DIN (in years)

Foreign companies

Nil

 

Arrangement or understanding with major shareholders, customers, suppliers or others for appointment
of Directors

Udai Dhawan has been appointed as a director of our Company pursuant to Marina’s right to appoint a nominee
director under the shareholders’ agreement dated July 3, 2012 and deed of adherence dated March 17, 2017. In
terms of the shareholders’ agreement dated July 3, 2012, IFC also has the right to nominate a director on Board.
Such right to nominate a director shall fall away in the event IFC and Marina fail to hold at least at least 30.00%
of their respective equity shares subscribed to and held by each of IFC and Marina (originally subscribed by
SCPE) on a fully diluted basis taking into account equity shares arising from bonus, split or sub-division of the
equity shares (excluding any acquisition of equity shares by the Investors post listing of the Equity Shares on the
Stock Exchanges). For more details, see “History and Certain Corporate Matters — Shareholders’ Agreements
and Other Agreements” on page 198. Except as stated above, none of our Directors has been appointed as a
director or member of senior management pursuant to any arrangement or understanding with major Shareholders,
customers, suppliers or others.

Brief profiles of our Directors

Srinivasan Ravi is the Chairman and Managing Director of our Company and has been associated with our
Company since its incorporation. He holds a bachelor’s degree in mechanical engineering from PSG College of
Technology, Coimbatore. He is the Promoter of our Company. He has experience of more than 34 years in the
automotive industry. He has received various awards, including “Outstanding Citizen of Coimbatore Award” by
Rotary Club of Coimbatore in 2018, “Entrepreneur of the Year 2015 Award” by Entrepreneurs’ Organization,
Coimbatore, “Outstanding Entrepreneur Achiever Award 2012” by Bharathiar School of Management and
Entrepreneur Development, Bharathiar University, Coimbatore and “Best Entrepreneur Award” by Coimbatore
Management Association in 2010.

Ravi Gauthamram is a Whole-time Director of our Company and has been on our Board since February 20,
2014. He holds a bachelor’s degree in mechanical engineering from PSG College of Technology, Coimbatore and
a master’s degree in mechanical engineering from RWTH Aachen University, Germany. He has experience in
automotive industry. He is engaged in building the product strategy in the industrial and engineering segment of
our Company. He is also the vice president of the Coimbatore Industrial Infrastructure Association. Prior to joining
our Company, he was associated with Caterpillar India Private Limited.

Udai Dhawan is a Nominee Director of our Company and has been on our Board since November 25, 2016. He
holds a bachelor’s degree in commerce (honours) from University of Delhi and is also a chartered accountant. He
holds a master’s degree in business administration from the Wharton School, University of Pennsylvania. He has
experience in financial services. He was associated with Standard Chartered Private Equity Advisory (1) Private
Limited, SkyWorks Capital, LLC, Kotak Mahindra Capital Company Limited, Sabre Inc., J.P. Morgan, and Arthur
Andersen & Co. in the past.

Chandrashekhar Madhukar Bhide is an Independent Director of our Company and has been on our Board since
January 31, 2011. He holds a bachelor’s degree in technology in mechanical engineering from Indian Institute of
Technology, Bombay and a post-graduate diploma in business administration from Indian Institute of
Management, Ahmedabad. He has experience in automotive industry. He was associated with Mahindra &
Mahindra Limited in the past.

Sundararaman Kalyanaraman is an Independent Director of our Company and has been on our Board since
June 30, 2017. He holds a bachelor’s degree in mechanical engineering from University of Madras. He has
completed senior executive course of the 3-tier programme for management development from Indian Institute of
Management, Ahmedabad and BPL strategic leadership programme from Indian Institute of Management,
Bengaluru. He has experience in automotive industry. He was associated with TG Kirloskar Automotive Private
Limited, Kirloskar Systems Limited, BPL Limited and Widia (India) Limited in the past. Further, he is a trustee
in Caring with Colours - A Manasi Kirloskar Initiative, and has completed a training course for preparation as an

205
 

S.No. Terms of Remuneration Details
reimbursed by our Company, as per the rules of the
Company;

8. Company contribution to provident fund not
exceeding 12.00% of the salary superannuation
fund, annuity fund, if any;

9. Gratuity payable at a rate not exceeding half a
month’s salary for each completed year of service:
and

10. Encashment of leave at the end of the tenure.

 

Ravi Gauthamram

Ravi Gauthamram has been appointed as our Whole-time Director for a period of five consecutive years
commencing from October 1, 2016 to September 30, 2021 pursuant to the meeting of our Board of
Directors held on August 25, 2016 and the meeting of our Shareholders held on April 30, 2018. He is
entitled to an annual remuneration of = 4.80 million (excluding perquisites), the terms of which are set
out below:

 

S.No. ‘Terms of Remuneration Details

L Basic Salary Fixed salary of % 400,000 per month in the scale on
300,000 to % 600,000. The increments within the scale
would be decided by the Board.

2. Commission Nil

3. Perquisites 1, Leave travel allowance for self, spouse and
dependent children up to 12.00% of the salary;

2. Reimbursement of medical expenses for self,
spouse, dependent children subject to a cap of one
month’s salary. The group mediclaim policy
premium to be borne/reimbursed within this limit;

3. The Company shall provide suitable vehicle to the
executive director for his official use. The vehicle
running expenses like fuel, maintenance, driver’s
salary would be borne/reimbursed by our Company;

4. The Company shall provide a mobile phone and
shall also provide telephone, internet connectivity
and other communication facilities at his residence.
All the expenses incurred therefore shall be paid or
reimbursed by our Company, as per the rules of our
Company; and

5. Any other allowances, benefits or perquisites as per
the rules of our Company applicable to senior
executives and as may be approved by the board
from time to time;

6. Company contribution to provident fund not
exceeding 12.00% of the salary, superannuation
fund, annuity fund, if any;

7. Gratuity payable at the rate not exceeding half a
month’s salary for each completed year of service;
and

8. Encashment of leave at the end of the tenure.

 

207
award assessor for the “Confederation of Indian Industry Award for Business Excellence” by European
Foundation for Quality Management (“EFQM”). He is a member of Indian Society for Advancement of Materials
and Process Engineering and is also a member of Project Management Institute (a global membership association
dedicated to advancing the practice, science and profession of project management).

Vijaya Sampath is an Independent Director of our Company and has been on our Board since April 30, 2018.
She holds a bachelor’s degree in arts from University of Madras and a bachelor’s degree in law from University
of Mysore. She is a fellow member of the Institute of Company Secretaries of India. She has attended the advanced
management program of Harvard Business School, USA and a program on managing strategic alliances conducted
by the Wharton School, University of Pennsylvania, USA. She has experience in corporate laws and advisory and
chairs the FICCI committee on corporate laws. She was associated with Lakshmikumaran & Sridharan Attorneys
as a senior partner and with the Bharti Airtel Limited as group general counsel and company secretary in the past.

Relationship between Directors and Key Managerial Personnel

Except for Ravi Gauthamram, our Whole-time Director who is the son of Srinivasan Ravi, our Chairman and
Managing Director, none of our Directors are related to each other or to the Key Managerial Personnel.

Terms of Appointment of our Managing Director and Whole-time Director
ds Srinivasan Ravi

Srinivasan Ravi has been appointed as our Chairman and Managing Director for a period of five
consecutive years commencing from October 1, 2016 to September 30, 2021 pursuant to the meeting of
our Board of Directors held on December 15, 2016 and the meeting of our Shareholders held on April
30, 2018. He is entitled to an annual remuneration of = 36.00 million (excluding perquisites) along with
commission, the terms of which are set out below:

 

S.No. Terms of Remuneration Details
1. Basic Salary % 3,000,000 per month
2. Commission Not exceeding 7.50% of the profits computed in

accordance with the Section 198 of Companies Act 2013
and deducting from there (a) fixed salary indicated above;
and (b) value of perquisites indicated below to the extent
actually availed by him.

3. Perquisites 1. Free furnished accommodation;

2. Reimbursement of electricity, fuel charges, water
charges and maintenance and up keep expenses;

3. Leave travel allowance for self, spouse and
dependent children and parents up to 12.00% of the
salary;

4. Reimbursement of medical expenses for self,
spouse, dependent children and parents subject to a
cap of one month’s salary. The group mediclaim
policy premium to be borne/reimbursed within these
limits;

5. Membership of two clubs — the admission and
annual membership fees would be borne by our
Company;

6. Commute for both official and personal use. The
vehicle running expenses like insurance, fuel,
maintenance, driver’s._ salary would —_be
bome/reimbursed by our Company on submission of
bills;

7. The Company shall provide a mobile phone and
shall also provide telephone, internet connectivity
and other communication facilities at his residence.
All the expenses incurred therefore shall be paid or

 

206
Contingent and deferred compensation payable to Managing Director and Whole-time Director

There is
Director.

no contingent or deferred compensation payable for Fiscal 2020 to Managing Director and Whole-time

Payment or benefit to Directors of our Company

The remuneration and sitting fees paid or payable to our Directors for Fiscal 2020 are set out below:

1.

Compensation to our Managing Director and Whole-time Director

Following is the remuneration paid or payable to our Managing Director and Whole-time Director for
Fiscal 2020:

 

S.No Name of Director Amount (in @ million)
1. Srinivasan Ravi 47.28
2 Ravi Gauthamram 5.30
3. Chandramohan Natarajan* 4.94
Total 57.52

 

* Chandramohan Natarajan ceased to be a Whole-time Director with effect from June 30, 2020 due to the expiration
of his term as a Whole-time Director. Further, he has resigned as a Director with effect from July 10, 2020.

Compensation paid to our Non-Executive Directors

Pursuant to the resolution passed by our Board of Directors on December 9, 2020, our non-executive
Directors are entitled to receive a sitting fee of = 50,000 for attending each meeting of our Board and 2
35,000 for attending each meeting of the Audit Committee, Nomination and Remuneration Committee,
Corporate Social Responsibility Committee and Stakeholders Relationship Committee with effect from
December 9, 2020.

Details of the sitting fees paid or payable by our Company to the non-executive Directors for Fiscal 2020
are as follows:

 

S.No Name of Director ‘Amount (in @ million)
1. Chandrashekhar Madhukar Bhide 0.57

2 Kallakurichi Kanniah Balu* 0.39

3. Udai Dhawan 0.46

4. Sundararaman Kalyanaraman 0.50

5 Vijaya Sampath 0.36
Total 2.26

 

* Ceased to be director with effect from May 23, 2020.
Commission payable to our Non-Executive Directors

Pursuant to the resolutions passed by our Board of Directors on March 30, 2018 and by our Shareholders
on April 30, 2018, our non-executive Directors are entitled to receive commission of = 150,000 per
calendar quarter, subject to the overall ceiling of 1.00% p.a. of net profit of the Company during any
financial year.

Details of the commission paid or payable by our Company to our non-executive Directors for Fiscal
2020 are as follows:

 

S.No Name of Director Amount (in % million)
1. Chandrashekhar Madhukar Bhide 0.60
2 Kallakurichi Kanniah Balu* 0.60
3. Udai Dhawan 0.60
4, Sundararaman Kalyanaraman 0.60
5 Vijaya Sampath 0.60
Total 3.00

 

* Ceased to be a director with effect from May 23, 2020.

208
4. Compensation paid or payable from our Subsidiaries
No compensation has been paid or is payable by our Subsidiaries to our Directors in Fiscal 2020.
5. Loans to our Directors

As on the date of this Prospectus, there are no outstanding loans availed of by our Directors from our
Company.

As on the date of this Prospectus, none of our Directors is related to the beneficiaries of loans, advances
and sundry debtors of our Company, Subsidiaries and Group Companies.

6. Bonus or profit sharing plan for our Directors

Except as disclosed in “- Terms of Appointment of our Managing Director and Whole-time Director”
and “- Commission payable to our Independent Directors” on pages 206 and 208, respectively, our
Company does not have a bonus or profit sharing plan for our Directors.

Shareholding of our Directors
1. Shareholding of Directors in our Company
Our Articles of Association do not require our Directors to hold any qualification shares.

Other than as disclosed under “Capital Structure — Other details of Shareholding of our Company” on
page 78, none of our Directors holds any shares in our Company as on the date of this Prospectus.

25 Shareholding of Directors in our Subsidiaries
None of our Directors holds Equity Shares in our Subsidiaries.
Service contracts with Directors

Except for statutory benefits payable upon termination of their employment in our Company or superannuation,
our Directors are not entitled to any benefits upon termination of employment or superannuation, pursuant to any
service contracts executed with our Company.

Interest of Directors

All our Directors may be deemed to be interested to the extent of fees, if any, payable to them for attending
meetings of the Board or a committee thereof, as well as to the extent of other remuneration and reimbursement
of expenses, if any, payable to them. For further information, see “- Payment or benefit to Directors of our
Company ” on page 208.

Our Directors may also be interested to the extent of Equity Shares, if any, held by them or held by the entities in
which they are associated as promoters, directors, partners, proprietors or trustees or held by their relatives or that
may be subscribed by or allotted to the companies, firms, ventures, trusts in which they are interested as promoters,
directors, partners, proprietors, members or trustees, pursuant to the Offer. Our Directors may also be deemed to
be interested to the extent of any dividend payable to them and other distributions in respect of such Equity Shares.
For further information regarding the shareholding of our Directors, see “Capital Structure — Other details of
Shareholding of our Company” on page 78.

No sum has been paid or agreed to be paid to our Directors or to firms or companies in which they may be
members, in cash or shares or otherwise by any person either to induce him/her to become, or to qualify him/her
as, a Director, or otherwise for services rendered by him/her or by such firm or company, in connection with the
promotion or formation of our Company.

None of our Directors has been declared as Wilful Defaulters.

209
Interest in land and property

Our Directors are not interested in any property acquired of or by our Company or presently intended to be
acquired of it or by it.

None of our Directors has any interests in any transaction by our Company for acquisition of land, construction
of building and supply of machinery.

Interest in promotion or formation of our Company

Except Srinivasan Ravi, our Promoter, Chairman and Managing Director, and Ravi Gauthamram, one of the
members of the Promoter Group and Whole-time Director, our Directors have no interest in the promotion or
formation of our Company, as on the date of this Prospectus. For further information, see “Promoter, Promoter

Group and Group Companies” on page 219.

For further confirmations with respect to our Directors, see “Other Regulatory and Statutory Disclosures” on
page 332.

Directorships of Directors in listed companies
Our Directors are not, and for the five years prior to the date of this Prospectus, have not been on the board of any
listed company whose shares have been/were suspended from being traded on any of the stock exchanges, during

his/ her tenure.

None of our Directors has been or is a director on the board of any listed companies which have been or were
delisted from any stock exchange(s), during his/ her tenure.

None of our Directors is associated with the securities market.
Changes in our Board during the last three years

The changes in our Board during the three years immediately preceding the date of this Prospectus are set forth
below:

 

Name of Director Date of Ghange Reasons
Vijaya Sampath April 30, 2018 Appointed as an Independent Director“)
Kallakurichi Kanniah Balu May 23, 2020 Ceased to be an Independent Director
Chandramohan Natarajan July 10, 2020 Resigned as a Director

 

( Regularized as an Independent Director pursuant to a resolution passed by our Shareholders in their meeting held on April 30, 2018.
Borrowing Powers

Pursuant to our Articles of Association, subject to the provisions of the Companies Act 2013 and other applicable
laws and pursuant to the resolution passed by the shareholders of our Company on April 30, 2018, our Board has
been authorized to borrow, from time to time, any sum or sums of money, as may, in the opinion of the Board, be
required to be borrowed by our Company notwithstanding that the monies already borrowed by the Company
(apart from temporary loans obtained and/or to be obtained from our Company’s bankers in the ordinary course
of business) will exceed the aggregate of the paid-up capital of our Company and its free reserves, provided that
the total monies borrowed by our Company and outstanding at any point of time for the principal amounts of loan
borrowed (apart from temporary loans obtained and/or to be obtained from the Company’s bankers in the ordinary
course of business) shall not exceed the sum of 2 15,000.00 million.

Corporate Governance

As on the date of this Prospectus, there are six Directors on our Board, comprising one Managing Director, one
Whole-time Director, one Nominee Director and three Independent Directors (including one woman Director).
The Chairman of our Board, Srinivasan Ravi, is also our Managing Director. Our Company is in compliance with
the corporate governance requirements prescribed under the SEBI Listing Regulations and the Companies Act
2013 in relation to the composition of our Board and constitution of committees thereof.

210
Board committees

Our Company has constituted the following Board committees in terms of the SEBI Listing Regulations, and the
Companies Act 2013:

(a) Audit Committee;

(b) Nomination and Remuneration Committee;
(o) Stakeholders Relationship Committee; and
(d) Corporate Social Responsibility Committee.
Audit Committee

Our Audit Committee was constituted by a resolution of our Board dated May 24, 2018 and was reconstituted on
February 3, 2020 and is in compliance with Section 177 of the Companies Act 2013 and Regulation 18 of the
SEBI Listing Regulations. The Audit Committee currently comprises:

1.

2,

By

4.

Chandrashekhar Madhukar Bhide, Independent Director (Chairperson);
Sundararaman Kalyanaraman, Independent Director (Member);
Vijaya Sampath, Independent Director (Member) and

Udai Dhawan, Nominee Director (Member).

The Company Secretary shall act as the secretary to the Audit Committee.

Scope and terms of reference: The terms of reference of the Audit Committee shall include the following:

The Audit Committee shall have powers, including the following:

1.

2,

By

4.

Ss

to investigate any activity within its terms of reference;

shall have full access to information contained in the records of the company;
to seek information from any employee;

to obtain outside legal or other professional advice; and

to secure attendance of outsiders with relevant expertise, if it considers necessary.

The role of the Audit Committee shall include the following:

1.

oversight of our Company’s financial reporting process and the disclosure of its financial information
and examination of financial statements and auditor’s report thereon to ensure that the financial
statements are correct, sufficient and credible;

recommendation for appointment, remuneration and terms of appointment of auditors (statutory, internal,
cost) of our Company;

reviewing the financial statements of our Company, its Subsidiaries, in particular investments made by
the unlisted subsidiaries;

approval of payment to statutory auditors for any other services rendered by the statutory auditors;
reviewing, with the management, the annual financial statements and auditor's report thereon before
submission to the Board for approval, with particular reference to:

a. matters required to be included in the director’s responsibility statement to be included in the
Board’s report in terms of clause (c) of sub-section 3 of section 134 of the Companies Act 2013;

211
10.

11.

12.

13.

14.

15.

16.

17.

18.

b. changes, if any, in accounting policies and practices and reasons for the same;

c major accounting entries involving estimates based on the exercise of judgment by
management;

d. significant adjustments made in the financial statements arising out of audit findings;

e compliance with listing and other legal requirements relating to financial statements;

f. reference to the Board of the related party transactions not falling under Section 188 where audit

committee does not approve of such transactions;
g. disclosure of any related party transactions; and
h. modified opinion(s) in the draft audit report.

reviewing, with the management, the quarterly financial statements before submission to the Board for
approval;

reviewing, with the management, the statement of uses/application of funds raised through an issue
(public issue, rights issue, preferential issue, etc.), the statement of funds utilized for purposes other than
those stated in the offer document/ prospectus/ notice and the report submitted by the monitoring agency
monitoring the utilization of proceeds of a public or rights issue, and making appropriate
recommendations to the Board to take up steps in this matter;

reviewing and monitoring the auditor’s independence and performance, and effectiveness of audit
process;

approval of any subsequent modification of transactions of our Company with related parties and
omnibus approval for related party transactions proposed to be entered into by our Company, subject to
the conditions as may be prescribed;

Explanation: The term “related party transactions” shall have the same meaning as provided in
Regulation 2(1)(zc) of the SEBI Listing Regulations and/ or the applicable Accounting Standards and/
or the Companies Act 2013.

scrutiny of inter-corporate loans and investments;

monitoring end use of the funds raised through public offers and related matters;

valuation of undertakings or assets of our Company, wherever it is necessary;

evaluation of internal financial controls and risk management systems;

reviewing, with the management, performance of statutory and internal auditors, adequacy of the internal
control systems;

reviewing the adequacy of internal audit function, if any, including the structure of the internal audit
department staffing and seniority of the official heading the department, reporting structure coverage and
frequency of internal audit;

discussion with internal auditors of any significant findings and follow up there on;

reviewing the findings of any internal investigations by the internal auditors into matters where there is
suspected fraud or irregularity or a failure of internal control systems of a material nature and reporting

the matter to the Board;

discussion with statutory auditors before the audit commences, about the nature and scope of audit as
well as post-audit discussion to ascertain any area of concern;

212
19. looking into the reasons for substantial defaults in the payment to depositors, debenture holders,
shareholders (in case of non-payment of declared dividends) and creditors;

20. reviewing the functioning of the whistle blower mechanism;

21. overseeing the vigil mechanism established by our Company, with the chairman directly hearing
grievances of victimization of employees and directors, who used vigil mechanism to report genuine
concerns in appropriate and exceptional cases;

22. approval of appointment of chief financial officer (i.e. the whole-time finance director or any other person
heading the finance function or discharging that function) after assessing the qualifications, experience
and background, etc. of the candidate;

23. reviewing the utilization of loans and/ or advances from/ investment by the holding company in the
subsidiary exceeding % 100 crore or 10% of the asset size of the subsidiary, whichever is lower including
existing loans/ advances/ investments existing as on the date of coming into force of this provision; and

24. carrying out any other function as is mentioned in the terms of reference of the Audit Committee.

The Audit Committee shall mandatorily review the following information:

1. management discussion and analysis of financial condition and results of operations;

2, statement of significant related party transactions (as defined by the Audit Committee), submitted by
management;

3. management letters/letters of internal control weaknesses issued by the statutory auditors;

4. internal audit reports relating to internal control weaknesses;

5. the appointment, removal and terms of remuneration of the chief internal auditor if any shall be subject

to review by the Audit Committee; and
6. statement of deviations in terms of the SEBI Listing Regulations:

a. quarterly statement of deviation(s) including report of monitoring agency, if applicable,
submitted to stock exchange(s); and

b. annual statement of funds utilized for purposes other than those stated in the offer
document/prospectus/notice.

Nomination and Remuneration Committee

Our Nomination and Remuneration Committee was constituted pursuant to a resolution passed by our Board on
May 24, 2018. The Nomination and Remuneration Committee is in compliance with Section 178 of the Companies
Act 2013 and Regulation 19 of the SEBI Listing Regulations. The Nomination and Remuneration Committee
currently comprises:

1. Vijaya Sampath, Independent Director (Chairperson);
2. Chandrashekhar Madhukar Bhide, Independent Director (Member); and
By Sundararaman Kalyanaraman, Independent Director (Member).

The Company Secretary shall act as the secretary to the Nomination and Remuneration Committee.

Scope and terms of reference: The terms of reference of the Nomination and Remuneration Committee shall
include the following:

1. formulation of the criteria for determining qualifications, positive attributes and independence of a

213
director and recommend to the Board a policy relating to the remuneration of the directors, key
managerial personnel and other employees.

The Nomination and Remuneration Committee, while formulating the above policy, should ensure that-

a. the level and composition of remuneration be reasonable and sufficient to attract, retain and
motivate directors of the quality required to run our Company successfully;

b. relationship of remuneration to performance is clear and meets appropriate performance
benchmarks; and

c remuneration to directors, key managerial personnel and senior management involves a balance
between fixed and incentive pay reflecting short and long term performance objectives
appropriate to the working of our Company and its goals.

formulation of criteria for evaluation of performance of independent directors and the Board;
devising a policy on Board diversity;

identifying persons who are qualified to become directors and who may be appointed in senior
management in accordance with the criteria laid down, and recommend to the Board their appointment
and removal and shall specify the manner for effective evaluation of performance of the Board, its
committees and individual directors to be carried out either by the Board, by the Nomination and
Remuneration Committee or by an independent external agency and review its implementation and
compliance;

whether to extend or continue of the term of appointment of the independent director, on the basis of the
report of performance evaluation of directors;

recommend to the Board, all remuneration, in whatever form, payable to senior management;

frame suitable policies, procedures and systems to ensure that there is no violation of securities laws, as
amended from time to time, including:

a. the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015;
and

b. the Securities and Exchange Board of India (Issue of Sweat Equity) Regulations, 2002;

@ the Securities and Exchange Board of India (Share Based Employee Benefits) Regulations,
2014; and

d. the Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade

Practices Relating to the Securities Market) Regulations, 2003, by the trust, the Company and
its employees, as applicable;

perform such other activities as may be delegated by the Board or specified/provided under the
Companies Act 2013 or by the SEBI Listing Regulations or by any other applicable law or regulatory
authority.

Stakeholders Relationship Committee

Our Stakeholders Relationship Committee was constituted by a resolution of our Board dated May 24, 2018 and
was last reconstituted on December 5, 2020, and is in compliance with Section 178 of the Companies Act 2013
and Regulation 20 of the SEBI Listing Regulations. The Stakeholders Relationship Committee currently

comprises:

1 Chandrashekhar Madhukar Bhide, Independent Director (Chairperson);
2. Srinivasan Ravi, Chairman and Managing Director (Member); and

By Sundararaman Kalyanaraman, Independent Director (Member).

The Company Secretary shall act as the secretary to the Stakeholders Relationship Committee.

214
Scope and terms of reference: The terms of reference of the Stakeholders Relationship Committee shall include
the following:

1. considering and resolving grievances of shareholders, debenture holders and other security holders;

2, resolving the grievances of the security holders of our Company, including complaints related to
transfer/allotment transmission of Equity Shares or any other securities, non-receipt of annual report,
non-receipt of declared dividends, non-receipt of balance sheet, issue of new/ duplicate certificates, issue
of share certificates arising from split or consolidation, general meetings, etc.;

By review of measures taken for effective exercise of voting rights by shareholders;

4. review of adherence to the service standards adopted by our Company in respect of various services
being rendered by the registrar and share transfer agent;

Ss review of the various measures and initiatives taken by our Company for reducing the quantum of
unclaimed dividends and ensuring timely receipt of dividend warrants/ annual reports/ statutory notices
by the shareholders of our Company;

6. overseeing the performance of the registrars and transfer agents of our Company and to recommend
measures for overall improvement in the quality of investor services; and

Fs carrying out any other functions required to be undertaken by the Stakeholders Relationship Committee
under applicable laws.

Corporate Social Responsibility Committee
Our Corporate Social Responsibility Committee was constituted by a resolution of the Board dated December 17,

2014. It was reconstituted by a resolution of the Board dated December 15, 2016 and is in compliance with Section
135 of the Companies Act 2013. The CSR Committee currently comprises:

1. Srinivasan Ravi, Chairman and Managing Director (Chairperson);
2. Udai Dhawan, Nominee Director (Member); and
Bs Chandrashekhar Madhukar Bhide, Independent Director (Member).

Scope and terms of reference: the terms of reference of the Corporate Social Responsibility Committee shall
include the following:

1, to formulate and recommend to the Board, a “Corporate Social Responsibility Policy” which shall
indicate the activities to be undertaken by the Company as specified in Schedule VII of the Companies
Act 2013;

2: to review and recommend the amount of expenditure to be incurred on the activities referred to in clause
(a);

3. to monitor the corporate social responsibility policy of the Company and its implementation from time
to time; and

4. to any other matter as the Corporate Social Responsibility Committee may deem appropriate after

approval of the Board or as may be directed by the Board from time to time.

215
Management Organization Chart

Board of Directors |

Chairman and Managing
Director

=
| |

| | Thiyagaraj

Srinivasan Ravi |

C.B. Chandrasekar
Chief Financial Officer

Ravi Gautham Ram

Whole-time Director Dasesdharass ey

Chief Operating Officer

 

y

Shainshad Aduvanni
Company Secretary
and Compliance Officer

 

Key Managerial Personnel

Set forth below are the details of our Key Managerial Personnel, in addition to Srinivasan Ravi, our Promoter,
Chairman and Managing Director, and Ravi Gauthamram, our Whole-time Director, as on the date of this
Prospectus. For further information on our Chairman and Managing Director, Srinivasan Ravi and our Whole-
time Director, Ravi Gauthamram, see “- Brief Profiles of our Directors” and ‘“- Terms of Appointment of our
Managing Director and Whole-time Director” on pages 205 and 206, respectively:

C.B. Chandrasekar, aged 61 years, our Chief Financial Officer, was appointed on February 3, 2020 for a period
of five years. He holds a bachelor’s degree in commerce from the University of Madras. He is an associate of the
Institute of Cost Accountants of India and Institute of Company Secretaries of India. He has overall experience of
more than three decades in the fields of finance, secretarial and accounting. Prior to joining our Company, he was
associated with Lakshmi Machine Works Limited and Elgi Equipments Limited. During Fiscal 2020, he received
a gross remuneration of 1.31 million.

Shainshad Aduvanni, aged 35 years, our Company Secretary and Compliance Officer, was appointed as our
Company Secretary on November 16, 2017 and our Compliance Officer on April 30, 2018. He joined our
Company on December 12, 2016 as a deputy company secretary. He holds a bachelor’s degree in commerce from
University of Madras and is a qualified associate company secretary. He has experience in secretarial and legal
affairs. Prior to joining our Company, he was associated with CG-VAK Software & Exports Limited as a company
secretary and compliance officer. During Fiscal 2020, he received a gross remuneration of = 1.53 million.

Thiyagaraj Damodharaswamy, aged 48 years, our Chief Operating Officer - Automotive, was appointed on
August 1, 2017. He joined our Company on January 1, 2002 as quality system engineer. He holds a diploma in
mechanical engineering from PSG College of Technology and Polytechnic where he was awarded the best
outgoing student award. He also holds a bachelor’s degree in mechanical engineering from Bharathiar University.
He has experience in the manufacturing and automotive industries. Prior to joining our Company, he was
associated with Rieter-LMW Machinery Limited. During Fiscal 2020, he received a gross remuneration of % 6.70
million.

216
Status of Key Managerial Personnel
All the Key Managerial Personnel are permanent employees of our Company.
Relationship among Key Managerial Personnel

Except for Ravi Gauthamram who is the son of Srinivasan Ravi, our Promoter and Chairman and Managing
Director, none of our Key Managerial Personnel are related to each another.

Shareholding of Key Managerial Personnel

For further information on shareholding of our Key Managerial Personnel in our Company, see “Capital Structure
— Other details of Shareholding of our Company” on page 78.

Bonus or profit sharing plan for the Key Managerial Personnel

There is no profit sharing plan for the Key Managerial Personnel. Our Company makes bonus/ex-gratia payments,
which is in accordance with their respective terms of employment.

Service contracts with Key Managerial Personnel

Except for the statutory benefits payable upon termination of their employment in our Company or
superannuation, our Key Managerial Personnel are not entitled to any benefit upon termination of employment or
superannuation, pursuant to any service contracts executed with our Company.

Interest of Key Managerial Personnel

None of our Key Managerial Personnel has any interest in our Company except to the extent of their remuneration,
benefits, reimbursement of expenses incurred by them in the ordinary course of business.

Contingent and deferred compensation payable to Key Managerial Personnel

There is no contingent or deferred compensation payable to our Key Managerial Personnel which does not form
part of their remuneration.

Arrangements and understanding with major shareholders, customers, suppliers or others for
appointment of Key Managerial Personnel

None of our Key Managerial Personnel has been appointed pursuant to any arrangement or understanding with
our major Shareholders, customers, suppliers or any other person.

Loans to and deposits from Key Managerial Personnel
There are no outstanding loans availed of by our Key Managerial Personnel from our Company.
Changes in Key Managerial Personnel during the last three years

The changes in our Key Managerial Personnel during the three years immediately preceding the date of this
Prospectus are set forth below:

 

Name Date of change Reason for change
Sivakumar Gopalan February 3, 2020 Resigned as the chief financial officer
C.B. Chandrasekar February 3, 2020 Appointed as the chief financial officer

 

Employee stock option and stock purchase schemes

As on date of this Prospectus, our Company does not have any employee stock option and stock purchase schemes.

217
Payment or benefits to officers of our Company

No amount or benefit has been paid or given to any officer of our Company within the two years immediately

preceding the date of this Prospectus or is intended to be paid or given, other than in the ordinary course of their
employment.

218
PROMOTER, PROMOTER GROUP AND GROUP COMPANIES
The promoter of our Company is Srinivasan Ravi.

As on the date of this Prospectus, our Promoter holds 52.83% the paid-up Equity Share capital of our Company.
For further information on the build-up of our Promoter’s shareholding in our Company, see “Capital Structure
- History of Equity Share Capital Build-up, Contribution and Lock-in of Promoter’s Shareholding” on page
72.

Promoter
Srinivasan Ravi

Srinivasan Ravi is our Promoter, Chairman and Managing Director. For
further information, see “Management - Brief Profiles of our Directors”
on page 205.

His driving license number is TN3719810002041, his voter identification number is TN/20/106/0189594 and his
Aadhaar card number is 9169 3513 5533. His permanent account number is AEYPR9359H.

Our Company confirms that the permanent account number, bank account number and the passport number of
Srinivasan Ravi have been submitted to the Stock Exchanges at the time of filing of the Draft Red Herring
Prospectus.

Interests of our Promoter
Interest of our Promoter in the promotion of our Company

Our Promoter is interested in our Company to the extent that he has promoted our Company and to the extent of
his shareholding in our Company and any dividend or other distributions payable, if any, by our Company. For
further information on our Promoter’s shareholding, see “Capital Structure - History of Equity Share Capital
Build-up, Contribution and Lock-in of Promoter’s Shareholding” on page 72.

Interest of our Promoter other than as the promoter of our Company

Our Promoter is also interested in our Company to the extent of (i) his directorship in our Company and our
Subsidiaries and any compensation, other remuneration, commission and reimbursement of expenses payable to
him in such capacity, and (ii) the shareholding of his relatives and the dividend payable thereon. For further
information on our Promoter’s compensation and other details, see “Capital Structure — Shareholding of our
Promoter and Promoter Group” and “Management - Terms of Appointment of our Managing Director and
Whole-time Director” on pages 72 and 206, respectively. For further details of interest of our Promoter in our
Company, see “Financial Statements” on page 225.

Interest of Promoter in the property of our Company

Our Promoter does not have any interest in any property acquired by our Company during the two years
immediately preceding the date of this Prospectus or any property proposed to be acquired by our Company.

Our Promoter does not have any interest in any transaction in the acquisition of land, construction of building or
supply of machinery.

Our Promoter is not interested as member of any firm or any company and no sum has been paid or agreed to be

219
paid to our Promoter or to such firm or company in cash or shares or otherwise by any person for services rendered
by our Promoter or by such firm or company in connection with the promotion or formation of our Company.

Payment of Benefits

Except as stated otherwise in “Management - Payment or benefit to Directors of our Company ”, “- Interests of
our Promoter” and “Financial Statements” on pages 208, 219 and 225, respectively, no benefit or amount has
been given or paid to our Promoter or members of our Promoter Group within the two years immediately preceding
the date of filing this Prospectus or is intended to be paid or given to our Promoter or members of our Promoter
Group.

Material Guarantees

Except as stated otherwise in “History and Certain Corporate Matters - Guarantees provided by our Promoter”
on page 199, our Promoter has not given any material guarantee to any third party with respect to the Equity
Shares, as on the date of this Prospectus.

Companies or Firms with which our Promoter have disassociated in the last three years

Our Promoter has not disassociated himself from any company or firm during the three years immediately
preceding the date of filing this Prospectus.

Our Promoter is the original promoter of our Company and there has not been any change in the management or
control of our Company in the five years immediately preceding the date of this Prospectus.

Confirmations

Our Promoter is not related to any of the sundry debtors of our Company, except to the extent of his directorship
in our Subsidiaries and Group Companies, in relation to any dues from these entities. For further information, see
“Financial Statements — Restated Financial Information — Annexure VII —Note No. 43” on page 276.

Our Promoter is not related to any beneficiary of loans and advances provided by our Company, except to the
extent of his directorship in our Subsidiaries. For further information, see “Financial Statements — Restated

Financial Information — Annexure VII —Note No. 43” on page 276.

There is no litigation or legal action pending or taken by any department of the Central Government or statutory
authority during the five years immediately preceding the date of this Prospectus against our Promoter.

Our Promoter and members of our Promoter Group have not been declared as Wilful Defaulters.

Our Promoter and members of our Promoter Group have not been prohibited from accessing or operating in capital
markets under any order or direction passed by SEBI or any other regulatory or governmental authority.

Our Promoter and members of the Promoter Group are not and have never been promoters, directors or person in
control of any other company which is prohibited from accessing or operating in capital markets under any order
or direction passed by SEBI or any other regulatory or governmental authority.

Promoter Group

As on the date of this Prospectus, the following is the list of persons constituting the promoter group of the
Company in terms of Regulation 2(1)(pp) of the SEBI ICDR Regulations:

Individuals forming part of the Promoter Group

 

Name of Promoter Name of relative Relationship
Srinivasan Ravi S. Manoranjitham Mother
S. Murali Brother
Chithra Ravi Spouse
Ravi Gauthamram Son
R. Mirthula Daughter

 

220
Latha Prabakar, the sister-in-law of our Promoter, has disassociated with our Promoter with effect from August
23, 2010 and therefore, she and any entities associated with her have not been considered within the definition of
“promoter group” under Regulation 2(1)(pp) of the SEBI ICDR Regulations. SEBI, by letter dated December 22,
2020, granted exemption to our Company from including Latha Prabakar and related parties, as a member of the
Promoter Group.

Entities forming part of the Promoter Group

1. Ashwinram Spinning Mills Private Limited;

2. Shanmo Engineering Products India Private Limited; and

3. Tech 82 Pictures LLP.

Group Companies

In terms of the SEBI ICDR Regulations and pursuant to the Materiality Policy, for the purposes of identification
of a group company for disclosure in connection with the Offer, our Company has considered:

a company (other than our Subsidiaries) with which there were related party transactions as disclosed in
the Restated Financial Information; and

(ii) such other company forming part of our Promoter Group, who has entered into one or more transactions
in the most recent audited fiscal or any stub period, individually or in the aggregate, exceeding 3.00% of
the consolidated profit after tax of the Company, as per the Restated Financial Information, for the latest
fiscal, i.e. Fiscal 2020.

On the basis of the Materiality Policy following companies has been identified as Group Companies, for the
purpose of disclosure in connection with the Offer:

1. MC Craftsman Machinery Private Limited.
2. Carl Stahl Craftsman Enterprises Private Limited.

For avoidance of doubt, it is hereby clarified that our Subsidiaries has not been considered for the purposes of the
disclosure as Group Companies in this Prospectus.

Details of our Group Companies:

MC Craftsman Machinery Private Limited

Corporate Information and nature of business

MC Craftsman Machinery Private Limited is a private limited company and was incorporated on November 6,
2007 under the Companies Act 1956. Its CIN is U29200TZ2007PTCO014014. Its registered office is located at
Senthel Towers, IV Floor, 1078, Avinashi Road, Coimbatore 641 018, Tamil Nadu, India. MC Craftsman
Machinery Private Limited is involved in the business of selling electric discharge machine and laser cutting
machine produced by Mitsubishi Electric Corporation as well as related spare parts.

Capital Structure

The authorized share capital of MC Craftsman Machinery Private Limited is ¥ 210,000,000 divided into 2,100,000
equity shares of = 100 each and its paid-up share capital is = 210,000,000 divided into 2,100,000 equity shares of
= 100 each. Our Company holds 209,999 equity shares aggregating to 10.00% of the total equity share capital of
MC Craftsman Machinery Private Limited.

Interest of our Promoter

Our Promoter is one of the directors on the board of MC Craftsman Machinery Private Limited. Our Promoter
holds one equity share of MC Craftsman Machinery Private Limited. Further, Ravi Gauthamram, our Whole-time

221
Director and a member of our Promoter Group, is also one of the directors on the board of MC Craftsman
Machinery Private Limited.

Financial Information

The financial information derived from the audited financial results of MC Craftsman Machinery Private Limited
for Fiscals 2020, 2019 and 2018 are set forth below:

(in million, except otherwise stated)

 

Particulars Fiscal 2020 Fiscal 2019 Fiscal 2018

Equity capital 210.00 210.00 210.00
Reserves and surplus (excluding (221.77) (100.95) (96.42)
revaluation reserves)

Revenues from operations 348.07 511.18 353.75
Profit/(loss) after tax (120.81) (4.53) (34.52)
Basic earnings per share (in 2) (67.53) (2.16) (16.44)
Diluted earnings per share (in 2) (57.53) (2.16) (16.44)
Net asset value per share (in 2) (16.72) 37.59 42.11

 

Net assets value per share = Net worth/number of shares as at year end

There are no significant notes of the auditors in relation to the aforementioned financial statements.
Carl Stahl Craftsman Enterprises Private Limited
Corporate Information and nature of business

Carl Stahl Craftsman Enterprises Private Limited is a private limited company and was incorporated on June 22,
2007 under the Companies Act 1956. The CIN of Carl Stahl Craftsman Enterprises Private Limited is
U51900TZ2007PTC013823. The registered office of Carl Stahl Craftsman Enterprises Private Limited is located
at Senthel Towers, IV Floor, 1078, Avanashi Road, Coimbatore 641 018, Tamil Nadu, India. Carl Stahl Craftsman
Enterprises Private Limited is involved in the business of trading in lifting gear and material handling equipment
and other equipment and accessories relating to mechanical and/or electrical segment of engineering and
marketing them in India. For further information, see “History and Certain Corporate Matters - Shareholders’
Agreements and Other Agreements - Key terms of other subsisting material agreements” on page 198.

Capital Structure

The authorized share capital of Carl Stahl Craftsman Enterprises Private Limited is = 40,000,000 divided into
4,000,000 equity shares of = 10 each and its paid-up share capital is = 20,000,000 divided into 2,000,000 equity
shares of = 10 each.

Interest of our Promoter

Our Promoter is one of the directors on the board of Carl Stahl Craftsman Enterprises Private Limited.

Financial Information

The financial information derived from the audited financial results of Carl Stahl Craftsman Enterprises Private
Limited for Fiscals 2020, 2019 and 2018 are set forth below:

(in million, except otherwise stated)

 

Particulars Fiscal 2020 Fiscal 2019 Fiscal 2018
Equity capital 20.00 20.00 20.00
Reserves and surplus (excluding 39.75 40.20 26.57
revaluation reserves)

Revenues from operations 257.54 309.49 216.53
Profit/(loss) after tax (0.53) 13.42 5.72
Basic earnings per share (in 2) (0.26) 6.71 2.86
Diluted earnings per share (in 2) (0.26) 671 2.86
Net asset value per share (in 2) 29.88 30.10 23.29

 

Net assets value per share = Net worth/number of shares as at year end

There are no significant notes of the auditors in relation to the aforementioned financial statements.

222
Details of loss-making Group Companies

MC Craftsman Machinery Private Limited has incurred losses in Fiscals 2020, 2019 and 2018. Carl Stahl
Craftsman Enterprises Private Limited has incurred losses in Fiscal 2020. Also, see “Risk Factors - Our Group
Companies have incurred losses in the last three Fiscals.” on page 25.

Details of Group Companies under winding up

As on the date of this Prospectus, our Group Companies are not under winding up. Further, as on the date of this
Prospectus, no winding up, insolvency resolution process or revocation proceedings or actions have been initiated
against our Group Companies.

Insolvent/defunct or sick Group Companies

As on the date of this Prospectus, our Group Companies have not been declared insolvent/bankrupt under the
Insolvency and Bankruptcy Code, 2016. Our Group Companies do not fall under the definition of sick industrial
companies under the erstwhile Sick Industrial Companies (Special Provisions) Act, 1985.

Our Group Companies have not been declared defunct under the Companies Act 2013 and no application has been
made to the RoC for striking off the name of our Group Companies during the five years immediately preceding
the date of the Draft Red Herring Prospectus, the Red Herring Prospectus and this Prospectus.

Interests of our Group Companies

As on the date of this Prospectus:

a. Our Group Companies do not have any interest in the promotion or formation of our Company.

b. Our Group Companies do not have any interest in any property acquired by our Company within the
three years immediately preceding the date of filing this Prospectus or proposed to be acquired by it.

Gs Our Group Companies do not have any interest in any transaction by our Company pertaining to
acquisition of land, construction of building and supply of machinery, etc.

d. Further, except as set forth in “Financial Statements” on page 225, our Company does not have any
sales or purchase transactions with our Group Companies exceeding, in the aggregate, 10% of the total
sales or purchases of our Company. For further information on related business transactions with our
Group Companies and their significance on our financial performance, see “Financial Statements” on
page 225.

Common pursuits of our Group Companies

Except as disclosed in “Business” and “Financial Statements” on pages 168 and 225, respectively, there are no
common pursuits or conflict of interest situations amongst our Group Companies and our Company.

Except as disclosed in “Business” and “Financial Statements” on pages 168 and 225, respectively, our Group
Companies do not have any business interest in our Company.

For further confirmations with respect to our Group Companies, see “Other Regulatory and Statutory
Disclosures” on page 332.

223
DIVIDEND POLICY

The declaration and payment of dividends, if any, will be recommended by our Board and approved by the
Shareholders, at their discretion, subject to the provisions of the Articles of Association and applicable law,
including the Companies Act 2013. The dividend, if any, will depend on a number of factors, including but not
limited to the earnings, capital requirements, contractual obligations, applicable legal restrictions and overall
financial position of our Company. We may retain all our future earnings, if any, for use in the operations and
expansion of our business. As a result, we may not declare dividends in the foreseeable future. Any future
determination as to the declaration and payment of dividends will be at the discretion of our Board and will depend
on factors that our Board deems relevant, including among others, our results of operations, financial condition,
cash requirements, business prospects and any other restrictive covenants under financing arrangements our
Company is currently availing of or may enter into, to finance our funding requirements for our business activities.
Our Board may also, from time to time, pay interim dividends from the profits of the financial year in which such
interim dividend is sought to be declared.

The amounts paid as dividends in the past are not necessarily indicative of our Company’s dividend payments, if
any, in the future. Our Company currently has no formal dividend policy.

The dividend paid by our Company on the Equity Shares in the nine months ended December 31, 2020 and Fiscals
2020, 2019 and 2018, is set out below:

 

Particulars Nine months ended Fiscal 2020 Fiscal 2019 Fiscal 2018
December 31, 2020

Number of equity shares 20,121,600 20,121,600 20,121,600 1,006,080

at year/period ended

Face value per equity 5 5 5 100

share (in 2)

Rate of dividend (%) Nil Nil 50% 10%

Dividend paid (in % Nil Nil 50.30 10.06

million)

Mode of payment of NA NA Bank transfer Bank transfer

dividend

 

Our Company has not paid any dividend for the period between January 1, 2021 and the date of filing of this
Prospectus.

224
SECTION V - FINANCIAL INFORMATION

FINANCIAL STATEMENTS

INDEPENDENT AUDITOR’S EXAMINATION REPORT ON _ RESTATED FINANCIAL
INFORMATION

To

The Board of Directors
Craftsman Automation Limited
Senthel Towers, IV floor,
1078, Avinashi road,
Coimbatore — 641 018

Tamil Nadu, India

Dear Sirs / Madam

1.

We have examined the attached Restated Consolidated Financial Information of Craftsman Automation
Limited (the "Company" and its subsidiaries (the Company and its subsidiaries together referred to as the
"Group") and its joint venture, comprising the Restated Consolidated Statement of Assets and Liabilities
as at 31 December 2020, 31 March 2020, 31 March 2019 and 31 March 2018, the Restated Consolidated
Statements of Profit and Loss (including other comprehensive income), the Restated Consolidated
Statement of Changes in Equity, the Restated Consolidated Cash Flow Statement for the nine months period
ended 31 December 2020 and for the years ended 31 March 2020, 31 March 2019 and 31 March 2018, the
Summary Statement of Significant Accounting Policies and other explanatory information (collectively,
the "Restated Consolidated Financial Information"), as approved by the Board of Directors of the Company
at their meeting held on 25 January 2021 for the purpose of inclusion in the Red Herring Prospectus
(“RHP”) and the Prospectus prepared by the management of Company (“the Management”) in connection
with its proposed Initial Public Offer of equity shares ("IPO") prepared in terms of the requirements of:

a. Section 26 of Part I of Chapter III of the Companies Act, 2013 (the "Act");

b. the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements)
Regulations, 2018, as amended ("ICDR Regulations"); and

@ the Guidance Note on Reports in Company Prospectuses (Revised 2019) issued by the Institute of
Chartered Accountants of India ("ICAI"), as amended from time to time (the "Guidance Note").

The Company's Board of Directors is responsible for the preparation of the Restated Consolidated Financial
Information for the purpose of inclusion in the RHP and the Prospectus, to be filed with SEBI, the National
Stock Exchange of India Limited, BSE Limited and Registrar of Companies, Tamil Nadu, in connection
with the proposed IPO. The Restated Consolidated Financial Information have been prepared by the
Management on the basis of preparation stated in notes B1 and B2 to the Restated Consolidated Financial
Information. The responsibility of the respective Board of Directors of the companies included in the Group
and its joint venture includes designing, implementing and maintaining adequate internal control relevant
to the preparation and presentation of the Restated Consolidated Financial Information. The respective
Board of Directors are also responsible for identifying and ensuring that the Group and its joint venture
complies with the Act, ICDR Regulations and the Guidance Note.

We have examined such Restated Consolidated Financial Information taking into consideration:

a. the terms of reference and terms of our engagement agreed upon with you in accordance with our
engagement letter dated 25 January 2021 in connection with the proposed IPO of equity shares of
the Company;

b. the Guidance Note. The Guidance Note also requires that we comply with the ethical requirements

of the Code of Ethics issued by the ICAI;

225
c concepts of test checks and materiality to obtain reasonable assurance based on verification of
evidence supporting the Restated Consolidated Financial Information; and

d. the requirements of Section 26 of the Act and the ICDR Regulations. Our work was performed
solely to assist you in meeting your responsibilities in relation to your compliance with the Act, the
ICDR Regulations and the Guidance Note in connection with the IPO.

These Restated Consolidated Financial Information have been compiled by the Management from:

a. Audited special purpose interim consolidated Ind AS financial statements of the Group and its joint
venture as at and for the nine months period ended 31 December 2020 prepared in accordance with
Indian Accounting Standard (‘Ind AS’) 34 "Interim Financial Reporting", specified under section
133 of the Act and other accounting principles generally accepted in India (the "Special Purpose
Interim Consolidated Ind AS Financial Statements") which have been approved by the Board of
Directors at their meeting held on 25 January 2021;

b. Audited Consolidated Ind AS financial statements of the Group and its joint venture as at and for
the years ended 31 March 2020, 31 March 2019 and 31 March 2018 prepared in accordance with
the Indian Accounting Standards (referred to as "Ind AS") as prescribed under Section 133 of the
Act read with Companies (Indian Accounting Standards) Rules 2015, as amended, and other
accounting principles generally accepted in India, which have been approved by the Board of
Directors at their meeting held on 7 May 2020, 15 May 2019 and 3 July 2018 respectively (the
"Audited Consolidated Ind AS Financial Statements").

For the purpose of our examination, we have relied on:

a. Auditors’ report issued by us dated 25 January 2021 on the Special Purpose Interim Consolidated
Ind AS Financial Statements of the Group and its joint venture as at and for the nine months period
ended 31 December 2020;

b. Auditors’ Report issued by the previous auditors, PKF Sridhar & Santhanam LLP, Chartered
Accountants, (the “Previous Auditors”) dated 7 May 2020, 15 May 2019 and 3 July 2018 on the
consolidated financial statements of the Group and its joint venture as at and for the years ended 31
March 2020, 31 March 2019 and 31 March 2018, respectively, as referred in Paragraph 4 above

The audits for the financial years ended 31 March 2020, 31 March 2019 and 31 March 2018 were
conducted by the Previous Auditors, and accordingly reliance has been placed on the restated
consolidated statement of assets and liabilities and the restated consolidated statements of profit and loss
(including other comprehensive income), statements of changes in equity and cash flow statements, the
Statement of Significant Accounting Policies and other explanatory information (collectively, the “2020,
2019 and 2018 Restated Consolidated Financial Information”) examined by them for the said years. The
examination report included for the said years is based solely on the report submitted by the Previous
Auditors. They have also confirmed that the 2020, 2019 and 2018 Restated Consolidated Financial
Information

i. have been prepared after incorporating adjustments for the changes in accounting policies, material
errors and regrouping / reclassifications, if any, retrospectively in the financial years ended 31
March 2020, 31 March 2019 and 31 March 2018 to reflect the same accounting treatment as per the
accounting policies and grouping / classifications followed as at and for the nine-months period
ended 31 December 2020;

ii. do not require any adjustment for modification as there is no modification in the underlying audit
reports;

iii. have been prepared in accordance with the Act, ICDR Regulations and the Guidance Note
As indicated in our audit report referred in 5(a) above

a. we did not audit the special purpose financial statements of joint venture whose share of profit /
(loss) included in the consolidated financial statements, for the nine months period ended 31

226
December 2020 is tabulated below, which have been audited by other auditor and whose report has
been furnished to us by the Management and our opinion on the consolidated financial statements,
in so far as it relates to the amounts and disclosures included in respect of the joint venture, is based
solely on the report of the other auditor:
Rs. Million
As at/ for the nine months period ended
31 December 2020

 

Particulars

 

Share of profit in its joint ventures (including
total comprehensive income)

0.90

 

 

 

the special purpose consolidated financial statements include the special purpose financial
statements of subsidiaries, M/s Craftsman Automation Singapore Pte. Ltd., which is in the process
of voluntary winding up and M/s. Craftsman Europe B.V., whose share of total assets, total revenues
and net cash inflows / (outflows) included in the consolidated financial statements, for the nine
months ended 31 December 2020 is tabulated below, have not been audited by us. The special
purpose financial statements of these subsidiaries are unaudited and has been furnished to us by the
Management and our opinion on the special purpose consolidated financial statements, in so far as
it relates to the amounts and disclosures included in respect of these subsidiaries, is based solely on

 

such unaudited special purpose financial statements certified by the Management.

Rs. Million

 

Particulars

As at / for the nine months period ended
31 December 2020

 

 

 

 

 

 

Total assets 200.9
Total revenue 131.3
Net cash inflows / (outflows) 40.8

 

Our opinion on the consolidated Ind AS financial statements is not modified in respect of these matters.

The comparative restated consolidated financial information of the Company prepared in accordance with
Ind AS for the years ended 31 March 2020, 31 March 2019 and 31 March 2018 included in these restated
consolidated financial information have been audited by the Previous Auditors. The Previous Auditors have
issued an unmodified examination report dated 25 January 2021 on the same.

Based on examination report dated 25 January 2021 provided by the Previous Auditors, the audit reports
on the consolidated financial statements issued by the Previous Auditors included following other matters:

“We did not audit the financial statements of the subsidiaries, whose share of total assets, total revenues
and net cash flows, included in the Restated Consolidated Financial Information for each of the financial

years is tabulated below:

Craftsman Singapore Pte. Limited

 

 

 

 

 

 

 

 

 

 

 

Rs. Million
Particulars As at / for the As at / for the As at / for the
year ended year ended year ended
31 March 2020 31 March 2019 31 March 2018
Total assets 1.02 3.83 5.02
Total revenue 7.96 12.42 13.32
Net cash inflows / (outflows) (0.80) (0.53) 0.72
Craftsman Europe B.V. (previously called Craftsman Marine B.V., Netherlands)
Rs. Million
Particulars As at / for the As at / for the As at / for the
year ended year ended year ended
31 March 2020 | 31 March 2019 31 March 2018
Total assets 200.70 182.04 181.99
Total revenue 169.40 195.47 162.20
Net cash inflows / (outflows) 0.80 (17.29) 6.68

 

 

 

 

227
10.

11.

12.

13.

These financial statements have been audited by other auditors, whose audit reports have been furnished to
us by the Management and our opinion on the consolidated financial statements, in so far as it relates to
the amounts and disclosures included in respect of these components is based solely on the audit report of
the other auditors. Our opinion on the consolidated Ind AS financial statements is not modified in respect
of these matters.”

Based on our examination and according to the information and explanations given to us and also as per
the reliance placed on the examination report submitted by the Previous Auditors for the years ended 31
March 2020, 31 March 2019 and 31 March 2018, we report that the Restated Consolidated Financial
Information

a. have been prepared after incorporating adjustments for the changes in accounting policies, material
errors and regrouping/reclassifications, if any, retrospectively in the financial years ended 31 March
2020, 31 March 2019 and 31 March 2018 to reflect the same accounting treatment as per the
accounting policies and grouping/classifications followed as at and for the nine-months period
ended 31 December 2020;

b. do not require any adjustment for modification as there is no modification in the underlying audit
reports; and

c have been prepared in accordance with the Act, ICDR Regulations and the Guidance Note
Emphasis of matter

We draw attention to Note B4 of the Restated Consolidated Financial Information, wherein the Group has
described its impact assessment due to the COVID-19 pandemic. As stated in the said note, eventual
outcome of the impact of the global health pandemic may be different from those estimated as on date of
the approval of these financial statements. Our opinion is not modified in respect of this matter.

The Restated Consolidated Financial Information do not reflect the effects of events that occurred
subsequent to the respective dates of the reports on the Special Purpose Interim Consolidated Ind AS
Financial Statements and Audited Consolidated Ind AS Financial Statements mentioned in paragraph 4
above.

This report should not in any way be construed as a reissuance or re-dating of any of the previous audit
reports issued by us or the Previous Auditors, nor should this report be construed as a new opinion on any
of the financial statements referred to herein.

We have no responsibility to update our examination report for events and circumstances occurring after
the date of this report.

Our report is intended solely for use of the Board of Directors for inclusion in the RHP and the Prospectus
to be filed with SEBI, the National Stock Exchange of India Limited, BSE Limited and Registrar of
Companies, Tamil Nadu, in connection with the proposed IPO. Our report should not be used, referred to,
or distributed for any other purpose except with our prior consent in writing. Accordingly, we do not accept
or assume any liability or any duty of care for any other purpose or to any other person to whom this report
is shown or into whose hands it may come without our prior consent in writing.

for Sharp & Tannan

Chartered Accountants
Firm Registration No. 003792S

V. Viswanathan

Partner
Place: Chennai Membership no. 215565
Date: 25 January 2021 UDIN: 21215565AAAAAC3366

228
Craftsman Automation Limited

Annexure I: Restated Consolidated Statement of Assets and Liabilities
(All amounts are in INR Millions unless otherwise stated)

 

 

 

 

 

 

 

 

  

 

 
   

 

 

   

 

Note
actinaliars No.ot | AsatDecember31| AsatMarch31 | AsatMarch31 | AsatMarch31
ieee 2020 2020 2019 2018
‘ASSETS
Non-current assets
[Property, Plant and Equipment 1 14,130.70 14,267.00 14,764.54 12,447.44
(capital Work in progress 2 27431 888.17 906.14 243.12
Intangible assets 3 78.66 106.25, 143.42 149.63,
Right-of-use Asset 4 847.15, 1,043.10 977.90 637.61
Investments accounted for using equity method 5 18.82 17.93 18.06 13.97
Financial assets
Investments 6 299 13.99 23.53 24.79
Security Deposits 7 201.74 219.30 217.04 180.90
Other Financial assets 8 17.62 105.69 5.85 14.11
|Current tax assets (Net) 9 - 1099 : 44.44
lOther non-currentassets 10 112.88 93.28 110.27 266.66
15,684.87 16,765.70 17,166.75 14,022.67
current assets
Inventories u 3,399.23 3,256.15 3,233.08 3,004.61
Financial assets
‘Trade receivables 2 2,142.00 1,943.19 2,10032 2,016.86
Cash and cash equivalents 1B 310.49 597.61 194.97 367.19
Other bank balances 14 211.20 118.81 70.84 119.58
Security Deposits 15 6.71 692 8.17 5.60
Other Financial assets 16 35.00 19.16 3.32 1.26
7 673.43 323.82 476.53 456.57
6,778.06 6,265.66 6,087.23 5,971.67
[Total Assets 22,462.93 23,031.36 23,253.98 19,994.34
EQUITY AND LIABILITIES
EQUITY
lEquity Share capital 18 100.61 100.61 100.61 100.61
Other Equity 19 7,615.50 7,088.37 6,731.98 5,865.96
7,716.11 7,188.98 6,832.59 5,966.57
LIABILITIES
Non-current liabilities
[Financial liabil
Borrowings 20 5,350.82 6,682.82 6,932.01 4,303.30
Other Financial Liabilities 21 987.68 1,083.62 912.53 557.02
Provisions 2 2.09 682 - -
Deferred tax liabilities (Net) 23 465.06 370.85 355.26 319.73
6,805.65 8144.11 8,199.80 5,180.05
Current liabilities
Financial Liabilities
Borrowings 24 1,566.91 2,442.73 1,350.14 2,720.85
‘Trade payables
(a) total outstanding dues of micro enterprises & small
enterprises 25 133.20 207.62 241.90 49.49
(b) total outstanding dues of creditors other than micro
enterprises & small enterprises 2,882.95 2,610.16 3,070.19 3,577.83
Other Financial Liabilities 26 2518.55 1,792.00 2,647.08 2,168.30
(Current tax labilities (Net) 27 69.27 : 50.11 :
Other current liabilities 28 74157 627.43, 810.64 290.38
Provisions 29 28.72 18.33 51.53 40.87
7,941.17 7,698.27 8,221.59 8,847.72
|Total Equity and Liabi 22,462.93 23,031.36 23,253.98 19,994.34

 

 

 

 

 

 

 

 

 

 

 

‘The accompanying notes form an integral part of the restated consolidated financial information

This is the restated consolidated statement of assets and liabilities referred to in our report of even date

For Sharp & Tannan

Chartered Accountants For and on behalf of the Board
Firm Registration No. 0037925

   

 

V. Viswanathan RGauthamram Savi
Partner Whole Time Director Chairman and Managing Director
Membership No. 215565, DIN : 06789004 DIN: 01257716
Place : Chennai Shainshad Aduvanni C.B. Chandrasekar

   

Date : 25-Jan-2021 Company Secretary M.No.A27895 Chief Financial Office

 

Place : Coimbatore
Date : 25-Jan-2021

229
Craftsman Automation Limited

Annexure Il: Restated Consolidated Statement of Profit and Loss

(All amounts are in INR Millions unless otherwise stated)

 

 

 

 

 

 

  

 

 

 

sl capa Year ended
Period April 12020 to
No.of
Particulars Annexure vu | December'31 2020 March 31 2020 March 312019 March 31 2018
INCOME
Revenue from Operations 30 10,227.87 14,924.65 18,180.07 15,115.31
Other Income 31 7121 85.92 136.36 113.31
[Total Income 10,299.08 15,010.57 18,316.43 15,228.62
EXPENSES
Cost of materials consumed 32 4,387.28 5,717.04 7,104.88 591688
(Changes in inventories of finished goods and work-in-progress 33 (48.08) 150.73 (70.5) (159.15)
Excise duty on sale of goods ; 5 324.44
Employee benefits expense 34 4,105.91 1,709.86 2,168.31 1,986.29
Depreciation, amortization and impairment expense 35 1414.73 1,949.88 1,761.48 1,491.53
other expenses 36 1,908.40 3,367.27 4550.62 4110.82
Finance costs 37 72.40 1,484.00 1,405.49 4,124.83
{Total expenses 9,540.64 14,378.78 16,920.63 14,795.64
Profit before share of profit from JV & exceptional items 758.44 631.79 1,395.80 432.98
Share of profit from JV 5 082 (016) 403 247
Profit before exceptional items 759.26 631.63 1,399.83 435.45,
Exceptional items 49 a (57.73) s -
Profit before tax 759.26 573.90 1,399.83 435.45,
Hrax expense:
Net Current Tax 40 321.10 168.35 78.39 =
Deferred tax (68.44) (5.18) 347.7 32041
Profit for the period / year 506.60 410.73 973.67 315.34
Jother Comprehensive Income
A (i) Items that will not be redassified to Statement of Profit
land Loss
~ Remeasurement of defined benefit plans (22.43) 41.29 (800) (1162)
~ Equity Instruments through OCI (11.00) (11.63) (1.65) (158)
~ Share of OCI of Joint Venture accounted for using equity
method 0.07 0.03 0.06 0.07
(i) Income tax relating to items that will not be
reclassified to Statement of Profit and Loss 7.84 (1443) 280 4.06
B (i) Items that will be reclassified to Statement of Profitand
- Exchange differences in translating the financial
statements of foreign operations 1233 4.83 (531) (1336)
- The effective portion of gains or loss on hedging
instruments in a cash flow hedge 51.85 (21.20) (12827) (56.64)
(i) Income tax relating to items that will be reclassified to
Statement of Profit and Loss (8.12) TAL 44.82 19.79
Other Comprehensive Income for the period / year, net of
tax 20.54 6.30 (95.55) (59.28)
Total Comprehensive Income for the period / year (Comprising 527.14 417.03 878.12 256.06
Profit and Other Comprehensive Income for the period / year)
Earnings per equity share (Face value of Rs. 5/-} *not
| ase 20a 49.39 1567
| Rs 50 25.18 2041 48.39 15.67
Earnings (before exceptional item) J
per equity share 25.18 22.28 48.39 15.67

 

 

 

 

 

 

The accompanying notes form an integral part of the restated consolidated financial information

This
For Sharp & Tannan
Chartered Accountants

Firm Registration No, 003792

 

V. Viswanathan
Partner
Membership No. 215565

Place: Chennai
Date : 25-Jan-2021

the restated consolidated statement of profit and loss referred to in our report of even date

RGauthamram
Whole Time Director
DIN: 06789004

Shainshad Aduvanni

Company Secretary M.No.A27895

Place : Coimbatore
Date : 25-Jan-2021

230

For and on behalf of the Board

S.Ravi

Chairman and Managing Director

DIN: 01257716

CB. Chandrasekar

Chief Financial Officer

 
Craftsman Automation Limited

Annexure III: Restated Consolidated Statement of Cash Flows
(Allamounts are in INR Millions unless otherwise stated)

 

Year ended

 

 

 

 

(Refer to note: 20 to Annexure VII for Net Debt Reconciliation)

 

 

 

 

 

 

 

 

 

 

 

 

Period April 12020 0
; December312020 | March 312020 | March312019 | March 312018
[Cash flows from operating activities
Profit before tax 759.26 573.90 139983 435.45
Adjustments to reconcile PBT to net cash flows:
Depreciation and amortization expense 1414.73 1,949.88 1,761.48 1,491.53
Gain on sale of assets (5.79) (0.28) (4.38) 0.04
Exchange difference on transaction /translation (oss/(gain)) (94.22) 34.00 (37.56) (55.59)
Share of Profit of Joint Venture (0.82) 0.16 (4.03) (247)
MTM Gain / (Loss) -Derivative-( Net) 0.16 3.25 1.56 (45.15)
Allowance for ECL on Advances 0.34 (0.09) - 285
Allowance for ECL on Doubtful debts 16.85 15.44 (5.42) 0.03
Projection for Warranty & Rejection (231) 0.95 9.85 7.00
Interest income (including fair value changes in financial instruments) (15.15) (21.63) (20.93) (2250)
Government grant income (188.02) (284.42) (31156) (24750)
Liabilities no longer required written back (1.68) (6.18) (35.62) (8.92)
Assets no longer receivable written off (including exceptional item) 13.82 69.72 57.70 47.04
Interest expense (including fair value changes in financial instruments) 819.96 1,395.88, 1,369.00 1,146.48
Operating cash flow before changes in working capital ZT7.13 3,730.58 4179.92 2,748.29
Adjustments for:
Increase/ (Decrease) in provisions (4.46) 13.96 (7.19) 3.16
Increase/ (Decrease) in other financial liabilities (35.65) (26.83) 27.41 53.90
Increase/ (Decrease) in other current liabilities 251.46 (75.43) 162.65 (25.68)
Increase/ (Decrease) in Trade Payables and other Payables, 211.05 (483.97) (283.89) 614.23
(Increase}/ Decrease in other non-current assets 25.59 (25.59) - 3
(Increase}/ Decrease in other financial assets (9.33) (17358) 8.01 (31.03)
(Increase}/ Decrease in other currentassets (31067) 143.54 16.46 580.25
(Increase}/ Decrease in trade and other receivables (18298) 189,79 (56.40) (274.68)
(Increase}/ Decrease in inventories (143.08) (23.07) (228.47) (721.46)
Cash generated from operations 2,509.05 3269.41 3,848.50 2,946.99
Direct taxes paid (88.47) (215.70) (248.46) (120.00)
INet cash generated / (used) from operating activities -A ZA20.59 3,053.70 3,600.04 2,826.99
[cash flows from investing activities
Purchase of property, plant and equipment (495.02) (1,386.91) (3,558.07) (2,038.63)
Purchase of Intangible assets (6.66) (17.43) (5267) (8259)
Proceeds from sale of property, plant and equipment 31.87 14.15 oil 283
Purchase of ungoutted shares 0.00 (2.09) (0.39) (tsi)
Interest received 15,15 21.63 20.93 2250
INet cash generated / (used) in investing activities - B 54.66) 370.65) (584.09) (@,107.40)}
[cash flows from financing activities
Proceeds from long-term borrowings 539.80 1,438.95 421587 4,444.97
Repayment of long term borrowings (1,045.34) (219854) (1555.39) (4,291.10)
Proceeds from/ (repayments to) short-term borrowings (850.41) 1,094.51 (141153) 469.45
Principal repayments towards lease liability (57.50) (167.31) (121.70) (86.33)
Interest paid (ind. interest on lease liability) (84056) (1,386.29) (1.29750) (1,133.15)
Dividend Paid (incl. Addditional tax on dividend paid) - (60.64) (12.10) (6.96)
INet cash generated / (used) in financing activities- C (254.01) 279.32) (182.34) 1603.12)|
Net increase in cash and cash equivalents - (A+B+C) (28808) 403.73 (166.39) 116.47
cash and cash equivalents at beginning of period / year 597.61 193.05 360.43 240.31
Effect of exchange rate changes on cash and cash equivalents 0.96 0.83 (0.99) 3.65
Cash and cash equivalents.at end of period / year 310.49 597.61 193.05 360.43
Reconciliation of Cash & Cash equivalents
Cash & cash equivalents consists of:
cash in hand 0.25 1at 0.76 1.02
Balances with banks
(i) in current accounts 31024 59650 194.21 36617
(ii) Overdraft (refer note: 24 to Annexure VIN) (1.92) (6.76)
Hrotal 31049 597.61 193.05 36043

 

 

‘The accompanying notes form an Integral part of the restated consolidated financial information
‘This is the restated consolidated statement of cash flows referred to in our report of even date

For Sharp & Tannan
Chartered Accountants
Firm Registration No, 0037925

V.Viswanathan
Partner
Membership No, 215565

Place: Chennai
Date : 25-Jan-2021

RGauthamram
Whole Time Director
DIN: 06789004

Shainshad Aduvanni

Company Secretary M.No.A27895

Place: Coimbatore
Date : 25-Jan-2021

231

For and on behalf of the Board

S.Ravi

Chairman and Managing Director

DIN: 01257716

CB. Chandrasekar

Chief Financial Officer
Craftsman Automation Limited

 

Annexure IV: Restated Consolidated Statement of Changes in Equity
(All amounts are in INR Millions unless otherwise stated)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(a) Equity Share Capital
; Face value of
Particulars Note Noof | Equity Shares ‘Shares Amount
Annexure VII (Nos.) eh
Balance as at April 01,2017 574,903, 100 57.49
changes in equity share capital during the year 431,177 100 43.12
Balance as at March 31,2018 7,006,080 100 100.61
Changes in equity share capital during the year * 19,115,520 - -
Balance as at March 31,2019 20,121,600 5 100.61
changes in equity share capital during the year : :
Balance as at March 31,2020 20,121,600 100.61
changes in equity share capital during the period - - -
Balance as at December 31,2020 20,121,600 100.61
“sub-division of shares of face value Rs.100 each into shares of face value Rs. 5 each
b. Other Equity
Reserves and Surplus Other Comprehensive Income
ii Equity Instruments : Foreign
Particulars Secuntes General Retained Share in the | ‘through Other Hecove Currency Total
Premium : networth of er | portion of Cash .
Reserve Earnings : Comprehensive Translation
Reserve Joint Venture Flow Hedges
Income Reserve
Balance as at April 01,2017 1422.65 966.21 3275.59 343 (24) @197) 2831 5,659.98
Profit for the year 31287 247 - © 315.34
other Comprehensive Income - 0.07 (1.58) (36.85) (38.36)
- Defined Benefit Plan (7.56) : . © “ (7.56)
- Foreign Currency Translation Reserve - ~ : : (13.36) (13.36)
‘Total Comprehensive Income for the year 305.31 254 (158) (3685) (13.36) 256.06
Dividends : (6.96) : (6.96)
Bonus shares issued (43.12) : : = = : = (43.12)
Balance as at March 31,2018 1,379.53 966.21 3575.94 TIT (7.82) 6882) 1495 5,865.96
Profit for the year 969.64 4.03 ss : 973.67
lother Comprehensive Income : 0.06 (1.65) (83.45) (85.04)
- Defined Benefit Plan (5.20) - = : - (5.20)
- Foreign Currency Translation Reserve - : : - (5.31) (5.31)
‘Total Comprehensive Income for the year 964.44 409 (165) (63-45) (5.31) 878.12
Dividends “ = (12.10) : : - : (12.10)
Balance as at March 31,2019 L379 5S 966-27 F526.28 1Z06 O47 (52.277 9.64 6,731.98
Profit for the year 410.89 (0.16) a - 410.73
Other Comprehensive Income : 0.03 (1163) (13.79) (25.39)
- Defined Benefit Plan 26.86 - - = “ 26.86
- Foreign Currency Translation Reserve - 4.83 4.83

 

232

 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reserves and Surplus Other Comprehensive Income
. Securities z Share inthe | P4uity Instruments) prective Foreign
Particulars , General Retained through Other , Currency Total
Premium : networth of er | portion of Cash :
Reserve Earnings : Comprehensive Translation
Reserve Joint Venture Flow Hedges
Income Reserve
Total Comprehensive Income for the year = = 437.75 (013) (1.63) (13.79) 483 417.03
Dividends < 2 (60.64) - : - (60.64)
Balance as at March 31,2020 T37953 966.21 4,903.39 TL9S (II) (66.06) 1447
Profit for the nine months period 505.78 082 506.60
lother Comprehensive Income : - - 0.07 (11.00) 33.73 - 22.80
- Defined Benefit Plan - (14.60) = : : = (14.60)
- Foreign Currency Translation Reserve : : : : : : 12.33 12.33
Total Comprehensive Income for the period = = 49116 089 (11.00) 33.73 12.33 527.13
Dividends a : 5 = : g : =
Balance as at December 31,2020 137955 966.21 5,394.57 TZ8Z GZI0) (132.33) 76.80 7615.50
‘The accompanying notes form an integral part of the restated consolidated financial information
This is the restated consolidated statement of changes in equity referred to in our report of even date
For Sharp & Tannan
Chartered Accountants For and on behalf of the Board
Firm Registration No. 0037925
V. Viswanathan RGauthamram S.Ravi
Partner Whole Time Director Chairman and Managing Director
Membership No. 215565 DIN : 06789004 DIN : 01257716
Place : Chennai Shainshad Aduvanni C.B. Chandrasekar
Date : 25-Jan-2021 Company Secretary M.No.A27895 Chief Financial Officer

Place : Coimbatore
Date : 25-Jan-2021

233

 
Craftsman Automation Limited
Annexure V: Statement of Significant Accounting Policies
A. Corporate Information

Craftsman Automation Limited ("the Company") was converted into public limited company with effect from 04 May
2018. The company is engaged in the business of manufacturing engineering components, sub-assemblies, products
and rendering of contract manufacturing services to various industries. The Company was incorporated on 18 July
1986 as a private limited company. Restated Consolidated Financial Information comprise the Restated Consolidated
Statement of Assets and Liabilities as at 31 December 2020, 31 March 2020, 31 March 2019 and 31 March 2018, the
Restated Consolidated Statements of Profit and Loss (including other comprehensive income), the Restated
Consolidated Statement of Changes in Equity, the Restated Consolidated Cash Flow Statement for the nine month
period ended 31 December 2020 and for the years ended 31 March 2020, 31 March 2019 and 31 March 2018, the
Summary Statement of Significant Accounting Policies and other explanatory information (collectively, the "Restated
Consolidated Financial Information")

B. Significant Accounting Policies
B.1. Statement of Compliance

The Restated Consolidated Financial Information have been prepared in accordance with Indian Accounting Standards
(Ind AS) as prescribed under Section 133 of Companies Act, 2013("the Act"), as amended read with Companies (Indian
Accounting Standards) Rules, 2015. The presentation of the Restated Consolidated Financial Information is based on
Schedule III of the Act.

The Restated Consolidated Financial Information relates to the Company and have been specifically prepared for
inclusion in the red herring prospectus and the prospectus to be filed by the Company with the Securities and
Exchange Board of India (“SEBI”), National Stock Exchange of India Limited, BSE Limited and Registrar of Companies,
Tamil Nadu in connection with the proposed Initial Public Offering (‘IPO') of equity shares of the Company (referred to
as the "Issue").

The Restated Consolidated Financial Information has been prepared to comply, in all material respects, with the
requirements of Section 26 of Part I of Chapter III of the Act read with Companies (Prospectus and Allotment of
Securities) Rules, 2014 as amended by Companies (Prospectus and Allotment of Securities) Amendment Rules,
2018(“the Rules”) and the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements)
Regulations, 2018, as amended from time to time in pursuance of provisions of Securities and Exchange Board of India
Act, 1992 (“ICDR Regulations”).

These Restated Consolidated Financial Information were approved by the Board of Directors of the Company in their
meeting held on 25 January 2021

The Restated Consolidated Financial Information of the Company has been compiled by the management of the
Company as follows:

As at and for the period/year ended 31 December 2020, 31 March 2020, 31 March 2019 and 31 March 2018 from
the audited consolidated financial statements of the Group as at and for the period / year ended 31 December
2020, 31 March 2020, 31 March 2019 and 31 March 2018 prepared in accordance with Indian Accounting
Standards (Ind AS) as prescribed under Section 133 of Companies Act 2013 read with Companies (Indian
Accounting Standards) Rules, 2015 and other relevant provisions of the Act, which have been approved by the
Board of Directors on 25 January 2021, 07 May 2020, 15 May 2019 and 03 July 2018 respectively.

234
The Restated Consolidated Financial Information have been prepared so as to contain information / disclosures and
incorporating adjustments set out below in accordance with the ICDR Regulations:

(a) Adjustments for audit qualification requiring corrective adjustment in the financial statements, if any;

(b) Material amounts relating to adjustments for previous years in arriving at profit/loss of the years to which
they relate, have been appropriately adjusted, if any;

(c) Adjustments for remeasurement, reclassification and regrouping of the corresponding items of income,
expenses, assets and liabilities in order to bring them in line with Ind AS and ICDR Regulations

(d) The resultant material tax impact on above adjustments has been appropriately adjusted in deferred taxes in
the respective years to which they relate.

The Restated Consolidated Financial Information have been prepared on accrual and going concern basis. All assets
and liabilities have been classified as current or non-current as per the normal operating cycle of the Company and
other criteria as set out in the Schedule III to the Companies Act, 2013. Based on the nature of services and the time
between the acquisition of assets for processing and their realization in cash and cash equivalents, the Company has
ascertained their operating cycle as 12 months for the purpose of current / non-current classification of assets and
liabilities.

Significant accounting policies - The accounting policies set out below have been applied consistently to the periods
presented in the Restated Consolidated Financial Information.

B.2 Basis of Preparation:

The Consolidated Financial Statements of the Group has been prepared in accordance with Ind AS. The presentation of
the Consolidated Financial Statements of the Group is based on Schedule III of the Act.

The items included in Consolidated Financial Statements from each of the Group entities are measured using the
currency of the primary economic environment (functional currency) in which each of the Group’s entities operate.
The consolidated financial statements are presented in Indian Rupees (INR) which is the functional and presentation
currency of the Company and all values are rounded to the millions with two decimals, except where otherwise
indicated. In the Group’s Consolidated Financial Statements, all assets, liabilities and transactions of Group entities
with a functional currency other than the INR are translated into INR upon consolidation.

Historical cost is generally based on the fair value of the consideration given in exchange for goods and services. Fair
value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between
market participants at the measurement date, regardless of whether that price is directly observable or estimated
using another valuation technique. In estimating the fair value of an asset or a liability, the Group takes into account
the characteristics of the asset or liability if market participants would take those characteristics into account when
pricing the asset or liability at the measurement date.

All assets and liabilities for which fair value is measured or disclosed in the Restated Consolidated Financial
Information are categorised within the fair value hierarchy, described as follows, based on the lowest level input that
is significant to the fair value measurement as a whole:

Level 1 — Quoted (unadjusted) market prices in active markets for identical assets or liabilities

Level 2 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is
directly or indirectly observable

Level 3 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is
unobservable.

235
The consolidated financial statements have been prepared on a historical cost basis, except for the following assets
and liability which have been measured at fair value

i) Derivative financial instruments
ii) Certain financial assets and liability measured at fair value (refer note. 42 to Annexure VII)
iii) Defined Benefits Obligations

Critical Accounting judgement and key sources of estimation uncertainty

The accounting policies which have the most significant effect on the figures disclosed in the Restated Consolidated
Financial Information are mentioned below and these should be read in conjunction with the disclosure of the
significant Ind AS accounting policies provided below:
i, Useful life of Property, Plant and Equipment and Intangible Assets
The assessment of the useful life of each asset by considering the historical experience and expectations
regarding future operations and expected usage, estimated technical obsolescence, residual value, physical wear
and tear and the operating environment in which the asset is located needs significant judgement by the Group. In
case of intangible assets the useful life is determined based on the period over which future economic benefit will
flow to the Group.

ii, Tools in use

The assessment of useful life of tools in use has been done considering the historical experience and estimated
refurbishment cycle and operating environment.

iii. Income Taxes

The calculation of income taxes requires judgement in interpreting tax rules and regulations. Management
judgement is used to determine the amounts of deferred tax assets and liabilities and future tax liabilities to be
recognized.

iv. Fair Value
Certain financial instruments, such as investments in equity securities, derivative financial instruments and
certain elements of borrowings, are carried in the Restated Consolidated Financial Information at fair value, with
changes in fair value reflected in the Restated Consolidated Statements of Profit and Loss. Fair values are
estimated by reference to published price quotations or by using other valuation techniques that may include
inputs that are not based on observable market data, such as discounted cash flows analysis.

v. Measurement of defined benefit obligations

Actuarial valuation of gratuity, a defined benefit obligation, considers various assumptions which are based on
the past experience and general economic conditions.

vi. Measurement and likelihood of occurrence of provisions and contingencies
The provision for warranty and rejection have been done based on past experiences, product lifecycle maturity,
reprocessing/repair cost.

vii. Recognition of deferred tax asset

The Group estimates the possible utilization of unabsorbed losses while recognizing deferred tax asset
considering the future business plans and economic environment.

236
viii. Leases

The Group evaluates if an arrangement qualifies to be a lease as per the requirements of Ind AS 116 "Leases".
Identification of a lease requires significant judgment. The Group uses significant judgement in assessing the
lease term (including anticipated renewals) and the applicable discount rate.

Ind AS 116 requires lessees to determine the lease term as the non-cancellable period of a lease adjusted with any
option to extend or terminate the lease, if the use of such option is reasonably certain. The Group makes an
assessment on the expected lease term on a lease-by-lease basis and thereby assesses whether it is reasonably
certain that any options to extend or terminate the contract will be exercised. In evaluating the lease term, the
Group considers factors such as any significant leasehold improvements undertaken over the lease term, costs
relating to the termination of the lease and the importance of the underlying asset to Group's operations taking
into account the location of the underlying asset and the availability of suitable alternatives. The Group revises
the lease term if there is a change in the non-cancellable period of a lease.

The discount rate is generally based on the incremental borrowing rate.

B.3 Principles of Consolidation

The Consolidated Financial Statements relate to the Company, its subsidiaries and joint venture. Subsidiaries are all
entities over which the Company exercises control. The Company exercises control if and only if it has the following:

. power over the entity.

. exposure, or rights, to variable returns from its involvement with the entity; and

. the ability to use its power over the entity to affect the amount of its returns,

The Consolidated Financial Statements have been prepared on the following basis:

. The Financial Statements of the Group have been combined on a line-by-line basis by adding together the book
values of like items of assets, liabilities, income and expenses, after fully eliminating intra-group balances and intra-
group transactions and resulting unrealised profits, unrealised losses from intra-group transactions are eliminated
unless cost cannot be recovered.

. The Group treats transactions with non-controlling interests that do not result in a loss of control as transactions
with equity owners of the Group. A change in ownership interest results in an adjustment between the carrying
amounts of the controlling and non-controlling interests to reflect their relative interests in the subsidiary. Any
difference between the amount of the adjustment to non-controlling interests and any consideration paid or received
is recognised within equity.

. A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights
to the net assets of the arrangement. Investments in associates and joint ventures are accounted for using the equity
method.

. Under the equity method, on initial recognition the investment in an associate or a joint venture is recognised at
cost. The carrying amount of the investment in associates and joint ventures is increased or decreased to recognise the
Group’s share of the profit or loss after the date of acquisition.

. The Financial Statements of joint venture are prepared for the same reporting period as the Group. When
necessary, adjustments are made to bring the accounting policies in line with those of the Group.
. The Consolidated Financial Statements have been prepared using uniform accounting policies for like

transactions and other events in similar circumstances and are presented to the extent possible, in the same manner,
as the Company’s separate Financial Statements.

B.4 Estimation of uncertainties relating to the global health pandemic from COVID-19

The COVID-19 pandemic has impacted the businesses around the world, including India. There has been severe
disruption to the regular operations of the Group in the first quarter of FY 2020-21 due to Government imposed
emergency restrictions and lockdown.

237
The Group has assessed the impact on liquidity position and carrying amounts of inventories, trade receivables,
investments, property, plant and equipment and other financial assets. Our assessment based on estimates and
judgements, available from internal and external sources of information including economic forecasts does not
indicate any material impact on the carrying value of assets and liabilities as on the reporting date.

The Group will continue to monitor the future economic conditions and assess its impact on the financial statements.
The eventual outcome of the impact of the global health pandemic may be different from those estimated as on date of
the approval of the consolidated financial statements.

B.5 PROPERTY PLANT AND EQUIPMENT

Recognition and Measurement

All Property Plant & Equipment (PPE) barring land as at transition date are stated at cost of acquisition / installation
as adjusted for import duty waivers and foreign exchange losses / gains less accumulated depreciation and
impairment losses.

