CHENNAI/KOCHI, WEDNESDAY, JUNE 19, 2024 FOLLOW US ON TWITTER & FACEBOOK. APP AVAILABLE ON APP STORE & PLAYSTORE WWW.FINANCIALEXPRESS.COM READ TO LEAD VOL NO. XLV 37, 22 PAGES, `12.00 P U B L I S H E D F R O M : A H M E D A B A D , B E N G A L U R U , C H A N D I G A R H , C H E N N A I , H Y D E R A B A D , K O C H I , K O L K ATA , L U C K N O W, M U M B A I , N E W D E L H I , P U N E THIS IS A PUBLIC ANNOUNCEMENT FOR INFORMATION PURPOSES ONLY. THIS IS NOT A PROSPECTUS ANNOUNCEMENT AND DOES NOT CONSTITUTE AN INVITATION OR OFFER TO ACQUIRE, PURCHASE OR SUBSCRIBE TO SECURITIES. NOT FOR RELEASE, PUBLICATION AND DISTRIBUTION, DIRECTLY OR INDIRECTLY, OUTSIDE INDIA. THE EQUITY SHARES OF OUR COMPANY WILL GET LISTED ON MAIN BOARD PLATFORM OF THE STOCK EXCHANGES IN COMPLIANCE WITH CHAPTER II OF THE SECURITIES AND EXCHANGE BOARD OF INDIA (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2018, AS AMENDED (“SEBI ICDR REGULATIONS”) (Please scan this QR code to view the RHP) DEE DEVELOPMENT ENGINEERS LIMITED Our Company was originally incorporated as “DE Development Engineers Private Limited” a private limited company under the Companies Act, 1956 through a certificate of incorporation dated March 21, 1988, issued by the RoC. Thereafter, the name of the Company was changed to “DEE Development Engineers Private Limited” pursuant to a Board resolution dated September 28, 1997 and a special resolution passed in the general meeting of the Shareholders held on October 22, 1997 and consequently a fresh certificate of incorporation dated January 8, 1998 was issued by the RoC to reflect the change in name. Pursuant to an amendment to the Companies Act, 1956, our Company was deemed public under Section 43A (1A) of the Companies Act, 1956 with effect from July 1, 1998. Consequently, the word ‘Private’ was deleted from the name of our Company and the name was changed to “DEE Development Engineers Limited” pursuant to a Board resolution dated June 1, 1998. Thereafter, our Company was converted into a private limited company pursuant to an amendment to Section 43A (1A) in Companies Act, 1956 by Section 43A (2A) of the Companies Amendment Act, 2000 with effect from July 16, 2004 and the name was changed to “DEE Development Engineers Private Limited” pursuant to a Board resolution dated July 16, 2004. The name of our Company was changed to ‘DEE Development Engineers Limited’ upon conversion to a public limited company pursuant to a Board resolution dated December 29, 2009 and a resolution passed in the extra-ordinary general meeting of the Shareholders held on January 18, 2010 and consequently a fresh certificate of incorporation dated March 11, 2010, was issued by the RoC. For further details, see “History and Certain Corporate Matters – Brief History of our Company” on page 248 of the red herring prospectus of our Company dated June 11, 2024 filed with the RoC read along with the Corrigendum to the red herring prospectus dated June 11, 2024 (“Red Herring Prospectus” or “RHP”). Registered and Corporate Office: Unit 1, Prithla-Tatarpur Road, Village Tatarpur, Dist. Palwal, Faridabad, Haryana – 121102, India Contact Person: Ranjan Kumar Sarangi, Company Secretary and Compliance Officer; Tel: +91 1275 248345, E-mail: secretarial@deepiping.com; Website: www.deepiping.com; Corporate Identity Number: U74140HR1988PLC030225 OUR PROMOTERS: KRISHAN LALIT BANSAL, ASHIMA BANSAL AND DDE PIPING COMPONENTS PRIVATE LIMITED INITIAL PUBLIC OFFERING OF UP TO [●] EQUITY SHARES OF FACE VALUE OF ` 10 EACH (“EQUITY SHARES”) OF DEE DEVELOPMENT ENGINEERS LIMITED (“OUR COMPANY” OR THE “ISSUER”) FOR CASH AT A PRICE OF ` [●] PER EQUITY SHARE (“OFFER PRICE”) AGGREGATING UP TO ` [●] MILLION (THE “OFFER”). THE OFFER COMPRISES OF A FRESH ISSUE OF UPTO [●] EQUITY SHARES BY OUR COMPANY AGGREGATING UPTO `3,250.00 MILLION (THE “FRESH ISSUE”) AND AN OFFER FOR SALE OF UP TO 45,82,000 EQUITY SHARES (THE “OFFERED SHARES”) BY KRISHAN LALIT BANSAL (“SELLING SHAREHOLDER”) AGGREGATING UP TO ` [●] MILLION (THE “OFFER FOR SALE”). THE OFFER SHALL CONSTITUTE [●] % OF THE POST-OFFER PAID-UP EQUITY SHARE CAPITAL OF OUR COMPANY. THIS OFFER INCLUDES A RESERVATION OF UP TO [●] EQUITY SHARES (CONSTITUTING UP TO [●]% OF THE POST OFFER PAID UP EQUITY SHARE CAPITAL OF OUR COMPANY) AGGREGATING UP TO ` 10.00 MILLION FOR SUBSCRIPTION BY ELIGIBLE EMPLOYEES (AS DEFINED HEREIN) (“EMPLOYEE RESERVATION PORTION”). THE EMPLOYEE RESERVATION PORTION SHALL NOT EXCEED 5% OF THE POST-OFFER PAID-UP EQUITY SHARE CAPITAL. THE OFFER LESS THE EMPLOYEE RESERVATION PORTION IS REFERRED TO AS THE “NET OFFER”. OUR COMPANY MAY, IN CONSULTATION WITH THE BOOK RUNNING LEAD MANAGERS, OFFER A DISCOUNT UP TO ` 19 OF THE OFFER PRICE TO ELIGIBLE EMPLOYEES BIDDING IN THE EMPLOYEE RESERVATION PORTION (“EMPLOYEE DISCOUNT”). THE OFFER AND THE NET OFFER SHALL CONSTITUTE [●]% AND [●]%, RESPECTIVELY, OF THE POST-OFFER PAID-UP EQUITY SHARE CAPITAL OF OUR COMPANY. DETAILS OF THE OFFER FOR SALE Name of the Selling Shareholder Type Number of Equity Shares of face value `10 Offered Weighted Average Cost of Acquisition per Equity Share of face value `10 (in `)*# Krishan Lalit Bansal Promoter Up to 45,82,000 Equity Shares of face value `10 aggregating up to ` [●] million 0.83 *As certified by VSD & Associates, Chartered Accountant, by way of their certificate dated June 11, 2024. # 12,330 Equity Shares were issued to the Promoter in lieu of the acquisition of the business of partnership firm of M/S Development Engineers. Value of given equity shares is not quantifiable. Accordingly, the consideration amount has not been included for the calculation of average cost of acquisition. DEE Development Engineers Limited is an engineering company providing piping solutions for industries such as oil and gas, power, chemicals and other process industries through engineering, procurement and manufacturing. The Offer is being made through the Book Building Process pursuant to Regulation 6(1) of the SEBI ICDR Regulations. QIB Portion: Not more than 50% of the Net Offer | Non-Institutional Portion: Not less than 15% of the Net Offer Retail Portion: Not less than 35% of the Net Offer. | Employee Reservation Portion: Up to [•] Equity Shares aggregating up to `10.00 million PRICE BAND: `193 TO `203 PER EQUITY SHARE OF FACE VALUE OF `10 EACH. THE FLOOR PRICE IS 19.3 TIMES THE FACE VALUE OF THE EQUITY SHARES AND THE CAP PRICE IS 20.3 TIMES THE FACE VALUE OF THE EQUITY SHARES. THE PRICE TO EARNINGS RATIO (“P/E”) BASED ON BASIC AND DILUTED EPS FOR FINANCIAL YEAR ENDED 2023 FOR THE COMPANY AT THE UPPER END OF THE PRICE BAND IS AS HIGH AS 82.86 TIMES AND AT THE LOWER END OF THE PRICE BAND IS 78.78 TIMES AS COMPARED TO THE AVERAGE INDUSTRY PEER GROUP P/E RATIO OF 42.40 TIMES. AVERAGE COST OF ACQUISITION OF EQUITY SHARES FOR THE SELLING SHAREHOLDER IS ` 0.83. AVERAGE RETURN ON NET WORTH FOR LAST THREE FULL FINANCIAL YEARS IS 2.78% BIDS CAN BE MADE FOR A MINIMUM OF 73 EQUITY SHARES AND IN MULTIPLES OF 73 EQUITY SHARES THEREAFTER. A DISCOUNT OF `19 PER EQUITY SHARE IS BEING OFFERED TO ELIGIBLE EMPLOYEES BIDDING IN THE EMPLOYEE RESERVATION PORTION. In accordance with the recommendation of the Committee of Independent Directors of our Company, pursuant to their resolution dated June 11, 2024, the above provided price band is justified based on quantitative factors/ KPIs disclosed in the “Basis for Offer Price” section of the RHP vis-à-vis the weighted average cost of acquisition of primary and secondary transaction(s) disclosed in the “Basis for Offer Price” section on page 135 of the RHP. IN MAKING AN INVESTMENT DECISION, POTENTIAL INVESTORS MUST RELY ON THE INFORMATION INCLUDED IN THE RED HERRING PROSPECTUS AND THE TERMS OF THE OFFER, INCLUDING THE RISKS INVOLVED AND NOT RELY ON ANY OTHER EXTERNAL SOURCES OF INFORMATION ABOUT THE OFFER AVAILABLE IN ANY MANNER. In relation to price band, potential Investors should only refer to the price band advertisement for the Offer and should not rely on any media articles/ reports in relation to the valuation of the Company as these are not endorsed, published or confirmed either by the Company or by the BRLMs. 