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Unimech Aerospace and Manufacturing Ltd

Unimech Aerospace and Manufacturing Ltd IPO

Status: Upcoming

Overview

IPO date

23 Dec 2024 to 26 Dec 2024

Face value

₹ 5 per share

Price

₹ 745 to ₹785 per share

Issue Size

6,369,427 shares
(aggregating up to ₹ 500 Cr)

Allotment Date

27 Dec 2024

Listing at

NSE

Issue type

Book Building

Sector

Aerospace & Defence

Objectives of Unimech Aerospace and Manufacturing Ltd IPO

Initial public offer of up to [*] equity shares of face value of Rs. 5 each ("Equity Shares") of Unimech Aerospace and Manufacturing Limited (The "Company" or the "Company" or the "Issuer") for cash at a price of Rs. [*] per equity share (including a premium of Rs. [*] per equity share) (the "Offer Price") aggregating up to Rs. 500.00 crores (the "Offer") comprising a fresh issue of up to [*] equity shares of face value of Rs. 5 each by the company aggregating up to Rs. 250.00 crores (the "Fresh Issue") and an offer for sale of up to [*] equity shares of face value of Rs. 5 each aggregating up to Rs. 250.00 crores (the "Offer for Sale"), comprising up to [*] equity shares of face value of Rs. 5 each aggregating up to Rs. 45.00 crores by Ramakrishna Kamajhola, up to [*] equity shares of face value of Rs. 5 each aggregating up to Rs. 45.00 crores by Mani P, up to [*] equity shares of face value of Rs. 5 each aggregating up to Rs. 45.00 crores by Rajanikanth Balaraman, up to [*] equity shares of face value of Rs. 5 each aggregating up to Rs. 30.00 crores by Preetham S V and up to [*] equity shares of face value of Rs. 5 each aggregating up to Rs. 85.00 crores by Rasmi Anil Kumar (referred to as the "Selling Shareholders" and such equity shares offered by the selling shareholders, the "Offered Shares"). The offer includes a reservation of up to [*] equity shares of face value of Rs. 5 each, aggregating up to Rs. 1.50 crores, for subscription by eligible employees not exceeding 5% of its post-offer paid-up equity share capital (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 shall constitute [*]% and [*]%, respectively, of the post-offer paid-up equity share capital of the company. Price Band: Rs. 745 to Rs. 785 per equity share of face value of Rs. 5 each. The Floor price is 149 times the face value of the equity shares and cap price is 157 times the face value of the equity shares. Bid can be made for a minimum of 19 equity shares and in multiples of 19 equity shares.

Unimech Aerospace and Manufacturing Ltd IPO Strategy

About Unimech Aerospace and Manufacturing Ltd

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Strengths vs Risks of Unimech Aerospace and Manufacturing Ltd

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Strengths

We are a global high precision and engineering solutions company with capabilities to manufacture under two models: (i) build to print and (ii) build to specifications, for our customers.
We have established ourselves as an approved supplier for various industry leaders in aerospace, defence, semi-conductor and energy sectors.
We have developed and have a potential to further evolve our facilities to cater to all the specific and changing needs and requirements of the customers with respect to the products we make and for the industry we supply products to, allowing us to provide customized and tailored solutions.
We are a leading exporter of aerospace components, with exports significantly contributing to our overall revenue.
We have a global delivery service model for supplying products to our customers, which includes logistical support and direct export to various companies including USA and Europe.
We are a key link in the global supply chain for global aerospace, defence, semi-conductor and energy OEMs and their licensees for the supply of critical parts like aero tooling, ground support equipment, electro-mechanical subassemblies and other precision engineered components.
We have established a sub-contractor ecosystem with vendors who undertake aspects of our manufacturing process with limited complexity, enabling us to concentrate on critical aspects of the manufacturing process.
We are led by a qualified and experienced management team who are supported by a motivated and hard-working team of engineers and other members.