Cost of acquisition / installation includes the fair value of the consideration given to acquire the PPE (net of discounts
and rebates) and any directly attributable costs of bringing the asset to working condition for its intended use
(inclusive of non-refundable purchase taxes and duties).

The Company capitalizes the import duty waived in respect of capital equipment imported under the Export

Promotion Capital Goods Scheme
Foreign exchange gain /loss arising on foreign currency denominated borrowing which are not hedged that were

incurred to acquire PPE are recorded as part of the cost of asset as per Ind AS 101 Para D13AA and Ind AS 21 Para 7AA
and depreciated over their remaining useful life. In respect of exchange gain or loss arising from foreign currency
denominated borrowings which are hedged accounting has been done based on hedge effectiveness either as
derivative or cash flow hedge as per Ind AS 109.

The cost of a self-constructed asset is determined using the same principles as for an acquired asset. If the Group
makes similar assets for sale in the normal course of business, the cost of the asset is usually the same as the cost of
constructing an asset for sale. Any internal profits are eliminated in arriving at such costs. Similarly, the cost of
abnormal amounts of wasted material, labour, or other resources incurred in self-constructing an asset is not included
in the cost of the asset. Borrowing Costs is covered by Ind AS 23 criteria for the recognition of interest as a component
of the carrying amount of a self-constructed item of property, plant and equipment.

Subsequent expenditure relating to an item of PPE is capitalised if it meets the recognition criteria

The import duty waived on capital assets which are purchased under the Export Promotion Capital Goods (EPCG)
schemes and which are capitalized are recorded as deferred revenue and recognized in Statement of Profit and Loss
on a systematic basis over the periods in which the related performance obligations are fulfilled.

Land was fair valued on transition to Ind AS and adopted as deemed cost.

Depreciation on Plant Property and Equipment

The depreciable amount of PPE (being the gross carrying value less the estimated residual value) is depreciated on a
systematic basis over its useful life.

In respect of certain classes of PPE, the Group uses different useful life other than those prescribed in Schedule II to
the Act. The useful life of such class of PPE has been ascertained based on technical review by a Chartered Engineer
and assessment by the management of the Group as detailed in the following table

 

 

 

 

 

 

 

 

Classes of PPE Useful life and basis of
depreciation
New Plant and Machinery 20 Years
Used Plant and Machinery 10 Years
Tool holder, jigs, fixtures, patterns, diel5 Years
Lease hold improvements Over lease period

 

238
De-recognition:

An item of PPE is de-recognised at the time of its disposal or when it is assessed that no future economic benefit would
accrue from it. The gain/ loss arising out of such disposal/retirement is taken to Statement of Profit and Loss

B.6 INTANGIBLE ASSETS

An intangible asset is an identifiable non-monetary asset without physical substance.

An intangible asset with finite useful life that are acquired separately and where the useful life is 2years or more is
capitalized and carried at cost less accumulated amortization. Amortization is recognized on a straight line basis over
the useful life of the asset. The class of asset and the estimated useful life is as follows

 

 

 

 

Description of the asset Usemullltte and Basis or
amortization
Software - Acquired 5 Years
Technical Know - Acquired 2.5 years

 

 

 

Internally generated intangible assets
Expenditure on research activities is recognised as an expense in the period in which it is incurred. An internally

generated intangible asset arising from development (or from the development phase of an internal project) is
recognised if, and only if, all of the following have been demonstrated:

- the technical feasibility of completing the intangible asset so that it will be available for use or sale,

- the intention to complete the intangible asset and use or sell it, the ability to use or sell the intangible asset,

- how the intangible asset will generate probable future economic benefits.

- the availability of adequate technical, financial and other resources to complete the development and to use or
sell the intangible asset, and

- the ability to measure reliably the expenditure attributable to the intangible asset during its development.

The amount initially recognised for internally generated intangible assets is the sum of the expenditure incurred from
the date when the intangible asset first meets the recognition criteria listed above. Where no internally generated
intangible asset can be recognised, development expenditure is recognised in Statement of Profit and Loss in the
period in which it is incurred. Subsequent to initial recognition, internally generated intangible assets are reported at
cost less accumulated amortisation and accumulated impairment losses, on the same basis as intangible assets that
are acquired separately.

 

Useful life and basis of
amortization
Development Expenditure 3 years

Description of the asset

 

 

 

 

 

De-recognition

An intangible asset is derecognised on disposal, or when no future economic benefits are expected from use or
disposal. Gains or losses arising from derecognition of an intangible asset, measured as the difference between the net
disposal proceeds and the carrying amount of the asset, are recognised in Statement of Profit or Loss when the asset is
derecognised.

239
B.7 IMPAIRMENT OF ASSETS

At the end of each reporting period, the Group determines whether there is any indication that its assets (tangible,
intangible assets and investments in equity instruments carried at cost) have suffered an impairment loss with
reference to their carrying amounts. If any indication of impairment exists, the recoverable amount of such assets is
estimated and impairment is recognised, if the carrying amount exceeds the recoverable amount. Recoverable amount
is higher of the fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash
flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of
the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been
adjusted.

B.8 LEASES

A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period
of time in exchange for consideration.

The Group as a lessee

The Group’s lease asset classes primarily consist of leases for machineries and buildings. The Group assesses whether
a contract contains a lease, at inception of a contract. To assess whether a contract conveys the right to control the use
of an identified asset, the Group assesses whether: (i) the contract involves the use of an identified asset (ii) the Group
has substantially all of the economic benefits from use of the asset through-out the period of the lease and (iii) the
Group has the right to direct the use of the asset.

At the date of commencement of the lease, the Group recognizes a right-of-use asset (“ROU”) and a corresponding
lease liability for all lease arrangements in which it is a lessee, except for leases with a term of twelve months or less
(short-term leases) and low value leases. For these short-term and low value leases, the Group recognizes the lease
payments as an operating expense on a straight-line basis over the term of the lease.

Certain lease arrangements include the options to extend or terminate the lease before the end of the lease term. ROU
assets and lease liabilities include these options when it is reasonably certain that they will be exercised.

The right-of-use assets are initially recognized at cost, which comprises the initial amount of the lease liability
adjusted for any lease payments made at or prior to the commencement date of the lease plus any initial direct costs
less any lease incentives. They are subsequently measured at cost less accumulated depreciation and impairment
losses.

Right-of-use assets are depreciated from the commencement date on a straight-line basis over the shorter of the lease
term and useful life of the underlying asset. Right of use assets are evaluated for recoverability whenever events or
changes in circumstances indicate that their carrying amounts may not be recoverable. For the purpose of impairment
testing, the recoverable amount (i.e. the higher of the fair value less cost to sell and the value-in-use) is determined on
an individual asset basis unless the asset does not generate cash flows that are largely independent of those from
other assets. In such cases, the recoverable amount is determined for the Cash Generating Unit (CGU) to which the
asset belongs.

The lease liability is initially measured at amortized cost at the present value of the future lease payments. The lease
payments are discounted using the interest rate implicit in the lease or, if not readily determinable, using the
incremental borrowing rates of the entity. Lease liabilities are remeasured with a corresponding adjustment to the
related right-of-use asset if the entity changes its assessment if whether it will exercise an extension or a termination
option.

240
Lease liability and ROU asset have been separately presented in the Balance Sheet and lease payments have been
classified as financing cash flows.

Transition to Ind AS 116 - Leases:

Effective 01 April, 2017, the Company adopted Ind AS 116 “Leases” and applied the standard to all lease contracts
existing on 01 April, 2017 using the modified retrospective method. Consequently, the Group recorded the lease
liability at the present value of the lease payments discounted at the incremental borrowing rate and the right-of-use
assets are recognised at an amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease
payments relating to that lease recognised in the balance sheet immediately before the date of initial application.

On transition, the adoption of the new standard resulted in recognition of 'Right of Use’ asset of 7629.45 million, anda
lease liability of 609.86 million. Ind AS 116 will result in an increase in cash inflows from operating activities and an
increase in cash outflows from financing activities on account of lease payments. On application of Ind AS 116, the
nature of expenses has changed from lease rent in previous periods to depreciation cost for the right-of-use asset, and
finance cost for interest accrued on lease liability.

The following is the summary of practical expedients elected on initial application:

1. Applied the exemption not to recognize right-of-use assets and liabilities for leases with less than 12 months of
lease term on the date of initial application

2. Excluded the initial direct costs from the measurement of the right-of-use asset at the date of initial application.
3. Applied the practical expedient to grandfather the assessment of which transactions are leases. Accordingly, Ind
AS 116 is applied only to contracts that were previously identified as leases under Ind AS 17.

The weighted average incremental borrowing rate applied to lease liabilities as at 01 April, 2017 is 10.50%.

B.9 FINANCIAL INSTRUMENTS

Financial assets and financial liabilities are recognised when the Group becomes a party to the contractual provisions
of the instruments. Financial assets and financial liabilities are initially measured at fair value. Transaction costs that
are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial
assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the
financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to
the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately
in profit or loss.

Classification of financial assets

The financial assets are initially measured at fair value. Transaction costs that are directly attributable to the
acquisition of financial assets are added to the fair value of the financial assets on initial recognition.

After initial recognition:

i) Financial assets (other than investments and derivative instruments) are subsequently measured at amortised
cost using the effective interest method.

Effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating interest
income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash
receipts (including all fees paid that form an integral part of the effective interest rate, transaction costs and other
premiums or discounts) through the expected life of the debt instrument, or, where appropriate, a shorter period, to
the net carrying amount on initial recognition.

ii) Financial assets (i.e. derivative instruments and investments in instruments other than equity of joint ventures)
are subsequently measured at fair value.

Such financial assets are measured at fair value at the end of each reporting period, with any gains or losses arising on
re-measurement recognised in other comprehensive income.

241
Investments in equity instruments other than joint venture

The Group has valued the investments in equity instruments other than joint ventures at fair value through other
comprehensive Income. Fair value of quoted instrument has been valued at market rate and in case of unquoted
instrument it has been valued at book value of that Company based on Level 2 input.

In respect of investment in equity share capital of group captive power companies which are made to comply with the
provisions of Electricity Rules 2003, these investments are carried at cost as these investments can be sold back only
at par.

 

 

Cash and cash equivalent:
For the purpose of presentation in the statement of cash flows, cash and cash equivalents includes cash on hand,

deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of
three months or less that are readily convertible to known amounts of cash which are subject to an insignificant risk of
changes in value, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities in the
Balance Sheet.

Trade receivables

Trade receivables are initially recognised at fair value. Subsequently, these assets are held at amortised cost net of any
expected credit losses. Loss allowance on trade receivables is measured at an amount equal to life time expected
losses i.e., expected cash shortfall.

Impairment of financial assets:
A financial asset is regarded as credit impaired when one or more events that may have a detrimental effect on

estimated future cash flows of the asset have occurred. The Group applies the expected credit loss model for
recognizing impairment loss on financial assets (i.e. the shortfall between the contractual cash flows that are due and
all the cash flows (discounted) that the Group expects to receive).

De-recognition of financial assets:

The Group derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or when
it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party. If
the Group neither transfers nor retains substantially all the risks and rewards of ownership and continues to control
the transferred asset, the Group recognises its retained interest in the asset and an associated liability for amounts it
may have to pay. On de-recognition of a financial asset in its entirety, the difference between the asset's carrying
amount and the sum of the consideration received and receivable is recognised in the Statement of Profit and Loss.

Financial liabilities and equity instruments:

Classification as debt or equity

Debt and equity instruments issued by the Group are classified as either financial liabilities or as equity in accordance
with the substance of the contractual arrangements and the definitions of a financial liability and an equity
instrument.

Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of
its liabilities. Equity instruments issued are recognised at the proceeds received, net of direct issue costs.

Repurchase of the Company's own equity instruments is recognised and deducted directly in equity. No gain or loss is
recognised in Statement of Profit and Loss on the purchase, sale, issue or cancellation of the Company’s own equity
instruments.

242
Financial liabilities

All financial liabilities (other than derivative instruments) are subsequently measured at amortised cost using the
effective interest method. The carrying amounts of financial liabilities that are subsequently measured at amortised
cost are determined based on the effective interest method. Interest expense that is not capitalized as a part of cost of
an asset is included in the “Finance Costs”.

The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating
interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future
cash payments (including all fees paid or received that form an integral part of the effective interest rate, transaction
costs and other premiums or discounts) through the expected life of the financial liability, or (where appropriate) a
shorter period, to the net carrying amount on initial recognition.

De-recognition of financial lial S

The Group derecognises financial liabilities when, and only when, the Group’s obligations are discharged, cancelled or
have expired. An exchange with a lender of debt instruments with substantially different terms is accounted for as an
extinguishment of the original financial liability and the recognition of a new financial liability. Similarly, a substantial
modification of the terms of an existing financial liability is accounted for as an extinguishment of the original financial
liability and the recognition of a new financial liability. The difference between the carrying amount of the financial
liability derecognised and the consideration paid and payable is recognised in Statement of Profit and Loss.

Derivative financial instruments:

The Group enters into a variety of derivative financial instruments to manage its exposure to interest rate and foreign
exchange rate risks, including foreign exchange forward contracts and cross currency interest rate swaps. Further
details of derivative financial instruments are disclosed in Note 42

Derivatives are initially recognised at fair value at the date the derivative contracts are entered into and are
subsequently re-measured to their fair value at the end of each reporting period. The resulting gain or loss is
recognised in Statement of Profit and Loss immediately unless the derivative is designated and effective as a hedging
instrument, in which event the timing of the recognition in Statement of Profit and Loss depends on the nature of the
hedging relationship and the nature of the hedged item.

Hedge accounting:
The Group designates certain derivatives as hedging instruments in respect of foreign currency risk as cash flow

hedges. Hedges of foreign exchange risk on firm commitments are accounted for as cash flow hedges.

At the inception of the hedge relationship, the entity documents the relationship between the hedging instrument and
the hedged item, along with its risk management objectives and its strategy for undertaking various hedge
transactions. Furthermore, at the inception of the hedge and on an ongoing basis, the Group documents whether the
hedging instrument is highly effective in offsetting changes in fair values or cash flows of the hedged item attributable
to the hedged risk.

Note 42b sets out details of the fair values of the derivative instruments used for hedging purposes.

Cash flow hedges
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is

recognised in other comprehensive income and accumulated under the heading of cash flow hedging reserve. The gain
or loss relating to the ineffective portion is recognised immediately in Statement of Profit and Loss, and is included in
the “Other Income”.

Amounts previously recognised in other comprehensive income and accumulated in equity (relating to effective
portion as described above) are reclassified to Statement of Profit and Loss in the periods when the hedged item
affects profit or loss, in the same line as the recognised hedged item. However, when the hedged forecast transaction
results in the recognition of a non-financial asset or a non-financial liability, such gains and losses are transferred from
equity (but not as a reclassification adjustment) and are included in the initial measurement of the cost of the non-
financial asset or non-financial liability.

243
Any gain or loss recognised in other comprehensive income and accumulated in equity at that time remains in equity
and is recognised when the forecast transaction is ultimately recognised in Statement of Profit and Loss. When a
forecast transaction is no longer expected to occur, the gain or loss accumulated in equity is recognised immediately in
profit or loss.

Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated, or exercised, or when it
no longer qualifies for hedge accounting.

B.10 INVENTORIES

The Group determines the cost for items that are not interchangeable or that have been segregated for specific
contracts on an individual-item basis as per Ind AS 2, ‘Inventories’. The cost of other inventory items used is assigned
by using weighted average cost formula.

The Group uses the same cost formula for all inventories of similar nature and use. The cost formula used is applied on
aconsistent basis from period to period.

Inventories are initially recognized at the lower of cost and net realisable value (NRV). Cost of inventories includes
import duties, non-refundable taxes, transport and handling costs and any other directly attributable costs, less trade
discounts, rebates and similar items. NRV is the estimated selling price in the ordinary course of business, less the
estimated costs of completion and estimated selling expenses.

i) Raw materials, components, stores and spares of inventory are measured at weighted average cost.
Materials and other items held for use in the production of inventories are not written down below cost if the finished
products in which they will be incorporated are expected to be sold at or above cost. Work in progress and finished
goods are valued at cost or Net Realizable Value whichever is lower. Cost includes direct materials, labor and a
portion of manufacturing overheads. Saleable scrap is valued at the lowest of the net realizable value in the last two
months.

ii) Tools are valued at cost till they are issued for usage in production process. In respect of issued tools which
can be refurbished, the Group depending upon its useful life amortizes on a straight line basis over its useful life.
Useful life determined for certain classes of tools is 2- 3 years. Tools which are not refurbish-able are charged off to
Statement of Profit and Loss upon issue from stores to usage. The “tools in use” are carried at Cost less accumulated
amortization.

B.11 PROVISIONS

The Group recognizes a provision when there is a present obligation to transfer economic benefits as a result of past
events, it is probable (more likely than not) that such a transfer will be required to settle the obligation, and a reliable
estimate of the amount of the obligation can be made.

The amount recognised as a provision is the best estimate of the consideration required to settle the present
obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the
obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying
amount is the present value of those cash flows (when the effect of the time value of money is material).

When some or all of the economic benefits required to settle a provision are expected to be recovered from a third
party, a receivable is recognised as an asset if it is certain that reimbursements will be received and the amount of the
receivable can be measured reliably.

A contingent asset is a possible asset that arises from past events and whose existence will be confirmed only by the
occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity.
Contingent assets are disclosed in the Restated Consolidated Financial Information by way of notes to accounts when
an inflow of economic benefits is probable.

Acontingent liability is

(a) a possible obligation that arises from past events and whose existence will be confirmed only by the occurrence or
non-occurrence of one or more uncertain future events not wholly within the control of the entity; or

(b) a present obligation that arises from past events but is not recognised because:

(i) it is not probable that an outflow of resources embodying economic benefits will be required to settle the
obligation; or

(ii) the amount of the obligation cannot be measured with sufficient reliability.

244
Contingent liabilities are disclosed in the Financial Statements by way of notes to accounts, unless possibility of an
outflow of resources embodying economic benefit is remote.

Provision for Warranty

Provisions for expected cost of warranty obligations are recognized based on Management's best estimate of the
expenditure required to settle the obligation which takes into account the empirical data on the nature, frequency and
average cost of warranty claims and regarding possible future incidences.

Provision for Rejection
Provision for rejection on sales is recognised once the products are sold. Materials are rejected due to various reasons

and are either re processed and replaced to the customers depending on the type of rejections. These rejections get
fulfilled within a period of 3 months and the provisions represent the value of management's best estimate of possible
rejections within the next one quarter.

B.12 REVENUE RECOGNITION
Sale of Goods & Rendering of Services

Revenue is recognised when a promise in a customer contract (performance obligation) has been satisfied by
transferring control over the promised goods to the customer. Control over a promised good refers to the ability to
direct the use of, and obtain substantially of all of the remaining benefits from, those goods. Control is usually
transferred upon shipment, delivery to, upon receipt of goods by the customer, in accordance with the individual
delivery and acceptance terms agreed with the customers. The amount of revenue to be recognized (transaction price)
is based on the consideration expected to be received in exchange for goods, excluding amounts collected on behalf of
third parties such as Goods and Services Tax or other taxes directly linked to sales.

Revenue from rendering of services is recognised over time as and when the customer receives the benefit of the
Group's performance and the Group has an enforceable right to payment for services transferred. Unbilled revenue
represents value of services performed in accordance with the contract terms but not billed.

Other Operating revenues

Other operating revenues comprise income from ancillary activities incidental to the operations of the Group and are
recognised when the right to receive the income is established as per the terms of the contract.

Dividend and Interest Income

Dividend income from investments is recognised when the Group's right to receive payment has been established
(provided that it is probable that the economic benefits will flow to the Group and the amount of income can be
measured reliably).

Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate
applicable (provided that it is probable that the economic benefits will flow to the Group and the amount of income
can be measured reliably).

B.13 BORROWING COST

Since the Group does not have any qualifying assets, capitalisation of borrowing cost is not applicable to the Group. All
borrowing costs are recognised in Statement of Profit and Loss in the period in which they are incurred.

245
B.14 GOVERNMENT GRANT

Government grants (including export incentives like Duty Drawback, Merchandise Exports from India Scheme(MEIS))
are recognised only when there is reasonable assurance that the Group will comply with the conditions attaching to
them and the grants will be received.

Government grants are recognised in Statement of Profit and Loss on a systematic basis over the periods in which the
Group recognises as expenses the related costs for which the grants are intended to compensate.

Import duty waivers for capital assets purchased under Export Promotion Capital Goods (EPCG) schemes are
recorded as deferred revenue and recognized in Statement of Profit and Loss on a systematic basis over the periods in
which the related performance obligations are fulfilled.

B.15 EMPLOYEE BENEFITS
Defined contribution plans

Provident fund (PF

Contribution towards PF is determined under the Employees’ Provident Funds & Miscellaneous Provisions Act, 1952
and charged to the Statement of Profit and Loss during the period of incurrence when the services are rendered by the
employees.

The Union Ministry of Labour issued draft rules under section 67 of the Code on Wages Act on 7 July 2020 in the
Gazette and the Act is yet to be effective

The three labour codes, the Occupational Health, Safety and Working Conditions Code 2020, the Industrial Relations
Code 2020 and the Code on Social Security 2020 have been passed by the parliament and have also received the assent
of the President of India on 28 September 2020. However, the date on which these Codes will come into effect has not
been notified. The Group will assess the impact of these Codes and will record any related impact in the period these
Codes become effective.

Defined benefit plans

Gratuity

Accounting for defined benefit plans is based on actuarial assumptions and different valuation methods to measure
the balance sheet obligation and the expense.

Where defined benefit plans are funded, the plan assets are measured at fair value. At each Balance Sheet date, the
plan assets and the defined benefit obligations are remeasured. The Statement of Profit & Loss reflects the change in
the surplus or deficit, except for contributions made to the plan and benefits paid by the plan, along with business
combinations and Re-measurement gains and losses.

Re-measurement gains and losses comprise actuarial gains and losses, return on plan assets (comprise amounts
included in net interest on the net defined benefit liability or asset) and any change in the effect of the asset ceiling
(excluding amounts included in net interest on the net defined benefit liability or asset). Re-measurements are
recognized in other comprehensive income.

The defined benefit costs are comprised of the following individual components:

. Service costs (including current and past service costs as well as gains/losses on curtailments and settlements)
. Net interest costs or income

. Re-measurement
The Group presents the first two components of defined benefit costs in Statement of Profit and Loss in the line item
‘Employee benefits expense’. Curtailment gains and losses are accounted for as past service costs.

246
Re-measurement of net defined benefit liability/ asset pertaining to gratuity comprises actuarial gains/ losses (i.e.
changes in the present value resulting from experience adjustments and effects of changes in actuarial assumptions)
and is reflected immediately in the Balance Sheet with a charge or credit recognised in other comprehensive income in
the period in which they occur. Re-measurement recognised in other comprehensive income is reflected immediately
in retained earnings and is not reclassified to Statement of Profit and Loss.

Short-term employee benefits:

A liability is recognised for benefits accruing to employees in respect of salaries, wages, performance incentives,
medical benefits and other short term benefits in the period the related service is rendered, at the undiscounted
amount of the benefits expected to be paid in exchange for that service.

Compensated leave absences:
Balances of compensated lease absences of the employees at the end of year are not carried forward as per policy. The
balances remaining to be encashed are fully provided at year end and encashed subsequently.

B.16 FOREIGN CURRENCY TRANSACTIONS

The Group’s foreign operations are an integral part of the Company's activities. In preparing the Restated Consolidated
Financial Information, transactions in currencies other than the entity’s functional currency (foreign currencies) are
recognised at the rates of exchange prevailing at the dates of the transactions. At the end of each reporting period,
monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Non-monetary
items that are measured in terms of historical cost in a foreign currency are not retranslated.

Exchange differences on monetary items are recognised in Statement of Profit and Loss in the period in which they
arise except for:

. Exchange differences on translation or settlement of long term foreign currency monetary items in respect of
loans borrowed, which are not hedged, before 01 April, 2016 at rates different from those at which they were initially
recorded or reported in the previous financial statements, insofar as it relates to acquisition of depreciable assets, are
adjusted to the cost of the assets and depreciated over remaining useful life of such assets. Where the borrowal is after
01 April, 2016, such exchange difference is recognised in Statement of Profit and loss. In other cases, where it has
been hedged the same has been restated and adjusted against cash flow hedge of the respective derivative
instruments.

. Exchange difference on translation of derivative instruments designated as cash flow hedge (see Note B.9 for
hedging accounting policies).

B.17 FOREIGN OPERATIONS

In the Group’s Consolidated Financial Statements, all assets, liabilities and transactions of the Group entities with a
functional currency other than the INR are translated into INR upon consolidation. The functional currency of
Craftsman Europe BV is EURO and the functional currency of Craftsman Automation Singapore Pte Limited is
Singapore Dollar (S$).

On consolidation, assets and liabilities have been translated into INR at the closing rate at the reporting date. Income
and expenses have been translated into INR at the average rate over the reporting period. Exchange differences are
charged or credited to other comprehensive income and recognised in the currency translation reserve in equity. On
disposal of a foreign operation, the related cumulative translation differences recognised in equity are re-classified to
Statement of Profit and Loss and are recognised as part of the gain or loss on disposal.

B.18 INCOME TAXES

Income tax expense represents the sum of the tax currently payable and deferred tax. Current and deferred tax are
recognised in Statement of Profit and Loss, except when they relate to items that are recognised in other
comprehensive income or directly in equity, in which case, the current and deferred tax are also recognised in other
comprehensive income or directly in equity respectively.

247
Segment revenue, segment expenses, segment assets and segment liabilities have been identified to segments on the
basis of their relationship to the operating activities of the segment and as well as those which can be allocated ona
reasonable basis. Operating segments are reported in a manner consistent with the internal reporting to the CODM of
the Group.

249
Current Tax

Current tax is determined on taxable profits for the year chargeable to tax in accordance with the applicable tax rates
and the provisions of the Income Tax Act, 1961 including other applicable tax laws that have been enacted or
substantively enacted.

Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which gives future economic benefit, in the form
of adjustment to future tax liability, is considered as an asset in the Balance Sheet. The carrying amount of MAT is
reviewed at each reporting date and the asset would be written down to the extent the Group’s right of adjustment
would lapse.

Deferred Tax

Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the
financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities
are generally recognised for all taxable temporary differences. Deferred tax assets are generally recognised for all
deductible temporary differences to the extent that it is probable that taxable profits will be available against which
those deductible temporary differences can be utilised. Such deferred tax assets and liabilities are not recognised if the
temporary difference arises from the initial recognition (other than in a business combination) of assets and liabilities
ina transaction that affects neither the taxable profit nor the accounting profit.

Deferred tax asset is recognised for the carryforward of unused tax losses and unused tax credits to the extent that it is
probable that future taxable profit will be available against which the unused tax losses and unused tax credits can be
utilised.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent
that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be
recovered.

Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the
liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively
enacted by the end of the reporting period.

The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from
the manner in which the Group expects, at the end of the reporting period, to recover or settle the carrying amount of
its assets and liabilities

B.19 SEGMENT REPORTING

The Chief Operating Decision Maker (CODM) evaluates the Group's performance and allocates resources based on an
analysis of various performance indicators of the reportable segments. The Group’s reportable segments have been
identified based on end consumption of the products sold or services rendered. The reportable segments are as
follows:

+ Automotive- Powertrain & Others : This segment develops, manufactures, sells its goods and services of
powertrain & other products to manufacturers of commercial / passenger vehicles, farm equipment, construction /
mining equipment.

» Automotive- Aluminium Products: This segment develops, manufactures, sells its goods and services consisting of
aluminium automotive products to the manufacturers of two wheelers, passenger vehicles and commercial vehicles.

¢ Industrial & Engineering: This segment develops, manufactures, sells its goods and services such as castings, gears,
material handling equipment, railway products, special purpose machines, other general engineering products
(together broadly termed as "High End Sub-assembly, Contract Manufacturing & Others" )and storage products to
various end user industries.

248
Craftsman Automation Limited

Annexure VI: Statement of Restatement Adjustments to Audited Consolidated Financial Statements
(All amounts are in INR Millions unless otherwise stated)

PART A: Statement of Restatement Adjustments to Audited Consolidated Financial Statements

Reconciliation between audited total comprehensive income and restated total comprehensive income

 

 

 

 

Period ended Year ended
Ramieiats an March 31 2020 | March 312019 | March 312018
[Audited total comprehensive income 52127 40630 899.60 272.40
Restatement adjustments:
Impact of lease accounting as per Ind AS 116 - income / (loss) 881 16.40 (33.07) (24.99)
Irax impact of above (294) (5.67) 1159 8.65
Restated total comprehensive income 52744 417.03 878.12 256.06

 

 

 

Reconciliation between audited equity and restated equity

 

Parsieatars As at December] As at March 31| As at March 31 | Asat March 31
312020 2020 2019 2018

 

|Audited Equity 7,737.30 7,215.90 6,870.20 5,982.70

Restatement adjustments:
(i) Audit qualifications

(ii) Changes in accounting policies

 

Impact of lease accounting as per Ind AS 116 - income / (loss) (32.75) (4142) (87.78) (24.71)
Tax impact of above 11.56 14.50 20.17 858
Restated Equity 771641 7,188.98 6832.59 5,966.57

 

 

 

 

 

 

 

 

 

 

Changes in accounting policie
Ind AS 116:
Ind AS 116 - Leases replaced the erstwhile accounting standard on lease accounting Ind AS 17 with effect from 01st April 2019. To ensure consitency of

accounting policies in the restated consolidated financial information, the Group has considered adoption of this standard w.ef 01st April 2017. The
impact of Ind AS 116 has been adjusted in the respective years

PART-B: Regrouping
Appropriate regroupings have been made in the Restated Consolidated Financial Information, wherever required, by reclassification of the

corresponding terms of income, expense, assets, liabilities and cash flows, in order to bring them in line with the accounting policies and classification
as per latest consolidated financial statements of the Group for the nine months period ended 31st December 2020.

250
Craftsman Auto!

 

jon Limited

Annexure VII: Notes to restated consolidated financial information
(All amounts are in INR Millions unless otherwise stated)

1 Property, Plant and Equipment

 

 

 

 

 

 

 

 

 

 

Freehold Bullding parsiances
Asset Category Freehold land (Incl Leasehold | Plant &Machinery | Office Equipment radune Vehicles Total
Improvements)

(Gross Block

|At April 01, 2017 764.82 1,518.41 11,791.30 121.57 27.78 18.76 14,242.64
|Additions . 71.21 1,502.38 19.39 441 - 1,597.09
Disposals e (31.65) (0.49) (0.34) (oan (32.89)
[Translation Reserve e 0.06 1.01 057 0.04 : 1.68
|At March 31, 2018 76482 1,589.68 15,263.04 14.04 3159 18.35 15,808.52
{Additions 156 175.14 3,643.42 20.59 3.46 : 3,844.17
Disposals : (129.20) (0.81) (0.30) (6.22) (136.53)
\Translation Reserve Z (0.01) (0.02) (0.12) - - (0.15)
|At March 31, 2019 766.38 1,764.81 16,777.24 160.70 3475 1213 19,516.01
|Additions z 64.31 1,113.47 12.58 16.19 - 1,206.55
Disposals = (0.11) (0.12) (0.08) (0.70) (51.01)
|Translation Reserve x 0.03 0.06 0.03 : - 0.12
|At March 31, 2020 766.38 1,829.15 17,840.66 173.19 50.86 1143 20,671.67
{Additions = 105.94 974.85 177 1.23 - 1,083.79
Disposals - (13.22) (42.59) , . - (65.81)
\Translation Reserve - 0.02 0.08 0.28 ‘ - 0.38
|At December 31, 2020 766.38 1921.89 18,773.00 175.24 52.09 114s 721,700.03
{Accumulated Depreciation

|At April 01, 2017 : 107.23 1,904.92, 49.02 5.61 819 2,074.97
{Additions s 75.98 1,205.82 25.98 3.83 3.28 1,314.89
Disposals e (29.09) (0.29) (0.34) (0.30) (30.02)
|Translation Reserve z 0.03 0.84 0.34 0.03 - 1.24
JAt March 31, 2018 5 183.24 3,082.49 75.05 9.13 T1i7 3,361.08
{Additions - 84.65, 1,407.92 26.67 3.89 216 1,525.29
Disposals - - (129.05) (0.81) (0.30) (4.64) (134.80)
[Translation Reserve - (0.01) (0.01) (0.08) - - (0.10)
|At March 31, 2019 267.88 436135 700.83 1272 8.69 GSAT
{Additions e 92.11 1,569.07 22.54 496 138 1,690.06
Disposals 5 - (36.27) (0.12) (0.08) (0.67) (87.14)
[Translation Reserve E 0.03 0.06 0.19 7 - 0.28
|At March 31, 2020 360.02 5894.21 123.44 17.60 940 6404.67
{Additions : 82.27 1,093.44 13.68 3:99 0.65 1,194.03
Disposals : (13.22) (1651) : : - (29.73)
[Translation Reserve : 0.02 0.08 0.26 2 - 0.36
|At December 31, 2020 429.09 6971.22 137.38 2159 10.05 7,569.33
|At April 01, 2017 764.82 1411.18 9,886.38 72.58 22.17 10.57 12,167.67
|At March 31, 2018 764.82 1,406.44 10,180.55 65.99 22.46 718 12,447.44
JAt March 31, 2019 766.38 1,496.93 12,415.89 59.87 22.03 3.44 14,764.54
|At March 31, 2020 766.38 1,469.13 11,946.45 49.75 33.26 2.03 14,267.00
|At December 31, 2020 766.38 1,492.80 11,801.78 37.86 30.50 1.38 14,130.70

 

 

 

 

 

 

 

 

 

Note:

1. All term loans both Rupee and Foreign Currency are secured by first pari passu charge on fixed assets of the Company. Refer Note no, 45 of Annexure VI
2. Management, as per the assessment of the current situation, has decided not to fair value freehold land

251

 
Craftsman Automation Limited

Annexure VII: Notes to restated consolidated financial information
(All amounts are in INR Millions unless otherwise stated)

2 Capital Work in progress

3 Intangible assets

 

 

 

Tangible Intangible Total Computer Software herman Tetney ino: Total
(Gross Block
lat April 1, 2017 111.56 - 111.56 97.51 60.87 - 158.38
|Additions 176.11 37.59 213.70 82.59 : : 82.59
Disposals (82.14) - (82.14) (4.79) (5.46) - (10.25)
[Translation Reserve - - : 1.08 0.82 : 1.90
|At March 31, 2018 205.53 37.59 243.12 176.39 56.23 =
|Additions 831.61 : 831.61 9.66 :
Disposals (131.00) (3759) (168.59) (4.64) (2.38) -
[Translation Reserve - : : 0.01 0.01 :
|At March 31, 2019 906.14 = 906.14 181.42 43.01
|Additions 552.85 - 552.85 17.43 - - z
Disposals (570.82) - (570.82) - - - -
[Translation Reserve - : = - - - =
|At March 34, 2020 888.17 = 888.17 198.85 43.01 295.72
|Additions 97.96 - 97.96 6.66 - - 6.66
Disposals (681.12) - (681.12) : : : -
[Translation Reserve : : : : : : :
|At December 31, 2020 305.01 = 305.01 205.51 53.86 43.01
|Accumulated Depreciation / Impairment
lat April 1, 2017 - - : 38 8.65 - 42.03
|Additions - - : 27.69 2191 : 49.60
Disposals - - - (4.79) (5.46) - (10.25)
[Translation Reserve - : : 0.87 0.74 :
|At March 31, 2018 = = = 37.15 25.84 =
|Additions - - - 31.90 21.28 5.70
Disposals, - - - (4.64) (2.38) -
[Translation Reserve : : : 0.01 0.01 :
|At March 31, 2019 = = - 84.42 44.75 5.70
|Additions - - - 28.28 941 17.21 ;
Disposals - - - - - - -
[Translation Reserve : : : : : : :
|At March 31, 2020 = = > 189.47
|Additions 30.70 - 30.70 - 34.25
Disposals - - - - : - -
[Translation Reserve : : : : : : :
|At December 31, 2020 30.70 = 30.70 35.87
lat April 1, 2017 111.56 - 64.13 -
|At March 31, 2018 205.53 37.59 é 119.24 -
|At March 31, 2019 906.14 - 906.14 97.00 .
|At March 31, 2020 888.17 - 888.17 86.15 - 20.10
|At December 31, 2020 274.31 - 274.31 7152 - 714

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

252
Annexure VII: Notes to restated consolidated financial information

(All amounts are in INR Millions unless otherwise stated)

4 Right-of-use Asset

As at December As at March 31 As at March 31 As at March 31

Particulars 312020 2020 2019 2018
Opening 1,043.10 977.90 637.61 629.45,
Additions 49.51 284.63 517.59 135.20
Amortisation (155.75) (205.14) (177.30) (127.04)
Deletions (89.71) (14.29) < :
Closing 847.15 1,043.10 977.90 637.61

5 Investments accounted for using equity method
Particulars As at December As at March 31 As at March 31 As at March 31
312020 2020 2019 2018
Investment in Equity of Joint Venture
Carlstahl Craftsman Enterprises Private Ltd

600,000 equity shares of Rs.10 each fully paid up 6.00 6.00 6.00 6.00

Recognition of opening value of investment in Joint venture

11.93 12.06 7.97 5.43
Share of current period / year profits in Joint Venture 0.89 (0.13) 4.09 2.54
18.82 17.93 18.06 13.97

6 Investments (Non-Current)
eal AsatDecember AsatMarch31  AsatMarch31—AsatMarch31

Particulars 312020 2020 2019 2018
Investment in Equity instruments (at Fair Value through
oct)
Quoted

Jain Irrigation Systems Limited - - 0.03 0.06

Entire shareholding was sold during the FY19-20 (as on 31-

Mar-19, 546 shares of Rs.2 each fully paid up market value Rs.

32,159(cost Rs. 1,00,000))

Unquoted
MC Craftsman Machinery Private Ltd* - - 11.60 13.22
2,10,000 equity shares of Rs.100 each fully paid up

iEnergy wind farm (Theni) Private Ltd 0.02 0.02 0.02 0.02
2167 equity shares of Rs.10 each fully paid up

‘TAGMA Centre of Excellence and Training 0.49 0.49 0.49 0.49
15 equity shares of Rs.10 each fully paid up

Bhatia Coke & Energy Limited - 11.00 11.00 11.00
34,810 equity shares of Rs.10 each fully paid up
(cost Rs. 10,999,960) (Refer note: 42.b(ii))

Hurricane Windfarms Pvt Limited* 0.39 0.39 0.39 7
39,000 equity shares of Rs.10 each fully paid up

Watsun Infrabuild Private Limited 2.09 2.09 “ :
209,252 equity shares of Rs. 10 each fully paid up
2.99 13.99 23.53 24.79

“Note: The company holds 26% equity stake in Hurricane Windfarms Pvt Ltd. As the shareholders agreement dated 22nd January 2018 entered
into with the promoters of Hurricane Windfarms Pvt Ltd contains restrictive covenants, the company cannot exercise "Significant influence” in
terms of Ind AS 28 and therefore is not classified under "Investments in Associates" and accordingly is not considered as a component for
consolidated financial statements

* Refer note: 43. The changes in the values are routed through OCI

Aggregate amount of quoted investments and market value thereof : - 0.03 0.06
Aggregate amount of unquoted investments 2.99 13.99 23.50 24.73
Aggregate amount of impairment in value of investments - - - -

253
Annexure VII: Notes to restated consolidated financial information

(All amounts are in INR Millions unless otherwise stated)
13 Cash and cash equivalents

Particulars
a. Balances with banks in current accounts
b. Cash on hand
Total

14 Other bank balances

Particulars

Margin money against Letter of Credit
Margin money against Guarantee
Other Deposits

15 Security Deposits (Current)
Particulars

‘Tender and other deposits

16 Other Financial assets (Current)

Particulars

Currency swap, Interest Rate Swaps & Forward cover derivative

17 Other Current assets
Particulars

(Unsecured, considered good unless otherwise stated)
Balances with Government Authorities
Advance to Suppliers ( Other than Capital Goods )
Prepaid Expenses
‘Advance to Employees
Contract assets - Unbilled Revenue
Others

Total

18 Equity Share capital

Particulars As at December 3

12020

Nos. Amount

Authorised

Equity Shares of Rs.100 each -
Equity Shares of Rs.5 each 40,000,000

Issued, called,subscribed & Paid Up

Equity Shares of Rs.100 each :
Equity Shares of Rs.5 each 20,121,600

Total 20,121,600

The movement of equity shares is as below
Particulars

Shares outstanding at the
beginning of the period / year
Addition due to sub-division of
shares

Bonus shares issued during the
period / year

Shares outstanding at the end of
the period / year

20,121,600

20,121,600

200.00

100.61

100.61

10061

10061

Asat December
312020

310.24

0.25

310.49

Asat December
312020

165.90

0.60

44.70

211.20

Asat December
312020

6.71

6.71

Asat December
312020

35.00

35.00

Asat December
312020

75.52
431.10
130.65

3.24

14.15

18.77
673.43

As at March 31 2020

Nos. Amount

40,000,000 200.00

20,121,600 100.61

20,121,600 100.61

20,121,600 100.61

20,121,600 100.61

255

Asat March 31
2020

596.50

11

597.61

Asat March 31.
2020

73.92

0.10

44.79

118.81

Asat March 31.
2020

6.92

6.92

Asat March 31
2020

19.16

19.16

Asat March 31
2020

103.76
68.08
122.47
3.89
1.31
24.31
323.82

As at March 31 2019

Nos. Amount Nos.
40,000,000 200.00
20,121,600 100.61
20,121,600

1,006,080

19,115,520

20,121,600

Asat March 31
2019

194.21

0.76

194.97

Asat March 31
2019

70.74

0.10

70.84

Asat March 31
2019

8.17

8.17

Asat March 31
2019

3.32

3.32

Asat March 31.
2019

92.34
146.31
172.06

6.39
41.61
17.82

476.53

Asat March 31
2018

366.17

1.02

367.19

Asat March 31
2018
119.58

119.58

Asat March 31
2018

5.60

5.60

Asat March 31
2018

1.26

1.26

As at March 31
2018

234.88
77.60
87.24

2.40
45.36
9.09
456.57

As at March 31 2018

Amount

- 2,000,000 —- 200.00

- 1006080 = 10061

100.61 1,006,080 100.61

10061 574,903 57.49

- 431,177 43.12

10061 1,006,080 100.61
Annexure VII: Notes to restated consolidated financial information
(All amounts are in INR Millions unless otherwise stated)
7 Security Deposits (Non-current)

4, As at December
Particulars SfD000
Rent Deposit 99.68
Other Deposits 102.06
Total 201.74
8 Other Financial assets (Non Current)

Particulars As at December
312020
Currency swap & Interest Rate Swap Derivative 17.62
17.62
9 Current tax assets (Net)
Particulars As at December
312020
‘Advance payment of income tax less provisions “
10 Other non-current assets
Particulars As at December
312020
Gratuity - excess value of plan assets over obligation “
Capital Advances 115.64
Less: Allowance for ECL on advances (2.76)
Total 112.88
11 Inventories
Particulars As at December
312020
Raw Materials, Components and Consumables 1,169.57
Work-in-progress 805.74
Finished goods 218.63
Consumable Stores 351.89
Tools in use 173.66
Machinery Spares 597.18
Packing Materials 35.85
Stock in transit 46.71
Total 3,399.23
Inventory valued at net realisable value 25.40
Amount written down to arrive at net realisable value* 11.50

Asat March 31
2020

101.70

117.60

219.30

Asat March 31.
2020

105.69

105.69

Asat March 31
2020

10.99

10.99

As at March 31
2020
25.59
70.45
(2.76)
93.28

Asat March 31
2020
1,223.90
862.58
113.71
382.70
202.51
430.45
24.76
15.54
3,256.15

24.00
8.70

Asat March 31
2019

96.82

120.22

217.04

Asat March 31
2019

5.85

5.85

Asat March 31.
2019

As at March 31
2019
113.12
(2.85)
110.27

Asat March 31.
2019
963.33
1,013.99
113.03
390.82
272.81
444.29
22.74
12.07
3,233.08

16.90
9.70

Asat March 31
2018

79.89

101.01

180.90

Asat March 31
2018

14.11

14.11

As at March 31
2018

44.44

44.44

As at March 31
2018
269.51
(2.85)
266.66

Asat March 31
2018
901.53
958.77
98.10
369.13
278.49
329.31
14.75
54.53
3,004.61

22.70
8.90

* These were recognised as an expense during the period / year and included in changes in value of inventories of finished goods and work-in-

progress in Statement of Profit and Loss.

12 Trade receivables

‘i As at December
Particulars egoone
Considered good - Secured 3
Considered good - Unsecured 2,142.00
Significant increase in Credit Risk 78.86
Credit impaired 18.40
Less: Allowance for ECL on trade receivables (97.26)
Total 2,142.00
Refer Note.43 of Annexure VII for receivables from related parties
Movement in allowance for ECL on trade receivables:

Opening 80.34
Allowance made 30.74
write off made (13.82)
Closing 97.26

254

Asat March 31.
2020

 

1,943.18
61.90
18.45

(80.34)
1,943.19

64.85
16.52
(1.03)
80.34

Asat March 31
2019

2,100.32
45.71
19.14

(64.85)
2,100.32

70.30
45.56
(51.01)
64.85

Asat March 31
2018

2,016.86
70.30

(70.30)
2,016.86

70.85
42.62
(43.17)
70.30
Annexure VII: Notes to restated consolidated financial information
(All amounts are in INR Millions unless otherwise stated)

Rights, Preferences and Restrictions to equity shares

‘The company has only one class of equity shares having a par value of Rs.5 per share. Each holder of equity shares is entitled to one vote per

share.
In the event of liquidation of the company, the shareholders will be entitled to receive the remaining assets of the company, in proportion to

their shareholding.

Details of equity shareholders holding more than 5% shares in the company

Name of the equity As at December 312020 As at March 31 2020 As at March 31 2019 As at March 31 2018
shareholder Nos. %holding —_—Nos. % holding Nos. % holding Nos. % holding

S Ravi 10630640 52.83% 10630640 52.83% 10630640 52.83% 531532 52.83%
International Finance Corporation- 2828100 14.06% 2828100 14.06% 2828100 14.06% 141405 14.06%
S Murali 2126260 10.57% 2126260 10.57% 2126260 10.57% 106313 10.57%
K Gomatheswaran 1417500 7.04% 1417500 7.04% 1417500 7.04% 70875 7.04%
Marina III (Singapore) Pte Limited 3118500 15.50% 3118500 15.50% 3118500 15.50% 155925 15.50%
Total 20121000 99.99% 20121000 99.99% — 20121000 99.99% 1006050 99.99%

For the period of five years immediately preceding 31st December 2020

i) Details of number and class of shares allotted as fully paid up pursuant to contract(s) without payment being received in cash
- The Company has not allotted any shares pursuant to contracts without payment being received in cash

ii) Details of number and class of shares allotted as fully paid up by way of bonus shares:
- Based on the approval by the shareholders in the Extra ordinary General Meeting held on December 11, 2017, the Company had allotted
431,177 number of fully paid Bonus shares on December 21, 2017 in the ratio of three equity shares of Rs.100 each fully paid up for every four
existing equity shares of Rs.100 each fully paid up.

iii) Details of number and class of shares bought back:
- The Company has not bought back any shares during the period of 5 years immediately preceding 3 1st December 2020

Sub-division of shares:
‘The shareholders of the Company at the Extra ordinary General Meeting held on April 30, 2018 approved the subdivision of equity shares of
Rs.100/- each into equity shares having a face value of Rs.5/- each. Consequently the total number of equity shareholding has changed to
20,121,600 equity shares of face value Rs.5/- each from that date.

19 Other Equity
Particulars As at December As at March 31 As at March 31 As at March 31
312020 2020 2019 2018

Reserves & Surplus

Securities Premium A 1,379.53 1,379.53 1,379.53 1,379.53

General Reserves B 966.21 966.21 966.21 966.21

Retained Earnings c 5,394.58 4,903.40 4,526.28 3,573.93

Total Reserves & Surplus

Cash Flow Hedging Reserve D (132.33) (166.06) (152.27) (68.82)
Equity instruments through Other Comprehensive Income (32.10) (21.10) (9.47) (7.82)
Foreign currency translation reserve 26.80 14.47 9.64 14.95

Share of Networth in JV 12.81 11.92 12.06 7.98

Total 7,615.50 7,088.37 6,731.98 5,865.96

Additions and Deductions since the last balance sheet date:

(i) Securities Premium Account

Opening balance 1,379.53 1,379.53 1,379.53 1,422.65

Issue of Bonus Shares ss # “ (43.12)
Closing balance 1,379.53 1,379.53 1,379.53 1,379.53

256
Annexure VII: Notes to restated consolidated financial information
(All amounts are in INR Millions unless otherwise stated)
(ii) Retained Earnings

Opening balance 4,903.39 4,526.28 3,573.94 3,275.59
Profit for the year 505.78 410.89 969.64 312.87
Items of other comprehensive income recognised directly in retained
- Remeasurements of defined benefit obligation (net of tax) (14.59) 26.86 (5.20) (7.56)

Dividend (including dividend distribution tax) _ (60.64) (12.10) (6.96)
‘Transfer from retained earnings

Closing balance 5,394.58 4,903.39 4,526.28 3,573.94
(iii) Cash Flow Hedging Reserve

Opening balance (166.06) (152.27) (68.82) (31.97)
Changes in fair value of hedging instruments 51.85 (21.20) (128.27) (56.64)
Deferred Tax (18.12) TAL 44.82 19.79
Closing Balance (132.33) (166.06) (152.27) (68.82)
(iv) Equity instruments through Other Comprehensive Income

Opening balance (21.10) (9.47) (7.82) (6.24)
Changes in fair value of FVOCI equity instruments (11.00) (11.63) (1.65) (1.58)
Closing Balance (32.10) (21.10) (9.47) (7.82)
(v) Foreign Currency Translation Reserve

Opening balance 14.47 9.64 14.95 28.31
Exchange differences in translating the financial statements of
foreign operations 12.33 4.83 (5.31) (13.36)
Closing Balance 26.80 14.47 9.64 14.95
(vi) Share of profit from JV

Opening balance 11.92 12.06 7.98 5.43
Share of current period / year profits in Joint Venture 0.82 (0.16) 4.03 2.47
Share of other comprehensive income in Joint Venture 0.07 0.03 0.06 0.07
Closing Balance 12.81 11.92 12.06 7.98

Refer "Statement of Changes in Equity" for additions/deletions in each of these items

A. Securities Premium represents premium received on equity shares issued, which can be utilised only in accordance with the provisions of the
Companies Act 2013 for specified purposes.

B. General reserve is created from time to time by transferring profits from retained earnings and can be utilised for purposes such as dividend
pay-out, bonus issue, etc.

C. Retained Earnings includes Rs 554.23 million of revaluation reserve created due to Land revaluation on transition date to Ind AS (01.04.2015),
which will not be available for distribution of profits

D. Cash flow hedge reserve represents the cumulative effective portion of gains or losses arising on changes in fair value of hedging instruments
entered into for cash flow hedges. The cumulative gain or loss arising on changes in fair value of the hedging instruments that are recognised and
accumulated in this reserve are reclassified to profit or loss only when the hedged transaction affects the profit or loss.

E. The amount that can be distributed by the Company as dividends to its equity shareholders is determined considering the requirements of the
Companies Act, 2013 and the dividend distribution policy of the Company. Thus, the amount reported in General Reserve is not entirely
distributable.

20 Borrowings (Non-Current)

Particulars As at December 312020 As at March 31 2020 As at March 31 2019 As at March 31 2018

Non-Current Current Non-Current Current Non-Current’ Current Non-Current Current

Secured

From Banks

Rupee ‘Term Loans 1,627.15 721.38 2,473.63 490.30 2,378.42 725.49 1,815.13 549.66
Foreign Currency Term Loans 2,822.27 1,086.31 3,136.89 790.64 3,614.13 635.98 2,085.15 830.52
4,449.42 1,807.69 5,610.52 1,280.94 5,992.55 1,361.47 3,900.28 1,380.18

From NBFC
Rupee Term Loans 901.40 175.70 1,072.30 m 939.46 209.01 403.02 62.50
901.40 175.70 1,072.30 “i 939.46 209.01 403.02 62.50
Total 5,350.82 1,983.39 6,682.82 1,280.94 6,932.01 1,570.48 4,303.30 1,442.68

Notes:

1. These are carried at amortised cost.

AsatDecember AsatMarch31  AsatMarch31 As at March 31

Barticulars 312020 2020 2019 2018

257
Annexure VII: Notes to restated consolidated financial information
(All amounts are in INR Millions unless otherwise stated)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  
 

 

 

Gross loan outstanding as at the end of the period/year 7,364.90 8,005.12 8,550.73 5,772.82
Less: Unamortised portion of upfront fee paid at the end of the (30.69) (41.36) (48.24) (2684)
period / year
Loans at amortised cost as at the end of the period/year 7,334.21 7,963.76 8,502.49 5,745.98
Less: Current portion as at the end of the period / year (1,983.39) (1,280.94) (1,570.48) (4,442.68)
Non-Current Borrowing as at the end of the period / year 5,350.82 6,682.82 6,932.01 4,303.30
2. Refer note no 45 for security and terms of borrowings.
* Taken to other current financial liabilities ( Note 26)
Net Debt Reconciliation
For the period ended 31 December 2020
Tastrumentto Non - Current
Particulars neteek | Meparms | Cieee PP TEEn? | caermuay'| crore
ye maturity*
‘Opening Net (debt)/ Cash & Cash Equivalents 597.61 (53.87)|__(2,448.83)|_(8,035.04)|_(4,157.65)| (11,097.79)
Acquisition of RoU asset - - - : (49.51) (49.51)
Pre-closure of leases - - - - 89.71 89.71
Cash Flows (288.08) : 850.39 505.52 57.08 1,124.90
Fair Value changes - (68.71) - - - (68.71)
Foreign exchange adjustments 0.96 : 25.41 136.57 - 162.94
Interest expense & other charges - - (155.03) (848.25) (80.82) (784.10)
Interest & charges paid : : 160.06 570.79 80.82 811.67
Closing Net (debt)/ Cash & Cash Equivalents 310.49 (212.59)|__(1,568.00)]__(7,370.42)|__(1,060.37)| __ (9,800.89)
For the year ended 31 March 2020
Instrumentto Non- Current
paces Cash and cash | hedge the Current | Borrowing ine. | 1 se Liability weasel
equivalents Borrowing current
maturity*
‘Opening Net (debt)/ Cash & Cash Equivalents 193.05 (430.32)| (4,354.73)! (8,584.11)| _(4,054.62)| (40,930.73)
Acquisition of RoU asset - - : : (284.41) (284.41)
Pre-closure of leases : : - : 14.29 14.29
Cash Flows 403.73 - (1,092.60) 770.60 167.09 248.82
Fair Value changes : 76.45 - - - 76.45
Foreign exchange adjustments 0.83 - - (203.70) - (202.87)
Interest expense & other charges - : (382.20) (857.00) (104.02)/ (4,343.22)
Interest & charges paid : - 380.70 839.17 104.02 1,323.89
Closing Net (debt)/ Cash & Cash Equivalents 597.61 (53.87)|__(2,448.83)|__(8,035.04)|__(1,157.65)|_ (11,097.79)
For the year ended 31 March 2019
Tastrumentto Non - Current
Particulars Cash and cash | hedge the Current | Borrowing ine. | 1 56 iabiity Total
equivalents finance Borrowing current
ys maturity*
‘Opening Net (debt)/ Cash & Cash Equivalents 360.43 (62.30)|_(2,724.28)| (5,786.67) (658.73)| (8,871.55)
Acquisition of RoU asset : - - (817.59) (817.59)
Pre-closure of leases - - - -
Cash Flows (166.39) : 1,416.46 | — (2,676.21) 121.70 (4,304.44)
Fair Value changes (68.02) - - (68.02)
Foreign exchange adjustments (0.99) - (45.66) (80.29) (126.94)
Interest expense & other charges - (421.60) (766.00) (95.00)| (1,282.60)
Interest & charges paid - 420.34 725.06 95.00 1,240.41
Closing Net (debt)/ Cash & Cash Equivalents 193.05 (230.32)|__(1,354.73)]__(8,584.11)| (4,054.62) (10,930.73)

 

 

 

 

 

 

 

 

258
Annexure VII: Notes to restated consolidated financial information
(All amounts are in INR Millions unless otherwise stated)
For the year ended 31 March 2018

 

 

 

 

 

 

 

 

 

 

Instrument to Non- Current
paraciaars Cash and cash | hedge the Current | Borrowing inet | 56 tiabitity ria
equivalents finance Borrowing current
Jiability** maturity*

Opening Net (debt)/ Cash & Cash Equivalents 240.31 (69.83)|  (2,235.41)| (5,578.03) (7,642.97)
Acquisition of RoU asset (745.06) (745.06)
Pre-dosure of leases - - - -
Cash Flows 116.47 - (476.28) (176.47) 86.33 (449.95)
Fair Value changes - 7.53 - - 7.53
Foreign exchange adjustments 3.65 - (9.22) (34.73) (40.30)
Interest expense & other charges - - (532.40) (538.40) (71.08)| (1,141.88)
Interest & charges paid - - 529.03 540.96 71.08 1,141.07
Closing Net (debt)/ Cash & Cash Equivalents 360.43 (62.30)| __(2,724.28)| (5,786.67) (658.73)|__(8,871.55)|

 

*Includes the portion of "interest accrued but not due" pertaining to borrowings.
“* does not include foreign currency forward contracts that are used for hedging liabilities that are operating cash flows

21 Other Financial Liabilities (Non-current)
AsatDecember AsatMarch31  AsatMarch31 As at March 31

Particulars 312020 2020 2019 2018
Currency swap & Interest Rate Swaps Derivative 113.48 103.70 32.36 6.24
Rent Advance 0.20 0.20 0.20 0.20
Lease Liability 874.00 979.72 879.97 550.58
Total 987.68 1,083.62 912.53 557.02
Notes:

1. Currency swaps are for principal only and are cash flow hedge and hence are carried at fair value through OCI
2. Interest Rate Swap & Interest Rate Collar derivatives that are hedge effective are carried at fair value

3. Rent advance is carried at amortized costs it is not material to be fair valued

4, Lease Liability - Please refer Note No B.8 & 46

22 Provisions (Non-current)
As at December As at March 31 As at March 31 As at March 31

Particulars 312020 2020 2019 2018

Provision for Warranty Cost 2.09 6.82 - -
2.09 6.82 : :

Note: Movement in Provision for product warranties is as follows :

Opening 6.82 = 2 1.99

‘Transferred to Short Term (5.16) - - (1.99)

Warranty provided for current year 0.43 6.82 = 2

Closing 2.09 6.82 : :

This provision is recognised once the products are sold. The estimated provision takes into account historical information, frequency and average
cost of warranty claims and the estimate regarding possible future incidence of claims. The provision for warranty claims represents the present
value of management's best estimate of the future economic benefits. The outstanding provision for product warranties as at the reporting date is
for the balance unexpired period of the respective warranties on the various products which ranges from 2 to S years

 

23 Deferred tax liabilities (Net)
As at December As at March 31 As at March 31 As at March 31

 

 

Raretcalars 31.2020 2020 2019 2018
Deferred Tax Liabilities 1,616.36 1,661.84 1,537.70 1,452.37
Deferred Tax Assets (318.68) (305.15) (182.24) (397.06)
Deferred Tax Liabilities (net) 1,297.68 1,356.69 1,355.46 1,055.31
MAT Credit Entitlement- Unused tax credit (832.62) (985.84) (1,000.20) (735.58)

465.06 370.85 355.26 319.73
Total

Note : Refer Note No 40 for detailed deferred tax working and effective tax rate reconciliation

259
Annexure VII: Notes to restated consolidated financial information

(All amounts are in INR Millions unless otherwise stated)
24 Borrowings (Short Term)

Particulars

Secured
Loans repayable on demand from banks
Rupee Loans
Foreign Currency Loans
Sub-total (A)

Unsecured
Rupee Loans
Overdraft
Sub-total (B)
Total (A+B)

Short Term Borrowings from banks are secured by
a. first pari passu charge on current assets of the Company.
b. second pari passu charge on fixed assets of the Company.

Asat December
312020

505.76
1,061.15
1,566.91

1,566.91

Asat March 31
2020

2,442.73

2,442.73

2,442.73

Asat March 31
2019

1,348.22

1,348.22

1.92
1.92

1,350.14

In addition to the above, the loans are guaranteed by personal guarantees of the Chairman and Managing Director

25 Trade payables

Particulars

Due to Micro and Small Enterprises-(MSE)
Sub-total (A)

Due to Other Suppliers
‘Accrued Expenses and others
Sub-total (B)

Total (A+B)

26 Other Financial Liabilities (Current)

Particulars

Current maturities of long-term debt (refer note 20)
Current portion - lease liability ( refer note 46)
Interest accrued but not due on borrowings
Currency swap , IRS & Forward cover derivative
Creditors for capital goods and services

Employee related liabilities

Dues to directors

Others

Total

27 Current tax labilities (Net)

Particulars

Income tax provisions less advance payment

28 Other current liabilities
Particulars

Advance from customers
Deferred Revenue- EPCG benefit
Statutory Dues

Total

As at December
312020

133.20
133.20

2,721.93
161.02
2,882.95

3,016.15

As at December
312020

1,983.39
185.95
37.32
51.72
90.50
124.43
2.03
43.21
2,518.55

Asat December
312020

69.27

69.27

Asat December
312020

485.01

142.69

113.87

741.57

260

Asat March 31
2020

207.62
207.62

2,517.59
92.57
2,610.16

2,817.78

Asat March 31
2020

1,280.94
177.93
77.42
74.50
46.36
121.91
0.23
12.71
1,792.00

Asat March 31
2020

Asat March 31
2020

258.43

280.01

88.99

627.43

Asat March 31.
2019

241.90
241.90

2,957.04
113.15
3,070.19

3,312.09

Asat March 31.
2019

1,570.48
174.65
93.89
108.78
421.89
205.55,
1.83
70.01
2,647.08

Asat March 31.
2019

50.11

50.11

Asat March 31
2019

279.90

387.79

142.95

810.64

Asat March 31
2018

2,342.47
371.62
2,714.09

6.76
6.76

2,720.85

As at March 31
2018

49.49
49.49

3,496.07
81.76
3,577.83

3,627.32

Asat March 31
2018

1,442.68
108.15
44.19
70.17
259.33
181.39
32.92
29.47
2,168.30

As at March 31
2018

Asat March 31
2018

199.38

30.18

60.82

290.38
Annexure VII: Notes to restated consolidated financial information
(All amounts are in INR Millions unless otherwise stated)

29 Provisions (Current)
As at December As at March 31 As at March 31 As at March 31

Particulars 31.2020 2020 2019 2018

Provision for employee benefits

Gratuity 8.00 “ 29.09 28.31

Other Provisions

Provision for Warranty Cost 11.27 12.31 9.72 4.78

Provision for Rejection 9.45 6.02 12.72 7.78
28.72 18.33 51.53 40.87

Note:

Movement in Provision for product warranties is as follows :

Opening 12.31 9.72 4.78 3.04

Expired during the period / year (12.31) (9.72) (4.78) (3.04)

Warranty provided for current period / year 11.27 12.31 9.72 4.78

Closing 11.27 12.31 9.72 4.78

‘This provision is recognised once the products are sold. The estimated provision takes into account historical information, frequency and average
cost of warranty claims and the estimate regarding possible future incidence of claims. The provision for warranty claims represents the present
value of management's best estimate of the future economic benefits. The outstanding provision for product warranties as at the reporting date is
for the balance unexpired period of the respective warranties on the various products which ranges upto one year.

is as follows :

 

Movement in Provision for reje

Opening 6.02 12.72 7.78 3.91
Expired during the period / year (6.02) (12.72) (7.78) (3.91)
Warranty provided for current period / year 9.45, 6.02 12.72 7.78
Closing 9.45 6.02 12.72 7.78

This provision is recognised once the products are sold. Materials are rejected due to various reasons and either get re processed and replaced to
the customers depending on the type of rejections. These rejections gets fulfilled within a period of 3 months and the provisions represents the
PV of management's best estimate of possible rejections within the next one quarter.

261
Annexure VII: Notes to restated consolidated financial information
(All amounts are in INR Millions unless otherwise stated)
30 Revenue from Operations

December 31

Particulars 2020
Sale of products;
Domestic Sales 5,943.00
Export Sales 1,006.86
A. 6,949.86
Sale of services;
Machining Charges 2,452.01
Service Charges 26.94
B. 2,478.95
Other operating revenues;
Sale of swarf & others 611.04
Duty Drawback 16.53
EPCG income on fulfilling obligation 149.08
Export Incentive under MEIS 22.41
c 799.06
Revenue from operations ( Gross )( A+B+C) 10,227.87

March 31 2020

8,475.39
1,393.23
9,868.62

3,831.40
23.61
3,855.01

916.60
25.54
224.90
33.98
1,201.02

14,924.65

Refer Note no: 51 of Annexure VII "Segment Reporting” for breakup of revenue from operations.

31 Other Income

Particulars December 31

2020
Interest Income from deposits measured at amortised cost 821
Interest Income due to unwinding of fair valued assets

-Rent Advance 6.94
Net gain on sale of PPE 5.79
Rental income 2.09
Foreign Exchange rate Gain/(Loss) on Transaction & Translation 46.50
Marked-To-Market Gain / (Loss) - Derivative -( Net) !
Unclaimed balances written back 1.68
Others :

Total 71.21

32 Cost of materials consumed

‘ December 31
Particulars

2020
Cost of goods sold 4,321.65
Carriage inward 4231
Sub Contract Charges 23.32
Total 4,387.28

33 Changes in inventories of finished goods and work-in-progress

Particulars December 31

2020

Inventory at the end of the year

Work in Progress 805.74

Finished Goods 218.63

Sub total 1,024.37

Inventory at the beginning of the year

Work in Progress 862.58

Finished Goods 113.71

Sub total 976.29
(Increase ) / decrease in inventory (48.08)

262

March 31 2020

12.71

8.92
0.28
2.97
49.13
1.74
6.18
3.99

85.92

March 31 2020

5,562.57
96.42
58.05

5,717.04

March 31 2020

862.58
113.71
976.29

1,013.99
113.03
1,127.02

150.73

March 312019 March 31 2018

9,483.59 7,986.40
1,619.62 1,275.09
11,103.21 9,261.49
5,323.44 4,517.80
13.34 10.77
5,336.78 4,528.57
1,428.52 1,077.75
32.53 25.75
240.61 195.37
38.42 26.38
1,740.08 1,325.25
18,180.07 15,115.31

March 312019 March 31 2018

14.87 17.92
6.06 458
4.38 (0.04)
2.87 2.34

72.65 71.21
(0.16) 7.88
35.62 8.92
0.07 050
136.36 113.31

March 312019 March 31 2018

6,896.83 5,719.16
149.49 154.83
58.56 42.89
7,104.88 5,916.88

March 312019 March 31 2018

1,013.99 958.77
113.03 98.10
1,127.02 1,056.87
958.77 794.33
98.10 103.39
1,056.87 897.72
(70.15) (159.15)
Annexure VII: Notes to restated consolidated financial information

(All amounts are in INR Millions unless otherwise stated)
34 Employee benefits expense

Particulars

Salaries and wages
Contributions to PF & ESI
Contribution to Gratuity fund
Payment to contractors

Staff welfare expenses

Total

35 Depreciation, amortization and impairment expense
Particulars

Depreciation on Property, Plant & Equipment
Amortisation of Intangible Assets ( Software & Dev.Exp.)
Amortization- Right-of-use Asset

Impairment of Capital Work in Progress

Total

36 Other expenses
Particulars

Manufacturing Expenses
Stores, Spares & tool consumed
Power & Fuel
Repairs & Maintenance

- Machinery

- Building

- Others
Other manufacturing expenses

Administrative Expenses
Professional and Consultancy charges
Insurance Charges
Rates & Taxes
Software Licenses
General Administrative Expenses
Printing & Stationary
Postage & Telegrams
Rent
Telephone Expenses
Travelling Expenses
Managerial Remuneration
Directors’ Sitting Fees
Remuneration to auditors

Statutory Audit
‘Taxation and Certification
CSR Expenses
Write off of
Bad debts
Tender deposits
‘Advances
Allowance for ECLon
Doubtful advances
Doubtful debts
Provision for
Warranty
Rejections

Selling expenses
Packing material consumed
Carriage Outward

Sales Promotion Expenses

Total (A+B+C)

263

December 31
2020

784.80

25.62

11.12

171.75

112.62

1,105.91

December 31
2020

1,194.03

34.25

155.75

30.70

1,414.73

December 31
2020

641.66
547.20

192.10
11.84
47.21
10.49

1,450.50

30.13
27.21
14.53
28.09
34.42
5.27
151
9.03
10.25
14.84
67.34
138

3.38
1.68
3.85

13.82

0.34
16.85

(5.74)
3.43
281.61

64.22
96.19
15.88
176.29
1,908.40

March 31 2020

1,232.17
47.28
15.70

22148
193.23
1,709.86

March 31 2020

1,690.15
54.59
205.14

1,949.88

March 31 2020

1,007.60
850.87

519.73
32.13
114.35
28.24
2,552.92

52.73
42.91

3.21
49.07
57.48
12.06

371
1786
24.11
81.08
64.52

2.27

5.14
135
8.95

1.03

10.96

(0.09)
15.44

7.65
(6.70)
454.74

145.34
181.93
32.34
359.61
3,367.27

March 31 2019

1,437.01
58.52
21.09

366.91
284.78
2,168.31

March 31 2019

1,525.29
58.89
177.30

1,761.48

March 31 2019

1,550.17
966.38

643.25
46.53
190.94
60.11
3,457.38

75.62
44.17
23.11
35.98
65.97
19.61
6.95
21.95
25.70
108.49
129.18
1.64

9.18
186
8.20

51.01
2.16
4.53

(5.42)

4.90
4.95
639.74

164.40
256.09
33.01
453.50
4,550.62

March 31 2018

1,332.91
58.42
16.70

287.90
290.36
1,986.29

March 31 2018

1,314.89
49.60
127.04

1,491.53

March 31 2018

1,505.04
855.95

486.71
50.19
209.39
31.54
3,138.82

80.95
40.67
28.37
37.03
7331
18.08
5.48
19.42
26.73
108.81
71.64
0.68

5.05
143
919

43.17

3.87

2.85
0.03

3.13
3.87
583.76

139.00
216.87
32.37
388.24
4,110.82
Annexure VII: Notes to restated consolidated financial information
(All amounts are in INR Millions unless otherwise stated)
37 Finance costs

Particulars

Interest expenses
On Short Term Borrowings
On Long Term Borrowings at Amortised Cost
Other Borrowing costs
Unwinding of discounted Upfront fee on loans
Interest unwind - lease liability
Unwinding of Rent Advance
Other bank charges
MTM Gain / (Loss) - Derivative -( Net) - Finance Cost
Net (gain) /loss on foreign currency transactions and translation

December 31
2020

155.03
535.70

12.56
80.82
6.94
28.91
0.16

(47.72)
772.40

264

March 31 2020

382.15
839.88

17.13
104.02
8.93
43.77
4.99

83.13
1,484.00

March 31 2019

421.58
750.28

15.74
95.00
6.06
80.34
140

35.09
1,405.49

March 31 2018

478.99
530.54

7.95
71.08
458
53.34

(3727)

15.62
1,124.83
38. The Subsidiaries and Associates considered in the Consolidated Financial Statements:

Following Subsidiaries are considered in the Consolidated Financial Statements:

 

 

 

 

coumury of % of Ownership Interest
S.No Name of the Subsidiary Incorporation [December 31] March 31] March 31 [March 31
2020 2020 2019 2018
1 Craftsman Automation Singapore Pte Ltd* [Singapore 100% 100% 100% 100%
g| Craftsman Europe BV
(formerly Craftsman Marine B.V) Netherlands 100% 100% 100% 100%

 

 

 

 

 

 

 

 

“Note: the Company passed Board Resolution at their meeting held on 20th August 2019 to wind up the subsidiary in Singapore. However, the
process of winding up could not be initiated due to outbreak of COVID 19 pandemic. Craftsman Automation Singapore Pte. Ltd. has filed a
declaration of solvency with the Accounting and Corporate Regulatory Authority, Singapore on September 30, 2020. The subsidiary was non-

operational as on 31st December 2020.

Following Joint Venture is considered in the Consolidated Financial Statements:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

caaneeeer % of Ownership Interest
S.No Name of the Joint Venture Incornorsaon [December 31] March 31 | March31 | March 31
Ps 2020 2020 2019 2018
; | at Stahl Craftsman Enterprises Private
Limited India 30% 30% 30% 30%
39. Additional Information - Subsidiaries & Joint Ventures:
Additional Information, as required under Schedule III to the Companies Act, 2013 of entities consolidated as Subsidiaries & Joint Ventures.
Consolidated Net Assets
December 312020 March 31 2020 March 31 2019 March 31 2018
Name of the entity
% Amount | % Amount |% Amount | % ‘Amount
Parent Company
craftsman Automation Limited 101%] 7,803.37 101%] 7,290.05 102%] 6,972.13 103%] 6,154.27
Foreign Subsidiaries
aia Automation Singapore 0% 7 0% 0.54 0% (31.70) -1% (3138)
Craftsman Europe B.V 2% 181.12 2% 136.52 “1% (79.66) -2%| (110.52)
Sub Total
/Add/Less: Intragroup eliminations / -3%| (268.39) -3%| (238.12) 0% (28.18) -1% (4581)
adjustments
‘Total 100%| 7,716.11} 100%] 7,188.98] 100%] 6,832.59] 100%] 5,966.57
Consolidated Profit or Loss
Name ofthe entit December 312020 March 312020 March 312019 March 312018
ame of the entity % Amount |% Amount ___|% Amount |[% ‘Amount
Parent Company
craftsman Automation Limited 100% 505.34 92% 377.17 95% 920.27 97% 305.01
Foreign Subsidiaries
eattsman ‘Automation Singapore aK - aig (139) aig nea tis 58
Craftsman Europe B.V -1% (531) 9% 36.13 5% 52.59 1% 1.93
Sub Total
lAdd/Less: Intragroup eliminations / ig “e ‘i ian ‘i aa 5 ay
adjustments
‘Total 100%] 506.60} 100%] 410.73) 100%] 973.67] 100%] 315.34

 

 

 

 

 

 

 

 

 

 

 

265
Consolidated Other Comprehensive Income

 

 

 

 

 

 

 

 

 

 

 

Name of the entit December 312020 March 31 2020 March 312019 March 312018
y % Amount | % Amount___|% Amount___|% ‘Amount

Parent Company
Craftsman Automation Limited 40% 8.13 24% 1.48 95% (90.32) 78% (46.00)
Foreign Subsidiaries
Craftsman Automation Singapore
Bota -3% (054)} — -18% (1.12) 1% (0.96) 2% (1.09)
Craftsman Europe B.V 63% 12.86 95% 5.96 5% (435) 21% (12.27)
Sub Total
|Add/Less: Intragroup eliminations / 0% oos 0% (002) 0% os ox oo7
adjustments
Total 100% 2054| 100% 630] 100%]  (95.55)}_  100%| — (59.28)
Consolidated Total Comprehensive Income

Name ofthe entit December 312020 March 312020 March 312019 March 312018

e % ‘Amount ___|% Amount __[% Amount__|% ‘Amount

Parent Company
Craftsman Automation Limited 97%| 513.47 91%| 378.65 95%] 829.95 101%] 259.01
Foreign Subsidiaries
eaten Automation Singapore 0% (0.54) “1% (2.51) 0% (0.32) 0% (0.96)
Craftsman Europe B.V 1% 755 10% 42.08 5% 48.23 -4% (10.34)
Sub Total
|Add/Less: Intragroup eliminations / 1% 666 0% (119) 0% 026 sang 835
adjustments
Total 100%] 527.14] 100%] 417.03] 100%] 878.12 | 100%] 256.06

 

 

 

 

 

 

 

 

 

 

 

40 Income Tax

Income tax expense for the year reconciled to accounting profit

Particulars

Profit before tax
Income tax rate
Income tax expense

Effect of:

December 31

i) EPCG Benefit Capitalisation not considered for Income Tax purpose

ii) Effect of expenses inadmissible for tax
iii) Deferred tax asset now recognised
iv) Effect due to land indexation

v) Effect of other adjustments

vi) Effect of tax free / lower tax income / loss of overseas subsidiaries

vii) Effect of share of profit from JV
viii) Difference due to change in tax rate

Income tax expense as per statement of profit and loss

March 312020 March 31 2019

March 31 2018

 

2020
759.26 573.90 1,399.83 435.45,
34.944% 34.944% 34.944% 34.608%
265.32 200.54 489.16 150.70
(15.26) (78.59) (26.38) (22.37)

0.78 69.99 1.78 15.53

: (11.58) (9.30) (40.14)

> 7 3.46 4.99

: (9.49) (13.85) 2.96
2.16 (7.77) (17.31) (2.65)
(0.29) 0.07 (1.40) 0.85

- - - 10.23
252.66 163.17 426.16 120.11

 

 

266
Movement in deferred tax assets & liabilities

December 31

Particulars Caso March 312020 March 312019 March 31 2018
Opening - (Liability) / asset (37085) (355.26) (319.73) (341.29)
Charged to profit or loss

Depreciation & amortisation 72.66 (84.56) (70.61) (96.28)
Unabsorbed loss : s (291.40) (4255)
Allwance for ECL on trade receivables 3.95 5.40 (1.88) 1.83
Allowance for ECL on Advances and others (7.36) 84.96 16.15 1692
Charged to other comprehensive income

Cash flow hedge reserve (18.12) 7.41 4482 19.79
Remeasurement of defined benefit obligation 7.84 (14.43) 2.80 4.06
MAT Credit

Availed / (utilised) (153.18) (14.36) 264.60 117.80
Closing - (Liability) / asset (465.06) (37085) (355.26) (319.73)

41 Employee Benefits

Defined contribution plan

‘The employee provident fund is in the nature of Defined contribution plan. The contribution made to the scheme is considered as expense in the
statement of Profit and loss when the employee renders the related service. There is no other obligation other than the contribution payable to
employee provident fund.

Particulars nee 31 March 312020 March 312019 March 312018
The total expenses recognised in statement of profit and loss represent
contribution payable by the Company at rates specified in the rules of

the plan. 21.18 35.67 36.26 34.99
Defined benefit plans

‘The Group extends defined benefit plan in the form of gratuity to employees. The company makes annual contribution to gratuity fund
administered by trustees and managed by SBI Life Insurance Company Ltd. The Company's liability is determined based on actuarial valuation
done at the year end as per projected unit credit method. The plan provides for a lump-sum payment to vested employees at retirement, death,
while in employment or on termination of employment of an amount equivalent to 15 days salary payable for each completed year of service
subject to the maximum of Rs.20 lakhs. Vesting occurs upon completion of five years of service.

‘These plans typically expose the group to actuarial risks such as: investment risk, interest rate risk, longevity risk and salary risk.

 

For funded plans that rely on insurers for managing the assets, the value of assets certified by the Insurer may not be|
the fair value of instruments backing the liability. In such cases, the present value of the assets is independent of the|
future discount rate. This can result in wide fluctuations in the net liability or the funded status if there are significant]
changes in the discount rate during the inter-valuation period.

Employees with high salaries and long durations or those higher in hierarchy, accumulate significant level of benefits,

If some of such employees resign / retire from the company there can be strain on the cash flows.
Market risk is a collective term for risks that are related to the changes and fluctuations of the financial markets. One|

actuarial assumption that has a material effect is the discount rate. The discount rate reflects the time value of money,|
Market Risk An increase in discount rate leads to decrease in Defined Benefit Obligation of the plan benefits & vice versa. This
assumption depends on the yields on the corporate / government bonds and hence the valuation of liability is exposed|

to fluctuations in the yields as at the valuation date.
Legislative risk ts the risk of increase in the plan abilities or reduction im the plan assets due to change im the

legislation / regulation. The government may amend the Payment of Gratuity Act thus requiring the companies to pay}
higher benefits to the employees. This will directly affect the present value of the Defined Benefit Obligation and the|
same will have to be recognized immediately in the year when any such amendments effective.

Investment risk

 

Liquidity Risk

 

 

Legislative Risk

 

 

 

 

‘The principal assumptions used for the purposes of the actuarial valuations were as follows

Discount rate 6.66% 6.54% 7.75% 7.59%
Expected rate of salary increase 5.00% 3.00% 7.00% 8.00%
Attrition rate 5.00% 10.00% 5.00% 5.00%

267
‘The estimate of future salary increase (which has been set in consultation with the company), take account of inflation, seniority, promotion and
other relevant factors, such as supply and demand in the employment market.

Amounts recognised in total comprehensive income in respect of these defined benefit plans are as follows:

Current Service Cost 12.40 14.80 18.70 1633
Net interest expense/ (income) (1.30) 1.00 2.40 0.37
Component of defined benefit cost recognised in P&L 11.10 15.80 21.10 16.70

Remeasurement on the net defined benefit liability comprising:

Actuarial (gain) /loss arising from changes in financial

25.60 (37.90) (17.40) 2155
assumptions

Actuarial (Gain)/ Losses due to Experience on DBO 6.10 (4.60) 25.40 (9.75)
Actuarial (gain) /loss arising from changes in financial ae (0.60) -
assumptions due to demographic assumption changes in DBO (9.10)

Return on Plan Assets (Greater) / Less than Disount rate (0.10) (1.40) 0.60 (0.18)
Components of defined benefit costs recognised in other ae aise 508 ak
comprehensive income

Total Defined Benefit Cost 33.60 (25.50) 29.10 28.32

‘The amount included in the balance sheet arising from the Company's obligation in respect of its defined benefit plans is as follows

Present value of defined benefit obligation 150.50 141.90 169.61 142.43
Fair value of plan assets 142.60 167.50 140.51 114.11
Net liability arising from defined benefit obligation (funded) (7.90) 25.60 (29.10) (2832)

Movements in the present value of the defined benefit obligation in the current period/year were as follows:

Opening defined benefit obligation 14189 169.61 142.43 113.92
Current Service Cost 12.40 14.75 18.65 1633
Interest Cost 6.30 10.66 12.40 8.34
Benefits paid (32.60) (13.20) (1134) (7.96)
Actuarial (gain) /loss 22.60 (39.93) TAT 1180
Closing defined benefit obligation 150.59 141.89 169.61 142.43

Movements in fair value of plan assets in the current period /year were as follows:

Opening fair value of plan assets 167.46 140.46 114.06 103.73
Interest income of the assets 7.60 9.70 9:96 7:96
Employer contribution : 29.10 2831 10.15
Benefits payout (32.60) (13.20) (1134) (7.96)
Actuarial (gain)/loss 0.10 1.40 (053) 0.18
Closing fair value of plan assets 142.56 167.46 140.46 114.06

 

The group funds the cost of the gratuity expected to be earned on yearly basis to SBI Life Insurance Company Lii
the plan assets.

ited, which manages

The actual return on plan assets 7.70 11.10 9.43 8.14

Significant actuarial assumptions for the determination of the defined obligation are discount rate and expected salary increase. The sensitivity
analysis below has been determined based on reasonably possible changes of the respective assumption occurring at the end of the reporting
period.

If the discount rate is 100 basis points higher/lower, the defined benefit obligation would

Decrease to 137.19 131.19 153.60 128.13
Increase to 166.29 154.29 188.49 159.41
If the expected salary is 100 basis points higher/lower, the defined benefit obligation would

Increase to 164.19 153.19 185.08 155.56
Decrease to 138.49 13189 155.73 130.44
If the attrition rate is 100 basis points higher/lower, the defined benefit obligation would

Increase to 152.19 144,99 170.46 142.98
Decrease to 148.79 138.29 168.63 141.95

268
‘The sensitivity analysis presented above may not be representative of the actual change in the defined benefit obligation as it is unlikely that the
change in assumptions would occur in isolation of one another as some of the assumptions may be correlated.

Furthermore, in presenting the above sensitivity analysis, the present value of the defined benefit obligation has been calculated using the
projected unit credit method at the end of each reporting period, which is the same as that applied in calculating the defined benefit obligation
liability recognised in the balance sheet. There was no change in the methods and assumptions used in preparing the sensitivity analysis from
previous year.

Funding arrangements

‘The company has been fully funding the liability through a trust administered by an insurance company. Regular assessment of the increase in
liability is made by the insurance company and contributions are being made to maintain the fund. Subject to credit risk of the insurance
company & the asset liability mismatch risk of the investments, the Company will be able to meet the past service liability on the valuation date
that falls due in the future.

‘The group expects to make, to the defined benefit plans for the

next financial year, a contribution of . 16.70 12.80 4.91 18.90
Information on the maturity profile of the liabilities:

Weighted average duration of the DBO 12.80 years 8.46 years 13.48 years 14.49 years
Projected Benefit Obligation 150.50 141.89 169.61 142.43
‘Accumulated Benefits Obligation 135.00 114.90 9658 8355
Maturity Profile :

Year (i) 13.50

Year (ii) 9.30

Year (iii) 7.30

Year (iv) 8.80

Year (v) 6.20

Next 5 year pay-outs(6-10yrs) 31.90

Pay-outs above ten years 73.40

42. FINANCIAL INSTRUMENTS
42.a, Capital Management:

‘The Company manages its capital to ensure that it will be able to continue as going concern while maximising the return to stakeholders through
the optimisation of the debt and equity balance.

‘The Company manages its capital structure and makes adjustments to it, in light of changes to economic conditions and the strategic objectives of
the Company. To maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders, buy back shares and
cancel them, or issue new shares. The Company finances its operations by a combination of retained profit, bank borrowings, disposals of
property assets and leases.

‘The Company monitors the capital structure on the basis of total debt to equity and maturity profile of the overall debt portfolio of the Company.

December 31 March 312020 March 312019 March 312018

 

2020
Debt (long-term and short-term borrowings including current 8,901.12 10,406.49 9,852.63 8,466.83
maturities)
Equity 7,716.11 7,188.98 6,832.59 5,966.57
Debt Equity Ratio (times) 115 145 1.44 1.42

42.b. Financial risk management:

In course of its business, the Company is exposed to certain financial risks that could have significant influence on the Company's business and
operational / financial performance. These include market risk (including currency risk and interest rate risk), credit risk and liquidity risk.

