• Price Band of ₹270 – ₹285 per equity share bearing face value of ₹ 10 each (“Equity Shares”)
• Bid/Offer Opening Date – Tuesday, June 06, 2023 and Bid/Offer Closing Date – Thursday, June 08, 2023.
• Minimum Bid Lot is 52 Equity Shares and in multiples of 52 Equity Shares thereafter.
• The Floor Price is 27 times the face value of the Equity Share and the Cap Price is 28.5 times the face value of the Equity Share.
Risks to Investors:
I. Risk Factors associated with our Company.
1. Proforma Financials: Since September 12, 2022 our Company owns 100% of the equity shareholding of our Subsidiaries. As our Company did not own 100% of the equity shareholding of our Subsidiaries until September 12, 2022, the Restated Consolidated Financial Information does not include financial information for our Subsidiaries prior to their acquisitions by our Company. Accordingly, our Restated Consolidated Financial Information, as of, and for the nine month period ended December 31, 2022, and as of, and for the years ended, March 31, 2022, 2021 and 2020, are not comparable to any future financial results that we may prepare. In addition, because of their nature, our Proforma Consolidated Financial Information addresses a hypothetical situation and, therefore, does not represent our factual results of operations or financial condition.
2. Customer Concentration: We are dependent on, and derive a substantial portion of our revenue from, a single customer, Signify Innovations India Limited, erstwhile Philips India and revenue from Signify accounted for 70.04%, 91.23%, 94.60% and 95.63%, respectively, of our restated revenue from operations and accounted for 51.31%, 60.45%, 70.76% and 61.07%, respectively, of our proforma consolidated revenue from operations. Further, over 85% of our revenue is derived from our top twenty customers on a restated basis and a proforma consolidated basis for the nine months ended December 31, 2022 and Fiscal 2022. Cancellation by our top customers or delay or reduction in their orders could have a material adverse effect on our business, results of operations and financial condition.
3. Product Concentration: We are dependent on, and derive a substantial portion of our revenue from, LED lighting products. Our revenue from operations on a restated basis in the LED lighting category accounted for 91.27%, 91.59%, 94.25% and 95.85%, respectively, of our restated revenue from operations. In the nine months ended December 31, 2022 and in Fiscal 2022, Fiscal 2021 and Fiscal 2020, our revenue from operations on a proforma consolidated basis in the LED lighting category accounted for 86.05%, 86.78%, 87.26% and 85.21%, respectively, of our proforma consolidated revenue from operations. Any reduction in orders from our LED lighting product line could have a material adverse effect on our business, results of operations and financial condition.
4. Dependence on Third Party Suppliers: We rely on a number of third party suppliers for our key components, materials and stock-in-trade as well as customer support services including product repairs and returns. Further, we do not have any long term contracts with any of the suppliers. Any shortfall in the supply of our components and raw materials or an increase in our component or raw material costs, or other input costs, may adversely affect the pricing and supply of our products and have an adverse effect on our business, results of operations and financial condition.
5. Dependence on Imported Components: We rely on imported components from vendors in China, Singapore, Hong Kong and Taiwan and raw materials, and in the nine months ended December 31, 2022 and in Fiscal 2022, imports accounted for 55.67% and 52.25% of our total raw materials purchased on a proforma consolidated basis. Any shortfall in the supply of our imported components and raw materials or an increase in our component or raw material costs, or other input costs, may adversely affect the pricing and supply of our products and have an adverse effect on our business, results of operations and financial condition.
6. Negative Cash Flows: We have experienced negative cash flows in the nine months ended December 31, 2022 and in Fiscal 2022, Fiscal 2021 and Fiscal 2020. In particular, we have experienced negative cash flows from operating activities in Fiscal 2022 and Fiscal 2021.
7. No Long Term Arrangements with Customers: We do not receive firm and long-term volume purchase commitments from our customers. If our customers choose not to renew their supply contracts with us or continue to place orders with us, our business and results of operations will be adversely affected.