1. 2. 3. 4. 5. 6. RISK TO INVESTORS Dependence on oil and gas, power (including nuclear), Power Generation through our Abohar Biomass 7. Compliance with high quality standards and stringent performance requirements by customers: Any Generation Plant and our Muktsar Biomass Generation Plant, process industries, chemical sectors: Our failure by us to comply with these standards or performance requirements may lead to the cancellation revenue contribution from our customers in the oil and gas, power (including nuclear power), Power of existing and future orders, recalls, liquidated damages, invocation of performance bank guarantees or Generation through our Abohar Biomass Generation Plant and our Muktsar Biomass Generation Plant, warranty and indemnity or liability claims, which could adversely affect our business. process industries including sugar, specialty chemicals and distilleries and chemical sectors as a 8. Indebtedness Risk: Our total borrowings as of April 15, 2024, Fiscal 2023, Fiscal 2022 and Fiscal 2021 percentage of our total revenue from operations in nine months ended December 31, 2023 were 52.76%, were ` 3,861.89 million, ` 3,526.22 million, ` 2,853.58 million and ` 2,571.65 million respectively. Any 24.65%, 11.20% 11.39% and Nil, respectively. Factors adversely affecting any of these industries in general, breach of terms under financing arrangements or inability to comply with repayment and other covenants or any of our customers in particular, could have a cascading adverse effect on our business, cash flow, could adversely affect our credit rating and business. We intend to utilize ` 1,750.00 million, i.e., a majority financial condition and results of operations. of the Net Proceeds towards the repayment or prepayment of all or a portion of certain borrowings availed Dependence on long term customers: Our revenue contribution as a percentage of our total revenue by us and the payment of the accrued interest thereon. from operations of our largest customer, our top 10 customers and our top 20 customers, for the nine 9. We will not receive any proceeds from the Offer for Sale: The Offer consists of a Fresh Issue and an Offer months ended December 31, 2023 were 12.46%, 66.18% and 86.19%, respectively. We derive a significant for Sale. The Selling Shareholder shall be entitled to the Net proceeds from the Offer for Sale, and our part of our revenue from some customers. If one or more of such customers choose not to source Company will not receive any proceeds from the Offer for Sale. their requirements from us or to terminate our contracts or purchase orders, it will adversely affect our 10. Introduction of Products and Customer Preferences: If we are unable to introduce new products or profitability and liquidity. engineering processes and respond to changing customer preferences in a timely and effective manner Underutilisation of Manufacturing Capacities: We have seven located Manufacturing Facilities, which or if our product become obsolete due to a breakthrough in the development of technology or alternate together with the Anjar Heavy Fabrication Facility have an aggregate installed capacity of 100,500 MT. The products, the demand for our products or engineering services and supplies may decline, which may capacity utilization of our facilities situated at Palwal Facility