‘The Board of Directors reviews and approves risk management framework and policies for managing these risks and monitors suitable
mitigating actions taken by the management to minimise potential adverse effects and achieve greater predictability to earnings.

269
In line with the overall risk management framework and policies, the treasury function provides services to the business, monitors and manages
through an analysis of the exposures by degree and magnitude of risks.

‘The Company uses derivative financial instruments to hedge risk exposures in accordance with the Company's policies as approved by the board
of directors.

Market Risk

Market risk is the risk that changes in market prices, liquidity and other factors that could have an adverse effect on realizable fair values or
future cash flows to the Company. The Company's activities expose it primarily to the financial risks of changes in foreign currency exchange
rates and interest rates as future specific market changes cannot be normally predicted with reasonable accuracy

reign currency risk management:

‘The Company undertakes transactions denominated in foreign currencies and thus it is exposed to exchange rate fluctuations. The Company
actively manages its currency rate exposures, arising from transactions entered and denominated in foreign currencies, through treasury division
and uses derivative instruments such as foreign currency forward contracts to mitigate the risks from such exposures. The use of derivative
instruments is subject to limits and regular monitoring by Management. The carrying amounts of the Company's foreign currency denominated
monetary assets and monetary liabilities at the end of the reporting period are as follows.

 

 

 

 

 

 

 

 

December 312020 | _ March312020 March 312019 March 312018
Liabilities Currency | AU) Amount | AME) Amount | AUPE) Amount | AMOUR") Amount
inForeign| in Foreign] in Foreign] in Foreign]
in Rs in Rs in Rs in Rs
currency currency currency currency
usp 718| 525.03 410| 309.26 0.44 31.07 7.24| 477.38
yPY 2687 19.01 232 1.63| 36082] 229.16] 171.09] 107.02,
EUR 0.04 371 0.05 4.07 0.29 23.07 0.06 5.05
sD - - - - 0.00 0.11 0.01 0.64
Payable (trade & other) GBP 0.00 0.18 0.00 0.29 0.72 37.61 ° 2
CHF - : 0.00 0.00 0.03 219 0.00 0.00
AUD : 2 : = 3 2 : =
SEK “ 7 7 - “ 7 7
caD : 2 : : 3 2 : :
usp 6551} 478718] 49.26) 3,690.74] 59.70] 4,154.26] 49.64) 3,251.14
Borrowings (ECB and Others) JPY = - - 3 60.18 36.16
EUR 224| 200.25 285| 236.78 1.22 95.84 : :
Total Payables (A) 5,535.36 4,242.77 457331 3,877.39
Hedged by derivative contracts (B) 3339] 244008] 2790) 210194] 55.90] 3,890.04) 1450] 1,977.20
Unhedged payables (C=A-B) 3,095.29 2,140.83, 683.27 1,900.19
December 312020 | _March312020 March 312019 March 312018
Assets Currency |. a Amount |. ae Amount |. eae: Amount |. ae Amount
in Foreign) “P00 {in Foreign| “N'"" |in Foreign] "P00" jin Foreign] “i
currency currency currency currency
usp 332| 242.73 348| 262.53 464| 318.31 4.63| 297.82
Receivables EUR 0.69 61.89 0.63 52.26 1.04 79.56 134] 105.86
GBP 0.00 037 : - : : : -
Total Receivables (A) 304.99 314.79 397.88 403.68
Hedged by derivative contracts (B) : 2 5
Unhedged receivables (C=A-B) 304.99 314.79 397.88 403.68

 

 

 

 

 

 

 

 

 

 

 

 

270
 

‘oreign currency sensitivity analys:

Movement in the functional currencies of the various operations of the Company against major foreign currencies may impact the Company's
revenues from its operations. Any weakening of the functional currency may impact the Company's cost of imports and cost of borrowings and
consequently may increase the cost of financing the Company's capital expenditures.

‘The foreign exchange rate sensitivity is calculated for each currency by aggregation of the net foreign exchange rate exposure of a currency anda
parallel foreign exchange rates shift in the foreign exchange rates of each currency by 1%, which represents Management's assessment of the
reasonably possible change in foreign exchange rates.

‘The sensitivity of profit or loss to changes in the exchange rates arises mainly from foreign currency denominated financials instruments. The
following table details the Company’s sensitivity movement in the unhedged foreign exposure:

Currency 1% Strengthening of FC
December 31 March 312020 March 312019 March 312018

 

2020
usp (50.69) (3737) (38.67) (3431)
JPY (0.19) (0.02) (2.29) (1.43)
EUR (1.42) (1.89) (0.39) 1.01
SGD % < (0.00) (0.01)
GBP 0.00 (0.00) (038) 2
CHF % (0.00) (0.02) (0.00)

(52.30) (39.28) (41.75) (34.74)

A depreciation of foreign currencies would have the opposite effect to the impact in the table above.

‘The following table details the forward foreign currency contracts outstanding at the end of the reporting period:

Foreign Currency Equivalent value Fair value of contracts
Cash Flow Hedges December March31 December March31 December = March 31
312020 2020 312020 2020 312020 2020
Sell USD 4.91 0.15 361.07 10.70 358.51 11.18

Note:
Included in the balance sheet under ‘other current financial liabilities’. [Refer Notes 20 of Annexure VII]. For the purpose of relevance, details for
the two most recent reporting periods are disclosed.

Interest rate risk management:

‘The Company is exposed to interest rate risk pertaining to funds borrowed at both fixed and floating interest rates. The risk of floating interest
rates in foreign currency loans is managed by the Company by the use of interest rate swap contracts. Hedging activities are evaluated regularly
to align with interest rate views and defined risk appetite, ensuring the most cost-effective hedging strategies.

Interest rate sensitivity analysis

‘The sensitivity analysis below has been determined based on the exposure to interest rates at the end of the reporting period. For floating rate
liabilities which are unhedged, the analysis is prepared assuming that the amount of the liability as at the end of the reporting period was
outstanding for the whole year. An increase or decrease of 50 basis point in rupee interest rates and 25 basis points in USD libor rate is used
when reporting interest rate risk internally to key management personnel and represents Management's assessment of the reasonably possible
change in interest rates.

 

 

 

 

 

| | Effect of Change in interest -
Increase in Outstanding as on
Base Rate Bascrate rates
31-Dec-20 | 31-Mar-20 [ 31-Dec-20 | 31-Mar-20
USD Libor 25 bps 0.91 - 363.80 :
INR Baserate 50 bps 15.71 18.77 3,142.87 3,753.68
3,506.67 3,753.68

 

 

 

 

 

 

 

A decrease in interest rates would have the opposite effect to the impact in the table above.

Foreign currency and interest rate sensitivity analysis for swap contracts

‘The Company has taken interest rate swap (IRS) contracts for hedging its interest rate risks related to certain external commercial borrowings.

271
   

0 Mar-20
‘The mark-to-market loss as at the end of the period / year (10080) (14660)
‘The amount recognized in Other Comprehensive Income for the 45.90 (10280)
period / year
‘The amount recognized in Statement of Profit and Loss for the (0.20) (5.00)
period /year

‘The company also has an Interest Rate collar for hedging the interest rate risk of one of its external commercial borrowings

 

Dec-20 0
‘The mark-to-market loss as at the end of the period / year (12.10) (11.10)
‘The amount recognized in Other Comprehensive Income for the (1.00) (11.10)

period

In addition to the above contract, the company has taken a call option contract which are designated as hedges.

Dec-20 Mar-20
‘The mark-to-market loss as at the end of the period / year 11.80 4380
‘The amount recognized in Other Comprehensive Income for the (32.00) 85.50

period

In case of currency swaps, the effective portion of cash flow hedges, is recognized in OCI in the cash flow hedge reserve, while any ineffective
portion is recognised immediately in profit or loss. Amounts recognised as Other Comprehensive Income (OCI) are transferred to profit or loss
when the hedged transaction affects profit or loss, such as when the hedged financial income or financial expense is recognised or when a
forecast sale occurs when the hedged item is the cost of a non-financial asset or non-financial liability, the amounts recognised as OCI are
transferred to the initial carrving amount of the non-financial asset or liabilitv.

‘The mark-to-market loss as at the end of the period / year
‘The amount recognized in Statement of OCI for the period /

year

  

effect given to OCI on account of restatement loss of the 109.20 (103.00)
underlying foreign currency loans

Note: For the purpose of relevance, details for the two most recent reporting periods are disclosed.

Credit Risk:
Credit risk is the risk of financial loss to the Company if a customer or counter-party fails to meet its contractual obligations.

Trade receivables:

‘The Company periodically assesses the financial reliability of customers / corporates taking into account the financial condition, current
economic trends, analysis of historical bad debts and ageing of accounts receivable. These include customers / corporates, which have high credit-
ratings assigned by international and domestic credit-rating agencies. Individual risk limits are set accordingly. The Company's trade and other
receivables, including loans under customer financing activities, consists of a large number of customers, across geographies, hence the Company
is not exposed to concentration risk. During the period under review, the company’s credit exposure to any single customer did not exceed 10%
of its total trade receivables.

‘The company has used a practical expedient by computing the expected credit loss allowance for trade receivable based on a provision matrix.
‘The provision matrix takes into account historical credit loss experience and adjusted for forward-looking information.

Movement in Credit loss allowance

December 31 March 312020 March 312019 March 312018

 

2020

Balance as at beginning of the period / year 80.34 64.85 70.30 7085
Allowance for bad and doubtful during the period / year 30.74 1652 45.56 42.62
‘Trade receivables written off during the period / year (13.82) (1.03) (51.01) (43.17)
Balance as at the end of the period / year 97.26 80.34 64.85 70.30

Other financial asset

 

=> Investment in Bhatia Coke & Energy Limited
Bhatia Coke & Energy Limited is under "Corporate Insolvency resolution process" as per the MCA website. Also, the management of the Company
is taken over by an insolvency professional appointed by the National Company Law Tribunal (NCLT).

Given this, the Group has fair valued the investment to NIL as at 31-Dec-20. Fair value loss recognized in OCI for the period ended 31st December
2020 is Rs.11.00 million

272
None of the Group's other cash equivalents, including time deposits with banks, are past due or impaired.

Movement in allowance on ECL for advances:

December 31 arch 312020 March 312019 March 312018

 

2020
Balance as at beginning of the period / year 2.76 2.85 2.85 :
Allowance for doubtful advances during the period / year : 10.87 4.53 6.72
Advances written off during the period / year - (10.96) (453) (3.87)
Balance as at the end of the period / year 2.76 2.76 2.85 2.85

42.b{ii) Liquidity Risk:

Liquidity risk refers to the risk that the Company cannot meet its financial obligations. The objective of liquidity risk management is to maintain
sufficient liquidity and ensure that funds are available for use as per requirements. The Company has obtained fund and non-fund based working
capital limits from various banks. The Company invests its surplus funds in bank fixed deposit, which carry minimal mark to market risks.

‘The table below summarizes the maturity profile remaining contractual maturity period at the balance sheet date for its non-derivative financial
liabilities based on the undiscounted cash flows.

(Rupees in Millions)

 

 

Duewithin1 Duebetween2 Due beyond 5 Total
year and 5 years years Amount
As at Dec 31 2020
Bankand other borrowings 3,550.30 4,977.56 373.26 8,901.12
Interest payments on borrowings 559.02 799.97 20.44 1,379.43
Lease liability 186.00 493.80 380.15 1,059.95
‘Trade Payables 3,016.15, - - 3,016.15
‘As at March 31 2020
Bank and other borrowings 3,723.60 5,971.94 710.95 10,406.49
Interest payments on borrowings 689.89 1,175.60 56.50 1,921.99
Lease liability 177.93 537.59 442.13 1,157.65
‘Trade Payables 2,817.78 . - 2,817.78
As at March 31 2019
Bank and other borrowings 2,920.62 5,792.90 1,139.10 9,852.63
Interest payments on borrowings 823.93 1,583.03 166.77 2,873.73
Lease liability 174.65 459.47 420.50 1,054.62
‘Trade Payables 3,312.09 : 5 3,312.09
As at March 31 2018
Bank and other borrowings 4,163.60 3,926.58 376.65 8,466.83
Interest payments on borrowings 510.68 850.22 18.70 1,379.60
Lease liability 108.15 318.75 231.83 658.73
‘Trade Payables 3,627.32 - - 3,627.32

The table below summarizes the maturity profile for its derivative financial liabilities based on the undiscounted contractual net cash inflows and
outflows on derivative liabilities that settle on a net basis or gross basis

 

 

 

Due between2 Due beyond 5 Total
and 5 years years Amount
As at Dec 31 2020
Currency & Interest Rate Swaps (14.59) (95.87) ~ (110.46)
Foreign exchange forwards (2.13) 2 : (2.13)
‘As at March 31 2020
Currency & Interest Rate Swaps (55.87) 199 ! (53.88)
Foreign exchange forwards 053 - - 0.53
As at March 31 2019
Currency & Interest Rate Swaps (103.72) (26.51) “ (130.23)
Foreign exchange forwards (1.74) “ (1.74)
As at March 31 2018
Currency & Interest Rate Swaps (70.20) 7:86 : (62.34)
Foreign exchange forwards 130 : = 1.30

273
42.c Categories of Financial assets and liabilities:
Deten 31 March 312020 March 312019 March 312018
Financial Assets
a. Measured at amortised cost:
Investments
Cash and cash equivalents 310.49 597.61 194.97 367.19
Other bank balances 211.20 118.81 70.84 119.58
Trade Receivables 2,142.00 1,943.19 2,100.32 2,016.86
Security Deposit 208.45 226.22 225.21 186.50

b. Mandatorily maintained at fair value through other comprehensive
income (FVTOCI
Investments 299 13.99 23.53 24.79
Currency swaps & options and IRS & IRC 52.62 124.35 435 -
Others . 0.50 -

c. Mandatorily maintained at fair value through profit or loss (FVTPL)
Currency swaps & IRS = : 482 14.10
Others : ’ 1.27

Financial Liabilities

a. Measured at amortised cost:
Borrowings 8,901.12 10,406.49 9,852.63 8,466.83
Trade Payables 3,016.15 2,817.78 3,312.09 3,627.32
Lease Liability 1,059.95 1,157.65 1,054.62 658.73
Other Financial Liabilities 297.69 258.83 793.37 547.50

b. Mandatorily maintained at fair value through other comprehensive
income (FVTOCI
Currency Swaps & IRS 164.88 178.03 139.40 65.69

c.Mandatorily maintained at fair value through profit or loss (FVTPL)
Currency Swaps & IRS 032 0.17 10.72
Others s 3 174 2

42.d Categories of Financial assets and liabilities:
i) Financial assets and financial liabilities that are measured at fair value on a recurring basis as at the end of each reporting period:

‘The fair value of financial instruments as referred to in note (A) above have been classified into three categories depending on the inputs used in
the valuation technique. The hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1
measurements) and lowest priority to unobservable inputs (Level 3 measurements).

‘The categories used are as follows:
Level 1 : Quoted (unadjusted) market prices in active markets for identical assets or liabilities
Level 2 : Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly
observable
Level 3 : Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.
For assets and liabilities that are measured at fair value as at balance sheet date., the classification of fair value calculation by category is
summarized below

274
December 31 March 312020 March 312019 March 312018

 

 

 

 

 

2020
Assets at fair value
Investments measured at
i) fair value through OCI
Level 1 - * 0.03 0.06
Level 2 - - 11.60 13.22
Level 3 2.99 13.99 11.90 11.51
2.99 13.99 23.53 24.79
Derivative instruments measured at
i) fair value through OCI
Level 1 - - - -
Level 2 66.15 124.90 4.30 -
Level 3 s - ! -
66.15 124.90 430 -
ii) fair value through P&L
Level 1 - - - -
Level 2 s 5 4.80 15.37
Level 3 = = = =
s z 480 15.37
Liabilities at fair value
Derivative instruments measured at
i) fair value through OCI
Level 1 - - - -
Level 2 177.61 178.04 139.40 65.69
Level 3 2 2 : :
177.61 178.04 139.40 65.69
ii) fair value through P&L
Level 1 - - - -
Level 2 0.02 0.17 1.70 10.72
Level 3 = = = =
0.02 0.17 1.70 10.72

Calculation of Fair Values:
The fair values of the financial assets and liabilities are defined as the price that would be received to sell an asset or paid to transfer a liability in
an orderly transaction between market participants at the measurement date. Methods and assumptions used to estimate the fair values are

consistent with those used.

275
Financial assets and liabilities measured at fair value as at Balance Sheet date:

 

The fair values of investment in quoted investment in equity shares is based on the current bid price of respective investment as at the
Balance Sheet date.

‘The fair values of the derivative financial instruments has been determined using valuation techniques with market observable inputs. The
models incorporate various inputs including the credit quality of counter-parties and foreign exchange forward rates.

43, Related party disclosure:

 

 

 

 

S.No_[Nature of Relationship 31-Dec-20 31-Mar-20 31-Mar-19 31-Mar-18
‘A__ [Other related parties
joint Venture (Carl Stahl Crapesman (Carl Stahl Crapesman (Carl Stahl Crapisman (Carl Stahl Crajesman
1 Enterprises Private Enterprises Private Enterprises Private Enterprises Private
Limited Limited Limited Limited

Company with common
2 directors MC Craftsman Machinery |MC Craftsman Machinery |MC Craftsman Machinery |MC Craftsman Machinery
Private Limited Private Limited Private Limited Private Limited

Wholly Owned Subsidiary |Craftsman Europe BV |Craftsman Europe B.V —_|Craftsman Europe B.V Craftsman Europe B.V

3
Craftsman Automation Craftsman Automation —_|Craftsman Automation _|Craftsman Automation
Singapore Pte Limited  |Singapore Pte Limited _|Singapore Pte Limited _|Singapore Pte Limited

4 |Key Management Mr. Srinivasan Ravi, Mr. Srinivasan Ravi, Mr. Srinivasan Ravi, Mr. Srinivasan Ravi,

Personnel Chairman And Managing Chairman And Managing |Chairman And Managing |Chairman And Managing

Director Director Director Director
Mr. RaviGauthamram, — \Mr. Ravi Gauthamram, _|Mr. Ravi Gauthamram, —_|Mr. Ravi Gauthamram,
Whole Time Director Whole Time Director Whole Time Director Whole Time Director

Mr. Chandrashekar Bhide, |Mr. Chandrashekar Bhide, |Mr. Chandrashekar Bhide, |Mr. Chandrashekar Bhide,
Director Director Director Director
Mr. Chandramohan

: ‘ Mr. Chandramohan Mr. Chandramohan Mr. Chandramohan
Natarajan, Whole Time " . ’ ’ , ,
; Natarajan, Whole Time —|Natarajan, Whole Time —_|Natarajan, Whole Time
Director (till 10th July é : :
Director Director Director
12020)
Mr. Sundararaman Mr. Sundararaman Mr. Sundararaman ey Semacearacnat

Kalyanaraman, Director
(wef. 30.06.17)

Mr. Udai Dhawan, Mr. Udai Dhawan, Mr. Udai Dhawan, Mr. Udai Dhawan,
Nominee Director Nominee Director Nominee Director Nominee Director

Mr. Kallakurichi Kanniah
Balu, Director (till 23rd

Kalyanaraman, Director |Kalyanaraman, Director |Kalyanaraman, Director

Mr. Kallakurichi Kanniah_ |Mr. Kallakurichi Kanniah_|Mr. Kallakurichi Kanniah

Balu, Director Balu, Director Balu, Director
May 2020)
Mrs. VITAYA SAMPATH, |Mrs. VIJAYA SAMPATH, |Mrs. VIJAYA SAMPATH, |Mrs. VIJAYA SAMPATH,
Director Director Director Director
|Mr. C.B.CHANDRASEKAR, |Mr. SIVAKUMAR |Mr. SIVAKUMAR
hier HAN alone ° Chief Financial Officer |GOPALAN, Chief Financial |GOPALAN, Chief Financial
(wef, 03 February, 2020) officer officer

Mr. THIYAGARAJ
DAMODHARASWAMY, __| Mr. RAJAMANICKAMS,
Chief Operating Officer-_ |Company Secretary (upto

Mr. SIVAKUMAR

Mr THIVAGARAL GOPALAN, Chief Financial

|DAMODHARASWAMY,

Chief Operating Officer oo (aH Oeebruany: | aiicomotive (wee lApr-17)
24.05.2018)
Mr. Shainshad Aduvanni, |Mr. THIYAGARA] |Mr. SHAINSHAD Mr. N.V.S. PAVANKUMAR
Company Secretary |DAMODHARASWAMY, |ADUVANNI, Company |(Aug 12'2017 to Nov
\Chief Operating Officer |Secretary |16'2017)
|Mr. SHAINSHAD
Mr. Shainshad Aduvanni, |ADUVANNI, Company
Company Secretary Secretary (From Nov
'16'2017)

 

 

 

 

 

 

 

276
B, Related party transactions and balances - summary

 

Transactions during the period/ year

 

 

 

 

ea Nature of Relationship 31-Dec-20 | 31-Mar-20 | 31-Mar-19 | 31-Mar-18
ende
Purchase of Goods & Services Subsidiaries 4.00 16.91 24.42 20.79
Joint Ventures 8.76 15.13 18.93 31.40
Common director - company 4.18 11.08 14.84 10.34
Sale of Goods & Services Subsidiaries 26.99 75.58 82.83 6459
Joint Ventures 119.04 197.66 207.68 187.92
Common director - company - 0.02 0.18 1.415
Sales Commission expenses \Joint Ventures 0.01 154 - -
Reimbursement of Expenditure to Subsidiaries 0.16 10.20 8.93 2.81
Reimbursement of Expenditure from _|Joint Ventures 0.35 - - -
Common director - company 0.19 - - -
Unwinding effect of deemed equity Subsidiaries 29.97 5.60 9.16 8.76
Dividend payments Key Management Personnel - 26.58 5.32 3.04
Remuneration to key management Key Management Personnel
personnel 41.45 68.68 66.30 5241
Commission Key Management Personnel 36.00 8.64 72.84 22.84
Sitting Fee Key Management Personnel 1.38 227 1.64 0.68
interest Income Subsidiaries - - 0.10 0.07
Loans given Subsidiaries : : : -
Loans recovered Subsidiaries 15.50 3.02 28.20 13.71
Conversion of Loan into Equity Subsidiaries - 255.41 - -
Rental Income \Joint Ventures 0.14 0.18 0.18 021
[Common director - company 1.95 2.79 2.69 2.53
Balance as at Nature of Relationship 31-Dec-20 | 31-Mar-20 | 31-Mar-19 | 31-Mar-18
Trade Receivables Subsidiaries 5.33 26.57 40.87 59.29
Joint Ventures 24.91 57.43 66.86 84.26
Common director - company 0.20
|Trade Payables Subsidiaries 15.86 18.25 2.40 3.36
JJoint Ventures - 0.32 161 759
Common director - company 2.78 2.62 5.37 2.23
Loans - Receivable Subsidiaries 23.17 43.28 243.30 262.80
Interest receivable Subsidiaries 0.33 030 0.30 0.20
Remuneration payable Key Management Personnel 2.03 0.20 1.80 32.90
Rent advance received Common director - company 0.20 0.20 0.20 0.20

 

 

 

 

 

 

 

277

 
C.Significant related party transactions and balances

 

Transactions during the period/ year

 

 

 

278

 

 

 

 

onded Nature of Relationship 31-Dec-20 | 31-Mar-20 | 31-Mar-19 | 31-Mar-18
Purchase of Goods & Services
Carl Stahl Craftsman Enterprises Private
Limited Joint Venture 876 15.13 18.93 31.40
Craftsman Automation Singapore Pte
Limited Subsidiary - 8.09 12.61 13.30
Craftsman Marine BV - Netherlands Subsidiary 4.00 8.82 11.81 7.48
MC Craftsman Machinery Private Limited |Common director - company 4.18 11.08 14.84 10.34
Sale of Goods & Services
Carl Stahl Craftsman Enterprises Private
Limited joint Venture 119.04 197.66 207.68 187.92
Craftsman Marine BV - Netherlands Subsidiary 26.99 75.58 82.83 64.59
MC Craftsman Machinery Private Limited |Common director - company - 0.02 0.18 115
Sales Commission Paid
Carl Stahl Craftsman Enterprises Private
Limited joint Venture 0.01 1.54 - -
Reimbursement of Expenditure to
Craftsman Automation Singapore Pte
Limited Subsidiary - - - 0.01
Craftsman Marine BV - Netherlands Subsidiary 0.16 10.20 8.93 2.80
Reimbursement of Expenditure from
Carl Stahl Craftsman Enterprises Private ag
Limited joint Venture na - - -
|MC Craftsman Machinery Private Limited }Common director - company ong - - -
Unwinding effect of deemed equity
Craftsman Marine BV - Netherlands Subsidiary 29.97 5.60 9.16 876
Dividend payments
Executive Directors Key Management Personnel : 26.58 532 3.04
[Remuneration to key management
personnel
Executive Directors Key Management Personnel 3118 50.76 49.50 42.79
Chief Financial Officer Key Management Personnel 5.03 9.89 9.08 714
Chief Operating Officer Key Management Personnel 4.10 6.50 6.32 -
Company Secretary 1.13 1.53 139 249
Commission
Executive Directors Key Management Personnel 33.00 6.59 7189 20.39
Non-Executive Key Management Personnel 3.00 2.05 0.95 2.45
Sitting Fee
Non-Executive Key Management Personnel 1.38 2.27 164 0.68
Loans recovered
Craftsman Marine BV - Netherlands Subsidiary 15.50 2.01 26.24 13.71
Craftsman Automation Singapore Pte
Limited Subsidiary - 1.01 1.97 :
Conversion of Loan into Equity
Craftsman Marine BV - Netherlands Subsidiary : 220.67 : :
Craftsman Automation Singapore Pte
Limited Subsidiary : 34.75 - -
Interest Income
Craftsman Automation Singapore Pte
Limited Subsidiary : - 0.10 0.07

 
 

 

 

 

 

 

 

 

 

 

 

Rent Income

(Carl Stahl Craftsman Enterprises Pvt Ltd Joint Venture 0.14 0.18 0.18 021

MC Craftsman Machinery Pvt Ltd Common director - company 1.95 2.79 2.69 2.53
Balances of Related Parties as on Nature of Relationship 31-Dec-20 | 31-Mar-20 | 31-Mar-19 | 31-Mar-18

Trade Receivable

Carl Stahl Craftsman Enterprises Private

Limited Joint Venture 24.91 57.43 66.86 84.26

Craftsman Marine BV - Netherlands Subsidiary 5.33 26.57 40.87 59.29

MC Craftsman Machinery Private Limited |Common director - company 0.20

Trade Payable

Carl Stahl Craftsman Enterprises Private

Limited joint Venture - 0.32 1.61 7.59

Craftsman Automation Singapore Pte

Limited Subsidiary - - 2.09 2.78

Craftsman Marine BV - Netherlands Subsidiary 15.86 18.25 0.32 058

MC Craftsman Machinery Private Limited |Common director - company 2.78 2.62 537 2.23

Loans - Receivable

Craftsman Marine B.V. Netherlands Subsidiary 23.15 43.30 208.70 22720

Craftsman Automation Singapore Pte

Limited Subsidiary 0.01 - 34.60 35.60

Interest Receivable

Craftsman Automation Singapore Pte

Limited Subsidiary 0.33 0.30 0.30 0.20

Rent advance received

MC Craftsman Machinery Private Limited Common director - company 0.20 0.20 0.20 0.20

Remuneration payable

Mr. S Ravi Key Management Personnel 2.03 0.20 180 32.90

Note:

1. All transactions with the related parties are in the normal course of business and on arm's length price

2. Transactions and balances with subsidiary companies are eliminated in these financial statements in accordance with Ind AS 110 Consolidated
Financial Statements. The same are disclosed in this note as required under SEBI ICDR Regulations.

44, Contingent Liabilities and Capital Commitments

44.a. Contingent Liabilities

Contingent liabilities are disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by
the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company or a present obligation
that arises from past events where it is either not probable that an outflow of resources will be required to settle the obligation or a reliable

estimate of the amount cannot be made.

December 31

March 312020 March 312019 March 31 2018

2020

i. _ Claims against the Group not acknowledged as debt

Excise

VAT
Service tax
GST

Income tax
Stamp Duty

ii, Sales Bill Discounting

44.b. Commitment on Capital Account

0.69
621
672
4.33
176.79
5.62

864.92

279

0.69
S53
672
2.74
176.79
5.62

5.62

304.90

7.33
5.23
7.70

173.28
5.62

376.38

928.10

12.60
6.83
6.86

69.48

459.83

1,120.00
45, Borrowings:

45a. Non-Current Borrowings:

; Rate of interest as on December 31, Amount outstanding as|
‘i ‘Amount (ia 5 :
hender Curren] relevant | Amount (in 2020 (p.a.) Repayment Schedule on December 31, 2020
cy foreign
currency

2)
)
State Bank of India 720.00} 720.00) 2.60% above MCLR rate 72 monthly instalments 342.12]

‘Sub-limit of € 500.00 million
repayable in 15 quarterly
ICICI Bank Limited 750.00} 750.00] 1.70% above the MCLR rate instalments 296.34]
[Sub-limit of & 250.00 repayable in
25 quarterly instalments

700% above six month LIBOR (7
5 availed in USD)
: 5 5 y instalments 6
ven, 315.00) 9 00% above the LTMLR (if availed 20 sarily taselment 1sa.g3
in?)

EPO Bank 4.00% above the six month LIBOR (i/
330.00 avmledan USD) 24 quarterly instalments 69.64

Discretion of the bank (ifavailed in &)}

375.00] 2.75% above three month LIBOR 20 quarterly instalments 365.37]
Standard Chartered Bank 518.00] 2.50% above three month LIBOR 20 quarterly instalments 350.76]

5

2.75% above three month LIBOR 20 quarterly instalments 31.54]
IRBL Bank Limited 24 quarterly instalments 222.09]
DBI Bank Limited 111.96]
24 quarterly instalments 237.50]

Bajaj Finance Limited
24 quarterly instalments 283.33}

Rate applicable agreed between bank 20 quarterly instalenents 104.601
and borrower

1.75% above one year MCLR 750.0

1.05% above one year MCLR 17.1

1.15% above one year MCLR 20.74

indusind Bank Limited i 500.00} (00.00) 1.00% above one year MCLR. 20 quarterly instalments 375.00}

250.00] 250.00] _1.40% above IDFC Bank MCLR 16 quarterly instalments 150.00}
DFC First Bank LOL 150.00] 16 quarterly instalments 125.32]
0

100.0 437% 16 quarterly instalments 74.93

International |

uae Haan 30.00] 2,175.00] 2.75% above six month LIBOR 13 half yearly instalments
{Corporation

Mabiod, Mahinda) oi 10.00] 400.00] 1.70% above SBI Base rate 48 equal monthly instalments 358.13
Financial Services Ltd

[CSB Bank Limited 250.00] 250.01 0.60% above | year MCLR 60 monthly instalments 191.67]
Principal — 20 quarterly
rata Capital Finanee| xa) Hon 400.00] 7:75% below the LTLR subject to a instalments oe
Services Limited minimum of 10.75% p.a
Interest ~ 60 monthly instalments

Allterm loans, both Rupee and Foreign Currency are secured by first pari passu charge on fixed assets of the company. Also, a second pari passu
charge on current assets of the company are created for all term loans except for loan from Kotak Mahindra Bank, In addition to the above, the
loans are guaranteed by personal guarantees of the Chairman and Managing Director.

Kotak Mahindra Bank INR
NI

indian Bank Limited

8

 

 

 

280
45b. Current Borrowings:

 

Sanctioned Amount

- Rate of interest as on December 31. Amount outstanding as|
: ‘Amount (in . s
Tender relevant [Amount (in 2020 (p.a.) Repayment pehedule on December 31, 2020
cy

foreign z

)
tate Bank of lade IN 1300] 300.00] 2.00% above 1 year MCLR Repayable on Demand 696.13
|(Consortium)
DFC Bank Limited
epaya lema s
Consortium) Repayable on demand 95.67]

Standard Chartered Bank
(Consortium ) LIBOR + margin (if availed in foreign
currency)

IDBI Bank Limited

_ ‘mit IN 300] Applicable spread over MCLR Repayable on demand 147.42]
(Consortium)
indian Bank Limited
oa amp IN 700] 700] 1.40% above one year MCLR Repayable on Demand 392.37
(Consortium)

IRBL Bank Limited INR] 100] 0.50% above one year MCLR_ Repayable on demand 16.45}
1,566.91]

Repayable on demand 218.87]

 

 

 

46. Lease arrangements
‘The company has adopted Ind AS 116 with modified retrospective approach with effect from April 1, 2017. The company has recognized
Rs.629.45 million as “Right-of-Use” Assets and lease liability of Rs.609.86 million as on the transition date (i.e) April 1, 2017. An amount of
Rs.66.30 million million has been reclassified from accrued liabilities to Right-of-Use Asset for the accrued operating lease rentals. Further, an
amount of Rs. 85.89 million has been reclassified from non-current assets on account of prepayments made towards leases. And In the statement
of Profit and Loss account for the reported period/ years, the nature of expenses in respect of operating leases have been changed from lease rent
in previous period to “Depreciation” for the Right-of-Use Asset and “Finance Cost" for the interest accrued on lease liability.

46.a Company as lessee :
Following are the changes in the carrying value of right of use assets:

December 31

Particulars 2020 March 312020 March 312019 March 31 2018
Machinery

Opening 106.35 149.09 11.14 13.00
Additions = = 159.14 5.72
Amortization/ expense (29.43) (42.74) (21.19) (7.59)
Deletion ” 7 - 7
Closing 76.92 106.35, 149.09 11.14
Land & Buildings

Opening 936.53 82881 626.48 616.44
Additions 49.51 284.41 358.45 129.48
Amortization/ expense (12632) (162.40) (156.11) (119.45)
Deletion (89.71) (14.29) 2 :
Closing 770.01 936.53 828.81 626.48
Total

Opening 1,042.88 977.90 637.61 629.45
‘Additions 49.51 284.41 517.59 135.20
Amortization/ expense (155.75) (205.14) (17730) (127.04)
Deletion (89.71) (14.29) 5 :
Closing 846.93 1,042.88 977.90 637.61

‘The aggregate depreciation expense on ROU assets is included under depreciation and amortization expense in the statement of Profit and Loss.

The following is the break-up of current and non-current lease liabilities as at December 31, 2020:

Particulars December 31 March 31, March 31, March 31,
2020 2020 2019 2018
Current lease liabilities 185.95 177.93 174.65 108.15
Non-current lease liabilities 874.00 979.72 879.97 550.58
Total 1,059.95 1,157.65 1,054.62 658.73

281
‘The following is the movement in lease liabilities during the period / year:

December 31

Particulars Caso March 31,2020 March 31,2019 March 31,2018
Balance at the beginning of the period 1,157.65 1,054.62 658.72 609.86
Additions 49.51 284.41 517.59 135.20
Finance cost accrued during the period 80.82 104.02 95.00 71.08
Deletion (89.71) (14.29) z =
Payment of lease liabilities (138.32) (271.11) (216.69) (157.42)
Balance at the end of the period 1,059.95 1,157.65 1,054.62 658.72

The table below provides details regarding the contractual maturities of lease liabilities on an undiscounted basis :

December 31 As at March 31, Asat March 31, Asat March 31,

Particulars 2020 2020 2019 2018

Less than one year 277.40 288.70 230.90 127.70
One to five years 732.70 813.20 668.80 373.40
More than five years 465.00 559.20 450.86 245.07
Total 1,475.10 1,661.10 1,350.56 746.17

‘The Company does not face a significant liquidity risk with regard to its lease liabilities as the current assets are sufficient to meet the obligations
related to lease liabilities as and when they fall due.

December 31

Particulars 2020 March 31,2020 March 31,2019 March 31, 2018
Rental expense recorded for short-term leases 9.03 17.86 21.95 19.42
Total cash outflow for leases including short-term 147.35 289.19 238.65 176.83

Note: The Group has elected not to assess any reduction in lease payments during the nine months period ended 31st December 2020 as lease
modification in accordance with MCA notification G.S.R. 463E dated 24th July 2020 on Ind AS 116 ‘Leases’

46.b Company as lessor
Company has provided a portion of its building on operating lease to MC Craftsman Machinery Private Ltd & Carlstahl Craftsman Enterprises
Private Limited for a period of 3 years.

Pecember 31 March 31,2020 March 31,2019 March 31, 2018
Not later than 1 year 2.60 2.90 2.70 130
Later than 1 year but not later than 5 years 0.30 2.00 430 E
Later than 5 years - - - -

Non-cancellable operating lease commitments

47. The information required to be disclosed under the Micro, Small and Medium Enterprises Development Act, 2006

December 31
2020

133.20 207.62 241.90 49.49

March 312020 March 312019 March 31 2018

‘The principal amount due to Micro, Small and Medium
Suppliers under this Act

Interest accrued and due to suppliers on the above amount 1.60 6.50 630 “
Interest paid to suppliers under this Act ( Section 16) Z =

Interest due and payable for the delay (for payment during the - - - -
year beyond due date)

Payment made to suppliers (other than interest) beyond the 2 2 s 2
appointed date, during the period /year

Interest accrued and remaining unpaid at the end of 1.60 650 630
period /year to suppliers under this Act

Interest due and payable to suppliers under this Act for Z =

payment already made
‘The information has been given in respect of Vendors to the extent they could be identified as "Micro and Small Enterprises” on the basis of

information available with the Group.

282
48. Corporate Social Responsibility Expenses

Particulars March 312020 March 312019 March 31 2018
(a) Gross amount required to be spent by the company during
the year as per section 135 of the Companies Act, 2013 read 13.40 8.00 9.40
with Schedule VII
(b) Amount spent during the year 8.90 8.20 9.20
‘Towards
(i Construction / acquisition of any asset

Incash 3.80 2.80 2

Yet to be paid in cash - 0.70 :
(ii) On purposes other than (i) above

Incash 5.10 4.70 9.20

Yet to be paid in cash -
Note: CSR requirements are to complied on an annual basis. Hence not reported for the nine months period ended 31st December 2020

49, Exceptional Item
‘The Company filed its Draft Red Herring Prospectus with Securities & Exchange Board of India (SEBI) in June, 2018 for a proposed Initial Public

Offering (IPO) of its equity shares. The Company was obligated to go for IPO as an exit option for the PE investors as per the shareholder's
agreement. In this relation, the Company had incurred Rs. 57.73 million towards non-recurring IPO related expenses. The proposed IPO had
envisaged fresh issue of equity shares by the Company and offer for sale by certain existing shareholders. As the SEBI approval expired in August,
2019 and the market conditions were not conducive for listing, the same was not pursued. Hence, the entire expense was charged off to the
Statement of Profit and Loss as "exceptional item" in FY 2019-20.

50. Earnings per Share

Period ended Year ended Year ended Year ended
December 312020 March 312020 March312019 March 312018

Earnings per share

Basic earnings per share (Rs./share) 25.18 20.41 48.39 15.67
Diluted earnings per share (Rs./share) 25.18 20.41 48.39 15.67
Earnings (before exceptional item) 2
per equity share (Rs./share) 25.18 22.28 48.39 15.67
Profit for the period / year attributable to equity share holders 506.60 410.73 973.67 315.34
Profit before exceptional items attributable to equity share holders 506.60 468.46 973.67 315.34
Total number of equity shares outstanding at the end of the
20.12 20.12 20.12 1.01

period / year
Weighted average number of equity shares

used in the calculation of basic earnings per share 20.12 20.12 20.12 20.12

after adjustment for effect of dilution 20.12 20.12 20.12 20.12

Note: In accordance with Ind AS 33 on "Earnings per Share", weighted average number of shares for the year ended March 31, 2018 has been
considered as 20.12 million factoring the subsequent bonus issue & subdivision of equity shares.

283
51. Segment reporting

Segment revenue

Automotive - Powertrain & Others
Automotive - Aluminium Products
Industrial & Engineering

Total revenue as per Statement of Profit and Loss

Segment profit or loss

Automotive - Powertrain & Others
Automotive - Aluminium Products
Industrial & Engineering

Total Segments

Less: Unallocable expenditure
‘Add: Other income

Earnings Before Interest & Tax

Less: Finance costs

Profit before exceptional items & tax
Exceptional items

Profit Before Tax as per Statement of Profit and Loss

Segment assets

Automotive - Powertrain & Others
Automotive - Aluminium Products
Industrial & Engineering

Total Segments

Add: Unallocable assets

Total assets as per Balance Sheet

Segment liabilities

Automotive - Powertrain & Others
Automotive - Aluminium Products
Industrial & Engineering

Total Segments

Add: Unallocable liabilities

Total liabilities as per Balance Sheet

Period ended
December 31 2020

Year ended
March 31 2020

Year ended
March 31 2019

Year ended
March 31 2018

 

 

 

5,237.44 7,092.90 10,084.99 8,708.82
2,158.22 2,576.90 3,081.50 2,353.15
2,832.21 5,254.85 5,013.58 4,053.34
10,227.87 14,924.65 18,180.07 15,115.31
Period ended Year ended Year ended Year ended

December 31 2020

March 31 2020

March 31 2019

March 31 2018

 

 

 

 

 

 

 

 

 

 

 

 

1,257.39 1,515.90 2,455.12 1,602.00
17.62 93.60 233.36 85.26
595.27 971.10 623.61 241.39
1870.28 7,580.60 331209 1,928.65
(410.65) (550.73) (647.16) (484.15)
72.03 85.76 140.39 115.78
531.66 211563 2,805.32 1560.28
(772.40) (1,484.00) (1,405.49) (1,124.83)
759.26 631.63 1399.83 435.45
¥ (87.73) 2 :
759.26 573.90 1,399.83 435.45
AsatDecember AsatMarch31 AsatMarch31 AsatMarch 31
31.2020 2020 2019 2018
9,811.44 9,732.90 10,272.96 8,749.38
4,934.30 4,776.80 4,647.82 2,667.63
5,373.79 5,615.30 5,861.33 5,344.03
20,119.53 20,125.00 20,782.11 16,761.04
2,343.40 2,906.36 2,471.87 3,233.30
22,462.93 23,031.36 23,253.98 19,994.34
AsatDecember AsatMarch31 AsatMarch31 Asat March 31
31.2020 2020 2019 2018

5,941.70 6,060.10 7,027.01 5,951.02
3,098.88 3,170.50 3,190.52 2,097.18
3,143.50 3,967.70 3,960.47 4,047.64
12,184.08 13,198.30 14,178.00 12,095.84
2,562.74 2,644.08 2,243.39 1,931.93
14,746.82 15,842.38 16,421.39 14,027.77

 

 

284
Disclosure about major customers:
Revenue from customers individually contributing morethan

10% of total revenue of the Group across all segments amounts 3,440.00 3,805.66 4,296.35 1,524.15

to

52. The separate financial statements of foreign subsidiaries have been prepared in accordance with the Generally Accepted Accounting
Principles of its Country of Incorporation or International Financial Reporting Standards. The Company has converted the financial statements of
such subsidiaries located outside India from accounting principles generally accepted in their respective countries to accounting principles
generally accepted in India. These subsidiaries follow calendar year as their financial year. The financial statements of the subsidiaries for the

reported financial period / years have been culled out from their financials for the purpose of consolidation.

For Sharp & Tannan
Chartered Accountants
Firm Registration No. 003792S

V. Viswanathan
Partner
Membership No. 215565

Place : Chennai
Date : 25-Jan-2021

R.Gauthamram
Whole Time Director
DIN : 06789004

Shainshad Aduvanni
Company Secretary M.No.A27895

Place : Coimbatore
Date : 25-Jan-2021

285

For and on behalf of the Board

S.Ravi
Chairman and Managing Director
DIN : 01257716

C.B. Chandrasekar
Chief Financial Officer
OTHER FINANCIAL INFORMATION

The audited standalone financial statements of our Company as at and for the year ended March 31, 2020, March
31, 2019, and March 31, 2018 and the reports thereon dated May 7, 2020, May 15, 2019 and July 3, 2018,
respectively (the “Standalone Financial Statements”) are available at www.craftsmanautomation.com. Our
Company is providing a link to this website solely to comply with the requirements specified in the SEBI ICDR
Regulations. The Standalone Financial Statements do not constitute, (i) a part of the Draft Red Herring Prospectus;
(ii) the Red Herring Prospectus, or (iii) this Prospectus, a statement in lieu of a prospectus, an offering circular,
an offering memorandum, an advertisement, an offer or a solicitation of any offer or an offer document to purchase
or sell any securities under the Companies Act 2013, the SEBI ICDR Regulations, or any other applicable law in
India or elsewhere in the world. The Standalone Financial Statements should not be considered as part of
information that any investor should consider to subscribe for or purchase any securities of our Company, or any
entity in which it or its shareholders have significant influence (collectively, the “Group”) and should not be
relied upon or used as a basis for any investment decision. Due caution is advised when accessing and placing
reliance on any historic or other information available in the public domain. None of the Group or any of its
advisors, nor any Book Running Lead Managers or the Selling Shareholders, nor any of their respective
employees, directors, affiliates, agents or representatives, accept any liability whatsoever for any loss, direct or
indirect, arising from any information presented or contained in the Standalone Financial Statements, or the
opinions expressed therein.

Set forth below are the details of accounting ratios as at December 31, 2020 and Fiscals 2020, 2019 and 2018
calculated on the of basis Restated Financial Information:
(in million, except otherwise stated)

 

Particulars December 31, Fiscal 2020 Fiscal 2019 Fiscal 2018
2020
Total Equity 7,716.11 7,188.98 6,832.59 5,966.57
Less: reserve on revaluation on land (654.23) (654.23) (654.23) (654.23)
Net worth as per regulation 2(1)(hh) 7,161.88 6,634.75 6,278.36 5,412.34
of SEBI ICDR Regulations
Profit attributable to the owners of 506.60 410.73 973.67 315.34

the company
Weighted average no. of Equity
Shares outstanding during the period

 

/ year
- For basic earnings per 20.12 20.12 20.12 20.12
Equity Share
- For diluted earnings per 20.12 20.12 20.12 20.12
Equity Share
Restated basic earnings per share (in 25.18 20.41 48.39 15.67
Xv
Restated diluted earnings per share 25.18 20.41 48.39 15.67
(in)
Return on net worth (%) 7.07% 6.19% 15.51% 5.83%
Net assets value per Equity Share of 355.93 329.73 312.02 268.98
face value & 5 (in 2)
EBITDA 2,946.39 4,065.51 4,566.80 3,051.81
Notes:

1. The above ratios are calculated as under:
a. Basic earnings per share = Net profit attributable to equity share holders/ Weighted average number of shares outstanding during the
year/period
b.Diluted earnings per share = Net profit attributable to equity share holders/ Weighted average number of diluted potential shares
outstanding during the year/period
c. Return on net worth (%) = Net profit attributable to equity share holders/ Net worth as the end of the year/period
d. Net asset value (Rs.) = Net worth/ Number of equity shares as the end of the year/period
2. Earnings per share (EPS) calculation is in accordance with Indian Accounting Standard (Ind AS 33 - Earnings per share).
3.Bonus shares issued on December 21, 2017 and sub-division of equity shares on April 30, 2018 have been reckoned for the purpose of
computing EPS & net asset value per share for the entire reporting period.
4. Basic earnings per equity share, Diluted earnings per equity share and Return on Net Worth for the nine months ended December 31, 2020
are not annualised.
5. EBITDA = EBITDA stands for earnings before interest, taxes, depreciation and amortization (Restated profit/ (loss) for the year/ period +
tax expense + exceptional items + Finance costs + depreciation and amortization).

 

 

286
CAPITALIZATION STATEMENT

The following table sets forth our Company’s capitalization as at December 31, 2020, on the basis of our Restated
Financial Information, and as adjusted for the Offer. This table should be read in conjunction with the sections
titled “Risk Factors”, “Financial Statements” and “Management’s Di sion and Analysis of Financial
Condition and Results of Operations” on pages 22, 225 and 288, respectively.

   

(in million)

 

Particulars Pre-Offer as at December As adjusted for the
31, 2020 proposed Offer*

Shareholders’ Funds
Equity Share Capital 100.61 105.64
Other equity 7,615.50 9,110.47
Total Shareholders’ Funds (A) 7,716.11 9,216.11
Debt
Current borrowings 1,566.91 1,566.91
Non-current borrowings (including current maturities) 7,334.21 7,334.21
Total Debt (B) 8,901.12 8,901.12
Non-current borrowings (including current maturities) 0.95 0.80
/equity ratio
Total debt/equity ratio 1.15 0.97

 

*Post Offer column reflects changes in equity on account of proceeds from the Fresh Issue of € 1,500 million, oul of which & 5.03 million has
been adjusted against the Equity Share capital and % 1,494.97 million has been adjusted in securities premium. Further the other equity
‘amount has not been adjusted for share issue expenses of the Fresh Issue.

287
MANAGEMEN'’

 

DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

You should read the following discussion and analysis of our financial condition and results of operations, and
our assessment of the factors that may affect our prospects and performance in future periods, together with our
Restated Financial Information, including the reports thereon, each included in this Prospectus.

The Restated Financial Information are prepared and presented in accordance with Ind AS, in each case restated
in accordance with the requirements of Section 26 of the Companies Act 2013 read with Rule 4 of Companies
(Prospectus and Allotment of Securities) Rules 2014, as amended, the SEBI ICDR Regulations and the Guidance
Note on “Reports in Company Prospectus (Revised 2016)” issued by the ICAI. As required by applicable law, we
have transitioned our financial reporting from Indian GAAP to Ind AS and, for the purposes of transition to Ind
AS, we have followed the guidance prescribed in “Ind AS 101 - First Time adoption of Indian Accounting
Standard”, with April 1, 2016 as the transition date.

Ind AS differs in certain material respects from Indian GAAP, IFRS and U.S. GAAP. Accordingly, the degree to
which our financial statements will provide meaningful information to an investor in countries other than India
is entirely dependent on the reader's level of familiarity with Ind AS. As a result, the Restated Financial
Information Statements may not be comparable to our historical financial statements. For a reconciliation of
Indian GAAP to Ind AS, please see “Financial Statements”. Please also see “Risk Factors - Our Company has
prepared financial statements under Ind AS. Significant differences exist between Ind AS and other accounting
principles.” on page 53.

This discussion and analysis contains forward-looking statements that reflect our current views with respect to
future events and our financial performance, which are subject to numerous risks and uncertainties. Our actual
results may differ materially from those anticipated in these forward-looking statements. As such, you should also
read “Forward-Looking Statements” and “Risk Factors” and beginning on pages 15 and 22, respectively, which
discuss a number of factors and contingencies that could affect our financial condition and results of operations.
Our fiscal year ends on March 31 of each year.

Overview

We are a diversified engineering company with vertically integrated manufacturing capabilities, engaged in three

business segments, namely powertrain and other products for the automotive segment (“Automotive -
Powertrain and Others”), aluminium products for the automotive segment (“Automotive — Aluminium
Products”), and industrial and engineering products segment (“Industrial and Engineering”). We are the largest
player involved in the machining of cylinder blocks and cylinder heads in the intermediate, medium and heavy
commercial vehicles segment as well as in the construction equipment industry in India. We are among the top
three-four component players with respect to machining of cylinder block for the tractor segment in India. (Source:
CRISIL Report). We are present across the entire value chain in the Automotive-Aluminium Products segment,
providing diverse products and solutions. Our strong in-house engineering and design capabilities help us offer
comprehensive solutions and products to our long standing domestic and international customers in each of the
segments in which we operate.

Our comprehensive solutions include design, process engineering and manufacturing including foundry, heat
treatment, fabrication, machining and assembly facilities. Our core competence in machining and assembly of
industrial and engineering products has helped us to first establish ourselves as a significant player in the
Automotive - Powertrain and Others segment. Our key products in this segment are highly engineered and include
engine parts such as cylinder blocks and cylinder heads, camshafts, transmission parts, gear box housings, turbo
chargers and bearing caps. The end users for our products include OEMs producing commercial vehicles, special
utility vehicle, tractors and off-highway vehicles. Additionally, we also provide machining services within our
Automotive — Powertrain and Others segment. Over the years, we have been instrumental in import substitution
for critical powertrain parts.

We have leveraged our long-term presence in developing aluminium products for precision components to also
establish and grow the Automotive - Aluminium Products segment. Within our Automotive — Aluminium
Products segment, we are equipped with an array of processes including the high pressure die casting, low pressure
die casting and gravity die casting machines to manufacture components, machining tools for machining and
assembly lines. Our key products are highly engineered and include crank case and cylinder blocks for two
wheelers, engine and structural parts for passenger vehicles and gear box housing for heavy commercial vehicle.
Our sales volume, in terms of tonnage, from the Automotive - Aluminium Products segment was 9,339.32 tonnes,

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12,596.22 tonnes, 18,863.83 tonnes and 11,819.04 tonnes for the nine months ended December 31, 2020 and
Fiscals 2020, 2019 and 2018, respectively.

Within the Industrial and Engineering segment, we have utilized our in-house engineering and design capabilities
and developed a diverse product portfolio across two sub-segments, namely, (i) the storage solutions sub-segment
under which we have the complete solution for conventional/automated storage; and (ii) the high end precision
products sub-segment under which we manufacture aluminium products for power transmission, high-end
precision products and undertake sub-assembly, material handling equipment such as hoists, crane kits and
industrial gears, manufacture gear and gear boxes, marine engines and accessories, special purpose machines
(“SPM”), which includes metal cutting and non-metal applications such as washing and leak testing solutions and
tool room, mould base and sheet metal. In our storage solutions business, we provide diverse products and
solutions such as pallets, racking, shelving, vertical storage solutions to several sectors such as FMCG, E-
commerce, food and beverages, logistics, pharmaceutical and electronics. According to the CRISIL Report, the
market sizing of storage solutions industry is estimated at 2 22 billion as of Fiscal 2020. The industry grew at a
CAGR of 15 to 16% over Fiscal 2016 to Fiscal 2020 and is expected to 2 36 billion in Fiscal 2024 from 2 21
billion in Fiscal 2021. Our storage solutions business has grown at a CAGR of 204.22% from Fiscal 2018 to Fiscal
2020 and has contributed 5.61%, 4.91%, 1.45% and 0.52% of our revenues from operations in the nine months
ended December 31, 2020 and Fiscals 2020, 2019 and 2018, respectively. We intend to leverage our strong product
development, designing, engineering and manufacturing capabilities, to create opportunities in increasing our
market share in the storage solutions business. We have commissioned new strategically located unit in Pune in
2019 for manufacturing storage solutions products which enables us to service the storage solutions market,
catering to customers across India.

We have long term relationships with several marquee domestic and global original equipment manufacturers
(“OEMs”) and component manufacturers across our three business segments. Within our Automotive —
Powertrain and Others segment, our key customers include Daimler India, Tata Motors, Tata Cummins, Mahindra
& Mahindra, Simpson & Co. Limited, TAFE Motors and Tractors, Escorts, Ashok Leyland, Perkins, Mitsubishi
Heavy Industries, John Deere and JCB India. Within our Automotive — Aluminium Products segment, our key
customers include Daimler India, TVS Motors, Royal Enfield, Perkins and Mahindra & Mahindra. Key customers
within our industrial and engineering segment include Siemens and Mitsubishi Heavy Industries. We are
considered as a strategic and preferred supplier by many of our OEM customers and are also the single source
supplier in certain product categories, for some of our key customers. Most of our business comprises direct supply
to our OEM customers, under long term agreements, which are renewed from time to time. With our track record
and wide product portfolio, we have been able to retain our existing customers and also been able to attract new
customers. We have a diversified client base with our top 10 customers accounting for 59.15%, 53.41%, 56.25%
and 52.59% of our revenue from operations, in the nine months ended December 31, 2020 and Fiscals 2020, 2019
and 2018, respectively.

We commenced operations in 1986 in Coimbatore, in the State of Tamil Nadu, India. We own and operate 12
strategically located manufacturing facilities across seven cities in India, with a total built up area of over 1.5
million sq. ft., close to some of our key customers to enable meeting our customers’ just-in-time delivery
schedules, allow economies of scale and logistical advantages for our customers, and to insulate them from local
supply or other disruptions. Our manufacturing facilities include state of the art equipment, engineered layout with
process controls and necessary automations for quality and productivity.

Our business is primarily operated from manufacturing facilities which are owned and operated directly by us.
We do not have any subsidiaries or joint ventures within or outside India manufacturing any of our products. This
allows us to keep our core competencies within our Company, allowing us to ensure strict quality control and
safety at each step of our manufacturing process. We have a wholly-owned overseas subsidiary, Craftsman Europe
B.V. (formerly known as Craftsman Marine B.V.), set up in 2008 in Netherlands, through which we are engaged
in marketing, sales and servicing of marine engines and other associated equipment used in yachts. These products
are manufactured and assembled by us in India and exported under the name “Craftsman Marine” and will help
us expand our footprint in Europe. We have a track record of growing through joint ventures and strategic
alliances, including by gaining access to new customers, business segments, geographies, knowhow and
technologies. We have a joint venture in India, Carl Stahl Craftsman Enterprises Private Limited, engaged in
marketing, installation, commissioning and rendering after-sales services of material handling equipment, such as
chain hoists, rope hoists and cranes kits, manufactured by us under the name “Carl Stahl Craftsman”. We also
have a strategic investment in MC Craftsman Machinery Private Limited, which is majority held by the Mitsubishi
group, strengthening our two decades of business relationship with the Mitsubishi group and allowing us
recognition and access to customers based in or headquartered out of Japan and the East Asia region.

289
Our Promoter, Chairman and Managing Director, Srinivasan Ravi, is a mechanical engineer and a first-generation
entrepreneur with over 34 years of relevant industry experience. We have received funding from reputed global
investors, International Finance Corporation (“IFC”) in 2010 and 2012, and Standard Chartered Private Equity
(Mauritius) II Limited (“SCPE”) in 2012 (which transferred its stake to its Affiliate, Marina III Singapore Pte
Limited (“Marina”) in 2017). IFC and Marina presently have 12.06% and 13.50% shareholding, respectively, in
our Company.

Our total revenue was = 10,227.87 million, = 14,924.65 million, = 18,180.07 million and 2 15,115.31 million in
the nine months ended December 31, 2020 and Fiscals 2020, 2019 and 2018, respectively. Our net profit was =
506.60 million, = 410.73 million, = 973.67 million and 2 315.34 million in the nine months ended December 31,
2020 and Fiscals 2020, 2019 and 2018, respectively.

Our EBITDA was % 2,946.39 million, = 4,065.51 million, = 4,566.80 million and 2 3,051.81 million for the nine
months ended December 31, 2020 and Fiscals 2020, 2019 and 2018, having increased at a CAGR of 15.42%,
from Fiscal 2018 to Fiscal 2020. Our EBITDA Margin (EBITDA as a percentage of our total revenue) was
28.81%, 27.24%, 25.12% and 20.19%, respectively, in the same periods, having increased at a CAGR of 16.15%,
from Fiscal 2018 to Fiscal 2020.

The share of our three business segments within our revenue from operations has remained relatively stable during
this period, with the Automotive — Powertrain and Others, Automotive — Aluminium Products and Industrial and
Engineering segments accounting for 51.21%, 21.10% and 27.69% of our revenue from operations in the nine
months ended December 31, 2020 and 47.52%, 17.27% and 35.21% of our revenue from operations in Fiscal
2020, compared to these three segments accounting for 55.47%, 16.95% and 27.58% of our revenue from
operations in Fiscal 2019, and 57.62%, 15.57% and 26.82% of our revenue from operations in Fiscal 2018. In our
Automotive — Powertrain and Others segment and Industrial and Engineering segment, we undertake domestic
sales as well as exports to various customers. Our domestic sales in the Automotive — Powertrain and Others
segment contributed 49.58%, 45.35%, 53.55% and 55.05% of our revenue from operations for the nine months
ended December 31, 2020 and Fiscals 2020, 2019 and 2018, respectively, while export sales contributed 1.63%,
2.18%, 1.93% and 2.56%, respectively, in the same periods. In our Industrial and Engineering segment, domestic
sales contributed 17.63%, 26.14%, 18.88% and 19.46% of our revenue from operations for the nine months ended
December 31, 2020 and Fiscals 2020, 2019 and 2018, respectively, while export sales contributed 9.98%, 9.06%,
8.70% and 7.36%, respectively, in the same periods. We supply to various customers with global presence who
export our products to demand their business demand abroad.

We have also built-up a significant size of assets in our machining and manufacturing capacities to meet the
growing demand for products from our customers and to expand into new segments. As of the nine months ended
December 31, 2020 and Fiscals 2020, 2019 and 2018, the Gross Block was % 22,307.42 million, = 21,855.56
million, = 20,700.44 million and = 16,284.26 million. The significant capital expenditure in the earlier years have
positioned our Company well to take advantage of future growth opportunities. For the nine months ended
December 31, 2020 and Fiscals 2020, 2019 and 2018, our capital expenditure aggregated to = 507.29 million, =
1,206.01 million, = 4,559.86 million and 2 1,811.24 million, respectively, used to modernize and upgrade our
manufacturing facilities, infrastructure, machines, equipment and technology to allow us to offer a diverse product
suite, reduce operating costs and drive productivity. For the nine months ended December 31, 2020 and for Fiscals
2020, 2019 and 2018, our Return on Capital Employed (“ROCE”) (calculated as earnings before interest and tax
divided by the difference between our total assets and total current liabilities) was 10.55%, 13.80%, 18.66% and
14.00%. Our net worth was 2 7,161.88 million, = 6,634.75 million, = 6,278.36 million and 2 5,412.34 million as
on December 31, 2020 and Fiscals 2020, 2019 and 2018, respectively, while our return on average net worth was.
7.34%, 6.36%, 16.66% and 5.96% and our Return on Equity (“ROE”) was 7.07%, 6.19%, 15.51% and 5.83% for
the same periods.

We have been consistently recognized by customers for the high-quality of the products supplied by us. For further
details on our recent awards and accolades, see — Awards and Recognitions” on page 185. We are also certified
for international quality management systems ISO 9001:2008, ISO/TS 16949:2009, and SO 14001 2004 by TUV
Nord, and have implemented environmental management system ISO 14001:2004.

Significant Factors Affecting our Results of Operations

Macro-Economic Conditions and Factors Affecting the Sectors in which we Operate

We derive a significant portion of our revenue from the manufacture and supply of automotive components to our
OEM customers. Sales of our products are directly linked to the production and sales of automobiles by our major

290
customers, particularly in the commercial vehicles, farm and construction equipment, two-wheelers and passenger
vehicle segments. The fluctuation in demand for OEMs from end customers therefore impacts us. The levels of
demand for automotive components depend primarily on the prevailing business conditions in the automotive
industry. This in turn, depends to a large extent on general macro-economic conditions in these markets. We are
particularly affected by factors impacting the Indian commercial vehicles, farm and construction equipment, two-
wheeler and passenger vehicle markets. In respect of our Industrial and Engineering segment products like storage,
material handling, gears, aluminium castings for power transmission, being capital goods by nature have a
degree of correlation to the gross capital formation and capital expenditure. Some of the general macro-economic
factors that can affect demand for our products and as a result for our business, include the following:

. global and local economic or fiscal instability in particular the general level of GDP growth in a country
or region, and growth in personal disposable income in that country or region impacts the affordability
of the people in buying of two or four wheelers and demand for products;

. agriculture and industrial growth of the country and its impact on the goods movement, levels of
agricultural activity, farm income impacts the farm equipment demand, rural household income and their
affordability;

. gross capital formation, planned expenditure and government revenues and its impact on the capital

expenditure funding in respect of power distribution and spending on railway expansion/modernization;

. global oil prices, which impacts the automotive industry and subsequently the components industry, both
globally and in India;

. global and local political and regulatory measures and developments;

. demographic conditions and population dynamics, such as the absolute size of a market and the growth

rates of the population in that market;

. availability of auto financing options;

. volatility in exchange rates;

. government initiatives such as Make in India and manufacturing subsidies;

. trade agreements with nations and international trading barriers by India and other countries; and

. laws on minimum wages, labour laws, pay commissions and other factors shaping the income levels of

the middle class population.

The outbreak of COVID-19 has significantly and adversely impacted and will likely continue to impact economic
activity and has contributed to significant volatility in global financial markets and led to operational challenges.
In response to the COVID-19 outbreak, the governments of many countries, including India have taken preventive
or protective actions, such as issuing advisories and imposing country or state wide lockdowns, which have
significantly slowed down economic activity. According to the CRISIL Report, this, coupled with the effects of a
troubled global economy, resulted in the worst ever real GDP contraction on record of 23.9% on-year in the first
quarter of Fiscal 2020. According to the CRISIL Report, the COVID-19 curve appears to be flattening in India,
with high frequency data in September evidencing improving economic conditions. For further details, see “Risk
Factors - The extent to which the coronavirus disease (COVID-19) affects our business, results of operations
and financial condition will depend on future developments, which are uncertain and cannot be predicted.”
and “Business - Impact of COVID-19 on our business operations” on pages 22 and 187, respectively.

Stronger macro-economic indicators tend to correlate with higher demand for automotive vehicles and industrial
and engineering products while weaker macro-economic indicators tend to correlate with lower demand for
automotive vehicles and other products.

The cyclical nature of general macro-economic conditions and, therefore, of the automotive and engineering
industry means that our results of operations can fluctuate substantially from period to period. We expect that
these macro-economic factors and conditions in the automotive industry, particularly changes in consumer
confidence, employment levels, fuel prices, consumer spending on two-wheeler, four-wheeler and commercial
vehicles, urbanisation, government policies and interest rates, will continue to be the most important factor

291
affecting our revenues and results of operations. Other factors, such as our competitiveness, quality and pricing,
have an effect on our market share and our ability to win customers in competitive situations, but the overall
direction of the automotive industry tends to have a more pronounced effect on our revenues and results of
operations.

See “Industry Overview” on page 96, for a discussion of macroeconomic conditions in the global economy and
Indian economy, respectively, and a more detailed description of the automotive components industries in the
markets in which we operate.

Raw Material Costs, Operating Costs and Efficiencies

Our business, financial condition, results of operations and prospects are significantly impacted by the prices of
raw materials purchased or imported by us as well as any changes in global metal prices, particularly, aluminium
ingots and ferrous castings and tools.

Raw material costs (consisting of the costs of materials consumed and changes in inventories of finished and
work-in-progress non-machined goods) constitute the most significant portion of our expenditures, representing
42.13%, 39.09%, 38.41% and 37.81% of our total income for the nine months ended December 31, 2020 and
Fiscals 2020, 2019 and 2018, respectively. Our financial condition and results of operations are significantly
impacted by the availability and costs of raw materials, particularly steel, aluminium ingots, ferrous castings and
tools.

We rely significantly on five of our suppliers for procurement of aluminium ingots required for manufacturing
aluminium products and a limited number of foundries which are nominated by our customers for raw castings
required for our powertrain products.

Raw material pricing can be volatile due to a number of factors beyond our control, including global demand and
supply, general economic and political conditions, transportation and labour costs, labour unrest, natural disasters,
competition, import duties, fuel prices and availability, power tariffs and currency exchange rates, and there are
uncertainties inherent in estimating such variables, regardless of the methodologies and assumptions that we may
use. This volatility in commodity prices can significantly affect our raw material costs. Further, volatility in fuel
prices can also affect commodity prices worldwide which may significantly increase our raw material costs. In
addition to market fluctuations, our average raw material prices can be affected by contractual arrangements and
hedging strategies, if any. We do not currently have long term contracts or exclusive supply arrangements with
any of our suppliers.

Historically, as a practice, we have priced our products so as to largely pass the increase in cost of metals,
especially aluminium and steel, onto our customers for our operations. Further, our contracts with our customers.
generally provide for pass through of any variation in the raw material costs. However, our cash flows may still
be adversely affected because of any gap in time between the date of procurement of those primary raw materials
and date on which we can reset the component prices for our customers, to account for the increase in the prices
of such raw materials. In addition, we are especially not able to pass all of our raw material price increases to our
customers for our operations, as we sell integrated systems rather than individual components. The inability to
pass fluctuations in raw material prices on to our customers may materially and adversely affect our profits and
profit margins.

Given the nature of our business, our ability to manage our operating costs and efficiencies is critical to
maintaining our competitiveness and profitability. Our profitability is partially dependent on our ability to spread
fixed production costs over higher production volumes. In addition, we face pressure from our key customers to
reduce prices, and in order to maintain our profitability, we must be able to boost our productivity and reduce our
operating expenses. We continually undertake efforts to reduce our costs in order to protect our margins, such as
interchanging capacity, product mix and manpower between facilities by moving machinery from one location to
another, rationalising suppliers, negotiating volume discounts, outsourcing non-critical processes, reducing energy
usage and rationalising our manpower. Our ability to reduce our operating costs in line with customer demand is
subject to risks and uncertainties, as our costs depend, in part, on external factors beyond our control.

The improvements in operational efficiency is generally a gradual process. Most of our general purpose machine
tools with change in attachments such as jigs, fixtures and tools certain modification are capable of being used
interchangeably amongst our three business segments, depending on the demand for products under each segment.
Our expanding production facilities, particularly the aluminium casting lines have added capacity to capture new
business, which has helped to grow our revenue. For the nine months ended December 31, 2020 and Fiscals 2020,

292
2019 and 2018, our EBITDA Margin was 28.81%, 27.24%, 25.12% and 20.19%, respectively. Our overall
EBITDA margin increased at a CAGR of 16.15% on a restated consolidated basis, from 20.19% in Fiscal 2018 to
27.24% in Fiscal 2020.

Employee benefits expense comprises a large part of our expense after raw material costs. For the nine months
ended December 31, 2020 and in Fiscals 2020, 2019 and 2018, our employee benefits expense aggregated to =
1,105.91 million, = 1,709.86 million, = 2,168.31 million and 2 1,986.29 million, respectively, and, as a percentage
of our revenue from operations, were 10.81%, 11.46%, 11.93% and 13.14%, respectively in those periods. Our
employee benefit expenses are affected by statutorily prescribed minimum wage as well as wage payments
following retrenchment, besides the increase in headcount due to increase in volumes. As a material portion of
our overall manpower is located in India, rising wages in India will have a material impact on our net income. In
recent times, labour related costs have been rising in India. While our employee benefit expenses may increase in
absolute terms, we have been able to improve our operational efficiencies, which has resulted in a reduction in
our employee benefits expense as a percentage of our revenue from operations.

We also incur certain costs in order to ensure that the products that we supply to our customers are of high quality
and free of defects. Such costs relate to matters such as capital expenditure, manpower, systems deployment and
rejection and re-working of products. Quality control is critical to our operations and a failure to prevent the
passing down of defects to our customers may lead to significant costs.

Key Customers

We are significantly dependent on certain key customers for a major portion of our revenue. Within our
Automotive — Powertrain and Others segment, our key customers include TVS Motors, Daimler India, Tata
Motors, Tata Cummins, Mahindra & Mahindra, Simpson & Co. Limited, TAFE Motors and Tractors, Escorts,
Ashok Leyland, Perkins, Nelcast, Mitsubishi Heavy Industries, John Deere and JCB India. Within our Automotive
— Aluminium Products segment, our key customers include Daimler India, Royal Enfield and Mahindra &
Mahindra. Key customers within our industrial and engineering segment include Siemens and Mitsubishi Heavy
Industries. We have a diversified client base with our top 10 customers accounting for 59.15%, 53.41%, 56.25%
and 52.59% of our revenue from operations, in the nine months ended December 31, 2020 and Fiscals 2020, 2019
and 2018, respectively. Demand for our products from these customers has a significant impact on our results of
operations and financial condition, and our revenue are particularly affected by the inventory and production levels
of our key customers. We consciously follow a policy of diversifying our customer base. The loss of key customers
may harm our financial condition and results of operations. Moreover, we face competition from competitors both
domestically and internationally, who we compete with in relation to specific sectors, segments, sub-segments or
geographies. Our key competitive strengths include quality, cost, delivery, technical capability, level of vertical/
horizontal integration, and quality of management. Typically, large suppliers work only with a limited number of
OEMs. Consequently, we do not have a single competitor across all our product ranges.

OEMs and suppliers are continuing to implement various cost-cutting strategies, which include the restructuring
of operations, relocation of production to low-cost regions, vendor rationalisation and sourcing on a global basis.
We believe that the criticality of the products we manufacture, our strong relationships with many of our
customers, lack of alternate vendors, our ability to quickly scale up our production, quality and delivery
commitment and ability to produce diverse range of products across a number of geographies will allow us meet
these business challenges.

The demand from our customers determines our revenue levels and results of operations, and our revenue are
directly affected by production and inventory levels of our customers. New investments or increased revenue by
our customers tends to increase our revenue and results of operations, while a slow-down in demand for our
customers’ products tends to have an adverse impact on our revenues and results of operations. Accordingly, our
operations have generally grown with our customers’ businesses over time. Our customers, in turn, are dependent
on general trends in the automotive industry (see “- Macro-Economic Conditions and Factors Affecting the
Sectors in which we Operate” on page 290). Foreign exchange fluctuations may also subdue exports for some of
our customers, in turn affecting the size of their order book. Similarly, new model launches by our OEM customers
can have a positive impact on demand for our components.

Our sales to our customers also depend largely on the number and type of products that we supply to them and
our ability to increase our overall share of our customers’ purchases.

While our constant interaction with our customers enable us to understand their business plans and their business
strategy, it is difficult for us to predict with certainty when our customers will decide to increase or decrease

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inventory levels or levels of production, any sudden change in their strategic direction, or whether future inventory
levels will be consistent with historical levels. Any increases or decreases in the levels of inventory and activity
by our customers, in turn, are likely to have a positive or negative effect on our revenues and our results of
operations.

Expansion in Product Portfolio and Markets

With continuous focus on quality and expansion of our technical capabilities, we have transitioned into a
vertically-integrated manufacturer and provider of products and services in automotive and industrial engineering
segments.

To provide comprehensive solutions across our business segments, we have undertaken forward and backward
integration enhancing our in-house manufacturing capabilities. These capabilities have evolved over a period to
become standalone business segments catering to clients, in addition to meeting our internal requirements.

Our core competence in machining and assembly of industrial and engineering products has helped us to establish
ourselves as a significant player in the Automotive - Powertrain and Others segment. We have leveraged our long
presence in developing aluminium products for precision components to establish and grow the Automotive —
Aluminium Products segment. Within the Industrial and Engineering segment, we have utilized our in-house
engineering and design capabilities and developed a diverse product portfolio under the high end precision
products sub segment with a variety of products including material handling equipment such as hoists, crane kits,
industrial gears/ gear boxes, marine engines and accessories, tool room, mould base products and SPMs which
includes metal cutting and non-metal applications such as washing and leak testing solutions.

According to the CRISIL Report, the market sizing of storage solutions industry, comprising pallets, racking and
shelving, is estimated at % 22 billion as of Fiscal 2020. The industry grew at a CAGR of 15 to 16% over Fiscal
2016 to Fiscal 2020 and is expected to 2 36 billion in Fiscal 2024 from 2 21 billion in Fiscal 2021. We intend to
leverage our strong product development, designing, engineering and manufacturing capabilities in storage
solutions and to create opportunities in increasing our market share in the storage solutions business. We continue
to provide storage solutions to a diverse customer base, including customers in the FMCG, E-commerce, food and
beverages, third party logistics, pharmaceutical and electronics sectors We have commissioned a new unit in Pune
in 2019 for manufacturing storage solutions which enables us to service the storage solutions market, primarily
catering to customers in the western and central markets in India.

We intend to deepen our customer relationships and grow our share of the customer wallet, by offering one stop
solutions including design, engineering, manufacturing and assembly, by anticipating the emerging trends and
offering innovative and superior products to our OEM and industrial and engineering segment customers. Going
forward, we intend to continue to explore other suitable opportunities to serve our customers with innovative and
proactive products and design solutions, swift response and delivery, to partner and support them in their planned
growth and expansion as well.

Through our overseas subsidiary, Craftsman Europe B.V. (formerly known as Craftsman Marine B.V.), we are
already engaged in marketing, sales and servicing of marine engines and engineering products in Europe under
the name “Craftsman Marine” with the aim to expand our footprint in Europe and grow our export sales by gaining
access to new customers, business segments and geographies. We have a joint venture in India, Carl Stahl
Craftsman Enterprises Private Limited, engaged in marketing, installation, commissioning and rendering after-
sales services of material handling equipment, such as chain hoists, rope hoists and cranes kits, manufactured by
us under the name “Carl Stahl Craftsman”. We also have a strategic investment in MC Craftsman Machinery
Private Limited, which is majority held by the Mitsubishi group, strengthening our two decades of business
relationship with the Mitsubishi group and allowing us recognition and access to customers based in or
headquartered out of Japan and the East Asia region.

The success of these businesses and products depends on our management’s ability to identify high growth
potential opportunities and utilise our resources to develop these opportunities, which could have a significant
impact on our results of operations.

Availability of Funds for Capital Expenditure and Working Capital Requirements
Given the sector in which we operate, we have substantial capital expenditure and working capital requirements.

We have significantly invested in in our machining and manufacturing capacities to meet the growing demand
from our customers and to expand our product portfolio. For the nine months ended December 31, 2020 and

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Fiscals 2020, 2019 and 2018, our capital expenditure aggregated to % 507.29 million, = 1,206.01 million, =
4,559.86 million and % 1,811.24 million, respectively. As of the nine months ended December 31, 2020 and for
Fiscals 2020, 2019 and 2018, the Gross Block was 2 22,307.42 million, = 21,855.56 million, = 20,700.44 million
and 2 16,284.26 million.

For the nine months ended December 31, 2020 and for Fiscals 2020, 2019 and 2018, our ROCE was 10.55%,
13.80%, 18.66% and 14.00%, while, given our net worth of % 7,161.88 million, % 6,634.75 million, = 6,278.36
million and 5,412.34 million as on December 31, 2020 and as on March 31, 2020, 2019 and 2018, respectively,
our ROE for the same periods was 7.07%, 6.19%, 15.51% and 5.83%.

Our finance costs have historically been significant as we have undertaken significant capital expenditure in the
earlier years of our business, with a view to further enhance our machining and manufacturing capacities, such as
commissioning the new unit in Pune in 2019 for manufacturing storage solutions. Our finance costs include
interest expenses, other borrowing costs and net gain/loss on foreign currency transactions and translation.
Historically, finance costs have been a material part of our expenses and increased by 31.93% from = 1,124.83
million in Fiscal 2018 to = 1,484.00 million in Fiscal 2020. As a percentage of our total income, our finance costs
have increased from 7.39% of our total income for Fiscal 2018 to 9.89% for Fiscal 2020, primarily as a result of
increase in interest expenses on our long term borrowings to fund our capital expenditure on account of increased
borrowings during this period to meet our high working capital requirements during this period.

As of December 31, 2020, our aggregate outstanding borrowings (including sales bill discounting, sales/purchase
invoice bill discounting, buyer’s credit and letter of credit facilities availed by our Company) was 2 8,901.12
million. Our borrowings increased by = 553.86 million, or 5.62%, from % 9,852.63 million in Fiscal 2019 to =
10,406.49 million in Fiscal 2020, primarily as a result of additional borrowings availed of by us at the end of
Fiscal 2020 to mitigate any unforeseen requirements due to COVID-19 pandemic. For further information, see
Objects of the Offer - Details of the Objects of the Fresh Issue - Repayment/pre-payment, in full or part, of
certain borrowings availed of by our Company” and “Financial Indebtedness” on pages 81 and 322,
respectively.

The actual amount and timing of our future capital requirements may differ from estimates as a result of, among
other factors, unforeseen delays or cost overruns, unanticipated expenses, regulatory changes, economic
conditions, engineering design changes, technological changes and additional market developments and new
opportunities in the automotive, industrial and engineering segments.

Critical Accounting Policies
Useful life of property, plant and equipment and intangibles

The assessment of the useful life of each asset by considering the historical experience and expectations regarding
future operations and expected usage, estimated technical obsolescence, residual value, physical wear and tear
and the operating environment in which the asset is located needs significant judgment by our management. In
case of intangibles, the useful life is determined based on the period over which future economic benefit will flow
to us.

Tools in use

The assessment of useful life of tools in use has been done considering the historical experience and estimated
refurbishment cycle and operating environment.

Income Taxes

The calculation of income taxes requires judgment in interpreting tax rules and regulations. Management judgment
is used to determine the amounts of deferred tax assets and liabilities and future tax liabilities to be recognized.

Fair Value

Certain financial instruments, such as investments in equity securities, derivative financial instruments and certain
elements of borrowings, are carried in the financial statements at fair value, with changes in fair value reflected
in the income statements. Fair values are estimated by reference to published price quotations or by using other
valuation techniques that may include inputs that are not based on observable market data, such as discounted
cash flows analysis.

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Measurement of defined benefit obligations

Gratuity actuarial valuation considers various assumptions which are based on the past experience and general
economic conditions.

Measurement and likelihood of occurrence of provisions and contingencies

The provision for warranty and rejection have been done based on past experiences, product lifecycle maturity,
reprocessing or repair cost.

Recognition of deferred tax asset

We estimate the possible utilization of unabsorbed losses while recognizing deferred tax asset considering our
future business plans and economic environment.

Leases

We evaluate if an arrangement qualifies to be a lease as per the requirements of Ind AS 116. Identification of a
lease requires significant judgment. We use significant judgement in assessing the lease term (including
anticipated renewals) and the applicable discount rate.

Ind AS 116 requires lessees to determine the lease term as the non-cancellable period of a lease adjusted with any
option to extend or terminate the lease, if the use of such option is reasonably certain. We make an assessment on
the expected lease term on a lease-by-lease basis and thereby assesses whether it is reasonably certain that any
options to extend or terminate the contract will be exercised. In evaluating the lease term, we consider factors
such as any significant leasehold improvements undertaken over the lease term, costs relating to the termination
of the lease and the importance of the underlying asset to our operations taking into account the location of the
underlying asset and the availability of suitable alternatives. We revise the lease term if there is a change in the
non-cancellable period of a lease. The discount rate is generally based on the incremental borrowing rate.

Principles of Consolidation
The Consolidated Financial Statements relate to our Company, our subsidiaries and joint venture. Subsidiaries are

all entities over which our Company exercises control. Our Company exercises control if and only if it has the
following:

. power over the entity;
° exposure, or rights, to variable returns from its involvement with the entity; and
. the ability to use its power over the entity to affect the amount of its returns.

The Consolidated Financial Statements have been prepared on the following basis:

. Our financial statements have been combined on a line-by-line basis by adding together the book values
of like items of assets, liabilities, income and expenses, after fully eliminating intragroup balances and
intra-group transactions and resulting unrealized profits, unrealized losses from intra-group transactions
are eliminated unless cost cannot be recovered.

. We treat transactions with non-controlling interests that do not result in a loss of control as transactions
with our equity owners. A change in ownership interest results in an adjustment between the carrying
amounts of the controlling and non-controlling interests to reflect their relative interests in the subsidiary.
Any difference between the amount of the adjustment to non-controlling interests and any consideration
paid or received is recognized within equity.

. A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have
rights to the net assets of the arrangement. Investments in associates and joint ventures are accounted for
using the equity method.

. Under the equity method, on initial recognition the investment in an associate or a joint venture is

recognized at cost. The carrying amount of the investment in associates and joint ventures is increased
or decreased to recognize our share of the profit or loss after the date of acquisition.

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. Financial statements of an associate or joint venture are prepared for the same reporting period as for our
Company. When necessary, adjustments are made to bring the accounting policies in line with those of
our Company.

. The consolidated financial statements have been prepared using uniform accounting policies for like
transactions and other events in similar circumstances and are presented to the extent possible, in the
same manner, as the Company’s separate financial statements.

Estimation of uncertainties relating to the global health pandemic from COVID-19

The COVID-19 pandemic has impacted the businesses around the world, including India. There has been severe
disruption to our regular operations in the first quarter of Fiscal 2021 due to Government imposed emergency
restrictions and lockdown.

We have assessed the impact on liquidity position and carrying amounts of inventories, trade receivables,
investments, property, plant and equipment and other financial assets. Our assessment based on estimates and
judgements, available from internal and external sources of information including economic forecasts does not
indicate any material impact on the carrying value of assets and liabilities as on the reporting date.

We will continue to monitor the future economic conditions and assess its impact on the financial statements. The
eventual outcome of the impact of the global health pandemic may be different from those estimated as on date
of the approval of the consolidated financial statements.

Property Plant and Equipment

All Property Plant & Equipment barring land as at transition date are stated at cost of acquisition / installation as
adjusted for import duty waivers and foreign exchange losses / gains less accumulated depreciation and
impairment losses.

Cost of acquisition / installation includes the fair value of the consideration given to acquire the PPE (net of
discounts and rebates) and any directly attributable costs of bringing the asset to working condition for its intended
use (inclusive of non-refundable purchase taxes and duties).

Foreign exchange gain or loss arising on unhedged foreign currency denominated borrowing taken to acquire
property, plant and equipment are recorded in the cost of asset and depreciated over their remaining useful life. In
respect of exchange gain or loss arising from foreign currency denominated borrowings which are hedged,
accounting has been done based on hedge effectiveness either as derivative or cash flow hedge.

We capitalize the import duty waived in respect of capital equipment imported under the Export Promotion Capital
Goods Scheme.

Foreign exchange gain /loss arising on foreign currency denominated borrowing which are not hedged that were
incurred to acquire PPE are recorded as part of the cost of asset and depreciated over their remaining useful life.
In respect of exchange gain or loss arising from foreign currency denominated borrowings which are hedged
accounting has been done based on hedge effectiveness either as derivative or cash flow hedge

Depreciation on Plant Property and Equipment

The depreciable amount of property, plant and equipment, being the gross carrying value less the estimated
residual value, is depreciated on a systematic basis over its useful life.

In respect of certain classes of property, plant and equipment, we use different useful life other than those
prescribed under law. The useful life of such class of property, plant and equipment has been ascertained based
on technical review by a chartered engineer and assessment by our management, as detailed in the following table:

 

Classes of Property, Plant and Equipment Useful life and Basis of Depreciation
New Plant and Machinery 20 years
Used Plant and Machinery 10 years

Tool holder, jigs, fixtures, patterns, dies, molds and 5 years
instruments and gauges
Lease hold improvements Over lease period

 

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De-recognition:

An item of property, plant and equipment is de-recognized at the time of its disposal or when it is assessed that
no future economic benefit would accrue from it. The gain or loss arising out of such disposal or retirement is
taken to our statement of profit or loss.