Risks

A significant portion of its total revenue from operations i.e. 98.25%, 99.35%, 94.70% and 95.84% in the six months period ended September 30, 2024, Fiscal 2024, Fiscal 2023 and Fiscal 2022, respectively is attributable to the aerospace sector wherein its manufacture products pertaining to aero engine tooling and airframe tooling. Any adverse changes in the aerospace sector could adversely impact its business, results of operations and financial condition.
The company is dependent on its top five customers who contribute to 94.62%, 96.80%, 93.88% and 88.97% of its total revenue from operations in the six months period ended September 30, 2024, Fiscal 2024, Fiscal 2023 and Fiscal 2022, respectively and the loss of any of these customers or a significant reduction in purchases by any of them could adversely affect its business, results of operations and financial condition.
Its business works on a longer gestation period wherein, there is considerable time gap of 7 to 28 weeks between the receipt of order and the payment, thereby, affecting its working capital requirements.
Its business is dependent on exports and the performance of geographies where the company supply its products. 95.67%, 97.64%, 95.20% and 91.06% of the company total revenue from operations in the six months period ended September 30, 2024, Fiscal 2024, Fiscal 2023 and Fiscal 2022, respectively came from exports. Any adverse changes in the conditions affecting the industries in global markets in which its products are supplied, including its key markets such as United States and Germany, can adversely impact its business, cash flows, results of operations and financial condition.
A significant part of its operations i.e. 83.46%, 89.35%, 73.50% and 68.06% in the six months period ended September 30, 2024, Fiscal 2024, Fiscal 2023 and Fiscal 2022, respectively were conducted through its Material Subsidiary, Innomech Aerospace Toolings Private Limited ("Innomech"), and the company is dependent on the operating income and cash flows generated by Innomech. Any loss or reduction in the business attributable to its subsidiary, or a change in the company shareholding in Innomech, could have a material adverse effect on its business, prospects, results of operations, cash flows and financial condition on a consolidated basis.
The company has experienced negative cash flows from investing and financing activities in previous periods and cannot assure you that its will not experience negative cash flows in future periods. Negative cash flows may adversely affect its financial condition, results of operations and prospects.
Certain land on which its manufacturing facilities are located are leased to it by Karnataka Industrial Areas Development Board. If the company is unable to comply with conditions of use of such land or relocate its operations on commercially reasonable terms, there may be an adverse effect on its business, financial condition and operations.
The Offer Price, market capitalization to total income multiple and price to earnings ratio based on the Offer Price of the Company, may not be indicative of the market price of the Equity Shares on listing.
While the company has achieved substantial revenue growth and expanded manufacturing capacity in recent years, it's important to note that its historical growth rate is partially attributed to a relatively small revenue base. There is no assurance that its can sustain this high growth rate in the future. Market conditions, competitive pressures, and economic factors could impact its ability to achieve similar growth levels going forward. The company has experienced growth in recent years and may be unable to sustain its growth or manage it effectively.
Its business and profitability is substantially dependent on the availability and cost of the company raw materials, and any disruption to the timely and adequate supply of raw materials, or volatility in the prices of raw materials may adversely impact its business, results of operations and financial condition. The company depends on these third-party suppliers of raw materials and does not have firm commitments for supply or exclusive arrangements with any of its suppliers and are required to pay advances from time to time. The absence of long-term contracts or exclusive arrangements and nonrecovery of advances, exposes it to potential supply chain disruptions which could significantly impact its production capacity, leading to delays in order fulfilment and potential loss of revenue.
Its products might require return and re-work. The financial burden associated with managing these returns and rework, coupled with potential delays in delivery schedules, can adversely affect its operational efficiency and overall financial performance.
The Company uses a variety of standard tools and parts in all the manufacturing processes some of which are imported. There is no certainty that the company may not experience volatility in the cost or availability of such standard parts. Its business, financial condition and results of operations could be adversely affected by volatility in the price or availability of standard parts and tools required for its manufacturing processes.
The company is exposed to foreign currency exchange rate fluctuations as on date of this Red Herring Prospectus, the Company does not have a hedging policy in place and hence, its may not be able to hedge its risk exposures, particularly during volatile interest rate environments which may have an adverse effect on its results of operations and profitability, independent of its operating results.
Its dependent on contract labour and any disruption to the supply of such labour for its manufacturing facilities or its inability to control the composition and cost of th company contract labour could adversely affect its operations.
There have been certain instances of delays in payment of statutory dues and over-dues in repayment of loans by the Company and its Material Subsidiary in the past. Any delay in payment of statutory dues or over-dues in repayment of loans by the Company and its Material Subsidiary in future, may result in the imposition of penalties and in turn may have an adverse effect on the Company's business, financial condition, results of operation and cash flows.
Its principal types of coverage include among others, protection from fire, earthquake, burglary, and fraudulent and dishonest acts committed by an employee or any other person, employee insurance policies such as medical and personal accident insurance policies and general liability insurance. While for six months period ended September 30, 2024, Fiscal 2024, Fiscal 2023 and Fiscal 2022, its insurance coverage was 65.36%, 89.68%, 50.06% and 77.84.90% of the total assets, respectively, in the future, its may not have sufficient insurance coverage to cover its economic losses as well as certain other risks, including those pertaining to litigation and claims by third parties. The occurrence of an event that causes losses in excess of the limits specified in its policies, or losses arising from events not covered by insurance policies, could materially harm its financial condition and future results of operations.
Its process of onboarding a customer can take up to three years, which may cause delays in revenue generation and dependency on trust-building for scaling operations and adversely harm its financial condition and future results of operations.
Its proposed expansion plans relating to the manufacturing facilities in its Material Subsidiary facility, proposed investment in new facility by the Company in Bengaluru, Karnataka and are subject to the risk of unanticipated delays in implementation and cost overruns.
Its Promoter, Anil Kumar P had acquired Equity Shares in the Company on March 29, 2024, which may influence investor perception.
The Company has in July 2024 raised Rs. 2,500.00 million, through a preferential basis. Its inability to successfully implement the company business plan and growth strategy could have an adverse effect on its business, results of operations, financial condition and cash flows.
The company experienced substantial increase in its revenue from operations i.e. 121.71% in Fiscal 2024 as compared to Fiscal 2023 and such growth may not be replicated in future or be indicative of the Company's future financial performance.
The company does not have long term contracts or agreements with its customers except for exclusive manufacturing agreement executed by the company with Dheya Engineering Technologies Private Limited on November 11, 2024, which could adversely harm its financial condition and future results of operations.
