Avalon Technologies Limited — Capital/Financing Update 2023

Nov 10, 2023

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To: To:

BSE Limited The Manager Corporate Relationship Department Listing Department PJ towers, The National Stock Exchange of India Limited Dhalal Street, “Exchange Plaza”, Bandra – Kurla Complex, Mumbai -400001 Bandra (EAST), BSE SCRIP CODE: 543896 Mumbai – 400051 NSE SYMBOL: AVALON

Sirs/Madam,

Sub: - Monitoring Agency Report & Statement of Deviation or Variation

Ref: Regulation 41 (4) of SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018 and under Regulation 32 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Pursuant to the SEBI Regulations mentioned above, please find enclosed herewith the Monitoring Agency Report in respect of the utilization of proceeds of Initial Public Offer (IPO), for the quarter ended September 30, 2023, issued by CARE Ratings Limited, Monitoring Agency.

Further please note that we do not have any deviation or variation in the funds raised through Initial Public Offer (IPO). The Nil Report of the Statement of Deviation or Variation as per Regulation 32(1) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is also enclosed herewith.

The above information will also be made available on the website of the company www.avalontec.com

You are requested to put/take the above information on your record.

Yours sincerely,

For AVALON TECHNOLOGIES LIMITED

RAJESH V

Digitally signed by RAJESH V Date: 2023.11.10 08:48:44 +05'30'

Name of the Person : Dr. V. Rajesh

Designation : Company Secretary Membership Number: F9213 Date: November 10, 2023 Encl : (1) Monitoring Agency Report (2) Statement of Deviation or Variation – NIL report

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No. CARE/CRO/RL/2023-24/1269

Shri Subramanian RM Chief Financial Officer Avalon Technologies Limited

B - 7, MEPZ, First Main Road Tambaram Chennai Tamil Nadu 600045

November 02, 2023

Dear Sir,

Monitoring Agency Report for the quarter ended September 30, 2023 - in relation to the Initial Public Offering of Equity Shares of Avalon Technologies Limited (“the Company”)

We write in our capacity of Monitoring Agency for the Fresh Issue of 73,39,449 equity shares aggregating to Rs. 320.00 crore of the Company and refer to our duties cast under 82 of the Securities & Exchange Board of India (Issue of Capital & Disclosure Requirements) Regulations.

In this connection, we are enclosing the Monitoring Agency Report for the quarter ended September 30, 2023, as per aforesaid SEBI Regulations and Monitoring Agency Agreement dated March 02, 2023.

Request you to kindly take the same on records.

Thanking you, Yours faithfully,

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Abitha Prabakaran

Assistant Director

Abitha.prabakaran@careedge.in

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Report of the Monitoring Agency

Name of the issuer: Avalon Technologies Limited For quarter ended: September 30, 2023 Name of the Monitoring Agency: CARE Ratings Limited (a) Deviation from the objects: Nil

(b) Range of Deviation: Not applicable

Declaration:

We declare that this report provides an objective view of the utilization of the issue proceeds in relation to the objects of the issue based on the information provided by the Issuer and information obtained from sources believed by it to be accurate and reliable. The MA does not perform an audit and undertakes no independent verification of any information/ certifications/ statements it receives. This Report is not intended to create any legally binding obligations on the MA which accepts no responsibility, whatsoever, for loss or damage from the use of the said information. The views and opinions expressed herein do not constitute the opinion of MA to deal in any security of the Issuer in any manner whatsoever. Nothing mentioned in this report is intended to or should be construed as creating a fiduciary relationship between the MA and any issuer or between the agency and any user of this report. The MA and its affiliates also do not act as an expert as defined under Section 2(38) of the Companies Act, 2013.

The MA or its affiliates may have a credit rating or other commercial transactions with the entity to which the report pertains and may receive separate compensation for its ratings and certain creditrelated analyses. We confirm that there is no conflict of interest in such relationship/interest while monitoring and reporting the utilization of the issue proceeds by the issuer, or while undertaking credit rating or other commercial transactions with the entity.

We have submitted the report herewith in line with the format prescribed by SEBI, capturing our comments, where applicable. There are certain sections of the report under the title “Comments of the Board of Directors”, that shall be captured by the Issuer’s Management / Audit Committee of the Board of Directors after the MA submitting their report to the issuer and before dissemination of the report through stock exchanges. These sections have not been reviewed by the MA, and the MA takes no responsibility for such comments of the issuer’s Management/Board.