Intangible assets

An intangible asset is an identifiable non-monetary asset without physical substance. An intangible asset with
finite useful life that are acquired separately and where the useful life is two years or more is capitalized and
carried at cost less accumulated amortization. Amortization is recognized on a straight line basis over the useful
life of the asset. The class of asset and the estimated useful life is as follows:

 

Description of the asset Useful life and basis of amortization
Software acquired 5 years
Technical Knowhow - acquired 2.5 years

 

Internally generated intangible assets

Expenditure on research activities is recognized as an expense in the period in which it is incurred. An internally
generated intangible asset arising from development, or from the development phase of an internal project, is
recognized if, and only if, all of the following have been demonstrated:

. the technical feasibility of completing the intangible asset so that it will be available for use or sale;

. the intention to complete the intangible asset and use or sell it;

. the ability to use or sell the intangible asset;

. how the intangible asset will generate probable future economic benefits;

. the availability of adequate technical, financial and other resources to complete the development and to

use or sell the intangible asset; and
. the ability to measure reliably the expenditure attributable to the intangible asset during its development.

The amount initially recognized for internally generated intangible assets is the sum of the expenditure incurred
from the date when the intangible asset first meets the recognition criteria listed above. Where no internally
generated intangible asset can be recognized, development expenditure is recognized in profit or loss in the period
in which it is incurred. Subsequent to initial recognition, internally generated intangible assets are reported at cost
less accumulated amortization and accumulated impairment losses, on the same basis as intangible assets that are
acquired separately.

 

 

Description of the asset Useful life and basis of amortization
Development Expenditure 3 years
De-recognition

An intangible asset is de-recognized on disposal, or when no future economic benefits are expected from use or
disposal. Gains or losses arising from de-recognition of an intangible asset, measured as the difference between
the net disposal proceeds and the carrying amount of the asset, are recognized in our statement of profit or loss
when the asset is de-recognized.

Impairment of assets

At the end of each reporting period, we determine whether there is any indication that our assets, tangible,
intangible assets and investments in equity instruments carried at cost, have suffered an impairment loss with
reference to their carrying amounts. If any indication of impairment exists, the recoverable amount of such assets
is estimated and impairment is recognized, if the carrying amount exceeds the recoverable amount. Recoverable
amount is higher of the fair value less costs of disposal and value in use. In assessing value in use, the estimated
future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market

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assessments of the time value of money and the risks specific to the asset for which the estimates of future cash
flows have not been adjusted.

Leases
As lessee

Leases entered into by us have been classified as operating leases as a significant portion of risks and rewards of
ownership are not transferred to us. Payments made are charged to our statement of profit or loss on a straight line
basis over the term of the lease.

As lessor

Rental income from operating lease is recognized on a straight-line basis over the term of the lease. Initial direct
costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset
and recognized over the lease term on the same basis as rental income. Contingent rents are recognized as revenue
in the period in which they are earned.

Inventories

We determine the cost for items that are not interchangeable or that have been segregated for specific contracts
on an individual-item basis. The cost of other inventory items used is assigned by using the weighted average cost
formula. We use the same cost formula for all inventories of similar nature and use. The cost formula used is
applied on a consistent basis from period to period.

Inventories are initially recognized at the lower of cost and net realizable value. Cost of inventories includes
import duties, non-refundable taxes, transport and handling costs and any other directly attributable costs, less
trade discounts, rebates and similar items. Net realizable value is the estimated selling price in the ordinary course
of business, less the estimated costs of completion and estimated selling expenses.

. Raw materials, components, stores and spares of inventory are measured at weighted average cost.
Materials and other items held for use in the production of inventories are not written down below cost
if the finished products in which they will be incorporated are expected to be sold at or above cost. Work
in progress and finished goods are valued at cost or net realizable value whichever is lower. Cost includes
direct materials, labor and a portion of manufacturing overheads. Saleable scrap is valued at lowest of
net realized values in the last two months.

. Tools are valued at cost till they are issued for usage in production process. In respect of issued tools which
can be refurbished, depending upon its useful life, we amortize on a straight line basis over useful life.
Useful life determined for certain classes of tools is 2-3 years. Tools which are not refurbish-able are
charged off to our statement of profit and loss upon issue from stores to usage. Tools in use are carried
at cost less accumulated amortization.

 

Provisions

We recognize a provision when there is a present obligation to transfer economic benefits as a result of past events,
it is probable (more likely than not) that such a transfer will be required to settle the obligation, and a reliable
estimate of the amount of the obligation can be made.

The amount recognized as a provision is the best estimate of the consideration required to settle the present
obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the
obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its
carrying amount is the present value of those cash flows, when the effect of the time value of money is material.
When some or all of the economic benefits required to settle a provision are expected to be recovered from a third
party, a receivable is recognized as an asset if it is certain that reimbursements will be received and the amount of
the receivable can be measured reliably.

A contingent asset is a possible asset that arises from past events and whose existence will be confirmed only by
the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the
entity. Contingent assets are disclosed in our financial statements by way of notes to accounts when an inflow of
economic benefits is probable.

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A contingent liability is:
(a) a possible obligation that arises from past events and whose existence will be confirmed only by the
occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the
entity; or

(b) a present obligation that arises from past events but is not recognised because:

@ it is not probable that an outflow of resources embodying economic benefits will be required to
settle the obligation; or
(ii) the amount of the obligation cannot be measured with sufficient reliability.

Contingent liabilities are disclosed in the financial statements by way of notes to accounts, unless the possibility
of an outflow of resources embodying economic benefit is remote.

Provision for Warranty

Provisions for expected cost of warranty obligations are recognized based on our management's best estimate of
the expenditure required to settle the obligation, which takes into account the empirical data on the nature
frequency and average cost of warranty claims and regarding possible future incidences.

Provision for Rejection

Provision for rejection on sales is recognized once the products are sold. Materials are rejected due to various
reasons and are either re processed and replaced to the customers depending on the type of rejections. These
rejections get fulfilled within a period of 3 months and the provisions represent the value of management’s best
estimate of possible rejections within the next one quarter.

Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable.
Sale of Goods

Revenue from the sale of goods is recognized when a promise in a customer contract (performance obligation)
has been satisfied by transferring control over the promised goods to the customer.

The amount of revenue to be recognized (transaction price) is based on the consideration expected to be received

in exchange for goods, excluding amounts collected on behalf of third parties such as GST or other taxes directly
linked to sales.

Rendering of Services

Revenue from services is recognized when the services are rendered in accordance with the specific terms of
contract and when collectability of the resulting receivable is reasonably assured.

Other Operating revenues

Other operating revenues comprise income from ancillary activities incidental to our operations and are
recognized when the right to receive the income is established as per the terms of the contract.

Dividend and Interest Income

Dividend income from investments is recognized when our right to receive payment has been established,
provided that it is probable that the economic benefits will flow to us and the amount of income can be measured
reliably.

Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest
rate applicable, provided that it is probable that the economic benefits will flow to us and the amount of income

can be measured reliably.

Borrowing Cost

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Since we do not have any qualifying assets, capitalization of borrowing cost is not applicable to us. All borrowing
costs are recognized in our statement of profit and loss in the period in which they are incurred.

Government Grant

Government grants (including export incentives like Duty Drawback, Merchandise Exports from India Scheme
(MEIS)) are recognized only when there is reasonable assurance that we will comply with the conditions attaching
to them and the grants will be received.

Government grants are recognized in profit or loss on a systematic basis over the periods in which we recognize
as expenses the related costs for which the grants are intended to compensate.

Import duty waivers for capital assets purchased under EPCG schemes are recorded as deferred revenue and
recognized in our statement of profit and loss on a systematic basis over periods in which the related performance
obligations are fulfilled.

Employee Benefits
Defined contribution plans
Provident fund

Contribution towards provident fund is determined under the relevant schemes and statute and charged to our
statement of profit and loss during the period of incurrence when the services are rendered by the employees.

Defined benefit plans

Accounting for defined benefit plans is based on actuarial assumptions and different valuation methods to measure
the balance sheet obligation and the expense.

Where defined benefit plans are funded, the plan assets are measured at fair value. At each balance sheet date, the
plan assets and the defined benefit obligations are re-measured. The income statement reflects the change in the
surplus or deficit, except for contributions made to the plan and benefits paid by the plan, along with business.
combinations and Re-measurement gains and losses.

Re-measurement gains and losses comprise actuarial gains and losses, return on plan assets (comprise amounts
included in net interest on the net defined benefit liability or asset) and any change in the effect of the asset ceiling
(excluding amounts included in net interest on the net defined benefit liability or asset). Remeasurements are
recognized in other comprehensive income.

The defined benefit costs are comprised of the following individual components:

. service costs (including current and past service costs as well as gains or losses on curtailments and
settlements);

. net interest costs or income; and

. re-measurement.

We present the first two components of defined benefit costs in profit or loss in the line item ‘Employee benefits
expense’. Curtailment gains and losses are accounted for as past service costs.

Re-measurement of net defined benefit liability or asset pertaining to gratuity comprises actuarial gains or losses
(i.e., changes in the present value resulting from experience adjustments and effects of changes in actuarial
assumptions) and is reflected immediately in the balance sheet with a charge or credit recognized in other
comprehensive income in the period in which they occur. Re-measurement recognized in other comprehensive
income is reflected immediately in retained earnings and is not reclassified to profit or loss.

Short-term employee benefits:

A liability is recognized for benefits accruing to employees in respect of salaries, wages, performance incentives,
medical benefits and other short term benefits in the period the related service is rendered, at the undiscounted
amount of the benefits expected to be paid in exchange for that service.

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Compensated leave absences:

Compensated leave absences are encashed by employees at year end and no carry forward of leave is permitted
as per the leave policy. All leave remaining to be encashed at year end are fully provided.

Foreign Currency Transactions

Our foreign operations are an integral part of our activities. In preparing our financial statements, transactions in
currencies other than the entity’s functional currency (foreign currencies) are recognized at the rates of exchange
prevailing at the dates of the transactions. At the end of each reporting period, monetary items denominated in
foreign currencies are retranslated at the rates prevailing at that date. Non-monetary items that are measured in
terms of historical cost in a foreign currency are not retranslated.

Exchange differences on monetary items are recognized in profit or loss in the period in which they arise except
for:

. exchange differences on translation or settlement of long term foreign currency monetary items in respect
of loans borrowed, which are not hedged, before April 1, 2016 at rates different from those at which they
were initially recorded or reported in the previous financial statements, insofar as it relates to acquisition
of depreciable assets, are adjusted to the cost of the assets and depreciated over remaining useful life of
such assets. Where the borrowing is after April 1, 2016, such exchange difference is recognized in
Statement of Profit and loss. In other cases, where it has been hedged the same has been restated and
adjusted against cash flow hedge of the respective derivative instruments; and;

. exchange difference on translation of derivative instruments designated as cash flow hedge.
Foreign Operations

In our Consolidated Financial Statements, all assets, liabilities and transactions of the consolidated entities with a
functional currency other than the Indian Rupee are translated into Indian Rupees upon consolidation. While the
functional currency of Craftsman Marine has remained unchanged during the reporting and comparative period,
there was a change in the functional currency of Craftsman Automation Singapore from Japanese Yen (JPY) to
Singapore Dollar (S$). We have initiated the process of winding up the subsidiary in Singapore. The subsidiary
‘was non-operational as on December 31, 2020.

On consolidation, assets and liabilities have been translated into Indian Rupees at the closing rate at the reporting
date. Income and expenses have been translated into Indian Rupees at the average rate over the reporting period.
Exchange differences are charged or credited to other comprehensive income and recognized in the currency
translation reserve in equity. On disposal of a foreign operation, the related cumulative translation differences
recognized in equity are reclassified to our statement of profit and loss and are recognized as part of the gain or
loss on disposal.

Income Taxes

Income tax expense represents the sum of the tax currently payable and deferred tax. Current and deferred tax are
recognized in profit or loss, except when they relate to items that are recognized in other comprehensive income
or directly in equity, in which case, the current and deferred tax are also recognized in other comprehensive income
or directly in equity respectively.

Current Tax

Current tax is determined on taxable profits for the year chargeable to tax in accordance with the applicable tax
rates and the provisions of the Income Tax Act of the respective jurisdiction including other applicable tax laws
that have been enacted or substantively enacted.

Minimum Alternate Tax

Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which gives future economic benefit, in the
form of adjustment to future tax liability, is considered as an asset in the Balance Sheet. The carrying amount of
MAT is reviewed at each reporting date and the asset would be written down to the extent our right of adjustment
would lapse.

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Deferred Tax

Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities in the
financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax
liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are generally
recognized for all deductible temporary differences to the extent that it is probable that taxable profits will be
available against which those deductible temporary differences can be utilized. Such deferred tax assets and
liabilities are not recognized if the temporary difference arises from the initial recognition, other than in a business
combination, of assets and liabilities in a transaction that affects neither the taxable profit nor the accounting
profit.

Deferred tax asset is recognized for the carry forward of unused tax losses and unused tax credits to the extent that
it is probable that future taxable profit will be available against which the unused tax losses and unused tax credits
can be utilized.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the
extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset
to be recovered.

Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which
the liability is settled or the asset realised, based on tax rates and tax laws that have been enacted or substantively
enacted by the end of the reporting period.

The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the
manner in which we expect, at the end of the reporting period, to recover or settle the carrying amount of its assets
and liabilities.

Segment reporting

Our reportable segments have been identified based on end consumption of the products sold or services rendered.
The reportable segments are currently as follows:

. Automotive - Powertrain and Others: This segment develops, manufactures, sells its goods and services
of power train and other products to manufacturers of commercial vehicles, farm equipment,
construction/mining equipment and passenger vehicles.

. Automotive - Aluminium Products: This segment manufactures and sells its goods and services of
aluminium automotive components to the manufacturers of two wheelers, passenger vehicles and
commercial vehicles.

. Industrial and Engineering: This segment develops, manufactures, sells its goods and services such as
storage solutions as well as castings, gears, material handling equipment, special purpose machines and
other general engineering products to various end user industries.

Changes in Accounting Policies

Ind AS 116 - leases replaced the erstwhile accounting standard on lease accounting Ind AS 17 with effect from
April 1, 2019. To ensure consistency of accounting policies in the Restated Financial Information, the Company
has considered adoption of this standard with effect from April 1, 2017. The impact of Ind AS 116 has been
adjusted in the respective years.

Summary of Results of Operations

The following is a summary of our profit and loss account as per our Restated Financial Information for the periods
indicated:

 

Particulars Nine months ended Fiscal 2020 Fiscal 2019 Fiscal 2018
December 31, 2020
in? % of in? % of int % of ing % of
million total million total million total million total
income income income income
Income

 

303
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue from 10,227.87 99.31 14,924.65 99.43 18,180.07 99.26 15,115.31 99.26
Operations
Other Income 71.21 0.69 85.92 0.57 136.36 0.74 113.31 0.74
Total Income 10,299.08 100.00 15,010.57 100.00 18,316.43 100.00 15,228.62 100.00
Expenses
Cost of materials 4,387.28 42.60 5,717.04 38.09 7,104.88 38.79 5,916.88 38.85
consumed
Changes in (48.08) (0.47) 150.73 1.00 (70.15) (0.38) (159.15) 1.05
inventories of
finished goods
and work-in-
progress
Excise duty on - - - - - - 324.44 2.13
sale of goods
Employee 1,105.91 10.74 1,709.86 11.39 2,168.31 11.84 1,986.29 13.04
benefits expense
Depreciation and 1,414.73 13.74 1,949.88 12.99 1,761.48 9.62 1,491.53 9.79
amortization
expense
Other expenses 1,908.40 18.53 3,367.27 22.43 4,550.62 24.84 4,110.82 26.99
Finance costs 772.40 7.50 1,484.00 9.89 1,405.49 7.67 1,124.83 7.39
Total expenses 9,540.64 92.64 14,378.78 95.79 16,920.63 92.38 14,795.64 97.16
Profit before 758.44 7.36 631.79 4.21 1,395.80 7.62 432.98 2.84
share of profit
from joint
venture & tax
Share of profit 0.82 0.01 (0.16) 0.00 4.03 0.02 2.47 0.02
from Joint
Venture
Profit before 759.26 7.37 631.36 4.21 1,399.83 7.64 435.45 2.86
exceptional items
Exceptional items - = G7.73) - - - - -
Profit before tax 759.26 7.37 573.90 3.82 1,399.83 7.64 435.45 2.86
Tax expense:
Net Current Tax 321.10 3.12 168.35 1.12 78.39 0.43 - -
Deferred Tax (68.44) (0.66) (5.18) (0.03) 347.77 1.90 120.11 0.79
Profit for the 506.60 4.92 410.73 2.74 973.67 5.32 315.34 2.07
period/ year

EBITDA and EBITDA Margin

The following table sets forth our Earnings before Interest, Taxes, Depreciation and Amortization Expenses
(“EBITDA”) and the manner in which it is calculated for the nine months ended December 31, 2020 and Fiscals
2020, 2019 and 2018. We define our EBITDA Margin as EBITDA divided by revenue from operations (net).

(in million except for EBITDA Margin)

 

 

 

 

Profit before tax 759.26 573.90 1,399.83 435.45
Add: Finance costs 772.40 1,484.00 1,405.49 1,124.83
‘Add: Depreciation and amortization expense 1,414.73 1,949.88 1,761.48 1,491.53
‘Add: Exceptional items 0.00 57.73 0.00 0.00
EBITDA 2,946.39 4,065.51 4,566.80 3,051.81

 

304
 

Particulars

EBITDA Margin (EBITDA as a percentage of
revenue from operations)

Nine
months
ended

December
31, 2020

28.81%

Fiscal 2020

27.24%

Fiscal 2019

25.12%

Fiscal 2018

20.19%

 

The following table sets forth a breakdown of segment-wise profitability for our three business segments, and our
EBITDA and our EBITDA margins for the time periods indicated:

 

Segments

Automotive
— Powertrain
and Others
Automotive
Aluminium
Products
Industrial
and
Engineering
Total
Less:
allocable
expenditure
Add: Other
Income
EBITDA

Un-

Nine months ended

December 31, 2020

EBITDA (in EBIDTA
% million) in *

(in %)
1,969.52 37.60
279.90 12.97
836.30 29.53
3,085.72 30.17
(211.36) =
72.03 =
2,946.39 28.81

Fiscal 2020

EBITDA EBIDTA

(inz margin

million) —_*(in %)
2,533.24 35.72
429.01 16.65
1,314.71 25.02
4,276.96 28.66
(297.21) :
85.76 >
4,065.51 27.24

Fiscal 2019

EBITDA _EBIDTA

(in? margin

million) —_*(in %)
3,392.88 33.64
504.33 16.37
894.03 17.83
4,791.24 26.35
(364.83) =
140.39 =
4,566.80 25.12

Fiscal 2018

EBITDA EBIDTA

(in? in

million) _*(in %)
2,438.85, 28.00
240.33 10.21
461.25 11.38
3,140.43, 20.78
(204.40) 2
115.78 2
3,051.81 20.19

 

* Calculated as EBITDA divided by revenue from the respective segment

Our overall EBITDA increased at a CAGR of 15.42% on a restated consolidated basis, from = 3,051.81 million
in Fiscal 2018 to 2 4,065.51 million in Fiscal 2020.

Return on Capital Employed

We calculate our ROCE as earnings before interest and tax divided by the difference between our total assets and
total current liabilities. For the nine months ended December 31, 2020 and Fiscals 2020, 2019 and 2018, our
ROCE was 10.55%, 13.80%, 18.66% and 14.00%.

Capital Expenditure

We have substantial capital expenditure and working capital requirements. For the nine months ended December
31 and Fiscals 2020, 2019 and 2018, our capital expenditure aggregated to = 507.29 million, = 1,206.01 million,
2 4,559.86 million and % 1,811.24 million, respectively.

The following table sets our capital expenditure for our three business segments for the periods indicated:

 

Segments

Automotive

Powertrain and

Others
Automotive
Aluminium
Products
Industrial
Engineering

and

Mine months ended

December 31, 2020
Capital —_-% of the
expenditur segmenta
e(ing lrevenue

million)*

205.37 3.92
178.11 8.25
79.71 2.81

Fiscal 2020
Capital % of the
expenditur segmenta
e(in% I revenue
million)
137.51 1.94
792.23 30.74
206.99 3.94

Fiscal 2019

Capital — % of the
expenditure segment

(int al
million) revenue
1,502.42 14.90
1,728.40 56.09
1,102.34 21.99

Fiscal 2018
Capital —_-% of the
expenditur segmenta
e(ing lrevenue
million)
424.42 4.87
834.90 35.48
188.71 4.66

 

305
 

 

Particulars Nine months ended Fiscal 2020 Fiscal 2019 Fiscal 2018
December 31, 2020
ine % of in? % of ine % of ine % of
million revenue million revenue million revenue million revenue
from from from from
operati operatio operatio operati
ons ns ns ons
Revenue 10,227.87 100.00 14,924.65, 100.00 18,180.07 100.00 15,115.31 100.00
from
operations
(Gross)
(A+B+C)
Segment mix

Our revenue from operations primarily comprised revenues from the Automotive - Powertrain and Others
segment, Automotive - Aluminium Products segment and the Industrial and Engineering segment, as detailed
below:

 

 

Particula Nine months ended Fiscal 2020 Fiscal 2019 Fiscal 2018
rs December 31, 2020
in? % of in? % of ine % of in& % of
million revenue million revenue million revenue million revenue
from from from from
operation operation operation operation
s s s s
Automoti 5,237.44 51.21 7,092.90 47.52 10,084.99 55.47 8,708.82 57.62
ve -
Powertrai
n and
Others
Automoti 2,158.22 21.10 2,576.90 17.27 3,081.50 16.95, 2,353.15 15.57
ve -
Aluminiu
m
Products
Industria 2,832.21 27.69 5,254.85 35.21 5,013.58 27.58 4,053.34 26.82
1 and
Engineer
ing
Revenue 10,227.87 100.00 14,924.65 100.00 18,180.07 100.00 15,115.31 100.00
from
Operatio
ns
Other income

Our other income accounted for 0.69%, 0.57%, 0.74% and 0.74% of our total income for the nine months ended
December 31, 2020 and Fiscals 2020, 2019 and 2018, respectively.

Our other income comprises interest income from deposits (measured at amortized cost), interest income due to
unwinding of fair valued assets such as rent advance and deemed equity, net gain on sale of assets, rental income,
exchange rate gain or loss on transaction and translation, mark-to-market gain or loss — derivative, unclaimed
balances written back and others.

Expenses

Cost of materials consumed

Our cost of materials consumed comprises cost of consumption, carriage inward, and sub-contract charges.

The following table sets out the cost of our materials consumed as a percentage of our total income for the
periods indicated:

307
 

Segments Mine months ended Fiscal 2020 Fiscal 2019 Fiscal 2018
December 31, 2020

Capital %ofthe Capital © %ofthe Capital © %ofthe Capital —-% of the
expenditur segmenta expenditur segmenta expenditure segment expenditur segmenta

e(in%  Irevenue e(in&_—_—Irevenue (in? al e(int revenue
million)* million) million) revenue __ million)
Total 463.19 453 1,136.73 7.62 4,333.16 23.83 1,448.03 9.58

 

* Excludes unallocated capital expenditure

EBITDA, EBITDA Margin and ROCE are non-GAAP financial measures relating to our operations and financial
performance which we consider to be useful measures of our business and financial performance. These are not
measurements of financial profitability or liquidity under Ind AS and should not be considered as an alternative
to performance measures derived in accordance with Ind AS.

We make no representations as to the methodologies used to define and/or calculate EBITDA, EBITDA Margin
and ROCE or whether these reflect an appropriate measure of our Company’s operating performance.

In addition, these are not standardized terms, hence a direct comparison between companies using such a term
may not be possible. Our use of these non GAAP measures thus has limitations as an analytical tool, and you
should not consider them either in isolation or as a substitute for analysis of our financial results as reported under
Ind AS. Because of these and other limitations, you should consider these non GAAP measures along with other
Ind AS-based financial performance measures, including various cash flow metrics, profit after tax, and our Ind
AS financial results.

Components of Income and Expenditure

Total Income

Our total income comprises our revenue from operations and other income.

Revenue from operations

Our revenue from operations comprises sale of products, sale of services, and other operating revenues.

Our revenue from sale of products accounted for 67.48%, 65.74%, 60.62% and 60.82% of our total income for
the nine months ended December 31, 2020 and Fiscals 2020, 2019 and 2018, respectively. Our revenue from sale
of products comprises revenues from products sold domestically and to export customers. Our revenue from sale
of services (comprising machining and services charges) accounted for 24.07%, 25.68%, 29.14% and 29.74% of
our total income for the nine months ended December 31, 2020 and Fiscals 2020, 2019 and 2018, respectively.

Our other operating revenues accounted for 7.76%, 8.00%, 9.50% and 8.70% of our total income for the nine
months ended December 31, 2020 and Fiscals 2020, 2019 and 2018, respectively. Our other operating revenues
comprise revenue from sale of swarf (being scrap metal and aluminium parts resulting from our machining and
other manufacturing process), duty drawback, EPCG income on fulfilling export obligations and export incentive
under the Merchandise Exports from India scheme resulting from our export sales.

 

Particulars Nine months ended Fiscal 2020 Fiscal 2019 Fiscal 2018
December 31, 2020
in? % of in? % of in? % of int % of
million revenue million revenue _million revenue million —_revenue
from from from from
operati operatio operatio operati
ons ns ns ons
Domestic 5,943.00 58.11 8,475.39 56.79 9,483.59 52.16 7,986.40 52.84
Sales
Export Sales 1,006.86 9.84 1,393.23 9.34 1,619.62 8.91 1,275.09 8.44
Total Sale of 6,949.86 67.95 9,868.62 66.12 11,103.21 61.07 9,261.49 61.28
products (A)
Sale of 2,478.95, 24.24 3,855.01 25.83 5,336.78 29.36 4,528.57 29.96
services (B)
Other 799.06 7.81 1,201.02 8.05 1,740.08 9.57 1,325.25 8.77
operating

revenues (C)

306
 

Particulars Nine months Fiscal 2020 Fiscal 2019 Fiscal 2018

ended December
31, 2020
inz % int % in® % in? %
million million million million
Cost of materials 4,387.28 42.60 5,717.04 38.09 7,104.88 38.79 5,916.88 38.85

consumed

 

Change in inventories of finished goods

Our change in inventories of finished goods and work-in-progress indicate the difference between our opening
and closing inventory of, finished goods and work-in-progress.

Excise duty on sale of goods

We paid excise duty of % 324.44 million on the sale of our goods for Fiscal 2018, which accounted for 2.13% of
our total income. We were not required to pay any excise duty for Fiscals 2020 and 2019 and the nine months
ended December 31, 2020 as goods and service tax has been implemented from July 1, 2017.

Employee benefits expense

Employee benefits expense primarily comprise salary and wages, contributions to provident fund and employee
state insurance, contribution to gratuity fund, payment to contractors and staff welfare expenses.

The following table sets out the employee benefit expense as a percentage of our total income for the periods
indicated:

 

Particulars Nine months ended Fiscal 2020 Fiscal 2019 Fiscal 2018
December 31, 2020
in @ million % ing % ing % int %
million million million
Employee benefits expense 1,105.91 10.74 1,709.86 11.39 2,168.31 11.84 1,986.29 13.04

 

Other expenses

Our other expenses accounted for 18.53%, 22.43%, 24.84% and 26.99% of our total income for the nine months
ended December 31, 2020 and Fiscals 2020, 2019 and 2018, respectively.

Other expenses primarily comprised manufacturing expenses (which consisted of expenses in relation to stores,
spares and tool consumed, power and fuel, repairs and maintenance towards machinery, building, and others),
administrative expenses (which primarily consisted of professional and consultancy charges, rent, travelling
expenses, managerial remuneration, insurance charges, expenses in relation to software licenses, and others), and
selling expenses (which comprised packing material consumed, carriage outwards, and sales promotion expenses).

EBITDA

Our EBITDA was % 2,946.39 million, = 4,065.51 million, = 4,566.80 million and 2 3,051.81 million for the nine
months ended December 31, 2020 and Fiscals 2020, 2019 and 2018, respectively.

Our EBITDA came to 28.81%, 27.24%, 25.12% and 20.19%, as a percentage of revenue from operations, for the
nine months ended December 31, 2020 and Fiscals 2020, 2019 and 2018, respectively.

Depreciation and amortization expense

Our depreciation and amortization expense accounted for 13.74%, 12.99%, 9.62% and 9.79% of our total income
for the nine months ended December 31, 2020 and Fiscals 2020, 2019 and 2018, respectively.

Depreciation and amortization expense comprises depreciation on property, plant and equipment, amortization of
intangible assets (software and development expenditure) and amortization of right-of-use-assets.

308
Finance costs

Our finance costs accounted for 7.50%, 9.89%, 7.67% and 7.39% of our total income for the nine months ended
December 31, 2020 and Fiscals 2020, 2019 and 2018, respectively.

Finance costs primarily comprised interest expenses, other borrowing costs, and net gain or loss on foreign
currency transactions and translation.

Profit before tax

Our profit before tax was 2 759.26 million, = 573.90 million, = 1,399.83 million and % 435.45 million for the nine
months ended December 31, 2020 and Fiscals 2020, 2019 and 2018, respectively.

Tax expenses
Our tax expenses include current tax, deferred tax and MAT credit entitlement.

Our current tax was 2 321.10 million, 168.35 million, = 78.39 million and 2 Nil million for the nine months
ended December 31, 2020 and Fiscals 2020, 2019 and 2018, respectively.

Our deferred tax was 2 (68.44) million, = (5.18) million, = 347.77 million and 2 120.11 million for the nine months
ended December 31, 2020 and Fiscals 2020, 2019 and 2018, respectively.

Profit after tax

Our profit after tax was % 506.60 million, = 410.73 million, = 973.67 million and 2 315.34 million for the nine
months ended December 31, 2020 and Fiscals 2020, 2019 and 2018, respectively.

Our profit after tax came to 4.92%, 2.74%, 5.32% and 2.07%, as a percentage of our total income, for the nine
months ended December 31, 2020 and Fiscals 2020, 2019 and 2018, respectively.

Nine months ended December 31, 2020

Income

Our total income for the nine months ended December 31, 2020 was 2 10,299.08 million.
Revenue from operations

Our revenue from operations was % 10,227.87 million and accounted for 99.31% of our total income, for the nine
months ended December 31, 2020.

Revenue from sale of products

Our revenue from sale of products was 2 6,949.86 million and accounted for 67.48% of our total income, for the
nine months ended December 31, 2020.

Sale of Services

Our revenue from sale of services was = 2,478.95 million and accounted for 24.07% of our total income in the
nine months ended December 31, 2020.

Other operating revenues

Our other operating revenues aggregated to = 799.06 million and accounted for 7.76% of our total income in the
nine months ended December 31, 2020.

Segment mix
Our revenue from operations primarily comprised revenues from the Automotive - Powertrain and Others

segment, Automotive - Aluminium Products segment and the Industrial and Engineering segment, as detailed
below:

309
 

Particulars Nine months ended December 31, 2020

in Z million %
Automotive - Powertrain and Others 5,237.44 51.21
Automotive - Aluminium Products 2,158.22 21.10
Industrial and Engineering 2,832.21 27.69
Revenue from Operations 10,227.87 100.00

 

Other income

Our other income was 2 71.21 million and accounted for 0.69% of our total income, in the nine months ended
December 31, 2020.

Expenses
Cost of materials consumed

Our cost of materials consumed was % 4,387.28 million and came to 42.60%, as a percentage of our total income
in the nine months ended December 31, 2020.

Change in inventories of finished goods

Our opening stock of finished goods was % 113.71 million as on April 1, 2020.

Our closing stock of finished goods was % 218.63 million as on December 31, 2020.
Excise duty on sale of goods

We were not required to pay any excise duty on sale of goods for the nine months ended December 31, 2020 as
goods and service tax has been implemented from July 1, 2017.

Employee benefits expense

Our employee benefits expense was 2 1,105.91 million and came to 10.74% of our total income in the nine months
ended December 31, 2020.

Other expenses

Our other expenses were % 1,908.40 million and came to 18.53% of our total income in the nine months ended
December 31, 2020.

EBITDA

Our EBITDA was 2 2,946.39 million for the nine months ended December 31, 2020.

Our EBITDA came to 28.81%, as a percentage of our total income in the nine months ended December 31, 2020.
Depreciation and amortization expense

Our depreciation and amortization expense was 2 1,414.73 million and accounted for 13.74% of our total income,
for the nine months ended December 31, 2020.

Finance costs

Our finance costs were = 772.40 million and accounted for 7.50%, of our total income, for the nine months ended
December 31, 2020.

Profit before tax
Our profit before tax was 2 759.26 million for the nine months ended December 31, 2020.
Tax expenses

Our current tax and MAT credit entitlement was = 321.10 million and deferred tax was = (68.44) million, for the
nine months ended December 31, 2020.

310
Profit after tax
Our profit after tax was = 506.60 million for the nine months ended December 31, 2020.

Our profit after tax came to came to 4.92%, as a percentage of our total income, for the nine months ended
December 31, 2020.

Fiscal 2020 compared to Fiscal 2019
Total Income

Our total income decreased by % 3,305.86 million, or 18.05%, from = 18,316.43 million in Fiscal 2019 to =
15,010.57 million in Fiscal 2020, on account of the factors discussed below.

Revenue from operations

Our revenue from operations decreased by % 3,255.42 million, or 17.91%, from = 18,180.07 million in Fiscal 2019
to = 14,924.65 million in Fiscal 2020, primarily as a result of decrease in the sales of our products and services
during this period.

Our revenue from operations accounted for 99.26% of our total income in Fiscal 2019, compared to 99.43% in
Fiscal 2020.

Revenue from sale of products

Our revenue from sale of products decreased by 2 1,234.59 million, or 11.12%, from 2 11,103.21 million in Fiscal
2019 to 2 9,868.62 million in Fiscal 2020, primarily as a result of decrease in domestic sales by 10.63% and a
decrease in export sales by 13.98%, as discussed below.

Our revenue from sale of products accounted for 60.62% of our total income in Fiscal 2019, compared to 65.74%
in Fiscal 2020.

Domestic and export mix

Our revenue from domestic sales decreased by = 1,008.20 million, or 10.63%, from 2 9,483.59 million in Fiscal
2019 to 2 8,475.39 million in Fiscal 2020, primarily as a result of decrease in domestic sales to customers in the
Automotive - Powertrain and Others and Automotive - Aluminium Products segments and a decrease in product
sales in our Industrial and Engineering segment.

Our revenue from export sales decreased by = 226.39 million, or 13.98%, from 2 1,619.62 million in Fiscal 2019
to = 1,393.23 million in Fiscal 2020, primarily as a result of decrease in export sales in 2019, which was partially
offset by increase in sale to our Industrial and Engineering segment customers.

Sale of Services

Our revenue from sale of services decreased by 2 1,481.77 million, or 27.77%, from % 5,336.78 million in Fiscal
2019 to % 3,855.01 million in Fiscal 2020, primarily as a result of decrease in machining charges for the commercial
vehicles, farm equipment and construction sub-segments of the Automotive - Powertrain and Others segment as a
result of decline in sales in the automotive industry.

Our revenue from sale of services accounted for 29.14% of our total income in Fiscal 2019, compared to 25.68%
in Fiscal 2020.

Other operating revenues

Our other operating revenues decreased by % 539.06 million, or 30.98%, from % 1,740 million in Fiscal 2019 to
2,201.02 million in Fiscal 2020, primarily as a result of a decrease in income from sale of swarf and others and a
decrease in EPCG income on fulfilling export obligation, commensurate with reduced product sales and exports

during this period, as discussed above.

Our other operating revenues accounted for 9.50% of our total income in Fiscal 2019, compared to 8.00% in Fiscal
2020.

311
Segment mix

Our revenue from the Automotive - Powertrain and Others, Automotive - Aluminium Products and the Industrial
and Engineering segments, increased during the period as detailed below:

 

Particulars Fiscal 2020 Fiscal 2019 Increase/ Increase/
in million in million (Decrease) in% (Decrease) in %
million
‘Automotive - Powertrain and Others 7,092.90 10,084.99 (2,992.09) (29.67)
Automotive - Aluminium Products 2,576.90 3,081.50 (504.60) (16.38)
Industrial and Engineering 5,254.85 5,013.58 241.27 4.81

 

The decrease in revenue in the Automotive - Powertrain and Others and the Automotive - Aluminium Products
segments is primarily as a result of decline in our business due to the general downturn in the automotive industry.
The increase in revenue in the Industrial and Engineering segment was primarily as a result of growth in demand
of products in this segment.

Other income

Our other income decreased by 2 50.44 million, or 36.99%, from % 136.36 million in Fiscal 2019 to = 85.92 million
in Fiscal 2020, primarily as a result of reduction in exchange rate gains on transaction and translation during this
period, mark-to-market net loss on derivatives, decrease in unclaimed balances written back, decrease in interest
income on deposits (measured at amortized cost), which was partially offset by an increase in the interest income
due to unwinding of fair valued assets (rent advance).

Our other income accounted for 0.74% of our total income in Fiscal 2019, compared to 0.57% in Fiscal 2020.
Expenses

Cost of materials consumed

Our cost of materials consumed decreased by 2 1,387.84 million, or 19.53%, from % 7,104.88 million in Fiscal 2019
to 2 5,717.04 million in Fiscal 2020. Our cost of materials consumed accounted for 38.79% of our total income in

Fiscal 2019, compared to 38.09% in Fiscal 2020.

This is primarily as a result of decrease in purchase of materials, due to decrease in sale of products, and a resultant
decrease in the cost of transportation of such materials.

Change in inventories of finished goods

Our opening stock of finished goods was % 98.10 million for the year ended March 31, 2019, while it was = 113.03
million for the year ended March 31, 2020.

Our closing stock of finished goods was = 113.03 million for the year ended March 31, 2019, while it was = 113.71
million for the year ended March 31, 2020.

The changes in inventories were primarily a result of decrease in the growth in sale of products, especially the
material intensive aluminium products and power train product sales, as indicated above.

Excise duty on sale of goods

We were not required to pay any excise duty on the sale of our goods as goods and service tax has been
implemented from July 1, 2017.

Employee benefits expense
Our employee benefit expense decreased by % 458.45 million, or 21.14%, from % 2,168.31 million in Fiscal 2019
to = 1,709.86 million in Fiscal 2020, primarily as a result of decrease in the number of employees owing to a

decrease in operating activities as well as a decrease in salaries and wages in this period.

Our employee benefits expense accounted for 11.84% of our total income in Fiscal 2019, compared to 11.39% in
Fiscal 2020.

312
Other expenses

Our other expenses decreased by % 1,183.35 million, or 26.00%, from 4,550.62 million in Fiscal 2019 to % 3,367.27
million in Fiscal 2020. Our other expenses accounted for 24.84% of our total income in Fiscal 2019, compared to
22.43% in Fiscal 2020.

This is primarily as a result of decrease in operating activities and corresponding decreases in repair and
maintenance and power and fuel expenses), administrative expenses (primarily due to a decrease in travelling
expenses, rates and taxes, managerial remuneration and doubtful debts) and selling expenses (primarily due to a
decrease in packing material consumed and carriage outwards expenses).

EBITDA

Our EBITDA decreased by 501.29 million or 10.98%, from 2 4,566.80 million in Fiscal 2019 to 2 4,065.51
million in Fiscal 2020, primarily as a result of the factors discussed above.

Our EBITDA accounted for 24.93% of our total income in Fiscal 2019, compared to 27.08% in Fiscal 2020.
Depreciation and amortization expense

Our depreciation and amortization expense increased by 2 188.40 million, or 10.70%, from 2 1,761.48 million in
Fiscal 2019 to 1,949.88 million in Fiscal 2020, primarily as a result of increase in capital expenditure on property,

plant and equipment (on account of commercialization of the equipment bought in the previous fiscal), leading to
higher depreciation.

Our depreciation and amortization expense accounted for 9.62% of our total income in Fiscal 2019, compared to
12.99% in Fiscal 2020.

Finance costs
Our finance costs increased by % 78.51 million, or 5.59%, from 2 1,405.49 million in Fiscal 2019 to 2 1,484.00
million in Fiscal 2020, primarily as a result of increase in interest expenses on our long term borrowings (at

amortized cost) to fund our capital expenditure on account of increased borrowings during this period to meet our
high working capital requirements during this period.

Our finance costs accounted for 7.67% of our total income in Fiscal 2019, compared to 9.89% in Fiscal 2020.
Profit before tax

Our profit before tax decreased by 2 825.93 million, or 59.00%, from 2 1,399.83 million in Fiscal 2019 to = 573.90
million in Fiscal 2020, as a result of among other things, decrease in total income as well as increased finance
costs, depreciation and amortization expense.

Our profit before tax accounted for 7.64% of our total income in Fiscal 2019, compared to 3.82% in Fiscal 2020.
Tax expenses

Our total tax expenses reduced by % 262.99 million, or 61.71%, from % 426.16 million in Fiscal 2019 to = 163.17
million in Fiscal 2020, which was due to a reduction in deferred tax and current tax.

Profit after tax

Our profit after tax decreased by = 562.94 million, or 57.82%, from % 973.67 million in Fiscal 2019 to 2 410.73
million in Fiscal 2020, primarily as a result of the factors discussed above, as adjusted for tax expenses.

Our profit after tax accounted for 5.32% of our total income in Fiscal 2019, compared to 2.74% in Fiscal 2020.
Fiscal 2019 compared to Fiscal 2018
Total Income

Our total income increased by 2 3,087.81 million, or 20.28%, from % 15,228.62 million in Fiscal 2018 to =
18,316.43 million in Fiscal 2019, on account of the factors discussed below.

313
Revenue from operations

Our revenue from operations increased by % 3,064.76 million, or 20.28%, from % 15,115.31 million in Fiscal 2018
to % 18,180.07 million in Fiscal 2019, primarily as a result of increase in the sale of our products and sale of
services during this period.

Our revenue from operations accounted for 99.26% of our total income in each of Fiscal 2018 and Fiscal 2019.
Revenue from sale of products

Our revenue from sale of products increased by = 1,841.72 million, or 19.86%, from % 9,261.49 million in Fiscal
2018 to 11,103.21 million in Fiscal 2019, primarily as a result of an increase in domestic sales by 18.75% and
an increase in export sales by 27.02%, as discussed below.

Our revenue from sale of products accounted for 60.82 % of our total income in Fiscal 2018, compared to 60.62%
in Fiscal 2019.

Domestic and export mix

Our revenue from domestic sales increased by % 1,497.19 million, or 18.75%, from 2 7,986.40 million in Fiscal
2018 to % 9,483.59 million in Fiscal 2019, primarily as a result of increase in domestic sales to customers in the
Automotive - Powertrain and Others and Automotive - Aluminium Products segments and in product sales in our
Industrial and Engineering segment.

Our revenue from export sales increased by 2 344.53 million, or 27.02%, from 2 1,275.09 million in Fiscal 2018
to = 1,619.62 million in Fiscal 2019, primarily as a result of an increase in export sales in Fiscal 2019.

Sale of Services

Our revenue from sale of services increased by % 808.21 million, or 17.85%, from 2 4,528.57 million in Fiscal
2018 to % 5,336.78 million in Fiscal 2019, primarily as a result of increase in machining charges for the commercial
vehicles, farm equipment and construction sub-segments of the Automotive - Powertrain and Others segment.

Our revenue from sale of services accounted for 29.74% of our total income in Fiscal 2018, compared to 29.14%
in Fiscal 2019.

Other operating revenues

Our other operating revenues increased by 2 414.83 million, or 31.30%, from % 1,325.25 million in Fiscal 2018
to = 1,740.08 million in Fiscal 2019, primarily as a result of an increase in sale of swarf and others and an increase
in EPCG income on fulfilling export obligations and an increase in duty drawbacks.

Our other operating revenues accounted for 8.70% of our total income in Fiscal 2018, compared to 9.50% in Fiscal
2020.

Segment mix

Our revenue from the Automotive - Powertrain and Others, Automotive - Aluminium Products and the Industrial
and Engineering segments increased during this period as detailed below:

 

Particulars Fiscal 2019 Fiscal 2018 Increase in = Increase in %

in million in million million
Automotive - Powertrain and Others 10,084.99 8,708.82 1,376.17 15.80
Automotive - Aluminium Products 3,081.50 2,353.15 728.35 30.95
Industrial and Engineering 5,013.58 4,053.34 960.24 23.69

 

The increase in revenue in each of the aforesaid segments is primarily as a result of growth in our business in such
segment, as a result of an increase in sales towards our customers in our Automotive - Powertrain and Others,
Automotive - Aluminium Products and Industrial and Engineering segments.

Other income

314
Our other income increased by % 23.05 million, or 20.34%, from % 113.31 million in Fiscal 2018 to = 136.36 million
in Fiscal 2019, primarily as a result of increase in write back of unclaimed balances, which was partially offset by a
decrease in the interest income from deposits measured at amortised cost.

Our other income accounted for 0.74% of our total income both in Fiscal 2018 and Fiscal 2019.
Expenses
Cost of materials consumed

Our cost of materials consumed increased by 2 1,188.00 million, or 20.08%, from % 5,916.88 million in Fiscal 2018
to 27,104.88 million in Fiscal 2019. Our cost of materials consumed accounted for 38.85% of our total income in
Fiscal 2018, compared to 38.79% in Fiscal 2019.

This is primarily as a result of increase in purchase of materials, due to rise in sale of products, and a resultant
increase in the cost of transportation of such materials.

Change in inventories of finished goods

Our opening stock of finished goods was % 103.39 million for the year ended March 31, 2018, while it was = 98.10
million for the year ended March 31, 2019.

Our closing stock of finished goods was % 98.10 million for the year ended March 31, 2018, while it was = 113.03
million for the year ended March 31, 2019.

The changes in inventories were primarily a result of increase in the growth in sale of products, especially the
material intensive aluminium products and power train product sales, as indicated above.

Excise duty on sale of goods

We were not required to pay any excise duty on the sale of our goods in Fiscal 2019 as goods and service tax has
been implemented from July 1, 2017. Our excise on duty sale of goods was % 324.44 million and accounted for
2.13% of our total income in Fiscal 2018.

Employee benefits expense

Our employee benefit expense increased by = 182.02 million, or 9.16%, from 2 1,986.29 million in Fiscal 2018.
to % 2,168.31 million in Fiscal 2019, primarily as a result of increase in salaries and wages owing to the
corresponding increase in the number of employees, as well as routine increases in employee compensation
packages owing to an increase in operating activities.

Our employee benefits expense accounted for 13.04% of our total income in Fiscal 2018, compared to 11.84% in
Fiscal 2019.

Other expenses

Our other expenses increased by % 439.80 million, or 10.70%, from % 4,110.82 million in Fiscal 2018 to % 4,550.62
million in Fiscal 2019. Our other expenses accounted for 26.99% of our total income in Fiscal 2018, compared to
24.84% in Fiscal 2019.

This is primarily as a result of increase in operating activities and decreased fuel costs, increased power and
consumption of tools, stores and spares, and increased expenditure on repairs and maintenance, as well as an
increase in carriage outwards expenditure and packing material costs due to an increase in manufacturing expenses
(primarily due to an increase in repair and maintenance and power and fuel expenses), an increase in administrative
expenses (primarily due to an increase in managerial remuneration and insurance charges), and increase in selling
expenses (primarily due to an increase in packing material consumed and carriage outwards expenses).

EBITDA

Our EBITDA increased by @ 1,514.99 million or 49.64%, from % 3,051.81 million in Fiscal 2018 to 2 4,566.80 million
in Fiscal 2019, primarily as a result of the factors discussed above.

Our EBITDA came to 20.04% of our total income in Fiscal 2018, compared to 24.93% in Fiscal 2019.

315
Depreciation and amortization expense

Our depreciation and amortization expense increased by % 269.95 million, or 18.10%, from = 1,491.53 million in
Fiscal 2018 to 2 1,761.48 million in Fiscal 2019, primarily as a result of increase in property, plant and equipment
(on account of commercialization of the equipment bought in the previous fiscal), leading to higher depreciation.

Our depreciation and amortization expense accounted for 9.79% of our total income in Fiscal 2018, compared to
9.62% in Fiscal 2019.

Finance costs

Our finance costs increased by % 280.66 million, or 24.95%, from = 1,124.83 million in Fiscal 2018 to = 1,405.49
million in Fiscal 2019, primarily as a result of increase in interest expenses on our long term borrowings at
amortised cost (which was partially offset by a decrease in interest expenses on short term borrowings) and our
other borrowing costs, on account of increased borrowings during this period to meet our high working capital
requirements during this period.

Our finance costs accounted for 7.39% of our total income in Fiscal 2018, compared to 7.67% in Fiscal 2019.
Profit before tax

Our profit before tax increased by 2 964.38 million, or 221.47%, from % 435.45 million in Fiscal 2018 to =
1,399.83 million in Fiscal 2019, primarily as a result of growth in our business, as reflected in our EBITDA and
EBITDA margin.

Our profit before tax accounted for 2.86% of our total income in Fiscal 2018, compared to 7.64% in Fiscal 2019.
Tax expenses

Our total tax expenses increased by % 306.05 million, or 254.81%, from 120.11 million in Fiscal 2018 to 7426.16
million in Fiscal 2019, which was due to higher income tax payments.

Profit after tax

Our profit after tax increased by 2 658.33 million, or 208.77%, from = 315.34 million in Fiscal 2018 to = 973.67
million in Fiscal 2019, primarily as a result of the factors discussed above, as adjusted for tax expenses.

Our profit after tax accounted for 2.07% of our total income in Fiscal 2018, compared to 5.32% in Fiscal 2019.
Financial Condition, Liquidity and Capital Resources

Our business requires working capital, part of which would be met through additional borrowings in the future.
In many cases, significant amounts of working capital are required to finance the procurement of raw materials,
labour and the upkeep of our production facilities before payments are received from customers. Additionally, our
working capital requirements have been high in recent years due to the general growth of our business and the recent
setting up of a new manufacturing unit in Pune in Fiscal 2019 to cater to our storage solutions business. All of
these factors may result, or have resulted, in increases in our working capital needs.

Our primary liquidity requirements have been, and will continue to be, to finance our working capital andcapital
expenditure requirements which we have primarily met from internal accruals and bank borrowings.

Cash Flows
The following table sets forth selected items from our restated cash flow statement for the periods indicated:

(in & million)

 

Particulars ‘Nine months Fiscal
ended December 2020 2019 2018
31,
2020
Net cash from operating activities 2,420.59 3,053.70 3,600.02 2,826.99
Net cash used in investing activities (454.66) (1,370.65) (3,584.09) (2,107.40)
Net cash used in financing activities (2,254.01) (1,279.32) (182.34) (603.12)

 

316
 

Net increase in cash and cash equivalenis (288.08) 403.73 (166.39) 116.47

 

Cash and cash equivalents as at beginning of 597.61 193.05 360.43 240.31
year/period
Cash and cash equivalents as at end of 310.49 597.61 193.05 360.43
year/period

Operating Activities

Net cash from operating activities for the nine months ended December 31, 2020 was 2 2,420.59 million and our
operating cash flow before changes in working capital for that period was 2 2,717.13 million. The difference was
primarily attributable to = 310.67 million increase in other current assets, = 182.98 million increase in trade and
other receivables and 2 143.08 million increase in inventories. This was partially offset by = 251.46 million
increase in other current liabilities and = 211.05 million increase in trade payables and other payables.

Net cash from operating activities in Fiscal 2020 was 2 3,053.70 million and our operating cash flow before
working capital changes for that period was % 3,730.58 million. The difference was primarily attributable to =
483.97 million decrease in trade payables and other payables, = 75.43 million decrease in other current liabilities
and % 189.79 million decrease in trade and other receivables, = 23.07 million increase in inventories and % 215.70
million inincome taxes paid during the period.

Net cash from operating activities in Fiscal 2019 was % 3,600.02 million and our operating cash flow before
working capital changes for that period was = 4,179.92 million. The difference was primarily attributable to @
228.37 million increase in inventories, = 283.89 million decrease in trade and other receivables, = 162.65 million
increase in other current liabilities and 2 248.46 million in income taxes paid during the period.

Net cash from operating activities in Fiscal 2018 was 2 2,826.99 million and our operating profit before working
capital changes for that period was 2 2,748.29 million. The difference was primarily attributable to = 274.68
million increase in trade and other receivables and % 721.56 million increase in inventories. This was partially
offset by = 580.25 million decrease in other current assets and = 120.00 million in income taxes paid during the
period.

Investing Activities

Net cash used in investing activities for the nine months ended December 31, 2020 was 2 454.66 million, primarily
consisting of purchase of property, plant and equipment of % 495.02 million, purchase of intangibles of 2 6.66
million, proceeds from sale of equipment of = 31.87 million and interest received of = 15.15 million.

Net cash used in investing activities in Fiscal 2020 was 2 1,370.65 million, primarily consisting of purchase of
property, plant and equipment of % 1,386.91 million, purchase of intangibles of 2 17.43 million, proceeds from
sale of equipment of 2 14.15 million and interest received of = 21.63 million.

Net cash used in investing activities in Fiscal 2019 was = 3,584.09 million, primarily consisting of purchase of
property, plant and equipment of 2 3,558.07 million, purchase of intangibles of = 52.67 million, proceeds from
sale of equipment of 2 6.11 million and interest received of = 20.93 million.

Net cash used in investing activities in Fiscal 2018 was 2 2,107.40 million, primarily consisting of purchase of
property, plant and equipment of % 2,038.63 million, purchase of intangibles of = 82.59 million, purchase of shares
of 2 11.51 million, including investments in Bhatia Coke & Energy Limited and interest received of = 22.50
million.

Financing Activities

Net cash used in financing activities for the nine months ended December 31, 2020 was % 2,254.01 million,
primarily consisting of proceeds from long-term borrowings of = 539.80 million availed for capital expenditure,
repayment of long-term borrowings of % 1,045.34 million, repayments to from short-term borrowings of = 850.41
million, interest paid of = 840.56 million (including interest of lease liability) and principal payment towards lease
liability of = 57.50 million.

Net cash from financing activities in Fiscal 2020 was 2 1,279.32 million, primarily consisting of proceeds from

long-term borrowings of = 1,438.95 million, repayment of long-term borrowings of % 2,198.54 million, interest
paid of 2 1,386.29 million (including interest of lease liability), dividends paid of % 60.64 million, principal

317
payment towards lease liability of = 167.31 million and net proceeds from short-term borrowings of % 1,094.51
million.

Net cash used in financing activities in Fiscal 2019 was = 182.34 million, primarily consisting of proceeds from
long-term borrowings of 2 4,215.87 million availed for capital expenditure, repayment of long-term borrowings
of 2 1,555.39 million, repayments to short term borrowings of % 1,411.53 million, principal payment towards lease
liability of = 121.70 million, interest paid of = 1,297.50 million (including interest of lease liability) and dividends
paid of 2 12.10 million.

Net cash used in financing activities in Fiscal 2018 was % 603.12 million, primarily consisting of proceeds from
long-term borrowings of 2 1,444.97 million availed for capital expenditure, repayment of long-term borrowings
of = 1,291.10 million, net proceeds from short-term borrowings of % 469.45 million, interest paid of = 1,133.15
million (including interest of lease liability), principal payment towards lease liability of = 86.33 million and
dividends paid of % 6.96 million.

Capital Expenditure

Our historical capital expenditures were, and we expect our future capital expenditures to be, primarily for
investments in property, plant and equipment for our manufacturing facilities and other intangible assets. We have
undertaken significant capital expenditure in the earlier years of our business, with a view to further enhance our
machining and manufacturing capacities to meet the growing demand for our Automotive - Powertrain and Others
and Automotive — Aluminium products from our customers and to expand into newer segments such as our storage
solutions business, based on revenue visibility.

For the nine months ended December 31, 2020 and Fiscals 2020, 2019 and 2018, our capital expenditure aggregated
to 507.29 million, = 1,206.01 million, = 4,559.86 million and % 1,811.24 million, respectively, used to modernize
and upgrade our manufacturing facilities, infrastructure, machines, equipment and technology to allow us to offer
a diverse product suite, reduce operating costs and drive productivity.

As of the nine months ended December 31, 2020 and Fiscals 2020, 2019 and 2018, the Gross Block was =
22,307.42 million, = 21,855.56 million, = 20,700.44 million and % 16,284.26 million.

For the nine months ended December 31, 2020 and Fiscals 2020, 2019 and 2018, our ROCE was 10.55%, 13.80%,
18.66% and 14.00%, while, given our net worth of 2 7,161.88 million, % 6,634.75 million, = 6,278.36 million and
% 5,412.34 million as on December 31, 2020 and March 31, 2020, 2019 and 2018, respectively, our ROE for the
same periods was 7.07%, 6.19%, 15.51% and 5.83%.

Indebtedness

As of December 31, 2020, our aggregate outstanding borrowing (including sales bill discounting, sales/purchase
invoice bill discounting, buyer’s credit and letter of credit facilities availed by our Company) was 2 8,901.12
million. For further information, see “Financial Statements — Restated Financial Information - Annexure VII -
Note No. 20” and “Financial Indebtedness” on pages 257 and 322, respectively.

Set forth below is a summary of our Company’s aggregate borrowings, in a consolidated basis, as on December
31, 2020:

(in million)

 

Category of borrowing Sanctioned amount Outstanding amount as on
December 31, 2020

Secured

Term loans 11,038.20 7,364.90
Working capital facilities*

. Fund based 3,300.00 1,566.91
, Non-fund based 870.00 826.49
Unsecured** 120.00 95.74
Total 15,328.20 9,854.04

 

*includes buyer's credit and letter of credit facilities availed by our Company.

318
**includes operating lease, sales bill discounting and sales/purchase invoice bill discounting facilities availed by our
Company.

Our Company proposes to utilize the funds which are being raised through the Fresh Issue for repayment/pre-
payment, in full or part, of certain borrowings availed by our Company. For further details, see “Objects of the
Offer - Details of the Objects of the Fresh Issue - Repayment/pre-payment, in full or part, of certain borrowings
availed of by our Company” on page 81.

Contingent Liabilities and Capital Commitments

The following table sets forth the principal components of our contingent liabilities and capital commitments:

(in & million)

 

Particulars Nine Fiscal ‘Fiscal ‘Fiscal
months 2020 2019 2018
ended
December

31, 2020
Claims against us not acknowledged as debt
- Excise 0.69 0.69 7.33 12.60
- VAT 6.21 5.53 5.23 6.83
- Service Tax 6.72 6.72 7.70 6.86
-GST 4.33 2.74 2 :
- Income Tax 176.79 176.79 173.28 «69.48
- Stamp duty 5.62 5.62 5.62 E

Sales Bill Discounting - 5.62 376.38 459.83
Commitment on Capital Account 864.92 304.90 928.10 1,120.00

 

Off-balance Sheet Arrangements
We do not have any material off-balance sheet arrangements.
Related Party Transactions

We have entered into, and expect to continue entering into, transactions with certain related parties, in the normal
course of business with Carl Stahl Craftsman Enterprises Private Limited and MC Craftsman Machinery Private
Limited.

For further information, see “Risk Factors - We have entered into transactions with related parties. These or
any future related party transactions may potentially involve conflicts of interest and there can be no assurance
that we could not have achieved better terms, had such arrangements been entered into with unrelated parties.”
and “Financial Statements — Restated Financial Information — Annexure VII —Note No. 43” on pages 45 and
276, respectively.

Significant Developments after December 31, 2020

There are no developments or circumstances that have arisen after December 31, 2020 that we expect to have a
material and adverse impact on our reserves, profits, earnings per Equity Share, book value or ability to pay our
liabilities within the next 12 months.

Quantitative and Qualitative Disclosure about Market Risks

General market risk

Market risk is the risk that changes in market prices, liquidity and other factors could have an adverse effect on
realizable fair values or future cash flows. Our activities expose us primarily to the financial risks of changes in
foreign currency exchange rates and interest rates.

Also see, “Risk Factors” on page 22.

Foreign exchange rate risk

319
We have entered into cross-currency and interest rate swap contracts for hedging our foreign currency and interest
rate risks relating to certain external commercial borrowings. In addition, we may enter into call option contracts
and interest rate swaps, which are not designated as hedges. In case of currency swaps, the effective portion, i.e.,
the amounts recognized as other comprehensive income are transferred to profit or loss when the hedged
transaction affects profit or loss (such as when the hedged financial income or financial expense is recognized, or
when a forecast sale occurs when the hedged item is the cost of a non-financial asset or non-financial liability),
while any ineffective portion is recognized immediately in profit or loss. In all such events, the net mark to market
gains or losses are recognized in our statement of profit or loss for the period. However, there can be no assurance
that our aforesaid measures will enable us to avoid the effect of any adverse fluctuations in the value of the Indian
Rupee against other relevant foreign currencies, to the extent that we recognize a net mark to market loss in our
statement of profit and loss for the period, our profitability may be adversely affected.

Also see, “Risk Factors” on page 22.
Interest rate risk

We are exposed to interest rate risk pertaining to funds borrowed at both fixed and floating interest rates. Although
the risk of floating interest rates in foreign currency is managed by the use of hedging arrangements including
interest rate swap contracts, from time to time, to the extent that we recognize a net mark to market loss in our
statement of profit and loss for the period, our profitability may be adversely affected.

Also see, “Risk Factors” on page 22.
Credit Risk

Credit risk is the risk of financial loss if a customer or counterparty fails to meet its contractual obligations. Also
see, “Risk Factors” on page 22.

Our trade receivables were % 2,142.00 million, = 1,943.19 million, % 2,100.32 million and 2 2,016.86 million, for
the nine months ended December 31, 2020 and for the years ended March 31, 2020, 2019 and 2018, respectively.
The expected credit loss allowance for trade receivables based on our provision matrix was % 97.26 million, =
80.34 million, = 64.85 million and 2 70.30 million, as at the end of the nine months ended December 31, 2020 and
Fiscals 2020, 2019 and 2018, respectively, due to delay in receiving payments from our customers as a result of
the impact of COVID-19 outbreak.

Liquidity Risk

Liquidity risk refers to the risk that we cannot meet our financial obligations, despite havingobtained fund-based
and non fund-based working capital limits from various banks and investing the surplus in bank fixed deposits.
Also see, “Risk Factors” on page 22.

Unusual or infrequent events or transactions

Except as discussed in this Prospectus, there have been no other events or transactions that, to our knowledge,
may be described as “unusual” or “infrequent”.

Known trends or uncertainties

To our knowledge, except as we have described in this Prospectus, including under this section and under “Risk
Factors” on page 22, there are no known trends or uncertainties, which we expect to have a material adverse
impact on our revenues or income from continuing operations.

Future changes in relationship between costs and revenues
Except as described in this section and in “Risk Factors” and “Business” on pages 22 and 168, respectively, to
our knowledge, there is no future relationship between expenditure and income that will have a material adverse

impact on our operations and finances.

Extent to which material increases in net sales or revenue are due to increased sale volume, introduction of
new products or services or increased sales prices

320
The extent to which material increases in net sales or revenue are due to increased sale volume, introduction of
new products or services or increased sales prices is discussed in this section above.

New Product or Business Segments

Other than as described above and in “Business” on page 168, there are no new products or business segments in
which we operate and we have not announced and do not expect to announce in the near future any new products
or business segments.

Significant regulatory changes that materially affected or are likely to affect income from continuing
operations

Except as described in “Risk Factors” and “Key Regulations and Policies in India” on pages 22 and 189,
respectively, there have been no significant regulatory changes that have materially affected or are likely to affect
our income from continuing operations.

The extent to which our business is seasonal

Our business experiences seasonal variation with the third quarter of the Fiscal year typically recording lower
sales primarily due to a reduction in sales on account of reduced number of working days due to festivities and
holidays in India and a reduction in export sales due to festivities and holidays in such jurisdictions. Furthermore,
some of our customers may have businesses that are seasonal in nature. However, see “Risk Factors - Our
quarterly results may fluctuate significantly, which could have a negative effect on the price of our Equity
Shares.”, “Risk factors - The cyclical and seasonal nature of automotive sales and production can adversely
affect our business.” and “Business”, on pages 44, 51 and 168, respectively.

Competitive conditions

For a description of the competitive conditions in which we operate, see “Industry Overview” and “Business -
Competition” on pages 96 and 187, respectively.

Supplier or customer concentration

We do not have any material dependence on a single or a few suppliers or customers. We have a diversified client
base with our top 10 customers accounting for 59.15%, 53.41%, 56.25% and 52.59% of our total revenue, in the
nine months ended December 31, 2020 and Fiscals 2020, 2019 and 2018, respectively. However, see “Risk
Factors - The loss of any of our key customers or significant reduction in production and sales of, or demand
for our production from our significant customers may adversely affect our business, results of operations and
financial condition.” and “Business” on pages 26 and 168, respectively, and the discussion of credit risk in “-
Credit Risk” on page 320.

321
FINANCIAL INDEBTEDNESS

Pursuant to our Articles of Association, subject to the provisions of the Companies Act 2013 and other applicable
laws and pursuant to the resolution passed by the shareholders of our Company on April 30, 2018, our Board has
been authorized to borrow, from time to time, any sum or sums of money, as may, in the opinion of the Board, be
required to be borrowed by our Company notwithstanding that the monies already borrowed by the Company
(apart from temporary loans obtained and/or to be obtained from our Company’s bankers in the ordinary course
of business) will exceed the aggregate of the paid-up capital of our Company and its free reserves, provided that
the total monies borrowed by our Company and outstanding at any point of time for the principal amounts of loan
borrowed (apart from temporary loans obtained and/or to be obtained from the Company’s bankers in the ordinary
course of business) shall not exceed the sum of 2 15,000.00 million.

As of December 31, 2020, our aggregate outstanding borrowings (including operating lease, sales bill discounting,
sales/purchase invoice bill discounting, buyer’s credit and letter of credit facilities availed by our Company) was
% 8,901.12 million.

Borrowings of our Company on consolidated basis

As of December 31, 2020, our Company had total outstanding borrowings amounting to % 8,901.12 million. Set
forth below is a brief summary of our Company’s aggregate borrowings:

 

(in million)
Category of borrowing Sanctioned amount Outstanding amount as on
December 31, 2020

Secured
Term loans 11,038.20 7,364.90
Working capital facilities*

- Fund based 3,300.00 1,566.91

- _ Non-fund based 870.00 826.49
Unsecured** 120.00 95.74
Total 15,328.20 9,854.04

 

*includes buyer's credit and letter of credit facilities availed by our Company.
**includes operating lease, sales bill discounting and sales/purchase invoice bill discounting facilities availed by our
Company.

Principal terms of the borrowings availed of by our Company

Set out below are the principal terms of the borrowing availed of by our Company:

Interest: In terms of the term loans availed of by our Company, the interest rate typically the base rate of a
specified lender, in case of Indian Rupee denominated loans or LIBOR, and in case of foreign currency
denominated loans and spread/margin per annum.

Tenor: The tenor of the term loans typically ranges from 48 months to 96 months.

Security: The term loans are typically secured by way of:

a. creating security by way of hypothecation on our Company’s fixed assets and current assets;
b. creating security by way of mortgage of our Company’s land and other immovable properties,
c providing personal guarantee of our Promoter; and

d. demand promissory notes.

This is an indicative list and there may be additional requirements for creation of security under the various
borrowing arrangements entered into by us.

Re-payment: The term loans are typically repayable in equally or quarterly or semi-annual instalments after a
moratorium period.

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Prepayment: The term loans availed of by our Company typically have prepayment provisions which allows for
pre-payment and re-scheduling of the outstanding loan amount on receiving prior approval from such concerned
lender, subject to such prepayment penalties as may be decided by the lender at the time of such prepayment, or
as laid down in the facility document, as the case may be.

Covenants: Borrowing arrangements entered into by our Company for the term loans typically contain various
restrictive conditions and covenants restricting certain corporate actions, and we are required to take the prior
approval of the lender before carrying out such activities, including for:

a. effecting any material change in the equity pattern;

b. amending our Memorandum of Association and Articles of Association;

c undertaking any new project, diversification, modernization or substantial expansion of our projects;

d. changing our capital structure or management of our Company;

e effect any merger, amalgamation or scheme of arrangement or compromise;

f. declaring or paying any dividend or any other distribution to any of the shareholders;

g. creating any charge, mortgage, pledge, hypothecation, lien or other encumbrance over assets constituting

security or any further indebtedness of any nature;

h. revaluing the assets of our Company;

i. changing the accounting policies of our Company;

je transferring or disposing of the Equity Shares by our Promoter;

k. incorporating new subsidiaries; and

L investing any funds by way of deposit, extending loan or advance to or placing deposit with other
companies.

Events of Default: Borrowing arrangements entered into by our Company for the term loans contain standard
events of default, including:

a. non-payment or default of principal and/or interest due on the loan obligation;

b. breach of any representation, warranty or undertaking by our Company;

c proceedings relating to winding up, insolvency, liquidation being initiated against our Company;

d. change in control of our Company;

e. non creation of security within stipulated period;

f. appointment of a receiver over or liquidator for all or any part of the undertaking of our Company;

g. cross default by our Company on amounts due to any other lender;

h. cessation of business of our Company; and

i. any circumstance or event which is prejudicial to or impair or imperils or jeopardizes or adversely affect
the ability or capacity of the borrower to perform or company its obligation to repay under the loan
agreements.

323
This is an indicative list and there may be additional terms that may amount to an event of default under the
various borrowing arrangements entered into by us. Also see “Objects of the Offer - Details of the Objects of the
Fresh Issue” on page 81.

324
SECTION VI - LEGAL AND OTHER INFORMATION
OUTSTANDING LITIGATION AND OTHER MATERIAL DEVELOPMENTS

Except as stated in this section, there are no: (i) outstanding criminal proceedings involving our Company,
Subsidiaries, Promoter or Directors; (ii) outstanding actions taken by statutory or regulatory authorities
involving our Company, Subsidiaries, Promoter or Directors; (iii) outstanding claims involving our Company,
Subsidiaries, Promoter or Directors for any direct or indirect tax liabilities; (iv) outstanding litigations as
determined to be material by our Board as per the Materiality Policy; (v) disciplinary actions including penalties
imposed by SEBI or stock exchanges against our Promoter in the last five Financial Years including any
outstanding action; and (vi) outstanding litigation involving our Group Companies which has a material impact
on our Company.

In accordance with the Materiality Policy, all pending litigation involving our Company, Subsidiaries, Promoter
or Directors, other than criminal proceedings, statutory or regulatory actions and taxation matters, would be
considered ‘material’, if the monetary amount of claim made by or against the Company, its Subsidiaries,
Directors and Promoter in any such pending litigation is in excess of 3.00% of the consolidated profit after tax of
our Company for Financial Year 2020, being % 12.32 million (as per the Restated Financial Information) or any
such litigation, an adverse outcome of which would materially and adversely affect our Company's business,
operations, prospects, financial position or reputation, irrespective of the amount involved in such litigation.

Further, it is clarified that for the purpose of the above, pre-litigation notices received by our Company,
Subsidiaries, Promoter or Directors from third parties (excluding those notices issued by statutory/regulatory/tax
authorities or notices threatening criminal action) shall, in any event, not be considered as litigation and
accordingly have not been disclosed in this section until such time that the Company, Subsidiaries, Promoter or
Directors are impleaded as defendants in litigation proceedings before any judicial forum.
Unless stated to the contrary, the information provided below is as of the date of this Prospectus.
L LITIGATION INVOLVING OUR COMPANY
A. Outstanding criminal proceedings involving our Company
Criminal proceedings against our Company
There are no criminal proceedings pending against our Company.
Criminal proceedings by our Company
There are no criminal proceedings pending which have been initiated by our Company.
B. Outstanding material civil litigation involving our Company
Civil proceedings against our Company
1. N. Sundaram (“Petitioner”) filed a suit against C. Padmavathy, M. Thulasiammal (“Defendants”) and
another before the Court of District Munsif of Coimbatore, for, among others,: (a) rectifying the
particulars of a sale deed executed by the Petitioner and the Defendants in relation to sale of certain
portion of land aggregating to 2.19 acres wrongfully transferred to the Defendants; and (b) restraining
the Defendants from alienating the disputed land. The disputed land was purchased our Company from
the Defendants before the aforesaid suit was initiated. The matter has been transferred from the Court of
District Munsif of Coimbatore to the Court of District Munsif, Sulur. Subsequently, the Petitioner filed
a petition to implead our Company as one of the defendants in the matter. The matter is currently pending.
Civil proceedings by our Company
1. Our Company issued a demand notice dated February 8, 2019 to Inox Wind Limited (“Corporate
Debtor”) for recovery of unpaid operational debt aggregating to = 8.47 million (including interest).

Subsequently, our Company filed an application (“Application”) before the National Company Law
Tribunal, Chandigarh (“NCLT”) to initiate insolvency proceedings against the Corporate Debtor under

325
the Insolvency and Bankruptcy Code, 2016 and the relevant rules thereunder alleging non-payment of
dues by the Corporates Debtor towards purchase of electric chain hoist from our Company. The matter
is currently pending. Further, our Company has also issued a notice dated November 28, 2019 to the
Corporate Debtor for recovery of additional unpaid operational debt aggregating % 6.60 million
(including interest). However, in respect of the same, our Company is yet to file an application to initiate
insolvency proceedings before the NCLT.

Outstanding actions by statutory or regulatory authorities against our Company

Our Company received a notice dated August 16, 2018 (“Notice”) from the Sub-Registrar, Class I,
Talegaon Dhamdhere, Pune, alleging deficit in payment of stamp duty amounting to 2 5.62 million
(including interest) under the provisions of the Maharashtra Stamp Act, 1958, in relation to the lease
agreement dated July 12, 2018 entered into by our Company. On November 2, 2018, in relation to the
Notice, the Joint District Registrar and Collector of Stamps, Pune, passed an adverse order against our
Company. Subsequently, our Company filed an appeal before the Deputy Inspector General of
Registration, Pune (“Appeal”) challenging the order dated November 2, 2018. The Appeal was rejected
by the Deputy Inspector General of Registration and Deputy Controller of Stamps, Pune, vide its order
dated November 6, 2019 (“Order”). Our Company has filed a writ petition dated December 18, 2019,
before the Bombay High Court for quashing and setting aside of the Order. The matter is currently
pending.

The Joint Commissioner of Labour, Tiruchirapalli (“Joint Commissioner’), issued a notice dated March
11, 2020 to our Company in relation to an application filed against our Company by V. Veeramani, an
employee of our Company, under the Employees’ Compensation Act, 1923, for a claim of compensation
of @ 2.00 million from the Company and has initiated proceedings before the Joint Commissioner. The
matter is currently pending.

Outstanding tax proceedings against our Company

The details with respect to direct tax and indirect tax proceedings involving our Company are set out
below:

 

Ss. Particulars Number of Aggregate amount involved (in ¢ million)*
No cases

1. Direct tax 17 176.79

Be Indirect tax Z 16.49

Total 24 193.28

 

* fo the extent quantifiable
Outstanding dues to creditors

As per the Materiality Policy, creditors to whom an amount exceeding 2 84.54 million, which is 3% of
the total consolidated trade payables of our Company as on the latest fiscal i.e. Fiscal 2020, as per the
Restated Financial Information, were considered ‘material’ creditors. Based on the above, there is one
material creditor of our Company as on December 31, 2020, to whom an aggregate amount of = 534.32
million was outstanding. Based on this criterion, details of outstanding dues (trade payables) owed to
micro, small and medium enterprises (as defined under Section 2 of the Micro, Small and Medium
Enterprises Development Act, 2006), material creditors and other creditors, as at December 31, 2020, by
our Company, are set out below:

 

‘Type of creditors Number of ‘Amount involved (in &
creditors million)

Micro, small and medium enterprises 207 155.06

Material creditors 1 534,32

Other creditors 1,558 2,326.77

Total 1,766 3,016.15

 

The details pertaining to net outstanding dues towards our material creditors as on December 31, 2020
(along with the names and amounts involved for each such material creditor) are available on the website
of our Company at www.craftsmanautomation.com/investors. It is clarified that such details available on
our website do not form a part of this Prospectus.

326
LITIGATION INVOLVING OUR DIRECTORS

Outstanding criminal litigation involving our Directors

Criminal proceedings against our Directors

There are no criminal proceedings pending against our Directors.

Criminal proceedings by our Directors

There are no criminal proceedings pending which have been initiated by our Directors.

Outstanding material civil litigation involving our Directors

Civil proceedings against our Directors

There are no material civil proceedings pending against our Directors.

Civil proceedings by our Directors

There are no material civil proceedings pending which have been initiated by our Directors.
Outstanding actions by statutory or regulatory authorities against any of our Directors

The Assistant Director General of Foreign Trade, Ministry of Commerce & Industry, Government of
India (“DGFT”) issued a show cause notice dated October 12, 2017 against Magnetic Electronics
Devices Private Limited (“MEDPL”), Sundararaman Kalyanaraman, ex-director of MEDPL, and certain
other individuals for alleged failure to discharge export obligations with respect to quantity based
advance authorization which was granted to them. The notice required the noticees to submit certain
documents evidencing fulfillment of export obligations to avoid any violation of the Foreign Trade
(Development and Regulation) Act, 1992. MEDPL filed a response dated November 15, 2017 denying
the violation. However, the DGFT passed an order dated November 15, 2017 pursuant to the show cause
notice imposing a penalty of 2 0.10 million on MEDPL. MEDPL filed an appeal dated December 13,
2017 against the impugned order of DGFT praying the impugned order and the show cause notice to be
set aside. The matter is pending before DGFT.

Outstanding tax proceedings involving our Directors

There are no direct or indirect tax proceedings pending involving our Directors.

LITIGATION INVOLVING OUR PROMOTER

Outstanding criminal litigation involving our Promoter

Criminal proceedings against Srinivasan Ravi

There are no criminal proceedings pending against Srinivasan Ravi.

Criminal proceedings by Srinivasan Ravi

There are no criminal proceedings pending which have been initiated by Srinivasan Ravi.

Outstanding material civil litigation involving our Promoter

Civil proceedings against Srinivasan Ravi

There are no material civil proceedings pending against Srinivasan Ravi.

Civil proceedings by Srinivasan Ravi

327
Iv.

There are no material civil proceedings pending which have been initiated by Srinivasan Ravi.
Outstanding actions by statutory or regulatory authorities against our Promoter

There are no pending actions by statutory or regulatory authorities against our Promoter.
Outstanding tax proceedings involving our Promoter

There are no direct or indirect tax proceedings involving our Promoter.

LITIGATION INVOLVING OUR SUBSIDIARIES

Outstanding criminal litigation involving our Subsidiaries

Craftsman Europe B.V. (formerly known as Craftsman Marine B.V.)

Criminal proceedings against Craftsman Europe B.V.

There are no criminal proceedings pending against Craftsman Europe B.V.

Criminal proceedings by Craftsman Europe B.V.

There are no criminal proceedings pending which have been initiated by Craftsman Europe B.V.
Craftsman Automation Singapore Pte. Ltd.

Criminal proceedings against Craftsman Automation Singapore Pte. Ltd.

There are no criminal proceedings pending against Craftsman Automation Singapore Pte. Ltd.
Criminal proceedings by Craftsman Automation Singapore Pte. Ltd.

There are no criminal proceedings pending which have been initiated by Craftsman Automation
Singapore Pte. Ltd.

Outstanding material civil litigation involving our Subsidiaries

Craftsman Europe B.V. (formerly known as Craftsman Marine B.V.)

Civil proceedings against Craftsman Europe B.V.

There are no material civil proceedings pending against Craftsman Europe B.V.

Civil proceedings by Craftsman Europe B.V.

There are no material civil proceedings pending which have been initiated by Craftsman Europe B.V.
Craftsman Automation Singapore Pte. Ltd.

Civil proceedings against Craftsman Automation Singapore Pte. Ltd.

There are no material civil proceedings pending against Craftsman Automation Singapore Pte. Ltd.
Civil proceedings by Craftsman Automation Singapore Pte. Ltd.

There are no material civil proceedings pending which have been initiated by Craftsman Automation
Singapore Pte. Ltd.

328
Cc Outstanding actions by statutory or regulatory authorities against our Subsidiaries
There are no pending actions by statutory or regulatory authorities against our Subsidiaries.
D. Outstanding tax proceedings involving our Subsidiaries
There are no outstanding tax proceedings involving our Subsidiaries.

Vv. OUTSTANDING LITIGATION INVOLVING OUR GROUP COMPANIES WHICH HAS A
MATERIAL IMPACT ON OUR COMPANY

MC Craftsman Machinery Private Limited

There are no litigation involving MC Craftsman Machinery Private Limited that has a material impact
on our Company.

Carl Stahl Craftsman Enterprises Private Limited

There are no litigation involving Carl Stahl Craftsman Enterprises Private Limited that has a material
impact on our Company.

Material developments since the last balance sheet date

Except as stated in “Management’s Discussion and Analysis of Financial Condition and Results of Operation
— Significant Developments after December 31, 2020” on page 321, no circumstances have arisen since
December 31, 2020, the date of the Restated Financial Information disclosed in this Prospectus, which materially
and adversely affect or are likely to affect the value of our consolidated assets or our ability to pay our material
liabilities within the next 12 months.

    

329
GOVERNMENT AND OTHER APPROVALS

Except as disclosed in this Prospectus, no further material consents, licenses, registrations, permissions and
approvals from any regulatory authority are required for carrying on the present or proposed business operations
of our Company. In the event that any of the material consents, licenses, registrations, permissions and approvals
that are required for the business operations of our Company expire in the ordinary course of business, our
Company applies for their renewal from time to time.

As on date of this Prospectus, our Company does not have any material subsidiary in terms of the SEBI Listing
Regulations. The material consents, licenses, registrations, permissions and approvals obtained by our Company,
which enable it to undertake its current business activities, are set out below:

10.

Incorporation details of our Company

Certificate of incorporation dated July 18, 1986 issued to our Company by the RoC in the name of
“Craftsman Automation Private Limited”.

Fresh certificate of incorporation dated May 4, 2018 issued to our Company by the RoC pursuant to the
conversion of our Company to a public limited company and consequent change in the name of our
Company from “Craftsman Automation Private Limited” to “Craftsman Automation Limited”.

For further information on corporate and other approvals in relation to the Offer, see “Other Regulatory
and Statutory Disclosures — Authority for the Offer - Corporate Approvals” on page 332.

Material approvals in relation to the operations of our Company
Factory licenses under Factories Act, 1948 and relevant state factories rules.

Consent to establish, consent to operate and authorization obtained under the Air (Prevention and Control
of Pollution) Act, 1981, Water (Prevention and Control of Pollution) Act, 1974 and rules thereunder.

Registration under the Employee Provident Fund and Miscellaneous Provisions Act, 1952.
Registration under the Employees State Insurance Act, 1948.
Registration under the Contract Labour (Regulation & Abolition) Act, 1970.

Registration certificate obtained from relevant state labour department under the shops and
establishments act of the relevant states where our Company operates an establishment.

Registration as employer and enrollment certificate under the relevant state professions, trade, calling
and employment legislation for payment of professional tax.

Approvals for obtaining PAN and TAN.
Registration for payment of goods and services tax.
Importer — exporter code.

Material approvals applied for, but not received

Certain material consents, licenses, registrations, permissions and approvals that are required to be
obtained by our Company for undertaking its business have elapsed in their normal course and our
Company has either made an application to the relevant Central Government or state government
authorities for renewal of such material consents, licenses, registrations, permissions and approvals or is
in the process of making such applications. Our Company has made applications to the Central
Government or relevant state government authorities to intimate the change in the name of our Company
pursuant to conversion into a public limited company and to obtain revised material consents, licenses,
registrations, permissions and approvals, wherever applicable. The material consents, licenses,

330
Iv.

registrations, permissions and approvals for which applications have been made by our Company
including:

Application dated December 9, 2020 for renewal of fire NOC for unit located in Pithampur.
Material approvals not applied for

Except as stated below, there are no material consents, licenses, registrations, permissions and approvals
for which applications are yet to be made by our Company:

Nil
Intellectual property related approvals

The details of certain trademarks registered and renewed in the name of our Company, under the Trade
Marks Act, are as provided below:

 

Ss. Trade Mark Class. Application Date of Date of
no. no. application expiry
4. WWW. CRAFTSMANAUTOMATION.COM 6 1697319 June 10,2008 June 10, 2028

2. WWW.CRAFTSMANAUTOMATION.COM 12 2020269 September 8, September 8,

2010 2030
3. 6 2040958 October 20, October 20,
Craftsman 2010 2030
4. re 7 2040959 October 20, October 20,
Apes 2010 2030
5. 12 2040961 October 20, October 20,
Craftsman 2010 2030
6. 6,9, 3559176 September 29, September
ey’ 20 2017 29, 2027
and
22

7. ST@R F 6,9, 3559177 May 29,2017 May 29, 2027
20

and
22

In addition to the above, our Company has registered its website domain name:
www.craftsmanautomation.com.

Our Company has filed applications for the registration of the following trademarks in accordance with
the Trade Marks Act, the status is provided below:

 

Ss. Description Class Application _Date of Status of
no. no. application _ application
1. mre 7 1534719 February 26, Opposed
CRAFTSMAN 3007
2: WWW. CRAFISMANAUTOMATION.COM 7 1697320 June 10,2008 ~—Refused

 

331
OTHER REGULATORY AND STATUTORY DISCLOSURES
Authority for the Offer
Corporate Approvals
. Our Board has, pursuant to a resolution passed at its meeting held on December 5, 2020, authorized the
Offer, subject to the approval of the Shareholders of our Company under Section 62(1)(c) of the
Companies Act 2013.

. Our Shareholders have, pursuant to a special resolution passed at their meeting held on December 7,
2020, under Section 62(1)(c) of the Companies Act 2013, authorized the Offer.

. The Draft Red Herring Prospectus has been approved by the Board on December 9, 2020.
. The Red Herring Prospectus has been approved by the Board on March 5, 2021.
. This Prospectus has been approved by the Board on March 18, 2021.

Approvals from the Selling Shareholders

Each of the Selling Shareholders have, severally and not jointly, approved the transfer of their respective Offered
Shares pursuant to the Offer for Sale, as set out below:

 

S.No. Name of the Selling Shareholder Date of Consent Letter Maximum number of
Offered Shares
1. _ Srinivasan Ravi October 29, 2020 130,640
2. Marina November 19, 2020 1,559,260
3. IEC November 25, 2020 1,414,050
4, K. Gomatheswaran November 2, 2020 1,417,500
Total 4,521,450

 

In-principle Listing Approvals

. Our Company has received in-principle approval from BSE for the listing of our Equity Shares pursuant
to a letter dated January 4, 2021.

. Our Company has received in-principle approval from NSE for the listing of our Equity Shares pursuant
to a letter dated January 5, 2021.

