AHMEDABAD, THURSDAY, AUGUST 1, 2024 FOLLOW US ON TWITTER & FACEBOOK. APP AVAILABLE ON APP STORE & PLAYSTORE WWW.FINANCIALEXPRESS.COM READ TO LEAD VOL NO. XIX 53, 52 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 AND IS NOT A PROSPECTUS ANNOUNCEMENT AND DOES NOT CONSTITUTE AN INVITATION OR OFFER TO ACQUIRE, PURCHASE OR SUBSCRIBE TO SECURITIES. NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION DIRECTLY OR INDIRECTLY OUTSIDE INDIA. INITIAL PUBLIC OFFER OF EQUITY SHARES (AS DEFINED BELOW) ON THE MAIN BOARD OF THE STOCK EXCHANGES (DEFINED BELOW) IN COMPLIANCE WITH CHAPTER II OF THE SECURITIES AND EXCHANGE BOARD OF INDIA (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2018, AS AMENDED (Please scan this QR code to view the RHP) Our Company was incorporated as a public company, limited by shares, under the Companies Act, 1956, as amended, in the name of ‘Akums Drugs and Pharmaceuticals Limited’, pursuant to a certificate of incorporation dated April 19, 2004 issued by the Registrar of Companies, Delhi and Haryana in New Delhi (“RoC”). Our Company received a certificate of commencement of business issued by the RoC dated May 13, 2004. For details of changes in the name and the registered office address of our Company, please see section titled “History and Certain Corporate Matters” on page 246 of the Red Herring Prospectus dated July 24, 2024 (“RHP”). Registered Office: 304, Mohan Place, LSC Saraswati Vihar, Delhi – 110 034, India, Corporate Office: Akums House, Plot No. 131 to 133, Block C, Mangolpuri Industrial Area Phase-1, Delhi 110 083, India Telephone: + 91 11 6904 1000; Contact person: Dharamvir Malik, Company Secretary and Compliance Officer, E-mail: cs@akums.net; Website: www.akums.in; Corporate Identity Number: U24239DL2004PLC125888 THE PROMOTERS OF OUR COMPANY ARE SANJEEV JAIN, SANDEEP JAIN AND AKUMS MASTER TRUST INITIAL PUBLIC OFFER OF UP TO [●] EQUITY SHARES OF FACE VALUE OF ` 2 EACH (“EQUITY SHARES”) OF AKUMS DRUGS AND PHARMACEUTICALS LIMITED (“COMPANY” OR “ISSUER”) FOR CASH AT A PRICE OF ` [●] PER EQUITY SHARE (INCLUDING A SHARE PREMIUM OF ` [●] PER EQUITY SHARE) (“OFFER PRICE”) AGGREGATING UP TO ` [●] MILLION COMPRISING A FRESH ISSUE OF UP TO [●] EQUITY SHARES AGGREGATING UP TO ` 6,800 MILLION BY OUR COMPANY (“FRESH ISSUE”) AND AN OFFER FOR SALE OF UP TO 17,330,435 EQUITY SHARES AGGREGATING UP TO ` [●] MILLION (“OFFERED SHARES”) BY THE SELLING SHAREHOLDERS, COMPRISING UP TO 1,512,000 EQUITY SHARES AGGREGATING UP TO ` [●] MILLION BY SANJEEV JAIN, UP TO 1,512,000 EQUITY SHARES AGGREGATING UP TO ` [●] MILLION BY SANDEEP JAIN (TOGETHER THE “PROMOTER SELLING SHAREHOLDERS”) AND UP TO 14,306,435 EQUITY SHARES AGGREGATING UP TO ` [●] MILLION BY RUBY QC INVESTMENT HOLDINGS PTE. LTD. (THE “INVESTOR SELLING SHAREHOLDER”) (THE PROMOTER SELLING SHAREHOLDERS AND THE INVESTOR SELLING SHAREHOLDER, COLLECTIVELY REFERRED TO AS THE “SELLING SHAREHOLDERS”) (“OFFER FOR SALE”, TOGETHER WITH THE FRESH ISSUE, THE “OFFER”). THIS OFFER INCLUDES A RESERVATION OF UP TO [●] EQUITY SHARES AGGREGATING UP TO ` 150.00 MILLION FOR SUBSCRIPTION BY ELIGIBLE EMPLOYEES (THE “EMPLOYEE RESERVATION PORTION”). THE OFFER LESS THE EMPLOYEE RESERVATION PORTION IS HEREINAFTER REFERRED TO AS THE “NET OFFER”. THE OFFER AND THE NET OFFER WILL CONSTITUTE [●]% AND [●]% OF OUR POST-OFFER PAID-UP EQUITY SHARE CAPITAL, RESPECTIVELY. THE FACE VALUE OF EQUITY SHARES IS ` 2 EACH. THE OFFER PRICE IS [●] TIMES THE FACE VALUE OF THE EQUITY SHARES. THE PRICE BAND AND THE MINIMUM BID LOT WILL BE DECIDED BY OUR COMPANY IN CONSULTATION WITH THE BOOK RUNNING LEAD MANAGERS AND WILL BE ADVERTISED IN ALL EDITIONS OF FINANCIAL EXPRESS, AN ENGLISH NATIONAL DAILY NEWSPAPER AND ALL EDITIONS OF JANSATTA, A HINDI NATIONAL DAILY NEWSPAPER (HINDI ALSO BEING THE REGIONAL LANGUAGE OF DELHI, WHERE OUR REGISTERED OFFICE IS LOCATED), EACH WITH WIDE CIRCULATION, AT LEAST TWO WORKING DAYS PRIOR TO THE BID/ OFFER OPENING