IKIO Technologies Limited — Capital/Financing Update 2024

Aug 13, 2024

SANDEEP

KUMAR AGARWAL

Digitally signed by SANDEEP KUMAR AGARWAL Date: 2024.08.13 14:56:14 +05'30'

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Monitoring Agency Report for IKIO Lighting Limited for the quarter ended June 30, 2024

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CRL/MAR/IKLIPL/2024-25/1152

August 12, 2024

To

IKIO Lighting Limited

411, Arunachal Building, 19 Barakhamba Road, Connaught Place, New Delhi – 110 001

Dear Sir,

Monitoring Agency Report for the quarter ended June 30, 2024 - in relation to the Initial Public Offer (“IPO”) of IKIO Lighting Limited (“the Company”)

Pursuant to Regulation 41(2) of SEBI (lssue of Capital and Disclosure Requirements) Regulations, 2018 (“ SEBI ICDR Regulations ”) and Monitoring Agency Agreement dated April 18, 2023, enclosed herewith the Monitoring Agency Report, issued by CRISIL Ratings Limited, Monitoring Agency, as per Schedule XI of the SEBI ICDR Regulations towards utilization of proceeds of IPO for the quarter ended June 30, 2024.

Request you to kindly take the same on records.

Thanking you,

For and on behalf of CRISIL Ratings Limited

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Sushant Sarode

Director, Ratings (LCG)

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Report of the Monitoring Agency (MA)

Name of the issuer: IKIO Lighting Limited

For quarter ended: June 30, 2024

Name of the Monitoring Agency: CRISIL Ratings Limited

• (a) Deviation from the objects: Not applicable

• (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 we do not perceive any conflict of interest in such relationship/interest while monitoring and reporting the utilization of the issue proceeds by the issuer.

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: Sushant Sarode Designation of Authorized person/Signing Authority: Director, Ratings (LCG)

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1) Issuer Details: Name of the issuer: IKIO Lighting Limited Names of the promoter: a. Hardeep Singh b. Surmeet Kaur Industry/sector to which it belongs : Consumer electronics 2) Issue Details Issue Period: Tuesday, June 06, 2023 to Thursday, June 08, 2023 Type of issue (public/rights): Initial Public Offer (IPO) Type of specified securities: Equity Shares IPO Grading, if any: NA Issue size: Rs 6,065.00 million Issue size comprises of fresh issuance/gross proceeds of Rs 3,500.00 million (Net proceeds of Rs 3,261.41 million*) and an offer for sale of Rs 2,565.00 million

• CRISIL Ratings shall be monitoring the net proceeds amount. During the reported quarter after payment of all Issue related expenses including GST, the remaining surplus balance of Rs 3.91 million in “Public Issue Account” was transferred to “Monitoring Account” and is added to GCP, hence, the net proceeds were revised to Rs 3,261.41 million.

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	Management undertaking, Statutory Auditor Certificate^, Final Offer Document, Bank Statements	No Comments	No Comments
Whether shareholder approval has been obtained in case of material deviations from expenditures disclosed in the Offer Document?	NA	Management undertaking, Statutory Auditor Certificate^	No Comments	No Comments
Whether the means of finance for the disclosed objects of the issue has changed?	No		No Comments	No Comments
Is there any major deviation observed over the earlier monitoringagencyreports?	No		No Comments	No Comments
Whether all Government/statutory approvals related to the object(s)have been obtained?	Yes		Refer Note	No Comments

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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 all arrangements pertaining to technical assistance/collaboration are in operation?	NA	Management undertaking, Statutory Auditor Certificate^	No Comments	No Comments
Are there any favorable events improving the viabilityof these object(s)?	No		No Comments	No Comments
Are there any unfavorable events affecting the viabilityof the object(s)?	No		No Comments	No Comments
Is there any other relevant information that may materially affect the decision making of the investors?	No		No Comments	No Comments
NA represents Not Applicable

Note: As per the offer document filed by the Company, the Company is required to obtain below mentioned approvals from government/statutory bodies, in relation to proposed objects and the status of these approvals as at the end of the reported quarter is as follows:

Sr. No.	Approval for	Authority	Stage at which approvals are required	Status
1	In-principle approval of buildinglayout	Noida Authority	-	Obtained
2	Consent to establish before commissioning	Noida Authority	Before commissioning	Obtained
3	Sanction of electrical load	UP Electricity Board	Before commissioning	Obtained
4	In-principle approval to construct, extend or take into use any buildingas a factory	Noida Authority	Before commissioning	Letter of consent to establish dated 23 April 2024 is Obtained by the Company, effective from 05 April 2024
5	Factory License (Refer note 1)	Industrial Department	Before commissioning	Letter dated 19 April 2024 is obtained by the Company for Registration and licence effective from the same day

Note 1: The Board of Directors of the Company vide resolution dated 28 June 2023 has approved the leasing of separate premises situated at, “Ikio Solutions Pvt Ltd Unit 2, Plot No- 6, Sector- 156, Gautam Buddha Nagar, 201310, District – Gautam Buddh Nagar” to speed up the production for object 2, the plant and machinery was installed in the leased premises for which factory licence was received on 08 January 2024 and commercial production started with effect from 20 March 2024. The leased premises are adjacent to the land already owned by the Company located at “Plot No 10, Sector 156, Noida, Gautam Budh Nagar, Uttar Pradesh – 201301” as mentioned in the prospectus filed by the Company.

As per the relevant extracts provided in the prospectus filed by the Company , “We may have to revise our funding requirement on account of various factors, such as financial and market conditions, delay in procuring and operationalizing assets or necessary licenses and approvals, competition, price fluctuations, interest rate fluctuations and other external factors, which may not be within the control of our management. This may also entail rescheduling of the proposed deployment of the Net Proceeds at the discretion of our management, subject to compliance with applicable laws.” Hence utilisation from these leased premises is in line with the disclosures provided in the prospectus filed by the Company.

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^Certificate dated July 30, 2024, issued by M/s BGJC & Associates LLP, Chartered Accountants (Firm Registration Number: 003304N/N500056), Statutory Auditors of the Company.

4) Details of object(s) to be monitored:

i. Cost of the object(s):

Sr. No.	Item Head	Source of information/ certification considered by MA for preparation of report	Original cost (as per the Offer Document) (Rs in million)	Revised Cost (Rs in million)	Comment of the MA	Comments of the Board of Directors	Comments of the Board of Directors	Comments of the Board of Directors
						Reason of Cost revision	Proposed financing option	Particulars of firm arrange- ments made
1	Repayment/ prepayment, in full or part, of certain borrowings availed by Company and its Subsidiaries on consolidated basis	Management undertaking, Statutory Auditor Certificate^, Final offer document	500.00	500.00	No Comments	No Comments	No Comments	No Comments
2	Investment in wholly owned Subsidiary, IKIO Solutions Private Limited, for setting up a new facility at Noida, Uttar Pradesh		2,123.12	2,123.12	No Comments	No Comments	No Comments	No Comments
3	General Corporate Purposes#		669.55	638.29	Refer note 2	No Comments	No Comments	No Comments
	Total	-	3,292.67	3,261.41	-	-	-	-

^Certificate dated July 30, 2024, issued by M/s BGJC & Associates LLP, Chartered Accountants (Firm Registration Number: 003304N/N500056), Statutory Auditors of the Company.

#The amount utilised for general corporate purposes does not exceed 25% of the Gross Proceeds (amounting to Rs 875.00 million) from the Fresh Issue.

Note 2: GST amount of Rs 35.17 million on Issue related expenses retained in “Public Issue Account” till previous quarter was reduced from net proceeds and further, during the reported quarter after payment of all Issue related expenses including GST, the remaining surplus balance of Rs 3.91 million in “Public Issue Account” was transferred to “Monitoring Account” and is added to GCP, hence, the net proceeds were revised to Rs 3,261.41 million.