Prohibition by SEBI and other Governmental Authorities

Neither our Company, nor our Promoter, members of our Promoter Group, our Directors, person(s) in control of
our Company or the Selling Shareholders is prohibited or debarred from accessing the capital markets or debarred
from buying, selling or dealing in securities under any order or direction passed by the SEBI or any securities

market regulator in any other jurisdiction or any other authority/court.

Neither our Promoter, nor any of our Directors is a promoter or a director of any other company which is debarred
from accessing the capital markets by SEBI.

Our Company, our Promoter, members of our Promoter Group and the Selling Shareholders are in compliance
with the Companies (Significant Beneficial Ownership) Rules, 2018, as amended and to the extent applicable.

None of our Directors is in any manner associated with the securities market and there is no outstanding action
against any of our Directors initiated by SEBI in the past five years preceding the date of this Prospectus.

332
Eligibility for the Offer

Our Company confirms that it is not ineligible to make the Offer in terms of Regulation 5 of the SEBI ICDR
Regulations, to the extent applicable. The details of our compliance with Regulation 5 of the SEBI ICDR
Regulations are as follows:

(a) Neither our Company nor our Promoter, members of our Promoter Group, our Directors or any of the
Selling Shareholders is debarred from accessing the capital markets by SEBI;

(b) Neither our Promoter nor our Directors is a promoter or director of any other company which is debarred
from accessing the capital markets by SEBI;

( Neither our Company nor our Promoter or our Directors is a Wilful Defaulter;
(d) Neither our Promoter nor any of our Directors is a fugitive economic offender;
(e) There are no outstanding warrants, options or rights to convert debentures, loans or other instruments

convertible into, or which would entitle any person any option to receive Equity Shares, as on the date
of this Prospectus.

Our Company is eligible for the Offer in accordance with the Regulation 6(1) of the SEBI ICDR Regulations, and
is in compliance with the conditions specified therein in the following manner:

(a) Our Company has had net tangible assets of at least = 30 million, calculated on a restated and consolidated
basis, in each of the preceding three full years (of 12 months each), of which not more than 50 % are
held in monetary assets;

(b) Our Company has an average operating profit of at least = 150 million, calculated on a restated and
consolidated basis, during the preceding three years (of 12 months each), with operating profit in each
of these preceding three years;

( Our Company has a net worth of at least = 10 million in each of the preceding three full years (of 12
months each), calculated on a restated and consolidated basis; and

(d) Our Company has not changed its name in the last one year.
Our Company’s net tangible assets, monetary assets, monetary assets as a percentage of the net tangible assets,
operating profits and net worth, derived from the Restated Financial Information included in this Prospectus as at,

and for the last three Fiscals 2020, 2019 and 2018 are set forth below:

(in million except as indicated)

 

 

Particulars Fiscal 2020 Fiscal 2019 Fiscal 2018

Net tangible assets ” 7,453.58 7,044.43 6,136.67
Monetary assets?) 716.42 265.81 486.77
Monetary assets as a percentage of net tangible 9.61% 3.77% 7.93%
assets (%)

Operating profit® 2,029.71 2,668.96 1,446.97
Net worth 6,634.75 6,278.36 5,412.34

Notes:

(1) Net tangible assets means the sum of all net assets of our Company, excluding intangible assets as defined in Ind AS 38.
(2). Monetary assets comprises cash and bank balances.

(3) Operating profit has been defined as the profit before tax after adjusting other income, loss on sale of investment, lease rentals written
off, interest income written off and finance costs.

(4) Net worth means the aggregate value of the paid-up share capital and all reserves created out of the profits and securities premium
account and debit or credit balance of profit and loss account, after deducting the aggregate value of the accumulated losses, deferred
expenditure and miscellaneous expenditure not written off, but does not include reserves created out of revaluation of assets, write-back
of depreciation and amalgamation.

Our Company has operating profit in each of the Fiscals 2020, 2019 and 2018 as per the Restated Financial
Information. Our average operating profit for Fiscals 2020, 2019 and 2018 is % 2,048.55 million.

333
Our Company confirms that it is in compliance with the conditions specified in Regulation 7(1) of the SEBI ICDR
Regulations, to the extent applicable, and will ensure compliance with the conditions specified in Regulation 7(2)
of the SEBI ICDR Regulations, to the extent applicable.

Further, in accordance with Regulation 49(1) of the SEBI ICDR Regulations, our Company shall ensure that the
number of Allottees under the Offer shall be not less than 1,000.

DISCLAIMER CLAUSE OF SEBI

IT IS TO BE DISTINCTLY UNDERSTOOD THAT SUBMISSION OF THE DRAFT RED HERRING
PROSPECTUS TO SEBI SHOULD NOT, IN ANY WAY, BE DEEMED OR CONSTRUED THAT THE
SAME HAS BEEN CLEARED OR APPROVED BY SEBI. SEBI DOES NOT TAKE ANY
RESPONSIBILITY EITHER FOR THE FINANCIAL SOUNDNESS OF ANY SCHEME OR THE
PROJECT FOR WHICH THE OFFER IS PROPOSED TO BE MADE OR FOR THE CORRECTNESS
OF THE STATEMENTS MADE OR OPINIONS EXPRESSED IN THE DRAFT RED HERRING
PROSPECTUS. THE BRLMS, AXIS CAPITAL LIMITED AND IIFL SECURITIES LIMITED HAVE
CERTIFIED THAT THE DISCLOSURES MADE IN THE DRAFT RED HERRING PROSPECTUS ARE
GENERALLY ADEQUATE AND ARE IN CONFORMITY WITH THE SECURITIES AND
EXCHANGE BOARD OF INDIA (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS)
REGULATIONS, 2018, AS AMENDED. THIS REQUIREMENT IS TO FACILITATE INVESTORS TO
TAKE AN INFORMED DECISION FOR MAKING AN INVESTMENT IN THE PROPOSED OFFER.

IT SHOULD ALSO BE CLEARLY UNDERSTOOD THAT WHILE THE COMPANY IS PRIMARILY
RESPONSIBLE FOR THE CORRECTNESS, ADEQUACY AND DISCLOSURE OF ALL RELEVANT
INFORMATION IN THE DRAFT RED HERRING PROSPECTUS, THE BRLMS ARE EXPECTED TO
EXERCISE DUE DILIGENCE TO ENSURE THAT THE COMPANY DISCHARGES ITS
RESPONSIBILITY ADEQUATELY IN THIS BEHALF AND TOWARDS THIS PURPOSE, THE
BRLMS HAVE FURNISHED TO SEBI, A DUE DILIGENCE CERTIFICATE DATED DECEMBER 9,
2020 IN THE FORMAT PRESCRIBED UNDER SCHEDULE V OF THE SECURITIES AND
EXCHANGE BOARD OF INDIA (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS)
REGULATIONS, 2018, AS AMENDED.

THE FILING OF THE DRAFT RED HERRING PROSPECTUS DOES NOT, HOWEVER, ABSOLVE
THE COMPANY FROM ANY LIABILITIES UNDER THE COMPANIES ACT, 2013, AS AMENDED
OR FROM THE REQUIREMENT OF OBTAINING SUCH STATUTORY AND/OR OTHER
CLEARANCES AS MAY BE REQUIRED FOR THE PURPOSE OF THE OFFER. SEBI FURTHER
RESERVES THE RIGHT TO TAKE UP, AT ANY POINT OF TIME, WITH THE BRLMS, ANY
IRREGULARITIES OR LAPSES IN THE DRAFT RED HERRING PROSPECTUS.

Disclaimer from our Company, our Directors, the Selling Shareholders and the BRLMs

Our Company, our Directors, the Selling Shareholders and the BRLMs accept no responsibility for statements
made otherwise than in this Prospectus or in the advertisements or any other material issued by or at our instance
and anyone placing reliance on any other source of information, including our website,
www.craftsmanautomation.com or any website of any of the members of our Promoter Group, Subsidiaries, Group
Companies or any affiliate of our Company, would be doing so at his or her own risk. Each Selling Shareholders
and their respective directors, affiliates, associates and officers accept/undertake no responsibility for any
statements made or undertakings provided other than those specifically undertaken or confirmed by such Selling
Shareholders, and only in relation to itself and/or to the respective Offered Shares.

The BRLMs accept no responsibility, save to the limited extent as provided in the Offer Agreement and the
Underwriting Agreement to be entered into between the Underwriters, the Selling Shareholders and our Company.

All information shall be made available by our Company, the Selling Shareholders (to the extent of themselves
and their Offered Shares) and the BRLMs to the Bidders and public at large and no selective or additional
information would be made available for a section of the investors in any manner whatsoever, including at road
show presentations, in research or sales reports, at Bidding Centres or elsewhere.

334
Neither our Company nor the Selling Shareholders nor any member of the Syndicate shall be liable to the Bidders
for any failure in uploading the Bids, due to faults in any software or hardware system, or otherwise; the blocking
of Bid Amount in the ASBA Account on receipt of instructions from the Sponsor Bank on account of any errors,
omissions or noncompliance by various parties involved in, or any other fault, malfunctioning or breakdown in,
or otherwise, in the UPI Mechanism.

The BRLMs and their respective associates may engage in transactions with, and perform services for our
Company, the Selling Shareholders and their respective affiliates or associates in the ordinary course of business,
and have engaged, or may in the future engage in commercial banking and investment banking transactions with
our Company or the Selling Shareholders or their respective affiliates or associates for which they have received,
and may in future receive compensation.

Bidders will be required to confirm, and will be deemed to have represented to our Company, the Selling
Shareholders, the Underwriters and their respective directors, officers, agents, affiliates and representatives that
they are eligible under all applicable laws, rules, regulations, guidelines and approvals to acquire the Equity
Shares, and will not issue, sell, pledge or transfer the Equity Shares to any person who is not eligible under
applicable laws, rules, regulations, guidelines and approvals to acquire the Equity Shares. Our Company, the
Selling Shareholders and the Underwriters and their respective directors, officers, agents, affiliates and
representatives accept no responsibility or liability for advising any investor on whether such investor is eligible
to acquire Equity Shares.

Disclaimer in respect of jurisdiction

Any dispute arising out of this Offer will be subject to the jurisdiction of appropriate court(s) at Coimbatore, India
only.

This Offer was made in India to persons resident in India (including Indian nationals resident in India who are
competent to contract under the Indian Contract Act, 1872, HUFs, companies, corporate bodies and societies
registered under the applicable laws in India and authorized to invest in equity shares, Indian Mutual Funds
registered with SEBI, Indian financial institutions, commercial banks, regional rural banks, co-operative banks
(subject to permission from the RBI), trusts under the applicable trust laws and who are authorized under their
respective constitutions to hold and invest in equity shares, public financial institutions as specified under Section
2(72) of the Companies Act 2013, venture capital funds, permitted insurance companies and pension funds,
permitted non-residents including Eligible NRIs, AIFs, FPIs registered with SEBI and QIBs. This Prospectus does
not, however, constitute an offer to sell or an invitation to subscribe to Equity Shares offered hereby, in any
jurisdiction to any person to whom it is unlawful to make an offer or invitation in such jurisdiction. Any person
into whose possession this Prospectus comes is required to inform himself or herself about, and to observe, any
such restrictions.

No action has been, or will be taken to permit a public offering in any jurisdiction where action would be required
for that purpose. Accordingly, the Equity Shares represented hereby may not be offered or sold, directly or
indirectly, and this Prospectus may not be distributed, in any jurisdiction, except in accordance with the legal
requirements applicable in such jurisdiction. Neither the delivery of this Prospectus, nor any offer or sale
hereunder, shall, under any circumstances, create any implication that there has been no change in our affairs or
in the affairs of the Selling Shareholders from the date hereof or that the information contained herein is correct
as of any time subsequent to this date.

The Red Herring Prospectus and the Prospectus do not constitute an invitation to subscribe to or purchase the
Equity Shares in the Offer in any jurisdiction, including India. Invitations to subscribe to or purchase the Equity
Shares in the Offer was made only pursuant to the Red Herring Prospectus if the recipient was in India or the
preliminary offering memorandum for the Offer, which comprises this Prospectus and the preliminary
international wrap for the Offer, if the recipient was outside India. No person outside India was eligible to bid
for Equity Shares in the Offer unless that person had received the preliminary offering memorandum for
the Offer, which contains the selling restrictions for the Offer outside India.

The Equity Shares have not been, and will not be registered under the U.S. 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 in accordance with any 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

335
made.

The Equity Shares have not been and will not be registered, listed or otherwise qualified in any other
jurisdiction outside India and were not offered or sold, and Bids were not made by persons in any such
jurisdiction, except in compliance with the applicable laws of such jurisdiction.

Each purchaser of the Equity Shares in the Offer in India shall be deemed to:

. represent and warrant to our Company, the Selling Shareholders, the BRLMs and the Syndicate Member
that it was outside the United States (as defined in Regulation S) at the time the offer of the Equity Shares
was made to it and it was outside the United States (as defined in Regulation S) when its buy order for
the Equity Shares was originated.

. represent and warrant to our Company, the Selling Shareholders, the BRLMs and the Syndicate Member
that it did not purchase the Equity Shares as result of any “directed selling efforts” (as defined in
Regulation S).

. represent and warrant to our Company, the Selling Shareholders, the BRLMs and the Syndicate Member
that it bought the Equity Shares for investment purposes and not with a view to the distribution thereof.
If in the future it decides to resell or otherwise transfer any of the Equity Shares, it agrees that it will not
offer, sell or otherwise transfer the Equity Shares except in a transaction complying with Rule 903 or
Rule 904 of Regulation S or pursuant to any other available exemption from registration under the U.S.
Securities Act.

. represent and warrant to our Company, the Selling Shareholders, the BRLMs and the Syndicate Member
that if it acquired any of the Equity Shares as fiduciary or agent for one or more investor accounts, it has
sole investment discretion with respect to each such account and that it has full power to make the
foregoing representations, warranties, acknowledgements and agreements on behalf of each such
account.

. represent and warrant to our Company, the Selling Shareholders, the BRLMs and the Syndicate Member
that if it acquired any of the Equity Shares for one or more managed accounts, that it was authorized in
writing by each such managed account to subscribe to the Equity Shares for each managed account and
to make (and it hereby makes) the representations, warranties, acknowledgements and agreements herein
for and on behalf of each such account, reading the reference to “it” to include such accounts.

. agree to indemnify and hold the Company, the Selling Shareholders, the BRLMs and the Syndicate
Member harmless from any and all costs, claims, liabilities and expenses (including legal fees and
expenses) arising out of or in connection with any breach of these representations, warranties or
agreements. It agrees that the indemnity set forth in this paragraph shall survive the resale of the Equity
Shares.

. acknowledge that our Company, the Selling Shareholders, the BRLMs, the Syndicate Member and others
will rely upon the truth and accuracy of the foregoing representations, warranties, acknowledgements
and agreements.

Bidders were advised to ensure that any Bid from them do not exceed the investment limits or maximum number
of Equity Shares that can be held by them under applicable law.

Disclaimer clause of BSE

BSE Limited (“the Exchange”) has given vide its letter dated January 04, 2021 permission to this Company to use
the Exchange’s name in this offer document as one of the stock exchanges on which this company’s securities are
proposed to be listed. The Exchange has scrutinized this offer document for its limited internal purpose of deciding
on the matter of granting the aforesaid permission to this Company. The Exchange does not in any manner: -

  

a) warrant, certify or endorse the correctness or completeness of any of the contents of this offer document; or

b) warrant that this Company’s securities will be listed or will continue to be listed on the Exchange; or

336
c) take any responsibility for the financial or other soundness of this Company, its promoters, its management or
any scheme or project of this Company;

and it should not for any reason be deemed or construed that this offer document has been cleared or approved by
the Exchange. Every person who desires to apply for or otherwise acquires any securities of this Company may
do so pursuant to independent inquiry, investigation and analysis and shall not have any claim against the
Exchange whatsoever by reason of any loss which may be suffered by such person consequent to or in connection
with such subscription/acquisition whether by reason of anything stated or omitted to be stated herein or for any
other reason whatsoever.

Disclaimer clause of NSE

As required, a copy of this Offer Document has been submitted to National Stock Exchange of India Limited
(hereinafter referred to as NSE). NSE has given vide its letter Ref.: NSE/LIST/875 dated January 05, 2021
permission to the Issuer to use the Exchange’s name in this Offer Document as one of the Stock Exchanges on
which this Issuer’s securities are proposed to be listed. The Exchange has scrutinized this draft offer document
for its limited internal purpose of deciding on the matter of granting the aforesaid permission to this Issuer. It is
to be distinctly understood that the aforesaid permission given by NSE should not in any way be deemed or
construed that the offer document has been cleared or approved by NSE; nor does it in any manner warrant, certify
or endorse the correctness or completeness of any of the contents of this offer document; nor does it warrant that
this Issuer’s securities will be listed or will continue to be listed on the Exchange; nor does it take any
responsibility for the financial or other soundness of this Issuer, its promoters, its management or any scheme or
project of this Issuer.

Every person who desires to apply for or otherwise acquire any securities of this Issuer may do so pursuant to
independent inquiry, investigation and analysis and shall not have any claim against the Exchange whatsoever by
reason of any loss which may be suffered by such person consequent to or in connection with such subscription
/acquisition whether by reason of anything stated or omitted to be stated herein or any other reason whatsoever.

Listing

Application has been made to the Stock Exchanges for obtaining permission for listing and trading of the Equity
Shares being offered and sold in the Offer and BSE is the Designated Stock Exchange, with which the Basis of
Allotment will be finalized for the Offer.

If the permission to deal in and for an official quotation of the Equity Shares is not granted by the Stock Exchanges,
our Company shall forthwith repay, without interest, all monies received from the applicants in pursuance of the
Red Herring Prospectus in accordance with applicable law. Our Company shall ensure that all steps for the
completion of the necessary formalities for listing and commencement of trading of Equity Shares at the Stock
Exchanges are taken within six Working Days of the Bid/Offer Closing Date. If our Company does not allot
Equity Shares pursuant to the Offer within six Working Days from the Bid/Offer Closing Date or within such
timeline as prescribed by SEBI, it shall repay without interest all monies received from Bidders, failing which
interest shall be due to be paid to the Bidders at the rate of 15% per annum for the delayed period.

The Selling Shareholders undertakes to provide such reasonable support and extend reasonable cooperation as
may be required and requested by our Company, to the extent such support and cooperation is required from such
Selling Shareholder to facilitate the process of listing and commencement of trading of their respective portion of
the Offered Shares on the Stock Exchanges within six working days from the Bid/Offer Closing Date.

Consents

Consents in writing of the Selling Shareholders, our Directors, our Company Secretary and Compliance Officer,
our Chief Financial Officer, Legal Counsel to the Company as to Indian Law, Legal Counsel to the BRLMs as to
Indian Law, Legal Counsel to the Investor Selling Shareholders, Special Purpose International Legal Counsel to
the BRLMs, the BRLMs, the Bankers to our Company, CRISIL Research, Statutory Auditors, Previous Auditors,
Registrar to the Offer, the Syndicate Member, Escrow Collection Bank, Public Offer Account Banks, Refund
Bank, Sponsor Bank and Monitoring Agency to act in their respective capacities, have been obtained. Further,
such consents shall not be withdrawn as on the date this Prospectus.

Expert opinion

337
Except as stated below, our Company has not obtained any expert opinions:

Our Company has received written consent from our Statutory Auditors to include their name in this Prospectus
as an “expert” as defined under Section 2(38) read with Section 26(5) of the Companies Act 2013 to the extent
and in their capacity as the statutory auditor of our Company and in respect of their examination report on our
Restated Financial Information dated January 25, 2021 and in respect of the statement of special tax benefits dated
February 25, 2021. The consent has not been withdrawn as of the date of this Prospectus.

Our Company has received written consent from Er. K. Sivakumar, Independent Chartered Engineer to include
his name in this Prospectus as an “expert” as defined under Section 2(38) read with Section 26(5) of the Companies
Act 2013 in respect of his certificate dated December 7, 2020. The consent has not been withdrawn as of the date
of this Prospectus.

Particulars regarding public or rights issues undertaken by our Company during the last five years

There have been no public issues or rights issues undertaken by our Company during the five years immediately
preceding the date of this Prospectus.

Commission or brokerage on previous issues during the last five years

 

Since this is the initial public offering of the Equity Shares, no sum has been paid or has been payable as
commission or brokerage for subscribing to or procuring or agreeing to procure public subscription for any of our
Equity Shares in the five years preceding the date of this Prospectus.

Capital Issues in the preceding three years

Our Company has not made any capital issues during the three years immediately preceding the date of this
Prospectus. None of our Subsidiaries or our Group Companies are listed on any stock exchange. Accordingly,
none of our Subsidiaries or Group Companies have made any capital issues during the three years immediately
preceding the date of this Prospectus.

Performance vis-a-vis objects - Public/ rights issue of our Company

Our Company has not undertaken any public, including any rights issues to the public in the five years immediately
preceding the date of this Prospectus.

Performance vis- a-vis objects: Public/ rights issue of the listed Subsidiaries
None of our Subsidiaries is listed on any stock exchange.

Price information of past issues handled by the BRLMs

L Axis Capital Limited

1g Price information of past issues (during the current financial year and two financial years preceding the
current financial year) handled by Axis Capital Limited

 

Ss. Tssue name Tssue sizelssue pric Listing date Openin __+/-% changein __+/- % changein _+/- % changein
No. mz gprice closing price, [+/-% closing price, [+/- closing price,
million) ‘on change inclosing —*% change in _—_[+/% change in
listing _benchmark]- 30" losing losing
date Calendar days from benchmark]- 90" — benchmark]-
(nd) listing Calendar days 180"
from listing Calendar days
from listing
1 Home First Finance Company 11,537.19 518.00 03-Feb-21 618.80 +4.98%, [+1.97%] - :
india Limited
2. UTI Asset Management Bas 0.60%, .
easy Tea 21,598.84 554.00 12-Oct-20 500.00 -10.43%, [+5.87%] ean dened
3. Mazagon Dock Shipbuilders 4,436.86 145.00 12-Oct-20 214,90 +18.90%, [+5.879%6] Bs oy -
4 tei +231.04%,
Route Mobile Limited 6,000.00 350.00 21-Sep-20 717.00 +105.81%, [+5.74%] [422.3191 -

 

338
 

s. Issue name Issue sizelssue pric Listingdate Openin __4/- % changein __4/- % changein _4/- % change in
No. (ne) gprice closing price, [+/-% closing price, [+/- closing price,
million) on change in closing % change in —_[+/% change in
listing _ benchmark]- 30" closing closing
date Calendar days from benchmark]-90" — benchmark]-
(ind) listing Calendar days 180"
from listing Calendar days
from listing
5. 3 eSF586.2 +86.59%, +100.79%,
Rossari Biotech Limited 4,962.50 425.00 23-Jul-20 669.25 +87.25%, [+1.39%] [+6.08%) [127.34%)
6. SBI Cards and Payment 00H 21.79%, +12.50%,
Gein Lived 103,407.88 755.00 16-Mar-20 661.00 33.05%, [-2.21%] [8.43%] [124.65%!
i CSB Bank Limited 4,096.77 195.00 04-Dec-19 275.00 +8.36%, [+1.98%] -12.18%, [-7.56%] Sree
8. Sterling And Wilson Solar -48.63%, -64.78%,
Camel 28,809.42 780.00 20-Aug-19 706.00 -21.88%, [-1.60%] vere pay
9. Spandana Sphoorty Financial a % +52.76%, +17.32%,
Tied 12,009.36 856.00 19-Aug-19 825.00 0.56%, [-2.14%] 17.61%] [+9.59%]
10. ji . Apr. - 5.359 +14.70%, [- ¥23.76%, [-
Polycab India Limited 13,452.60 538.008 16-Apr-19 633.00 15.36%, [-5.35%] Tae cone

 

‘Source: www.nseindia.com

® Offer Price was ® 680.00 per equity share to Eligible Employees
“Offer Price was % 485.00 per equity share to Eligible Employees

Notes:

«a. Issue Size derived from Prospectus/final post issue reports, as available.
b, The CNX NIFTY is considered as the Benchmark Index.

c. Price on NSE is considered for all of the above calculations.

d. In case 30th/90th/180th day is not a trading day, closing price on NSE of the previous trading day has been considered.
e. Since 30 calendar days, 90 calendar days and 180 calendar days, as applicable, from listing date has not elapsed for few of the above issues, data for same

is not available.

 

2 Summary statement of price information of past issues (during the current financial year and two
financial years preceding the current financial year) handled by Axis Capital Limited
Finandal_ Total Total funds Nos. of IPOs trading at__Nos. of IPOs trading at Nos. of IPOs trading at _ Nos. of IPOs trading at
year no. of raised discount — 30" calendar premium — 30" calendar discount — 180 premium — 180"
IPOs (in 2 million) day from listing day from listing calendar day from calendar day from listing
listing

Over Between Less Over Between Less Over Between Less Over Between Less

50% 25%-50% than 50% 25%- than 50%  25%- than 50%  25%- than

25% 50% 25% 50% 25% 50% 25%

2020-21* 48,535.39 z - 1 2 a = = = <
2019-205 161,776.03 - 12 - - 2 79 1 z - 3
2018-19 4 54,206.94 z 1 4 = 2m 2 2

 

* The information is as on the date of the document
‘The information for each of the financial years is based on issues listed during such financial year.
Note: Since 30 calendar days and 180 calendar days, as applicable, from listing date has not elapsed for few of the above issues, data for same is not available.

 

 

I. IIFL Securities Limited
1g Price information of past issues (during the current financial year and two financial years preceding the
current financial year) handled by IIFL Securities Limited
s. Issue name Tssue size Issue price Listing date Opening +/- % changein __+/- % changein _+/- % change in
No. (in Z million) @) price on closing price, [+/-% closing price, [+/- % closing price, [+/%
listing date change in closing change in closing _change in closing
(m2) benchmark]- 30 —_benchmark]- 90" —benchmark]- 180
Calendar days from Calendar days from Calendar days
sting listing from listing
1. MTAR Technologies 5,964.14 575,00 March 15,2021 1,050.00 NA. NA. NA.
Limited
2. ‘Antony Waste 2,999.85 315.00 January 1, 2021 436.10 -10.27%, [-2.74%] NA NA.
Handling Cell Limited
3. Mrs. Bectors Food 5,405.40 288.00 December 24, 500.00 +37.69%, [+4.53%] NA. NA.
Specialities Lid 2020
4, Equitas Small Finance 5,176.00 33.00 November 2, 31.10 +5.45%, [+12.34%]  +19.55%, [16.84%] NA
Bank Lid 2020
5. Ujjivan Small Finance 7,459.46 37.00 December 12, 58.75 +41.08%, [+2.38%] +10.27%J-12.70%] -16.62%, [-15.07%]
Bank Limited 2019
6 CSB Bank Lid 4,096.77 195.00 December 4, 275.00 +8.36%, [+1.98%] 12.18%, [-7.56%] -36.95%, [-20.45%]
2019
7. Sterling and Wilson 28,809.42 780.00 August 20, 2019 706.00 -21.88%[-1.60%]  -48.63%,[+7.97%] | -64.78%,[+9.95%]
Solar Lid
8 Spandana Sphoorty 12,009.36 856.00 August 19, 2019 825.00 -0.56% [-2.14%] | +52.76% [+7.61%] | +17.32%[+9.59%]
Financial Ltd
9. Polycab India Limited 13,452.60 __ 538.00 April 16, 2019 633.00 +15.36% [-5.35%] _+14.70% [-1.99%] _ +23.76% [-4.09%]

 

339
 

s. Issue name Issue size Issue price Listingdate Opening 4/-%changein__¥/- %changein _¥/- % chang

 

No. (in ® million) @) price on closing price, [+/-% closing price, [+/-% closing price, [+/%
listing date change in closing change in closing _change in closing
(in) benchmark]- 30 —_benchmark]- 90" —benchmarki- 180"
Calendar days from Calendar days from Calendar days
sting listing from listing
10. Credit Access 11,311.88 422,00 August 23, 2018 390.00 -21.16%,{-3.80%]  -14.91%[-8.00%] —-5.71%,[-8.13%]

Grameen Limited
‘Source: www.nseindia.com

Notes:

a, Benchmark Index taken as CNX NIFTY.

b. Price on NSE is considered for all of the above calculations.

cc. The 30", 90" and 180" calendar day from listed day have been taken as listing day plus 29, 89 and 179 calendar days, except wherever 30"/90"/180"
calendar day from listing day is a holiday, the closing data of the previous trading day has been considered.

d. _ % change taken against the issue price in case of the issuer.

 

e. The Nifty 50 index is considered as the benchmark index.
f  NAmeans Not Applicable.
2s Summary statement of price information of past issues (during the current financial year and two
financial years preceding the current financial year) handled by IIFL Securities Limited
Financial Total ‘Total funds Nos. of IPOs trading at__Nos. of IPOs trading at__Nos. of IPOs trading at _ Nos. of IPOs trading at
year no. of raised discount 30" calendar premium ~ 30" calendar discount 180" calendar _ premium — 180
IPOs (in Z million) day from listing day from listing day from listing _ calendar day from listing
Over Between Less Over Between Less Over Between Less Over Between Less
50% 25%-50% than 50%  25%- than 50%  25%- than 50%  25%- than
25% 50% 25% 50% 25% 50% 25%
2020- 4 19,545.39 z z 1 : 1 1 = = . : s S
2021"
2019-2020 5 65,827.61 - - 2 - 1 2 1 1 1 : - 2
2018-20194 94,013.29 - 1 1 i - 1 - 1 z - - 1

 

‘Source: www.nseindia.com

* The information is as on the date of the document

‘The information for each of the financial years is based on issues listed during such financial year.

Note: Data for number of IPOs trading at premium/discount taken at closing price on NSE on the respective date. In case any of the days falls on a non-trading
day, the closing price on the previous trading day has been considered.

Track record of past issues handled by the BRLMs

For further information regarding the track record of the BRLMs, as specified under Circular reference
CIR/MIRSD/1/2012 dated January 10, 2012 issued by SEBI, see the websites of the BRLMs mentioned below:

 

BRLM Website
Axis Capital Limited www.axiscapital.co.in
IIFL Securities Limited www.iiflcap.com

 

Stock market data of the Equity Shares

This being the initial public offering of the Equity Shares, the Equity Shares are not listed on any stock exchange
as on the date of this Prospectus, and accordingly, no stock market data is available for the Equity Shares.

Mechanism for redressal of Investor Grievances

The Registrar Agreement provides for retention of records with the Registrar to the Offer for a minimum period
of eight years from the date of listing and commencement of trading of the Equity Shares on the Stock Exchanges,
in order to enable the investors to approach the Registrar to the Offer for redressal of their grievances.

Investors can contact the Company Secretary and Compliance Officer, the Book Running Lead Managers or the
Registrar to the Offer in case of any post-Offer related problems such as non-receipt of letters of Allotment, non-
credit of Allotted Equity Shares in the respective beneficiary account, non-receipt of refund orders or non-receipt
of funds by electronic mode, etc.

All grievances, other than by Anchor Investors, may be addressed to the Registrar to the Offer, with a copy to the

relevant Designated Intermediary, where the Bid cum Application Form was submitted, quoting the full name of
the sole or First Bidder, Bid cum Application Form number, Bidder’s DP ID, Client ID, PAN, address of the

340
Bidder, number of Equity Shares applied for, date of Bid cum Application Form, name and address of the relevant
Designated Intermediary, where the Bid was submitted and ASBA Account number (for Bidders other than RIIs
bidding through the UPI mechanism) in which the amount equivalent to the Bid Amount was blocked or UPI ID
in case of RIIs applying through the UPI mechanism in which the amount equivalent to the Bid Amount is blocked.
Further, the Bidder shall enclose the Acknowledgement Slip or provide the acknowledgement number received
from the Designated Intermediaries in addition to the documents/information mentioned hereinabove.

All grievances of the Anchor Investors may be addressed to the Registrar to the Offer, giving full details such as
the name of the sole or First Bidder, Bid cum Application Form number, Bidders DP’ ID, Client ID, PAN, date
of the Bid cum Application Form, address of the Bidder, number of the Equity Shares applied for, Bid amount
paid on submission of the Bid cum Application Form and the name and address of the BRLMs where the Bid cum
Application Form was submitted by the Anchor Investor.

Our Company has obtained authentication on the SCORES and shall comply with the SEBI circular
(CIR/OIAE/1/2013) dated April 17, 2013 and SEBI circular (CIR/OIAE/1/2014) dated December 18, 2014 in
relation to redressal of investor grievances through SCORES.

Our Company has not received any investor complaint during the three years preceding the date of the Draft Red
Herring Prospectus, the Red Herring Prospectus and this Prospectus. There are no investor complaint in relation
to our Company pending as on the date of the Draft Red Herring Prospectus, the Red Herring Prospectus and this
Prospectus. Our Subsidiaries and Group Companies are not listed on any stock exchange.

Our Company, the Selling Shareholders, the BRLMs and the Registrar to the Offer accept no responsibility for
errors, omissions, commission of any acts of the Designated Intermediaries, including any defaults in complying
with its obligations under the SEBI ICDR Regulations.

Disposal of investor grievances by our Company

Our Company estimates that the average time required by our Company and/or the Registrar to the Offer for the
redressal of routine investor grievances shall be 10 Working Days from the date of receipt of the complaint. In
case of non-routine complaints and complaints where external agencies are involved, our Company will seek to
redress these complaints as expeditiously as possible.

Our Company has appointed Shainshad Aduvanni, our Company Secretary, as our Compliance Officer and he
may be contacted in case of any post-Offer related problems at the contact details set out in “General
Information” on page 62.

Further, our Board has constituted the Stakeholders Relationship Committee which is responsible for redressal of
grievances of the security holders of our Company. For further information, see “Management - Board
committees - Stakeholders Relationship Committee” on page 214.

Disposal of investor grievances by listed Group Companies and Subsidiaries

As on the date of this Prospectus, our Subsidiaries and Group Companies are not listed on any stock exchange,
and therefore there are no investor complaints pending against them.

341
SECTION VII - OFFER RELATED INFORMATION
TERMS OF THE OFFER

The Equity Shares being issued pursuant to the Offer are subject to the provisions of the Companies Act, the SEBI
ICDR Regulations, the SCRA, the SCRR, the MoA, the AoA, the SEBI Listing Regulations, the terms of the Red
Herring Prospectus and this Prospectus, the Bid cum Application Form, the Revision Form, the Abridged
Prospectus and other terms and conditions as may be incorporated in the confirmation of allocation notes (for
Anchor Investors), Allotment Advice and other documents and certificates that may be executed in respect of the
Offer. The Equity Shares will also be subject to all applicable laws, guidelines, rules, notifications and regulations
relating to issue and offer for sale and listing and trading of securities, issued from time to time, by SEBI,
Government of India, Stock Exchanges, the RoC, the RBI and/or other authorities to the extent applicable or such
other conditions as may be prescribed by such governmental and/or regulatory authority while granting approval
for the Offer.

Ranking of Equity Shares

The Equity Shares being offered and allotted in the Offer will be subject to the provisions of the Companies Act,
SEBI Listing Regulations, the Memorandum of Association and the Articles of Association and will rank pari
passu with the existing Equity Shares, including in respect of dividends and other corporate benefits, if any,
declared by our Company after the date of Allotment. For further information, “Dividend Policy” and “Main
Provisions of Articles of Association” on pages 224 and 368, respectively.

Mode of Payment of Dividend

Our Company will pay dividend, if declared, to our equity shareholders, as per the provisions of the Companies
Act, the SEBI Listing Regulations, our Memorandum of Association and the Articles of Association, and any
guidelines or directives that may be issued by the Government of India in this respect. Any dividends declared,
after the date of Allotment (including pursuant to the transfer of Equity Shares from the Offer for Sale) in this
Offer, will be received by the Allottees, in accordance with applicable law. For further information, see “Dividend
Policy” and “Main Provisions of Articles of Association” on pages 224 and 368, respectively.

Face Value and Price Band

The face value of each Equity Share is = 5. The Floor Price of the Equity Shares was 2 1,488 and the Cap Price of
the Equity Shares was % 1,490. The Offer Price and the Anchor Offer Price was = 1,490. At any given point in
time there will be only one denomination for the Equity Shares.

The Price Band and the Minimum Bid Lot was decided by our Company and the Investor Selling Shareholders in
consultation with the BRLMs and published at least two Working Days prior to the Bid/Offer Opening Date, in
all editions of Financial Express (a widely circulated English national daily newspaper), all editions of Jansatta (a
widely circulated Hindi national daily newspaper) and all editions of Makkal Kural (a widely circulated Tamil
regional daily newspaper, Tamil being the regional language in Coimbatore where our Registered Office is
located), and was made available to the Stock Exchanges for the purpose of uploading on their websites. The Price
Band, along with the relevant financial ratios calculated at the Floor Price and at the Cap Price were pre-filled in
the Bid cum Application Forms available at the website of the Stock Exchanges.

Compliance with disclosure and accounting norms
Our Company shall comply with all disclosure and accounting norms as specified by SEBI from time to time.
Rights of the Equity Shareholders

Subject to applicable law and our Articles of Association, the equity Shareholders will have the following rights:

. Right to receive dividend, if declared.
. Right to attend general meetings and exercise voting powers, unless prohibited by law.
. Right to vote on a poll either in person or by proxy and e-voting.

342
. Right to receive offers for rights shares and be allotted bonus shares, if announced.
. Right to receive any surplus on liquidation subject to any statutory and preferential claims being satisfied.

. Right of free transferability of their Equity Shares, subject to applicable foreign exchange regulations
and other applicable law.

. Such other rights as may be available to a shareholder of a listed public company under the Companies
Act, the terms of the SEBI Listing Regulations and our Memorandum of Association and Articles of
Association.

For a detailed description of the main provisions of our Articles of Association relating to voting rights, dividend,
forfeiture, lien, transfer, transmission, consolidation and splitting, see “Main Provisions of Articles of
Association” on page 368.

Market Lot and Trading Lot

Since trading of our Equity Shares is in dematerialized form, the tradable lot is one Equity Share. Allotment in
the Offer will be only in dematerialized form in multiples of one Equity Share, subject to a minimum allotment
of 10 Equity Shares. For the method of Basis of Allotment, see “Offer Procedure” on page 350.

Joint Holders

Where two or more persons are registered as the holders of any Equity Shares, they will be deemed to hold such
Equity Shares as joint-tenants with benefits of survivorship.

Nomination Facility to the Bidder

In accordance with Section 72 of the Companies Act 2013, read with Companies (Share Capital and Debentures)
Rules, 2014, the sole or First Bidder, with other joint Bidders, may nominate any one person in whom, in the event
of the death of sole Bidder or in case of joint Bidders, death of all the Bidders, as the case may be, the Equity
Shares Allotted, if any, will vest. A nominee entitled to the Equity Shares by reason of the death of the original
holder(s), will, in accordance with Section 72 of the Companies Act 2013 be entitled to the same benefits to which
he or she will be entitled if he or she were the registered holder of the Equity Shares. Where the nominee is a
minor, the holder(s) may make a nomination to appoint, in the prescribed manner, any person to become entitled
to Equity Share(s) in the event of the holder’s death during minority. A nomination may be cancelled, or varied
by nominating any other person in place of the present nominee, by the holder of the Equity Shares who has made
the nomination, by giving a notice of such cancellation or variation to our Company in the prescribed form.

Further, any person who becomes a nominee by virtue of Section 72 of the Companies Act 2013 will, on the
production of such evidence as may be required by our Board, elect either:

. to register himself or herself as holder of Equity Shares; or

. to make such transfer of the Equity Shares, as the deceased holder could have made.

Further, our Board may at any time give notice requiring any nominee to choose either to be registered himself or
herself or to transfer the Equity Shares, and if the notice is not complied with within a period of 90 days, our
Board may thereafter withhold payment of all dividend, bonuses or other monies payable in respect of the Equity
Shares, until the requirements of the notice have been complied with.

Since the Allotment of Equity Shares in the Offer will be made only in dematerialized form, there is no need to
make a separate nomination with our Company. Nominations registered with the respective Depository Participant
of the Bidder will prevail. If Bidders want to change their nomination, they are advised to inform their respective
Depository Participant.

Withdrawal of the Offer

Our Company and the Investor Selling Shareholders, in consultation with the BRLMs, reserve the right to not

343
proceed with the Offer and each Investor Selling Shareholder, severally and not jointly, reserves the right not to
proceed with the Offer for Sale, at any time after the Bid/Offer Opening Date but before Allotment. If our
Company and the Investor Selling Shareholders withdraw the Offer, our Company will issue a public notice within
two days from the Bid/Offer Closing Date or such time as may be prescribed by SEBI, providing reasons for not
proceeding with the Offer. The BRLMs, through the Registrar to the Offer, will instruct the SCSBs and Sponsor
Bank, as applicable, to unblock the ASBA Accounts within one Working Day from the day of receipt of such
instruction. The notice of withdrawal will be issued in the same newspapers where the pre-Offer advertisements
have appeared and the Stock Exchanges will also be informed promptly.

If our Company and the Investor Selling Shareholders, in consultation with the BRLMs, withdraw the Offer after
the Bid/Offer Closing Date and thereafter determine that they will proceed with a public offering of Equity Shares,
a fresh draft red herring prospectus will be filed and/or submitted with SEBI and the Stock Exchanges.

Notwithstanding the foregoing, the Offer is also subject to obtaining (i) the final listing and trading approvals of
the Stock Exchanges, which our Company will apply for only after Allotment and within six Working Days of
the Bid/Offer Closing Date or such other period as per applicable law; and (ii) the final RoC approval of the
Prospectus after it is filed and/or submitted with the RoC and the Stock Exchanges.

Except in relation to Anchor Investors, Bids and any revision in Bids were accepted only between 10:00 a.m. and
5:00 p.m. (Indian Standard Time) during the Bid/Offer Period at the Bidding Centres, except that on the Bid/Offer
Closing Date, Bids were accepted only between 10:00 a.m. and 3:00 p.m. (Indian Standard Time) and uploaded
until (i) 4:00 p.m. (Indian Standard Time) for Bids by QIBs and Non-Institutional Investors; and (ii) 5:00 p.m. or
such extended time as permitted by the Stock Exchanges (Indian Standard Time) in case of Bids by Retail
Individual Investors.

On the Bid/Offer Closing Date, extension of time was granted by the Stock Exchanges only for uploading Bids
received from Retail Individual Investors after taking into account the total number of Bids received up to closure
of timings for acceptance of Bid cum Application Forms as stated herein and reported by the BRLMs to the Stock
Exchanges.

Due to limitation of time available for uploading the Bids on the Bid/Offer Closing Date, Bidders were advised
to submit their Bids one day prior to the Bid/Offer Closing Date and in any case no later than 3:00 p.m. IST on
the Bid/ Offer Closing Date. Any time mentioned in this Prospectus is IST. Bidders were cautioned that, in the
event a large number of Bids were received on the Bid/Offer Closing Date, some Bids could not get uploaded due
to lack of sufficient time. Such Bids that could not be uploaded were not considered for allocation under this
Offer. Bids were accepted only during Working Days.

It is clarified that Bids not uploaded on the electronic bidding system or in respect of which the full Bid
Amount were not blocked by the SCSBs were rejected.

Our Company, the Selling Shareholders and the members of Syndicate will not be responsible for any failure in:
(i) uploading Bids due to faults in any hardware/software system or otherwise; and (ii) the blocking of Bid Amount
in the ASBA Account on receipt of instructions from the Sponsor Bank on account of any errors, omissions or
non-compliance by various parties involved in, or any other fault, malfunctioning or breakdown in, or otherwise,
in the UPI Mechanism. Investors may please note that as per letters dated July 3, 2006 and July 6, 2006, issued
by BSE and NSE respectively, Bids and any revisions in Bids were not accepted on Saturdays and public holidays
as declared by the Stock Exchanges.

In case of any discrepancy in the data entered in the electronic book vis-a-vis data contained in the Bid cum
Application Form for a particular Bidder, the details as per the Bid file received from the Stock Exchanges were
taken as the final data for the purpose of Allotment.

 

 

 

 

 

Bid/Offer Period

BID/OFFER OPENED ON* Monday, March 15, 2021
BID/OFFER CLOSED ON Wednesday, March 17, 2021
FINALIZATION OF BASIS OF ALLOTMENT On or about Monday, March 22, 2021
INITIATION OF REFUNDS FOR ANCHOR On or about Tuesday, March 23, 2021
INVESTORS/UNBLOCKING OF FUNDS FROM ASBA

ACCOUNTS**

CREDIT OF EQUITY SHARES TO DEPOSITORY On or about Wednesday, March 24, 2021

 

344
 

ACCOUNTS

COMMENCEMENT OF TRADING OF THE EQUITY On or about Thursday, March 25, 2021

SHARES ON THE STOCK EXCHANGES
* The Anchor Investor Bidding Date was one Working Day prior to the Bid/Offer Opening Date in accordance with the SEBIICDR Regulations
i.e. Friday, March 12, 2021.
“In case of any delay in unblocking of amounts in the ASBA Accounts (including amounts blocked through the UPI Mechanism) exceeding
four Working Days from the Bid/Offer Closing Date, the Bidder shall be compensated at a uniform rate of @ 100 per day for the entire duration
of delay exceeding four Working Days from the Bid/Offer Closing Date by the intermediary responsible for causing such delay in unblocking.
The BRLMs shall, in their sole discretion, identify and fix the liability on such intermediary or entity responsible for such delay in unblocking.

 

 

This timetable is indicative in nature and does not constitute any obligation or liability on our Company,
the Selling Shareholders or the members of the Syndicate.

While our Company will use best efforts to ensure that listing and trading of our Equity Shares on the
Stock Exchanges commences within six Working Days of the Bid/Offer Closing Date, the timetable may be
subject to change for various reasons, including any delays in receipt of final listing and trading approvals
from the Stock Exchanges, delay in receipt of final certificates from SCSBs, etc. The commencement of
trading of the Equity Shares will be entirely at the discretion of the Stock Exchanges in accordance with
applicable law. Bids other than Bids from Anchor Investors for non-ASBA were liable to be rejected.

SEBI is in the process of streamlining and reducing the post issue timeline for IPOs. Any circulars or
notifications from SEBI after the date of this Prospectus may result in changes to the above mentioned
timelines. Further, the offer procedure is subject to change basis any revised SEBI circulars to this effect.

Minimum Subscription

If our Company does not receive the minimum subscription of 90% of the Fresh Issue, including through the
devolvement to the Underwriters, as applicable, on the date of closure of the issue; or withdrawal of applications;
or after technical rejections; or if the listing or trading permission is not obtained from the Stock Exchanges for
the Equity Shares so offered under the Red Herring Prospectus, our Company shall forthwith refund the entire
subscription amount received within the timelines prescribed under applicable laws, failing which, the Directors
of our Company who are officers in default shall jointly and severally be liable to repay that money with interest
at the rate of 15% per annum. This is further subject to the compliance with Rule 19(2)(b) of the SCRR.

Further in terms of Regulation 49(1) of the SEBI ICDR Regulations, our Company will ensure that the number of
Bidders to whom the Equity Shares are Allotted in the Offer will be not less than 1,000.

In the event of under subscription in the Offer, the Equity Shares will be Allotted in the following order:

(i) such number of Equity Shares will first be Allotted by the Company such that 90% of the Fresh Issue portion
is subscribed;

(ii) next, the Offered Shares will be Allotted, in proportion to the number of Equity Shares offered by each
Selling Shareholder, in a pro-rata manner; and

(iii) once Equity Shares have been Allotted as per (i) and (ii) above, such number of Equity Shares will be
Allotted by the Company that the balance 10% of the Fresh Issue portion is also subscribed.

Arrangement for Disposal of Odd Lots

Since our Equity Shares will be traded in dematerialized form only and the market lot for our Equity Shares will
be one Equity Share, no arrangements for disposal of odd lots are required.

Restriction on Transfer of Shares

Except for lock-in of pre-Offer equity shareholding, Minimum Promoter’s Contribution and Anchor Investor lock-
in the Offer, as detailed in “Capital Structure - History of Equity Share Capital Build-up, Contribution and
Lock-in of Promoter’s Shareholding” on page 72 and as provided in our Articles as detailed in “Main Provisions
of Articles of Association” on page 368, there are no restrictions on transfers and transmission of shares and on
their consolidation/splitting.

Allotment in Dematerialized Form

345
Allotment of Equity Shares to successful Bidders will only be in the dematerialized form (i.e. not in the form of
physical certificates but be fungible and be represented by the statement issued through the electronic mode).
Bidders will not have the option of Allotment of the Equity Shares in physical form. The Equity Shares on
Allotment will be traded only in the dematerialized segment of the Stock Exchanges.

In this context, tripartite agreements had been signed among our Company, the respective Depositories and the
Registrar to the Offer:

. Agreement dated May 24, 2018 amongst NSDL, our Company and the Registrar to the Offer.

. Agreement dated May 16, 2018 amongst CDSL, our Company and Registrar to the Offer.

346
OFFER STRUCTURE
The Offer comprises 5,528,161 Equity Shares, for cash at a price of = 1,490 per Equity Share comprising a Fresh
Issue of 1,006,711 Equity Shares, aggregating to 2 1,500.00 million by our Company and an Offer for Sale of
4,521,450 Equity Shares, aggregating to % 6,736.96 million by the Selling Shareholders, subject to finalization of
the Basis of Allotment.
The face value of the Equity Shares is = 5 each.

In terms of Rule 19(2) (b) of the SCRR, the Offer was made through the Book Building Process, in compliance

with Regulation 31 of the SEBI ICDR Regulations.

 

Particulars
Number of Equity

Shares available for
Allotment/allocation®

Percentage of Offer
size available for
Allotmenv/allocation

Basis of Allotment if
respective category is
oversubscribed?)

QIBs®

Not more than
Equity Shares

2,764,079*

Not more than 50% of the
Offer size was made available
for allocation to QIBs.

However 5% of the QIB
Category (excluding the
Anchor Investor Portion) was
made available for allocation
proportionately to Mutual
Funds only. Mutual Funds
participating in the Mutual
Fund Portion were also
eligible for allocation in the
remaining balance QIB
category (excluding the
‘Anchor Investor Portion).

The unsubscribed portion in
the Mutual Fund Portion, if
any, was made available for
allocation to other QIBs

follows
Anchor

Proportionate as
(excluding the
Investor Portion):

(a) 55,282* Equity Shares was
allocated on a proportionate
basis to Mutual Funds only
and

(b) 1,050,350* Equity Shares
was allocated on a
proportionate basis to all QIBs
including Mutual Funds
receiving allocation as per (a)
above.

Not more than 1,658,447*
Equity Shares was allocated
on a discretionary basis to
Anchor Investors

Our Company and the Investor
Selling Shareholders in
consultation with the BRLMs,
allocated up to 60% of the QIB

Non-Institutional Investors

Not less than 829,225* Equity
Shares available for allocation
or Offer less allocation to QIB
Bidders and RIls

Not less than 15% of the Offer
or the Offer less allocation to
QIB Bidders and Retail
Individual Investors was made
available for allocation

Proportionate

Retail Individual Investors

Not less than 1,934,857*
Equity Shares available for
allocation or Offer less
allocation to QIB Bidders and
Non-Institutional Investors

Not less than 35% of the Offer
or the Offer less allocation to
QIB- Bidders and Non-
Institutional Investors was
made available for allocation

Proportionate, subject to
minimum Bid Lot. For

details see “Offer
Procedure” beginning
on page 350

 

347
 

Particulars

Mode of Bidding
Minimum Bid

Maximum Bid

Mode of Allotment
Bid Lot
Allotment Lot

Trading Lot
Who can Apply ®

QIBs®

Portion to Anchor Investors at

the Anchor Investor
Allocation Price on a
discretionary basis, out of

which at least one-third was
made available for allocation
to Mutual Funds only, subject
to valid Bid received from
Mutual Funds at or above the
Anchor Investor Allocation
Price.

Non-Institutional Investors

Retail Individual Investors

Through ASBA process only (except for Anchor Investors)

Such number of Equity Shares
that the Bid Amount that
exceeded % 200,000 and in
multiples of 10 Equity Shares
thereafter

Such number of Equity Shares
in multiples of 10 Equity
Shares not exceeding the size
Offer subject to applicable
limits to the Bidder

Such number of Equity Shares
that the Bid Amount that
exceeded % 200,000 and in
multiples of 10 Equity Shares
thereafter

Such number of Equity Shares
in multiples of 10 Equity
Shares not exceeding the size
of the Offer, excluding QIB
portion, subject to applicable
limits to the Bidder

10 Equity Shares and in
multiples of 10 Equity Shares
thereafter

Such number of Equity
Shares in multiples of 10
Equity Shares such that the
Bid Amount does not exceed
% 200,000.

Compulsorily in dematerialized form
10 Equity Shares and in multiples of 10 Equity Shares thereafter
10 Equity Shares and in multiples of one Equity Share thereafter

Public financial institutions as
specified in Section 2(72) of
the Companies Act 2013,
scheduled commercial banks,
multilateral and __ bilateral
development financial
institutions, mutual fund
registered with SEBI, FPIs
other than __ individuals,
corporate bodies and family
offices, VCFs, AIFs, FVCIs,
state industrial development

corporation, insurance
companies registered with
IRDAI, provident —_ fund

(subject to applicable law)
with minimum corpus of & 250
million, pension fund with
minimum corpus of % 250
million, in accordance with
applicable law and National
Investment Fund set up by the
Government of India,
insurance funds set up and
managed by army, navy or air
force of the Union of India,
insurance funds set up and
managed by the Department of
Posts, India and Systemically
Important NBFC having a net-
worth of more than five
hundred crore rupees as per
the last audited financial
statements.

One Equity Share
Resident Indian individuals,
Eligible NRIs, HUFs (in the
name of Karta), companies,

corporate bodies, scientific
institutions societies. and
trusts, FPIs who are

individuals, corporate bodies
and family offices which are
classified as Category II FPIs
and registered with SEBI such
that the Bid Amount exceeded
2 200,000 in value.

10 Equity Shares and in
multiples of one Equity Share

thereafter subject. —to
availability in the Retail
Category

Resident Indian Individuals,
Eligible NRIs, HUF (in the
name of Karta) applying for
Equity Shares such that the
Bid Amount does not exceed
% 2,00,000 in value.

 

348
 

Particulars QIBs® Non-Institutional Investors _Retail Individual Investors

Terms of Payment In case of Anchor Investors: Full Bid Amount was payable by the Anchor Investors at the time
of submission of their Bids

In case of all other Bidders: Full Bid Amount was blocked by the SCSBs in the bank account of

the ASBA Bidder (other than Anchor Investors) including UPI ID in case of RIls, that is specified

in the ASBA Form at the time of submission of the ASBA Form

Our Company and the Investor Selling Shareholders, in consultation with the BRLMs, allocated up to 60% of the QIB Category to

Anchor Investors on a discretionary basis subject to there being (i) a maximum of two Anchor Investors, where allocation in the Anchor
Investor Portion is up to @ 100 million, (ii) minimum of two and maximum of 15 Anchor Investors, where the allocation under the Anchor
Investor Portion is more than & 100 million but up to & 2,500 million under the Anchor Investor Portion, subject to a minimum Allotment
of @ 50 million per Anchor Investor, and (iii) in case of allocation above & 2,500 million under the Anchor Investor Portion, a minimum
of five such investors and a maximum of 15 Anchor Investors for allocation up to @ 2,500 million, and an additional 10 Anchor Investors
for every additional % 2,500 million or part thereof will be permitted, subject to minimum allotment of @ 50 million per Anchor Investor.
‘An Anchor Investor was required to make a minimum Bid of such number of Equity Shares, that the Bid Amount is at least 100 million.
One-third of the Anchor Investor Portion was reserved for domestic Mutual Funds, subject to valid Bids being received from domestic
Mutual Funds at or above the Anchor Investor Allocation Price. For further information, see “Offer Procedure” on page 350.

 

 
      

® Subject to valid Bids being received at or above the Offer Price. The Offer was made in accordance with Rule 19(2)(b) of the SCRR and
under Regulation 6(1) of the SEBI ICDR Regulations. The Offer was made through the Book Building Process wherein not more than
50% of the Offer was made available for allocation on a proportionate basis to QIBs, of which our Company and the Investor Selling
Shareholders, in consultation with the BRLMs, allocated up to 60% of the QUB Category to Anchor Investors on a discretionary basis.
One-third of the Anchor Investor Portion was reserved for domestic Mutual Funds, subject to valid Bids being received from domestic
Mutual Funds at or above the Anchor Investor Allocation Price. 5% of the QIB Category (excluding the Anchor Investor Portion), was
made available for allocation on a proportionate basis to Mutual Funds only and the remainder of the QIB Category was made available
for allocation on a proportionate basis to all QIB Bidders including Mutual Funds, subject to valid Bids being received at or above the
Offer Price. Further, not less than 15% of the Offer was made available for allocation on a proportionate basis to Non-Institutional
Investors and not less than 35% of the Offer was made available for allocation to Retail Individual Investors in accordance with the
SEBI ICDR Regulations, subject to valid Bids being received at or above the Offer Price.

Subject to valid Bids being received at or above the Offer Price, under-subscription, if any, in the Non-Institutional Category or the
Retail Category was allowed to be met with spill-over from other categories or a combination of categories at the discretion of our
Company and the Investor Selling Shareholders, in consultation with the BRLMs and the Designated Stock Exchange in accordance
with applicable law. However, under-subscription, if any, in the QIB Category was not be allowed to be met with spill-over from other
categories or a combination of categories. The Offer has been made in terms of Rule 19(2)(b) of the SCRR read with Regulation 31 of
the SEBI ICDR Regulations. In case of an under subscription in the Offer, afier meeting the minimum subscription requirement of 90%
of the Fresh Issue, the balance subscription in the Offer will be first met through the Equity Shares offered pursuant to the Offer for Sale
on a pro-rata basis in a manner proportionate to the respective portion of the Offered Shares of each Selling Shareholder and
subsequently, the balance part of the Fresh Issue.

  

© Assuming full subscription in the Offer.
‘Incase of joint Bids, the Bid cum Application Form should have contained only the name of the First Bidder whose name should have
also appeared as the first holder of the beneficiary account held in joint names. The signature of only such First Bidder would have been
required in the Bid cum Application Form and such First Bidder would have been deemed to have signed on behalf of the joint holders.

© For further information on terms of payment applicable to Anchor Investors, see “Offer Procedure ~ Payment into Anchor Escrow
Accounts” on page 364.

Bidders have confirmed and will confirm, and have been deemed and will be deemed, to have represented to our Company, the Selling
Shareholders, the Underwriters, their respective directors, officers, agents, affiliates and representatives that they are eligible under
applicable law, rules, regulations, guidelines and approvals to acquire the Equity Shares and will not issue, sell, pledge, or transfer the Equity
Shares to any person who is not eligible under any applicable laws, rules, regulations, guidelines and approvals to acquire the Equity Shares,
the Company, the Selling Shareholders, Underwriters and their respective directors, officers, agents, affiliates and representatives accept no
responsibility or liability for advising any investor on whether such investor is eligible to acquire Equity Shares.

349
OFFER PROCEDURE

All Bidders should read the General Information Document for Investing in Public Issues prepared and issued in
accordance with the SEBI circular no. SEBI/HO/CFD/DIL1/CIR/P/2020/37 dated March 17, 2020 and the SEBI
UPI Circulars (the “General Information Document”) which highlights the key rules, processes and procedures
applicable to public issues in general in accordance with the provisions of the Companies Act 2013, the SCRA,
the SCRR and the SEBI ICDR Regulations which is part of the Abridged Prospectus accompanying the Bid cum
Application Form. The General Information Document is available on the websites of the Stock Exchanges and
the BRLMs. Please refer to the relevant provisions of the General Information Document which are applicable to
the Offer.

Additionally, all Bidders may refer to the General Information Document for information in relation to (i)
category of investors eligible to participate in the Offer; (ii) maximum and minimum Bid size; (iii) price discovery
and allocation; (iv) payment instructions for ASBA Bidders; (v) issuance of CAN and Allotment in the Offer; (vi)
general instructions (limited to instructions for completing the Bid cum Application Form); (vii) designated date;
(viii) disposal of applications; (ix) submission of Bid cum Application Form; (x) other instructions (limited to
joint bids in cases of individual, multiple bids and instances when an application would be rejected on technical
grounds); (xi) applicable provisions of Companies Act, 2013 relating to punishment for fictitious applications;
(xii) mode of making refunds; and (xiii) interest in case of delay in Allotment or refund.

SEBI, through its circular no. SEBI/HO/CFD/DIL2/CIR/P/2018/138 dated November 1, 2018, and as modified
though its circular no. SEBI/HO/CFD/DIL2/CIR/P/2019/50 dated April 3, 2019, has introduced an alternate
payment mechanism using UPI and consequent reduction in timelines for listing in a phased manner. From
January 1, 2019, the UPI Mechanism for Rs applying through Designated Intermediaries have been made
effective along with the existing process and existing timeline of T+6 days. The same was effective till June 30,
2019 (“UPI Phase I”).

With effect from July 1, 2019, SEBI vide its circular no. SEBI/HO/CF D/DIL2/CIR/P/2019/76 dated June 28, 2019,
read with circular bearing number SEBI/HO/CFD/DIL2/CIR/P/2019/85 dated July 26, 2019 with respect to Bids
by RIIs through Designated Intermediaries (other than SCSBs), the existing process of physical movement of
forms from such Designated Intermediaries to SCSBs for blocking of funds has been discontinued and only the
UPI Mechanism for such Bids with existing timeline of T+6 days will continue for a period of three months or
launch of five main board public issues, whichever is later (“UPI Phase II”). Subsequently, SEBI, vide its circular
no. SEBI/HO/CFD/DCR2/CIR/P/2019/133 dated November 8, 2019 extended the timeline for implementation of
UPI Phase II till March 31, 2020. However, given the prevailing uncertainty due to the COVID-19 pandemic,
SEBI vide its circular no. SEBI/HO/CFD/DIL2/CIR/P/2020/50 dated March 30, 2020, has decided to continue
with the UPI Phase I! till further notice. The final reduced timeline of T+3 days will be made effective using the
UPI Mechanism for applications by RIIs (“UPI Phase III”), as may be prescribed by SEBI. Accordingly, the
Offer is being undertaken pursuant to the processes and procedures under UPI Phase II, subject to any circulars,
clarification or notification issued by SEBI from time to time.

The BRLMs shall be the nodal entity for any issues arising out of public issuance process.

In terms of Regulation 23(5) and Regulation 271 of SEBI ICDR Regulations, the timelines and processes
mentioned in SEBI circular no. SEBI/HO/CFD/DCR2/CIR/P/2019/133 dated November 8, 2019 shall continue to
form part of the agreements being signed between the intermediaries involved in the public issuance process and
lead managers shall continue to coordinate with intermediaries involved in the said process.

Our Company, the Selling Shareholders and the Syndicate do not accept any responsibility for the completeness
and accuracy of the information stated in this section and the General Information Document section and are not
liable for any amendment, modification or change in the applicable law which may occur after the date of this
Prospectus. Bidders are advised to make their independent investigations and ensure that their Bids are submitted
in accordance with applicable laws and do not exceed the investment limits or maximum number of Equity Shares
that can be held by them under applicable law or as specified in the Red Herring Prospectus and this Prospectus.

Further, our Company, the Selling Shareholders and the members of the Syndicate do not accept any

responsibility for any adverse occurrences consequent to the implementation of the UPI Mechanism for
application in the Offer.

350
Book Building Procedure

The Offer was made through the Book Building Process, in accordance with Regulation 6(1) of the SEBI ICDR
Regulations, wherein not more than 50% of the Offer was made available for allocation on a proportionate basis
to QIBs, of which our Company and the Investor Selling Shareholders, in consultation with the BRLMs, allocated
up to 60% of the QIB Category to Anchor Investors on a discretionary basis. One-third of the Anchor Investor
Portion was reserved for allocation to domestic Mutual Funds, subject to valid Bids being received from domestic
Mutual Funds at or above the Anchor Investor Allocation Price. 5% of the QIB Category (excluding the Anchor
Investor Portion), was made available for allocation on a proportionate basis to Mutual Funds only and the
remainder of the QIB Category was made available for allocation on a proportionate basis to all QIB Bidders
including Mutual Funds, subject to valid Bids being received at or above the Offer Price. Further, not less than
15% of the Offer was made available for allocation on a proportionate basis to Non-Institutional Investors and not
less than 35% of the Offer was made available for allocation to Retail Individual Investors in accordance with the
SEBI ICDR Regulations, subject to valid Bids being received at or above the Offer Price.

Under-subscription, if any, in any category, except in the QIB Category, was allowed to be met with spill-over
from any other category or categories, as applicable, at the discretion of our Company and the Investor Selling
Shareholders, in consultation with the BRLMs and the Designated Stock Exchange, on a proportionate basis,
subject to applicable laws.

The Equity Shares, on Allotment, shall be traded only in the dematerialized segment of the Stock Exchanges.

Investors should note that the Equity Shares will be Allotted to all successful Bidders only in dematerialized
form. The Bid cum Application Forms which did not have the details of the Bidders’ depository account,
including DP ID, Client ID, and PAN and UPI ID (for RIIs Bidding using the UPI Mechanism), were treated
as incomplete and rejected. Bidders were not given the option of being Allotted Equity Shares in physical
form.

Phased implementation of Unified Payments Interface

SEBI has issued the SEBI UPI Circulars in relation to streamlining the process of public issue of inter alia equity
shares. Pursuant to the SEBI UPI Circulars, the UPI Mechanism has been introduced in a phased manner as a
payment mechanism (in addition to mechanism of blocking funds in the account maintained with SCSBs under
ASBA) for applications by RIIs through Designated Intermediaries with the objective to reduce the time duration
from public issue closure to listing from six Working Days up to three Working Days. Considering the time
required for making necessary changes to the systems and to ensure complete and smooth transition to the UPI
payment mechanism, the SEBI UPI Circulars have introduced the UPI Mechanism in three phases in the following
manner:

Phase I: This phase was applicable from January 1, 2019 until March 31, 2019 or floating of five main board
public issues, whichever was later. Subsequently, the timeline for implementation of Phase I was extended till
June 30, 2019. Under this phase, an RII had the option to submit the ASBA Form with any of the Designated
Intermediary and use his/her UPI ID for the purpose of blocking of funds. The time duration from public issue
closure to listing continued to be six Working Days.

Phase II: This phase has become applicable from July 1, 2019 and was to initially continue for a period of three
months or floating of five main board public issues, whichever is later. SEBI, vide its circular no.
SEBI/HO/CFD/DCR2/CIR/P/2019/133 dated November 8, 2019, has decided to extend the timeline for
implementation of UPI Phase II until March 31, 2020. Subsequently, SEBI, vide its circular no.
SEBI/HO/CFD/DIL2/CIR/P/2020/50 dated March 30, 2020, extended the timeline for implementation of UPI
Phase II till further notice. Under this phase, submission of the ASBA Form by RIlIs through Designated
Intermediaries (other than SCSBs) to SCSBs for blocking of funds has been discontinued and replaced by the UPI
Mechanism. However, the time duration from public issue closure to listing continues to be six Working Days
during this phase.

Phase III: The commencement period of Phase III is yet to be notified. In this phase, the time duration from
public issue closure to listing is proposed to be reduced to three Working Days.

All SCSBs offering the facility of making application in public issues were required to provide facility to make
application using UPI. Our Company was required to appoint one of the SCSBs as a sponsor bank to act as a

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conduit between the Stock Exchanges and NPCI in order to facilitate collection of requests and/or payment
instructions of the Retail Individual Investors using the UPI.

For further details, refer to the General Information Document available on the websites of the Stock Exchanges
and the BRLMs.

Electronic registration of Bids

e The Designated Intermediary could register the Bids using the online facilities of the Stock Exchanges. The
Designated Intermediaries could also set up facilities for off-line electronic registration of Bids, subject to the
condition that they could subsequently upload the off-line data file into the online facilities for Book Building
on a regular basis before the closure of the Offer.

* On the Bid/Offer Closing Date, the Designated Intermediaries could upload the Bids till such time as may be
permitted by the Stock Exchanges and as disclosed in the Red Herring Prospectus.

« Only Bids that were uploaded on the Stock Exchanges Platform were considered for allocation/Allotment.
The Designated Intermediaries were given till 1:00 pm on the next Working Day following the Bid/Offer
Closing Date to modify select fields uploaded in the Stock Exchanges’ platform during the Bid/Offer Period
after which the Stock Exchange(s) would send the bid information to the Registrar to the Offer for further
processing.

Bid cum Application Form

Copies of the Bid cum Application Form (other than for Anchor Investors) and the Abridged Prospectus were
made available with the Designated Intermediaries at relevant Bidding Centres and at our Registered and
Corporate Office. The electronic copy of the Bid cum Application Forms were also made available for download
on the websites of NSE (www.nseindia.com) and BSE (www.bseindia.com) at least one day prior to the Bid/Offer
Opening Date.

All Bidders (other than Anchor Investors) were mandatorily required to participate in the Offer only through the
ASBA process. ASBA Bidders were required to provide either (i) the bank account details and authorization to
block funds in the ASBA Form, or (ii) the UPI ID, as applicable, in the relevant space provided in the ASBA
Form. The ASBA Forms that did not contain such details were liable to be rejected. Applications made by the
RIIs using third party bank account or using third party linked bank account UPI ID were liable for rejection.
Anchor Investors were not permitted to participate in the Offer through the ASBA process. ASBA Bidders were
required to ensure that the Bids were made on ASBA Forms bearing the stamp of the relevant Designated
Intermediary, submitted at the relevant Bidding Centres only (except in case of electronic ASBA Forms) and the
ASBA Forms not bearing such specified stamp were liable to be rejected. Since the Offer is being made under
Phase II of the SEBI UPI Circulars, ASBA Bidders could submit the ASBA Form in the manner below:

(ii) RUs (other than the RIIs using UPI Mechanism) could submit their ASBA Forms with SCSBs (physically
or online, as applicable), or online using the facility of linked online trading, demat and bank account (3 in
1 type accounts), provided by certain brokers.

(iii) RIJs using the UPI Mechanism, could submit their ASBA Forms with the Syndicate, sub-syndicate members,
Registered Brokers, RTAs or CDPs, or online using the facility of linked online trading, demat and bank
account (3 in 1 type accounts), provided by certain brokers.

(iv) QIBs and NIBs could submit their ASBA Forms with SCSBs, Syndicate, sub-syndicate members, Registered
Brokers, RTAs or CDPs.

For Anchor Investors, the Bid cum Application Forms were made available at the offices of the BRLMs.
Bidders were required to ensure that the ASBA Account had sufficient credit balance such that an amount

equivalent to the full Bid Amount can be blocked by the SCSB or the Sponsor Bank, as applicable, at the time of
submitting the Bid.

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The prescribed colour of the Bid cum Application Forms for various categories were as follows:

 

Category Colour of Bid cum
Application Form”

Resident Indians including resident QIBs, Non-Institutional Investors, Retail Individual White

Investors and Eligible NRIs applying on a non-repatriation basis”

Eligible NRIs, FVCls, FPIs and registered bilateral and multilateral institutions applying on Blue

a repatriation basis"

Anchor Investors”” White

 

* Excluding electronic Bid cum Application Forms

“*Bid cum Application Forms for Anchor Investors were made available at the office of the BRLMs.

* Electronic Bid cum Application forms were also made available for download on the websites of NSE (www.nseindia.com) and BSE
(www.bseindia.com).

In case of ASBA forms, the relevant Designated Intermediaries were required to capture and upload the relevant
bid details (including UPI ID in case of ASBA Forms under the UPI Mechanism) in the electronic bidding system
of the Stock Exchanges.

For RIIs Bidding using UPI Mechanism, the Stock Exchanges were required to share the Bid details (including
UPI ID) with the Sponsor Bank on a continuous basis through API integration to enable the Sponsor Bank to
initiate UPI Mandate Request to RIlIs, for blocking of funds. The Sponsor Bank was required to initiate request
for blocking of funds through NPCI to RIIs, who were required to accept the UPI Mandate Request for blocking
of funds on their respective mobile applications associated with UPI ID linked bank account. For all pending UPI
Mandate Requests, the Sponsor Bank was required to initiate requests for blocking of funds in the ASBA Accounts
of relevant Bidders with a confirmation cut-off time of 12:00 pm on the first Working Day after the Bid/Issue
Closing Date (“Cut-Off Time”).

Accordingly, RIIs Bidding using through the UPI Mechanism were required to accept UPI Mandate Requests for
blocking off funds prior to the Cut-Off Time and all pending UPI Mandate Requests at the Cut-Off Time have
lapsed. For ASBA Forms (other than RIIs Bidding using UPI Mechanism) Designated Intermediaries (other than
SCSBs) were required to submit/deliver the ASBA Forms to the respective SCSB where the Bidder has an ASBA.
bank account and were required not to submit it to any non-SCSB bank or any Escrow Collection Bank.

Participation by associates and affiliates of the BRLM and the Syndicate Member, Promoter, Promoter
Group and persons related to Promoter/Promoter Group

The BRLMs and the Syndicate Member are not be allowed to purchase the Equity Shares in any manner, except
towards fulfilling their underwriting obligations. However, the respective associates and affiliates of the BRLMs
and the Syndicate Member could purchase Equity Shares in the Offer, either in the QIB Category or in the Non-
Institutional Category as may be applicable to such Bidders, where the allocation is on a proportionate basis and
such subscription may be on their own account or on behalf of their clients. All categories of investors, including
respective associates or affiliates of the BRLMs and Syndicate Member, were required to be treated equally for
the purpose of allocation to be made on a proportionate basis.

Neither (i) the BRLMs or any associates of the BRLMs (except Mutual Funds sponsored by entities which are
associates of the BRLMs or insurance companies promoted by entities which are associate of BRLMs or AIFs
sponsored by the entities which are associate of the BRLMs or FPIs, FPIs other than individuals, corporate bodies
and family offices sponsored by the entities which are associates of the BRLMs) nor; (ii) any “person related to
the Promoter/ Promoter Group” were permitted to apply in the Offer under the Anchor Investor Portion.

For the purposes of this section, a QIB who has any of the following rights weas deemed to be a “person related
to the Promoter”: (a) rights under a shareholders’ agreement or voting agreement entered into with the Promoter;
(b) veto rights; or (c) right to appoint any nominee director on our Board.

Further, an Anchor Investor was deemed to be an associate of the BRLMs, if: (a) either of them controls, directly
or indirectly through its subsidiary or holding company, not less than 15% of the voting rights in the other; or (b)
either of them, directly or indirectly, by itself or in combination with other persons, exercises control over the
other; or (c) there is a common director, excluding a nominee director, amongst the Anchor Investor and the
BRLMs.

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Except to the extent of participation in the Offer for Sale by the Promoter, the Promoter and the Promoter Group
did not participate in the Offer.

Bids by Mutual Funds

With respect to Bids by Mutual Funds, a certified copy of their SEBI registration certificate was required to be
lodged with the Bid cum Application Form. Failing this, our Company and the Investor Selling Shareholders
reserved the right to reject any Bid without assigning any reason therefore. Bids made by asset management
companies or custodians of Mutual Funds were required to specifically state names of the concerned schemes for
which such Bids are made.

In case of a Mutual Fund, a separate Bid could be made in respect of each scheme of a Mutual Fund registered
with SEBI and such Bids in respect of more than one scheme of a Mutual Fund were not treated as multiple Bids,
provided that such Bids clearly indicate the scheme for which the Bid was submitted.

No Mutual Fund scheme could invest more than 10% of its net asset value in equity shares or equity related
instruments of any single company provided that the limit of 10% was not applicable for investments in case of
index funds or sector or industry specific scheme. No Mutual Fund under all its schemes can own more than 10%
of any company’s paid-up share capital carrying voting rights.

Bids by Eligible NRIs

Eligible NRIs could obtain copies of Bid cum Application Form from the Designated Intermediaries. Eligible
NRIs applying on a repatriation basis were required to authorize their SCSBs or confirm or accept the UPI
Mandate Request (in case of Retail Individual Investors Bidding through the UPI Mechanism) to block their Non-
Resident External (“NRE”) accounts (including UPI ID, if activated), or Foreign Currency Non-Resident
(“FCNR”) accounts, and Eligible NRIs Bidding on a non-repatriation basis were required to authorize their
SCSBs to block their Non-Resident Ordinary (“NRO”) accounts for the full Bid amount, at the time of submission
of the Bid cum Application Form.

Eligible NRIs Bidding on a repatriation basis were advised to use the Bid cum Application Form meant for Non-
Residents (blue in colour).

Eligible NRIs Bidding on non-repatriation basis were advised to use the Bid cum Application Form for residents
(white in colour).

Participation of Eligible NRIs in the Offer is subject to the FEMA Rules. Only Bids accompanied by payment in
Indian rupees or fully convertible foreign exchange will be considered for Allotment.

Bids by HUFs

With respect to Bids by Hindu Undivided Families or HUFs, in the individual name of the Karta, the Bidder was
required to specify that the Bid was being made in the name of the HUF in the Bid cum Application Form as
follows: “Name of sole or First Bidder: XYZ Hindu Undivided Family applying through XYZ, where XYZ is the
name of the Karta”. Bids by HUFs was considered at par with Bids from individuals.

Bids by FPIs

In terms of the SEBI FP! Regulations, the investment in Equity Shares by a single FPI or an investor group (which
means multiple entities registered as FPIs and directly or indirectly having common ownership of more than 50%
or common control) must be below 10% of our post-Offer Equity Share capital. Further, in terms of the FEMA
Rules, the total holding by each FPI or an investor group shall be below 10% of the total paid-up Equity Share
capital of our Company. With effect from the April 1, 2020, the aggregate limit by FPIs shall be the sectoral caps
applicable to the Indian company as prescribed in the FEMA Rules with respect to its paid-up equity capital on a
fully diluted basis. While the aggregate limit as provided above could have been decreased by the concerned
Indian companies to a lower threshold limit of 24% or 49% or 74% as deemed fit, with the approval of its board
of directors and its shareholders through a resolution and a special resolution, respectively before March 31, 2020,
our Company has not decreased such limit and accordingly the applicable limit with respect to our Company is
100%. In terms of the FEMA Rules, for calculating the aggregate holding of FPIs in a company, holding of all
registered FPIs shall be included.

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In case of Bids made by FPIs, a certified copy of the certificate of registration issued under the SEBI FPI
Regulations was required to be attached to the Bid cum Application Form, failing which our Company reserved
the right to reject any Bid without assigning any reason. FPIs who participated in the Offer were advised to use
the Bid cum Application Form for Non-Residents (Blue in colour).

A FPI may purchase or sell equity shares of an Indian company which is listed or to be listed on a recognized
stock exchange in India, and/ or may purchase or sell securities other than equity instruments.

The FEMA Rules was enacted on October 17, 2019 in supersession of the Foreign Exchange Management
(Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2017, except for things done or
omitted to be done before such supersession.

FPIs were permitted to participate in the Offer subject to compliance with conditions and restrictions which may
be specified by the Government from time to time.

Subject to compliance with all applicable Indian laws, rules, regulations, guidelines and approvals in terms of
Regulation 21 of the SEBI FPI Regulations, an FPI, may issue, subscribe to or otherwise deal in offshore derivative
instruments (as defined under the SEBI FPI Regulations as any instrument, by whatever name called, which is
issued overseas by a FPI against securities held by it in India, as its underlying) directly or indirectly, only in the
event (i) such offshore derivative instruments are issued only by persons registered as Category I FPIs; (ii) such
offshore derivative instruments are issued only to persons eligible for registration as Category I FPIs; (iii) such
offshore derivative instruments are issued after compliance with ‘know your client’ norms; and (iv) such other
conditions as may be specified by SEBI from time to time.

In case the total holding of an FPI increases beyond 10% of the total paid-up Equity Share capital, on a fully
diluted basis or 10% or more of the paid-up value of any series of debentures or preference shares or share warrants
issued that may be issued by our Company, the total investment made by the FPI will be re-classified as FDI
subject to the conditions as specified by SEBI and the RBI in this regard and our Company and the investor will
be required to comply with applicable reporting requirements.

In accordance with the FEMA Non-Debt Rules, the total holding by any individual NRI, on a repatriation basis,
shall not exceed five percent of the total paid-up equity capital on a fully diluted basis or shall not exceed five
percent of the paid-up value of each series of debentures or preference shares or share warrants issued by an Indian
company and the total holdings of all NRIs and OCIs put together shall not exceed 10% of the total paid-up equity
capital on a fully diluted basis or shall not exceed 10% of the paid-up value of each series of debentures or
preference shares or share warrant. Provided that the aggregate ceiling of 10 percent may be raised to 24 percent
if a special resolution to that effect is passed by the general body of the Indian company.

An FPI issuing offshore derivate instruments is also required to ensure that any transfer of offshore derivative
instrument is made by, or on behalf of it subject to, inter alia, the following conditions:

i. each offshore derivative instruments are transferred to persons subject to fulfilment of SEBI FPI Regulations;
and

ii. prior consent of the FPI is obtained for such transfer, except when the persons to whom the offshore derivative
instruments are to be transferred are to be pre-approved by the FPI.

Bids by FPIs submitted under the multiple investment managers structure with the same PAN but with different
beneficiary account numbers, Client ID and DP ID were not be treated as multiple Bids.

Further, Bids received from FPIs bearing the same PAN were treated as multiple Bids and were liable to be
rejected, except for Bids from FPIs that utilize the multiple investment manager structure in accordance with the
Operational Guidelines for Foreign Portfolio Investors and Designated Depository Participants which were issued
in November 2019 to facilitate implementation of SEBI (Foreign Portfolio Investors) Regulations, 2019 (such
structure “MIM Structure”) provided such Bids were made with different beneficiary account numbers, Client
IDs and DP IDs. Accordingly, it should be noted that multiple Bids received from FPIs, who did not utilize the
MIM Structure, and bear the same PAN, were liable to be rejected. In order to ensure valid Bids, FPIs making
multiple Bids using the same PAN, and with different beneficiary account numbers, Client IDs and DP IDs, were
required to provide a confirmation along with each of their Bid cum Application Forms that the relevant FPIs

355
making multiple Bids utilize the MIM Structure and indicate the names of their respective investment managers
in such confirmation. In the absence of such confirmation from the relevant FPIs, such multiple Bids were liable
to be rejected.

Bids by VCFs, AIFs and FVCIs

The SEBI FVCI Regulations and the SEBI AIF Regulations inter-alia prescribe the investment restrictions on the
VCFs, FVCIs and AIFs registered with SEBI. Further, the SEBI AIF Regulations prescribe, among others, the
investment restrictions on AIFs.

Accordingly, the holding by any individual VCF or FVCI registered with SEBI in any company should not exceed
25% of the corpus of the VCF or FVCI. Further, VCFs and FVClIs can invest only up to 33.33% of the investible
funds by way of subscription to an initial public offering.

The category I and II AIFs cannot invest more than 25% of the corpus in one investee company. A category III
AIF cannot invest more than 10% of the corpus in one investee company. A VCF registered as a category I AIF,
as defined in the SEBI AIF Regulations, cannot invest more than 1/3 of its corpus by way of subscription to an
initial public offering of a venture capital undertaking. Additionally, the VCFs which have not re-registered as an
AIF under the SEBI AIF Regulations shall continue to be regulated by the SEBI VCF Regulations until the
existing fund or scheme managed by the fund is wound up and such fund shall not launch any new scheme after
the notification of the SEBI AIF Regulations.

All Non-Resident investors should note that refunds (in case of Anchor Investors), dividends and other
distributions, if any, will be payable in Indian Rupees only and net of bank charges and commission.

Our Company, the Selling Shareholders and the BRLMs will not be responsible for any loss, incurred by the
Bidder on account of conversion of foreign currency

Bids by limited liability partnerships

In case of Bids made by limited liability partnerships registered under the Limited Liability Partnership Act, 2008,
a certified copy of certificate of registration issued under the Limited Liability Partnership Act, 2008, was required
to be attached to the Bid cum Application Form. Failing this, our Company and the Investor Selling Shareholders
reserved the right to reject any Bid without assigning any reason thereof.

Bids by banking companies

In case of Bids made by banking companies registered with RBI, certified copies of: (i) the certificate of
registration ed by RBI, and (ii) the approval of such banking company’s investment committee were required
to be attached to the Bid cum Application Form, failing which our Company and the Investor Selling Shareholders
reserved the right to reject any Bid without assigning any reason therefor.

 

The investment limit for banking companies in non-financial services companies as per the Banking Regulation
Act, 1949 (the “Banking Regulation Act”), and Master Direction — Reserve Bank of India (Financial Services
provided by Banks) Directions, 2016, is 10% of the paid-up share capital of the investee company or 10% of the
banks’ own paid-up share capital and reserves, whichever is less. Further, the aggregate investment by a banking
company in subsidiaries and other entities engaged in financial and non-financial services company cannot exceed
20% of the investee company’s paid-up share capital and reserves. A banking company may hold up to 30% of
the paid-up share capital of the investee company with the prior approval of the RBI provided that the investee
company is engaged in non-financial activities in which banking companies are permitted to engage under the
Banking Regulation Act, or the additional acquisition is through restructuring of debt/corporate debt
restructuring/strategic debt restructuring, or to protect the bank’s interest on loans/investments made to a
company. The bank is required to submit a time-bound action plan for disposal of such shares within a specified
period to the RBI. A banking company would require a prior approval of the RBI to make investment in excess
of 30% of the paid-up share capital of the investee company, investment in a subsidiary and a financial services
company that is not a subsidiary (with certain exceptions prescribed), and investment in a non-financial services
company in excess of 10% of such investee company’s paid-up share capital as stated in the Reserve Bank of
India (Financial Services provided by Banks) Directions, 2016, as amended.

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Bids by Systemically Important NBFCs

In case of Bids made by Systemically Important NBFCs registered with RBI, certified copies of: (i) the certificate
of registration issued by RBI, (ii) certified copy of its last audited financial statements on a standalone basis and
a net worth certificate from its statutory auditor, and (iii) such other approval as may be required by the
Systemically Important NBFCs, were required to be attached to the Bid cum Application Form. Failing this, our
Company and the Investor Selling Shareholders, in consultation with the BRLMs, reserved the right to reject any
Bid without assigning any reason. Systemically Important NBFCs participating in the Offer were required to
comply with all applicable regulations, guidelines and circulars issued by RBI from time to time.