The company is subjected to margin erosion on account of absorption of minor cost fluctuations without adjusting product prices. Consistently covering increased costs instead of passing them on to its customers may ultimately compromise its profitability over time.
Majority of the Net Proceeds i.e. 67.60% of its Net Proceeds, will be utilised for the Material Subsidiary by funding its capital expenditure, working capital requirements and repayment of its outstanding debt. Any deviation or failures in achieving these objectives may adversely impact the anticipated returns from the issue proceeds which could directly affect the consolidated financial performance of the Company.
Its manufacturing operations are not characterised by high volumes of products, and are dependent on high value products since the Company specializes in manufacturing of high precision tooling for aero-engines and airframes, along with complex high precision components, assemblies, and electro-mechanical turnkey systems for the aerospace, defence, energy, and semiconductor industries. Any failures to maintain its existing volumes or pricing may adversely impact the company business, results of operations and financial condition.
The company does not own its Registered Office and Corporate Office and land on which the Company's manufacturing facilities is located. A failures to renew its existing lease arrangement at commercially favourable terms or at all may have a material adverse effect on its business, financial condition and results of operations.
Under-utilization of its manufacturing capacities and an inability to effectively utilize the company expanded manufacturing capacities could have an adverse effect on its business, future prospects and future financial performance.
The company generally do business with its customers on a purchase order basis and the company customers does not make long-term commitments/ agreements with it and may cancel or change the purchase order as per their production requirements. Such cancellations or changes may adversely affect its financial condition, cash flows and results of operations.
The company engage sub-contractors for a substantial portion of its manufacturing processes, with whom the company does not have exclusive arrangements, and whose sub-contracting charges for six months period ended September 30, 2024, Fiscals 2024, 2023 and 2022 were Rs. 94.30 million, Rs. 269.14 million, Rs. 74.13 million and 28.89 million which represented 26.75%, 37.81%, 28.08% and 28.83% of the cost of goods sold, respectively. Any delay, unavailability or deviation in quality of work by the sub- contractors may adversely impact its product, revenue from operations and thereby the company profitability.
Failures to recover supplier advances or supply chain disruptions may adversely affect its financial condition, operations, and overall profitability.
Its manufacturing operations are significantly dependent on the cooperation and continued support of the company workforce, particularly its shop- floor employees and operating personnel. The company may be subject to industrial unrest, slowdowns and increased employee costs, which may adversely affect itsr business and results of operations.
The company need to maintain sufficient inventory levels to meet customer expectations at all times. Its inability to maintain appropriate levels of inventory to meet the demands of its customers may have an adverse effect on the company results of operations and financial condition.
There are outstanding legal proceedings involving the Company, Subsidiaries, Directors (other than promoters) and Promoters. Any adverse outcome in such proceedings may have an adverse impact on its reputation, business, financial condition, results of operations and cash flows.
The company has been engaged in various related party transactions including payment of consultancy charges to the family members of the Promoters and guarantee commission to its Promoters, in lieu of the personal guarantees extended by them in relation to the loans availed by its Material Subsidiary from the financial institutions. These related party transactions may face regulatory scrutiny or stakeholder concerns regarding these related party transactions, particularly in the absence of adequate disclosure or justification, may have an adverse impact on investor confidence and the valuation of the Company.
The company is entitled to certain tax benefits at its manufacturing facility at Bengaluru Aerospace SEZ park (Karnataka). Its cannot assure you that the company will continue to be eligible to receive such tax benefits in the future. Any inability to avail such tax benefits could have an adverse effect on its growth strategy, and financial performance.
The Company has registered transfers between its Promoters and members of the Promoter Group for which no valuation was conducted, which may give rise to potential conflicts of interest and could have an adverse impact on its reputation, financial condition, and results of operations.
Its Statutory Auditors have included certain emphasis of matters in their auditor's report for the Financial Years ended March 31, 2022 and March 31, 2023 and the annexure to the auditor's reports as required under the Companies (Auditor's Report) Order, 2020. If such observations are included in future audit reports or examination reports, the trading price of the Equity Shares may be adversely affected.
Its business depends on the company ability to successfully obtain payments from its customers for products and services provided. There is no guarantee that the company will accurately assess the creditworthiness of its customers, and actual losses on amounts due to the company from customer could differ from those that its currently anticipate. The company inability to collect receivables in time or at all and default in payment from its customers could result in the reduction of the company revenue, profits and affect its cash flows.
There is a factual inaccuracy in one of the company corporates filings. Its cannot assure you that regulatory proceedings or actions will not be initiated against it in the future which may impact its financial condition and reputation and the company will not be subject to any penalty imposed by the competent regulatory authority in this regard.
Its operations are susceptible to risks and uncertainties associated with exports in India and customs clearances. The Indian customs authorities have wide powers to check the consignments which are exported from India. Any inability to effectively export its products across Indian borders or delay in customs clearance for its export consignments resulting in delays in deliveries of its products may result in a material adverse impact on the company business, cash flows, results of operations and financial condition.
Reduced frequency of repeated purchases by its customers or aviation companies could adversely impact its business, results of operations and financial condition, given that more than 94% of the company total revenue from operations as of six months ended September 30, 2024 and in each of the last three Fiscals is attributable to the aerospace sector.
Risk related to non-utilisation of the funds raised through private placement for the pre-defined objects.
The company may not be able to adequately protect its intellectual property. While the Company has registered three trademarks in India, and may register its other intellectual property in the future, if the company fails to register the appropriate intellectual property, or its efforts to protect relevant intellectual property prove to be inadequate, the value attached to its brand and proprietary property could deteriorate, which could have a material adverse effect on its business growth and prospects, financial condition, results of operations, and cash flows.
The company regularly work with hazardous materials and activities in its operation can be dangerous, which could cause injuries to people or property. The occurrence of any of these hazards could result in a suspension of operations and the imposition of civil or criminal liabilities. If these claims and lawsuits, individually or in the aggregate, are resolved against it, the company business, results of operations and financial condition could be adversely affected.
Objects of the Fresh Issue for which the funds are being raised have not been appraised by any bank or financial institutions. Any variation in the utilization of its Net Proceeds as disclosed in this Red Herring Prospectus would be subject to certain compliance requirements, including prior Shareholders' approval.