I, Palwal Facility II, Palwal Facility III, Barmer have an adverse effect on our business. Facility, Anjar Facility I, Bangkok Facility and Anjar Heavy Fabrication Facility for the nine months ended December 31, 2023 were 5.45%, 50.43%, 107.00%, 78.99%, 64.83%, 39.79% and 25.98%, respectively. Under 11. Risks related to objects of the Offer: The objects of the Offer for which funds have been raised and utilisation of our manufacturing capacities over extended periods, or significant under utilisation in the proposed deployment of the Net Proceeds of the Offer have not been appraised by a bank or a financial short-term, could materially and adversely impact our business, growth prospects and future financial institution. Any revision in the estimates, delays or cost overruns may have a significant impact on our performance. business. We have in the past, and may in the future, experience negative cash flows from investing and financing 12. Price of raw materials: Our raw material cost constitutes a significant percentage of our total expenses. activities: Our net cash flow generated from operating activities, used in investing activities and financing Steel constituted 72.85%, 68.05%, 66.72% and 74.25% of total raw materials purchased by the Company activities for the nine months ended December 31, 2023 were ` 697.11 million, ` (948.21) million and ` for the nine months ended December 31, 2023, Fiscal 2023, Fiscal 2022 and Fiscal 2021, respectively. Any 247.06 million respectively, with Net increase/ (decrease) in cash and cash equivalents to be ` (4.04) increase in the prices of raw materials or a change in our customers’ preference of raw material suppliers million. Any negative cash flows in the future would adversely affect our results of operations, cash flows could adversely affect our affect the business and the profitability of our Company. and financial condition. 13. Contractual risks under power purchase agreements: We are subject to contractual risks with our power Audit Report Qualifications: The audit reports of our Company and our Subsidiaries contain an emphasis purchaser, the Punjab State Power Corporation Limited, which is a government body. Any failure to of matter paragraph and the annexure to Auditor’s Report under the Companies (Auditor’s Report) Order, extend or renew our PPAs will have a material and adverse effect on our business. 2020 and Companies (Auditor’s Report) Order, 2016 of our Company and few of our Subsidiaries, certain 14. International operations and foreign currency risks: A portion of our revenues and expenses are adverse remarks or qualifications, which could adversely affect our business. For further details please denominated in foreign currencies. Our revenue from operations outside India as a percentage of total refer to Risk factor no 26 appearing on page 53 of the RHP. revenue from operations in the nine months ended December 31, 2023, Fiscal 2023, Fiscal 2022 and Fiscal Losses incurred by subsidiaries: Our Subsidiaries, DEE Piping Systems (Thailand) Co. Limited and DEE 2021 were 40.53%, 45.10%, 36.48% and 45.63%, respectively. Our existing international operations subject Fabricom India Private Limited have incurred losses in the last three Fiscals. Our subsidiary DEE Piping us to various business, economic, political, regulatory and legal risks. Further, we are also exposed to Systems (Thailand) Co. Limited and DEE Fabricom India Private Limited have incurred a loss of ` (56.64) foreign currency exchange risks and regulatory changes in foreign exchange management which may and ` (19.61), respectively during Fiscal 2023. These subsidiaries may continue to incur such losses in adversely impact our business. the future, which could have a material adverse effect on our business. Continued on next page... CHENNAI/KOCHI