8. Dependence on Manufacturing Facilities: Our business is dependent and will continue to depend on our manufacturing facilities, and we are subject to certain risks in our manufacturing process such as the breakdown or failure of equipment, industrial accidents, injury to employees, severe weather conditions and natural disasters. In addition, any strikes, work stoppages or increased wage demands by our employees could also interfere with our operations. Further, we do not own certain of the premises of our manufacturing facilities and corporate offices. While the lease agreements for our manufacturing facilities may be long term or short term lease in nature and provide us with an option to renew them, they also provide the lessor with the right to terminate the lease for non-compliance of the terms of the agreement. Further, our manufacturing facilities are located in Uttarakhand and the National Capital Region “NCR” exposing us to regulatory and other geography specific risks such as labour unrests, terrorist attacks, other acts of violence and occurrence of natural and man-made disasters.
9. Sizeable Working Capital: We require sizeable amounts of working capital for our continued operation and growth. Our inability to meet our working capital requirements could have a material adverse effect on our business, results of operations and financial condition. As at December 31, 2022, March 31, 2022, March 31, 2021 and March 31, 2020, we had total outstanding working capital loans On a Restated Consolidated Basis aggregating to ₹ 874.84 million, ₹ 147.22 million, ₹ 28.72 million and ₹ 51.20 million, respectively. As at December 31, 2022, March 31, 2022, March 31, 2021 and March 31, 2020, we had total outstanding working capital loans on a proforma consolidated basis aggregating to ₹ 874.84 million, ₹ 678.39 million, ₹ 347.70 million and ₹ 298.62 million, respectively.
II. Details of weighted average cost of acquisition of all Equity Shares transacted in last one year, eighteen months and three years preceding the date of the RHP:
Period Weighted average cost of acquisition per Equity Share (in ₹)^ Cap Price is ‘X’ times the weighted average cost of acquisition^ Range of acquisition price per Equity Share: lowest price – highest price (in ₹)^
One Year# Nil Nil Nil
Eighteen Months# Nil Nil Nil
Three Years Nil Nil Nil
^ As certified by the Statutory Auditor, BGJC & Associates LLP, by way of their certificate dated May 29, 2023.
# Acquired pursuant to a bonus issuance of Equity Shares, allotted on September 17, 2022.
III. Average cost of acquisition of equity shares for our Selling Shareholders namely, Hardeep Singh is ₹ 0.01 and Surmeet Kaur is ₹ 0.01 and Offer Price at upper end of the Price Band is ₹ 285 per Equity Share.
IV. Details of price at which specified securities were acquired in the three years preceding the date of the Red Herring Prospectus. The details of the price at which specified securities were acquired in the three years preceding the date of the Red Herring Prospectus, by our Promoters (also the Selling Shareholders), Promoter Group and Shareholders with the right to nominate a director or with other rights, are disclosed below:
S.
No Name of the acquirer/shareholder Date of acquisition of equity shares Number of Equity Shares acquired Acquisition price per equity share^(in ₹)
Promoters (also the Selling Shareholders)
1 Hardeep Singh July 17, 2021 14,970,000 Nil#
2 Hardeep Singh September 17, 2022 23,999,472 Nil#
3 Surmeet Kaur July 17, 2021 9,980,000 Nil#
4 Surmeet Kaur September 17, 2022 16,000,000 Nil#
Promoter Group
1 Ishween Kaur October 04, 2021 100 Nil$
2 Ishween Kaur September 17, 2022 160 Nil#
3 Harjeet Singh October 04, 2021 100 Nil$
4 Harjeet Singh September 17, 2022 160 Nil#
# Pursuant to the issuance of bonus Equity Shares.
$ Pursuant to a gift from Hardeep Singh
^ As certified by the Statutory Auditor, BGJC & Associates LLP, by way of their certificate dated May 29, 2023.
As on the date of the Red Herring Prospectus, the Company does not have any shareholders entitled with right to nominate Directors or any other rights.