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ii. Progress in the object(s)[#] :

Sr. No.		Source of
				Amount utilized					Comments of the Board
		information/	Amount
		certifications	as	(Rs in million)					of Directors
		considered by	proposed				Total	Comments of
		Monitoring	in the				unutilized	the
				As at		At the
	Item Head	Agency for	Offer				amount	Monitoring
				beginning	During	end				Proposed
		preparation of	Document				(Rs in	Agency	Reasons for
				of the	the	of the				course of
		report	(Rs in				million)		idle funds
				quarter	quarter	quarter				action
			million)
1	Repayment/ prepayment, in full or part, of certain borrowings availed by Company and its Subsidiaries on consolidated basis	Management undertaking, Statutory Auditor Certificate^, Final Offer Document, Bank Statements	500.00	500.00	0.00	500.00	0.00	Fully utilised during quarter ended June 30, 2023	No comments	No comments
2	Investment in wholly owned Subsidiary, IKIO Solutions Private Limited, for setting up a new facility at Noida, Uttar Pradesh		2,123.12	579.93				No comments	No comments	No comments
					176.14
						756.07	1,367.05
					(Refer note 3)
3	General Corporate Purposes		638.29 (Refer note 2)	443.27				No comments	No comments	No comments
					39.00	482.27	156.02
	Total	-	3,261.41	1,523.20	215.14			-	-	-
					(Refer note	1,738.34	1,523.07
					4)

^Certificate dated July 30, 2024, issued by M/s BGJC & Associates LLP, Chartered Accountants (Firm Registration Number: 003304N/N500056), Statutory Auditors of the Company.

#All figures in the above table are rounded off to nearest two decimal places

Note 3: During the Q4 FY24, the Company had released the payment of Rs 2.06 million for building related lift work, but the supplier was not able to present cheque within stipulated period and hence this amount was returned during the reported quarter. Therefore, the aforesaid amount is reduced from total utilisation towards project during the reported quarter Q1 FY25.

Further, during the Q2 FY 24, the Company had paid Rs. 0.775 million as advance for building related work. However, after negotiation with the supplier, company has received material for Rs. 0.771 million and hence Rs. 0.004 million was returned during the reported quarter. Therefore, the aforesaid amount is reduced from total utilisation towards project during the reported quarter Q1 FY25.

Note 4: The Board of Directors of the Company vide resolution dated 24 May, 2024 has approved the utilization of net proceeds for FY 2024-2025 amounting to Rs 1,000 million. Further, the board approved the provisional amount of Rs 30.00 million towards GCP for Q1 FY 25. However, during the reported quarter, the actual utilization has exceeded the amount approved by the board. The Board of directors have ratified the excess utilisation of net proceeds of Rs. 9 million towards utlisation of GCP.

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#Brief description of objects:

Object of the Issue Description of objects as per the offer document filed by the issuer

Object of the Issue	Description of objects asper the offer document filed by the issuer
Repayment/ prepayment, in full or part, of certain borrowings availed by Company and its Subsidiaries on consolidated basis	The loan facilities availed by the Company and its Subsidiaries include borrowing in the form of, inter alia, vehicle loans, term loans and working capital facilities including fund based and non-fund-based borrowings. As at January 31, 2023, total outstanding borrowings amounted on consolidated basis to₹1,515.53 million. Company proposes to utilise an estimated amount of₹500.00 million from the Net Proceeds towards full or partial repayment or pre-payment of certain borrowings availed by the Company and its Subsidiaries on consolidated basis.
Investment in wholly owned Subsidiary, IKIO Solutions Private Limited, for setting up a new facility at Noida, Uttar Pradesh	Investment in wholly owned Subsidiary, IKIO Solutions, in order to set up a new manufacturing facility at Noida, Uttar Pradesh. The proposed investment by the Company will be undertaken to set -up a new manufacturing facility for carrying out electronic manufacturing services. This will also allow the Company to better serve its existing customers, assist in better addressing the business requirements of large customers, and allowing them to expand into new business verticals, in particular, to address the growing consumer of electronic manufacturing services for lights, rotary switch and electric switch, socket, ABS pipe and solar for recreational vehicles.
General Corporate Purposes (GCP)	The general corporate purposes for which the Company proposes to utilize Net Proceeds include, without limitation: (i) Business development initiatives, (ii) Research and development, (iii) Meeting any expense including salaries and wages, rent, administration costs, insurance premiums, repairs and maintenance, (iv) Payment of taxes and duties, Other similar other expenses incurred in the ordinary course of the business or towards any exigencies