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Signature: Name of the Authorized Signatory: Abitha Prabakaran Designation of Authorized person/Signing Authority: Assistant Director

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Annexure I

1) Issuer Details:

Name of the issuer : Avalon Technologies Limited Name of the promoter : Mr Kunhamed Bicha and Mr Bhaskar Srinivasan Industry/sector to which it belongs : Electronics Manufacturing Services

2) Issue Details

Issue Period : April 03, 2023, to April 06, 2023 Type of issue (public/rights) : Public issue Type of specified securities : Equity shares IPO Grading, if any : Not applicable Issue size (in Rs. crore) : Rs. 320.00 crore (Note 1)

Note 1:

Particulars	Remarks
Total shares issued and subscribed as part of fresh issue	73,39,449
Total proceeds received from fresh issue (in Rs.)	320,00,00,000
Details of expenses incurred related to fresh issues* (in Rs.)	20,60,00,000
Net proceeds available for utilisation (in Rs.)*	299,40,00,000

*Estimated cost of issue as per the offer document was Rs. 20.6 crore. The BRLMs have reworked and earmarked ₹ 21.57 crore for the issue expenses and transferred an amount of Rs. 298.43 crore into the monitoring agency account. The variation of ₹ 0.97 crore is not material and within permissible deviation limit of 10%.

3) Details of the arrangement made to ensure the monitoring of issue proceeds:

Particulars	Reply	Source of information / certifications considered by Monitoring Agency for preparation of report	Comments of the Monitoring Agency	Comments the Board of Directors
Whether all utilization is as per the disclosures in the Offer Document?	Yes	Chartered Accountant certificate*, Bank statement	Yes	Nil
Whether shareholder approval has been obtained in case of material deviations# from expenditures disclosed in the Offer Document?	Not applicable	Not applicable	Not applicable
Whether the means of finance for the disclosed objects of the issue have changed?	No	Not applicable	Not applicable

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Particulars	Reply	Source of information / certifications considered by Monitoring Agency for preparation of report	Comments of the Monitoring Agency	Comments the Board of Directors
Is there any major deviation observed over the earlier monitoring agency reports?	Not applicable	Not applicable	Not applicable
Whether all Government/statutory approvals related to the object(s) have been obtained?	Not applicable	Not applicable	Not applicable
Whether all arrangements pertaining to technical assistance/collaboration are in operation?	Not applicable	Not applicable	Not applicable
Are there any favorable/unfavorable events affecting the viability of these object(s)?	No	Not applicable	Not applicable
Is there any other relevant information that may materially affect the decision making of the investors?	No	Not applicable	Not Applicable

• Chartered Accountant certificate from M/s Mohan & Venkatraman, Chartered Accountants dated October 17, 2023.

#Where material deviation may be defined to mean:

• a) Deviation in the objects or purposes for which the funds have been raised

• b) Deviation in the amount of funds actually utilized by more than 10% of the amount projected in the offer documents.

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4) Details of objects to be monitored:

(i) Cost of objects –

Sr. No	Item Head	Source of information / certifications considered by Monitoring Agency for preparation of report	Original cost (as per the Offer Document) in Rs. Crore	Revised Cost in Rs. Crore	Comments of the Monitoring Agency	Comments of the Board of Directors	Comments of the Board of Directors	Comments of the Board of Directors
						Reason for cost revision	Proposed financing option	Particulars of firm arrangements made
1	Prepayment or repayment of all or a portion of certain outstanding borrowings availed by our Company and one of our Material Subsidiaries, ATSPL	Offer Document	145.00	Not applicable	Nil	Nil
2	Funding the working capital requirements of our Company	Offer Documents	90.00	Not Applicable	Nil
3	General corporate purposes (GCP)	Offer Documents	64.40#	Not Applicable	#
Total			299.40

As per the offer document, GCP was Rs. 64.40 crore which was worked out based on estimated cost of issue of Rs. 20.6 crore. The BRLMs have reworked and earmarked ₹ 21.57 crore for the issue expenses and transferred an amount of Rs. 298.43 crore into the monitoring agency account. This deviation is not material and within the permissible deviation limit of 10%.

The company has not fully incurred the offer expenses yet. The earmarked funds for issue expenses is still an estimate and the balance funds is in the public issue account. Surplus after paying the issue expenses would be credited to the monitoring account and shall be utilised for the objects. Hence, this would continue to be monitored.