V. Motilal Oswal Investment Advisors Limited (the "BRLM") associated with the Offer has handled 7 public issues in the past three years, out of which 3 issues closed below the offer price on the listing date.
VI. Market Value at Offer Price to Total Turnover and P/E Ratio at Offer Price
Particulars At Floor Price (i.e. ₹270) At Cap Price (i.e. ₹285)
Restated Consolidated Financial Statements
Market Capitalization / Turnover (Fiscal 2022) 9.57 10.02
P/E Ratio 62.65 66.13
Proforma Consolidated Financial Information
Market Capitalization / Turnover (Fiscal 2022) 6.34 6.64
P/E Ratio 34.75 36.68
VII. Weighted average cost of acquisition compared to Floor Price and Cap Price: There have been no primary transactions as our Company has not issued any Equity Shares or convertible securities, neither has there been any secondary transaction during the last three years preceding the date of the Red Herring Prospectus.
VIII. Price/Earnings ratio based on diluted EPS for FY22 as compared to the average industry peer group PE ratio
P/E based on Diluted EPS as on FY2022 NA
P/E at Higher End of Price Band based on Diluted EPS (FY2022) 66.13x
Average Industry Peer Group PE Ratio* 56.30x
*Arithmetic Average of P/E ratios of peer companies mentioned in the table appearing in point 7 in Basis of Offer Price on page 120 of the RHP. It may be noted that the P/E Ratio has been computed based on the closing market price of the equity shares as of May 15, 2023 (Source: NSE) on www.nseindia.com, divided by the Diluted EPS for the period ended March 31, 2022
The PE ratio based on the Price Band or the Offer Price of our Company may not be indicative of the market price of our Company on listing or thereafter.
Mumbai, June 1, 2023: IKIO Lighting Limited, a manufacturer of Light Emitting Diode (LED) Lighting in India, has fixed the price band at ₹270 to ₹285 per Equity Share (of face value ₹10 each) for its maiden public offer. The initial public offering (“IPO” or “Offer”) of the Company will open on Tuesday, June 06, 2023, for subscription and closes on Thursday, June 08, 2023. Investors can bid for a minimum of 52 Equity Shares and in multiples of 52 Equity Shares thereafter.
The Offer with a face value of ₹ 10 per equity share consists of a fresh issue of equity shares worth up to ₹ 350 crore and an offer-for-sale (OFS) of up to 9,000,000 equity shares by existing shareholders.
The Company is primarily an Original Design Manufacturer (ODM) and designs, develops, manufactures and supplies products to customers who then further distribute these products under their own brands. They also work with their customers to develop, manufacture and supply products that are designed by their customers. Products are categorized as LED lighting, refrigeration lights, ABS (acrylonitrile butadiene styrene) piping and other products. Equipment and systems produced by the Company are used in various industries, including residential, industrial and commercial lighting.
The largest customer of IKIO Lightning is Signify Innovations India Limited (formerly known as Philips Electronics India Limited) which, in Fiscal 2022, had a 50% market share in India’s functional decorative lighting category (including LED spotlights, LED downlights and cove lights) and a 10% market share in India’s true-blue decorative lighting segment (including chandeliers, wall lights, pendants, outdoor lights) according to F & S Report. The Company also has a diversified customer base across industry sectors and geographies which includes Western Refrigeration Private Limited, Panasonic Life Solutions India Private Limited and Novateur Electrical & Digital Systems Private Limited.
IKIO Lighting Limited’s revenue from operations on a proforma consolidated basis grew 55.47% from ₹ 213.45 crore in Fiscal 2021 to ₹ 331.84 crore in Fiscal 2022 and profit after tax has increased 75.37% from ₹ 28.81 crore in Fiscal 2021 to ₹ 50.52 crore in Fiscal 2022. The Company, on a Proforma Consolidated basis for Fiscal 2022, has a return on net worth (RoNW) of 46.40% as against some of its listed peers on a consolidated basis such as Dixon Technologies (19.08%), Amber Enterprises (6.30%), Syrma SGS Technology (10.29%) and Elin Electronics (12.93%).