Cyber threats and non-compliance with and changes in privacy laws and regulations, failures or disruption of its Information Technology systems may adversely affect the company business, financial condition, results of operations and prospects.
Any downward revision of its credit ratings could result in an increase in the interest rates the company would pay on any new borrowings and could decrease its ability to borrow as much money as the company require to finance its business.
Its may undertake technical collaboration, joint ventures, alliances and acquisitions in the future, which may be difficult to integrate and manage, and non-performance of any of its strategic investments etc. might expose the company to risks that could adversely affect its business.
Its may not be successful in implementing the company growth strategies. Any failures in such implementation may have an adverse effect on its future business growth, acquiring new clients, results of operations and financial condition.
If the company is unable to anticipate, identify, understand and respond timely to rapidly evolving technological and market trends to meet its customers' demands and to adapt to major changes and shifts in the aerospace, semi-conductor, energy and defence markets, its business may be materially adversely affected.
The company outsource certain operations of its business - ancillary support services related to factory and operations of the business including transport, logistics and other processes to third parties. Any failures by such third parties to deliver their services could have an adverse impact on its business.
The company has significant power, fuel, water requirements and other utilities and any disruption to the supply of power, fuel or water could disrupt our manufacturing operations and increase its production costs, which could adversely affect the company results of operations.
Its business and operations are subject to extensive environmental and other related regulations and policies and any onerous amendments to such regulations and policies may involve incurring added compliance costs. The company also require certain licenses, permits and approvals under such laws and regulations in India in the ordinary course of business, and the failure to obtain or retain them in a timely manner may materially affect its operations.
The company is dependent on its manufacturing facilities and any disruption, slowdown or shutdown of its manufacturing facilities may restrict the company operations and adversely affect its business and financial condition.
The company has substantial capital expenditure and working capital requirements and may requires additional financing to meet those requirements, which could have an adverse effect on its results of operations and financial condition.
Invocation of bank guarantees or additional borrowings could adversely impact adversely impact its operations, financial health, and shareholder returns.
The company has undergone changes in statutory auditors in preceding five years and such change in future could adversely impact its financial position and profitability.
The company has entered into certain credit facilities that are repayable on demand. Any unexpected demand for repayment of such facilities by the lenders or failures to comply with any obligations under financing agreements may adversely affect its business, financial condition, cash flows and results of operations.
The company has in the past entered into related party transactions and may continue to do so in the future, which may potentially involve conflicts of interest.
Its may incur contingent liabilities in future which could adversely affect the company financial condition.
The company is entitled to certain tax and export benefits which are subject to the policies and decisions of the Government of India.
If the company is inadvertently infringe upon the intellectual property rights of others, its business and results of operations or if third parties infringe upon its intellectual property rights, the profitability and reputation of the Company may be adversely affected.
The company is subject to stringent labour laws or other industry standards and any kind of disputes with its employees could adversely affect the company business, results of operations, financial condition and cash flows.
The Company is subjected to various industry related risks including but not limited to heavy dependency on the aerospace segment, lack of guaranteed revenue flow and customer concentration. In the event any of these risks materialise, it may adversely impact its revenue and results of operations.
The company operates in a competitive environment and may not be able to effectively compete. The compnay faces competition from both domestic as well as multinational corporations and its inability to compete effectively could result in the loss of customers, hence, its market share, which could have an adverse effect on the company business, results of operations, financial condition and future prospects.
The company depends on the skills and experience of its Promoters, Key Managerial Personnel, Senior Management and employees with technical expertise for its business and future growth. If their involvement in the company business reduces in the future, its may be unable to implement the company plans as anticipated or maintain administrative control as its currently the company, which in turn could adversely affect its business, results of operations, financial condition and prospects.
Its Promoters, who are also the company Directors, and members of the company Promoter Group will continue to hold a significant equity stake in the Company after the Offer and their interests may differ from those of the other shareholders.
The Offer of [Rs.] Equity Shares aggregating up to Rs. 5,000.00 million, comprises a Fresh Issue of up to [*] Equity Shares aggregating up to Rs. 2,500.00 million, and an Offer for Sale of up to [*] Equity Shares aggregating up to Rs. 2,500.00 million by the Selling Shareholders. The Offer for Sale comprises 50% of the total Offer size. The Company will not receive any proceeds from the Offer for Sale.
Any variation in the utilization of the Net Proceeds would be subject to certain compliance requirements, including prior Shareholders' approval. Any delay or inability in obtaining such shareholders' approval may adversely affect its business or operations.
Its ability to pay dividends in the future will depends on the company future earnings, cash flows, working capital requirements, capital expenditures, financial condition and restrictive covenants of its financing arrangements. The company cannot assure you that its will generate sufficient revenues to cover the company operating expenses and, as such, pay dividends to the Company's shareholders consistent with its past practices, or at all.
If there is deterioration in the reputation and market perception of its brand image, or if the company sales and marketing efforts are ineffective, it could adversely affect its sales, profitability and the implementation of the company growth strategy.
Its may not be successful in penetrating new export markets which may have an adverse impact on its business, financial condition, results of operations and future prospects.
Its may not be able to detect or prevent fraud or other misconduct committed by its employees or third parties.
The Company has prepared financial statements under Indian Accounting Standards. Significant differences exist between Indian Accounting Standards and other accounting principles.
This Red Herring Prospectus contains information from an industry report, prepared by an independent third-party research agency, Frost & Sullivan, which the company has commissioned and paid for purposes of confirming its understanding of the industry exclusively in connection with the Offer and reliance on such information for making an investment decision in the Offer is subject to certain inherent risks.
This Red Herring Prospectus contains certain non-GAAP financial measures and certain other selected statistical information related to its operations and financial performance. These non-GAAP measures and statistical information may vary from any standard methodology that is applicable across the manufacturing industry, and therefore may not be comparable with financial or statistical information of similar nomenclature computed and presented by other manufacturing companies.