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(ii) Progress in the objects – (Give item by item description for all	(ii) Progress in the objects – (Give item by item description for all	(ii) Progress in the objects – (Give item by item description for all	(ii) Progress in the objects – (Give item by item description for all	the Objects stated in the Offer Document in following format)	the Objects stated in the Offer Document in following format)	the Objects stated in the Offer Document in following format)	the Objects stated in the Offer Document in following format)	the Objects stated in the Offer Document in following format)	the Objects stated in the Offer Document in following format)	the Objects stated in the Offer Document in following format)
Sr . N o	Item Head	Source of informatio n / certificati ons considere d by Monitorin g Agency for preparatio n of report	Amount as propose d in the Offer Docume nt in Rs. Crore	Amount utilised in Rs. Crore			Total unutilis ed amount ₹ Crore	Commen ts of the Monitori ng Agency	Comments of the Board of Directors
					Crore
				As at beginni ng of the quarter in Rs. Crore	Durin g the quart er in Rs. Crore				Reaso ns for idle funds	Propos ed course of action
						At the
						end of
						the
						quarter
						in Rs. Crore
1	Prepayme nt or repaymen t of all or a portion of certain outstandin g borrowing s availed by our Company and one of our Material Subsidiari es, ATSPL	Chartered Accountant certificate*, Bank statements, closure letters, Offer Document	145.00	144.97	-	144.97	0.03	-	Nil
2	Funding the working capital requireme nts of our Company	Chartered Accountant certificate*, Bank statements, Offer Document	90.00	90.00	-	90.00	-	-
3	General corporate purposes (GCP)	CA certificate, Bank statements, Offer Document	64.40	63.46	-	63.46	**	**
Total			299.40	298.43 **	-	298.43 **	**

• Chartered Accountant certificate from M/s Mohan & Venkatraman, Chartered Accountants dated October 17, 2023

** As per the offer document, GCP was Rs. 64.40 crore which was worked out based on estimated cost of issue of Rs. 20.60 crore. The BRLMs have reworked and earmarked ₹ 21.57 crore for the issue expenses and transferred an amount of Rs. 298.43 crore into the monitoring agency account. This deviation is not material and within the permissible deviation limit of 10%.

The company has not fully incurred the offer expenses yet. The earmarked funds for issue expenses are still an estimate and the balance funds is in the public issue account. Surplus after paying the issue expenses would be credited to the monitoring account and shall be utilised for the objects. Hence, this would continue to be monitored.

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(iii) Deployment of unutilised IPO proceeds:

Sr. No.	Name of the Bank	Name of the Bank	Type of account	Type of account	Amount in Rs. crore	Amount in Rs. crore	Source of information / certifications considered by Monitoring Agency for preparation of report	Source of information / certifications considered by Monitoring Agency for preparation of report	Source of information / certifications considered by Monitoring Agency for preparation of report
1.	Not applicable		Not applicable		Not applicable			Not applicable
Sr. No.	Type of instrument and name of the entity invested in	Amount invested		Maturity date		Earning		Return on Investment (%)	Market Value as at the end of quarter
1.	Not applicable	Not applicable		Not applicable		Not applicable		Not applicable	Not applicable

(iv) Delay in implementation of the object(s)

				Comments of the Board of	Comments of the Board of
	Completion Date
				Directors
			Delay (no. of
Objects					Proposed
	As per the offer		days/ months)	Reason of
					course of
	document	Actual		delay
					**action **
Prepayment or repayment of all or a portion of certain outstanding borrowings availed by our Company and one of our Material Subsidiaries, ATSPL	FY24	NA	NA	NA	NA
Funding the working capital requirements of our Company	FY24	FY24	NA	NA	NA
General corporatepurposes(GCP)	FY24	NA	NA	NA	NA

5) Details of utilization of proceeds stated as General Corporate Purpose (GCP) amount in the offer document:

Sr. No		Amount in Rs. Crore	Source of information /
			certifications considered	Comments of	Comments of the Board
	Item Head^
			by Monitoring Agency for	Monitoring Agency	of Directors
			preparation of report
			Not applicable for the quarter under review**

• Chartered Accountant certificate from M/s Mohan & Venkatraman Chartered Accountants dated October 17, 2023.

**As per the offer document, GCP was Rs. 64.40 crore which was worked out based on estimated cost of issue of Rs. 20.6 crore. The BRLMs have reworked and earmarked ₹ 21.57 crore for the issue expenses and transferred an amount of Rs. 298.43 crore into the monitoring agency account.