For the nine months ended December 31, 2022, on a proforma consolidated basis, the company’s revenue from operations stood at ₹ 328.63 crore and profit after tax stood at ₹ 51.35 crore.
In case of any revision to the Price Band, the Bid/Offer Period will be extended by at least three additional Working Days after such revision in the Price Band, subject to the Bid/Offer Period not exceeding 10 Working Days. In cases of force majeure, banking strike or similar circumstances, the Company may, in consultation with the Book Running Lead Manager, for reasons to be recorded in writing, extend the Bid / Offer Period for a minimum of three Working Days, subject to the Bid/ Offer Period not exceeding 10 Working Days. Any revision in the Price Band and the revised Bid/Offer Period, if applicable, shall be widely disseminated by notification to the Stock Exchanges, by issuing a public notice, and also by indicating the change on the website of the Book Running Lead Manager and at the terminals of the Syndicate Member(s) and by intimation to the Designated Intermediaries and the Sponsor Banks, as applicable.
The Offer is being made through the Book Building Process, wherein not more than 50% of the Offer shall be available for allocation to Qualified Institutional Buyers, not less than 15% of the Offer shall be available for allocation to Non-Institutional Bidders and not less than 35% of the Offer shall be available for allocation to Retail Individual Bidders.
Motilal Oswal Investment Advisors Limited is the sole book running lead manager and KFin Technologies Limited is the registrar to the offer. The equity shares are proposed to be listed on the Main Board of BSE and NSE.
Disclaimers: IKIO LIGHTING LIMITED is proposing, subject to receipt of requisite approvals, market conditions and other considerations, to make an initial public offer of its Equity Shares and has filed a draft red herring prospectus dated September 29, 2022 (the “DRHP”) with SEBI and has filed the red herring prospectus dated May 29, 2023 with the RoC (the “RHP”). The RHP shall be made available on the website of the SEBI at www.sebi.gov.in as well as on the website of the BRLM i.e., Motilal Oswal Investment Advisors Limited at www.motilaloswalgroup.com, the website of the National Stock Exchange of India Limited at www.nseindia.com and the website of the BSE Limited at www.bseindia.com. Any potential investor should note that investment in equity shares involves a high degree of risk and for details relating to such risks, see “Risk Factors” beginning on page 33 of the RHP. Potential investors should not rely on the DRHP for any investment decision.
This announcement does not constitute an offer of securities for sale in any jurisdiction, including the United States, and any securities described in this announcement may not be offered or sold in the United States absent registration under the U.S. Securities Act or an exemption from such registration. Any public offering of securities to be made in the United States will be made by means of a prospectus that may be obtained from the issuer or the selling security holder and that will contain detailed information about the company and management, as well as financial statements. No offering or sale of securities in the United States is contemplated.
DISCLAIMER CLAUSE OF SEBI: SEBI only gives its observations on the offer documents and this does not constitute approval of either the Offer or the specified securities stated in the Offer Document. The investors are advised to refer to page 477 of the RHP for the full text of the disclaimer clause of SEBI.
DISCLAIMER CLAUSE OF BSE (The Designated Stock Exchange): It is to be distinctly understood that the permission given by BSE Limited should not in any way be deemed or construed that the RHP has been cleared or approved by BSE Limited nor does it certify the correctness or completeness of any of the contents of the RHP. The investors are advised to refer to the page 481 of the RHP for the full text of the disclaimer clause of the BSE Limited.
DISCLAIMER CLAUSE OF NSE: It is to be distinctly understood that the 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 certify the correctness or completeness of any of the contents of the Offer Document. The investors are advised to refer to page 481 of the RHP for the full text of the disclaimer clause of NSE.
For further details in relation to the Company, BRLM, Company Secretary and Compliance Officer of the Company, availability of application forms and RHP, please refer to statutory advertisement dated May 31, 2023.
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