Kaynes Technology India Limited ("Kaynes Technology" or "Company"), an end-to-end and IoT solutions enabled integrated electronics manufacturing player, having capabilities across the entire spectrum of electronics system design and manufacturing ("ESDM") services, has fixed the price band at ₹559 to ₹587 per Equity Share for its maiden public offer of Equity Shares. The initial public offering ("IPO" or "Offer") of the Company will open on Thursday, November 10, 2022, for subscription and closes on Monday, November 14, 2022. Investors can bid for a minimum of 25 Equity Shares and in multiples of 25 Equity Shares thereafter.
The issue with a face value of ₹10 per Equity Share consists of a fresh issue of Equity Shares aggregating to ₹ 530 crore (the "Fresh Issue"), and an offer for sale of up to 5,584,664 Equity Shares comprising up to 2,084,664 Equity Shares by Ramesh Kunhikannan ("Promoter Selling Shareholder") and up to 3,500,000 Equity Shares by Freny Firoze Irani ("Investor Selling Shareholder" and together with Promoter Selling Shareholder, the "Selling Shareholders") (such offer for sale by the Selling Shareholders, the "Offer for Sale" and together with the Fresh Issue, "the Offer".
The offer also includes a reservation of up to ₹1.5 crore for subscription by eligible employees.
Additionally, the Company in consultation with book running lead managers to the Offer ("BRLMs") had undertaken the pre-IPO placement of 2,338,760 at a price of ₹555.85 per Equity Share aggregating up to ₹ 130 crore comprising of private placement of 1,439,237 Equity Shares to Acacia Banyan Partners aggregating to ₹ 80 crore on October 12, 2022; and 899,523 Equity Shares to Volrado Venture Partners Fund II aggregating to ₹ 50 crore on October 14, 2022.
Ramesh Kunhikannan, the Promoter and one of the Selling Shareholder, entered into share purchase agreement with IIFL Special Opportunities Fund Series-9, IIFL Special Opportunities Fund Series-10 and IIFL High Conviction Fund Series-1 ("Purchasers") pursuant to which Purchasers acquired 807,668 Equity Shares at a price of ₹ 619.07 per Equity Share, aggregating to ₹ 50 crore and also with Ashoka India Equity Investment Trust PLC ("Ashoka") pursuant to which Ashoka acquired 807,668 Equity Shares at ₹ 619.07 aggregating to ₹ 50 crore.
Ramesh Kunhikannan, a technocrat founded Kaynes Technology as a sole proprietorship in 1989 and has over 33 years of expertise in the electronic manufacturing services industry, is the Company's Promoter and Managing Director. Kaynes Technology was one of the first companies to offer design led electronics manufacturing to original equipment manufacturers ("OEMs") using its mature embedded design capabilities. Among the listed space, Kaynes Technology competes with Dixon Technologies India Limited, Syrma SGS Technology Limited and Amber Enterprises India Limited.
Kaynes Technology has eight manufacturing facilities in India, in the states of Karnataka, Haryana, Himachal Pradesh, Tamil Nadu, and Uttarakhand, allowing it to service its customers efficiently and cost-effectively. It had a combined capacity to assemble over 1,500 million (on an annualized basis) components as of June 30, 2022, with an exclusive line for "Green Manufacturing" that is compliant with Directive 2002/95/EC Restriction of Hazardous Substances ("RoHS"), and under the manufacturing infrastructure includes one design facility and two service centres.
As on June 30, 2022, Kaynes Technology had an order book of ₹ 2,266.26 crore, with orders from several customers across business verticals.
Kaynes Technology is the first company in the ESDM industry to be accredited for aerospace products by the National Aerospace and Defense Contractors Accreditation Program ("NADCAP"), and one of the few Indian companies to maintain this accreditation (Source: F&S Report). It has long-term relationship with a large customer base that is diverse in terms of verticals and geographical locations. It served 229 customers in 21 countries for the three months ended June 30, 2022, in verticals such as automotive, aerospace and defence, industrial, railways, medical and IT / ITES.
For three months ended June 30, 2022, Kaynes derives its revenue from business segments which includes OEM - Turnkey Solutions - Box Build; OEM - Turnkey Solutions - Printed Circuit Board Assemblies; ODM; and Product Engineering and IoT Solutions representing 23.52%, 66.59%, 4.97% and 4.92% of the revenue from operations, respectively.
Kaynes Technology clocked a profit after tax of ₹ 41.68 crore in FY22 against ₹ 9.73crore in the previous year, whereas revenue during FY22 increased 67.90% to ₹ 706.24 crore from ₹ 420.63 crore in the previous year, primarily due to increase in sale of goods (net) and sale of services (net).