The investment limit for Systemically Important NBFCs shall be as prescribed by RBI from time to time.
Bids by SCSBs

SCSBs participating in the Offer were required to comply with the terms of the circulars dated September 13,
2012 and January 2, 2013 issued by SEBI. Such SCSBs were required to ensure that for making applications on
their own account using ASBA, they should have a separate account in their own name with any other SEBI
registered SCSBs. Further, such account was required to used solely for the purpose of making application in
public issues and clear demarcated funds were required to be made available in such account for such Bids.

Bids by insurance companies

In case of Bids made by insurance companies registered with the IRDA, a certified copy of certificate of
registration issued by IRDA was required to be attached to the Bid cum Application Form. Failing this, our
Company and the Investor Selling Shareholders reserved the right to reject any Bid without assigning any reason
thereof.

The exposure norms for insurers are prescribed under the Insurance Regulatory and Development Authority
(Investment) Regulations, 2016 (the “IRDA Investment Regulations”), based on investments in the equity shares
of a company, the entire group of the investee company and the industry sector in which the investee company
operates. Bidders are advised to refer to the IRDA Investment Regulations for specific investment limits
applicable to them and shall comply with all applicable regulations, guidelines and circulars issued by IRDAI
from time to time.

Bids under Power of Attorney

In case of Bids made pursuant to a power of attorney or by limited companies, corporate bodies, registered
societies, eligible FPIs, Mutual Funds, insurance companies, insurance funds set up by the army, navy or air force
of the India, insurance funds set up by the Department of Posts, India, Systemically Important NBFC or the
National Investment Fund and provident funds with a minimum corpus of = 250 million (subject to applicable
laws) and pension funds with a minimum corpus of % 250 million, a certified copy of the power of attorney or the
relevant resolution or authority, as the case may be, along with a certified copy of the memorandum of association
and articles of association and/or bye laws were required to be lodged along with the Bid cum Application Form.
Failing this, our Company and the Investor Selling Shareholders reserved the right to accept or reject any Bid in
whole or in part, in either case, without assigning any reason thereof.

Our Company and the Investor Selling Shareholders, in consultation with the BRLMs, in their absolute discretion,
reserve the right to relax the above condition of simultaneous lodging of the power of attorney along with the Bid
cum Application Form, subject to such terms and conditions that our Company and the Investor Selling
Shareholders, in consultation with BRLMs, may deem fit.

Bids by Anchor Investors
a. In accordance with the SEBI ICDR Regulations, in addition to details and conditions mentioned in this
section the key terms for participation by Anchor Investors are provided below. Anchor Investor

Application Forms were made available for the Anchor Investor Portion at the offices of the BRLMs.

b. The Bid was to be made for a minimum of such number of Equity Shares so that the Bid Amount exceeded
= 100.00 million. A Bid could not be submitted for over 60% of the QIB Category. In case of a Mutual

357
Fund, separate Bids by individual schemes of a Mutual Fund were aggregated to determine the minimum
application size of = 100.00 million.

c One-third of the Anchor Investor Portion was reserved for allocation to domestic Mutual Funds.

d. Bidding for Anchor Investors was opened one Working Day before the Bid/ Offer Opening Date and was
completed on the same day.

e Our Company and the Investor Selling Shareholders, in consultation with the BRLMs finalized the
allocation to the Anchor Investors on a discretionary basis, provided that the minimum number of Allottees
in the Anchor Investor Portion was not be less than:

* maximum of two Anchor Investors, where allocation under the Anchor Investor Portion is up to 100.00
million;

e = minimum of two and maximum of 15 Anchor Investors, where the allocation under the Anchor Investor
Portion is more than 100.00 million but up to 2 2,500.00 million, subject to a minimum Allotment of =
50.00 million per Anchor Investor; and

e in case of allocation above 2 2,500.00 million under the Anchor Investor Portion, a minimum of five
such investors and a maximum of 15 Anchor Investors for allocation up to = 2,500.00 million, and an
additional 10 Anchor Investors for every additional = 2,500.00 million, subject to minimum Allotment
of = 50.00 million per Anchor Investor.

f. Allocation to Anchor Investors was completed on the Anchor Investor Bidding Date. The number of Equity
Shares allocated to Anchor Investors and the price at which the allocation is made, was made available in
the public domain by the BRLMs before the Bid/Offer Opening Date, through intimation to the Stock

Exchanges.

g. Anchor Investors could not withdraw or lower the size of their Bids at any stage after submission of the
Bid.

h. If the Offer Price was greater than the Anchor Investor Allocation Price, the additional amount being the

difference between the Offer Price and the Anchor Investor Offer Price was payable by the Anchor
Investors on the Anchor Investor pay-in date specified in the CAN. If the Offer Price was lower than the
Anchor Investor Offer Price, Allotment to successful Anchor Investors was at the higher price.

i. Equity Shares Allotted in the Anchor Investor Portion will be locked in for a period of 30 days from the
date of Allotment.

je Neither the BRLMs nor any associate of the BRLMs (except Mutual Funds sponsored by entities which
are associates of the BRLMs or insurance companies promoted by entities which are associate of BRLMs
or AIFs sponsored by the entities which are associate of the BRLMs or FPIs, other than individuals,
corporate bodies and family offices sponsored by the entities which are associate of the and BRLMs)
applied in the Offer under the Anchor Investor Portion. For details, see “- Participation by associates and
affiliates of the BRLM and the Syndicate Member, Promoter, Promoter Group and persons related to
Promoter/Promoter Group” on page 353.

k. Bids made by QIBs under both the Anchor Investor Portion and the QIB Category were not be considered
multiple Bids.

Bids by provident funds/pension funds

In case of Bids made by provident funds/pension funds, subject to applicable laws, with minimum corpus of =
250 million, a certified copy of certificate from a chartered accountant certifying the corpus of the provident
fund/pension fund was required to be attached to the Bid cum Application Form. Failing this, our Company and
the Investor Selling Shareholders reserved the right to reject any Bid, without assigning any reason therefor.

In accordance with RBI regulations, OCBs could not participate in the Offer.

Pre-Offer Advertisement

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Our Company, after filing the Red Herring Prospectus with the RoC, published a pre-Offer advertisement, in the
form prescribed by the SEBI ICDR Regulations and requirements under Section 30 of the Companies Act, 2013,
in all editions of Financial Express (a widely circulated English national daily newspaper), all editions of Jansatta
(a widely circulated Hindi national daily newspaper) and all editions of Makkal Kural (a widely circulated Tamil
regional daily newspaper, Tamil being the regional language in Coimbatore where our Registered Office is
located). Our Company, in the pre-Offer advertisement, stated the Bid/Offer Opening Date, the Bid/Offer Closing
Date and the QIB Bid/Offer Closing Date. This advertisement was in the format prescribed in Part A of Schedule
X of the SEBI ICDR Regulations and requirements under Section 30 of the Companies Act, 2013.

The Equity Shares have not been, and will not be registered under the U.S. 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 in accordance with any 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.

The above information is given for the benefit of the Bidders. Our Company, the Selling Shareholders and
the BRLMs are not liable for any amendments or modification or changes in applicable laws or regulations,
which may occur after the date of the Red Herring Prospectus and which could occur after the date of this
Prospectus. Bidders were advised to make their independent investigations and ensure that any single Bid
from them did not exceed the applicable investment limits or maximum number of the Equity Shares that
can be held by them under applicable law or regulation or as specified in the Red Herring Prospectus and
this Prospectus.

Signing of Underwriting Agreement and filing of Prospectus with the RoC

Our Company and the Selling Shareholders have entered into the Underwriting Agreement with the Underwriters.
After signing the Underwriting Agreement, our Company is required to file this Prospectus with the RoC. This
Prospectus contains details of the Offer Price, Anchor Investor Offer Price, Offer size and the underwriting
arrangements and is complete in all material respects.

General Instructions

Please note that QIBs and Non-Institutional Investors were not permitted to withdraw their Bid(s) or lower the
size of their Bid(s) (in terms of quantity of Equity Shares or the Bid Amount) at any stage. Retail Individual
Investors could revise their Bid(s) during the Bid/Offer Period and withdraw their Bid(s) until Bid/Offer Closing
Date. Anchor Investors were not allowed to withdraw their Bids after the Anchor Investor Bidding Date.

Do’s:

1. Check if you are eligible to apply as per the terms of the Red Herring Prospectus and under applicable
law, rules, regulations, guidelines and approvals.

2. Ensure that you have Bid within the Price Band.

3. Read all the instructions carefully and completed the Bid cum Application Form in the prescribed form.

4. All Bidders (other than Anchor Investors) were required to submit their Bids through the ASBA only.

By Ensure that you (other than the Anchor Investors) mentioned the correct details of ASBA Account (i.e.
bank account number or UPI ID, as applicable) and PAN in the Bid cum Application.

6. Since the Allotment will be in dematerialized form only, ensure that the depository account is active, the

correct DP ID, Client ID, UPI ID (for RIIs Bidding through UPI mechanism) and the PAN were
mentioned in their Bid cum Application Form and that the name of the Bidder, the DP ID, Client ID,
UPI ID (for RIIs Bidding through UPI mechanism) and the PAN entered into the online IPO system of
the Stock Exchanges by the relevant Designated Intermediary, as applicable, matched with the name, DP
ID, Client ID, UPI ID (for RIIs Bidding through UPI mechanism) and PAN available in the Depository
database.

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10.

11.

12.

13.

14.

15.

16.

17.

18.

19.

Ensure that your Bid cum Application Form bearing the stamp of a Designated Intermediary was
submitted to the Designated Intermediary at the Bidding Centre (except in case of electronic Bids) within
the prescribed time. RIIs Bidding using UPI Mechanism, could submit their ASBA Forms with Syndicate
Member, Registered Brokers, RTAs or CDPs and were required to ensure that the ASBA Forms contains
the stamp of such Designated Intermediary.

In case of joint Bids, ensure that the first Applicant was the ASBA Account holder, and also signed the
Bid cum Application Form (for all Bidders other than RIIs Bidding using the UPI Mechanism).

Ensure that you mentioned the correct ASBA Account number (for all Bidders other than RIIs Bidding
using the UPI Mechanism) in the Bid cum Application Form.

RIlIs Bidding in the Offer were required to ensure that they use only their own ASBA Account or only
their own bank account linked UPI ID (only for RIlIs using the UPI Mechanism) to make an application
in the Offer and not ASBA Account or bank account linked UPI ID of any third party.

RIlIs Bidding using the UPI Mechanism were required to ensure that the correct UPI ID is mentioned in
the Bid cum Application Form.

RIIs Bidding were required to ensure that the bank, with which they have bank account, where the funds
equivalent to the application amount were available for blocking is UPI 2.0 certified by NPCI.

Ensure that the signature of the First Bidder in case of joint Bids, was included in the Bid cum Application
Forms. If the First Bidder was not the ASBA Account holder, ensure that the Bid cum Application Form
was also signed by the ASBA Account holder.

Ensure that the name(s) given in the Bid cum Application Form was/were exactly the same as the name(s)
in which the beneficiary account is held with the Depository Participant. In case of joint Bids, the Bid
cum Application Form was required to contain only the name of the First Bidder whose name should
also appear as the first holder of the beneficiary account held in joint names.

Ensure that you requested for and received a stamped acknowledgement in the form of a counterfoil or
by specifying the application number for all your Bid options as proof of registration of the Bid cum
Application Form from the concerned Designated Intermediary.

Ensure that you had funds equal to the Bid Amount in the ASBA Account maintained with the SCSB
before submitting the Bid cum Application Form under the ASBA process to any of the Designated
Intermediaries.

Submitted revised Bids to the same Designated Intermediary, through whom the original Bid was placed
and obtain a revised acknowledgment.

With respect to Bids by SCSBs, ensure that you had a separate account in your own name with any other
SCSB having clear demarcated funds for applying under the ASBA process and that such separate
account (with any other SCSB) was used as the ASBA Account with respect to your Bid.

Except for Bids (i) on behalf of the Central Government or state governments and the officials appointed
by the courts, who, in terms of a SEBI circular dated June 30, 2008, could be exempt from specifying
their PAN for transacting in the securities market, (ii) Bids by persons resident in the state of Sikkim,
who, in terms of a SEBI circular dated July 20, 2006, could be exempted from specifying their PAN for
transacting in the securities market, and (iii) any other category of Bidders, including without limitation,
multilateral/bilateral institutions, which could be exempted from specifying their PAN for transacting in
the securities market, all Bidders were required to mention their PAN allotted under the Income Tax Act.
The exemption for the Central or the state government and officials appointed by the courts and for
investors residing in the State of Sikkim were subject to (a) the Demographic Details received from the
respective depositories confirming the exemption granted to the beneficiary owner by a suitable
description in the PAN field and the beneficiary account remaining in “active status”; and (b) in the case
of residents of Sikkim, the address as per the Demographic Details evidencing the same. All other
applications in which PAN were not mentioned were liable to be rejected.

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20.

21.

22.

23.

24.

25.

26.

27.

28.

29.

30.

31.

32.

33.

Ensure that Anchor Investors submitted their Anchor Investor Application Form only to the BRLMs.
Ensure that the Demographic Details were updated, true and correct in all respects.

Ensure that thumb impressions and signatures other than in the languages specified in the Eighth
Schedule to the Constitution of India were attested by a Magistrate or a Notary Public or a Special
Executive Magistrate under official seal.

Ensure that the category and the investor status was indicated in the Bid cum Application Form to ensure
proper upload of your Bid in the electronic Bidding system of the Stock Exchanges.

Ensure that in case of Bids under power of attorney or by limited companies, corporates, trust etc.,
relevant documents, including a copy of the power of attorney, was submitted.

Ensure that Bids submitted by any person outside India were required to be in compliance with applicable
foreign and Indian laws.

Bidders were required to note that in case the DP ID, Client ID and the PAN mentioned in their Bid cum
Application Form and entered into the online IPO system of the Stock Exchanges by the relevant
Designated Intermediary, as the case may be, did not match with the DP ID, Client ID and PAN available
in the Depository database, then such Bids were liable to be rejected. Where the Bid cum Application
Form was submitted in joint names, ensure that the beneficiary account was also held in the same joint
names and such names were in the same sequence in which they appeared in the Bid cum Application
Form.

Ensure that while Bidding through a Designated Intermediary, the Bid cum Application Form (other than
for Anchor Investors) was submitted to a Designated Intermediary in a Bidding Centre and that in case
of Bidding through a Designated Intermediary (other than for Anchor Investors and RIIs Bidding through
the UPI Mechanism), the SCSB where the ASBA Account, as specified in the ASBA Form, was
maintained had named at least one branch at that location for the Designated Intermediary to deposit
ASBA Forms (a list of such branches is available on the website of SEBI at www.sebi.gov.in).

Ensure that you correctly signed the authorization/undertaking box in the Bid cum Application Form, or
otherwise provided an authorization to the SCSB or Sponsor Bank, as applicable, via the electronic mode,
for blocking funds in the ASBA Account equivalent to the Bid Amount mentioned in the Bid cum
Application Form at the time of submission of the Bid.

The Bid cum Application Form was liable to be rejected if the above instructions, as applicable, were
not complied with.

For RIIs Bidding using the UPI Mechanism, ensure that you approved the UPI Mandate Request
generated by the Sponsor Bank to authorize blocking of funds equivalent to application amount and
subsequent debit of funds in case of Allotment, in a timely manner.

RIIs were required to ensure that details of the Bid were reviewed and verified by opening the attachment
in the UPI Mandate Request and then proceeded to authorize the UPI Mandate Request using his/her
UPI PIN. Upon the authorization of the mandate using his/her UPI PIN, an RII may be deemed to have
verified the attachment containing the application details of the RII in the UPI Mandate Request and
have agreed to block the entire Bid Amount and authorized the Sponsor Bank to block the Bid Amount
mentioned in the Bid Cum Application Form.

RIlIs Bidding using the UPI Mechanism were required to mention valid UPI ID of only the Applicant (in
case of single account) and of the first Applicant (in case of joint account) in the Bid cum Application
Form.

RIIs Bidding using the UPI Mechanism, who revised their Bids subsequent to making the initial Bid,
were also required to approve the revised UPI Mandate Request generated by the Sponsor Bank to
authorize blocking of funds equivalent to the revised Bid Amount and subsequent debit of funds in case
of allotment in a timely manner.

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34. Bids by Eligible NRIs HUFs and any individuals, corporate bodies and family offices which are
recategorized as Category II FPI and registered with SEBI for a Bid Amount of less than 2 200,000 were
considered under the Retail Category for the purposes of allocation and Bids for a Bid Amount exceeding
% 200,000 were considered under the Non-Institutional Category for allocation in the Offer.

35. In case of QIBs and NIls, ensure that while Bidding through a Designated Intermediary, the ASBA Form
was submitted to a Designated Intermediary in a Bidding Centre and that the SCSB where the ASBA
Account, as specified in the ASBA Form, was maintained had named at least one branch at that location
for the Designated Intermediary to deposit ASBA Forms (a list of such branches is available on the
website of SEBI at www.sebi.gov.in)

The Bid cum Application Form was liable to be rejected if the above instructions, as applicable, are not
complied with. Application made using incorrect UPI handle or using a bank account of an SCSB or SCSBs
which is not mentioned in the Annexure ‘A’ to the SEBI circular no. SEBI/HO/CFD/DIL2/CIR/P/2019/85
dated July 26, 2019 were liable to be rejected.

Don’ts:

ds Do not Bid for lower than the minimum Bid size.

2, Do not Bid/revise Bid Amount to less than the Floor Price or higher than the Cap Price.

By Do not Bid on another Bid cum Application Form after you have submitted a Bid to a Designated
Intermediary

4. Do not pay the Bid Amount in cash, by money order, cheques or demand drafts or by postal order or by

stock invest.

5. Do not send Bid cum Application Forms by post. Instead submit the same to the Designated Intermediary
only.

6. Anchor Investors should not Bid through the ASBA process

7. Do not submit the Bid cum Application Forms to any to any Designated Intermediary that is not

authorized to collect the relevant Bid cum Application Forms or to our Company.

8. Do not Bid on a Bid cum Application Form that does not have the stamp of the relevant Designated
Intermediary.
9. Do not Bid at Cut-off Price (for Bids by QIBs and Non-Institutional Investors).

10. Do not fill up the Bid cum Application Form such that the Equity Shares Bid for exceeds the Offer/Offer
size and/or investment limit or maximum number of the Equity Shares that can be held under the
applicable laws or regulations or maximum amount permissible under the applicable regulations or under
the terms of the Red Herring Prospectus.

11. Do not submit your Bid after 3.00 pm on the Bid/Offer Closing Date.

12; If you are a QIB, do not submit your Bid after 3.00 p.m. on the QIB Bid/Offer Closing Date.

13. Do not instruct your respective banks to release the funds blocked in the ASBA Account under the ASBA.
process.

14. Do not Bid for a Bid Amount exceeding % 200,000 (for Bids by Retail Individual Investors).

15: Do not submit the General Index Register (GIR) number instead of the PAN.

362
16.

17.

18.

19.

20.

21.

22.

23.

24.

25.

26.

27.

28.

29.

30.

31.

Do not submit incorrect details of the DP ID, Client ID, PAN or UPI ID, if applicable, or provide details
for a beneficiary account which is suspended or for which details cannot be verified by the Registrar to
the Offer.

Do not submit incorrect UPI ID details if you are a RII Bidding through the UPI Mechanism.

Do not submit the Bid without ensuring that funds equivalent to the entire Bid Amount are available for
blocking in the relevant ASBA Account.

In case of ASBA Bidders, do not submit more than one ASBA Forms per ASBA Account.

Do not submit more than one Bid cum Application Form for each UPI ID in case of RIIs Bidding through
the Designated Intermediaries using the UPI Mechanism.

Do not withdraw your Bid or lower the size of your Bid (in terms of quantity of the Equity Shares or the
Bid Amount) at any stage, if you are a QIB or a Non-Institutional Investor. RIIs can revise or withdraw
their Bids on or before the Bid/ Offer Closing Date.

Do not submit Bids on plain paper or on incomplete or illegible Bid cum Application Forms or on Bid
cum Application Forms in a colour prescribed for another category of Bidder.

Do not submit a Bid in case you are not eligible to acquire Equity Shares under applicable law or your
relevant constitutional documents or otherwise.

Do not link the UPI ID with a bank account maintained with a bank that is not UPI 2.0 certified by the
NPCI in case of Bids submitted by RII Bidder using the UPI Mechanism.

Do not Bid if you are not competent to contract under the Indian Contract Act, 1872 (other than minors
having valid depository accounts as per Demographic Details provided by the depository).

Do not submit a Bid cum Application Form with third party UPI ID (in case of in case of Bids submitted
by RII Bidder using the UPI Mechanism).

Do not Bid for Equity Shares in excess of what is specified for each category.

Do not submit Bids to a Designated Intermediary at a location other than the Bidding Centres.

If you are an RII which is submitting the ASBA Form with any of the Designated Intermediaries and
using your UPI ID for the purpose of blocking of funds, do not use any third party bank account or third
party linked bank account UPI ID.

RIIs Bidding through the UPI Mechanism using the incorrect UPI handle or using a bank account of an
SCSB or a bank which is not mentioned in the list provided in the SEBI website is liable to be rejected.

Do not Bid if you are an OCB.

The Bid cum Application Form is liable to be rejected if the above instructions, as applicable, are not complied

with.

Further, in case of post-Offer related issues regarding share certificates/demat credit/refund orders/unblocking
etc., investors can reach out the Company Secretary and Compliance Officer. For details of the Company Secretary
and Compliance Officer, see “General Information” on page 62.

In case of any delay in unblocking of amounts in the ASBA Accounts (including amounts blocked through the
UPI Mechanism) exceeding four Working Days from the Bid/Offer Closing Date, the Bidder shall be compensated
at a uniform rate of 2 100 per day for the entire duration of delay exceeding four Working Days from the Bid/Offer
Closing Date by the intermediary responsible for causing such delay in unblocking. The BRLMs shall, in their
sole discretion, identify and fix the liability on such intermediary or entity responsible for such delay in
unblocking.

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For details of grounds for technical rejections of a Bid cum Application Form, please see the General Information
Document.

Names of entities responsible for finalising the Basis of Allotment in a fair and proper manner

The authorized employees of the Stock Exchanges, along with the BRLMs and the Registrar to the Offer, shall
ensure that the Basis of Allotment is finalized in a fair and proper manner in accordance with the procedure
specified in SEBI ICDR Regulations.

Method of allotment as may be prescribed by SEBI from time to time

Our Company will not make any allotment in excess of the Equity Shares offered through the Offer through the
Red Herring Prospectus and this Prospectus except in case of oversubscription for the purpose of rounding off to
make allotment, in consultation with the Designated Stock Exchange. Further, upon oversubscription, an allotment
of not more than 1% of the Offer to public may be made for the purpose of making allotment in minimum lots.

The allotment of Equity Shares to applicants other than to the RIIs and Anchor Investors shall be on a
proportionate basis within the respective investor categories and the number of securities allotted shall be rounded
off to the nearest integer, subject to minimum allotment being equal to the minimum application size as determined
and disclosed.

The allotment of Equity Shares to each RII shall not be less than the minimum Bid Lot, subject to the availability
of Equity Shares in Retail Category, and the remaining available shares, if any, shall be allotted on a proportionate
basis.

Payment into Anchor Escrow Accounts

Our Company and the Investor Selling Shareholders, in consultation with the BRLMs, in their absolute discretion,
will decide the list of Anchor Investors to whom the Allotment Advice will be sent, pursuant to which the details
of the Equity Shares allocated to them in their respective names will be notified to such Anchor Investors. Anchor
Investors were not permitted to Bid in the Offer through the ASBA process. Instead, Anchor Investors were
required to transfer the Bid Amount (through direct credit, RTGS, NACH or NEFT). The payment instruments
for payment into the Anchor Escrow Accounts was required to be drawn in favour of:

(i) In case of resident Anchor Investors: “CRAFTSMAN AUTOMATION LIMITED-ANCHOR
RESIDENT A/C”

(ii) Incase of non-resident Anchor Investors: “CRAFTSMAN AUTOMATION LIMITED-ANCHOR NON-
RESIDENT A/C”

Anchor Investors should note that the escrow mechanism is not prescribed by SEBI and was established as an
arrangement between our Company, the Selling Shareholder, the Syndicate, the Escrow Collection Bank and the
Registrar to the Offer to facilitate collections of Bid amounts from Anchor Investors.

Impersonation

Attention of the Applicants is specifically drawn to the provisions of sub-section (1) of Section 38 of the
Companies Act 2013, which is reproduced below:

“Any person who:

(@) makes or abets making of an application in a fictitious name to a company for acquiring, or
subscribing for, its securities; or

(b) makes or abets making of multiple applications to a company in different names or in different
combinations of his name or surname for acquiring or subscribing for its securities; or

() otherwise induces directly or indirectly a company to allot, or register any transfer of, securities to

him, or to any other person in a fictitious name, shall be liable for action under Section 447.”

The liability prescribed under Section 447 of the Companies Act 2013 includes imprisonment for a term which

364
shall not be less than six months extending up to 10 years (provided that where the fraud involves public interest,
such term shall not be less than three years) and fine of an amount not less than the amount involved in the fraud,
extending up to three times of such amount.

Undertakings by our Company

Our Company undertakes the following:

@

(ii)

(iii)

(iv)

(v)

(vi)

(vii)

(viii)

(ix)

@)
(xi)

(xii)

(xiii)

(xiv)

that the complaints received in respect of the Offer shall be attended to by our Company expeditiously
and satisfactorily;

if Allotment is not made, application monies will be refunded/unblocked in the ASBA Accounts within
15 days from the Bid/Offer Closing Date or such lesser time as specified by SEBI, failing which interest
will be due to be paid to the Bidders at the rate of 15% per annum for the delayed period;

that all steps will be taken for completion of the necessary formalities for listing and commencement of
trading at all the Stock Exchanges within six Working Days of the Bid/Offer Closing Date;

that funds required for making refunds to unsuccessful Applicants, as per the mode(s) disclosed, shall be
made available to the Registrar to the Offer by our Company;

where refunds (to the extent applicable) are made through electronic transfer of funds, a suitable
communication shall be sent to the Applicant within 15 days from the Bid/Offer Closing Date, or such
time period as specified by SEBI, giving details of the bank where refunds shall be credited along with
amount and expected date of electronic credit of refund;

that no further issue of Equity Shares shall be made until the Equity Shares offered through the Red
Herring Prospectus are listed or until the Bid monies are refunded/unblocked in the ASBA Accounts on
account of non-listing, under-subscription, etc.;

that if our Company does not proceed with the Offer after the Bid/Offer Closing Date but prior to
Allotment, the reason thereof shall be given as a public notice within two days of the Bid/Offer Closing
Date. The public notice shall be issued in the same newspapers where the pre-Offer advertisements were
published. The Stock Exchanges shall also be informed promptly;

that if our Company withdraw the Offer after the Bid/Offer Closing Date, our Company shall be required
to file a fresh offer document with SEBI, in the event our Company or the Investor Selling Shareholders
subsequently decides to proceed with the Offer;

that the allotment of securities/refund confirmation to Eligible NRIs shall be dispatched within specified
time;

that adequate arrangements were made to collect all Bid cum Application Forms;

that our Company shall not have recourse to the proceeds of the Fresh Issue until the final approval for
listing and trading of the Equity Shares from all the Stock Exchanges has been received;

that the Promoter’s Contribution in full, wherever required, was brought in advance before the Bid/Offer
Opening Date;

that there shall be only one denomination of the Equity Shares, unless otherwise permitted by law; and

that our Company shall comply with such disclosure and accounting norms as may be specified by SEBI
from time to time.

Undertakings by the Selling Shareholders

Each Selling Shareholder, severally and not jointly, specifically confirms and undertakes the following in respect
of itself and its respective portion of the Offered Shares:

365
(ii)
(iii)

(iv)

(vy)

its respective portion of the Offered Shares are free and clear of any encumbrances and shall be
transferred to the Bidders within the time specified under applicable law;

it is the legal and beneficial holder and have full title to their respective portion of the Offered Shares;

its respective portion of the Offered Shares are fully paid and shall be in dematerialized form prior to
filing of the Red Herring Prospectus;

its respective portion of the Offered Shares are eligible to be offered for sale pursuant to the Offer as per
the provisions of Regulation 8 of the SEBI ICDR Regulation; and

it will not have recourse to the proceeds of the Offer for Sale which shall be held in escrow in its favour,
until receipt by our Company of the final listing and trading approvals from all the Stock Exchanges in
accordance with applicable law.

Utilization of Net Proceeds

@

Our Company and the Selling Shareholder, severally and not jointly, specifically confirm that all monies
received out of the Offer shall be credited/transferred to a separate bank account other than the bank
account referred to in sub-section (3) of Section 40 of the Companies Act;.

366
RESTRICTION ON FOREIGN OWNERSHIP OF INDIAN SECURITIES

Foreign investment in Indian securities is regulated through the FEMA, the Consolidated FDI Policy and the
circulars and notifications issued thereunder. Unless specifically restricted, foreign investment is freely permitted
in all sectors of the Indian economy, subject to certain applicable pricing and reporting requirements. FDI in
companies engaged in sectors/ activities which are not listed in the FDI Policy is permitted up to 100% of the paid
up share capital of such company under the automatic route, subject to compliance with certain prescribed
conditions.

The Government has from time to time made policy pronouncements on FDI through press notes and press
releases. The DPIIT, issued the Consolidated FDI Policy which consolidates and supersedes all previous press
notes, press releases and clarifications on FDI issued by the DPIIT that were in force and effect as on October 15,
2020. The Government proposes to update the consolidated circular on FDI Policy once every year and therefore,
the Consolidated FDI Policy will be valid until the DPIIT issues an updated circular.

Subject to certain condition, the transfer of shares by way of sale between an Indian resident and a non-resident
does not require the prior approval of the RBI or the relevant ministry or department of the Government of India,
provided that (i) the activities of the investee company are under the automatic route under the FDI Policy and
transfer does not attract the provisions of the Takeover Regulations; (ii) the non-resident shareholding is within
the sectoral limits under the Consolidated FDI Policy; and (iii) the pricing is in accordance with the guidelines
prescribed by SEBI and RBI.

Further, in accordance with Press Note No. 3 (2020 Series), dated April 17, 2020 issued by the DPIIT, all
investments by entities incorporated in a country which shares land border with India or where the beneficial
owner of an investment into India is situated in or is a citizen of any such country (the “Restricted Investors”),
will require prior approval of the Government of India, as prescribed in the Consolidated FDI Policy. It is not
clear from the press note whether or not an issuance of the Equity Shares to Restricted Investors will also require
a prior approval of the Government of India and each Bidder should seek independent legal advice about its ability
to participate in the Offer. In the event such prior approval of the Government of India is required and such
approval has been obtained, the Bidder was required to intimate the Company and the Registrar about such
approval within the Offer Period.

The Equity Shares offered in the Offer have not been and will not be registered under the U.S. 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 in accordance with any 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 under the U.S. Securities Act and the applicable laws of
the jurisdictions where such offers and sales are made.

367
SECTION VIII - MAIN PROVISIONS OF ARTICLES OF ASSOCIATION

Capitalized terms used in this section have the meaning that has been given to such terms in the Articles of
Association. Pursuant to Schedule I of the Companies Act 2013 and the SEBI ICDR Regulations, the main
provisions of the Articles of Association of our Company are detailed below:

(*Change of Status from Private to Public approved by special resolution passed at the Extra Ordinary General
Meeting held on 30/04/2018)

The Articles of Association of the Company comprise two parts, Part A and Part B, of which Part A shall be
effective immediately upon the listing and commencement of trading of Equity Shares on the Stock Exchanges
pursuant to the Offer. Until the listing and commencement of trading of Equity Shares on a recognized stock
exchange pursuant to the Offer, provisions of Part B shall be applicable. However, upon listing of the Equity
Shares on the Stock Exchanges pursuant to an initial public offering of the Equity Shares, Part B shall
automatically stand deleted, not have any force and be deemed to be removed from the Articles of Association
and the provisions of the Part A shall automatically come in effect and be in force, without any further corporate
or other action by the Company or its shareholders.

Part A**

“The following regulations comprised in these Articles of Association were adopted pursuant to members’
resolution passed at the Extraordinary general meeting of the Company held on 30‘ April, 2018 in substitution
for, and to the entire exclusion of, the earlier regulations comprised in the extant Articles of Association of the
Company.

 

 

 

APPLICATION
1 |) _ | The regulations contained in the Table marked ‘F” in Schedule I to the Act shall apply ] Table ‘F’ to apply
to the Company, except in so far as the same has been adopted, modified or expressly | to the extent not
mentioned as ‘not being applicable’ in these Articles. adopted or
modified in these
Articles
(2) _| Articles shall act as the regulations for the management of the Company and for the | Company to be

observance by its members thereto and their representatives, shall, subject to any | governed by these
exercise of the statutory powers of the Company with reference to the deletion or | Articles

alteration of, or addition to, its Articles by resolution as prescribed or permitted by the
Companies Act, 2013, be such as are contained in these Articles, unless the same are
repugnant or contrary to the provisions of the Act or any Applicable Law or any
amendment or notification thereto.

 

DEFINITIONS AND INTERPRETATION

 

2_[@ In these Articles:

(a) “Act” means The Companies Act, 2013 (including the relevant rules framed | “Act”
thereunder) or any statutory modification or re-enactment thereof for the time
being in force and the term shall be deemed to refer to the applicable section
thereof which is relatable to the relevant Article in which the said term appears
in these Articles and any previous company law, so far as may be applicable.

 

 

(6) “Applicable Laws* means all applicable statutes, laws, ordinances, rules and | “Applicable
regulations, judgments, notifications circulars, orders, decrees, bye-laws, | Laws”
guidelines, or any decision, or determination, or any interpretation, policy or
administration, having the force of law, including but not limited to, any
authorization by any authority like Ministry of Corporate Affairs, Securities
Exchange Board of India or any other regulatory body, in each case, as may be
applicable to the Company and being in effect from time to time.

(© “Articles™ means these articles of association of the Company as altered or | “Articles™
supplemented from time to time in pursuance of the provisions of the Act.

 

 

 

 

 

 

 

 

(@) “Board of Directors” or “Board”, in relation to a company, means the collective | “Board of
body of the directors of the Company. Directors” or
“Board”
(©) “Company” means Craftsman Automation Limited. “Company”

 

368
 

 

(f) “Electronic Mode” means electronic medium of communication including video
conferencing or other audio- visual means or other electronic communication
facility capable of being recorded, as may be applicable.

 

 

(g) “Investor Shares” are those shares subscribed to and held by IFC and Marina
(Originally SCPE subscribed shares) on fully diluted basis taking into account
shares arising from bonus, split or sub-division of shares. For the purpose of this
definition, IFC and Marina shall be collectively referred to as the “Investors” and
individually as the “Investor”. Post Listing, any acquisition of shares by the
Investors will not be reckoned as Investor Shares.

“Investor
Shares”” and
“"Investor’”

 

(h) “Key Managerial Personnel” in relation to a company, means -
(i) the Chief Executive Officer or the managing director or the manager;
(ii) the company secretary;
(iii) the whole-time director;
(iv) the Chief Financial Officer
(v)_ such other officer, not more than one level below the directors who is in
whole-time employment, designated as key managerial personnel by the

Board; and

(vi) such other officer as may be prescribed

“Key Managerial
Personnel”

 

() “Listing” means listing of the equity shares of the Company on any recognised
stock exchange in India pursuant to an initial public offering of the equity shares
of the Company

* Listing”

 

() “Memorandum” means the Memorandum of Association of the Company.

“Memorandum”

 

(kK) “Share” means a share in the share capital of a company and includes stock.

“Share”?

 

(D “Securities” means the securities as defined in clause (h) of section 2 of the
Securities Contracts (Regulation) Act, 1956 (42 of 1956).

“*Securities’’

 

 

 

 

 

 

 

 

 

(2) _ | Words importing the singular number shall include the plural number and words | “Number” and
importing the masculine gender shall, where the context admits, include the feminine | “Gender”
and neuter gender.

@)__| The terms “writing” or “written” include printing, typewriting, lithography, photography | “Writing” oF
and any other mode or modes (including electronic mode) of representing or reproducing | “Written”
words in a legible and non-transitory form.

(4) Unless the context otherwise requires, the words or expressions contained in these | Expressions in the
Articles, but not defined herein shall bear the same meaning as in the Act or any | Articles to bear
statutory modification, as the case may be, if not inconsistent with the subject or | the same meaning
context of these Articles. as in the Act.

(5) The marginal notes are inserted for convenience and shall not affect the construction | Insertion of
of these Articles. Marginal Notes.

SHARE CAPITAL, SECURITIES AND VARIATION OF RIGHTS

(1) Subject to the provisions of the Act, these Articles, SEBI Guidelines and other | Shares,
statutory provisions, if and where applicable, shares, depository receipts, debentures | Depository
and other securities that the company may propose to issue from time to time shall be | Receipts,
under the control of the Board of Directors who may allot the same to such persons, | Debentures and
on such terms and conditions, and either at a premium or at par, in such proportion | other Securities
and at such time as the Board may, from time to time, think fit. shall be under

the control of
Board.
@ | @_ The Company may issue the following Kinds of shares in accordance with these | Kinds of Share

 

Articles, the Act, the Rules and other Applicable Laws:

 

Capital

 

369

 
 

(i) Equity Share capital with voting rights and / or

(ii) Equity Share capital with differential rights as to dividend, voting or
otherwise in accordance with the Rules; and

(iii) Preference share capital

 

(3)

The Authorized share capital of the Company shall be such amount and of such
description as is stated for the time being in Clause V of the Memorandum of
Association.

Authorised Share
Capital as stated
in Memorandum

 

>)

The Company shall have the power to issue any shares of the original capital or any
new capital, increase, reclassify, subdivide [by apportioning the right to participate in
profits, in any manner as between the shares resulting from sub-division], consolidate
the capital into several classes from time to time and to attach thereto, respectively,
such preferential, deferred, qualified or special rights, privileges or conditions with
voting rights or with differential rights as to dividend, voting or otherwise in
accordance with the provisions of the Act.

Rights associated
with Authorised
Share Capital

 

(5)

Subject to section 55 and other provisions of the Act, the Company shall have the
power to issue or re-issue preference shares of one or more classes which are liable to
be redeemed, or converted to equity shares, on such terms and conditions and in such
manner as determined by the Board in accordance with the Act.

The redemption of preference shares shall be made only out of profits of the company
which would otherwise be available for distribution for dividend and premium, if any,
payable on redemption shall be provided for out of the profits of the Company or out
of the Company's share premium account before the shares are redeemed.

Power to issue
redeemable
preference shares

 

(6)

Where at any time, the Company proposes to increase its subscribed capital by issue
of further shares, either out of the unissued capital or the increased share capital, such
shares shall be offered:

(a) to persons who, at the date of offer, are holders of Equity Shares of the Company,
in proportion as near as circumstances admit, to the share capital paid up on those
shares by sending a letter of offer on the following conditions: -

(i) the aforesaid offer shall be made by a notice specifying the number of shares
offered and limiting a time prescribed under the Act from the date of the
offer within which the offer, if not accepted, will be deemed to have been
declined

(ii) the aforementioned offer shall be deemed to include a right exercisable by
the person concerned to renounce the shares offered to him or any of them
in favour of any other person and the notice mentioned in sub-Article (i),
above shall contain a statement of this right; and

(iii) after the expiry of the time specified in the aforesaid notice or on receipt of
earlier intimation from the person to whom such notice is given that he
declines to accept the shares offered, the Board of Directors may dispose of
them in such manner which is not disadvantageous to the shareholders and
the Company; or

(b) to employees under any scheme of employees’ stock option, subject to a special
resolution passed by the Company and subject to the conditions as specified
under the Act and Rules thereunder-r; or

(c)_ to any persons, if it is authorized by a special resolution passed by the Company
in a General Meeting, whether or not those persons include the persons referred
to in clause (a) or clause (b) above, either for cash or for consideration other than
cash, subject to applicable provisions of the Act and Rules thereunder.

Further issue of
Share Capital

 

 

 

”

 

Nothing in this Article shall apply to the increase of the subscribed capital of the
Company caused by the exercise of an option as a term attached to the debentures
issued or loans raised by the Company to convert such debenture or loans into shares

 

Increase of
Subscribed capital
in case of exercise

 

370

 
 

in the Company, or to subscribe to the shares in the Company, provided the terms of
issue of such debentures or loan containing such an option have been approved before
the issue of such debenture or the raising of loan by a resolution passed by the
Company in general meeting as prescribed by the Act.

of option as a term
attached to
debentures

 

(8)

A further issue of shares may be made in any manner whatsoever as the Board may
determine including by way of preferential offer or private placement, subject to and
in accordance with the Act and the Rules.

Mode of further
issue of shares

 

(9)

The Board may issue, allot or otherwise dispose shares in the capital of the Company
as per the provisions of Section 62 of the Act, on payment or part payment for any
property or assets of any kind whatsoever sold or transferred, goods or machinery
supplied or for services rendered to the Company in the conduct of its business and
any shares which may be so allotted may be issued as fully paid-up or partly paid-up
and may be for a consideration otherwise than for cash, and if so issued, shall be
deemed to be fully paid-up or partly paid-up shares, as the case may be, provided that
the option or right to call of shares shall not be given to any person or persons without
the sanction of the Company in the general meeting.

The Board may also allot shares to the employees or directors of the Company as sweat
equity as per Section 54 of the Act or in the form of Share Based Employee Benefits
as per the provisions of Applicable laws.

Board may allot
shares for
consideration
otherwise than for
cash

 

(0)

The rights conferred upon the holders of the shares of any class issued with preferred
or other rights shall not, unless otherwise expressly provided by the terms of issue of
the shares of that class, be deemed to be varied by the creation or issue of further shares
ranking pari passu therewith.

Issue of further
shares not to
affect rights of
existing members

 

i)

If at any time the share capital is divided into different classes of shares, the rights
attached to any class (unless otherwise provided by the terms of issue of the shares of
that class) may, subject to the provisions of Section 48 of the Act, and whether or not
the Company is being wound up, be varied with the consent in writing, of such number
of the holders of the issued shares of that class, or with the sanction of a resolution
passed at a separate meeting of the holders of the shares of that class, as prescribed by
the Act.

Variation of
Members’ Rights

 

1)

Subject to the applicable provisions of Section 71 of the Act, and rules thereunder, and
other Applicable Laws, any debentures, debenture-stock or other securities may be
issued on such terms as the Board may think fit, whether secured or otherwise,
including debt securities convertible into shares and such terms and conditions may
provide for redemption, surrender, drawing, allotment of shares and attending (but not
voting), transfer, transmission, appointment of nominee directors, etc at a general
meeting.

Terms of issue of
debentures

 

(13)

Debentures with the right to conversion into or allotment of shares shall be issued only
with the consent of the Company in a general meeting by resolution to be passed as
prescribed under the Act and compliance of provisions of other applicable laws.

Option to convert
Debt to Share
capital

 

(14)

The company may exercise the powers of paying commissions conferred by sub-
section (6) of Section 40, provided that the rate per cent. or the amount of the
commission paid or agreed to be paid shall be disclosed in the manner required by that
section and rules made thereunder.

Payment of
Commissions to
any person in
connection with
the subscription to
its securities

 

(15)

The rate or amount of the commission shall not exceed the rate or amount prescribed
in the rules made under sub-section (6) of Section 40.

Rate of
commission in
accordance with
Rules

 

(6)

The commission may be satisfied by the payment of cash or the allotment of fully or
partly paid shares or partly in the one way and partly in the other.

Mode of payment
of commission

 

ALTERATION OF SHARE CAPITAL

 

 

 

@

 

(a) Subject to the provisions of Section 61 of the Act, the Company may, by
resolution prescribed in the Act —

 

Power to alter
share capital

 

371

 
 

() _ increase the share capital by such amount as it thinks expedient

(ii) consolidate and divide all or any of its share capital into shares of larger
amount than its existing shares. Provided that no consolidation and division
which results in changes in the voting percentage of shareholders shall take
effect unless it is approved by the Tribunal on an application made in the
manner prescribed in the Act;

convert all or any of its fully paid-up shares into stock, and reconvert that
stock into fully paid-up shares of any denomination;

 

(iv) sub-divide its shares, or any of them, into shares of smaller amount than is
fixed by the Memorandum, so, however, that in the sub-division the
proportion between the amount paid and the amount, if any, unpaid on each
reduced share shall be the same as it was in the case of the share from which
the reduced share is derived;

(v)_ cancel any shares which, at the date of the passing of the resolution in that
behalf, have not been taken or agreed to be taken by any person and diminish
the amount of its share capital by the amount of the shares so cancelled.

 

 

 

 

 

 

 

 

 

(® | @ The Company may, by resolution or consent as prescribed by the Act, reduce in | Reduction of
any manner — capital
(i) _ its share capital; and/or
(ii) any capital redemption reserve account; and/or
(iii) any securities premium account; and/or
(iv) any other reserve in the nature of share capital.
(3) __ | Notwithstanding anything contained in these Articles but subject to all applicable | Buy-back of
provisions of the Act [Sections 68 to 70] or any other Applicable Laws for the time | shares
being in force, the Company may purchase its own shares or other specified securities.
DEMATERIALISATION OF SECURITIES

(1) Notwithstanding anything contained in these Articles, the Company shall be entitled | Shares and
to dematerialize its existing Securities, rematerialize its Securities held in the | securities may be
Depositories and/or to issue, offer fresh Securities in a dematerialized form or hold | held in
existing securities and the certificates in respect thereof in dematerialized form | dematerialized
pursuant to the Depositories Act, 1996 and the rules framed thereunder, if any. form.
In such event the rights and obligations of the parties concerned and matters connected
therewith or incidental thereto shall be governed by the provisions of the Depositories
Act, 1996.

(® __| All Securities held by a Depository shall be dematerialized and be held in fungible | Dematerialized
form. securities held in

fungible form
(3) If a Person opts to hold his Securities with a Depository, the Company shall intimate | Option to opt for
such Depository the details of allotment of the Securities and on receipt of the | dematerialization
information, the Depository shall enter in its record the name of the allottee as the | by a person
Beneficial Owner of the Securities.

(4) (a) Notwithstanding anything to the contrary contained in the Act or these Articles, | Rights of
a Depository shall be deemed to be the Registered Owner for the purposes of | Depositories &
effecting transfer of ownership of Securities on behalf of the Beneficial Owner. | Beneficial

Owners

 

(b) Save as otherwise provided in (a) above, the Depository as the Registered Owner
of the Securities shall not have any voting rights or any other rights in respect of
the Securities held by it.

 

 

372

 
 

(©) Every person holding shares of the Company and whose name is entered as the
Beneficial Owner in the records of the Depository shall be deemed to be a
Shareholder of the Company.

(a) The Beneficial Owner of Securities shall, in accordance with the provisions of
these Articles and the Act, be entitled to all the rights and subject to all the
liabilities in respect of his Securities, which are held by a Depository.

 

 

 

 

 

 

 

 

 

 

 

 

(5) Except as ordered by a court of competent jurisdiction or as may be required by Law | Treatment as
and subject to the applicable provisions of the Act, the Company shall be entitled to | Beneficial Owner
treat the person whose name appears on the Register as the holder of any share or | of shares
whose name appears as the Beneficial Owner of any share in the records of the
Depository as the absolute owner thereof and accordingly shall not be bound to
recognize any benami trust or equity, equitable contingent, future, partial interest,
other claim to or interest in respect of such shares or (except only as by these Articles
otherwise expressly provided) any right in respect of a share other than an absolute
right thereto in accordance with these Articles, on the part of any other person whether
or not it has expressed or implied notice thereof.

(© | The Company shall cause the Depository to keep a Register and Index of Beneficial | Register and
Owners with details of shares and debentures held in dematerialized forms in any | Index of
media as may be permitted by Law including any form of electronic media. The | Beneficial
Register and Index of Beneficial Owners maintained by a Depository under the | Owners
Depositories Act shall be deemed to be a Register and Index of members for the
purposes of this Act.

(7) Notwithstanding anything contained in the Act or these Articles to the contrary, where | Service of
Securities are held in a Depository, the records of the beneficial ownership may be | Documents
served by such Depository on the Company by means of electronic mode or by
delivery of floppies or discs.

(8) Notwithstanding anything in the Act or these Articles, where Securities are dealt with | Allotment of
by a Depository, the Company shall intimate the details of allotment of relevant | Securities dealt
Securities thereof to the Depository immediately on allotment of such Securities. with in a

Depository

() __| Subject to compliance with applicable Law, if a Beneficial Owner seeks to opt out of | Option to opt out
a Depository in respect of any Security, he shall inform the Depository accordingly. | in respect of any
The Depository shall on receipt of such information make appropriate entries in its | such Security
records and shall inform the Company. The Company shall within such prescribed
time of the receipt of intimation from a Depository and on fulfilment of such
conditions and on payment of such fees as may be specified by the regulations, issue
the certificate of securities to the Beneficial Owner or the transferee as the case may
be.

(0) | Upon receipt of certificate of securities on surrender by a person who has entered into | Cancellation _ of
an agreement with the Depository through a participant, the Company shall cancel | Certificates upon
such certificates and shall substitute in its record, the name of the Depository as the | surrender by
registered owner in respect of the said Securities and shall also inform the Depository | Person
accordingly.

(11) | Except as specifically provided in these Articles, the provisions relating to joint | Provisions of
holders of securities, calls, lien, forfeiture, transfer and transmission of securities shall | Articles to apply
be applicable to securities held in Depository so far as they apply to securities held in | to Securities held
physical form subject to the provisions of the Depositories Act. in Depository

(12)_| The provisions of the Articles relating to issue of certificates, lien, calls, transfers, | Provisions of
transmissions, forfeiture, joint holdings, registers shall mutatis mutandis apply to issue | Articles to apply
of any securities including debentures, whether in physical mode or in dematerialized | mutatis mutandis
form to the extent applicable (except where the Act or applicable laws otherwise | to Securities
requires) for the Company.

SHARE CERTIFICATES
(| @ Every person whose name is entered as a member in the register of members shall | Issue of Share

 

be entitled to receive within two months after allotment or within one month from
the date of receipt by the Company of the instrument or application for the

 

certificates

 

373

 
 

registration of transfer or transmission, sub-division, consolidation or renewal of
shares or within such other period as the conditions of issue shall provide —

(i) one or more certificates in marketable lots for all his shares of each class or
denomination registered in his name without payment of any charges; or

(ii) several certificates, each for one or more of his shares, upon payment of
Rupees Twenty for each certificate or such charges as may be fixed by the
Board for each certificate after the first.

(b) A person subscribing to shares offered by the Company shall have the option
either to receive certificates for such shares or hold the shares in a dematerialised
state with a depository.

 

2)

Every certificate shall be under the seal and shall specify the shares to which it relates,
distinctive numbers of shares in respect of which it is issued and the amount paid-up
thereon and shall be in such form as the Board may prescribe and approve.

Form of Share
certificate

 

(3)

Nothing contained in the Act or these Articles regarding the necessity of having
certificate number/distinctive numbers for Securities issued by the Company shall
apply to Securities held with a Depository.

Certificate

Number and other
details of
Securities in
Depository

 

@

(a) In respect of any share or shares held jointly by several persons, the Company
shall not be bound to issue more than one certificate, and delivery of a certificate
for a share to the person first named on the register of members shall be sufficient
delivery to all such holders.

(b) Where two or more persons are registered as joint holders (not more than three)
of any share, they shall be deemed (so far as the Company is concerned) to hold
the same as joint tenants with benefits of survivorship, subject to the following
and other provisions contained in these Articles:

(c)_ The joint-holders of any share shall be liable severally as well as jointly for and
in respect of all calls or instalments and other payments which ought to be made
in respect of such share.

(a) On the death of any one or more of such joint-holders, the survivor or survivors
shall be the only person or persons recognized by the Company as having any
title to the share but the Board may require such evidence of death as they may
deem fit, and nothing herein contained shall be taken to release the estate of a
deceased joint-holder from any liability on shares held by him jointly with any
other person.

(e) Any one of such joint holders may give effectual receipts of any dividends,
interests or other moneys payable in respect of such share.

(f) Only the person whose name stands first in the register of members as one of the
joint-holders of any share shall be entitled to the delivery of certificate, if any,
relating to such share or to receive notice (which term shall be deemed to include
all relevant documents) and any notice served on or sent to such person shall be
deemed service on all the joint-holders.

(g) Any one of two or more joint-holders may vote at any meeting either personally or
by attorney or by proxy in respect of such shares as if he were solely entitled
thereto and if more than one of such joint holders be present at any meeting
personally or by proxy or by attorney then that one of such persons so present
whose name stands first or higher (as the case may be) on the register in respect
of such shares shall alone be entitled to vote in respect thereof.

(h) Several executors or administrators of a deceased member in whose (deceased
member) sole name any share stands, shall for the purpose of this clause be
deemed joint-holders.

Issue of Share
Certificate in case
of joint holding

 

 

 

(3)

 

(a) If any certificate be worn out, defaced, mutilated or torn or if there be no further
space on the back for endorsement of transfer, then upon production and
surrender thereof to the Company, a new certificate may be issued in lieu thereof.

 

Issue of new
certificate in place
of one defaced,
lost or destroyed

 

374

 
 

(b) No fee shall be charged for issue of new certificates in replacement of those
which are old, defaced or worn out or where there is no further space on the back

and issue of
duplicate share

 

 

 

 

 

 

 

 

 

 

 

 

 

thereof for endorsement of transfer. certificate.
(i) Every new certificate issued under this Article otherwise than as stipulated
above shall be issued on payment of fees not less than Rupees twenty and
not more than Rupees fifty for each certificate as may be fixed by the Board
from time to time. The Board shall also have the discretion to not charge any
fees for this purpose.
(ii) Duplicate share certificate shall be issued in lieu of those that are lost or
destroyed, with prior consent of the Board and without payment of the fee
stated above on such reasonable terms, such as furnishing supporting
evidence and indemnity as the Board deems adequate.
(© | Toaccept from any member, as far as may be permissible by the Board, surrender of | Surrender of
his shares or part thereof, on such terms and conditions as shall be agreed. Shares
(7) __ | Except as required by Applicable Laws, no person shall be recognized by the | Holding of shares
Company as holding any share upon any trust, and the Company shall not be bound | upon trust
by, or be compelled in any way to recognize (even when having notice thereof) any
equitable, contingent, future or partial interest in any share, or any interest in any
fractional part of a share, or (except only as by these Articles or by Applicable Laws)
any other rights in respect of any share except an absolute right to the entirety thereof
in the registered holder.
NOMINATION
(i) Any person whose name is entered in the relevant register as a member of the | Facility of
Company or as a debenture holder may, if he so desires, nominate another person to | nomination
whom the shares or debentures held by him shall vest on his death.
(2) Where the nominee is a minor, it shall be lawful for the holder of the securities, making | Minor as
the nomination to appoint, in the prescribed manner, any person to become entitled to | Nominee
the securities of the company, in the event of the death of the nominee during
his minority.
(3) __ | Such nomination may be revoked at any time and the member may make fresh | Revocation of
nomination if he so desires. nomination
(@ _| The nomination must be made in accordance with the provisions of the Act. Compliance of
law
(©) __| Ifthe shares or debentures are held in joint names, all the joint holders, shall jointly, | Nomination and
nominate a person to whom the shares or debentures shall vest on the death of all the | joint holding
joint holders. Otherwise the nomination shall be liable to be rejected.
(© __| Any person who becomes entitled to shares or debentures due to any nomination in | Rights of
his favour may, upon production of such evidence as may be required by the Board | nominee
and subject as hereinafter provided, elect, either
(a) to be registered himself as holder of the share or debenture, as the case may be;
or
(b) to make such transfer of the share or debenture, as the case may be, as the
deceased shareholder or debenture holder could have made.
CALLS ON SHARES
(| @ The Board may, from time to time, make calls upon the members in respect of | Board may make

 

any monies unpaid on their shares (whether on account of the nominal value of
the shares or by way of premium) and not by the conditions of allotment thereof
made payable at fixed times.

(b) Provided that no call shall exceed one-fourth of the nominal value of the share or
be payable at less than one month from the date fixed for the payment of the last
preceding call.

 

Calls

 

375

 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2) All calls shall be made on a uniform basis on all shares falling under the same class. Calls on shares of

same class to be
Explanation: Shares of the same nominal value on which different amounts have been | on uniform basis
paid-up shall not be deemed to fall under the same class.

(3) _| Each member shall, subject to receiving at least fourteen days’ notice specifying the | Notice of call
time or times and place of payment, pay to the Company, at the time or times and place
so specified, the amount called on his shares.

(4 __| Acall may be revoked or postponed at the discretion of the Board. Revocation or
postponement of
call

(5) A call shall be deemed to have been made at the time when the resolution of the Board | Call to take effect
authorising the call was passed and may be required to be paid by instalments. from date of

resolution

(© __| Ifby the conditions of allotment of any shares, the whole or part of the amount of issue | Instalments on
price thereof shall be payable by instalments, then every such instalment shall, when | shares to be duly
due, be paid to the Company by the person who, for the time being and from time to | paid
time, is or shall be the registered holder of the share or the legal representative of a
deceased registered holder.

(7) __| The joint holders of a share shall be jointly and severally liable to pay all calls in | Liability of joint
respect thereof. holders of shares

(8) | Ifa sum called in respect of a share is not paid before or on the day appointed for | When interest on
payment thereof (the “due date”), the person from whom the sum is due shall pay | call or instalment
interest thereon from the due date to the time of actual payment at such rate not higher | payable
than 10% per annum, as may be fixed by the Board.

() __| The Board shall be at liberty to waive payment of any such interest wholly or in part. | Board may waive

interest

(0) | Any sum which by the terms of issue of a share becomes payable on allotment or at | Sums deemed to
any fixed date, whether on account of the nominal value of the share or by way of | be calls
premium, shall, for the purposes of these Articles, be deemed to be a call duly made
and payable on the date on which by the terms of issue such sum becomes payable.

(11) In case of non-payment of such sum, all the relevant provisions of these Articles as to | Effect of non-
payment of interest and expenses, forfeiture or otherwise shall apply as if such sum | payment of sums
had become payable by virtue of a call duly made and notified.

(22) | (@ The Board, Payment in

anticipation of
(i) may, if it thinks fit, subject to the provisions of the Act, receive from any | calls may carry
member willing to advance the same, all or any part of the monies uncalled | interest
and unpaid upon any shares held by him; and
(ii) upon all or any of the monies so advanced, may (until the same would, but
for such advance, become presently payable) pay interest at such rate not
exceeding 12% per annum as may be fixed by the Board, unless the
company in general meeting directs otherwise; as may be agreed upon
between the Board and member paying the sum in advance.
(b) Nothing contained in this clause shall confer on the member,
(i) any right to participate in profits or dividends or
(ii) any voting rights in respect of the moneys so paid by him until the same
would, but for such payment, become presently payable by him.
(c) The Directors may at any time repay the amount so advanced.
FORFEITURE OF SHARES
(D __| Ifa member fails to pay any call, or instalment of a call or any money due in respect | If call or

 

of any share, on the day appointed for payment thereof, the Board may, at any time
thereafter during such time as any part of the call or instalment remains unpaid or a
judgement or decree in respect thereof remains unsatisfied in whole or in part, serve a

 

instalment not
paid notice must
be given

 

376

 
 

notice on him requiring payment of so much of the call or instalment or other money
as is unpaid, together with any interest which may have accrued and all expenses that
may have been incurred by the Company by reason of non-payment.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2 __| The notice aforesaid shall, Form of notice
(i) name a further day (not being earlier than the expiry of fourteen days from the date
of service of the notice) on or before which the payment required by the notice is to
be made; and
(ii) state that, in the event of non-payment on or before the day so named, the shares
in respect of which the call was made shall be liable to be forfeited.

(3) __| Ifthe requirements of any such notice as aforesaid are not complied with, any share in | In default _ of
respect of which the notice has been given may, at any time thereafter, before the | payment of shares
payment required by the notice has been made, be forfeited by a resolution of the | to be forfeited
Board to that effect. Such forfeiture shall include all dividends declared in respect of
the forfeited shares and not actually paid before the forfeiture.

(4 __| When any share shall have been so forfeited, notice of the forfeiture shall be given to | Entry of forfeiture
the defaulting member and an entry of the forfeiture with the date thereof, shall | in register of
forthwith be made in the register of members. members

(5) The forfeiture of a share shall involve extinction at the time of forfeiture, of all interest | Effect of
in and all claims and demands against the Company, in respect of the share and all | forfeiture
other rights incidental to the share.

(© __| A forfeited share may be sold or re-allotted or otherwise disposed of either to the | Forfeited _ shares
person who was before such forfeiture the holder thereof or entitled thereto or to any | may be sold, etc.
other person on such terms and in such manner as the Board thinks fit.

(7) __| Atany time before a sale, re-allotment or disposal as aforesaid, the Board may cancel | Cancellation of
the forfeiture on such terms as it thinks fit. forfeiture

(8) _ | A person whose shares have been forfeited shall cease to be a member in respect of | Members _ still
the forfeited shares, but shall, notwithstanding the forfeiture, remain liable to pay, and | liable to pay
shall pay, to the Company all monies which, at the date of forfeiture, were presently | money owing at
payable by him to the Company in respect of the shares. the time of

forfeiture

(9) __ | The liability of such person shall cease if and when the Company shall have received | Cesser of liability
payment in full of all such monies in respect of the shares.

(10) A duly verified declaration in writing that the declarant is a director, the manager or | Certificate of
the secretary of the Company, and that a share in the Company has been duly forfeited | forfeiture
on a date stated in the declaration, shall be conclusive evidence of the facts therein
stated as against all persons claiming to be entitled to the share.

(11) | The Company may receive the consideration, if any, given for the share on any sale, | Title of purchaser
re-allotment or disposal thereof and may execute a transfer of the share in favour of | and transferee of
the person to whom the share is sold or disposed of. forfeited shares

(12) _ | The transferee shall thereupon be registered as the holder of the share. Transferee to be

registered as
holder

(13) The transferee shall not be bound to see to the application of the purchase money, if | Transferee not
any, nor shall his title to the share be affected by any irregularity or invalidity in the | affected
proceedings in reference to the forfeiture, sale, re-allotment or disposal of the share.

(i4)_| Upon any sale after forfeiture or for enforcing a Lien in exercise of the powers | Validity of sale
hereinabove given, the Board may, if necessary, appoint some person to execute an
instrument for transfer of the shares sold and cause the purchaser's name to be entered
in the register of members in respect of the shares sold and after his name has been
entered in the register of members in respect of such shares the validity of the sale
shall not be impeached by any person.

(i5)__| Upon any sale, re-allotment or other disposal under the provisions of the preceding | Cancellation of

 

Articles, the certificate(s), if any, originally issued in respect of the relative shares

 

share certificate in

 

377

 
 

shall (unless the same shall on demand by the Company has been previously
surrendered to it by the defaulting member) stand cancelled and become null and void
and be of no effect, and the Board shall be entitled to issue a duplicate certificate(s) in
respect of the said shares to the person(s) entitled thereto.

respect of
forfeited shares

 

 

 

 

 

 

 

 

 

 

 

 

(16) _| The provisions of these Articles as to forfeiture shall apply in the case of non-payment | Sums deemed to
of any sum which, by the terms of issue of a share, becomes payable at a fixed time, | be calls
whether on account of the nominal value of the share or by way of premium, as if the
same had been payable by virtue of a call duly made and notified.
TRANSFER OF SHARES OR OTHER SECURITIES
10 |) | A proper instrument of transfer shall be used and the instrument of transfer of any ] Instrument of
share or other securities in the Company shall be in writing which shall be duly | transfer to be
executed by or on behalf of both the transferor and transferee and the instrument shall | executed by
be duly stamped, dated and executed and shall be in compliance of all provisions of | transferor and
section 56 of the Act and statutory modification thereof for the time being shall be | transferee
duly complied with in respect of all transfer of shares or other securities and
registration thereof. The instrument for transfer properly executed should be delivered
to the Company within a period of sixty days from the date of execution along with
the certificate relating to the shares or other securities.
(2) The transferor shall be deemed to remain a holder of the share until the name of the | Entry of transfer
transferee is entered in the register of members in respect thereof. in the Register or
Members
(3) __ | The Board may, subject to the right of appeal conferred by the Section 58 of the Act | Board may refuse
decline to register, to register transfer
(a) the transfer of a share, not being a fully paid share, to a person of whom they do
not approve; or
(b) any transfer of shares on which the Company has a Lien.
(4) The Board may decline to recognise any instrument of transfer unless- Board may
decline to
(a) the instrument of transfer is duly executed and is in the form as prescribed in the | recognize
Rules made under sub-section (1) of Section 56 of the Act; instrument of
transfer
(b) the instrument of transfer is accompanied by the certificate of the shares or other
securities to which it relates, and such other evidence as the Board may
reasonably require to show the right of the transferor to make the transfer; and
(©) the instrument of transfer is in respect of only one class of shares or other
securities.
Provided that the registration of a transfer shall not be refused on the ground of the
transferor being either alone or jointly with any other person or persons indebted to
the Company on any account whatsoever.
© | No transfer shall be made to a minor or person of unsound mind except as required by | No Transfer to
law. Minor
(6) _ | On giving of previous notice of at least seven days or period in accordance with | Transfer of shares
Section 91 of the Act and Rules made there under, the registration of transfers may | when suspended
not be suspended for more than thirty days at any one time or for more than forty five
days in the aggregate in any year.
(7) | The Company shall within thirty days from the date on which the instrument of | Notice of refusal
transfer was delivered to Company, or such other period as may be prescribed by the | to register transfer
Act, send notice of the refusal to the transferee and the transferor giving reasons for
such refusal.
TRANSMISSION OF SHARES OR OTHER SECURITIES
li | @) On the death of a member, the survivor or survivors where the member was a joint | Title to shares or

 

 

holder, and his nominee or nominees or legal representatives where he was a sole
holder, shall be the only persons recognised by the Company as having any title to his
interest in the shares or other securities.

 

other securities on
death of amember

 

378

 
 

Q)

Nothing in clause (1) shall release the estate of a deceased joint holder from any
liability in respect of any share or other securities which had been jointly held by him
with other persons.

Estate of deceased
member liable

 

(3)

Any person becoming entitled to a share or other securities in consequence of the death
or insolvency of a member may, upon such evidence being produced as may from time
to time properly be required by the Board and subject as hereinafter provided, elect,
either —

(a)_ to be registered himself as holder of the share or other securities; or

(b) to make such transfer of the share or other securities as the deceased or insolvent
member could have made.

Transmission
Clause

 

@

The Board shall, in either case, have the same right to decline or suspend registration
as it would have had, if the deceased or insolvent member had transferred the share or
other securities before his death or insolvency.

Board's right
unaffected

 

(5)

If the person so becoming entitled shall elect to be registered as holder of the share or
other securities himself, he shall deliver or send to the Company a notice in writing
signed by him stating that he so elects.

Right to election
of holder of share
or other securities

 

(6)

If the person aforesaid shall elect to transfer the share or other securities, he shall
testify his election by executing a transfer of the share or other securities.

Manner of
testifying election

 

”%)

All the limitations, restrictions and provisions of these regulations relating to the right
to transfer and the registration of transfers of shares or other securities shall be
applicable to any such notice or transfer as aforesaid as if the death or insolvency of
the member had not occurred and the notice or transfer were a transfer signed by that
member.

Limitations
applicable to
notice

 

(8)

(a) A person becoming entitled to a share or other securities by reason of the death
or insolvency of the holder shall be entitled to the same dividends and other
advantages to which he would be entitled if he were the registered holder of the
share or other securities, except that he shall not, before being registered as a
member in respect of the share or other securities, be entitled in respect of it to
exercise any right conferred by membership in relation to meetings of the
Company.

(b) Provided that the Board may, at any time, give notice requiring any such person
to elect either to be registered himself or to transfer the share or other securities,
and if the notice is not complied with within ninety days, the Board may thereafter
withhold payment of all dividends, bonuses or other monies payable in respect of
the share or other securities, until the requirements of the notice have been
complied with.

Claimant to be
entitled to same
advantage

 

(9)

No fee shall be charged for registration of transfer, transmission, probate, succession,
certificate and letter of administration, certificate of death or marriage, power of
attorney or similar other documents.

No fee for transfer
or transmission

 

LIEN ON SHARES

 

 

12

 

@

 

(a) The Company shall have a first and paramount Lien-

(i) on every share (not being a fully paid share) and upon the proceeds of sale
thereof for all monies (whether presently payable or not) called, or payable
at a fixed time, in respect of that share; and

(ii) onall shares (not being fully paid shares) standing registered in the name of
a member, for all monies presently payable by him or his estate to the
Company.

(b) Provided that the Board may at any time declare any share to be wholly or in part
exempt from the provisions of this Article.

(c)_ Provided further that the fully paid up shares shall be free from all lien.

 

Company's lien
on shares

 

379

 
 

Q)

The Company’s Lien, ifany, ona share shall extend to all dividends payable and bonus
shares issued from time to time in respect of such shares.

Lien to extend to
dividends, etc.

 

 

 

 

 

 

 

 

 

 

 

 

@ Unless otherwise agreed by the Board, the registration of a transfer of shares shall | Waiver of Lien in
operate as a waiver of the Company’s Lien. case of
registration

(| @ The Company may sell, in such manner as the Board thinks fit, any shares on | As to enforcing

which the Company has a Lien. Provided that no sale shall be made— Lien by sale
(i) unless a sum in respect of which the Lien exists is presently payable; or
(ii) until the expiration of fourteen days after a notice in writing stating and

demanding payment of such part of the amount in respect of which the Lien

exists as is presently payable, has been given to the registered holder for the

time being of the share or to the person entitled thereto by reason of his death

or insolvency or otherwise.

© __| To give effect to any such sale, the Board may authorise some person to transfer the | Validity of sale
shares sold to the purchaser thereof.

(© __| The purchaser shall be registered as the holder of the shares comprised in any such | Purchaser to be
transfer, registered holder

(7) _ | The receipt of the Company for the consideration (if any) given for the share on the | Title to the share
sale thereof shall (subject, if necessary, to execution of an instrument of transfer or a
transfer by relevant system, as the case may be) constitute a good title to the share and
the purchaser shall be registered as the holder of the share.

(8) _| The purchaser shall not be bound to see to the application of the purchase money, nor | Purchaser __not
shall his title to the shares be affected by any irregularity or invalidity in the | affected by
proceedings with reference to the sale. irregularity in

proceedings of
sale

(9) __| The net proceeds of the sale, after payment of cost of such sale shall be received by | Application of
the Company and applied in or towards payment of such part of the amount in respect | proceeds of sale
of which the Lien exists as is presently payable and towards satisfaction of the said
debts, liabilities or engagements.

(10) | The residue, if any, shall, subject to a like Lien for sums not presently payable as | Payment of
existed upon the shares before the sale, be paid to the person entitled to the shares at | residual proceeds
the date of the sale, member, his heirs, executors, administrators or other legal | of sale
representatives as the case may be.

CAPITALISATION OF PROFITS
13 | (@) | (@ The Company in general meeting may, upon the recommendation of the Board, ] Capitalisation of
resolve Profits
(i) that it is desirable to capitalise any part of the amount for the time being
available in the Company’s free reserve accounts, securities premium and
capital redemption reserve; but excluding revaluation reserves, and
(ii) that such sum be accordingly set free for distribution in the manner specified
in Article 13 (2) below amongst the members who would have been entitled
thereto, if distributed by way of dividend and in the same proportions.
(2 | @ The sum aforesaid shall not be paid in cash but shall be applied, subject to the | Sum how applied

 

 

provision contained in Article 13(3) below, either in or towards:

(i) _ paying up any amounts for the time being unpaid on any shares held by such
members respectively in accordance with their respective rights and
interests and in proportion to the amounts paid or credited as paid up
thereon, of paid-up shares, debentures, debenture-stock bonds or other
obligations of the Company;

 

 

380

 
 

(i) paying up in full, unissued shares or other securities of the Company to be
allotted and distributed, credited as fully paid-up, to and amongst such
members in the proportions aforesaid;

(iii) partly in the way specified in sub-clause (i) and partly in that specified in
sub-clause (ii) above.

 

 

 

 

 

 

 

 

 

 

 

 

 

(3) A securities premium account and a capital redemption reserve account or any other | Issue of Bonus
permissible reserve account may, for the purposes of this Article, be applied in the | Shares
paying up of unissued shares to be issued to members of the Company as fully paid
bonus shares.
(4) __| The Board shall give effect to the resolution passed by the Company in pursuance of | Power of Board to
this Article and issue bonus shares subject to provisions of Section 63. issue bonus shares
(5) Whenever such a resolution as aforesaid shall have been passed, the Board shall- Actions to be
completed for
(a) make all appropriations and applications of the amounts resolved to be capitalised | capitalisation
thereby, and all allotments and issues of fully paid shares or other securities, if
any; and
(b) generally do all acts and things required to give effect thereto.
(© __| The Board shall have power - Board’s power to
issue fractional
(a) to make such provisions, by the issue of fractional certificates/coupons or by | certificate/
payment in cash or otherwise as it thinks fit, for the case of shares or other | coupon etc
securities becoming distributable in fractions; and
(b) to authorise any person to enter, on behalf of all the members entitled thereto,
into an agreement with the Company providing for the allotment to them
respectively, credited as fully paid-up, of any further shares or other securities to
which they may be entitled upon such capitalisation, or as the case may require,
for the payment by the Company on their behalf, by the application thereto of
their respective proportions of profits resolved to be capitalised, of the amount or
any part of the amounts remaining unpaid on their existing shares.
(7) _| Any agreement made under such authority shall be effective and binding on such | Agreement
members. binding on
members
GENERAL MEETINGS
14 | (4) | All general meetings other than annual general meeting shall be called extraordinary | Extraordinary
general meeting. general meeting
(2) _ | The Board may, whenever it thinks fit, call an extraordinary general meeting. Powers of Board
to call
extraordinary
general meeting
PROCEEDINGS AT GENERAL MEETINGS
15 | (4) | Proceedings at General meetings shall be conducted in accordance with the provisions | Conduct of
of the Act and Secretarial Standards. Proceedings
(® | A general meeting of a company may be called by giving not less than clear twenty- | Notice of
one days’ notice either in writing or through electronic mode in such manner as may | Meetings
be prescribed in the Act and Secretarial Standards.
(3) A document or notice may be served or given by the company or given to the joint- | Notice to whom

 

 

 

holders of a share by serving or giving the document or notice on or to the joint-holders

named first in the Register of Members in respect of the share.

 

 

served in case of
joint shareholders

 

381

 
 

@

‘A document or notice may be served or given by the company on or to the persons

Notice to be

 

 

 

 

 

 

 

 

 

 

 

entitled to a share in consequence of the death or insolvency of a member by sending | served to
it through post in a prepaid letter addressed to him or them by name or by the title of | representative
representatives of the deceased or assignee of the insolvent or by any like description,
at the address if any in India supplied for the purpose by the persons claiming to be
entitled, or (until such an address has been so supplied) by serving the document or
notice in any manner in which the same might have been given if the death or
insolvency had not occurred.

(5) The Accidental omission to give notice to or the non receipt — thereof by any member | Accidental
shall not invalidate any resolution passed at any such meeting. omission to give

notice or non —
receipt

(© | No business shall be transacted at any general meeting unless a quorum of members | Presence of
is present at the time when the meeting proceeds to business. Quorum

(7) _ | The quorum for a general meeting shall be as provided in Section 103 of the Act. Quorum for

general meeting

(8) If at any meeting no director is willing to act as Chairman or if no director is present | Members to elect
within fifteen minutes after the time appointed for holding the meeting, the members | a Chairman
present shall, by poll or electronically, choose one of their members to be Chairman
of the meeting.

(9) __ | No business shall be discussed or transacted at any general meeting except election of | Business confined
Chairman whilst the chair is vacant. to election of

Chairman whilst
chair vacant

(10) On any business at any general meeting, in case of an equality of votes, whether on a | Chairman to have
show of hands or electronically or on a poll, the Chairman shall have a second or | casting vote
casting vote.

(11) | @ Notwithstanding anything contained elsewhere in these Articles, the Company, Resolution by

Postal Ballot

(i) shall, in respect of such items of business as the Central Government may,

by notification, declare or which are under any other applicable Law

required to be transacted only by means of postal ballot; and
(ii) may, in respect of any item of business, other than ordinary business and

any business in respect of which Directors or auditors have a right to be

heard at any meeting, transact by means of postal ballot, in such manner as

may be prescribed, instead of transacting such business at a General

Meeting.

(b) If aresolution is assented to by the requisite majority of the Shareholders by means
of postal ballot, it shall be deemed to have been duly passed at a General Meeting
convened in that behalf.

(c) Provided that any item of business required to be transacted by means of postal
ballot under clause (a), may be transacted at a general meeting by a company
which is required to provide the facility to members to vote by electronic means
under section 108, in the manner provided in that section, or as may be stipulated
by the Act.

(2) _| The Company shall cause minutes of the proceedings of every general meeting of any | Minutes of
class of members or creditors and every resolution passed by postal ballot to be | proceedings of
prepared and signed in such manner as may be prescribed by the Secretarial Standards. | meetings and

resolutions passed
by postal ballot

(13) | There shall not be included in the minutes any matter which, in the opinion of the | Certain matters

 

Chairman of the meeting,
(a) is, or could reasonably be regarded, as defamatory of any person; or

(b)_is irrelevant or immaterial to the proceedings; or

 

not to be included
in Minutes

 

382

 
 

(c) is detrimental to the interests of the Company.

 

 

 

 

 

 

 

 

 

 

(i4)_| The books containing the minutes of the proceedings of any general meeting of the | Inspection of
Company or a resolution passed by postal ballot shall minute books of
general meeting
(a) be kept at the registered office of the Company; and
(b) be open to inspection of any member without charge, during business hours on
all working days.
(5) | (@ Any member shall be entitled to obtain a copy of the minutes within the time | Members may
prescribed by the Act, after he has made a request in writing in that behalf to the | obtain copy of
Company, on payment of such fees as may be fixed by the Board, which shall not | minutes
exceed Rs. ten per page or part of any page.
(b) In case a Member requests for the copy of the Minutes in electronic form, in
respect of any previous General Meetings held during a period immediately
preceding three financial years, the company shall furnish the same free of cost.
ADJOURNMENT OF GENERAL MEETINGS
16 |) | @ A duly convened Meeting shall not be adjourned unless circumstances so ] Chairman may
warrant. The Chairman may adjourn the meeting with the consent of members, | adjourn the
at which a quorum is present, and shall adjourn a Meeting if so directed by the | meeting
Members.
(b) Meetings shall stand adjourned for want of requisite Quorum. If, at an adjourned
Meeting, Quorum is not present within half an hour from the time appointed, the
Members present, being not less than two in number, will constitute the Quorum.
(c) Ifa Meeting, other than a requisitioned Meeting, stands adjourned for want of
Quorum, the adjourned Meeting shall be held on the same day, in the next week
at the same time and place or on such other day, not being a National Holiday, or
at such other time and place as may be determined by the Board. If, within half
an hour from the time appointed for holding a Meeting called by requisitionists,
a Quorum is not present, the Meeting shall stand cancelled.
(@) The Chairman may also adjourn a Meeting in the event of disorder or other like
causes, when it becomes impossible to conduct the Meeting and complete its
business.
(2) __ | No business shall be transacted at any adjourned meeting other than the business left | Business at
unfinished at the meeting from which the adjournment took place. adjourned
meeting
(@) _ | Whena meeting is adjourned sine die or for a period of thirty days or more, notice of | Notice of
the adjourned meeting shall in accordance with the provisions of Secretarial Standards | adjourned
2 with respect to conduct of any general meeting. meeting sine die
or for 30 day or
more
(4) If a Meeting is adjourned for a period of less than thirty days, the company shall give | Notice of meeting
not less than three days’ Notice specifying the day, date, time and venue of the | adjourned for a
Meeting, to the Members either individually or by publishing an advertisement in a | period less than 30
vernacular newspaper in the principal vernacular language of the district in which the | days.
registered office of the company is situated, and in an English newspaper in English
language, both having a wide circulation in that district.
However, if a Meeting is adjourned for a period not exceeding three days and where
an announcement of adjournment has been made at the Meeting itself, giving in the
details of day, date, time, venue and business to be transacted at the adjourned
Meeting, the company may also opt to give Notice of such adjourned Meeting either
individually or by publishing an advertisement, as prescribed in the Secretarial
Standards.
VOTING RIGHTS
17 | (i) (a) Subject to the provisions of Section 47, Section 43, sub-section (2) of section 50 | Entitlement to

 

 

and sub-section (1) of section 188 and any rights or restrictions for the time being

 

voting rights

 

383

 
 

attached to any class or classes of shares, whether by virtue of terms of issue or
otherwise on account of any of the provisions of the Act or rules and other
applicable regulations —

(i) every member of a company limited by shares and holding equity share
capital therein, shall have a right to vote on every resolution placed before
the company;

(ii) ona show of hands, every member present in person shall have one vote;
and

(iii) his voting right on a poll shall be in proportion to his share in the paid-up
equity share capital of the company.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2) A member may exercise his vote at a meeting by electronic means in accordance with | Voting through
the Act and shall vote only once. electronic means

(3) In the case of joint holders, the vote of the senior who tenders a vote, whether in person | Vote of joint
or by proxy, shall be accepted to the exclusion of the votes of the other joint holders. | holders

(4 _| For this purpose, seniority shall be determined by the order in which the names stand | Seniority of
in the register of members. names

(© | A member of unsound mind, or in respect of whom an order has been made by any | Members non
court having jurisdiction in lunacy, may vote, whether on a show of hands or ona poll, | compos mentis
by his committee or other legal guardian, and any such committee or guardian may,
ona poll, vote by proxy.

(©) __| Ifany member be a minor, the vote in respect of his share or shares shall be by his | Voting rights in
guardian or any one of his guardians. case of a minor

(7) _ | Any business other than that upon which a poll has been demanded may be proceeded | Business may
with, pending the taking of the poll. proceed pending

poll

(8) No member shall be entitled to vote at any general meeting unless all calls or other | Restriction on
sums presently payable by him in respect of shares in the Company have been paid or | voting rights
in regard to which the Company has exercised any right of Lien as per Section 106 of
the Act. Save as aforesaid, a member may not be entitled to voting rights on certain
relations such as those for approving related party transactions as may be necessitated
by Applicable laws.

(9) A member is not prohibited from exercising his voting on the ground that he has not | Restriction on
held his share or other interest in the Company for any specified period preceding the | exercise of voting
date on which the vote is taken, or on any other ground not being a ground set out in | rights in other
the preceding Article. cases to be void

(0) | Any member whose name is entered in the register of members of the Company shall | Equal rights of
enjoy the same rights and be subject to the same liabilities as all other members of the | members
same Class.

PROXY
18 | (1) Any member entitled to attend and vote at a general meeting may do so either | Member may vote
personally or through another person as a proxy on his behalf, for that meeting. in person or
otherwise

(2) The instrument appointing a proxy and the power-of attorney or other authority, if any, | Proxies when to
under which it is signed or a notarised copy of that power or authority, shall be | be deposited
deposited at the registered office of the Company not less than 48 hours before the
time for holding the meeting or adjourned meeting at which the person named in the
instrument proposes to vote, and in default the instrument of proxy shall not be treated
as valid.

(3) _| An instrument appointing a proxy shall be in the form as prescribed in the Rules. Form of proxy

(4) ___| A vote given in accordance with the terms of an instrument of proxy shall be valid, | Proxy to be valid

 

 

notwithstanding the previous death or insanity of the principal or the revocation of the
proxy or of the authority under which the proxy was executed, or the transfer of the
shares in respect of which the proxy is given.

 

notwithstanding
death of — the
principal

 

384

 
 

Provided that no intimation in writing of such death, insanity, revocation or transfer
shall have been received by the Company at its office before the commencement of
the meeting or adjourned meeting at which the proxy is used.

 

REPRESENTATION AT MEETINGS

 

 

 

 

 

 

 

 

 

 

 

19 | (1) A body corporate whether a Company within the meaning of the Act or not may, Representatives
of bodies
(a) if it is a member of the Company, by resolution of its Board of Directors or other | corporate
governing body, authorize such person as it thinks fit to act as its representative
at any meeting of the Company or at any meeting of any class of members of the
Company.
(b) if it is a creditor, including a holder of debentures, of a company within the
meaning of this Act, by resolution of its directors or other governing body,
authorise such person as it thinks fit to act as its representative at any meeting of
any creditors of the company held in pursuance of this Act or of any rules made
thereunder, or in pursuance of the provisions contained in any debenture or trust
deed, as the case may be.

(2) __ | The person authorized by a resolution as aforesaid shall be entitled to exercise the | Rights and powers
same rights and powers including the right to vote by proxy and by postal ballot, on | of such
behalf of the body corporate, which he represents as that body could exercise if it were | representatives
an individual member, creditor or holder of debentures of the company.

REPRESENTATION AT MEETINGS OTHERWISE THAN STATED ABOVE

20 Any member of a company may give a power of attorney in favour of some other | Representation at
person to attend the general meetings of the Company, in which case the person so | the meeting
attending the meeting shall not be deemed to be a proxy. through a Power

of Attorney
BOARD OF DIRECTORS

2 Ta Unless otherwise determined by the Company in general meeting, the number of ] Board of
directors shall not be less than three and shall not be more than fifteen. Directors

(2 _| The Directors shall not be required to hold any qualification shares in the Company. | Qualification

Shares

(3) _ | The Board of Directors shall appoint the Chairman of the Company as Mr Srinivasan | Chairman of the
Ravi, the Promoter of the Company. On his request in writing or his absence from the | Company
company due to any unforeseen reasons, the Board of Directors shall on majority of
votes appoint any other person as the Chairman of the Company.

(4 __| The Chairman be permitted to hold the position of both the Chairman of the Board | Chairman may
and/or General Meeting as well as Managing Director/Chief Executive Officer | hold position of
position thereof in the Company as per the provisions of Section 203 of the Act or as | Managing
may be permitted by applicable laws from time to time. Director /Chief

Executive Officer

(5) Subject to the provisions of the Act, the Board shall have the power to determine the | Directors not

 

 

Directors whose period of office is or is not liable to determination by retirement of
directors by rotation.

(a) At every annual General Meeting of the Company, two-third of such of the
Directors for the time being as are liable to retire by rotation out of which one-
third will retire by rotation or if their number is not three or a multiple of three,
the number nearest to one-third shall retire from office.

(b) Subject to Section 152(6)(d) of the Act, the Directors to retire by rotation at every
annual General Meeting shall be those who have been longest in office since their
last appointment, but as between Persons who become Directors on the same day,
those who are to retire, shall, in default of and subject to any agreement amount
themselves, be determined by lot.