The company has not fully incurred the expenses yet. The earmarked funds for issue expenses are still an estimate and the balance funds is in the public issue account. The surplus after paying the issue expenses would be credited to the monitoring account and shall be used for the objects. No amounts were transferred from public account to monitoring account during the quarter under review. Hence, this continues to be monitored

^Section from the offer document related to GCP:

The general corporate purposes for which our Company proposes to utilise the Net Proceeds include, without limitation, strategic initiatives, funding growth opportunities, strengthening marketing capabilities and brand building exercises, meeting ongoing general corporate contingencies, expenses incurred in ordinary course of business, meeting our business requirements, payment of lease liabilities, payment of commission and/or fees to consultants, acquisition of fixed assets, capital expenditure in the ordinary course of business, business development initiatives, employee welfare activities, any of the other Objects, payment of pre – payment/repayment penalties upon prepayment/repayment of loans, other expenses including salaries and wages, administration, insurance, repairs and maintenance, payment of taxes and duties and any other purpose, as may be approved by our Board or a duly constituted committee thereof from time to time, subject to compliance with applicable law, including provisions of the Companies Act. In the event our Company is unable to utilise the Net Proceeds towards any of the objects of the Offer for any of the reasons as aforementioned, our Company may

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utilise such Net Proceeds towards general corporate purposes, provided that the aggregate amount deployed towards general corporate purposes shall not exceed 25% of the gross proceeds from the Fresh Issue.

The quantum of utilisation of funds towards each of the above purposes will be determined by our Board, based on the amount available under this head and the business requirements of our Company, from time to time. Our Company’s management, in accordance with the policies of the Board, shall have flexibility in utilising surplus amounts, if any. In the event that we are unable to utilise the entire amount that we have currently estimated for use out of Net Proceeds in a Fiscal, we will utilise such unutilised amount(s) in the subsequent Fiscals.

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Enclosed No; 2

STATEMENT ON DEVIATION OR VARIATION FOR PROCEEDS OF PUBLIC ISSUE, RIGHTS ISSUE, PREFERENTIAL ISSUE, QUALIFIED INSTITUTIONS PLACEMENT ETC

1.	Name of the Listed Entity		Avalon Technologies Limited	Avalon Technologies Limited
2.	Mode of Fund Raising		Public Issue~~/ Rights~~ ~~Issues / Preferential Issues /QIP / Others~~
3.	Date of RaisingFunds		April 03, 2023 to April 06, 2023
4.	Amount Raised		₹ 8650 Million (comprising of fresh issue of 7,339,449 Equity Shares, aggregating to ₹ 3,200.00 million and offer for sale of 12,499,997 Equity Shares,aggregatingto ₹ 5,450.00 million)
5.	Report filed forQuarter ended		September	30,2023
6.	MonitoringAgency		Applicable	/~~Not Applicable~~
7.	MonitoringAgencyName,if applicable		CARE Ratings Limited
8.	Is there a Deviation / Variation in use of funds raised		No
9.	If yes, whether the same is pursuant to change in terms of a contract or objects, which was approved bythe shareholders		Not Applicable
10.	If Yes,Date of shareholder Approval		Not Applicable
11.	Explanation for the Deviation / Variation		Not Applicable
12.	Comments of the Audit Committee after review		None
13.	Comments of the auditors if any		None

Objects for which funds have been raised and where there has been a deviation, in the following table:

(₹ in crores)

Original Object	Modified Object if any	Original Allocation	Modified allocation if any	Funds Utilised	Amount of Deviation/Variation for the quarter according to applicable object	Remarks if any
Prepayment or repayment of all or a portion of certain outstanding borrowings availed by our Company and one of our Material Subsidiaries, ATSPL	Not Applicable	145.00	Not applicable	144.97	Not applicable	None
Funding the working capital requirements of our Company	Not Applicable	90.00	Not Applicable	90.00	Not applicable	None
General corporate purposes (GCP)	Not Applicable	64.40	Not Applicable	63.46	Not applicable	Refer Note 2
	TOTAL	299.40		298.43
NOTES:

1.

Particulars	Remarks
Total shares issued and subscribed as part of fresh issue	73,39,449
Total proceeds received from fresh issue (in Rs.)	320,00,00,000
Details of expenses incurred related to fresh issues (in Rs.)	20,60,00,000
Net proceeds available for utilization (in Rs.)*	299,40,00,000

2. Estimated cost of issue as per the offer document was Rs. 20.60 crore. The BRLMs have reworked and earmarked ₹ 21.57 crore for the issue expenses and transferred an amount of Rs. 298.43 crore into the monitoring agency account. The variation of ₹ 0.97 crore is not material and within permissible deviation limit of 10%. The same has also been mentioned in the Report of Monitoring Agency.