Profit after tax for the three-month period ended June 30, 2022 stood at ₹ 10.05 crore on revenue from operations of ₹ 199.27 crore. In the three months period ended June 30, 2022, the top 10 customers account for 62.81% of the revenue from operations.
The Offer is being made through the Book Building Process, wherein not more than 50% of the Net Offer shall be available for allocation to Qualified Institutional Buyers, not less than 15% of the Net Offer shall be available for allocation to Non-Institutional Bidders and not less than 35% of the Net Offer shall be available for allocation to Retail Individual Bidders.
In case of revision in the Price Band, the Bid/Offer Period shall be extended for at least three additional Working Days after such revision, subject to the Bid/Offer Period not exceeding 10 Working Days. In cases of force majeure, banking strike or similar circumstances, the Company, in consultation with the BRLMs, 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 Price Band, and the revised Bid/Offer Period, if applicable, shall be widely disseminated by notification to the Stock Exchanges, by issuing a press release and also by indicating the change on the respective websites of the BRLMs and on the terminals of the Syndicate Members and by intimation to the Designated Intermediaries and the Sponsor Bank(s), as applicable. In case of revision of Price Band, the Bid Lot shall remain the same. This is an Offer in terms of Rule 19(2)(b) of the Securities Contracts (Regulation) Rules, 1957, as amended ("SCRR"), read with Regulation 31 of the SEBI ICDR Regulations. The Offer is being made through the Book Building Process in terms of Regulation 6(1) of the SEBI ICDR Regulations, wherein not more than 50% of the Net Offer shall be available for allocation on a proportionate basis to Qualified Institutional Buyers ("QIBs and such portion, the "QIB Portion"), provided that the Company, in consultation with the BRLMs, may allocate up to 60% of the QIB Portion to Anchor Investors on a discretionary basis ("Anchor Investor Portion"), out of which one-third portion shall be reserved for domestic Mutual Funds only, subject to valid Bids being received from domestic Mutual Funds at or above the price at which allocation is made to Anchor Investors ("Anchor Investor Allocation Price"), in accordance with the SEBI ICDR Regulations. In the event of under-subscription, or non-allocation in the Anchor Investor Portion, the balance Equity Shares shall be added to the QIB Portion (excluding the Anchor Investor Portion) ("Net QIB Portion"). Further, 5% of the Net QIB Portion shall be available for allocation on a proportionate basis to Mutual Funds only, and the remainder of the Net QIB Portion shall be available for allocation on a proportionate basis to all QIB Bidders, including Mutual Funds, subject to valid Bids being received from them at or above the Offer Price. However, if the aggregate demand from Mutual Funds is less than 5% of the Net QIB Portion, the balance Equity Shares available for allocation in the Mutual Fund Portion will be added to the remaining Net QIB Portion for proportionate allocation to QIBs. Further, not less than 15% of the Net Offer shall be available for allocation to Non-Institutional Bidders of which one-third portion shall be available for allocation to Non-Institutional Bidders with a Bid size of more than ₹ 200,000 and up to ₹ 1,000,000 and two third portion shall be available for allocation to Non-Institutional Bidders with a Bid size of more than ₹ 1,000,000, in accordance with the SEBI ICDR Regulations and not less than 35% of the Net Offer shall be available for allocation to Retail Individual Bidders in accordance with the SEBI ICDR Regulations, subject to valid Bids being received from them at or above the Offer Price. Further, Equity Shares will be allocated on a proportionate basis to Eligible Employees applying under the Employee Reservation Portion, subject to valid Bids being received from them at or above the Offer Price. All potential Bidders (except Anchor Investors) are mandatorily required to utilise the Application Supported by Blocked Amount ("ASBA") process by providing details of their respective ASBA accounts and UPI ID in case of UPI Bidders using the UPI Mechanism, as applicable, pursuant to which their corresponding Bid Amount will be blocked by the Self Certified Syndicate Banks ("SCSBs") or by the Sponsor Bank(s) under the UPI Mechanism, as the case may be, to the extent of the respective Bid Amounts. Anchor Investors are not permitted to participate in the Offer through the ASBA Process. For further details, see "Offer Procedure" on page 427 of the RHP.
DAM Capital Advisors Limited and IIFL Securities Limited are the BRLMs to the Offer and Link Intime India Private Limited is the registrar to the Offer.
The Equity Shares offered through the Red Herring Prospectus are proposed to be listed on BSE and NSE.