DATE AND SHALL BE MADE AVAILABLE TO BSE AND NSE (TOGETHER WITH BSE, THE “STOCK EXCHANGES”) FOR THE PURPOSE OF UPLOADING ON THEIR RESPECTIVE WEBSITES. NAME OF THE SELLING SHAREHOLDER DETAILS OF THE OFFER FOR SALE AND THE WEIGHTED AVERAGE COST OF ACQUISITION PER EQUITY SHARE NUMBER OF EQUITY SHARES OFFERED TYPE WEIGHTED AVERAGE COST OF ACQUISITION (IN ` PER EQUITY SHARE)*# Sanjeev Jain Promoter Selling Shareholder Up to 1,512,000 Equity Shares of face value of ` 2 each aggregating up to ` [●] million Negligible Sandeep Jain Promoter Selling Shareholder Up to 1,512,000 Equity Shares of face value of ` 2 each aggregating up to ` [●] million Negligible Ruby QC Investment Holdings Pte. Ltd. Investor Selling Shareholder Up to 14,306,435 Equity Shares of face value of ` 2 each aggregating up to ` [●] million 231.64 *As certified by T A M S & CO LLP, Chartered Accountants by way of their certificate dated July 24, 2024. # Includes 33,000 Equity Shares held jointly by Sanjeev Jain with Arushi Jain, 5,500 Equity Shares held jointly by Sandeep Jain with Kanishk Jain and 5,500 Equity Shares held joint by Sandeep Jain with Manan Jain We are a pharmaceutical contract development and manufacturing organization offering pharmaceutical products and services in India and overseas and also engaged in the sale of branded pharmaceutical formulations and manufacturing of active pharmaceutical ingredients. The Offer is being made through the Book Building Process in accordance with Regulation 6(2) of the SEBI ICDR Regulations. QIB Portion: Not less than 75% of the Net Offer | Non-Institutional Portion: Not more than 15% of the Net Offer | Retail Portion: Not more than 10% of the Net Offer. Employee Reservation Portion: Up to [•] Equity Shares of face value of `2 each aggregating up to `150 million. PRICE BAND: `646 TO `679 PER EQUITY SHARE OF FACE VALUE OF `2 EACH. THE FLOOR PRICE IS 323.00 TIMES THE FACE VALUE OF THE EQUITY SHARES AND THE CAP PRICE IS 339.50 TIMES THE FACE VALUE OF THE EQUITY SHARES. SINCE BASIC AND DILUTED EPS FOR THE FINANCIAL YEAR 2024 ON RESTATED CONSOLIDATED FINANCIAL INFORMATION OF THE COMPANY IS NEGATIVE, P/E RATIO WILL NOT BE ASCERTAINABLE. BIDS CAN BE MADE FOR A MINIMUM OF 22 EQUITY SHARES AND IN MULTIPLES OF 22 EQUITY SHARES THEREAFTER. A DISCOUNT OF ` 64 PER EQUITY SHARE IS BEING OFFERED TO ELIGIBLE EMPLOYEES BIDDING IN THE EMPLOYEE RESERVATION PORTION. ASBA # Applications Supported by Blocked Amount (“ASBA”) is a better way of applying to Issues by simply blocking the fund in the bank account. For further details, check section on ASBA. Mandatory in public issues. No cheque will be accepted. # Simple, Safe, Smart way of Application!!! In accordance with the recommendation of the committee of Independent Directors of our Company, pursuant to their resolution dated July 24, 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 138 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 BRLM. RISK TO INVESTORS (For details refer to section titled “Risk Factors” on page 28 of the RHP.) 1. Concentration of manufacturing units: Our manufacturing units and research and development Employees’ Provident Fund and Miscellaneous Provisions Act, 1952, Drugs and Cosmetics Act, centres are concentrated in Haridwar, Uttarakhand and we are exposed to risks originating from 1940 and other applicable law by our Company and Subsidiaries in the past. Failure to defend economic, regulatory, political and other changes in this region, including natural disasters, these proceedings successfully could have an adverse effect on our business operations and which could have an adverse effect on our business operations. resultantly, our financial condition. 