Unimech Aerospace and Manufacturing Ltd Peer Comparison

Understand the company’s industry standing

Unimech Aerospace and Manufacturing Ltd

MTAR Technologies Ltd

Azad Engineering Ltd

Face Value

Standalone / Consolidated

Consolidated

Total Income Rs. Cr.

120.656

318.452

209.944

EPS-Basis

8.49

7.54

6.45

EPS-Diluted

8.49

7.54

6.45

NAV Per Share

85.65

227.42

115.5

P/E-Basic EPS

---

98.01

157.49

P/E-Diluted EPS

---

RONW(%)

9.92

3.32

5.57

Latest NAV Period

---

Latest NAV

---

How to check the allotment status of Unimech Aerospace and Manufacturing Ltd IPO?

Follow the steps

Open link to the registrar using this URL (https://evault.kfintech.com/ipostatus/).

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The IPO opens on 23 Dec 2024 & closes on 26 Dec 2024.

Unimech Aerospace and Manufacturing Limited was originally incorporated as 'Unimech Aerospace and Manufacturing Private Limited' dated August 12, 2016, issued by the Central Registration Centre, Karnataka at Bangalore. The Company name was changed to 'Unimech Aerospace and Manufacturing Limited', and upon conversion of the Company from a Private Limited to Public Limited Company, a fresh Certificate of Incorporation dated June 21, 2024, was issued by the RoC. The Company is a global high precision engineering solutions company specializing in complex manufacturing solutions for aerospace, defence, energy, and semiconductor industries. The Company is engaged in carrying on the business of manufacturing products and components used in civil and defence aerospace sector. Their products include engine lifting and balancing beams, assembly, disassembly and calibration tooling, ground support equipment, airframe assembly platforms, engine transportation stands, mechanical & electro-mechanical turnkey systems, and precision components. In 2017, the Company acquired the business and business assets from M/s. Unimech Consulting Engineers, through Business Transfer Agreement effective on November 1, 2017. The Company further acquired Innomech Aerospace Toolings Private Limited as a subsidiary in 2018. The Company further acquired Innomech Aerospace Toolings Private Limited as a subsidiary in 2018. The Company has established as a leading manufacturer of complex tooling, mechanical assemblies, electro-mechanical turnkey systems and precision components, widely used in the aeroengine and airframe tooling for production, MRO and line maintenance activities. The Company is planning to come out with an Initial Public Issue by raising money from public aggregating Rs 500 Crore comprising a Fresh Issue of Rs 250 Crore Equity Shares and an Offer for Sale of Rs 250 Crore through Offer for Sale.

Unimech Aerospace and Manufacturing Ltd IPO will close on 26 Dec 2024.

We are a global high precision and engineering solutions company with capabilities to manufacture under two models: (i) build to print and (ii) build to specifications, for our customers.
We have established ourselves as an approved supplier for various industry leaders in aerospace, defence, semi-conductor and energy sectors.
We have developed and have a potential to further evolve our facilities to cater to all the specific and changing needs and requirements of the customers with respect to the products we make and for the industry we supply products to, allowing us to provide customized and tailored solutions.
We are a leading exporter of aerospace components, with exports significantly contributing to our overall revenue.
We have a global delivery service model for supplying products to our customers, which includes logistical support and direct export to various companies including USA and Europe.
We are a key link in the global supply chain for global aerospace, defence, semi-conductor and energy OEMs and their licensees for the supply of critical parts like aero tooling, ground support equipment, electro-mechanical subassemblies and other precision engineered components.
We have established a sub-contractor ecosystem with vendors who undertake aspects of our manufacturing process with limited complexity, enabling us to concentrate on critical aspects of the manufacturing process.
We are led by a qualified and experienced management team who are supported by a motivated and hard-working team of engineers and other members.

S.No	Promoters Name	Pre Issue Shares	Pre Issue Percentage	Post Issue Shares	Post Issue Percentage
1	Anil Kumar P	13344200	27.99	13344200	26.24
2	Ramkrishna Kamojhala	7879620	16.53	7306372	14.37
3	Mani P	7879620	16.53	7306372	14.37
4	Rajnikanth Balaraman	7879620	16.53	7879620	15.49
5	Preetham S V	5253360	11.02	4871194	9.58
6	Rasmi Anil Kumar	1540180	3.23	457377	0.9