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iii. Deployment of unutilised proceeds[^] :

S. No.	Type of instrument where amount is invested	Amount invested (in million)	Maturity date	Earnings as on June 30, 2024 (in million)	Return on Investment	Market value as at the end of quarter (in million)
1	Fixed Deposit- HDFC Bank	50.00	1-Jul-24	0.08	4.75%	50.08
2	Fixed Deposit- HDFC Bank	70.00	21-Dec-24	0.16	7.10%	70.16
3	Fixed Deposit- HDFC Bank	50.00	5-May-25	0.71	7.40%	50.71
4	Fixed Deposit- HDFC Bank	45.00	5-May-25	0.67	7.75%	45.67
5	Fixed Deposit- HDFC Bank	250.00	20-Jun-25	0.63	7.65%	250.63
6	Fixed Deposit- HDFC Bank	52.40	15-Jul-24	1.87	6.75%	54.27
7	Fixed Deposit- HDFC Bank	90.00	22-Aug-24	3.99	7.25%	93.99
8	Fixed Deposit- HDFC Bank	110.00	22-Aug-24	4.87	7.25%	114.87
9	Fixed Deposit- HDFC Bank	55.00	3-Mar-25	0.78	7.35%	55.78
10	Fixed Deposit- HDFC Bank	50.00	15-Jul-24	1.67	7.25%	51.67
11	Fixed Deposit- HDFC Bank	50.00	20-Sep-24	1.29	7.25%	51.29
12	Fixed Deposit- HDFC Bank	50.00	4-Oct-24	1.02	7.25%	51.02
13	Fixed Deposit- HDFC Bank	50.00	22-Oct-24	1.29	7.25%	51.29
14	Fixed Deposit- HDFC Bank	50.00	25-Nov-24	1.31	7.35%	51.31
15	Fixed Deposit- HDFC Bank	50.00	3-Jan-25	1.04	7.35%	51.04
16	Fixed Deposit- HDFC Bank	250.00	15-Jan-25	8.92	7.55%	258.92
17	Fixed Deposit- HDFC Bank	50.00	4-Feb-25	1.04	7.35%	51.04
18	Fixed Deposit- HDFC Bank	150.00	4-Apr-25	3.28	7.75%	153.28
19	Fixed Deposit- HDFC Bank(Refer note 6)	3.50	28-Mar-25	0.13	7.10%	3.63
20	Fixed Deposit- HDFC Bank(Refer note 6)	3.00	26-Aug-25	0.08	7.25%	3.08
21	Balance net proceeds lying in Monitoring account of the company	3.97	NA	NA	NA	3.97

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22	Balance net proceeds lying in IKIO Solutions Private Limited - Object account	0.05	NA	NA	NA	0.05
23	Balance net proceeds lying in IKIO Lighting Limited - Object account(Refer note 7)	20.86	NA	NA	NA	20.86
	Total	1,553.78 (Refer note 5)		34.81		1,588.59

Note 5: Total interest received in Monitoring agency account of the Company till quarter ended June 30, 2024 from closure of FDs amounted to Rs 110.70 million, further, Rs 80.00 million is transferred to current account of the company, out of which Rs 20.00 million is transferred during the reported quarter for business purposes and hence Rs 30.70 million is lying in Monitoring agency account as at the end of the reported quarter.

Note 6: These FD are against Custom indemnity bond for import of goods at concessional rate of duty.

Note 7: During the normal course of transactions of the business, the Company had issued cheques worth Rs 0.35 million to vendors for payments against liability recorded in the books of accounts of the Company, these cheques were not presented for payment by the vendors to the bank till the end of the reported quarter. Since, these cheques are issued against the purchase of project assets which form part of the objects of issue, hence, the amount of Rs 0.35 million is considered as part of utilised amount during the reported quarter.

