Happiest Minds Technologies Limited — Capital/Financing Update 2024

Nov 14, 2024

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Happiest Minds Technologies Limited Regd. Office: #53/1-4, Hosur Main Road, Madivala, Bengaluru-560068, Karnataka, India CIN of the Co. L72900KA2011PLC057931 P: +91 80 6196 0300, F: +91 80 6196 0700 Website: www.happiestminds.com Email: investors@happiestminds.com

November 14, 2024

Listing Compliance & Legal Regulatory BSE Limited Phiroze Jeejeebhoy Towers Dalal Street, Mumbai 400 001 Stock Code: 543227

Listing & Compliance National Stock Exchange of India Limited Exchange Plaza, Bandra Kurla Complex Bandra East, Mumbai 400 051 Stock Code: HAPPSTMNDS

Dear Sir/Madam,

Sub: Report of the Monitoring Agency

Pursuant to Regulation 32(6) of SEBI (Listing Obligations and Disclosure Requirements) Regulation, 2015 read with Regulation 173A of SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018, please find enclosed herewith Monitoring Agency Report dated November 14, 2024, in respect of utilization of proceeds of QIP for the quarter ended September 30, 2024, issued by M/s. CARE Ratings Limited, Monitoring Agency.

This is for your information and records.

Thanking you, Yours faithfully,

For Happiest Minds Technologies Limited

Praveen Kumar Digitally signed by Praveen Kumar Darshankar Darshankar Date: 2024.11.14 20:45:30 +05'30' Praveen Kumar Darshankar Company Secretary & Compliance Officer Membership No. F6706

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Monitoring Agency Report

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No. CARE/HO/GEN/2024-25/1106

Shri Sriranganarayana Krishnamacharya Vice President (Finance) Happiest Minds Technologies Limited

No 53/1-4, Hosur Main Road, Madivala, Next To Madivala Police Stn, Bengaluru

Karnataka 560068

November 14, 2024

Dear Sir,

- Monitoring Agency Report for the quarter ended September 30, 2024 in relation to the QIP issue of Happiest Minds Technologies Limited (“the Company”)

We write in our capacity of Monitoring Agency for the QIP Issue for the amount aggregating to Rs. 500.00 crore of the Company and refer to our duties cast under 173A 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, 2024 as per aforesaid SEBI Regulations and Monitoring Agency Agreement dated August 04, 2023.

Request you to kindly take the same on records.

Thanking you,

Yours faithfully,

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Hitesh Avachat Associate Director

Hitesh.avachat@careedge.in

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Report of the Monitoring Agency

Name of the issuer: Happiest Minds Technologies Limited

For quarter ended: September 30, 2024 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 credit rating or other commercial transactions with the entity to which the report pertains and may receive separate compensation for its ratings and certain credit related 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 subsequent to 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 and designation of the Authorized Signatory: Hitesh Avachat Designation of Authorized person/Signing Authority: Associate Director

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1) Issuer Details:

Name of the issuer Name of the promoter Industry/sector to which it belongs

: Happiest Minds Technologies Limited : Mr. Ashok Soota : Information Technology

2) Issue Details

Issue Period Type of issue Type of specified securities IPO Grading, if any Issue size (in crore)

: July 11, 2023 to July 14, 2023 : Qualified Institutional Placement : Equity shares : Not applicable : Rs. 500 crore

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 of the Board of Directors
Whether all utilization is as per the disclosures in the Offer Document?	Yes	Chartered Accountant Certificate* Bank statement	The unutilized issue proceeds were invested in fixed deposits in several bank accounts. Upon maturity, these funds were either directly utilized or transferred to other accounts and were expensed towards the stated objects of the issue. However, due to numerous other transactions in these bank accounts, we were not clearly able to ascertain the interim utilization of the issue proceeds. CARE Ratings have thus relied on management declaration issued by the company and the CA certificate issued by the peer- reviewed firm, along with bank account statement highlighting the specific end utilization of the proceeds.	Nil