A significant portion of its total revenue from operations i.e. 98.25%, 99.35%, 94.70% and 95.84% in the six months period ended September 30, 2024, Fiscal 2024, Fiscal 2023 and Fiscal 2022, respectively is attributable to the aerospace sector wherein its manufacture products pertaining to aero engine tooling and airframe tooling. Any adverse changes in the aerospace sector could adversely impact its business, results of operations and financial condition.
The company is dependent on its top five customers who contribute to 94.62%, 96.80%, 93.88% and 88.97% of its total revenue from operations in the six months period ended September 30, 2024, Fiscal 2024, Fiscal 2023 and Fiscal 2022, respectively and the loss of any of these customers or a significant reduction in purchases by any of them could adversely affect its business, results of operations and financial condition.
Its business works on a longer gestation period wherein, there is considerable time gap of 7 to 28 weeks between the receipt of order and the payment, thereby, affecting its working capital requirements.
Its business is dependent on exports and the performance of geographies where the company supply its products. 95.67%, 97.64%, 95.20% and 91.06% of the company total revenue from operations in the six months period ended September 30, 2024, Fiscal 2024, Fiscal 2023 and Fiscal 2022, respectively came from exports. Any adverse changes in the conditions affecting the industries in global markets in which its products are supplied, including its key markets such as United States and Germany, can adversely impact its business, cash flows, results of operations and financial condition.
A significant part of its operations i.e. 83.46%, 89.35%, 73.50% and 68.06% in the six months period ended September 30, 2024, Fiscal 2024, Fiscal 2023 and Fiscal 2022, respectively were conducted through its Material Subsidiary, Innomech Aerospace Toolings Private Limited ("Innomech"), and the company is dependent on the operating income and cash flows generated by Innomech. Any loss or reduction in the business attributable to its subsidiary, or a change in the company shareholding in Innomech, could have a material adverse effect on its business, prospects, results of operations, cash flows and financial condition on a consolidated basis.
The company has experienced negative cash flows from investing and financing activities in previous periods and cannot assure you that its will not experience negative cash flows in future periods. Negative cash flows may adversely affect its financial condition, results of operations and prospects.
Certain land on which its manufacturing facilities are located are leased to it by Karnataka Industrial Areas Development Board. If the company is unable to comply with conditions of use of such land or relocate its operations on commercially reasonable terms, there may be an adverse effect on its business, financial condition and operations.
The Offer Price, market capitalization to total income multiple and price to earnings ratio based on the Offer Price of the Company, may not be indicative of the market price of the Equity Shares on listing.
While the company has achieved substantial revenue growth and expanded manufacturing capacity in recent years, it's important to note that its historical growth rate is partially attributed to a relatively small revenue base. There is no assurance that its can sustain this high growth rate in the future. Market conditions, competitive pressures, and economic factors could impact its ability to achieve similar growth levels going forward. The company has experienced growth in recent years and may be unable to sustain its growth or manage it effectively.
Its business and profitability is substantially dependent on the availability and cost of the company raw materials, and any disruption to the timely and adequate supply of raw materials, or volatility in the prices of raw materials may adversely impact its business, results of operations and financial condition. The company depends on these third-party suppliers of raw materials and does not have firm commitments for supply or exclusive arrangements with any of its suppliers and are required to pay advances from time to time. The absence of long-term contracts or exclusive arrangements and nonrecovery of advances, exposes it to potential supply chain disruptions which could significantly impact its production capacity, leading to delays in order fulfilment and potential loss of revenue.
Its products might require return and re-work. The financial burden associated with managing these returns and rework, coupled with potential delays in delivery schedules, can adversely affect its operational efficiency and overall financial performance.
The Company uses a variety of standard tools and parts in all the manufacturing processes some of which are imported. There is no certainty that the company may not experience volatility in the cost or availability of such standard parts. Its business, financial condition and results of operations could be adversely affected by volatility in the price or availability of standard parts and tools required for its manufacturing processes.
The company is exposed to foreign currency exchange rate fluctuations as on date of this Red Herring Prospectus, the Company does not have a hedging policy in place and hence, its may not be able to hedge its risk exposures, particularly during volatile interest rate environments which may have an adverse effect on its results of operations and profitability, independent of its operating results.
Its dependent on contract labour and any disruption to the supply of such labour for its manufacturing facilities or its inability to control the composition and cost of th company contract labour could adversely affect its operations.
There have been certain instances of delays in payment of statutory dues and over-dues in repayment of loans by the Company and its Material Subsidiary in the past. Any delay in payment of statutory dues or over-dues in repayment of loans by the Company and its Material Subsidiary in future, may result in the imposition of penalties and in turn may have an adverse effect on the Company's business, financial condition, results of operation and cash flows.
Its principal types of coverage include among others, protection from fire, earthquake, burglary, and fraudulent and dishonest acts committed by an employee or any other person, employee insurance policies such as medical and personal accident insurance policies and general liability insurance. While for six months period ended September 30, 2024, Fiscal 2024, Fiscal 2023 and Fiscal 2022, its insurance coverage was 65.36%, 89.68%, 50.06% and 77.84.90% of the total assets, respectively, in the future, its may not have sufficient insurance coverage to cover its economic losses as well as certain other risks, including those pertaining to litigation and claims by third parties. The occurrence of an event that causes losses in excess of the limits specified in its policies, or losses arising from events not covered by insurance policies, could materially harm its financial condition and future results of operations.
Its process of onboarding a customer can take up to three years, which may cause delays in revenue generation and dependency on trust-building for scaling operations and adversely harm its financial condition and future results of operations.
Its proposed expansion plans relating to the manufacturing facilities in its Material Subsidiary facility, proposed investment in new facility by the Company in Bengaluru, Karnataka and are subject to the risk of unanticipated delays in implementation and cost overruns.
Its Promoter, Anil Kumar P had acquired Equity Shares in the Company on March 29, 2024, which may influence investor perception.
The Company has in July 2024 raised Rs. 2,500.00 million, through a preferential basis. Its inability to successfully implement the company business plan and growth strategy could have an adverse effect on its business, results of operations, financial condition and cash flows.
The company experienced substantial increase in its revenue from operations i.e. 121.71% in Fiscal 2024 as compared to Fiscal 2023 and such growth may not be replicated in future or be indicative of the Company's future financial performance.
The company does not have long term contracts or agreements with its customers except for exclusive manufacturing agreement executed by the company with Dheya Engineering Technologies Private Limited on November 11, 2024, which could adversely harm its financial condition and future results of operations.