Note 8 : Monitoring the deployment of Interest Income earned from unutilised proceeds & utilisation towards issue expenses does not form part of the scope of Monitoring Agency report.

Note: All figures in the above table are rounded off to nearest two decimal places

^On the basis of management undertaking and Certificate dated July 30, 2024, issued by M/s BGJC & Associates LLP, Chartered Accountants (Firm Registration Number: 003304N/N500056), Statutory Auditors of the Company.

iv. Delay in implementation of the object(s)^:

				Comments of the Board of Directors	Comments of the Board of Directors
	Completion Date
			Delay
	As per the				Proposed
Object(s)			(no. of days/	Reason of
	Offer	Actual	months)	delay	course of
	Document				action
	Not Applicable

^On the basis of management undertaking and Certificate dated July 30, 2024, issued by M/s BGJC & Associates LLP, Chartered Accountants (Firm Registration Number: 003304N/N500056), Statutory Auditors of the Company.

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

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S. No.	Item heads	Amount@ (Rs in million)	Remarks
1	Administration costs	6.72	Expenses incurred in ordinary course of business. Also refer note 4.
2	General Capex	18.54
3	d
	Venor Payment - WkiCitl	13.74
	orngapa
	Total	39.00

^On the basis of management undertaking and Certificate dated July 30, 2024, issued by M/s BGJC & Associates LLP, Chartered Accountants (Firm Registration Number: 003304N/N500056), Statutory Auditors of the Company

@ All figures in the above table are rounded off to nearest two decimal places

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Disclaimers:

• a) This Report is prepared by CRISIL Ratings Limited (hereinafter referred to as "Monitoring Agency” / “MA" / “CRL”) . 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.

• f) The MA report is intended for the jurisdiction of India only. This report does not constitute an offer of services. Without limiting the generality of the foregoing, nothing in the report is to be construed as CRL providing or intending to provide any services in jurisdictions outside India, where it does not have the necessary licenses and/or registration to carry out its business activities referred to above.

• g) Access or use of this report does not create a client relationship between CRL and the user.

• h) CRL is not aware that any user intends to rely on the report or of the manner in which a user intends to use the report. In preparing this report, MA has not taken into consideration the objectives or particular needs of any particular user.

• i) It is made abundantly clear that the report is not intended to and does not constitute an investment advice. The report is not an offer to sell or an offer to purchase or subscribe for any investment in any securities, instruments, facilities or solicitation of any kind to enter into any deal or transaction with the entity to which the report pertains. The report should not be a basis for any investment decision within the meaning of any law or regulation (including the laws and regulations applicable in the US).

• j) The report comprises professional opinion of CRL as of the date they are expressed, based on the information received from the issuer and other sources considered reliable by CRL. Any opinions expressed here are in good faith, are subject to change without notice, and are only current as of the stated date of their issue. The report does not constitute statements of fact or recommendations to purchase, hold or sell any securities/instruments or to make any investment decisions.

• k) Neither CRL nor its affiliates, third-party providers, as well as their directors, officers, shareholders, employees or agents guarantee the accuracy, completeness or adequacy of the report, and shall not have any liability for any errors, omissions or interruptions therein, regardless of the cause, or for the results obtained from the use of any part of the report. CRL and each aforesaid party disclaims any and all express or implied warranties, including but not limited to any warranties of merchantability, suitability or fitness for a particular purpose or use or use. In no event shall CRL or any aforesaid party be liable to any user for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees or losses (including, without limitation, lost income or lost profits and opportunity costs) in connection with any use of any part of the report even if advised of the possibility of such damages.

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• l) CRL has established policies and procedures to maintain the confidentiality of certain non-public information received in connection with the preparation of this report. CRL has in place a code of conduct and policies for managing conflict of interest.

• m) Unless required under any applicable law, this report should not be reproduced or redistributed to any other person or in any form without prior written consent from CRL.

• n) By accepting a copy of this Report, the recipient accepts the terms of this Disclaimer, which forms an integral part of this Report.

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