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Particulars	Reply	Source of information / certifications considered by Monitoring Agency for preparation of report	Comments of the Monitoring Agency	Comments of the Board of Directors
Whether shareholder approval has been obtained in case of material deviations# from expenditures disclosed in the Offer Document?	No	NA	Nil	Nil
Whether the means of finance for the disclosed objects of the issue have changed?	No	NA	Nil	Nil
Is there any major deviation observed over the earlier monitoring agency reports?	No	NA	Nil	Nil
Whether all Government/statutory approvals related to the object(s) have been obtained?	NA	NA	Nil	Nil
Whether all arrangements pertaining to technical assistance/collaboration are in operation?	NA	NA	Nil	Nil
Are there any favorable/unfavorable events affecting the viability of these object(s)?	No	NA	Nil	Nil
Is there any other relevant information that may materially affect the decision making of the investors?	No	NA	Nil	Nil

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.

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				Comments of the Board of	Comments of the Board of	Directors
			Original cost (as per the Offer Document) in Rs. Crore	Revised Cost in Rs. Crore	Comments of the Monitoring Agency	Reason for cost revision	Proposed financing option	Particulars of -firm arrangement s made
1	Investment in Subsidiaries	Placement document/Bank statements	25.00	NA	NA	NA	NA	NA
2	Working Capital requirement	Placement document/Bank statements	300.00	NA	NA	NA	NA	NA
3	Inorganic Growth	Placement document/Bank statements	50.00	NA	NA	NA	NA	NA

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4	General Corporate Purpose	Placement document/Bank statements	111.00	NA	NA	NA	NA	NA
Total			486.00

*As per Chartered Accountant certificate from ADITHYA and VISHWAS dated November 12, 2024.

– (ii) Progress in the objects

Sr. No	Item Head	Source of information / certifications considered by Monitoring Agency for preparation of report		Amount utilised in Rs. Crore	Amount utilised in Rs. Crore	Amount utilised in Rs. Crore	Total	Comments of the Monitoring Agency	Comments of the Board of Directors	Comments of the Board of Directors
			Amount as proposed in the Offer Document in Rs. Crore
				As at beginni ng of the quarter in Rs. Crore	During the quarter in Rs. Crore	At the end of the quarter in Rs. Crore			Reasons for idle funds	Propose d course of action
							unutilised
							amount in
							Rs. crore
1	Investment in Subsidiaries	Placement document/Bank statements	25.00	-	-	-	25.00	Nil	Nil	Nil
2	Working Capital requirement	Placement document/Bank statements	300.00	213.17	86.83	300.00	-	Nil	Nil	Nil
3	Inorganic Growth	Placement document/Bank statements	50.00	50.00	-	50.00	-	Nil	Nil	Nil
4	General Corporate Purpose	Placement document/Bank statements	111.00	92.80	18.20	111.00	-	Nil	Nil	Nil
Total				355.97	105.03	461.00	25.00

• *As per Chartered Accountant certificate from ADITHYA and VISHWAS dated November 12, 2024. Fund Deployment summary:

• Rs. 93.83 crores were utilized towards payroll payments.

• Rs. 10.13 crores were utilized towards TDS payments.

• Rs. 1.07 crores were utilized towards payment of Interest expenses.

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(iii) Deployment of unutilized proceeds:

	Sr. No.	Type of instrument and name of the entity invested in	Type of instrument and name of the entity invested in	Amount invested	Maturity date	Maturity date	Maturity date	Earning		Return on Investment (%)	Return on Investment (%)	Market Value as at the end of quarter
					Parking of funds
1.		Balance in Axis Monitoring account		9.50	-			-		-		NA
2.		Balance in Axis Bank account (xxxxxxxxxxx2146)		3.00	-			-		-		NA
3.		Balance with SBI bank (xxxxxxx1308)		12.50	-			-		-		NA
	*** As per Chartered certificate from ADITHYA and VISHWAS dated November 12, 2024. Note:**The company has earned an interest of Rs. 15.43 crores till September 30, 2024 from parking of funds. (iv) Delay in implementation of the object(s)–
			Completion Date				Delay (no. of			Comments of the Board of Directors
	Objects		As per the offer				days/				Proposed course of
									Reason of delay
			document			Actual	months)				action
	Investment in Subsidiaries		FY 2024*			Delay than estimated scheduled	7 Months		Nil		Nil
	Working Capital requirement		FY 2024 & FY 2025			Utilisations exceeding estimated Schedule for FY24	Partially Delayed		Nil		Nil
	Inorganic Growth		FY 2024*			Delay than estimated scheduled	5 Months		Nil		Nil
	General Corporate Purpose		FY 2024 & FY 2025			Utilisations exceeding estimated Schedule for FY24	Partially Delayed		Nil		Nil

*As per the company placement document, the estimated timeline of execution is FY24, however the document states that in the event that estimated utilization out of the Net Proceeds in a fiscal is not completely met, the same shall be utilized in the subsequent fiscals, as may be decided by the Company, in accordance with applicable laws.

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

			Source of information /
		Amount	certifications considered by	Comments of Monitoring	Comments of the Board of
Sr. No	Item Head^
		in Rs. Crore	Monitoring Agency for preparation	Agency	Directors
			of report
1.	Sept 2024 payroll payment	18.20	Management report, CA certificate and Bank Statement	NA	NA

^ Section from the offer document related to GCP:

“Our company intends to deploy Rs 11,100 lacs out of the Net Proceeds towards general corporate purpose subject to the amount allocated towards general corporate purpose not exceeding 25% of the Gross Proceeds in compliance with the circular bearing reference No. NSE/CML/2022/56 dated December 13, 2022, issued by NSE and circular no. 20221213-47 dated December 13, 2022, issued by BSE.

We will have flexibility in utilizing the Net Proceeds for general corporate purpose, including but not restricted to strategic initiatives, investments, repayment and prepayment penalty on loans as applicable, strengthening of our research and development (R&D), meeting exigencies and expenses incurred by our Company, as may be applicable, funding any shortfall in any of the objects is se forth above, or such other purposes as may be determined by the Board or a duly constituted committee thereof from time to time, subject to compliance with applicable law, including provisions of the Companies Act. The quantum of utilization of funds or the deployment towards each of the above purposes will be determined by our Board or a committee thereof, based on the amount actually available under this head and business requirements of our Company, from time to time.”earmarked for general corporate purposes.”

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Disclaimers to MA report:

a) This Report is prepared by CARE Ratings Ltd (hereinafter referred to as “Monitoring Agency/MA” ). The MA has taken utmost care to ensure accuracy and objectivity while developing this Report based on the information provided by the Issuer and information obtained from sources believed by it to be accurate and reliable. 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.

b) This Report has to be seen in its entirety; the selective review of portions of the Report may lead to inaccurate assessments. For the purpose of this Report, MA has relied upon the information provided by the management /officials/ consultants of the Issuer and third-party sources like statutory auditors (or from peer reviewed CA firms) appointed by the Issuer believed by it to be accurate and reliable. c) Nothing contained in this Report is capable or 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 MA is also not responsible for any errors in transmission and specifically states that it, or its directors, employees do not have any financial liabilities whatsoever to the users of this Report. d) The MA and its affiliates do not act as a fiduciary. The MA and its affiliates also do not act as an expert to the extent defined under Section 2(38) of the Companies Act, 2013. While the MA has obtained information from sources it believes to be reliable, it does not perform an audit and undertakes no independent verification of any information/ certifications/ statements it receives from auditors (or from peer reviewed CA firms), lawyers, chartered engineers or other experts, and relies on in its reports. e) The MA or its affiliates may have other commercial transactions with the entity to which the report pertains. As an example, the MA may rate the issuer or any debt instruments / facilities issued or proposed to be issued by the issuer that is subject matter of this report. The MA may receive separate compensation for its ratings and certain credit-related analyses, normally from issuers or underwriters of the instruments, facilities, securities or from obligors.