The company is subjected to margin erosion on account of absorption of minor cost fluctuations without adjusting product prices. Consistently covering increased costs instead of passing them on to its customers may ultimately compromise its profitability over time.
Majority of the Net Proceeds i.e. 67.60% of its Net Proceeds, will be utilised for the Material Subsidiary by funding its capital expenditure, working capital requirements and repayment of its outstanding debt. Any deviation or failures in achieving these objectives may adversely impact the anticipated returns from the issue proceeds which could directly affect the consolidated financial performance of the Company.
Its manufacturing operations are not characterised by high volumes of products, and are dependent on high value products since the Company specializes in manufacturing of high precision tooling for aero-engines and airframes, along with complex high precision components, assemblies, and electro-mechanical turnkey systems for the aerospace, defence, energy, and semiconductor industries. Any failures to maintain its existing volumes or pricing may adversely impact the company business, results of operations and financial condition.
The company does not own its Registered Office and Corporate Office and land on which the Company's manufacturing facilities is located. A failures to renew its existing lease arrangement at commercially favourable terms or at all may have a material adverse effect on its business, financial condition and results of operations.
Under-utilization of its manufacturing capacities and an inability to effectively utilize the company expanded manufacturing capacities could have an adverse effect on its business, future prospects and future financial performance.
The company generally do business with its customers on a purchase order basis and the company customers does not make long-term commitments/ agreements with it and may cancel or change the purchase order as per their production requirements. Such cancellations or changes may adversely affect its financial condition, cash flows and results of operations.
The company engage sub-contractors for a substantial portion of its manufacturing processes, with whom the company does not have exclusive arrangements, and whose sub-contracting charges for six months period ended September 30, 2024, Fiscals 2024, 2023 and 2022 were Rs. 94.30 million, Rs. 269.14 million, Rs. 74.13 million and 28.89 million which represented 26.75%, 37.81%, 28.08% and 28.83% of the cost of goods sold, respectively. Any delay, unavailability or deviation in quality of work by the sub- contractors may adversely impact its product, revenue from operations and thereby the company profitability.
Failures to recover supplier advances or supply chain disruptions may adversely affect its financial condition, operations, and overall profitability.
Its manufacturing operations are significantly dependent on the cooperation and continued support of the company workforce, particularly its shop- floor employees and operating personnel. The company may be subject to industrial unrest, slowdowns and increased employee costs, which may adversely affect itsr business and results of operations.
The company need to maintain sufficient inventory levels to meet customer expectations at all times. Its inability to maintain appropriate levels of inventory to meet the demands of its customers may have an adverse effect on the company results of operations and financial condition.
There are outstanding legal proceedings involving the Company, Subsidiaries, Directors (other than promoters) and Promoters. Any adverse outcome in such proceedings may have an adverse impact on its reputation, business, financial condition, results of operations and cash flows.
The company has been engaged in various related party transactions including payment of consultancy charges to the family members of the Promoters and guarantee commission to its Promoters, in lieu of the personal guarantees extended by them in relation to the loans availed by its Material Subsidiary from the financial institutions. These related party transactions may face regulatory scrutiny or stakeholder concerns regarding these related party transactions, particularly in the absence of adequate disclosure or justification, may have an adverse impact on investor confidence and the valuation of the Company.
The company is entitled to certain tax benefits at its manufacturing facility at Bengaluru Aerospace SEZ park (Karnataka). Its cannot assure you that the company will continue to be eligible to receive such tax benefits in the future. Any inability to avail such tax benefits could have an adverse effect on its growth strategy, and financial performance.
The Company has registered transfers between its Promoters and members of the Promoter Group for which no valuation was conducted, which may give rise to potential conflicts of interest and could have an adverse impact on its reputation, financial condition, and results of operations.
Its Statutory Auditors have included certain emphasis of matters in their auditor's report for the Financial Years ended March 31, 2022 and March 31, 2023 and the annexure to the auditor's reports as required under the Companies (Auditor's Report) Order, 2020. If such observations are included in future audit reports or examination reports, the trading price of the Equity Shares may be adversely affected.
Its business depends on the company ability to successfully obtain payments from its customers for products and services provided. There is no guarantee that the company will accurately assess the creditworthiness of its customers, and actual losses on amounts due to the company from customer could differ from those that its currently anticipate. The company inability to collect receivables in time or at all and default in payment from its customers could result in the reduction of the company revenue, profits and affect its cash flows.
There is a factual inaccuracy in one of the company corporates filings. Its cannot assure you that regulatory proceedings or actions will not be initiated against it in the future which may impact its financial condition and reputation and the company will not be subject to any penalty imposed by the competent regulatory authority in this regard.
Its operations are susceptible to risks and uncertainties associated with exports in India and customs clearances. The Indian customs authorities have wide powers to check the consignments which are exported from India. Any inability to effectively export its products across Indian borders or delay in customs clearance for its export consignments resulting in delays in deliveries of its products may result in a material adverse impact on the company business, cash flows, results of operations and financial condition.
Reduced frequency of repeated purchases by its customers or aviation companies could adversely impact its business, results of operations and financial condition, given that more than 94% of the company total revenue from operations as of six months ended September 30, 2024 and in each of the last three Fiscals is attributable to the aerospace sector.
Risk related to non-utilisation of the funds raised through private placement for the pre-defined objects.
The company may not be able to adequately protect its intellectual property. While the Company has registered three trademarks in India, and may register its other intellectual property in the future, if the company fails to register the appropriate intellectual property, or its efforts to protect relevant intellectual property prove to be inadequate, the value attached to its brand and proprietary property could deteriorate, which could have a material adverse effect on its business growth and prospects, financial condition, results of operations, and cash flows.
The company regularly work with hazardous materials and activities in its operation can be dangerous, which could cause injuries to people or property. The occurrence of any of these hazards could result in a suspension of operations and the imposition of civil or criminal liabilities. If these claims and lawsuits, individually or in the aggregate, are resolved against it, the company business, results of operations and financial condition could be adversely affected.
Objects of the Fresh Issue for which the funds are being raised have not been appraised by any bank or financial institutions. Any variation in the utilization of its Net Proceeds as disclosed in this Red Herring Prospectus would be subject to certain compliance requirements, including prior Shareholders' approval.