(c) Aretiring Director shall be eligible for re-election.

(a) Subject to Sections 152(6)(e) and 152(7)(a) of the Act and these Articles, the
Company at the General Meeting at which a Director retires in a manner aforesaid

 

may fill up the vacated office by electing a Person thereto;

liable to retire by
rotation

 

385

 
 

(i) _ If the place of the retiring Director is not so filled up and the meeting has
not expressly resolved not to fill the vacancy, the meeting shall stand
adjourned till the same day in the next week, at the same time and place, or
if that day is a national holiday, till the next succeeding day which is not a
national holiday, at the same time and place.

(ii) Ifat the adjourned meeting also, the place of the retiring Director is not filled
up and that meeting also has not expressly resolved not to fill the vacancy,
then the retiring Director shall be deemed to have been reappointed at the
adjourned meeting, unless:-

a. at that meeting or at the previous meeting a resolution for the
reappointment of such Director has been put to the meeting and lost;

b. the retiring Director has, by a notice in writing addressed to the
Company or its Board, expressed his unwillingness to be so
reappointed;

c. he is not qualified or is disqualified for appointment; or

d. aresolution whether special or ordinary is required for the appointment
or reappointment by virtue of any applicable provisions of the Act.

 

APPOINTMENT & CESSATION OF OFFICE

 

 

 

 

 

 

 

 

22 ](@) | The Company may by way of a resolution or the Directors may by way of a board | Appointment of
resolution, subject to subsequent shareholder approval and the relevant provisions of | Directors
the Act, from time to time, appoint directors. Their appointment shall cease ipso facto
if the person concerned vacates his directorship.

(2) Subject to the provisions of Section 196 of the Act, the Company may appoint one or | Appointment of
more of the Directors to be Managing Director or Whole-time Director or Manager of | Managing
the Company, for a term not exceeding five years at a time and may, from time to time. | Director, Whole
Their terms of employment shall be subject to the provisions of any contract entered | time Director(s)
into between each of them and the Company. or Manager

(3) __ | The same individual may, at the same time, be appointed as the Chairman of the | Same _ individual
Company as well as the Managing Director or Chief Executive Officer of the | may be Chairman
Company or equivalent position in the Company and Managing

Director/ Chief
Executive Officer

(4 _| Subject to the provisions of the Act, the Board shall have power at any time, and from | Appointment of
time to time, to appoint a person as an additional director, provided the number of the | additional
directors and additional directors together shall not at any time exceed the maximum | directors
strength fixed for the Board by the Articles.

(5) _ | Such person shall hold office only up to the date of the next annual general meeting | Duration of office
of the Company but shall be eligible for appointment by the Company as a director at | of additional
that meeting subject to the provisions of the Act. director

(© _ | Subject to the provisions of the Applicable laws, the Board shall appoint such number | Independent
of directors as Independent Directors, who shall have appropriate experience and | Director
qualifications to hold a position of this nature on the Board.

(7%) | @ If as per the terms of agreement or arrangement in respect of any loan or | Nominee Director

 

 

borrowing by the Company from any Government, bank, finance institution or
any body corporate the right is given to the lender for the appointment of a
Director or Directors with the power to remove such Director or Directors, in the
event of a Director or Directors being appointed or vacating his office by
resignation or otherwise then such appointment or resignation shall be supported
by the Board notwithstanding anything to the contrary contained in these Articles.

(b) The Director or Directors so appointed shall not be liable to retirement by rotation
and they will not be taken into account in determining the retirement by rotation
of Directors. If the Director or Directors so appointed ceases to be a Director by
resignation or otherwise, the reappointment or fresh appointment as the case may

 

/ Lender Director

 

386

 
 

be shall be done in accordance with the agreement entered into between the
Company and the lender.

 

(8)

Notwithstanding anything contained in these Articles, so long as Marina and IFC
individually hold at least 30% of their respective Investor Shares, and adjusted for any
sub-division or bonus or adjustment on its respective Investor Shares, each of Marina
and IFC shall individually be entitled to nominate one Director respectively on the
Board of the Company, subject to the approval of such right of nomination of a
Director by the members of the Company by way of a special resolution passed in the
first general meeting held post the completion of the initial public offering of the
equity shares of the Company.

Investor Director

 

(9)

Each Investor may require the removal of the Investor Director nominated by such
Investor at any time and shall be entitled to nominate another person as its Investor
Director in place of any such Investor Director so removed. In the event of the
resignation, retirement or vacation of office of any Investor Director, the Investor
appointing such Investor Director shall be entitled [subject to maximum number of
directors stipulated in Article 21(1) of these Articles] to nominate another person as
in place of such Investor Director, as per the provisions of the Applicable Laws.

Removal or
Replacement or
Resignation of
Investor Directors

 

(0)

The Board may appoint an alternate director to act for a director (hereinafter in this
Article called “the Original Director”) during his absence for a period of not less than
three months from India. No person shall be appointed as an alternate director for an
independent director unless he is qualified to be appointed as an independent director
under the provisions of the Act.

Appointment of
alternate director

 

(4)

‘An alternate director shall not hold office for a period longer than that permissible to
the Original Director in whose place he has been appointed and shall vacate the office
if and when the Original Director returns to India.

Duration of office
of alternate
director

 

(12)

If the term of office of the Original Director is determined before he returns to India
the automatic reappointment of retiring directors in default of another appointment
shall apply to the Original Director and not to the alternate director.

Re-appointment
provisions
applicable to
Original Director

 

(13)

If the office of any director appointed by the Company in general meeting is vacated
before his term of office expires in the normal course, the resulting casual vacancy
may, be filled by the Board of Directors at a meeting of the Board, which shall be
subsequently approved by members in the immediate next general meeting, if required
as per the provisions of the Act.

Appointment of
director to fill a
casual vacancy

 

(14)

The director so appointed shall hold office only till the date upto which the director in
whose place he is appointed would have held office if it had not been vacated.

Duration of office
of Director
appointed to fill
casual vacancy

 

(5)

(@ The office of a Director shall automatically become vacant, if he is disqualified
under any of the provisions of the Act or the rules framed thereunder.

(b) Further, subject to the provisions of the Act, a Director may resign from his office
at any time by giving a notice in writing addressed to the Board and the Company
shall intimate the registrar and also place the fact of such resignation in the report
of Directors laid in the immediately following General Meeting. Such Director may
also forward a copy of his resignation along with detailed reasons for the
resignation to the registrar within thirty days of resignation. The resignation of a
Director shall take effect from the date on which the notice is received by the
Company or the date, if any, specified by the Director in the notice, whichever is
later.

(©) The Company may, subject to the provisions of Section 169 and other applicable
provisions of the Act and these Articles remove any Director before the expiry of
his period of office.

Disqualification,
Resignation and
Removal of
Director

 

REMUNERATION OF DIRECTORS

 

 

23

 

@

 

The remuneration of Directors by way of salary and commission shall be in
accordance with the provisions of Section 197, Section 198 read with Schedule V and
Section 188 of the Act.

 

Remuneration of
Directors

 

387

 
 

Q)

Subject to the provisions of these Articles, and the provisions of the Act, if any
Director, being willing, shall be called upon to perform extra service or to make any
special exertions in going or residing away from the place of his normal residence for
any of the purposes of the Company or has given any special attendance for any
business of the Company, the Company may remunerate the Director so doing either
by a fixed sum or otherwise as may be determined by the Director.

Payment for Extra
Service

 

(3)

(a)_In addition to the remuneration payable to them in pursuance of the Act, the
directors may be paid all travelling, hotel and other expenses properly incurred
by them—

(i) in attending and returning from meetings of the Board of Directors or any
committee thereof or general meetings of the Company; or

(ii) in connection with the business of the Company.

Travelling and
other expenses

 

@

Subject to the provisions of these Articles and the provisions of the Act,
may, decide to pay a Director out of funds of the Company by way of sitting fees,
within the ceiling prescribed under the Act, a sum to be determined by the Board for
each meeting of the Board or any committee or sub-committee thereof attended by
him in addition to his travelling, boarding and lodging and other expenses incurred.

 

Sitting Fees

 

POWERS OF BOARD

 

24

@

(@ The management of the business of the Company shall be vested in the Board
and the Board may exercise all such powers, and do all such acts and things, as
the Company is by the memorandum of association or otherwise authorized to
exercise and do, and, not hereby or by the statute or otherwise directed or required
to be exercised or done by the Company in general meeting but subject
nevertheless to the provisions of the Act and other Applicable Laws and of the
Memorandum of Association and these Articles and to any regulations, not being
inconsistent with the Memorandum of Association and these Articles or the
Applicable laws, from time to time made by the Company in general meeting
provided that no such regulation shall invalidate any prior act of the Board which
would have been valid if such regulation had not been made.

(b) Subject to Section 179 of the Act and other applicable provisions, the Board shall
exercise the powers specified therein on behalf of the Company only by means
of resolutions passed at meetings of the Board.

General Powers of
the Company
vested in Board

 

2)

To open any account or accounts with such Bank or Banks as the Board may select
or appoint, to operate on such accounts, to make, sign, draw, accept, endorse or
otherwise execute all cheques, promissory notes, drafts, hundies, orders, bills of
exchange, bills of lading and other negotiable instruments, to make and give
receipts, releases and other discharges for moneys payable to the Company and for
the claims and demands of the Company to execute deeds.

To open accounts
and execute
instruments

 

(3)

Subject to the provisions of the Act, the Board may from time to time, at their discretion
raise or borrow or secure the payment of any sum or sums of money for and on behalf
of the Company. Any such money may be raised or the payment or repayment thereof
may be secured in such manner and upon such terms and conditions in all respect as the
Board may think fit by promissory notes or by opening loan or current accounts or by
receiving deposits and advances at interest with or without security or otherwise and in
particular by the issue of bonds, perpetual or redeemable debentures of the Company
charged upon all or any part of the property of the Company (both present and future)
including its uncalled capital for the time being or by mortgaging or charging or pledging
any lands, buildings, machinery, plant, goods or other property and securities of the
Company or by other means as the Board deems expedient.

Borrowing
powers to Board

 

 

 

@

 

The Board of Directors shall, as provided in the Act, except with the consent of the
Company by way of a resolution, not borrow moneys where the moneys to be borrowed
together with the moneys already borrowed by the Company (apart from temporary loans
obtained from the Company’s bankers in the ordinary course of business) exceeds the
aggregate of paid up share capital, free reserves and securities premium or such other
limit as may be applicable or prescribed in the Act.

 

Limit on
Borrowing

 

388

 
 

(3)

Board may invest otherwise than in trust securities any compensation received by it
as a result of any merger or amalgamation subject to the provisions of Applicable laws.

Power to invest

 

 

 

 

 

 

 

 

 

 

 

 

(© __ | Subject to the provisions of the Act, the Company shall have the power to make | Enter into
compromise or make arrangements with Creditors and Members, consolidate, | Compromise or
demerge, takeover, absorb units or business entities that have similar or other objects, | Arrangements
amalgamate or merge with other company or companies in accordance with the
provisions of the Act and any other applicable Laws and which would be in the best
interests of the company.

(7) _| Subject to provisions of the Applicable laws, Board may sell, lease or otherwise | Power to sell,
dispose off (subject to any restrictions, if any, imposed by the Shareholders) the whole | lease or dispose
or substantially the whole of the undertaking of the Company or where the Company | off undertakings
holds more than one undertaking, of the whole or substantially the whole of any such
undertakings.

(8) Board may remit or grant time to remit or repay any debt due from a director. Power to remit
debt due by a
director

(9) To appoint at any time and from time to time by a power of attorney, any person to be | To grant power of
the attorney of the Company for such purposes and with such powers, authorities and | attorney
discretions (not exceeding those which are vested in or exercisable by the Directors
under these Regulations) and for such period and subject to such conditions as the
Board may from time to time think fit, with powers for such attorneys to sub-delegate
all or any of the powers, authorities and discretions vested in the attorney for the time
being.

(10) To acquire by lease, mortgage, purchase or otherwise any property, rights or privileges | To acquire and
which the Company is authorized to acquire at such price and on such terms and | dispose of
conditions as the Board may think fit and to sell, let, exchange or otherwise dispose of | property and
absolutely or conditionally any property, rights, privileges and undertakings of the | rights
Company upon such terms and conditions and for such consideration as they think fit.

Provided, however, that the Directors shall not exercise the powers to sell the whole
or substantially the whole of its undertaking or assets unless the previous consent of
the Company is obtained by a resolution.

(1) _| To appoint officers, professionals for permanent, temporary, contractual or special | To appoint,
services as the Board may from time to time think fit and to determine their powers | remove or
and duties and to fix their salaries and to require security in such instances of such | suspend third
amount as the Board may think fit and to remove or suspend any such officers, clerks, | parties,
labourers and other workmen. employees and

other staff

(12) Subject to the provisions of the Act to pay and give gratuities, pensions and allowances | To make statutory
to any person or persons including any Director or to his widow, children or | payments like
dependants that may appear to the Directors just or proper whether any such person, | provident fund,
widow, children or other dependants have or have not a legal claim upon the Company | gratuity, — bonus,
and whether such person is still in the service of the Company or has retired from its | allowance,
services, to make contributions to any funds, to deduct from their monetary payments, | pension,
salaries or wages, or make payment of premiums for the purchase or provision of any | superannuation
such statutory payments like provident fund, gratuity, bonus, allowance, pension, | etc.
superannuation etc.

(13) Subject to the provisions of Section 181 to contribute to the bona fide charitable and | Power to
other funds (subject to any restrictions, if any, imposed by the Shareholders). Contribute to

Charitable — and
other funds

(i4)_| Subject to the provisions of Section 182 to contribute directly or indirectly to any | Power to
political party. contribute to

political party

(i5)_| (@_ To set aside portions of the profits of the Company to form a fund or funds for | To set__ aside

 

objects mentioned above before recommending any dividends.

(b) To make and alter rules and regulations concerning the time and manner of
payment of the contributions of the employees and the Company respectively to
any such fund and accrual, employment, suspension and forfeiture of the benefits

 

profits to form a
fund

 

389

 
 

of the said fund and the application and disposal thereof and otherwise in relation
to the working and management of the said fund as the Directors shall from time
to time think fit.

 

 

 

 

 

 

 

 

 

 

 

 

(6) | To refer claims or demands by or against the Company to arbitration and observe To refer to
and perform any awards made thereon. arbitration

(17) To institute, conduct, defend, compound or abandon any legal proceedings by or To institute and
against the Company or its officers or otherwise concerning the affairs of the defend legal
Company and also to compound and allow time for payment or satisfaction of any proceedings and
debts due to and of claims or demands by or against the Company and to appoint appoint _legal
solicitors, advocates, counsels and other legal advisers for such purposes or for any | advisors
other purpose and settle and pay their remuneration.

(18) | Directors shall be entitled, during normal business hours of the Company and with | Power to examine
prior reasonable written notice, to examine the books of accounts and records of the | books and records
Company and to reasonably inspect the properties and facilities of the Company. The
Company shall provide such information relating to the business affairs and financial
position of the Company, as the Directors may reasonably require.

(9) | To establish any branch, including foreign branch or any kind of business, duly | To undertake/
authorized, at such time or times as it shall think fit and if necessary to keep in | keep in abeyance
abeyance activities of such offices so long as the Board may deem it expedient not to | any activity in any
commence or proceed with such branch or kind of business. branch

(20) | To offer and issue, subject to applicable provisions of law, shares or securities to | Listing or
public, resident or non-resident and to get the shares or securities of the company listed | Delisting of
in one or more stock exchanges in India or abroad and to de-list from time to time | securities.
from any such stock exchanges.

PROCEEDINGS OF MEETINGS OF THE BOARD
25 |G) | @ The Board of Directors may meet for the conduct of business, adjourn and | When meeting to
otherwise regulate its meetings, as it deems fit, subject to compliance of the Act | be convened
and Secretarial Standards.
(b) Provided, that the Board of Directors shall hold meetings at such frequencies as
per provisions of the applicable laws.

(2) The Chairman or any one Director with the previous consent of the Chairman may, or | Who may
the company secretary on the direction of the Chairman or of one or more directors | summon Board
shall, at any time, summon a meeting of the Board. meeting

(3) | @ Atleast seven days written notice shall be given to every director, by hand or by | Notice of Board

speed post or by registered post or by courier or by facsimile or by e-mail or by | meetings
any other electronic means.

(b) Proof of sending notice and its delivery shall be maintained by the Company.

(c) Where a Director specifies a particular means of delivery of Notice, the Notice
shall be given to him by such means.

(d) To transact urgent business, the Notice, Agenda and Notes on Agenda may be
given at shorter period of time than stated above, if at least one Independent
Director, if any, shall be present at such Meeting. If no Independent Director is
present, decisions taken at such a Meeting shall be circulated to all the Directors
and shall be final only on ratification thereof by at least one Independent Director,
if any. The fact that the Meeting is being held at a shorter Notice shall be stated
in the Notice.

(4) The Agenda, setting out the business to be transacted at the Meeting, and Notes on | Agenda and Notes
‘Agenda shall be given to the Directors at least seven days before the date of the | to Agenda for the
Meeting. Board meeting

© __| The quorum for a Board meeting shall be as provided in the Act. Quorum for Board

 

 

 

meetings

 

390

 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

© The participation of directors in a meeting of the Board may be either in person or | Participation at
through video conferencing or audio visual means or teleconferencing, as may be | Board meetings
prescribed by the Act and Secretarial Standards.

(7)__| Save as otherwise expressly provided in the Act, questions arising at any meeting of | Questions at
the Board shall be decided by a majority of votes. Board meeting

how decided

(8) _ | Incase of an equality of votes, the Chairman of the Board, if any, shall have a second | Casting vote of
or casting vote. Chairman at

Board meeting

(9) The continuing directors may act notwithstanding any vacancy in the Board; but, if | Directors not to
and so long as their number is reduced below the quorum fixed by the Act for a | act when number
meeting of the Board, the continuing directors or director may act for the purpose of | falls below
increasing the number of directors to that fixed for the quorum, or of summoning a | minimum
general meeting of the Company, but for no other purpose.

(10) | The Chairman of the Company shall be Mr Srinivasan Ravi, and shall also be the | Chairman to
Chairman at meetings of the Board. In his absence, the Board may elect a Chairman | preside at
of its meetings and determine the period for which he is to hold office. meetings of the

Board

(11) If the Chairman is not present within fifteen minutes after the time appointed for | Directors to elect
holding the meeting and no such Chairman is elected by the Board, at any meeting, | a Chairman
the directors present may choose one of them to be Chairman of the meeting.

(12) The Board may, subject to the provisions of the Act, delegate any of its powers to | Delegation of
Committees consisting of such member or members of its body as it thinks fit, powers

(13) | The Act requires certain business to be approved only at Meetings of the Board. | Passing of
However, other business that requires urgent decisions can be approved by means of | resolution by
Resolutions passed by circulation. Resolutions passed by circulation are deemed to be | Circulation
passed at a duly convened
Meeting of the Board and have equal authority.

(14) _| Allacts done in any meeting of the Board thereof or by any person acting asa director, | Acts of Board
shall, notwithstanding that it may be afterwards discovered that there was some defect | valid
in the appointment of any one or more of such directors or of any person acting as | notwithstanding
aforesaid, or that they or any of them were disqualified or that his or their appointment | defect of
had terminated, be as valid as if every such director or such person had been duly | appointment
appointed and was qualified to be a director.

PROCEEDINGS AT MEETINGS OF COMMITTEES OF BOARD
26 |) | Any Committee formed by Board shall, in the exercise of the powers so delegated, | Committee to
conform to any regulations that may be imposed on it by the Board and by the | conform to Board
Applicable laws. regulations

(2) The participation of directors in a meeting of the Committee may be either in person | Participation at
or through video conferencing or audio visual means or teleconferencing, as may be | Committee
prescribed by the Rules or permitted under Applicable Laws and Secretarial Standards. | meetings

@) | A Committee may elect a Chairman of its meetings unless the Board, while | Chairman of
constituting a Committee, has appointed a Chairman of such Committee. Committee

(4) If no such Chairman is elected, or if at any meeting the Chairman is not present within | Chairman to
fifteen minutes after the time appointed for holding the meeting, the members present | preside at
may choose one of their members to be Chairman of the meeting. meetings of

Committee

© | A Committee may meet and adjourn as it thinks fit. Committee to

meet

(6) Questions arising at any meeting of a Committee shall be determined by a majority of | Questions at
votes of the members present. Committee

meeting how
decided

(7) ___| Incase of an equality of votes, the Chairman of the Committee shall have a second or | Casting vote of
casting vote. Chairman at

Committee
meeting

 

 

 

 

391

 
 

 

 

 

 

 

 

 

 

 

 

(8) | The Committee may in case of urgent matters decide to pass a resolution by | Passing of
circulation. resolution by
Circulation
APPOINTMENT OR REMOVAL OF KEY MANAGERIAL PERSONNEL OTHER THAN MANAGING
DIRECTORS, WHOLE TIME DIRECTORS OR MANAGERS
27 | (1) (a) Subject to the provisions of the Act, a Chief Executive Officer, Manager, | Appointment and
Company secretary and Chief financial officer may be appointed by the Board | Removal
for such term, at such remuneration and upon such conditions as it may think fit;
and any Chief Executive Officer, Manager, Company Secretary and Chief
Financial Officer so appointed may be removed by means of a resolution of the
Board.
(b) The Board may appoint one or more Chief Executive Officers for its multiple
businesses.
@ A director may be appointed as Chief Executive Officer, Manager, Company | Director may be
Secretary or Chief Financial Officer or Chief Executive Officer, Manager, Company | designated
Secretary or Chief Financial Officer may be appointed as a director in accordance with
the provisions of Applicable laws.
@) __| The Board shall have the powers to designate any other officer of the company not | Power io
more than one level below the directors who are in the whole-time employment of the | designate any
Company as Key managerial personnel, determine their terms of appointment and fix | other officer of the
remuneration. Such Key managerial personnel may be removed by means of a | company as Key
resolution of the Board. managerial
personnel and
determine terms
of appointment
MAINTENANCE, INSPECTION & EXTRACTS OF STATUTORY REGISTERS
28 | (1) The Company shall keep and maintain at its registered office all Statutory Registers | Statutory registers

namely, Register of charges, Register of members [separately for each class of equity

and preference shares], Register of debenture holders, Register of any other security

holders, Register and index of beneficial owners maintained under Section 11 of

Depositories Act, 1996, Register of loans, guarantees, security and acquisitions made

by the Company, Register of investments not held in its own name and Register of

contracts and arrangements in which directors are interested and any other Statutory

Register, in such manner and for such duration and containing such particulars as may

be prescribed by the Applicable Laws.

(| @ The Company may exercise the powers conferred on it by section 88 of the Act | Foreign register
with regard to the keeping of a Foreign Register of Members, Beneficial owners,
debenture holders, other securities holder residing outside India.

(b) A foreign register shall be deemed to be part of the company’s register [“the
principal register”] of members or of debenture holders or of any other security
holders or beneficial owners, as the case may be, and shall be maintained in the
same format as the principal register.

@) | @ A duplicate of the foreign register shall be maintained in India and shall be | Maintenance of
updated as per timelines prescribed in the Act. Such register shall be kept open | Foreign _ register
for inspection and may be closed, and extracts may be taken therefrom and copies | and inspection
thereof may be required, in the same manner, mutatis mutandis, as is applicable | rights
to the principal register except that the advertisement before closing the register
shall be inserted in at least two newspapers circulating in the place wherein the
foreign register is kept.

(b) The company may discontinue the keeping of any foreign register; and thereupon
all entries in that register shall be transferred to some other foreign register kept
by the company outside India or to the principal register.

(4) (a) Inspection of statutory registers shall be permitted by the Company to prescribed | Inspection Rights
persons based on the provisions of Applicable laws. Wherever there is an | for Statutory
enablement for charging of fees for inspection in the Applicable laws, the | registers
company shall charge Rs. 50 per person per inspection or such other revised fee
as the Board of Directors may prescribe.

 

 

 

 

392

 
 

(b) Notwithstanding the provisions of this Article, there may be statutory registers
wherein no inspection rights have been prescribed, which means the Company or
Board shall be under no obligation to grant inspection rights. Alternatively,
amendments to these rights may be introduced by the Act. In such instances, the
provision of the Act shall override the provisions of the Articles.

 

(3)

(a) The Company shall provide extracts or hard copies or Statutory registers to
persons prescribed under the Applicable laws. Wherever the laws permit
charging of a fee for obtaining extracts/hard copies, Rs. 10 per page or such other
amount as may be decided by the Board shall be charged. Extracts or copies shall
be provided post inspection of the registers.

(b)_ In case of availing soft copies, no fees shall be levied on members or persons
authorised to obtain extracts of statutory registers. However in case the register
has not been maintained in soft copy and in order to fulfil the requirement of the
person requiring the extracts, registers have to be converted to soft form then
charges at the same rate stipulated in clause (a) or such other rate as may be
prescribed by the Board shall be levied.

(e) Provisions of this Article with respect to charging of fees for extracts/copies shall
not apply to auditors, government or other regulators or regulatory bodies in
performance of their duties or as authorised under any law for the time being in
force.

(f) Notwithstanding the provisions of this Article, there may be statutory registers
wherein no rights have been prescribed for obtaining extracts or copies, which
means the Company or Board shall be under no obligation to grant extracts of
such registers. Alternatively, amendments to these rights may be introduced by
the Act. In such instances, the provision of the Act shall override the provisions
of the Articles.

Fees to be

charged

for providing

extracts/c
Statutory
Registers

copies of

 

(6)

The Company shall ensure that extracts of statutory registers are provided to the
eligible parties stipulated or as enabled under the Act, within the time limit specified
therein.

Company

to

provide extracts of
statutory registers

 

AUTHENTICATION OF DOCUMENTS PROCEDINGS AND CONTRACTS

 

29

Any document or proceeding requiring authentication by a company; or any
contracts made by or on behalf of a company, may be signed by any key managerial
personnel or an officer or employee of the company duly authorised by the Board in
this behalf.

Power to Grant
Authorisation

 

DECLARATION OF DIVIDENDS

 

30

@

The Company in general meeting may declare dividends, but no dividend shall exceed
the amount recommended by the Board but the Company in general meeting may
declare a lesser dividend.

‘Company
general
may
dividends

in
meeting
declare

 

2)

The Board of Directors of a company may declare interim dividend during any
financial year or at any time during the period from closure of financial year till
holding of the annual general meeting out of the surplus in the profit and loss account
or out of profits of the financial year for which such interim dividend is sought to be
declared or out of profits generated in the financial year till the quarter preceding the
date of declaration of the interim dividend.

Provided that in case the company has incurred loss during the current financial year
up to the end of the quarter immediately preceding the date of declaration of interim
dividend, such interim dividend shall not be declared at a rate higher than the average
dividends declared by the company during the immediately preceding three financial
years.

Interim dividends

 

 

 

(3)

 

(a) The Board may declare dividends for a financial year out of the profits of the
company for that year arrived at after providing for depreciation in accordance
with the provisions of Section 123 (2), or out of the profits of the company for
any previous financial year or years arrived at after providing for depreciation in
accordance with the provisions of that sub-section and remaining undistributed,
or out of both.

 

Dividends

to be

paid out of profits

 

393

 
 

(b) Provided that in computing profits any amount representing unrealised gains,
notional gains or revaluation of assets and any change in carrying amount of an
asset or of a liability on measurement of the asset or the liability at fair value shall
be excluded; or out of money provided by the Central Government or a State
Government for the payment of dividend by the company in pursuance of a
guarantee given by that Government.

(©) Provided that no dividend shall be declared or paid by a company from its
reserves other than free reserves.

(a) Provided also that no company shall declare dividend unless carried over
previous losses and depreciation not provided in previous year or years are set
off against profit of the company for the current year.

 

 

 

 

 

 

 

 

 

 

 

 

 

(4 ___| The Board may, before the declaration of any dividend in any financial year, transfer | Carry forward of
such percentage of its profits for that financial year as it may consider appropriate to | Profits
the reserves of the company.

(© ___| No amount paid or credited as paid on a share in advance of calls shall be treated for | Payments in
the purposes of this Article as paid on the share. advance

(© | @ Ail dividends shall be apportioned and paid proportionately to the amounts paid | Dividends to be

or credited as paid on the shares during any portion or portions of the period in | apportioned
respect of which the dividend is paid; but if any share is issued on terms providing
that it shall rank for dividend as from a particular date such share shall rank for
dividend accordingly.
(b) Subject to the rights of persons, if any, entitled to shares with special rights as to
dividends, all dividends shall be declared and paid according to the amounts paid
or credited as paid on the shares in respect whereof the dividend is paid.

(7) __ | The Board may deduct from any dividend payable to any member all sums of money, | No. member to
if any, presently payable by him to the Company on account of calls or otherwise in | receive dividend
relation to the shares of the Company. whilst being

indebted to the
Company and
Company’s right
to reimbursement
therefrom

(8) __ | The Board may retain dividends payable upon shares in respect of which any person | Retention of
is, under the Transmission Clause hereinbefore contained, entitled to become a | dividends
member, until such person shall become a member in respect of such shares.

(9) _ | Any dividend, interest or other monies payable in cash in respect of shares may be | Dividend how
paid by electronic mode or by cheque or warrant sent through the post directed to the | remitted
registered address of the holder or, in the case of joint holders, to the registered address
of that one of the joint holders who is first named on the register of members, or to
such person and to such address as the holder or joint holders may in writing direct.

(10) | Every such cheque or warrant shall be made payable to the order of the person to | Instrument of
whom it is sent. Payment

(11) _| Payment in any way whatsoever shall be made at the risk of the person entitled to the | Discharge to
money paid or to be paid. The Company will not be responsible for a payment which | Company
is lost or delayed. The Company will be deemed to having made a payment and
received a good discharge for it if a payment using any of the foregoing permissible
means is made.

(12) Any one of two or more joint holders of a share may give effective receipts for any | Receipt of one
dividends, bonuses or other monies payable in respect of such share. holder sufficient

(13) No dividend shall bear interest against the Company. No interest on

dividends

(14) _| The waiver in whole or in part of any dividend on any share by any document (whether | Waiver of
or not under seal) shall be effective only if such document is signed by the member | dividends

 

(or the person entitled to the share in consequence of the death or bankruptcy of the

 

 

394

 
 

holder) and delivered to the Company and if or to the extent that the same is accepted
as such or acted upon by the Board.

 

UNPAID OR UNCLAIMED DIVIDENDS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

31 | (@) | Where the Company has declared a dividend but which has not been paid or claimed | Transfer of
within thirty days from the date of declaration, the Company shall, within seven days | unclaimed
from the date of expiry of the said period of thirty days, transfer the total amount of | dividend
dividend which remains unpaid or unclaimed, to a special account to be opened by the
Company in that behalf in any scheduled bank.

(2) _ | Any money transferred to the unpaid dividend account of the Company which remains | Transfer to IEPF
unpaid or unclaimed for a period of seven years from the date of such transfer, shall | Account
be transferred by the Company to the Investor Education and Protection Fund (IEPF)
established under section 125 of the Act.

(3) _ | The Company shall ensure that as per the provisions of Section 124(6) of the Act, All | Transfer of shares
shares in respect of which dividend has not been paid or claimed for seven consecutive | in case of
years or more shall be transferred by the company in the name of Investor Education | unclaimed
and Protection Fund. dividends

(4) Any person claiming to be entitled to an amount or shares so transferred to Investor | Right to claim
Education and Protection Fund, may apply to the company and/or the authority | back the amount
constituted by the Central Government for the payment of the money claimed or shares | or shares
so transferred. transferred to

JEPF
© | No unclaimed or unpaid dividend shall be forfeited by the Board until the claim | Forfeiture of
becomes barred by Applicable Laws. unclaimed
dividend
BOOKS OF ACCOUNTS
32 | () The Board shall cause true accounts to be kept of the assets and liabilities and of all | Maintenance of
sums of money received and expended by the Company as prescribed in the | Books of
Applicable laws. Accounts of
Company

(2)__ | The Books of account and books and papers of the Company, or any of them, shall be | Inspection by
open to the inspection of directors in accordance with the applicable provisions of the | Directors
Act and the Rules.

@) | No member (not being a director) shall have any right of inspecting any books of | Restriction on
account or books and papers or document of the Company except as conferred by | inspection by
Applicable Laws or authorised by the Company in General Meeting. members

APPOINTMENT, RESIGNATION & REMOVAL OF AUDITORS
33 |G) | The Statutory auditors of the company shall be appointed, their remuneration shall be | Appointment of
fixed, rights, duties and liabilities shall be regulated and their qualifications and | Statutory Auditors
disqualifications shall be in accordance with the provisions of Sections 139 to 148 (both
inclusive) of the Act.

(2) __ | The Directors may fill up any casual vacancy in the office of the auditors within thirty | Casual Vacancy
days subject to the provisions of Section 139 and 140 of the Act and the rules framed
thereunder.

(@) __| The remuneration of the auditors shall be fixed by the Company in the Annual General | Remuneration of
Meeting or in such a manner as the Company in the annual General Meeting may | Statutory auditors
determine except that, subject to the applicable provisions of the Act, remuneration of
the first or any auditor appointed by the Directors may be fixed by the Directors.

(4) (a) The Board shall duly appoint Practising Cost Accountant to conduct Cost audit | Cost Auditor

of the Company in accordance with the provisions of the Act [Section 148] and
remuneration shall be fixed subject to approval at the general meeting of the
Company.
(b) Resignation, Casual Vacancy and Removal of Cost Auditors etc., shall be
governed by the provisions of the Act.
(5) (a) The Board shall duly appoint Practising Company Secretaries to conduct | Secretarial
Secretarial audit of the Company in accordance with the provisions of the Act | Auditor

 

 

[Section 204].

 

 

395

 
 

(b) Resignation, Casual Vacancy and Removal etc., of Cost Auditors shall be
governed by the provisions of the Act.

 

(6)

(a) The Board shall appoint Internal Auditors to conduct internal audit of the
functions and activities of the Company in accordance with the provisions of the
Act and fix their terms of appointment [Section 138].

(b) Resignation, Casual Vacancy and Removal etc, of Cost Auditors shall be
governed by the provisions of the Act.

Internal Auditor

 

SERVICE OF DOCUMENTS AND NOTICE ON THE COMPANY

 

34

A document or notice may be served or given by the company on any member either
personally or sending it by post to him to his registered address or (if he has no
registered address in India) to the address, if any, in India supplied by him to the
company for serving documents or notices on him or by way of any electronic
transmission, as prescribed in section 20 of the act and Applicable Law made
thereunder.

Where a document or notice is sent by post, services of the document or notice shall
be deemed to be effected by properly addressing, prepaying and posting a letter
containing the document or notice, provided that where a member has intimated to the
company in advance that document or notices should be sent to him by registered post
with or without acknowledgement due and has deposited with the company a sum
sufficient to defray the expenses of the doing so, service of the documents or notice
shall not to be deemed to be effected unless it is sent in the manner intimated by the
member and such service shall be deemed to have been effected in the case of Notice
of a meeting, at the expiration of forty-eight hours after the letter containing the
document or notice id posted and in any other case at the time at which the letter would
be delivered in the ordinary course of post.

Service of
Documents And
Notice

 

WINDING UP

 

35

The Company may be wound up in accordance with the provisions of the Act.

Winding up of
Company

 

SECRECY

 

36

M

Subject to the provisions of the Act, no Member shall be entitled to visit or inspect
any work of the Company without the permission of the Board of Directors, Managing
Directors or Secretary or to require inspection of any books of accounts or documents
of the Company or any discovery of any information or any detail of the Company's
business or any other matter, which is or may be in the nature of a trade secret, mystery
of secret process or which may relate to the conduct of the business of the Company
and which in the opinion of the Board or the Managing Director will be inexpedient
in the collective interests of the Members of the Company to communicate to the
public or any Member.

Duty of Directors

 

2)

Every Director, Manager, Secretary, Key managerial personnel, Auditor, Trustee,
Member of Committee, officer, servant, agent, accountant or other person employed
in the business of the Company will be upon entering his duties pledging himself to
observe strict secrecy in respect of all matters of the Company including all transaction
with customers, state of accounts with individual and other matters relating thereto
and to not reveal any of the matters which may come to his knowledge in the discharge
of his duties except when required so to do by the Directors or by any meeting or by
a court of Law and except so far as may be necessary in order to comply with any of
the provisions in these Articles and the provisions of the Act.

Duty to maintain
confidentiality

 

 

(3)

 

No share holder or other person, not being a director shall be entitled to enter into the
premises or the properties of the company, or to inspect the company's premises or
properties or books of account of the company except to the extent authorised by the
Act and subject to such restrictions as the company in General Meeting or the Board
may impose in this behalf from time to time. No person shall be entitled to require
disclosure of any information respecting any details in the nature of a trade secret,
mystery of trade or process or of any matter whatsoever which, in the opinion of the
Board or the Managing Director of the Company would be inexpedient to
communicate.

 

Restriction on
right of members

 

 

INDEMNITY AND INSURANCE

 

396

 
 

37

@

Subject to the provisions of the Act, every director, managing director, whole-time
director, manager, company secretary, key managerial personnel and other officer of
the Company shall be indemnified by the Company out of the funds of the Company,
to pay all costs, losses and expenses (including travelling expense) which such
Director, Manager, Company Secretary, key managerial personnel and officer may
incur or become liable for by reason of any contract entered into or act or deed done
by him in his capacity as such Director, Manager, Company secretary, key managerial
personnel or officer or in any way in the discharge of his duties in such capacity
including expenses.

Directors and
officers right to
indemnity

 

2)

Subject as aforesaid, every Director, Managing Director, Manager, Company
Secretary, key managerial personnel or other officer of the Company shall be
indemnified against any liability incurred by him in defending any proceedings,
whether civil or criminal in which judgement is given in his favour or in which he is
acquitted or discharged or in connection with any application under applicable
provisions of the Act in which relief is given to him by the Court.

Indemnity in case
of Civil. or
Criminal
Proceedings

 

(3)

No Director, key managerial personnel or other officer of the Company shall be liable
for the acts, deceits, neglect or default of any other Director or officer joining in any
deceit or other act, or any loss or expense happening to the Company through the
insufficiency or deficiency of a title to any property acquired by order of the Board
for and on behalf of the Company, or for the insufficiency or deficiency of any security
of investment in or upon which any of the moneys of the Company shall be invested
or for any loss or damage arising from the bankruptcy, insolvency or tortuous acts of
any persons with whom any moneys, securities or effects, shall be deposited, or for
any loss, occasioned by any error of judgment or oversight on his part, or for any other
loss, damage or misfortune whatever, which shall happen in the execution of the duties
of his office or in relation thereto unless the same happens through his own dishonesty.

No liability of
individuals in
certain cases

 

>)

The Company may take and maintain any insurance as the Board may think fit on
behalf of its present and/or former directors and key managerial personnel for
indemnifying all or any of them against any liability for any acts in relation to the
Company for which they may be liable but have acted honestly and reasonably.

Insurance

 

GENERAL POWER OF THE COMPANY

 

 

38

 

 

Wherever in the Act, it has been provided that the Company shall have any right,
privilege or authority or that the Company could carry out any transaction only if the
Company is so authorized by its articles, then and in that case this Article authorizes
and empowers the Company to have such rights, privileges or authorities and to carry
out such transactions as have been permitted by the Act, without there being any
specific Article in that behalf herein provided.

 

General power of
the Company to
act as per the
provisions of its
Articles of
Association

 

397

 
PART - B*

(Incorporated under Companies Act 1956)
(Limited By Shares)

* Part-B of the Articles of Association reflects the previous Articles of Association of the Company as existed
before the EGM held on 30.04.2018, except for the restrictions pertaining to a private limited company which
have been removed as a consequence of conversion of the company from private to public and sections has been
realigned as per the provisions Companies Act, 2013.

Preliminary

1.

The Regulations contained in Table 'F' in Schedule I to the Companies Act, 2013 or any statutory
modifications thereof, shall apply to the Company as far as applicable to a private company except to the
extent the said regulations have been expressly altered, varied or omitted in these Articles. These Articles,
and wherever required the said regulations contained in Table ‘F’, shall be the regulations for the
management of the Company.

Interpretation

2,

In these Articles, the following words and expressions shall have the following meanings unless excluded
by the subject or context.

“Accession Instrument" means a deed of adherence to the Shareholders Agreement substantially in the
form set forth in Schedule 3 (Accession Instrument) of the Shareholders Agreement, with applicable
amendments which are in form and substance satisfactory to each of the parties to the Shareholders
Agreement;

“Accounting Standards" means the accounting standards issued from time to time by the Government
of India under the Companies (Accounting Standards) Rules, 2006;

"Act" shall mean the (Indian) Companies Act, 2013 and all amendments or statutory modifications
thereto or re-enactment thereof;

“Action Plan" means the plan or plans developed by the Company, a copy of which is attached as Annex
C (Action Plan) to the Shareholders Agreement, setting out the specific social and environmental
measures to be undertaken by the Company, to enable the Company's Business to be undertaken in
compliance with the Performance Standards;

"Affiliate" means with respect to any Person, any Person directly or indirectly Controlling, Controlled
by or under common Control with, that Person;

“Aggregate Subscription Amount” means with respect to each Investor, the amounts paid by the
respective Investors to the Company towards the subscription of the respective Investor Shares;

“Amended and Restated Put Option Agreement” means the amended and restated put option
agreement dated July 3, 2012 executed amongst IFC, the Company, each of the Sponsors and SM;

“Annual Monitoring Report” means the Annual Environment and Social Monitoring Report, in the
form set out in Schedule 6 (Annual Environment and Social Monitoring Report) of the Shareholders
Agreement, setting out the specific social, environmental and developmental impact information to be
provided by the Company in respect of the Business;

“Applicable Law" means all applicable statutes, laws, ordinances, rules and regulations, including but
not limited to, any license, permit or other Authorisations, in each case as in effect from time to time;

"Applicable S&E Law" means all applicable statutes, laws, ordinances, rules and regulations of the
Country, including without limitation, all Authorisations setting standards concerning environmental,
social, labor, health and safety or security risks of the type contemplated by the Performance Standards
or imposing liability for the breach thereof;

398
“Approved Business Plan” means the Business Plan or, as the case may be, any revision thereof, duly
approved by the Board of Directors of the Company;

"Articles" shall mean these Articles of Association framed or as altered from time to time or of this Act;

“Audited Financial Statements" means the financial statements of the Company for any Financial Year,
which includes the balance sheet and the profit and loss account of the Company audited by the statutory
Auditors of the Company, including the notes to accounts;

"Auditors" means the independent, external auditors of the Company;

“Authorisations” mean any consent, registration, filing, agreement, notarization, certificate, license,
approval, permit, authority or exemption from, by or with any Authority, whether given by express action
or deemed given by failure to act within any specified time period and all
corporate, creditors’ and shareholders' approvals or consents;

"Authority" means any national, supranational, regional or local government, or governmental,
statutory, regulatory, administrative, fiscal, judicial, or government-owned body, department,
commission, authority, tribunal, agency or entity, or central bank (or any Person whether or not
government owned and howsoever constituted or called, that exercises the functions of the central
bank);

“Authorized Representative" means, in relation to the Company, any individual who is duly authorized
by the Company to act on its behalf and whose name and a specimen of whose signature appear on the
Certificate of Incumbency and Authority most recently delivered by the Company to the Investors;

“Average EBITDA” means the average of (i) EBITDA as per the Audited Financial Statements of the
Company for the Financial Year immediately preceding the Financial Year in which the question of
computing “Average EBITDA” has arisen and (ii) the projected EBITDA as per the latest Approved
Business Plan;

“Board of Directors" or "Board" means the board of directors of the Company, nominated and elected
from time to time, constituted in accordance with the Act and in compliance of terms of these Articles;

“Borrowing” means any indebtedness in respect of:

(a) monies borrowed;

(b) any amount raised by acceptance under any acceptance credit facility or dematerialised
equivalent;

(a) any amount raised pursuant to any note purchase facility or the issue of bonds (other than

performance bonds), notes, debentures, loan stock or any similar instrument;

(d) the amount of any liability in respect of any lease or hire purchase contract which would, in
accordance with Indian GAAP, be treated as a finance or capital lease;

(e) receivables sold or discounted (other than any receivables to the extent they are sold on a non-
recourse basis);

(p any amount raised under any other transaction (including any forward sale or purchase
agreement) having the commercial effect of a borrowing;

(g) any derivative transaction entered into in connection with protection against or benefit from

fluctuation in any rate or price (and, when calculating the value of any derivative transaction,
only the marked to market value shall be taken into account);

399
(h) any counter-indemnity obligation in respect of a guarantee, indemnity, bond (other than
performance and similar bonds issued in the ordinary course of trading), standby or
documentary letter of credit or any other instrument issued by a bank or financial institution;
and

(i) the amount of any liability in respect of any guarantee or indemnity for any of the items
referred to in paragraphs (a) to (h) above.

"Business" means the business carried on by the Company and its Subsidiaries or capable of being carried
by the Company and its Subsidiaries in accordance with memorandum of association as in force from
time to time comprising of its existing and future operations, activities and facilities of the Company and
its Subsidiaries and also the existing and future operations and activities of its Joint Ventures (including
the design, construction, operations, maintenance, management and monitoring thereof, as applicable),
whether in India or outside India and without prejudice to the generality of the above it includes, (a)
machining job work: finishing and machining of high precision, critical components, (b) product
engineering and manufacturing: turnkey manufacturing and assembly solutions for various industrial
customers, (c) standard products: manufacture and sale of niche engineering products, (d) die casting,
pressure die casting, plastic products and components, material handling and storage equipments and
articles, environment protection and purification equipments, products, articles and things, (e) packaging
for medical, electrical and other products and components and (f) any other related backward or forward
integration activity, including foundry and forging;

“Business Day" means a day, except for a Saturday or a Sunday, when banks are open for business in
Mauritius, New York, United States of America, Mumbai, Chennai and Coimbatore, India;

“Business Plan" means the annual business plan of the Company or any revision thereof prepared by the
Management of the Company for any Financial Year containing the operating performance budget,
capital expenditure and borrowing details of the Company and other relevant key performance indicators,
to the satisfaction of the Investors and a copy thereof being provided to the Investors;

"CAO" means the Compliance Advisor Ombudsman, the independent accountability mechanism for IFC
that responds to environmental and social concerns of affected communities and aims to enhance
outcomes;

"CAO's Role" means the role of the CAO which is:

(a) to respond to complaints by Persons who have been or are likely to be negatively affected by
the social or environmental impacts of IFC projects; and

(b) to oversee audits of IFC's social and environmental performance, particularly in relation to
sensitive projects, and to ensure compliance with IFC's social and environmental policies,
guidelines, procedures and systems;

"Certificate of Incumbency and Authority" means a certificate provided to the Investors by the
Company substantially in the form set forth in Schedule 2 (Form of Certificate of Incumbency and
Authority) of the Shareholders Agreement;

"Chairman" means the chairman of the Board of Directors elected or appointed from time to time;

"Charter" or “Charter Documents” means the memorandum of association of the Company, these
Articles or, as applicable, the memorandum of association and articles of association of any Subsidiary;

“Claim” includes any notice, demand, claim, action, assessment taken by any Authority or any other
Person, whereby the Company or, as the case may be, any of the Investors: (i) may be placed or is sought
to be placed under an obligation to make payment; or (ii) is likely to suffer any loss, damage, cost,
expense, liability, penalty or prosecution including any payments with respect to any Tax or interest or
penalties in relation thereto; or (iii) may be deprived of any relief, allowance, credit or repayment
otherwise available;

400
“Closing Date” shall mean, with respect to both the Investors, the earlier of the dates on which the
Company allots and issues the Investor Subscription Shares to the Investors in terms of the SCPE
Subscription Agreement or the IFC Subscription Agreement, as the case may be;

“Corporate Governance Improvement Plan" means the plan or plans to be developed by the Company,
and suitably adopted by the Board, setting out specific corporate governance improvement measures to
be undertaken by the Company, to enable it to improve the corporate governance of the Company, in
form and substance satisfactory to the Investors, covering at the minimum:

(a) Board structure and composition;

(b) Appointment of chief financial officer and other key senior positions;

( Implementation of the ERP and material management systems;

(d) Protection of minority Shareholders; and

(e) Meeting of any other requirements to be abided by or fulfilled upon the listing of the shares of
the Company.

"Coercive Practice" has the meaning set forth in Annex A (Anti-Corruption Guidelines for IFC
Transactions) of the Shareholders Agreement;

"Collusive Practice" has the meaning set forth in Annex A (Anti-Corruption Guidelines for IFC
Transactions) of the Shareholders Agreement;

"Control" means the power to direct the management or policies of a Person, directly or indirectly,
whether through the ownership of shares or other securities, by contract or otherwise; provided that, in
any event, the direct or indirect ownership of twenty-six per cent (26%) or more of the voting share
capital of a Person is deemed to constitute Control of that Person, and "Controlling" and "Controlled"
have corresponding meanings;

“Corrupt Practice" has the meaning set forth in Annex A (Anti-Corruption Guidelines for IFC
Transactions) of the Shareholders Agreement;

"Country" means the Republic of India;

“Deed of Adherence" means a deed of adherence to the Shareholders Agreement substantially in the
form set forth in Schedule 4 (Deed of Adherence) of the Shareholders Agreement, with applicable
amendments which are in form and substance satisfactory to each of the parties to the Shareholders
Agreement.

"Director" means an individual who is a member of the Board of Directors of the Company nominated
and elected from time to time;

"Distribution" means: (a) the transfer of cash or other property without consideration, whether by way
of dividend or otherwise; or (b) the purchase or redemption of shares of the Company or Share
Equivalents for cash or property, other than any repurchase or redemption of shares of the Company or
Share Equivalents issued to or held by employees, officers, Directors or consultants of the Company or
its Subsidiaries pursuant to an employee stock plan upon termination of their employment;

“Encumbrance" means any lien, mortgage, pledge, charge, assignment, hypothecation, security
interest, title retention, preferential right, option (including call commitment), trust arrangement, right
of set-off, counterclaim or banker's lien, privilege or priority of any kind having the effect of
security, any designation of loss payees or beneficiaries or any similar arrangement under or with
respect to any insurance policy or any preference of one creditor over another arising by operation of
law and / or any adverse claim as to title, possession or use;

*“Equity Shares” means the issued and fully paid-up equity shares of the Company of face value Rs. 5
each;

401
* Altered pursuant to the sub-division of the equity shares from face value of Rs. 100 each to Rs. 5 each approved
at the Extraordinary General Meeting held on 30.04.2018

“Essential Rights” means the rights specified in Article 102 (b)(ii), Article 102(d), Article 102 (e),
Article 102 (f)(ii) and Article 102 (i) of these Articles of Association;

"Financial Year" means the accounting year of the Company commencing each year on April 1 and
ending on the following March 31;

“FMV Price” shall mean the fair market value of the Equity Shares of the Company, determined by an
Independent Audit Firm as may be approved by the Board of Directors and acceptable to Investors, who
are not the Auditors of the Company at the time of making such determination;

"Fraudulent Practice" has the meaning set forth in Annex A of the Shareholders Agreement (Anti-
Corruption Guidelines for IFC Transactions);

“General Meeting" means either an extraordinary general meeting of the Company's shareholders or the
annual general meeting of the Company's shareholders;

“Governmental Approval” shall mean any Authorisation required to be obtained from any Authority;

"IFC" shall mean the International Finance Corporation, an international organization established by
Articles of Agreement among its member countries including the Republic of India;

“IFC Initial Shares” shall mean 66,263 (Sixty Six Thousand Two Hundred and Sixty Three) Equity
Shares, subscribed to by IFC pursuant to a share subscription agreement dated June 28, 2010 executed
amongst IFC, the Sponsors, SM and the Company constituting 14.06% of the then Share Capital;

“IFC Subscription Agreement” means the share subscription agreement dated July 3, 2012 executed
amongst the Sponsors, SM, the Company and IFC;

“IFC Subscription Shares” means the 14,540 (Fourteen Thousand Five Hundred and Forty) Equity
Shares of the Company subscribed by IFC pursuant to the IFC Subscription Agreement;

"Independent Director" means a Director who has no direct or indirect material relationship with the
Company other than membership on the Board and who:

(a) is not, and has not been in the past 5 (five) years, employed by the Company or its Affiliates;

(b) does not have, and has not had in the past 5 (five) years, a business relationship with the
Company or its Affiliates (either directly or as a partner, shareholder (other than to the extent to
which shares are held by such Director pursuant to a requirement of Applicable Law in the
Country relating to directors generally), and is not a director, officer or senior employee of a
Person that has or had such a relationship);

() is not affiliated with any non-profit organization that receives significant funding from the
Company or its Affiliates;

(d) does not receive and has not received in the past 5 (five) years, any additional remuneration
from the Company or its Affiliates other than his or her director's fee and such director’s fee
does not constitute a significant portion of his or her annual income;

(e) does not participate in any share option scheme/plan or pension scheme/plan of the Company
or any of its Affiliates;

(f) is not employed as an executive officer of another company where any of the Company’s
executives serve on that company’s board of directors;

402
(g)

(h)

@

(k)

is not, nor has been at any time during the past 5 (five) years, associated with or employed by a
present or former Auditor of the Company or any of its Affiliates;

does not hold a material interest in the Company or its Affiliates (either directly or as a partner,
shareholder, director, officer or senior employee of a Person that holds such an interest);

is not a member of the immediate family (and is not the executor, administrator or personal
representative of any such Person who is deceased or legally incompetent) of any individual
who would not meet any of the tests set out in (a) to (h) (where he or she a director of the
Company);

is identified in the annual report of the Company distributed to the shareholders of the Company
as an independent director; and

has not served on the Board for more than 10 (ten) years.

For purposes of this definition, "material interest" shall mean a direct or indirect ownership of voting
shares representing at least 5% (five percent) of the outstanding voting power or equity of the Company
or any of its Affiliates;

"Intellectual Property" means any or all of the following and all rights in, arising out of, or associated
with any or all of the following:

@

(ii)

(iii)

(iv)

)
(vi)
(vii)

(viii)

all national, foreign and international patents and patent rights (including all patents, patent
applications, provisional patent applications, and any and all divisions, continuations,
continuations-in-part, reissues, re-examinations and extensions thereof, and all invention
registrations and invention disclosures);

all trademarks and trademark rights, service marks and service mark rights, trade names and
trade name rights, service names and service name rights (including all goodwill, common law
rights and governmental or other registrations or applications for registration pertaining thereto),
designs, trade dress, brand names, business and product names, internet domain names, logos
and slogans;

all copyrights and/or rights to use a copyright (including all common law rights, and
governmental or other registrations or applications for registration pertaining thereto, and
renewal rights therefor);

all sui generis database rights, ideas, inventions (whether patentable or not), invention
disclosures, improvements, technology know-how, show-how, trade secrets, formulas, systems,
processes, designs, methodologies, industrial models, works of authorship, databases, content,
graphics, technical drawings, statistical models, algorithms, modules, computer programs,
technical documentation, business methods, work product, intellectual and industrial property
licenses, proprietary information and documentation relating to any of the foregoing;

all mask works, mask work registrations and applications therefor;
all industrial designs and any registrations and applications therefor throughout the world;

all computer software including all source code, object code, firmware, development tools, files,
records and data, and all media on which any of the foregoing is recorded; and

all similar, corresponding or equivalent rights to any of the foregoing.

“Investment Date” refers to the date on which the subscription amounts are paid by the Investors to the
Company with respect to the subscription to the Investor Shares and the Investor Shares are issued and
allotted to the respective Investors pursuant to receipt of such payment by the Company in its designated
bank account;

*“Investors” shall collectively refer to IFC and Marina III.

403
*Altered pursuant to the transfer of equity shares from SCPE to Marina III Singapore Pte Ltd dated 24‘ March,
2017

“Investor Shares” shall mean the IFC Initial Shares, the Investor Subscription Shares and any other
additional Equity Shares issued to the Investors, the amounts for which may be paid by such Investor to
the Company for the subscription of such additional Equity Shares, if any;

*“Investor Subscription Shares” shall mean the Marina III Shares and the IFC Subscription Shares;

*Altered pursuant to the transfer of equity shares from SCPE to Marina III Singapore Pte Ltd dated 24" March,
2017.

“IRR” means with respect to any Investor, the internal rate of the return achieved by such Investor
calculated using the Microsoft Excel XIRR function (or if such program is no longer available, such
other software program for calculating IRR acceptable to the Investors and Sponsors), at the time when
the IRR is required to be calculated in accordance with the Shareholders Agreement as a specified
percentage of the shareholding of the Investor reckoned as Shares on a Fully Diluted Basis calculated
commencing on the respective Investment Dates and shall be arrived at duly taking into account the (a)
the Aggregate Subscription Amount paid by the Investor to the Company and (b) minimum floor price
per share at which the Qualified IPO or Investor Request Qualified IPO opens or in the case of a buy
back or Third Party purchase the price per Equity Share at which such transaction takes place duly
adjusted for Equity Shares held by the Investor reckoned as Shares on a Fully Diluted Basis and duly
adjusted therefrom all previous Distributions (including dividends, buy-back amounts or payments made
pursuant to a reduction of capital) by the Company to such Investor; Calculation of IRR for any Investor
shall be done on a pre-tax basis;

“Joint Ventures" means Carl Stahl Craftsman Enterprises Private Limited and MC Craftsman
Machinery Private Limited, and any other joint venture that the Company may enter into after July 03,
2012 being the date of execution of the Shareholders Agreement;

“KG” means K. Gomatheswaran, s/o Kaliappa Gounder, a citizen of India, residing at 4A,
Windchimes,248/3, Race Course, Coimbatore - 641 018, Tamil Nadu, India, having Permanent Account
No.AFXPG9306B;

“Liquidation Event" means any liquidation, winding up or bankruptcy, reorganization, composition
with creditors or other analogous insolvency proceeding of the Company or any Subsidiary, whether
voluntary or involuntary, or any petition presented or resolution passed for any such event or for the
appointment of an insolvency practitioner;

"Listing" means the admission of Equity Shares of the Company (and/or Share Equivalents) to listing
on any securities exchange and/or to trading on any Relevant Market;

“Long Term Borrowings" means any Borrowing not originally due for repayment in full within 12
(twelve) months from the date of such Borrowing;

“Management of the Company” refers to the function involving the management of the affairs of the
Company carried out under the leadership of the Managing Director of the Company comprising of
executive directors, key management personnel and other officers;

*“Marina III means Marina III (Singapore) Pte Limited a company incorporated and registered under
the laws of Singapore, having its registered office at 8, Marina Boulevard, #23-01, Marina Bay Financial
Centre Tower 1, Singapore 018981.

*Inserted pursuant to the transfer of equity shares from SCPE to Marina III Singapore Pte Ltd dated 24" March,
2017

*“Marina III Subscription Shares” means the 89,100 (Eighty Nine Thousand One Hundred) Equity

Shares of the Company subscribed by SCPE pursuant to the SCPE Subscription Agreement and now
held by Marina III;

404
*Inserted pursuant to the transfer of equity shares from SCPE to Marina III Singapore Pte Ltd dated 24" March,
2017

“Material Adverse Effect" means a material adverse effect on:

(a) the Company's, or any of its Subsidiaries’ assets or properties;

(b) the Company's, or any of its Subsidiaries' business prospects or financial condition;

(3) the carrying on of the Company's, or any of its Subsidiaries' Business or operations;

(d) the ability of the Company to comply, and ensure that each of its Subsidiaries complies, with

its obligations under the Shareholders Agreement, or the Company's Charter and in the case of
each of its Subsidiaries, such Subsidiary's Charter; or

(e) the ability of the Sponsor and SM to comply with their obligations under the Shareholders
Agreement.

*“Net Worth” means the aggregate value of the paid-up share capital and all reserves created out of the
profits securities premium account and debit or credit balance of profit and loss account, after deducting
the aggregate value of the accumulated losses, deferred expenditure and miscellaneous expenditure not
written off, as per the audited balance sheet, but does not include reserves created out of revaluation of
assets, write-back of depreciation and amalgamation;

“Obstructive Practice" has the meaning set forth in Annex A (Anti-Corruption Guidelines for IFC
Transactions) of the Shareholders Agreement;

"Offering" means any primary or secondary public or private offering of Equity Shares of the Company
and/or Share Equivalents;

“Parties” means collectively, the Company, the Sponsors, SM and the Investors;
"Performance Standards" means IFC's Performance Standards on Social & Environmental

Sustainability, dated January 1, 2012, copies of which are available publicly on the IFC website at
http://www. ifc.org/ifcext/enviro.nsf/Content /EnvSocStandards;

 

"Person" means any individual, corporation, company, body corporate, partnership, firm, voluntary
association, joint venture, trust, unincorporated organization, Authority or any other entity whether
acting in an individual, fiduciary or other capacity;

“pro-rata share" or “pro-rata Equity Share” means, with respect to any Shareholder, the total number
of issued and outstanding Equity Shares of the Company and Share Equivalents held by the relevant
Shareholder, expressed as a percentage of the total number of shares of the Company and Share
Equivalents then issued and outstanding, reckoned as Shares on a Fully-Diluted Basis;

“Proxy” includes attorney duly constituted under a power of attorney;
"Qualified IPO Date" means the date on which a Qualified IPO takes place;

"Qualified IPO Price" means a share price at the lower end of the IPO price band that would result ina
minimum IRR of 10% (ten per cent) on the Aggregate Subscription Amount calculated with respect to
each of the Investors from the respective Investment Dates till the Qualified IPO Date or Investor Request
Qualified IPO Date, as the case may be;

“Related Party" means any Person: (a) that holds a material interest in the Company or any Subsidiary;
(b) in which the Company or any Subsidiary holds a material interest; (c) that is otherwise an Affiliate
of the Company; or (d) who serves or has within the past 12 (twelve) months served as a Director; (e)
who is a Relative of any individual included in any of the foregoing or (f) an employee of the Company
or the Subsidiaries from whom the Company or any Subsidiary, has directly or indirectly, procured goods
and services, of a value of more than 5% (five per cent) of sales of the Company as per the Audited

405
"Special Resolution" means special resolution as defined under Section 114 of the Act;

"Special Rights” shall mean the rights of the Investors under Article 101 and the right of the Investors
to be entitled to appoint its nominee as a Director on the Board;

“Specified Matters” shall mean the following:

@ significant adjustments or qualifications made to the financial statements arising out of audit
findings; or

(ii) any issues or material change in accounting policies or practices of the Company that could
affect the true and fair nature of any financial statements of the Company.

"Sponsor" means SR and KG and shall include any other Person designated as a Sponsor from time to
time in accordance with these Articles;

"SR" means S. Ravi, s/o Dr. G. Srinivasan, a citizen of India residing at Old No. 153, New No. 209,
Tea Estate Compound, Race Course, Coimbatore — 641 018, Tamil Nadu, India, having Permanent
Account No. AEYPR9359H;

"Subsidiary" means a subsidiary as defined under the Act and shall include (a) Craftsman Marine BV;
and (b) Craftsman Automation Singapore Pte Ltd or any other subsidiary which the Company or its
Subsidiaries may establish from time to time, in India or elsewhere;

"Tax", "Taxation" or "Taxes" means any present or future taxes (including stamp duties), withholding
obligations, duties and other charges of whatever nature levied by any Authority together with any
interest, penalties, surcharges or fines relating thereto ;

"The Company" or "This Company" or "Company" means Craftsman Automation Limited;

“Third Party” shall mean any Person that is not a signatory to the Shareholders Agreement;

“Total Debt” shall mean the sum total of all indebtedness of the Company calculated at any time when
the Company proposes to incur a debt including aggregate of each of the following:

(a) Long Term Borrowings;

(b) Short Term Borrowings;

(c) Indebtedness of the Company in respect of any Borrowing other than (a) and (b) above;

(d) Indebtedness of the company in respect of bills discounted with recourse to the Company; and
(e) Indebtedness of the company in respect of corporate guarantees issued by the Company in

favour of other entities.

“Transaction Documents” shall mean the Shareholders Agreement, the SCPE Subscription Agreement,
the IFC Subscription Agreement, the Amended and Restated Put Option Agreement, the Deed of
Adherence dated 17" March, 2017 signed by Marina III and such other documents as may be designated
as such by the Parties;

"Transfer" means to directly or indirectly, transfer, sell, convey, assign, pledge, hypothecate, create a
security interest in or Encumbrance on, place in trust (voting or otherwise), transfer by operation of law
or in any other way subject to any Encumbrance or dispose of, whether or not voluntarily, and
"Transferring" and "Transferred" shall have corresponding meanings.

*Capital

407
Financial Statements for the Financial Year immediately preceding the Financial Year in which the
question arises or to whom the Company or any Subsidiary has, directly or indirectly supplied any goods
and services of a value of more than 5% (five per cent) of sales of the Company as per the Audited
Financial Statements for the Financial Year immediately preceding the Financial Year in which the
question arises. For the purpose of this definition, "material interest" shall mean a direct or indirect
ownership of Equity Shares representing at least 5% (five per cent) of the outstanding voting power or
equity of the Company or any Subsidiary;

“Relative” shall have the meaning ascribed to such term under Section 2(77) of the Act;

“Relevant Market" means the BSE Limited and/or the National Stock Exchange of India Limited, or
any other reputable and internationally recognized automated quotation system(s) or stock exchange(s)
acceptable to the Investors in their sole discretion;

“Relevant Parties" means the Company, the Sponsors, SM and any other shareholder of the Company
that is a party to the Shareholders Agreement or becomes a party to the Shareholders Agreement
pursuant to an Accession Instrument or Deed of Adherence;

"Sanctionable Practice" means any Corrupt Practice, Fraudulent Practice, Coercive Practice, Collusive
Practice, or Obstructive Practice, as those terms are defined herein and interpreted in accordance with
the Anti-Corruption Guidelines attached to the Shareholders Agreement as Annex A (Anti-Corruption
Guidelines for IFC Transactions);

“SCPE” shall mean Standard Chartered Private Equity (Mauritius) I Limited, a company incorporated
and registered under the laws of Mauritius, having its registered office at C/o Kross Border Trust
Services Limited, St Louis Business Centre, Cnr Desroches & St Louis Streets, Port Louis, Mauritius,
registered as a Foreign Venture Capital Investor under the laws of India having registration number
IN/FVCI/05-06/22;

“SCPE Subscription Agreement” means the share subscription agreement dated July 3, 2012 executed
amongst the Sponsors, SM, the Company and SCPE;

"Share Capital" means the total issued and paid-up equity share capital of the Company calculated as
per Shares on a Fully Diluted Basis;

"Share Equivalents" means preferred shares, bonds, loans, warrants, options or other similar
instruments or securities which are convertible into or exercisable or exchangeable for, or which carry
a right to subscribe for or purchase, equity shares of the Company or any instrument or certificate
representing a beneficial ownership interest in the equity shares of the Company, including global
depository receipts or American depository receipts;

"Shareholders" means collectively, the Investors, the Sponsors, SM and any other shareholder of the
Company that is a party to the Shareholders Agreement or becomes a party to the Shareholders
Agreement pursuant to an Accession Instrument or a Deed of Adherence;

"Shareholders Agreement" refers to the shareholders agreement dated July 3, 2012 entered into
between the Company, SR, KG, SM, SCPEand IFC ;

"Shares on a Fully Diluted Basis", shall mean that number of shares obtained by assuming that all
outstanding options, warrants and other equity securities convertible into or exercisable or exchangeable
for equity shares of the Company (whether or not by their term then currently convertible, exercisable or
exchangeable), have been so converted, exercised or exchanged;

"Shell Bank" means a bank incorporated in a jurisdiction in which it has no physical presence and which
is not an affiliate of a regulated bank or a regulated financial group;

“Short Term Borrowings” shall mean all Borrowings other than Long Term Borrowings;

“SM” shall mean S. Murali, s/o Dr. G. Srinivasan a citizen of India residing at 1613, Air India Lane,
Trichy Road, Coimbatore — 641 018, Tamil Nadu, India, having Permanent Account No.AJQPM1542C;

406
The Authorised Share Capital of the Company is  20,00,00,000/- (Rupees twenty crores only) divided
into 4,00,00,000 (Four Crore) equity shares of ¢ 5/- (Rupees Five only) each, with power to increase or
reduce the capital of the Company and to divide the shares in the capital for the time being into several
classes and to attach thereto respectively such preferential, deferred, qualified or special rights,
privileges or conditions as may be determined by or in accordance with the Articles of Association of the
Company and to vary, modify, amalgamate or abrogate any such rights, privileges or conditions in such
manner as may be for the time being provided by the Articles of Association of the Company.

* Altered vide Special Resolution passed at the Extraordinary General meeting held on 30.04.2018

Allotment of Shares

4.

Subject to the applicable provisions of the Act and these Articles, the shares of the Company shall be
under the control of the Directors who may allot or otherwise dispose of the same.

Alteration of share capital

Ss

Subject to the provisions of Section 61 of the Act and the provisions of these Articles, the Company may,
by a resolution passed in the General Meeting:

(a) increase its Share Capital by such amount and with such terms, rights and conditions as it thinks
expedient by issuing new shares for a premium or for a discount;

(b) consolidate and divide all or any of its share capital into shares of larger amount than its existing
shares;
() convert all or any of its fully paid up shares into stock and reconvert that stock into fully paid

up shares of any denomination;

(d) sub-divide its shares or any of them into shares of smaller amount than is fixed by the
memorandum of association of the Company, so that in the sub-division, the proportion between
the amount paid and the amount if any unpaid on each reduced share shall be the same as it was
in the case of the share from which the reduced share is derived; or

(e) cancel shares which at the date of passing of the resolution have not been taken or agreed to be
taken by any person and diminish the amount of its share capital by the amount of the shares so
cancelled.

Dematerialization of Securities

6.

a. Notwithstanding anything contained in these Articles, the Company shall be entitled to
dematerialize its existing Securities, rematerialize its Securities held in the Depositories and/or
to offer its fresh Securities in a dematerialized form pursuant to the Depositories Act, and the
rules framed thereunder, if any.

b. Subject to the applicable provisions of the Act, the Company may exercise an option to issue,
dematerialize, hold the securities (including shares) with a Depository in electronic form and
the certificates in respect thereof shall be dematerialized, in which event the rights and
obligations of the parties concerned and matters connected therewith or incidental thereto shall
be governed by the provisions of the Depositories Act.

c If a Person opts to hold his Securities with a Depository, the Company shall intimate such
Depository the details of allotment of the Securities and on receipt of the information, the
Depository shall enter in its record the name of the allottee as the Beneficial Owner of the

Securities.
d. Securities in Depositories to be in fungible form:
e All Securities held by a Depository shall be dematerialized and be held in fungible form.

408
Rights of Depositories & Beneficial Owners:

i. Notwithstanding anything to the contrary contained in the Act or these Articles, a
Depository shall be deemed to be the Registered Owner for the purposes of effecting
transfer of ownership of Securities on behalf of the Beneficial Owner.

ii. Save as otherwise provided in (i) above, the Depository as the Registered Owner of the
Securities shall not have any voting rights or any other rights in respect of the Securities
held by it.

iii. Every person holding shares of the Company and whose name is entered as the

Beneficial Owner in the records of the Depository shall be deemed to be a Shareholder
of the Company.

iv. The Beneficial Owner of Securities shall, in accordance with the provisions of these
Articles and the Act, be entitled to all the rights and subject to all the liabilities in
respect of his Securities, which are held by a Depository

v. All the aforesaid provisions with respect to rights of depositories and beneficial owners
are subject to Article (s) 8 to 29 of the Articles of Association of the Company.

Except as ordered by a court of competent jurisdiction or as may be required by Law required
and subject to the applicable provisions of the Act, the Company shall be entitled to treat the
person whose name appears on the Register as the holder of any share or whose name appears
as the Beneficial Owner of any share in the records of the Depository as the absolute owner
thereof and accordingly shall not be bound to recognize any benami trust or equity, equitable
contingent, future, partial interest, other claim to or interest in respect of such shares or (except
only as by these Articles otherwise expressly provided) any right in respect of a share other than
an absolute right thereto in accordance with these Articles, on the part of any other person
whether or not it has expressed or implied notice thereof but the Board shall at their sole
discretion register any share in the joint names of any two or more persons or the survivor or
survivors of them subject to the Company shall not be bound to register more than 3 (three)
persons as the joint holders of any share except in the case of executors or trustees of a deceased
member.

Register and Index of Beneficial Owners:

The Company shall cause to be kept a register and index of members with details of shares and
debentures held in materialized and dematerialized forms in any media as may be permitted by
Law including any form of electronic media. The register and Index of Beneficial Owners
maintained by a Depository under the Depositories Act shall be deemed to be a register and
index of members for the purposes of this Act. The Company shall have the power to keep in
any state or country outside India a register resident in that state or country.

Cancellation of Certificates upon surrender by Person:

Upon receipt of certificate of securities on surrender by a person who has entered into an
agreement with the Depository through a participant, the Company shall cancel such certificates
and shall substitute in its record, the name of the Depository as the registered owner in respect
of the said Securities and shall also inform the Depository accordingly.

Service of Documents:

Notwithstanding anything contained in the Act or these Articles to the contrary, where
Securities are held in a Depository, the records of the beneficial ownership may be served by
such Depository on the Company by means of electronic mode or by delivery of floppies or

discs.

Transfer of Securities

409
Capitalisation

Fe

i. Consequent upon the termination of the Shareholders agreement and its provisions
contained here in the Articles of the Association of the Company, nothing contained
in Section 56 of the Act or these Articles shall apply to a transfer of Securities effected
by transferor and transferee both of whom are entered as Beneficial Owners in the
records of a Depository.

ii. In the case of transfer or transmission of shares or other Securities where the Company
has not issued any certificates and where such shares or Securities are being held in
any electronic or fungible form in a Depository, the provisions of the Depositories Act
shall apply.

iii. All the aforesaid provisions with respect to rights of depositories and beneficial owners
with respect to transfer of securities are subject to Article (s) 8 to 29 of the Articles of
Association of the Company.

Allotment of Securities dealt with in a Depository:

Notwithstanding anything in the Act or these Articles, where Securities are dealt with by a
Depository, the Company shall intimate the details of allotment of relevant Securities thereof to
the Depository immediately on allotment of such Securities.

Certificate Number and other details of Securities in Depository:

Nothing contained in the Act or these Articles regarding the necessity of having certificate
number/distinctive numbers for Securities issued by the Company shall apply to Securities held
with a Depository.

Provisions of Articles to apply to Shares held in Depository:

Except as specifically provided in these Articles, the provisions relating to joint holders of
shares, calls, lien on shares, forfeiture of shares and transfer and transmission of shares shall be
applicable to shares held in Depository so far as they apply to shares held in physical form
subject to the provisions of the Depositories Act.

Depository to furnish information:

Every Depository shall furnish to the Company information about the transfer of securities in
the name of the Beneficial Owner at such intervals and in such manner as may be specified by
Law and the Company in that behalf.

Option to opt out in respect of any such Security:

Subject to compliance with applicable Law, if a Beneficial Owner seeks to opt out of a
Depository in respect of any Security, he shall inform the Depository accordingly. The
Depository shall on receipt of such information make appropriate entries in its records and shall
inform the Company. The Company shall within 30 (thirty) days of the receipt of intimation
from a Depository and on fulfilment of such conditions and on payment of such fees as may be
specified by the regulations, issue the certificate of securities to the Beneficial Owner or the
transferee as the case may be.

The Company, in a General Meeting of the Members, in person or proxy or by any other means, as may
be permitted may on the recommendation of the Board with in the permissible provisions of the
Companies Act, 2013 and the rules made there under, direct capitalization of the whole or any part of the
undivided profits for the time being of the Company or the whole or any part of the Reserve Fund or
other funds of the Company including the moneys in the Securities Premium Account and the Capital
Redemption Reserve Account or the premiums received on the issue of any shares, debentures or
debenture-stock of the Company and that such sum be accordingly set free for the purpose, (1) by the

410
issue and distribution, among the holders of the shares of the Company or any of them, in accordance
with their respective rights and interests and in proportion to the amounts paid or credited as paid up
thereon, of paid-up shares, debentures, debenture-stock bonds or other obligations of the Company, or
(2) by crediting any shares of the Company which may have been issued and are not fully paid up, in
proportion to the amounts paid or credited as paid up thereon respectively, with the whole or any part of
the same.

For the purposes above set out the Company may, subject to the provisions contained in section 63,
apply: (i) its free reserves, (ii) the Securities Premium Account subject to the provisions of Section 52(2)
of the said Act; (iii) the Capital Redemption Reserve Fund subject to the provisions of Section 55(4) of
the said Act; and (iv) such other reserves or account as may be applied for issue of bonus shares.

Reduction of Share Capital

8.

Subject to the provisions of Section 66 of the Act, the Company may by a Special Resolution reduce its
capital in any way and in particular may:-

(a) extinguish or reduce the liability on any of its shares in respect of the share capital not paid up;

(b) either with or without extinguishing or reducing the liability on any of its shares, cancel any
paid up Share Capital which is lost or is unrepresented by available assets; or

( either with or without extinguishing or reducing the liability on any of its shares, pay any paid
up Share Capital which is in excess of the wants of the Company,

and may, if and so far as is necessary alter its memorandum of association by reducing the amount of its
share capital and of its shares accordingly.

Ownership and Share Retention

9.

(a) SR and KG shall jointly maintain a direct aggregate voting and economic interest (which interest
shall include the right to vote and the right to receive a proportionate share of dividends, profits,
liquidation proceeds, and other similar amounts distributed by the Company) in: (i) the
Company equal to at least 55% (fifty five per cent) of the Share Capital (“Sponsors
Threshold”), of which SR shall, subject to the provisions of these Articles, maintain, at all
times, a direct aggregate voting and economic interest (which interest shall include the right to
vote and the right to receive a proportionate share of dividends, profits, liquidation proceeds,
and other similar amounts distributed by the Company) in the Company equal to at least 51%
(fifty one per cent) of the Share Capital (“SR Threshold”). The Sponsors Threshold shall be
deemed to be 65% (sixty five per cent) of the Share Capital if SM is deemed to be a Sponsor in
terms of the Shareholders Agreement; provided however that if the shareholding of SM in the
Company falls below 15% (fifteen per cent) of the Share Capital, the Sponsors Threshold shall
also fall by such amount, subject to Sponsors Threshold being maintained. The Sponsors and
SM shall maintain all their shareholding and interests in the Company, free of all Encumbrances
or rights of Third Parties (other than as set out in these Articles). The Sponsors and SM shall
not, save and except Permitted Transfers as per Article 10 (Permitted Transfers) below, Transfer
any of their shareholding in the Company, without the prior written consent of the Investors. It
is clarified that the Investors shall have the discretion to grant or withhold consent in respect of
any such Transfer. In the event the Investors grant consent for any such Transfer, the Sponsors
and/or SM shall adhere to the terms and conditions imposed by the Investors (including without
limitation the Investors’ right to tag along the Equity Shares held by them) at the time of granting
such consent.

(b) Subject to the provisions of Article 9 (a) above and Article 13 (Restricted Transfers), if a
Sponsor or SM wishes to Transfer any Equity Shares or any Share Equivalents to a Person that
is not already a Shareholder, it shall require as a condition of the Transfer that such transferee
executes an Accession Instrument confirming that it shall be bound by these Articles as a
Sponsor in respect of the shares in the Company and/or Share Equivalents Transferred to that
transferee.

411
Permitted Transfers

10.

(a) Subject to the maintenance of Sponsors Threshold and SR Threshold, SR and KG shall be
entitled to Transfer their respective Equity Shares inter-se upon providing a prior written
intimation in this regard to the Investors.

(b) SM shall be entitled to Transfer the Equity Shares held by him to only SR, upon providing a
prior written intimation in this regard to the Investors. In the event that SR chooses not to acquire
all the Equity Shares proposed to be Transferred by SM, such shares shall continue to be held
by SM until termination of the Shareholders Agreement.

Permitted Encumbrance

11.

12.

The Sponsors jointly and SR in his personal capacity shall not be entitled to create any Encumbrance of
any description on any of their or his Equity Shares or Share Equivalents to the extent of Sponsors
Threshold or SR Threshold, as the case may be. In other words, to the extent of Sponsors Threshold or
as the case may be SR Threshold, no Encumbrance of any description can be created on the Equity Shares
or Share Equivalents held by the Sponsors. It is further clarified that SM shall not be entitled to create
any Encumbrance of any description on any Equity Share or Share Equivalents held by him in the
Company as of the date of execution of the Shareholders Agreement.

The Company, the Sponsors and the Board of Directors shall be bound to refuse to recognize any
purported Transfer of Equity Shares of the Company or Share Equivalents in violation of these Articles
or record or register any such Transfer of such shares or Share Equivalents. Any Transfer made in breach
of these Articles shall be null and void.

Restricted Transfers

13.

14.

As long as any of the Investors are Shareholders in the Company or hold any Share Equivalents:

@ the Relevant Parties shall not Transfer any shares in the Company or Share Equivalents to any
of the individuals or entities named on (A) lists promulgated by the United Nations Security
Council or its committees pursuant to resolutions issued under Chapter VII of the United
Nations Charter; or (B) the World Bank Listing of Ineligible Firms (see
www.worldbank.org/debarr);

(ii) the Sponsors shall cause the Company to, and the Company shall, refuse to recognize any
purported Transfer of shares in the Company or Share Equivalents in violation of this Article
13 (Restricted Transfers), or record or register any such Transfer of shares in the Company or
Share Equivalents in its share registry. Any Transfer made in breach of this Article 13
(Restricted Transfers), shall be null and void;

For avoidance of doubt, Article 13 (i) and Article 13 (ii), shall not apply in the case of sales of shares of
the Company or Share Equivalents on any trading market by any of the Sponsors or the Investors after
the consummation of a Listing.

Investors’ Right to Transfer

15.

Each Investor shall be always entitled to freely Transfer the Shares of the Company held by such Investor,
subject to the provisions of this Article 15 and Article 29 (Right of First Offer), to any Person (“Investor
Third Party Transferee”), subject to such Person executing a Deed of Adherence. In the event that the
proposed Transfer of such beneficial (direct or indirect) interest by any of the Investors is by way of
placement with other investors of any shares owned by such Investor, the Company shall, take such steps
as may reasonably be deemed necessary by such Investor to facilitate such Transfer by the Investor,
including without limitation, access to necessary information and relevant records.

Transfer to Affiliates

16.

The provisions of Article 29 (Right of First Offer) shall not apply in relation to any Transfer of Investor
Shares to any Affiliates of the relevant Investor subject to: (i) such Affiliate executing a Deed of

412
Adherence, (ii) such Affiliate agreeing to re-transfer such Equity Shares to the relevant Investor (or its
Affiliate) upon ceasing to be an Affiliate of such Investor. Notwithstanding anything stated in these
Articles, the Investors shall be free to assign all its rights under the Shareholders Agreement including
the Special Rights and Investor Director Rights to any of its Affiliates provided such Affiliate (a) executes
a Deed of Adherence; and (b) is agreeable to re-assign those Special Rights back to such Investor upon
ceasing to be an Affiliate of such Investor. Nothing contained herein shall be construed as permitting
both the Investors and the Assignee to enjoy Investor Director Rights simultaneously and there cannot
not be more than one Affiliate holding the Special Rights at the same time.

Transfer of Special Rights

17.

An Investor may transfer its Special Rights under these Articles to the Investor Third Party Transferee.
Only so long as the Investor, or the Investor Third Party Transferee, as the case may be, continues to
hold the Rights Threshold, they will be entitled to the Special Rights. “Rights Threshold” shall mean
holding either the (i) 50% (fifty per cent) of the number of respective Investor Shares held by such
Investor reckoned as Shares on a Fully Diluted Basis; or (ii) 5% (five per cent) of the Share Capital of
the Company, whichever is lower. Investor concerned has the absolute discretion to transfer the Special
Rights to such Investor Third Party Transferee or retain the Special Rights with it until cessation of those
rights in terms of the Shareholders Agreement. Both the Investor and the Investor Third Party Transferee
shall not be entitled to the right to appoint Investor Director envisaged under Article 72 (Board
Composition) at the same time. Subject to Rights Threshold, any second and subsequent transferee of the
Equity Shares who acquires any shares from such Investor Third Party Transferee, shall be entitled to
the Special Rights which may have been transferred to it by the Investor Third Party Transferee. In the
event that either of the Investors ceases to hold the Rights Threshold following the Transfer to the
Investor Third Party Transferee, such Investor shall no longer be entitled to Special Rights and shall only
be entitled to the Essential Rights so long as the Investor concerned continues to hold not less than 2%
(two per cent) of the Share Capital of the Company. It is clarified that, except for the Special Rights,
which may be transferred pursuant to this Article 17, all other rights of the Investors under the
Shareholders Agreement shall be freely transferable by the Investors to any Third Party.

Cessation of Special Rights

18.

In the event that any of Investors Transfer more than 70% (seventy per cent) of the number of the Investor
Shares reckoned as Shares on a Fully Diluted Basis held by such Investor in one or more Transfer(s), the
Investor shall, upon completion of such Transfer(s), cease to have any Special Rights. However the
Investor concerned shall be entitled to Essential Rights so long as it continues to hold not less than 2%
(two per cent) of the Share Capital of the Company.

Preemptive and Anti-Dilution Rights

19.

(a) The Investors shall have the right to subscribe to their respective pro-rata share of New
Securities (as defined below) in the manner set out below. The Company and the Sponsors shall
ensure that the Investors are protected against any dilution of their shareholding in the Company
in the event of any share split, bonus shares, share dividends, consolidation of shares,
combinations and such similar events. In the case of a dilution event other than by virtue of
transfer of Investor Shares by such Investor to any Affiliate or a Third Party, the Company shall
be bound to, and the Sponsors shall be bound to co-operate with the Investors and the Company
such that the Company forthwith takes all necessary steps to issue additional Equity Shares or
other securities convertible into Equity Shares to the Investors as would enable the Investors to
maintain their respective proportion of shareholding reckoned as Shares on a Fully Diluted Basis
in the Company in accordance with the terms and conditions of these Articles, in accordance
with Applicable Law.

(b) Subject to Article 102 (Investor Consent Rights), if the Company proposes to issue New
Securities, it shall give the Investors written notice of its intention, describing the type and
number of New Securities to be issued, the price at which they are proposed to be issued, the
Persons to whom they are proposed to be issued and other terms and conditions of such issuance,
and specifying each of the Investor's pro-rata share of such issuance, such that each Investor can
maintain the proportion of its shareholding in the Company reckoned as Shares on a Fully
Diluted Basis (the "Issue Notice"). Each Investor shall have thirty (30) days after the receipt of

413
20.

21.

22.

23.