2. Third party dependence for raw materials: We rely on domestic and international third-party 6. Customer Concentration: Our business is dependent on the sale of products to a limited number suppliers for the supply of raw materials and any delay, interruption or reduction in such supply of clients for a significant portion of our revenues. The loss of one or more such clients or could have an adverse effect on our business operations. the deterioration of their financial condition or prospects could adversely affect our business For the Financial Year operations. 2024 2023 2022 The revenue contribution of the ten largest clients of our CDMO business for the Financial Years % of total % of total % of total Particulars 2024, 2023 and 2022 is `12,841.14 million, `10,597.55 million and `10,982.66 million constituting purchases purchases purchases (` in (` in (` in 39.31%, 38.92% and 41.27% of revenue from operations from CDMO business respectively. of raw of raw of raw millions) millions) millions) materials materials materials 7. Manage inventory: Our inability to accurately forecast demand for our products and manage our Domestic sourcing 18,331.71 88.11 17,456.85 89.77 21,461.70 88.98 Direct imports 2,473.08 11.89 1,988.80 10.23 2,658.04 11.02 3. Fluctuation in financial ratios: Our EBITDA margin, profit after tax margin, return on equity and return on capital employed have fluctuated significantly during the Financial Years 2024, 2023 and 2022. Particulars For the Financial Year 2024 2023 3.73 10.38 0.02 2.64 0.11 13.52 inventory may have an adverse effect on our business, results of operations, financial condition and cash flows: Particulars 2024 % of total (` in assets millions) 6,304.25 17.93 As of March 31, 2023 % of total (` in assets millions) 7,297.95 22.34 2022 % of total (` in assets millions) 7,224.48 23.54 2022 Inventories (1.87) 8. Our Company had issued Equity Shares to more than 49 investors in the past, which may have (6.79) been in non-compliance with the Companies Act, 1956. (40.13) Return on capital employed (%) 3.37 24.60 (18.89) 9. Significant capital expenditure requirement: Our business requires significant capital expenditure. If we are unable to have access to capital, it could have an adverse effect on our 4. Negative Cash Flows: We have had negative cash flows from investing activities during the business operations. The capital expenditure incurred by us for our CDMO business in Fiscals Financial Year 2024. Negative cash flows over extended periods, or significant negative cash 2024, 2023 and 2022 is `2,994.12 million, `2,879.10 million and `1,970.12 million respectively. flows in the short term, could affect our ability to operate our business and implement our EBITDA margin (%) Profit after tax margin (%) Return on equity (%) growth plans. 5. 10. Export Risk: We export our products to regulated and semi-regulated markets and a failure to comply with the regulatory and other requirements of such markets could have an adverse effect on our business operations. For the Financial Year 2024 2023 2022 Particulars (` in millions) 11. Operation Risk: Any slowdown or shutdown in our manufacturing and research and development Net cash generated from operating activities 4,982.59 1,766.31 318.54 operations could have an adverse effect on our business operations. Net cash (used in) investing activities (3,304.15) (3,047.02) (2,348.22) 12. Missing corporate records: Certain of our corporate records, filings and instruments of transfer Net cash (used in) / generated from financing activities (1,080.21) 1,245.40 2,360.40 are not traceable. We cannot assure you that no legal proceedings or regulatory actions will be Net increase/ (decrease) in cash and cash equivalents 598.23 (35.31) 330.72 initiated against us in the future in relation to any such discrepancies. Regulatory Risk: We have received various notices from regulatory authorities in India alleging instances of non-compliances, including with respect to certain violations of Companies Act, 13. Incurred losses in past: We have incurred losses in the past and may incur losses in the future. Continued on next page... Ahmedabad