Cyber threats and non-compliance with and changes in privacy laws and regulations, failures or disruption of its Information Technology systems may adversely affect the company business, financial condition, results of operations and prospects.
Any downward revision of its credit ratings could result in an increase in the interest rates the company would pay on any new borrowings and could decrease its ability to borrow as much money as the company require to finance its business.
Its may undertake technical collaboration, joint ventures, alliances and acquisitions in the future, which may be difficult to integrate and manage, and non-performance of any of its strategic investments etc. might expose the company to risks that could adversely affect its business.
Its may not be successful in implementing the company growth strategies. Any failures in such implementation may have an adverse effect on its future business growth, acquiring new clients, results of operations and financial condition.
If the company is unable to anticipate, identify, understand and respond timely to rapidly evolving technological and market trends to meet its customers' demands and to adapt to major changes and shifts in the aerospace, semi-conductor, energy and defence markets, its business may be materially adversely affected.
The company outsource certain operations of its business - ancillary support services related to factory and operations of the business including transport, logistics and other processes to third parties. Any failures by such third parties to deliver their services could have an adverse impact on its business.
The company has significant power, fuel, water requirements and other utilities and any disruption to the supply of power, fuel or water could disrupt our manufacturing operations and increase its production costs, which could adversely affect the company results of operations.
Its business and operations are subject to extensive environmental and other related regulations and policies and any onerous amendments to such regulations and policies may involve incurring added compliance costs. The company also require certain licenses, permits and approvals under such laws and regulations in India in the ordinary course of business, and the failure to obtain or retain them in a timely manner may materially affect its operations.
The company is dependent on its manufacturing facilities and any disruption, slowdown or shutdown of its manufacturing facilities may restrict the company operations and adversely affect its business and financial condition.
The company has substantial capital expenditure and working capital requirements and may requires additional financing to meet those requirements, which could have an adverse effect on its results of operations and financial condition.
Invocation of bank guarantees or additional borrowings could adversely impact adversely impact its operations, financial health, and shareholder returns.
The company has undergone changes in statutory auditors in preceding five years and such change in future could adversely impact its financial position and profitability.
The company has entered into certain credit facilities that are repayable on demand. Any unexpected demand for repayment of such facilities by the lenders or failures to comply with any obligations under financing agreements may adversely affect its business, financial condition, cash flows and results of operations.
The company has in the past entered into related party transactions and may continue to do so in the future, which may potentially involve conflicts of interest.
Its may incur contingent liabilities in future which could adversely affect the company financial condition.
The company is entitled to certain tax and export benefits which are subject to the policies and decisions of the Government of India.
If the company is inadvertently infringe upon the intellectual property rights of others, its business and results of operations or if third parties infringe upon its intellectual property rights, the profitability and reputation of the Company may be adversely affected.
The company is subject to stringent labour laws or other industry standards and any kind of disputes with its employees could adversely affect the company business, results of operations, financial condition and cash flows.
The Company is subjected to various industry related risks including but not limited to heavy dependency on the aerospace segment, lack of guaranteed revenue flow and customer concentration. In the event any of these risks materialise, it may adversely impact its revenue and results of operations.
The company operates in a competitive environment and may not be able to effectively compete. The compnay faces competition from both domestic as well as multinational corporations and its inability to compete effectively could result in the loss of customers, hence, its market share, which could have an adverse effect on the company business, results of operations, financial condition and future prospects.
The company depends on the skills and experience of its Promoters, Key Managerial Personnel, Senior Management and employees with technical expertise for its business and future growth. If their involvement in the company business reduces in the future, its may be unable to implement the company plans as anticipated or maintain administrative control as its currently the company, which in turn could adversely affect its business, results of operations, financial condition and prospects.
Its Promoters, who are also the company Directors, and members of the company Promoter Group will continue to hold a significant equity stake in the Company after the Offer and their interests may differ from those of the other shareholders.
The Offer of [Rs.] Equity Shares aggregating up to Rs. 5,000.00 million, comprises a Fresh Issue of up to [*] Equity Shares aggregating up to Rs. 2,500.00 million, and an Offer for Sale of up to [*] Equity Shares aggregating up to Rs. 2,500.00 million by the Selling Shareholders. The Offer for Sale comprises 50% of the total Offer size. The Company will not receive any proceeds from the Offer for Sale.
Any variation in the utilization of the Net Proceeds would be subject to certain compliance requirements, including prior Shareholders' approval. Any delay or inability in obtaining such shareholders' approval may adversely affect its business or operations.
Its ability to pay dividends in the future will depends on the company future earnings, cash flows, working capital requirements, capital expenditures, financial condition and restrictive covenants of its financing arrangements. The company cannot assure you that its will generate sufficient revenues to cover the company operating expenses and, as such, pay dividends to the Company's shareholders consistent with its past practices, or at all.
If there is deterioration in the reputation and market perception of its brand image, or if the company sales and marketing efforts are ineffective, it could adversely affect its sales, profitability and the implementation of the company growth strategy.
Its may not be successful in penetrating new export markets which may have an adverse impact on its business, financial condition, results of operations and future prospects.
Its may not be able to detect or prevent fraud or other misconduct committed by its employees or third parties.
The Company has prepared financial statements under Indian Accounting Standards. Significant differences exist between Indian Accounting Standards and other accounting principles.
This Red Herring Prospectus contains information from an industry report, prepared by an independent third-party research agency, Frost & Sullivan, which the company has commissioned and paid for purposes of confirming its understanding of the industry exclusively in connection with the Offer and reliance on such information for making an investment decision in the Offer is subject to certain inherent risks.
This Red Herring Prospectus contains certain non-GAAP financial measures and certain other selected statistical information related to its operations and financial performance. These non-GAAP measures and statistical information may vary from any standard methodology that is applicable across the manufacturing industry, and therefore may not be comparable with financial or statistical information of similar nomenclature computed and presented by other manufacturing companies.

The Issue type of Unimech Aerospace and Manufacturing Ltd is Book Building.

The minimum application for shares of Unimech Aerospace and Manufacturing Ltd is 19.

The total shares issue of Unimech Aerospace and Manufacturing Ltd is 6369427.

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