24,

25:

the Issue Notice (the "Notification Period") to give the Company written notice that it agrees
to purchase part or all of its pro-rata share of the New Securities for the price and on the terms
specified in the Issue Notice (the "Subscription Notice"). The Investors may also notify the
Company in the Subscription Notice that it is willing to buy a specified number of the New
Securities in excess of its pro-rata share of such issuance ("Additional Securities") for the price
and on the terms specified in the Issue Notice. If the Investors fail to give the notice required
under this Article 19 (b) solely because of the Company’s failure to comply with the notice
provisions of Clause 10.1 (Notices) of the Shareholders Agreement, then the Company shall not
issue any New Securities pursuant to this Article 19 and if purported to be issued, such issuance
of securities shall be void. An Investor may assign to its Affiliate the right to acquire the
securities pursuant to this Article 19.

For the avoidance of doubt, the Company shall not issue any New Securities until the expiry of the
Notification Period.

If any of the Investors has indicated that it is willing to buy Additional Securities, the Company shall
give such Investor written notice of the total number of New Securities not taken up by other
Shareholders of the Company or any other Third Party, as the case may be ("Unpurchased Securities")
within five (5) days of the expiry of the Notification Period. Such notice shall specify the particulars of
the payment process for the New Securities to be purchased by such Investor pursuant to the Subscription
Notice.

Within twenty one (21) Business Days after expiry of the Notification Period, the Company shall ensure
that the issuance of the New Securities is approved by the Board and/or the Shareholders, (The date of
approval of issuance of securities by the Board of Directors shall be known as “Approval Date”) as may
be required under the Applicable Law.

The issue of the New Securities, shall be completed within 21 (twenty one) Business Days of the
Approval Date, including

a. issuance of any securities to any of the Investors based on the Subscription Notice;

b. if any of the Investors has indicated that it is willing to buy Additional Securities, such Investor
shall also subscribe for the lower of the number of Additional Securities and the number of
Unpurchased Securities;

@ the Investor shall pay the relevant consideration to the Company or relevant registrar;

d. the Company shall register in its share registry and in the name of the Investor the number of
New Securities for which the Investor has subscribed; and

e the Company shall issue new certificates to the Investor representing the number of New
Securities for which the Investor has subscribed.

In the event that the issue of the New Securities, is not completed within 21 (twenty one) Business Days
from the Approval Date, the provisions of Articles 19 to 28 shall become applicable de novo. All
Authorisations required in issuing the New Securities shall be obtained by the Company. Any time
required to obtain any Governmental Approvals for issuing the New Securities to any of the Investors
shall be excluded from the aforementioned 21 (twenty one) Business Days period in Article 23 above.

For the purposes of Articles 19 to 28, "New Securities" shall mean any shares of the Company or any
Share Equivalents, including already existing shares of the Company; provided, that the term "New
Securities" does not include:

a. equity shares (or options to purchase equity shares) issued or issuable to officers, Directors and
employees of, or consultants to, the Company pursuant to an employee stock plan that has been
approved by the Board of Directors;

b. equity shares issuable upon the exercise or conversion of Share Equivalents in existence as of
the date of the Shareholders Agreement;

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26.

27.

28.

c equity shares issued or issuable in connection with any stock split or stock dividend of the
Company;

d. equity shares issued or issuable pursuant to the bona fide acquisition of another Person by the
Company by merger, purchase of substantially all of the assets of such Person, or exchange of
shares or other transaction, in each case, approved by the Board of Directors; and

e equity shares issued or issuable as part of the Listing.

In the event of an issue of, or subscription to, any New Securities, notwithstanding the Investors’
subscription or participation in such issuance, if the Company offers any New Securities at a price that
is lower than the price per Equity Share paid by the Investor with respect to the subscription to the
Investor Shares, such Investors’ subscription price per Investor Share shall be adjusted in a manner
acceptable to the Investor, in accordance with Applicable Law, such that the average price of such
Investor with respect to all its Investor Shares shall be equal to the lowest price at which the New Security
is issued. In the event that any such adjustment requires any Authorisations and / or Governmental
Approvals, the Company and the Sponsors shall make best efforts to obtain such Authorisations and / or
Governmental Approvals. At the time of any event contemplated in this Article 26, the Company and the
Sponsors shall be bound to co-operate with the Investors such that the Company forthwith takes all
necessary steps to issue additional equity shares and/or preference shares or any Share Equivalents (as
the Investors may choose) to the Investors at the lowest price permissible under Applicable Law and/or
compensate the Investors in any other manner (as the Investors may choose) in accordance with the terms
and conditions of this Article.

The Company and the Sponsors shall not, without the prior written consent of the Investors, grant rights
or terms of investment to any Person that are more favourable than those offered to the Investors under
these Articles. If the Investors consent to such investment, then the same rights shall also be provided to
the Investors.

The Company shall not issue any Equity Shares or Share Equivalents to any Person unless such Person:

a. executes a Deed of Adherence confirming that it shall be bound by the Shareholders Agreement
as a Shareholder in respect of all Equity Shares in the Company and/or Share Equivalents held
or to be held by such Person and promptly provides copies of such executed Deed of Adherence
to each of the other parties to the Shareholders Agreement; and

b. delivers to each of the other Parties to the Shareholders Agreement: (i) a Certificate of
Incumbency and Authority in a form as set out in Schedule 2 of the Shareholders Agreement;
(ii) a copy of the applicable corporate documentation of such Person authorizing the execution
of the Deed of Adherence and the subscription or purchase of the applicable Equity Shares in
the Company and/or Share Equivalents; and (iii) any other documentation reasonably requested
by any party to the Shareholders Agreement.

Right of First Offer - Investor Transfer

29.

In the event that any of the Investors proposes to Transfer (“Selling Investor”) all or any portion of
Equity Shares held by it in the Company and/or Share Equivalents (the “Transfer Shares”), such Selling
Investor shall first give a notice thereof (the “RFO Notice”) to the other Investor (“Non Selling
Investor”) and SR (the “Offeree Sponsor”) setting forth the number of Transfer Shares proposed to be
Transferred. The Non Selling Investor and Offeree Sponsor shall be collectively referred to as the
“Offerees”. Such RFO Notice shall not be amended by the Selling Investor till the expiry of the Offering
Period.

a. Within thirty (30) Business Days from receipt of the RFO Notice (the “Offering Period”), each
of the Offerees shall have an option to acquire up a pro-rata portion of the Transfer Shares,
based on the proportion that their respective shareholding in the Company bears to their
aggregate shareholding in the Company (“Acceptance Shares”), by delivering a written notice
(the “Acceptance Notice”) to the Selling Investor either (i) stating the number of Acceptance
Shares it is willing to acquire and the price per Transfer share it is willing to pay (“Offer Price”)

415
or (ii) its refusal to purchase the Transfer Shares. In the event that any of the Offerees do not
exercise their right to acquire all the Acceptance Shares that such Offeree was eligible to
acquire, the other Offeree shall have the right to additionally acquire such additional Transfer
Shares not acquired by such Offeree by issuance of a separate Acceptance Notice in this regard
at the Offer Price. For this purpose, simultaneous with the issue of an Acceptance Notice, each
Offeree issuing such Acceptance Notice, shall inform in writing to all the other Offerees the
number of Acceptance Shares he / it intends to acquire from the Selling Investor. Each
Acceptance Notice shall be irrevocable.

In the event the Offerees;

@. are unwilling to purchase the Transfer Shares for any reason whatsoever and have not
offered an Offer Price for the Transfer Shares, or

(ii). fail to respond to the RFO Notice within the prescribed time, the Offerees shall be
deemed to have rejected the right of first offer set out in this Article 29, in which event,
the Selling Investor shall be entitled to sell the Transfer Shares to any Investor Third
Party Transferee on such terms and conditions as it deems fit; or

(iii). have submitted the Acceptance Notice within the Offering Period, but the Offer Price
is not acceptable to the Selling Investor, then the Selling Investor shall be entitled to
sell the Offer Shares to a Investor Third Party Transferee, at a price which is not less
than the Offer Price and on the same terms and conditions as offered to the Offerees.

The entire sale and purchase of the Transfer Shares to the Investor Third Party Transferee (if
applicable) shall be completed within a period of 120 (one hundred and twenty) Business Days
from the expiry of the Offering Period.

If an Offeree delivers a timely Acceptance Notice, which is acceptable to the Selling Investor,
the same shall constitute a binding agreement to acquire the relevant Transfer Shares. On the
Sixtieth (60) Business Day after the end of the Offering Period (or such other date as may be
agreed in writing by the Selling Investor and the Offerees who have delivered an Acceptance
Notice) ( the “RFO Closing date”), the Selling Investor shall transfer the relevant number of
Transfer Shares, calculated in accordance with Article 29 to each Offeree that has delivered an
Acceptance Notice and each such Offeree shall pay to the Selling Shareholder, the purchase
price for such number of Transfer Shares at the Offer Price set out in the Acceptance Notice,
provided that the Selling Investor shall have no obligation to transfer any Transfer Shares unless
the Selling Shareholder receives payment in full of the purchase price for the Transfer Shares
from the relevant Offeree that has delivered an Acceptance Notice. Between the end of the
Offering Period and the RFO Closing Date, each Offeree that has delivered an Acceptance
Notice shall obtain any Authorisations, if required in connection with the transfer of the Transfer
Shares before the RFO Closing Date.

The Selling Investor shall not make (or be required to make) any representation or warranty to
the Offeree that served an Acceptance Notice, other than good title to the Transfer Shares,
absence of Encumbrances with respect to the Transfer Shares, customary representation and
warranties concerning the Selling Investor’s power and authority to undertake the proposed
transfer, and the validity and enforceability of the Selling Investor’s obligations in connection
with the proposed transfer.

If (I) the Selling Investor does not receive payment in full of the purchase price for all the
Transfer Shares on the RFO Closing Date; or (II) any Authorisation required in connection with
the transfer of the Transfer Shares has not been obtained by the RFO Closing Date, then the
Selling Investor shall be free to transfer all or any part of the Transfer Shares to the Investor
Third Party Transferee within a period of 120 (one hundred and twenty) Business Days after
the RFO Closing Date (as the case may be) at a price per Transfer Share not less than the
minimum price per Transfer Share specified in the RFO Notice. If the Selling Investor does not
complete the transfer within such period, any subsequent proposed Transfer by it of some or all
of the Transfer Shares shall again be subject to the provisions of this Article 29.

416
30.

No Transfer may be made pursuant to Article 29 above, unless the transferee of the Transfer Shares
executes a Deed of Adherence and unless the transferee complies in all respects with the other applicable
provisions of these Articles and Applicable Law.

Investors’ Right to Exit

Qualified IPO

31.

32.

On or before the expiry of 42 (forty two) months from the Closing Date (“IPO Deadline Date”), the
Company shall and the Sponsors shall cause the Company to complete an IPO of the Company at the
price that shall be at least the Qualified IPO Price (“Qualified IPO”), which shall be undertaken in the
manner set out in Article 32 below.

The Company and the Sponsors shall seek the prior written consent of the Investors, which shall not be
unreasonably withheld by the Investors, to determine all key matters with respect to the Qualified IPO
including, the timing of undertaking such Qualified IPO, offer price per Equity Share, the mode of the
issue, the size of the issue, the lead managers and merchant banker, legal counsel, and such related
matters in relation to the Qualified IPO, which may be undertaken by way of (i) a fresh issuance of Equity
Shares and/or (ii) an offer for sale of existing Equity Shares. In case the Qualified IPO comprises an offer
for sale of the Equity Shares from the existing Shareholders, (a) the Investors shall have the right, but
not the obligation, to participate in the Qualified IPO by offering for sale, at their sole discretion, up to
75% (seventy five per cent) of the Equity Shares, being offered for sale in such Qualified IPO (“Investor
Aggregate Limit”), proportionate to their respective shareholding in the Company, or such other
mutually agreed proportion inter - se the Investors and (b) the Sponsors and SM shall have the right to
offer up to 25% (twenty five per cent) of the Equity Shares, being offered for sale in such Qualified IPO,
proportionate to their respective shareholding in the Company or such other mutually agreed proportion
between the Sponsors and SM. In the event that any of the Investors choose not to offer all the Equity
Shares that it may be entitled to offer in such offer for sale, the other Investor may, utilize any part of
whole of such unutilized portion of the Investor and offer such additional Equity Shares held by it up to
the maximum Investor Aggregate Limit.

Investor Request Qualified IPO

33.

34,

35.

36.

At any time after the expiry of the IPO Deadline Date, any Investor (“IPO Requesting Investor”) may,
obligate the Company to undertake an IPO at the Qualified IPO Price (“Investor Request Qualified
IPO”) as per the provisions of Articles 33 to 38, by delivering a written notice in this regard to the
Company, the Sponsors and the other Investor (“IPO Request Notice”). Within a period of 30 (thirty)
Business Days from the date of the IPO Request Notice, the other Investor shall have the right to, but not
the obligation to deliver a written notice to the Company, the Sponsors and the IPO Requesting Investor
(“IPO Consent Notice”), to participate in the Investor Request Qualified IPO, in the same capacity as
the IPO Requesting Investor, and the other Investor shall, upon delivery of such notice also be deemed
to be an IPO Requesting Investor for the purposes of the Articles 33 to 38. In the event such other Investor
elects to not participate in the Investor Request Qualified IPO, such Investor shall be deemed to be a
Non-Participating Investor for the purpose of the Articles 33 and 36.

The Investor Request Qualified IPO may be undertaken by way of an Offer for Sale (“OFS”) with or
without a fresh issuance of Equity Shares.

With respect to an OFS, the IPO Requesting Investor shall have the right, but not the obligation, to offer
for sale such number of its Equity Shares as it may desire leaving the remaining quantity of Equity Shares
that may be offered in such Investor Request Qualified IPO, for being utilized by the Investor who has
not delivered a IPO Consent Notice for the Investor Request Qualified IPO (“Non-Requesting
Investor”), SM and Sponsors (between them Non Requesting Investor enjoying a preference).

The minimum number of Equity Shares to be issued in order to consummate a Listing as per Applicable
Law shall be known as Minimum IPO Size. The difference between (a) the Minimum IPO Size and (b)
the aggregate number of Equity Shares proposed to be offered through OFS by all the parties under
Article 35 above shall be deemed to be the Shortfall. Such Shortfall shall be made up by a fresh issuance
of Equity Shares and / or the Sponsors, SM and the IPO Requesting Investor may be required to offer for
sale, the Equity Shares held by them, proportionate to their respective shareholdings in the Company or

417
37.

38.

such other mutually agreed proportion between them, such that the total number of Equity Shares being
offered in such OFS, complies with the Minimum IPO Size. It is expressly clarified that the Non-
Participating Investor shall have the right but not the obligation to tender Equity Shares held by it to
make good the Shortfall, at its sole discretion.

The objective of the parties shall be to facilitate and ensure consummation of the Investor Request
Qualified IPO.

The IPO Requesting Investor will have the right to determine, in conjunction with the Company, all key
matters with respect to the Qualified IPO including the timing of undertaking such Qualified IPO, offer
price per Equity Share, the mode of the issue, the size of the issue, the lead managers and merchant
banker, legal counsel, and such related matters in relation to the Qualified IPO except that the IPO
Requesting Investor will have no right to obligate the IPO Non-Requesting Investor to offer its Equity
Shares in the Qualified IPO.

Other IPO

39.

Notwithstanding and without prejudice to the obligations regarding a Qualified IPO or an Investor
Request Qualified IPO, Sponsors have the right, but with the prior written consent of the Investors, at
any time prior to the IPO Deadline Date, to commence an Initial Public Offer (“Other IPO”).

Terms Applicable to any IPO

40.

41.

42.

43,

44,

45.

The Company and the Sponsors shall take all such steps, and extend all cooperation to each other, the
Investors and the investment banks, lead managers, underwriters and other persons, including any
Authority, as may be required for the purpose of expeditiously making and completing an IPO, including
(i) preparing and signing the relevant offer documents; (ii) conducting road shows with adequate
participation of senior management; (iii) entering into appropriate and necessary agreements;
(iv) providing all necessary information and documents required to prepare the offer documents; (v)
filing of offer documents with appropriate Authorities; and (vi) obtaining necessary consents from
relevant Persons in relation to such a IPO, as the case may be. The Company and the Sponsors shall
ensure that the Qualified IPO or the Investor Request Qualified IPO, as the case may be, complies with
Applicable Law and listing requirements of any Relevant Market.

The Company and the Sponsors shall ensure that the Investors, shall not, upon listing or sale of the Equity
Shares, held by it, be required to give any warranties or indemnities to any underwriter, broker, Relevant
Market, any Authority or any other Person other than in relation to title of the Equity Shares held by it.

Subject to Applicable Law, all costs, charges, fees and expenses, including those of the merchant banker
and any other agents, banks, managers or advisors involved with the IPO, incurred in connection with
the same shall be borne and paid by solely the Company.

The Company shall comply with all ongoing listing costs and requirements including, inter alia, payment
of all present and future costs relating to the listing and sponsorship, underwriting fees, listing fees,
merchant bankers fees, bankers fees, brokerage, commission and any other costs that may be incurred
due to the changes to the Applicable Law for the time being in force and all intermediaries, agents and
managers shall be appointed by the Company in consultation with the Investors and at the cost of the
Company.

The Company and the Sponsors shall jointly and severally indemnify the Investors and their respective
Affiliates, as well as their officers against any losses arising out of any misrepresentation, inadequate
disclosure or incorrect and misleading information contained either in the IPO prospectus or other
publicity material and/or future representation and information or any violation of Applicable Law
(including but not limited to, securities laws and exchange requirements applicable to any Offering).

Subject to Applicable Law, the Company and the Sponsors shall ensure that such percentage as

prescribed under Applicable Law, of the Share Capital of the Company, reckoned as Shares on a Fully
Diluted Basis, is issued / sold to the public pursuant to Articles 31 to 38.

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46.

47.

48.

49.

Subject to Applicable Law, the Company shall ensure that the Investors and / or their Affiliates and SM
are not in any way liable or responsible for the prospectus to be filed by the Company or otherwise
classified as a “promoter” of the Company for any purpose whatsoever in relation to such IPO.

In the event of a Qualified IPO or a Investor Request Qualified IPO, if the Equity Shares of the Investors
may be subject to any mandatory “close periods”, “lock-ups” or other restrictions on Transfer under the
rules of the relevant stock exchange on which the Equity Shares are to be listed or any other requirement
of Applicable Law, then: (i) the Sponsors shall (A) first offer the Equity Shares held by them pro rata
inter - se the Sponsors (or in such ratio as they may mutually decide) to satisfy any requirements under
Applicable Law relating to restrictions on Transfer, (B) ensure that any Equity Shares held by the
Investors are not subject to any such lock-up restrictions, and (C) take such actions under Applicable
Law (with the prior approval of the Investors) as are necessary to ensure that the Equity Shares held by
the Investors are not subject to any such lock-up restrictions; and (ii) notwithstanding the foregoing, if
the Equity Shares held by the Investors are subject to mandatory “lock-up” restrictions, then the Sponsors
shall also subject the Equity Shares held by them to similar “lock-up” restrictions that are binding on the
Investors (pursuant to contract or otherwise) to the same extent as the restrictions imposed on the
Investors.

Subject to the provisions of these Articles, during the period in which the Company undertakes the
Qualified IPO or the Investor Request Qualified IPO, as the case may be, and subsequent to the
completion of the Qualified IPO or the Investor Request Qualified IPO, as the case may be, to the
maximum extent permitted by Applicable Law, the provisions of the Shareholders Agreement
incorporated in these Articles shall continue to apply and such provisions of the Shareholders Agreement
shall continue to be incorporated in the Charter Documents.

In the event of any initial public offering, subject to Applicable Law, the Company and the Sponsors
shall ensure that all Equity Shares of the Company and Share Equivalents (upon their conversion) are
included in the Listing such that Investors Shares will be freely tradable by Investors immediately
following the Listing.

Exit Rights

50.

51.

If the Company and / or the Sponsors fail to complete the Qualified IPO or the Investor Request Qualified
IPO within a period of 54 (Fifty Four) months from the Closing Date (“Exit Trigger Date”), then the
Investors may, by notice to the Sponsor and the Company (“Exit Option Notice”), require the Sponsors
and/or the Company, subject to Applicable Law including the receipt of the requisite Governmental
Approvals, the sale of all or some of the Investor Shares at the higher of the (A) FMV Price and (B) ata
price which would result in an IRR of 18% (Eighteen) on the Aggregate Subscription Amount, as the
case may be, calculated from the respective Investment Dates till the date of the Exit Trigger Date (“Exit
Option Price”), by adopting either or all of the following:

a. to cause the Company to buyback all or part of the Equity Shares held by the Investors
(“Buyback Shares”) in accordance with Applicable Law (including the Act), and procure that
the Company shall pay to the Investors, the relevant Exit Option Price for the Buyback Shares
after complying with all requirements of Applicable Law for a Buyback of shares (including
those of Section 68 of the Act) (“Buyback”) and (a) the Company shall effect such Buyback;
(b) the Sponsors shall not tender any Equity Shares owned by them in such Buyback. In relation
to a Buyback, only if the Exit Option Price is not permissible to be paid by the Company to the
Investors under Applicable Law, then the Exit Option Price in relation to such Buyback shall
be the highest price permitted to be paid by the Company to Investors in relation to the Buyback
under Applicable Law; and / or

b. to require the Sponsors to (i) identify a suitable purchaser to purchase the Investor Shares, at
the best possible price in accordance with the RBI guidelines and Applicable Law, which price
shall in any event not be lower than the Exit Option Price and (ii) to ensure completion of the
Transfer of the Investor Shares to such purchaser at the Exit Option Price in accordance with
the RBI pricing guidelines and Applicable Law.

The options set out in Article 50 above, are collectively referred to as “Exit Options” and individually
as “Exit Option”. Notwithstanding the provisions of Article 50 above, the Investors shall have the right

419
b) the provisions of Article 110 (Policy Covenants), Articles 121 to 124 (Indemnity), and Article
128 (Invalid Provisions) shall survive and continue in relation to an Investor as long as such
Investor holds any Investor Shares.

Preference Shares

61.

On the issue of redeemable preference shares the following provision shall take effect:

(a) No such shares shall be redeemed except out of the profits of the Company which would
otherwise be available for dividend or out of the proceeds of a fresh issue of shares made for
the purposes of the redemption.

(b) No such shares shall be redeemed unless they are fully paid.

( The premium, if any, payable on redemption shall be provided for out of the profits of the
Company or out of the Company's share premium account before the shares are redeemed.

(d) Where any such shares are redeemed otherwise than out of the proceeds of a fresh issue, there
shall, out of profits which would otherwise have been available for dividend be transferred to a
reserve account to be called, “The Capital Redemption Reserve Account” a sum equal to the
nominal amount of the shares redeemed and the provisions of the Act relating to the reduction
of the Share Capital of the company shall except as provided under Section 55 of the Act apply
as if the Capital Redemption Reserve Account were paid-up Share Capital of the Company.

(e) Subject to the provisions of Section 55 of the Act and these Articles, the redemption of
preference shares hereunder may be effected in accordance with the terms and conditions of
their issue and failing that in such manner as the Directors may think fit.

Variation of Rights, Voting Rights and Share Certificates

62.

63.

64.

Subject to the provisions of these Articles, the rights attached to the shares of any class may be varied
with the consent, in writing, of the holders of not less than three-fourths (3/4") of the issued shares of
that class or with the sanction of a Special Resolution passed at a separate meeting of the holders of the
issued shares of that class, provided that the variation of the rights and terms of the Investor Shares or
any shares or Share Equivalents held by the Investors shall require the prior written consent of the
Investors.

Each equity share shall carry one (1) vote on a poll.
If the share certificate is defaced, lost or destroyed, it may be renewed on such terms as the Board may

direct as to evidence and indemnity in investigation of such evidences. The expenses, if any, incurred by
the Company on such investigation shall be reimbursed on such terms as the Directors think fit.

Company's lien on shares partly paid-up

65.

The Company shall have a first and paramount lien for any moneys due from such Shareholder towards
calls made on shares, or for any debts, or liabilities due to the Company solely or jointly with any other
person, whether the period for the payment fulfillment or discharge thereof shall have actually become
due or not:

a. on all shares registered in his name; and

b. on all dividends and bonuses declared in respect of such shares.

*Restrictions on Transfer and transmission of shares

66.

The Board may, subject to the right of appeal conferred by the Section 58 of the Act decline to register,

@ the transfer of a share, not being a fully paid share, to a person of whom they do not approve;
or

421
52.

53.

54.

55.

56.

57.

58.

59.

to identify a suitable purchaser to purchase the Investor Shares from the Investors at the Exit Option
Price or such price higher than the Exit Option Price, in accordance with the RBI pricing guidelines and
Applicable Law, at the sole option of the Investors and the Company and the Sponsors shall provide the
Investors and such Third Party purchaser identified by the Investors with all such assistance and
cooperation as may be required to ensure completion of the Transfer of the Investor Shares to such Third
Party purchaser.

All expenses with respect to the determination of the FMV Price shall be borne by the Company.

In case of a sale to a Third Party pursuant to Articles 50 and 51, the Sponsors and the Company will
provide all reasonable assistance as may be required to transfer the Investor Shares to such Third Party,
provided further that the Investors shall only be required to provide representations to such Third Party
regarding the title of the Investor Shares.

The Sponsors shall extend full support and co-operation to the Investors and shall take all necessary steps
to assist the Investors in consummating the transaction pursuant to the exercise of the Exit Option (s) by
the Investors. The Sponsors and the Company shall be required to complete the transactions pursuant to
the exercise of the Exit Option (s) no later than 66 months from the Closing Date.

Each Party shall bear its own expenses in connection with the Exit Option (s), provided however that any
taxes (save and except the Investor’s income tax liability), duties, charges including stamp duty that are
payable in connection with the Exit Option shall, subject to Applicable Law, be to the account of the
Company.

The Sponsors and the Company shall reasonably co-operate with the Investors for procuring and
maintaining all Governmental Approvals as may be required by the Investors for effectuating any
Transfer of Investor Shares to any Person pursuant to Articles 50 and 51.

Notwithstanding anything contained in these Articles, it is clarified that in the event of any conflict
between the Exit Option Price for the Exit Option initiated by either Investor, the Exit Option Price shall
be the higher of the (A) FMV Price and (B) the price which would result in an IRR of 18% (eighteen per
cent) on the Aggregate Subscription Amount, calculated from the respective Investment Dates till the
date of the Exit Trigger Date.

Notwithstanding anything contained hereinabove and without prejudice to the provision stated in Article
57, the Sponsors and the Company may, with the written consent of each of the Investors, proceed to
initiate a Qualified IPO or an Other IPO even after the expiry of the period of 54 months referred to in
Article 50 with a view to providing an exit to the Investors.

Notwithstanding anything contained herein above, in the event: (a) the Company and/or the Sponsors are
unable to complete the transactions pursuant to the exercise of the Exit Options by the Investors, within
a period of 66 months from the Closing Date; or (b) the Additional Put Trigger Event (as defined in the
Amended and Restated Put Option Agreement) occurs at any time during the Additional Put Trigger
Period (as defined in the Amended and Restated Put Option Agreement), IFC shall be entitled to exercise
the put option with respect to IFC Initial Shares in accordance with the terms of the Amended and
Restated Put Option Agreement. The Sponsors, SM and the Company shall extend full support and co-
operation to IFC and shall take all necessary steps to assist IFC in exercising the put option with respect
to all IFC Initial Shares under the Amended and Restated Put Option Agreement.

Term and Termination

60.

Save as aforesaid, it is expressly clarified that upon a Listing, all the Articles contained herein
corresponding to the relevant provisions of the Shareholders Agreement, shall stand terminated except
for the Articles as set forth below:

a) subject to Applicable Law and as long as the Investor concerned continues holding at least 30%
of its Investor Shares reckoned as Shares on a Fully Diluted Basis, Article 75 (Investor Director)
and Article 80 (Removal / Replacement / Resignation of Investor Directors) shall survive and
continue to be in full force or effect in relation to such Investor; and

420
67.

(ii) any transfer of shares on which the Company has a Lien.

No fees shall be payable in respect of Transfer or transmission of shares.

*Altered pursuant to conversion of the Company from private to public approved vide special resolution passed
at the Extraordinary General Meeting held on 30.04.2018

Forfeiture of shares

68.

69.

70.

If a Shareholder fails to pay any call or installment of a call on the day appointed for payment thereof, or
within the extended time fixed thereof, the Board may, at any time thereafter, during such time as such
money remains unpaid, serve a notice on him requiring payment together with any interest which may
have accrued.

The notice aforesaid shall:

a. name a further day (not less than 14 days from the date of notice) at which the money is to be
paid; and
b. state that in the event of non-payment within the stipulated time the shares in respect of which

the same is owing will be liable to be forfeited.

If the requisitions of any such notice as aforesaid are not complied with, every or any share in respect of
which the notice is given may, at any time thereafter, before payment of all calls, installments, allotment
moneys, interest or expenses due in respect thereof, be forfeited by a resolution of the Board to that
effect. Such forfeiture shall include all dividends declared in respect of the forfeited shares and not
actually paid before the forfeiture.

Authority of Board and Management

71.

Subject to the provisions of these Articles and the Act, the Board is entitled to exercise all the powers of
the Company and shall collectively be responsible for making policy decisions pertaining to the
management of the affairs of the Company. The powers and responsibilities of the Directors of the
Company shall be according to the Act, and in Table 'F' thereof except in so far as they stand modified
by the provisions of these Articles.

Board Composition

72.

73.

The number of Directors shall not be less than 5 (five) or more than 12 (twelve) and the Directors shall
be appointed within these limits from time to time. The Board shall always have at least 1 (one)
Independent Director.

The following director shall be Director for life, unless they resign or vacate office as per the provisions
of the Act:

Sri. S.Ravi

Any other Director or Directors may be appointed by a resolution of the Board or by the Company in its
General Meeting and such Director so appointed shall hold office for such period and upon such terms
and conditions as may be stated in such resolution. The Board may also appoint Additional Directors in
accordance with the provisions of the Act.

No Share Qualification

74.

Any person, whether a Shareholder or not, may be appointed as a Director. No qualification by way of
holding shares in the capital of the Company shall be required of any Director.

422
Investor Director

75.

Subject to the provisions of Article 18 (Cessation of Special Rights), and Article 60 (Term and
Termination) of these Articles, each Investor shall have a right but not an obligation to nominate one (1)
Director each. The nominee appointed by IFC (“IFC Director”) and the nominee of Marina III Director”)]
shall collectively be referred to as the “Investor Directors” and individually as the “Investor Director”.
The Company, the Sponsors and SM shall procure that each of the Investor Directors is appointed to the
Board in accordance with Applicable Law. The Investor Directors shall be non-executive Directors, shall
not be responsible for the day-to-day Management of the Company and shall not be liable for any failure
by the Company to comply with Applicable Law. The Company shall nominate any of the Directors or
other senior officers of the Company other than the Investor Directors as “person in charge” as
contemplated under Applicable Law and shall make their best efforts to ensure that the Investor Directors
are not included within the scope of “officer who is in default” under Applicable Law. The Investor
Directors shall not be required to hold any qualification shares. In the event that any notice or proceedings
have been filed against any of the Investor Directors, the Company, the Sponsors and SM shall take all
necessary steps to ensure that name of such Investor Director is excluded / deleted and the charges /
proceedings against such Investor Director are withdrawn and shall also take all steps to defend such
Investor Director against such proceedings and the Company shall pay all costs, damages, fines, levies
etc. that may be levied against such Investor Director.

Nominee Director for Lenders

76.

If as per the terms of agreement or arrangement in respect of any loan or borrowing by the Company
from any Government, bank, finance institution or any body corporate the right is given to the lender for
the appointment of a Director or Directors with the power to remove such Director or Directors, in the
event of a Director or Directors being appointed or vacating his office by resignation or otherwise then
such appointment or resignation shall be supported by the Board notwithstanding anything to the contrary
contained in these Articles. The Director or Directors so appointed shall not be liable to retirement by
rotation and they will not be taken into account in determining the retirement by rotation of Directors. If
the Director or Directors so appointed ceases to be a Director by resignation or otherwise, the
reappointment or fresh appointment as the case may be shall be done in accordance with the agreement
entered into between the Company and the lender.

Appointment of Managing/ Whole Time/ Executive Directors and their remuneration

77.

The Board may from time to time appoint one or more of their body to the office of managing directors/
whole time directors/ executive directors for such term, on such remuneration (whether by way of salary
(including perquisites) or a commission or partly by one and partly by another) as they may think fit.
Their appointment shall cease ipso facto if the person concerned ceases from any cause to be a Director.

Alternate Director

78.

79.

The Board of Directors of the Company may appoint an alternate director (“Alternate Director”) to act
for a Director (hereinafter called “the Original Director”) during his absence for a period of not less than
three (3) months from the State in which the meetings of the Board are ordinarily held and such
appointment shall have effect and such appointee, whilst he holds office as an Alternate Director shall
be entitled to notice of meetings as the Directors and to attend and vote thereat accordingly. Alternate
Director appointed under this Article shall not hold office as such for a period longer than that permissible
to the Original Director in whose place he has been appointed and shall vacate office if and when the
Original Director returns to the State. If the term of office of the Original Director is terminated before
he returns to the State, any provisions in the Act or in these Articles for the automatic re-appointment of
retiring Directors in default of another appointment shall apply to the Original Director and not to the
Alternate Director. The appointment of an Alternate Director shall not constitute an addition to the
strength of the Board and the number of Original Directors alone will be counted in order to ascertain
the maximum strength of the Board as provided in Article 72 (Board Composition). Any vacancy arising
in the office of an Alternate Director shall not create any vacancy in the Board of Directors.

The Investors shall be entitled to nominate Alternate Director(s) to the Directors nominated by them, to

act in accordance with the Act and shall issue a written notice to the Company providing the name and
contact address of such Alternate Director (“Alternate Director Nomination Notice”). The Board shall

423
appoint the Alternate Directors so nominated by the respective Investors in their meeting immediately
following, the receipt of such Alternate Director Nomination Notice. The Investors shall also have a right
to withdraw their respective nominated Alternate Director(s) and nominate another person to act as an
Alternate Director to their respective Investor Director instead. The Sponsors shall take all such actions,
including exercising their respective votes in relation to the Equity Shares controlled by each of them, as
may be required to cause any Alternate Director so nominated to be duly appointed.

Removal / Replacement / Resignation of Investor Directors

80.

Each Investor may require the removal of the Investor Director nominated by such Investor at any time
and shall be entitled to nominate another person as its Investor Director in place of any such Investor
Director so removed in the manner as provided by a notice in writing to the Company. In the event of
the resignation, retirement or vacation of office of any Investor Director, the Investor appointing such
Investor Director shall be entitled, subject to Article 72 (Board Composition), to nominate another person
in place of such Investor Director and the Sponsors and SM shall, ensure, to the fullest extent of all rights
and powers available to them, that such nominee is promptly appointed as a Investor Director, as per the
provisions of the Act and in accordance with Applicable Law.

Committees of the Board

81.

The Board may constitute such committees, as it deems appropriate, consisting of such member(s) of the
Board, to the extent permitted under Applicable Law and in accordance with the Corporate Governance
Improvement Plan and shall also frame the terms governing such committees, including the terms of
reference and the composition of such committees. Each Investor may, at its option, nominate the
Investor Director, in any committee which may hereafter be constituted by the Board as per the Corporate
Governance Improvement Plan, including a committee constituted for the purpose of an initial public
offering by the Company or any fund raising committee and the Board shall ensure that such Investor
Director is nominated to such committee. However it is made clear that the each of the Investor Directors
shall have the right to be present and take part only as an invitee in any discussion relating to Specified
Matters, in any audit committee, if and when constituted, with a mandate and scope of powers that
includes any of the Specified Matters.

Procedures and Meetings of the Board

82.

83.

84.

Subject to Applicable Law, the Board shall meet at least once every quarter of each Financial year, and
at least 4 (four) meetings of the Board shall be held in each calendar year subject to an annual schedule
and confirmation of the date of the next Board meeting at the previous Board meeting. Provided the gap
between any two meetings shall not be more than 120 days.

Written notice of each meeting of the Board shall be given to all the Directors and their duly appointed
alternates, if any, as provided under Article 78 and 79 (Alternate Director). Written notice of a meeting
under this Article 83 shall be sent to the address, notified from time to time by the Directors and their
alternates, if any, at least 15 (fifteen) days in advance of such meeting provided that where, exceptionally,
the Board is required to make a decision in circumstances in which the foregoing notice requirements
cannot be observed, such notice requirements may be waived by a majority of the Directors.

An agenda setting out in detail the items of business proposed to be transacted at a meeting of the Board
together with necessary information and supporting documents shall be circulated to each of the Directors
and their alternates, if any along with the notice for such meeting of the Board or at least 10 (ten) days
prior to the date of meeting. Provided where the agenda includes any matter which is specified under
Article 102 (Investor Consent Rights), the agenda shall be sent to Directors as soon as may be possible
but within 3 (three) days of issue of notice of meeting of the Board. Provided any waiver granted with
respect to notice under Article 83 shall mutatis mutandis apply to agenda under this Article.
Notwithstanding anything contained herein, no decisions shall be taken by the Board with respect to
matters specified in Article 102 (Investor Consent Rights) without each Investor’s prior written consent.

424
Quorum at Board Meetings

85.

Votes

86.

(a) Subject to the provisions of the Act, the quorum for a meeting of the Board, duly convened and
held, shall be a majority of the Directors then in office, including an Independent Director, at
the beginning of the meeting.

(b) In the absence of a valid quorum at a meeting of the Board, duly convened, the meeting shall
be adjourned and reconvened to the same time and place not earlier than 10 (ten) days but no
later than 21(twenty-one) days thereafter as the Chairman may determine or if the Chairman is
not present, at such time and place as may be agreed to by the majority of the Directors, with
the same agenda. The quorum requirements as set out in Article 84 (a) above shall also be
applicable at such adjourned meeting.

Each Director is entitled to cast 1 (one) vote at any meeting of the Board. The Chairman of the Board or
chairman of any committee thereof, or of any meeting of the shareholders of the Company shall not have
a casting vote, in case of equality of votes at such meeting. The adoption of any resolution of the Board
shall require the affirmative vote of a majority of the Directors present at a duly constituted meeting of
the Board or, in the case of a circular resolution, the signature of a majority of the Directors to whom the
resolution is circulated.

Telephonic/Video Participation

87.

Directors may, subject to Applicable Law, participate in meetings of the Board through tele-conference
or by way of audio - video conference facilities, in compliance with Applicable Law (including the Act
and the Information Technology Act, 2000).

Resolution by circulation or written consent

88.

Subject to Applicable Law, no resolution shall be deemed to have been duly and validly passed by the
Board, or by a committee thereof, by circulation or written consent, unless the resolution has been
circulated in draft form, together with all the necessary details required to make a fully-informed, good
faith decision with respect to such resolution and appropriate documents required to evidence passage of
such resolution, if any, to all Directors, whether in India or outside India at their usual address, and has
been approved, in writing, by a majority of such of the Directors entitled to vote on the resolution,
provided that if such resolution relates to a matter set out in Article 102 (Investor Consent Rights), such
decisions shall be taken in accordance with Article 102 (Investor Consent Rights).

Sitting Fees and Remuneration for Non-Executive Directors

89.

Directors, other than managing, whole-time and executive directors, shall be paid out of the funds of the
Company, such amount as sitting fees, as the Board may decide from time to time, for each meeting of
the Board or any committee thereof, attended by him and any reasonable expenses incurred by him in
attending such meeting. Subject to applicable provisions of the Act and these Articles, non-executive
Directors may also be paid remuneration as the Board may decide from time to time.

Sitting Fees and Commission for the Investor Directors

90.

The Investor Directors shall also be entitled to all the rights and privileges of other non-executive
Directors and the Investor Directors shall also be entitled to the sitting fees, commission and
reimbursement of actual out-of-pocket expenses, as set out in these Articles; provided that if any Investor
Directors are officers of the Investors, the sitting fees or commission in relation to the Investor Directors
shall accrue to the Investor, and the same shall accordingly be paid by the Company directly to the
Investors. Provided further that if the fees or commission mentioned in this Article cannot be paid to the
Investors as a result of any provision in Applicable Law, then such fees or commission shall be paid to
the Investor Directors.

425
Director Expenses

91. The Directors shall be paid all reasonable out of pocket expenses incurred in India (such as domestic
travel, boarding and lodging expenses) by the Company for attending any shareholders’ meetings of the
Company and Board meetings including meetings of the Board committees and any other expenses
incurred in India by the Directors in the course of fulfilling their duties and obligations as Directors of
the Company.

Directors’ Access

92. Directors shall be entitled, during normal business hours of the Company and with prior reasonable
written notice, to examine the books of accounts and records of the Company and to reasonably inspect
the properties and facilities of the Company. The Company shall provide such information relating to the
business affairs and financial position of the Company, as the Directors may reasonably require. The
Investor Directors may provide such information to the respective Investors by whom they have been
nominated.

Powers of Borrowing

93. Subject to Section 179 and Section 180 of the Act, the Board of Directors may from time to time, raise
or borrow any sums of money for and on behalf of the Company from the Shareholders or other Persons,
companies or Banks, or Directors may themselves advance money to the Company on such terms and
conditions as may be approved by the Board.

Issue of Debentures, etc.

94, The Board of Directors, may from time to time, secure the payment of such money in such manner and
upon such terms and conditions in all respects as they think fit, and in particular, by issue of debentures
or bonds of the Company or by a mortgage or charge on all or any part of the property of the Company
and of its uncalled capital for the time being.

Issue of Securities at Discount, Premium, etc.

95. Any debentures, bonds or other securities may be issued at discount, premium or otherwise and on such
terms and conditions as may be decided by the Board of Directors / Shareholders in accordance with
Applicable Law and the provisions of these Articles.

Contracts with Directors

96. Subject to the provisions of the Act and these Articles, the Directors are permitted to enter into contracts,
subject to Applicable Law, with the Company for sale to, or purchase of goods from the Company, or
for availing services from the Company or for rendering services to the Company, provided each contract
is approved by the Board individually.

97. Disclosure of interest in proposed contract

98. Subject to Applicable Law, a Director may attend, take part in the discussions and vote in the meetings
of the Board where a contract in which such Director is interested, is entered into by the Company,
provided that the Director who is interested directly or indirectly in a contract has disclosed his interest
therein before it is entered into.

Board may fill up casual vacancy

99. If the office of any Director appointed by the Company in General Meeting is vacated before his term of
office will expire in the normal course, the resulting casual vacancy may be filled at a meeting of the
Board, which shall be subsequently approved by members in the immediate next general meeting, if
required as per the provisions of the Act. Any persons so appointed shall hold office only to the date upto
which the Director in whose place he is appointed would have held office, if he had not vacated office
as aforesaid.

426
General Meetings

100.

Complete Effect

101.

(a)

(b)

(©)

@)

Subject to the provisions of Applicable Law, not less than 21 (twenty-one) days’ prior written
notice, of all General Meetings, unless a shorter notice period is consented to by all the
Shareholders entitled to vote at such General Meeting, shall be given to the Shareholders at their
respective addresses notified by them to the Company in writing.

An agenda and accompanying materials setting out the business proposed to be transacted at a
General Meeting shall be circulated by the Company to the Shareholders at the same time as the
Notice referred to in Article 100 (a) above is circulated. No business shall be transacted at any
General Meeting duly convened and held other than that specified in the Notice without the
prior consent of all Shareholders. In relation to matters specified under Article 102 (Investor
Consent Rights), which may require the approval of the Shareholders under Applicable Law or
as per the Charter Documents, the Notice and the agenda for such meeting shall specifically
mention that the item of business for such matter requires the prior written consent of the
Investors. Notwithstanding anything contained herein, no decisions shall be taken at the General
Meeting with respect to matters specified in Article 102 (Investor Consent Rights), without each
Investor’s prior written consent

The Board shall provide the Company's previous Financial Year's Audited Financial Statements
to all Shareholders at least 21 (twenty-one) days before the annual general meeting which is
held to approve and adopt such Audited Financial Statements, unless a shorter period is
consented to by all the shareholders entitled to vote at such General Meeting. The notice for
such General Meeting shall specify that it is the annual general meeting of the Company.

The quorum for a General Meeting shall be at least 2 (two) Shareholders holding at least 50%
(fifty per cent) of the Share Capital, present in person or by proxy, or by corporate
representative.

(e) Subject to Applicable Law and the provisions of these Articles, resolutions may be passed at a

(8)

(h)

General Meeting by a vote of a majority of the shares present at the meeting. The voting shall
be by way of poll, unless otherwise agreed in writing by the Shareholders present at such
General Meeting.

In the absence of a valid quorum at a General Meeting, duly convened, the meeting shall be
adjourned and reconvened at the same time and place not earlier than 10 (ten) days but no later
than 21 (twenty-one) days thereafter as the chairman may determine, with the same agenda. The
quorum requirements set out in Article 100 (d) shall also be applicable at such reconvened
meeting provided that if 2 (two) such consecutive reconvened meetings are inquorate, the
quorum for the next meeting shall be reduced to 2 (two) shareholders holding at least 35% (thirty
five per cent) of the Share Capital.

Shareholders may, subject to Applicable Law, participate in General Meetings through tele-
conference or by way of audio - video conference facilities, in compliance with Applicable Law
(including the Act and the Information Technology Act, 2000).

The provisions of this Article 100 (General Meeting) shall apply, mutatis mutandis, to meetings
of any class of Shareholders.

Subject to Applicable Law, the Sponsors and SM shall exercise their voting rights in respect of its Equity
Shares at any General Meeting, and shall take all other actions necessary, to give effect to the provisions
of these Articles. In addition, each Shareholder shall vote its Equity Shares at any General Meeting upon
any matter submitted for action by the Shareholders or with respect to which the Shareholders may vote
and shall cause its Directors on the Board to vote, in conformity with the specific terms and provisions
of these Articles to the extent legally permissible to give complete legal effect to the provisions of the
Shareholders Agreement. The Parties shall use their best efforts to take, or cause to be taken, all actions
and to do, or cause to be done, all things necessary or desirable under Applicable Law to consummate or
implement expeditiously the transactions contemplated by, and the agreements and understanding

427
contained in these Articles and the Shareholders Agreement. The Shareholders shall vote their Equity
Shares and shall take all other action necessary or required, to ensure that at all times the Charter
Documents facilitate, and do not conflict with, the provisions of the Shareholders Agreement.

Investor Consent Rights

102.

The Board shall not and shall ensure that the Company and each of its Subsidiaries shall not take any
decisions or actions, with respect to the following matters, without the prior written consent of each of
the Investors and all matters in relation to the following decisions and actions, shall be mandatorily be
required to be referred to the Board or a committee of the Board in which the Investor Director has been
appointed by the Board:

(a)

(b)

(©)

@)

(e)

(8)

(h)

@
@

amend or repeal the Company's Charter Documents or the Charter Documents of any
Subsidiary;

@ other than in connection with the issuance of the Investor Subscription Shares, create,
authorize or issue any shares in the capital of the Company, Share Equivalents or other
equity security in the Company ranking pari passu with the Investor Shares, with
respect to any matter, including, without limitation, dividend rights, voting rights or
liquidation preference;

(ii) other than in connection with the issuance of the Investor Subscription Shares, create,
authorize or issue any shares in the capital of the Company, Share Equivalents or other
equity security in the Company having a structural or legal preference over, or ranking
senior to the Investor Shares, with respect to any matter, including, without limitation,
dividend rights, voting rights or liquidation preference;

authorize or undertake any arrangement for the disposal of: (i) more than 10%(ten per cent) (by
value) of the assets or business of the Company or any Subsidiary, whether in one or a series of
transactions; or (ii) any shares of any Subsidiary that results in the Company owning (directly
or indirectly) less than 26%( twenty six per cent) of any Subsidiary;

any amalgamation, partnerships, merger, consolidation, reconstitution, restructuring or similar
transaction that results in a change in Control of the Company or any Subsidiary;

authorize or undertake any Liquidation Event;

@ authorize or undertake any Listing, any Offering of the shares of the Company or any
Subsidiary

(ii) authorize or undertake any delisting (unless required by Applicable Law) of the shares
of the Company or any Subsidiary;

authorize or undertake any change of capital structure including but not limited to increase or
reduction of capital or share repurchase, other than any repurchase of shares of the Company or
Share Equivalents issued to or held by employees, officers, Directors or consultants of the
Company or its Subsidiaries pursuant to an employee stock plan (that has been previously
approved in writing by the Investors) upon termination of their employment;

the sale, transfer or assignment of all or substantially all of the Intellectual Property rights as
such (including those relating to copyrights, trademarks, patents and designs) of the Company
or any of its Subsidiaries, taken as a whole, other than in the normal course of business;

any change in the Business of the Company or any of its Subsidiaries;

authorising or entering into any partnership or profit sharing agreement whereby the Company’s

income or profits are or might be, shared with any other Person except for commissions paid in
the normal course of business;

428
(k)

@
(m)

(n)

(0)

(p)

(q)

authorising or undertaking any acquisition of business or undertaking by the Company whether
by way of acquisition of shares or assets in excess of Rs.300,000,000 (Rupees Three Hundred
Million);

removing or replacing the Auditor or changing the Financial Year;

any capital expenditure in excess of the limits specified in the Approved Business Plan by Rs.
300,000,000 (Rupees Three Hundred Million);

@ For the period between the date of execution of the Shareholders Agreement and March
31, 2013, incurring any Borrowing which would result in (provided such Borrowing is
not in breach by the Company of any financial covenants in any agreements with its
lenders): (a) Long Term Borrowings of the Company exceeding Rs.5,000,000,000
(Rupees Five Billion); or (b) Short Term Borrowings of the Company exceeding
Rs.2,000,000,000 (Rupees Two Billion).

(¢7)) For the period after March 31, 2013, incurring any Borrowing which would result in
(provided such Borrowing is not in breach by the Company of any financial covenants
in any agreements with its lenders): (a) Long Term Borrowings of the Company
exceeding 1.75 times of the Net Worth of the Company as per the Audited Financial
Statements of the Company as at the end of the Financial Year immediately preceding
the Financial Year in which the question arises; or (b) Short Term Borrowings of the
Company exceeding 25% (twenty five per cent) of the projected sale of goods and
services as per the latest Approved Business Plan; or (c) Total Debt of the Company
exceeding 4 times of the Average EBITDA.

material transactions, agreements or arrangements between the Company or its Subsidiaries
with any Related Parties in excess of Rs. 30,000,000 (Rupees Thirty Million) for any Financial
Year, in the aggregate, whether in a single transaction or in a series of transactions.

Provided that the aforesaid limits shall not be applicable to the following:

a. Aggregate managerial remuneration (including but not limited to commissions) to be
paid collectively to the Sponsors, subject to (i) a maximum fixed managerial
remuneration (which shall be payable irrespective of adequacy of profits) of Rs.
20,000,000 (Rupees Twenty million) for the Financial Year ended March 31, 2013,
Rs. 25,000,000 (Rupees Twenty Five Million)for the Financial Year ended March 31,
2014 and Rs. 30,000,000 (Rupees Thirty Million) for the Financial Year ended March
31, 2015 and (ii) a further aggregate commission not exceeding 7% (seven per cent) of
post tax profits of the Company for each respective Financial Year as aforesaid,
determined as per the Audited Financial Statements for that Financial Year after
deducting therefrom the sum paid or payable as the fixed managerial remuneration;
and

b. Transactions with Joint Ventures of the Company, subject to a maximum aggregate
value (without any netting of transactions) of Rs. 300,000,000 Rupees Three Hundred
Million) for the Financial Year ended March 31, 2013; Rs. 500,000,000 (Rupees Five
Hundred Million) for the Financial Year ended March 31, 2014; and Rs. 700,000,000
(Rupees Seven Hundred Million) for the Financial Year ended March 31, 2015.

Provided further that transactions between the Company and its wholly owned subsidiaries shall
not be construed to be falling under this Clause.

authorising or entering into any obligation outside the normal course of business which could
involve the payment of amounts in excess of Rs. 100,000,000 (Rupees One Hundred Million)
per annum whether in a single or in a series of transactions;

declaration or payment of any dividend or other Distribution (whether in cash, securities,

property or other assets) on any class of Equity Shares or Share Equivalents in excess of the
dividend policy duly approved by the Board of Directors;

429
() termination, and/ or effecting of any amendment to the terms of any of the Joint Venture where
such amendment may have an adverse impact on the interests of the Investors and/or the
Company; and

(s) any material changes to or deviations from the Approved Business Plan.

Board supermajority requirements

103.

The Board shall not and the Company and Sponsors shall ensure that the board of directors of each of its
Subsidiaries shall not, without the unanimous approval of all the Directors, including the Investor
Directors and the Independent Director, if appointed, (in case of the Company) and all the directors on
the board of directors, (in case of the Subsidiaries) present at a quorate meeting of the Company or
Subsidiaries, as the case may be, directly or indirectly declare, authorize or make any Distribution in
relation to any shares or Share Equivalents of the Company or (shares or share equivalents of any
Subsidiary) inconsistent with the applicable Charter, other than reductions of capital or repurchases of
shares or Share Equivalents of the Company or (shares or share equivalents of any Subsidiary) issued to
or held by employees, officers, directors or consultants (other than the Sponsors or a Related Party) of
the Company or its Subsidiaries pursuant to any employee stock plan, upon termination of their
employment at a price not greater than the fair market value.

Corporate Governance Improvement Plan

104.

The Company, SM and the Sponsors shall cause the proper and timely implementation of the Corporate
Governance Improvement Plan. The Sponsors shall oversee the implementation of the Corporate
Governance Improvement Plan. The Board of Directors shall periodically, consistent with the deadlines
set forth in the Corporate Governance Improvement Plan, provide written reports to the Investors on the
progress of implementation of the Corporate Governance Improvement Plan and any delays in
implementation or deviations from the agreed Corporate Governance Improvement Plan.

Entitlement to Special Rights

105.

The entitlement of each of Investors or as the case may be the Investor Third Party Transferee to Special
Rights shall be subject to Articles 17 (Transfer of Special Rights), 18 (Cessation of Special Rights), and
60 (Term and Termination) of these Articles.

General Reporting Covenants

106.

(a). The Company shall furnish to the Investors the following information

@ within 90 (ninety) days after the end of each Financial Year, annual financial
statements (a balance sheet as of the end of such Financial Year and the related
statements of income, shareholders' equity and cash flows for the Financial Year then
ended) for the Company on a consolidated and an unconsolidated basis and for each of
its Subsidiaries, audited in accordance with the Accounting Standards and certified by
the Auditors, or as the case may be the auditors of the Subsidiaries concerned, along
with a consolidating statement prepared by the Auditors, and a copy of all management
letters delivered by the Auditors;

(ii) within 45 (forty-five) days after the end of each quarter of each Financial Year,
unaudited quarterly financial statements (a balance sheet as of the end of such quarter
and the related statements of income, shareholders' equity and cash flows for the
quarter then ended) for the Company and each of its Subsidiaries, on an unconsolidated
basis, prepared in accordance with the Accounting Standards;

(iii) no later than 45 (forty-five) days before commencement of each Financial Year, the

proposed Business Plan, and following the approval of the same by the Board, the
Approved Business Plan;

430
(b)

(©)

@)
(e)

(iv) no later the 5 (five) days from the date of approval of any revision to Approved
Business Plan by the Board, such Approved Business Plan, with the relevant revisions;

(v) the notification as required under Article 113 (b) (Reporting of Sponsor Conditions);
and
(vi) within 45 (forty-five) days after the end of each quarter of each Financial Year, an

update on any proceeding, action or development in relation to the proceedings set out
in Schedule 7 of the Shareholders Agreement (Proceedings in relation to Registration
of Trademarks).

The Board, shall, and the Sponsors shall make best efforts to have one of the Big Four Audit
Firms appointed, as the new Auditors of the Company for the Financial Year commencing from
April 1, 2013 or at least for the Financial Year commencing from April 1, 2014. No later than
30(thirty) days after any change in Auditors, the Company shall issue an authorization (in
substantially the same form as Schedule 5 (Form of Letter to Company's Auditors) of the
Shareholders Agreement) to the new Auditors (authorizing them to communicate directly with
the Investors at any time regarding the Company's financial statements, accounts and
operations) and provide a copy thereof to the Investors.

The Company shall promptly provide to the Investors such information as the Investors from
time to time request with regard to any material developments in or affecting the Company's,
and/or any of its Subsidiaries! and/or any of the Joint Ventures’ Business.

Each Business Plan and Approved Business Plan shall be to the satisfaction of the Investors.

Following a Listing, unless the Shareholders Agreement is terminated prior to the Listing in
accordance with the terms of the Shareholders Agreement, the Investors may, by notice to the
Company, elect not to receive any of the information described in this Article 106 (General
Reporting Covenants). In this case, the Company shall provide the Investors with copies of all
information publicly disclosed and/or filed, in compliance with the rules and regulations of
Relevant Market on which any of its securities are listed and any Applicable Law.

Company Reporting Covenants

107.

(a)

()

The Company shall promptly notify the Investors upon becoming aware of any:

@ litigation or investigations or proceedings which have or may reasonably be expected
to have a Material Adverse Effect, including any update, development or further notice,
proceeding or action in respect of the proceedings set out in Schedule 7 of the
Shareholders Agreement (Proceedings in relation to Registration of Trademarks); or

(ii) any criminal investigations or proceedings against the Company or any Relevant Party,
and any such notification shall specify the nature of the action or proceeding and any
steps that the Company proposes to take in response to the same.

Upon the Investors' request, and with reasonable prior notice to the Company, the Company
shall permit the Investor Directors or any other representative of the Investors duly authorized
by the respective Investors in writing and duly notified to the Company and Sponsors and the
CAO, during normal office hours, to:

(i). visit any of the sites and premises where the Business of the Company or its
Subsidiaries is conducted;

(ii). inspect any of the sites, facilities, plants and equipment of the Company or its
Subsidiaries;
(iii). have access to the books of account and all records of the Company and its

Subsidiaries; and

431
108.

109.

(iv). have access to key managerial personnel, major contractors and sub-contractors
carrying out not less than 5% (five per cent) of the total value of the turnover of the
Company and its Subsidiaries who have or may have knowledge of matters with
respect to which the Investors or the CAO seeks information;

Provided that: (A) no such reasonable prior notice shall be necessary if special circumstances
so require and (B) in the case of the CAO, such access shall be for the purpose of carrying out
the CAO's Role.

The Company shall:

a.

within 90(ninety) days after the end of each Financial Year, deliver to the Investors, the Annual
Monitoring Plan consistent with the requirements of the Shareholders Agreement confirming
compliance with the Action Plan, the social and environmental covenants of the Shareholders
Agreement and Applicable S&E Law or, as the case may be, identifying any non-compliance
or failure, and the actions being taken to remedy any such deficiency;

within 3(three) days after its occurrence, notify the Investors of any social, labor, health and
safety, security or environmental incident, accident or circumstance having, or which could
reasonably be expected to have, any material adverse social and/or environmental impact or any
material adverse impact on the implementation or operation of the Business in compliance with
the Performance Standards, specifying in each case the nature of the incident, accident, or
circumstance and the impact or effect arising or likely to arise therefrom, and the measures the
Company is taking or plans to take to address them and to prevent any future similar event; and
keep the Investors informed of the on-going implementation of those measures;

within 90(ninety) days after the end of the expiry of any of the insurance policies referred to in
Annex B to the Shareholders Agreement (Minimum Insurance Requirements), a certificate from
an Authorized Representative confirming that, as of the date of such certificate, the Company
maintains the insurance policies required to be maintained as in Annex B to the Shareholders
Agreement (Minimum Insurance Requirements) and providing a detailed explanation of any
material changes, if any in such insurance policies.

Following a Listing, unless the Shareholders Agreement is terminated prior to the Listing in accordance
with the terms of the Shareholders Agreement, any of the Investors may, by notice to the Company,
request the Company to provide such Investor with copies of all information publicly disclosed and/or
filed, in compliance with the rules and regulations of the Relevant Market on which any of the Company's
securities are listed and any Applicable Law.

Policy Covenants

110.

(a)

(b)

Sanctionable Practices

@ Each of the Relevant Parties shall not engage in (nor authorize or permit any Affiliate
or any other Person acting on its behalf to engage in) any Sanctionable Practice with
respect to any shareholding in the Company or any Business;

(ii) In the event that any of the Relevant Parties become aware of any violation of Article
110 (a)(i) above, it shall promptly notify the Investors; and

(iii) If any of the Investors notify the Company and/or any other Relevant Party of its
concern that there has been a violation of Article 110 (a)(i), the Company and any other
such Relevant Party shall cooperate in good faith with such Investor and its
representatives in determining whether such a violation has occurred, and shall respond
promptly and in reasonable detail to any notice from such Investor, and shall furnish
documentary support for such response upon such Investor's request

Affirmative Environmental Covenants

The Company shall and shall ensure that each of its Subsidiaries shall:

432
(©)

@)

@ implement the Action Plan and undertake the Business in compliance with the
Performance Standards and Applicable S&E Law; and

(¢7)) periodically review the form of the Annual Monitoring Report and advise the Investors
as to whether revision of the form is necessary or appropriate in light of changes to the
Business and revise the form of the Annual Monitoring Report, if applicable, with the
prior written consent of the Investors.

Negative Environmental Covenant

The Company shall not amend the Action Plan or the format of the Annual Monitoring Report
in any material respect without the prior written consent of the Investors.

UN Security Council Resolutions

The Company shall not and shall ensure that each of its Subsidiaries shall not enter into any
transaction or engage in any activity prohibited by any resolution of the United Nations Security
Council under Chapter VII of the United Nations Charter.

Shell Banks

The Company shall not and shall ensure that each of its Subsidiaries shall not conduct Business
or enter into any transaction with, or transmit any funds through, a Shell Bank.

Insurance

The Company and its Subsidiaries shall, at all times, insure and keep insured, at a minimum
level equivalent to the requirements set forth in Annex B of the Shareholders Agreement
(Minimum Insurance Requirements), with a financially sound and reputable insurer or insurers,
all of its assets and business which can be insured, against insurable losses, and maintain any
other insurance required by Applicable Law.

Other Affirmative Covenants

111. The Company shall:

(a)

()

(©)

@)

undertake its Business, activities and investments, and cause each of its Subsidiaries to
undertake their Business, activities and investments, in compliance with Applicable Law;

undertake all transactions with Related Parties on an arm’s length basis, in compliance with
Applicable Law and ensure that all transactions with Related Parties are placed before and
approved by the Board;

adopt and maintain a policy, in form and substance satisfactory to the Investors, designed to
maximize its ownership of Intellectual Property developed or acquired in the course of its
operations, which policy shall require the Company to: (i) cause all material technological
developments, patentable or unpatentable, inventions, discoveries or improvements by the
Company's or any of its Subsidiaries' officers or employees to be documented in accordance
with the appropriate professional standards; and (ii) cause all officers and key employees, and
to the extent practicable, consultants of the Company and its Subsidiaries, to enter into non-
disclosure and proprietary rights agreements in customary form, approved by the Board of
Directors;

ensure that actions of the Company in respect of, or in connection with each of the Joint
Ventures are in compliance with the terms of these Articles.

433
Other affirmative covenants of the Sponsors

112.

(a)

(b)

@)

Each of the Sponsors (i) shall conduct the Business exclusively through the Company or a
Subsidiary of the Company; (ii) other than through the medium of the Company or through a
Subsidiary of the Company, shall not (directly or indirectly), in any capacity, including, for their
own account or as agent, employee, officer, director, consultant, investor, or shareholder or
equity owner of any other Person, establish, develop, undertake, manage, finance, invest in,
carry on or assist in carrying on or be engaged, concerned, interested or employed in or provide
technical, commercial or professional advice to any other business, enterprise or venture which
is engaged in the business or which supplies goods and / or services which are competitive with
the Business; (iii) shall not acquire or hold, directly or indirectly, equity shares or share
equivalents of any Subsidiary other than through the Company; and (iv) shall direct all
commercial opportunities (related to the Business) that are or become known to them to the
Company.

Each of the Sponsors shall devote a substantial amount of their time, energy and resources to
the operation and Management of the Company and the Subsidiaries.

Notwithstanding the foregoing, the acquisition of any business or undertaking by the Sponsors
whether by way of acquisition of assets or shares, in excess of Rs. 200,000,000 (Rupees Two
Hundred Million) will be subject to specific prior written approval from the Investors.

The provisions of this Article 112 shall apply mutatis mutandis to SM in the event and during
such times that SM is directly or indirectly in Control of the Company.

SM Designation as Sponsor

113.

(a)

()

As of the date of execution of the Shareholders Agreement, SM holds 12.89% (twelve point
eighty nine per cent) of the Share Capital. Upon the occurrence of any of the following events,
SM shall automatically be deemed to be included within the definition of the term ‘Sponsor’
and shall be treated as one of the Sponsors along with SR and KG:

i. SM is appointed on the Board of the Company; and/or;

ii. SM’s shareholding in the Company equals to 15% or more of the economic interest in
the Company, including as represented by the equity share capital, held by him
reckoned as Shares on a Fully Diluted Basis; and/or;

iii. SM is directly or indirectly in Control of the Company,

then notwithstanding anything to the contrary herein, SM shall be designated, and included as
a Sponsor (in addition to SR and KG) and at the Investor’s option, shall be bound and be
required to comply with the obligations of the Sponsors under the Shareholders Agreement.
Following, SM’s inclusion and designation as Sponsor, if so required by the Investors, (I) the
Shareholders Agreement may be amended as appropriate, (II) SM may be required to execute
such amended Shareholders Agreement or such other documents and the Investors may specify
in connection with his designation as Sponsor, and (III) the Company shall and the Sponsors
and the other Shareholders shall procure that the Company shall amend the relevant Charter to
reflect the amendments to the Shareholders Agreement as aforesaid

Reporting of Sponsor Conditions:

Within 2 (two) days of:

@ SM being appointed as a Director on the Board or ceasing to be a Director on the
Board; or
(ii) SM’s shareholding in the Company increasing above 15% (fifteen per cent) of the

Share Capital reckoned as Shares on a Fully Diluted Basis or ceasing to be less than

434
15% (fifteen per cent) of the Share Capital reckoned as Shares on a Fully Diluted Basis;
and / or

SM acquiring or ceasing to be in Control of the Company, the Company and SM shall notify
the Investors of the same.

Common seal

114. The Company shall have a common seal (the “Seal’”) and the Directors shall provide for the safe custody
thereof. The Seal shall not be affixed to any instrument except by the authority of a resolution of the
Board and in the presence of at least 1 (one) Director and of the secretary of the Company or such other
person as the Board may appoint for the purpose and they shall sign every instrument to which the Seal
shall be affixed in their presence. Such signature shall be conclusive evidence of the fact that the seal has
been properly affixed.

Accounts and audit books of accounts to be kept

115. The managing director, or in case the office of managing director remains vacant, the Board shall cause
true accounts to be kept of the assets and liabilities and of all sums of money received and expended by
the Company.

116. Subject to the provisions of Section 128 of the Act, the books of accounts shall be kept at the registered
office of the Company or at such other places as may be decided by the Directors and shall be open to
inspection by the Directors. No Shareholder, not being a Director, shall have any right of inspection of
any account, or book or document of the Company except to the extent conferred by Applicable Law or
authorized by the Company in General Meeting.

Profit and Loss Account and Balance Sheet

117. At each annual general meeting, the Directors shall lay before the Company a balance sheet and a
statement of profit and loss account as provided in the Act.

Audit Report
118. The Auditor's report shall be attached to every profit and loss account and balance sheet.
Directors’ Report

119. The Directors’ report shall be attached to every such balance sheet, stating the conditions of the Company
and the amount, if any, which they recommend as dividend or bonus to the Shareholders. The Directors’
report, balance sheet and profit and loss account together with all annexures and attachments thereto shall
be approved by the Board and duly authenticated as per the provisions of Sections 134 of the Act
respectively.

Secrecy

120. Subject to other provisions of these Articles, no person, shall be entitled to visit or inspect the Company's
properties without the consent of the Board or the managing director or to require disclosure of any
information regarding the details of the Company's working, trading and any other matters in the nature
of trade secrets which in the opinion of the managing director may not be expedient in the interests of
the Company to communicate to the public.

Indemnity

121, The Company and each of the Sponsors (each, an “Indemnifying Party”) shall indemnify, and hold

harmless each of the Investors and their respective officers, directors, employees, agents and
sentatives (each, an “Indemnified Party”), from and against any and all losses, Claims, damages,
ies, and expenses (including fees, charges and disbursements of counsel) which may be incurred
by or asserted against any Indemnified Party arising out of, in connection with, or related to: (i) the
execution, delivery or performance of the Shareholders Agreement or any Transaction Document or any

 

435
122.

123.

124,

other agreement or instrument contemplated thereby or the consummation of the subscription to the
Investor Shares or any other transactions contemplated under the Shareholders Agreement ; (ii) as a result
of any misrepresentation, false, inaccurate or misleading statement or breach of any representation or
warranty made by the Indemnifying Party in the Shareholders Agreement; (iii) any failure by any
Indemnifying Party to perform any covenant or obligation or agreement or undertaking under the
Transaction Documents; or (iv) any actual or prospective Claim, litigation, investigation or proceeding
relating to any of the foregoing, whether based on contract, tort or any other theory and regardless of
whether any Indemnified Party is party thereto; provided that such indemnity will not be available to any
Indemnified Party to the extent that such losses, claims, damages, liabilities or expenses resulted directly
from such Indemnified Party’s gross negligence or willful misconduct as determined by a final judgment
of a court of competent jurisdiction.

The rights of Indemnified Parties pursuant to these Articles shall be in addition to and not exclusive of,
and shall be without prejudice to, any other rights and remedies available to such Indemnified Party at
equity or law including the right to seek specific performance, rescission, restitution or other injunctive
relief, none of which rights or remedies shall be affected or diminished thereby.

The Sponsors shall not have any right for any reason to seek contribution or reimbursement from, or
make any claim against or claim any restitution against, the Company or the Subsidiaries in respect of
any indemnification payments to be made by them to the Indemnified Parties under these Articles.
Neither the Company nor any of its Subsidiaries shall, nor shall they have any obligation to, reimburse
the Sponsor for any such amounts.

To the extent the payment by the Company or the Sponsors of any indemnification payment has been
agreed by them or held by a court of competent jurisdiction to be due and payable pursuant to the
provisions of these Articles shall be subject to receipt of any Governmental Approvals, the Company and
the Sponsors shall be responsible for obtaining all such Governmental Approvals or consents and shall
make all applications and take all steps required to obtain the same.

Indemnity against contract

125.

Without prejudice to the provisions of Articles 121 to 124, and subject to Applicable Law, every Director
and other officer or servant of the Company shall be indemnified against loss incurred in connection with
the performance of their duties to the Company out of the assets of the Company and in this regard, it
shall be duty of the Board to pay all the costs, losses and expenses which any such officer or servant may
incur or become liable to by reason of contracts entered into or acts or things done by such officer or
servant as such or in any way in the rightful discharge of his duties as such officer or servant.

Indemnity against other events

126.

No Director or other officer of the Company shall be liable for the acts, deceits, neglect or default of any
other Director or officer joining in any deceit or other act, or any loss or expense happening to the
Company through the insufficiency or deficiency of a title to any property acquired by order of the Board
for and on behalf of the Company, or for the insufficiency or deficiency of any security of investment in
or upon which any of the moneys of the Company shall be invested or for any loss or damage arising
from the bankruptcy, insolvency or tortuous acts of any persons with whom any moneys, securities or
effects, shall be deposited, or for any loss, occasioned by any error of judgment or oversight on his part,
or for any other loss, damage or misfortune whatever, which shall happen in the execution of the duties
of his office or in relation thereto unless the same happens through his own dishonesty.

Addition of Shareholders

127.

From time to time, and in accordance with these Articles, one or more Shareholders may be added as a
Sponsor or Relevant Party by their execution and delivery of an Accession Instrument.

Invalid Provisions

128.

If any provision of these Articles is held to be illegal, invalid or unenforceable under any law from time
to time: (a) such provision will be fully severable; (b) these Articles will be construed and enforced as if
such illegal, invalid or unenforceable provision had never comprised a part hereof; and (c) the remaining

436
provisions of these Articles will remain in full force and effect and will not be affected by the illegal,
invalid or unenforceable provision or by its severance here from.

Effect of Changes in Shareholders Agreement

129. Any valid and binding variation or amendment or termination or any other change to the Shareholders.
Agreement or any clause thereof, all of which are collectively referred to as ‘Changes’ shall ipso facto
apply to these Articles as if the alteration corresponding to such Changes have been duly made to these
Articles also and these Articles shall be construed accordingly.

The existing Article No. 3 has been deleted, Article No. 6, 6A, 6B has been renumbered as 5, 6, 7 and
consequently Article No.4 to 128 has been renumbered as Article No.3 to 129.

437
SECTION IX - OTHER INFORMATION

MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION

The following contracts (not being contracts entered into in the ordinary course of business carried on by our
Company or entered into more than two years before the date of the Red Herring Prospectus) which are, or may
be deemed material, have been entered or to be entered into by our Company. These contracts, copies of which
were attached to the copy of the Red Herring Prospectus delivered to the RoC for filing, and also the documents
for inspection referred to hereunder were made available for inspection at our Registered and Corporate Office,
from 10.00 am to 4.00 pm on Working Days from the date of the Red Herring Prospectus until the Bid/Offer

Closing Date.

A. Material Contracts to the Offer

1. Offer Agreement dated December 9, 2020 entered into amongst our Company, the Selling Shareholders
and the BRLMs.

2. Registrar Agreement dated December 9, 2020 entered into amongst our Company, the Selling
Shareholders and the Registrar to the Offer.

3. Cash Escrow and Sponsor Bank Agreement dated March 1, 2021 entered into amongst our Company,
the Selling Shareholders, the BRLMs, Escrow Collection Bank, Refund Bank, Public Offer Account
Banks, Sponsor Bank and the Registrar to the Offer.

4, Share Escrow Agreement dated March 1, 2021 entered into amongst the Selling Shareholders, our
Company and a share escrow agent.

5. Syndicate Agreement dated March 1, 2021 entered into amongst the members of the Syndicate, our
Company, the Selling Shareholders and the Registrar to the Offer.

6. Underwriting Agreement dated March 18, 2021 entered into amongst our Company, the Selling
Shareholders, the BRLMs and Syndicate Member*.

Ts Monitoring Agency Agreement dated March 1, 2021 entered into amongst our Company, the Selling
Shareholders and Monitoring Agency.

B. Other Material Contracts in relation to our Company

1. Shareholders Agreement dated July 2, 2010 amongst our Company, our Promoter, S. Murali, K.
Gomatheswaran and IFC and amended by the Shareholders Agreement dated July 3, 2012 amongst our
Company, our Promoter, S. Murali, K. Gomatheswaran, IFC and Standard Chartered Private Equity
(Mauritius) II Limited.

2. Deed of Adherence dated March 17, 2017 amongst our Company, our Promoter, S. Murali, K.
Gomatheswaran, IFC, Standard Chartered Private Equity (Mauritius) II Limited and Marina.

3. Waiver letter dated March 29, 2018, supplementary letter to the waiver letter dated November 30, 2020
issued by Marina and IFC and the second supplementary letter to the waiver letter dated March 10, 2021.

4, Put Option Agreement dated July 2, 2010 amongst our Company, our Promoter, S. Murali, K.
Gomatheswaran and IFC and the Amended and Restated Put Option Agreement dated July 3, 2012
amongst our Company, our Promoter, S. Murali, K. Gomatheswaran, IFC and Standard Chartered Private
Equity (Mauritius) II Limited.

5. Joint Venture Agreement dated June 21, 2007 between our Company and Carl Stahl Hebetechnik GmbH
(previously known as Carl Stahl International GmbH).

6. Joint Venture Agreement dated October 22, 2007 between our Company, Mitsubishi Corporation,

Mitsubishi Corporation India Private Limited and Mitsubishi Corporation Technos.

438
10.

11.

12.

13.

14.

15.

16.

17.

Personal guarantees given to lenders of our Company by Srinivasan Ravi.

Board resolution dated May 15, 2019 fixing the remuneration of Ravi Gauthamram.
Material Documents in relation to the Offer

Memorandum of Association and Articles of Association as amended until date.

Certificate of incorporation dated July 18, 1986 upon incorporation and fresh certificate of incorporation
dated May 4, 2018 consequent upon conversion to a public limited company.

Board resolution dated December 5, 2020 and Shareholders’ resolution of our Company December 7,
2020 authorizing the Offer and other related matters.

Board resolution dated December 9, 2020, approving the Draft Red Herring Prospectus.
Board resolution dated March 5, 2021, approving the Red Herring Prospectus.
Board resolution dated March 18, 2021, approving this Prospectus*.

Consent letters from Srinivasan Ravi dated October 29, 2020, Marina dated November 19, 2020, IFC
dated November 25, 2020 and K. Gomatheswaran dated November 2, 2020, being the Selling
Shareholders authorizing their respective portions of the Offer for Sale.

Copies of the annual reports of the Company for the Financial Years 2020, 2019 and 2018 and audit
report for the nine months ended December 31, 2020.

The examination report of the Statutory Auditors, Sharp & Tannan, Chartered Accountants, on the
Restated Financial Information included in the Red Herring Prospectus and this Prospectus.

Consent from our Statutory Auditors, Sharp & Tannan, Chartered Accountants, to include their name in
the Red Hering Prospectus and this Prospectus as an “expert” as defined under Section 2(38) read with
Section 26(5) of the Companies Act 2013 to the extent and in their capacity as the statutory auditor of
our Company and in respect of their examination report on our Restated Financial Information dated
January 25, 2021 and in respect of the statement of possible tax benefits dated February 25, 2021 included
in the Red Hering Prospectus and this Prospectus.

Consent from Er. K. Sivakumar, Independent Chartered Engineer, to include his name in the Red Herring
Prospectus and this Prospectus as “expert”, as defined under Section 2(38) of the Companies Act 2013,
in respect of his certificate dated December 7, 2020.

Consents of our Directors, our Chief Financial Officer, our Company Secretary and Compliance Officer,
Legal Counsel to the Company as to Indian Law, Legal Counsel to the BRLMs as to Indian Law, Legal
Counsel to the Investor Selling Shareholders, Special Purpose International Legal Counsel to the
BRLMs, the BRLMs, the Bankers to our Company, Registrar to the Offer, Syndicate Member, Escrow
Collection Bank, Public Offer Account Banks, Refund Bank, Sponsor Bank and the Monitoring Agency
to act in their respective capacities.

Report titled “Studying the Automotive and Industrial Engineering Business in India” dated December
2020 prepared by CRISIL Research and its consent dated December 8, 2020, for use of such report or
any extract thereof.

In-principle listing approvals dated January 4, 2021 and January 5, 2021 from BSE and NSE,
respectively.

Tripartite Agreement dated May 24, 2018 amongst our Company, NSDL and the Registrar to the Offer.

Tripartite Agreement dated May 16, 2018 amongst our Company, CDSL and the Registrar to the Offer.

Due diligence certificate to SEBI from the BRLMs, dated December 9, 2020.

439
18. SEBI exemption letter (Ref. No. CFD/DIL-I/YJ/KB/22416/2020) dated December 22, 2020.

19. SEBI final observation letter (Ref. No. SEBI/HO/CFD/DIL1/YJ/KB/OW/P/2021/2174/1) dated January
28, 2021.

* These documents have been approved after the Bid/ Offer Closing Date.
Any of the contracts or documents mentioned in this Prospectus may be amended or modified at any time if so

required in the interest of our Company or if required by the other parties, without reference to the shareholders,
subject to compliance with the provisions contained in the Companies Act and other relevant statutes.

440
DECLARATION
I hereby certify and declare that all relevant provisions of the Companies Act and the rules, regulations and
guidelines issued by the Government of India, or the regulations or guidelines issued by SEBI, as the case may
be, have been complied with and no statement made in this Prospectus is contrary to the provisions of the
Companies Act, the Securities Contracts (Regulation) Act, 1956, the Securities and Exchange Board of India Act,
1992, each as amended or the rules, regulations or guidelines issued thereunder, as the case may be. I further
certify that all the statements in this Prospectus are true and correct.

SIGNED BY THE DIRECTOR OF OUR COMPANY

Srinivasan Ravi
(Chairman and Managing Director)

Date: March 18, 2021

Place: Coimbatore

441
DECLARATION
I hereby certify and declare that all relevant provisions of the Companies Act and the rules, regulations and
guidelines issued by the Government of India, or the regulations or guidelines issued by SEBI, as the case may
be, have been complied with and no statement made in this Prospectus is contrary to the provisions of the
Companies Act, the Securities Contracts (Regulation) Act, 1956, the Securities and Exchange Board of India Act,
1992, each as amended or the rules, regulations or guidelines issued thereunder, as the case may be. I further
certify that all the statements in this Prospectus are true and correct.

SIGNED BY THE DIRECTOR OF OUR COMPANY

Ravi Gauthamram
(Whole-time Director)

Date: March 18, 2021

Place: Coimbatore

442
DECLARATION
I hereby certify and declare that all relevant provisions of the Companies Act and the rules, regulations and
guidelines issued by the Government of India, or the regulations or guidelines issued by SEBI, as the case may
be, have been complied with and no statement made in this Prospectus is contrary to the provisions of the
Companies Act, the Securities Contracts (Regulation) Act, 1956, the Securities and Exchange Board of India Act,
1992, each as amended or the rules, regulations or guidelines issued thereunder, as the case may be. I further
certify that all the statements in this Prospectus are true and correct.

SIGNED BY THE DIRECTOR OF OUR COMPANY

Udai Dhawan
(Nominee Director)

Date: March 18, 2021

Place: New Delhi

443
DECLARATION
I hereby certify and declare that all relevant provisions of the Companies Act and the rules, regulations and
guidelines issued by the Government of India, or the regulations or guidelines issued by SEBI, as the case may
be, have been complied with and no statement made in this Prospectus is contrary to the provisions of the
Companies Act, the Securities Contracts (Regulation) Act, 1956, the Securities and Exchange Board of India Act,
1992, each as amended or the rules, regulations or guidelines issued thereunder, as the case may be. I further
certify that all the statements in this Prospectus are true and correct.

SIGNED BY THE DIRECTOR OF OUR COMPANY

Chandrashekhar Madhukar Bhide
(Independent Director)

Date: March 18, 2021

Place: Mumbai

444
DECLARATION
I hereby certify and declare that all relevant provisions of the Companies Act and the rules, regulations and
guidelines issued by the Government of India, or the regulations or guidelines issued by SEBI, as the case may
be, have been complied with and no statement made in this Prospectus is contrary to the provisions of the
Companies Act, the Securities Contracts (Regulation) Act, 1956, the Securities and Exchange Board of India Act,
1992, each as amended or the rules, regulations or guidelines issued thereunder, as the case may be. I further
certify that all the statements in this Prospectus are true and correct.

SIGNED BY THE DIRECTOR OF OUR COMPANY

Sundararaman Kalyanaraman
(Independent Director)

Date: March 18, 2021

Place: Bangalore

445
DECLARATION
I hereby certify and declare that all relevant provisions of the Companies Act and the rules, regulations and
guidelines issued by the Government of India, or the regulations or guidelines issued by SEBI, as the case may
be, have been complied with and no statement made in this Prospectus is contrary to the provisions of the
Companies Act, the Securities Contracts (Regulation) Act, 1956, the Securities and Exchange Board of India Act,
1992, each as amended or the rules, regulations or guidelines issued thereunder, as the case may be. I further
certify that all the statements in this Prospectus are true and correct.

SIGNED BY THE DIRECTOR OF OUR COMPANY

Vijaya Sampath
(Independent Director)

Date: March 18, 2021

Place: Delhi

446
DECLARATION
I hereby certify and declare that all relevant provisions of the Companies Act and the rules, regulations and
guidelines issued by the Government of India, or the regulations or guidelines issued by SEBI, as the case may
be, have been complied with and no statement made in this Prospectus is contrary to the provisions of the
Companies Act, the Securities Contracts (Regulation) Act, 1956, the Securities and Exchange Board of India Act,
1992, each as amended or the rules, regulations or guidelines issued thereunder, as the case may be. I further
certify that all the statements in this Prospectus are true and correct.

SIGNED BY THE CHIEF FINANCIAL OFFICER OF OUR COMPANY

C.B. Chandrasekar
(Chief Financial Officer)

Date: March 18, 2021

Place: Coimbatore

447
DECLARATION BY SRINIVASAN RAVI, AS A SELLING SHAREHOLDER
I, Srinivasan Ravi, hereby confirm that all statements and undertakings specifically made by me in this Prospectus
in relation to myself, as a Selling Shareholder and my respective portion of the Offered Shares, are true and correct.

I assume no responsibility for any other statements including statements made by or relating to the Company or
any other person(s) in this Prospectus.

Srinivasan Ravi
Date: March 18, 2021

Place: Coimbatore

448
DECLARATION BY MARINA III (SINGAPORE) PTE LIMITED, AS A SELLING SHAREHOLDER
We, Marina III (Singapore) Pte Limited, hereby confirm that all statements and undertakings specifically made
by us in this Prospectus in relation to ourselves, as a Selling Shareholder and our respective portion of the Offered
Shares, are true and correct. We assume no responsibility for any other statements including statements made by
or relating to the Company or any other person(s) in this Prospectus.

For and on behalf of Marina III (Singapore) Pte Limited

Name: Paul Grose
Designation: Director
Date: March 18, 2021

Place: Singapore

449
DECLARATION BY INTERNATIONAL FINANCE CORPORATION, AS A SELLING
SHAREHOLDER

We, International Finance Corporation, hereby confirm that all statements and undertakings specifically made by
us in this Prospectus in relation to ourselves, as a Selling Shareholder and our respective portion of the Offered
Shares, are true and correct. We assume no responsibility for any other statements including statements made by
or relating to the Company or any other person(s) in this Prospectus.

For and on behalf of International Finance Corporation

Name: Ramesh Ramanathan
Designation: Manager
Date: March 18, 2021

Place: Mumbai

450
DECLARATION BY K. GOMATHESWARAN, AS A SELLING SHAREHOLDER
I, K. Gomatheswaran, hereby confirm that all statements and undertakings specifically made by me in this
Prospectus in relation to myself, as a Selling Shareholder and my respective portion of the Offered Shares, are

true and correct. I assume no responsibility for any other statements including statements made by or relating to
the Company or any other person(s) in this Prospectus.

K. Gomatheswaran
Date: March 18, 2021

Place: Coimbatore

451
