Company’s 8:1 Bonus Issue Expanded Share Count Ninefold Before IPO

Company completed an 8:1 bonus issue on September 23, 2025, increasing its paid-up equity share count from 7,57,732 to 68,19,588. The issue added 60,61,856 fully paid shares at a nil issue price by capitalising free reserves and the securities premium account, with no revaluation reserve used.

What changed in Company’s share capital before the IPO?

Company’s paid-up equity share count became nine times its pre-bonus level after the September 23, 2025 allotment. An 8:1 bonus issue gives eight additional shares for every one share held, so the 7,57,732 shares outstanding before the allotment were supplemented by 60,61,856 bonus shares, producing the disclosed total of 68,19,588 shares.

Company also increased authorised equity share capital on September 22, 2025, one day before the bonus allotment. Authorised capital rose from Rs 1 crore, divided into 10,00,000 equity shares of Rs 10 each, to Rs 12.5 crore, divided into 1,25,00,000 equity shares of Rs 10 each, creating capacity above the 68,19,588 paid-up shares reported in the draft prospectus.

How did Company’s 8:1 bonus issue expand its share count?

Company’s 8:1 bonus issue expanded the number of equity shares while retaining the Rs 10 face value of each share. The 60,61,856 shares were allotted at a nil issue price for consideration other than cash, meaning shareholders received additional equity shares rather than contributing new cash to Company.

The paid-up nominal capital increased with the share count, from Rs 75.77 lakh represented by 7,57,732 shares to Rs 6.82 crore represented by 68,19,588 shares. This was a capital reclassification because Company capitalised internal balances into share capital on September 23, 2025 rather than raising cash through a fresh equity issue.

Company’s allotment list shows that the bonus shares went to its existing shareholders. Jai Agarwal received 32,00,000 bonus shares from the 60,61,856-share issue, while the disclosed 8:1 ratio applied across the eligible holders. A ratio-based bonus allotment maintains each holder’s proportionate ownership at allotment, provided no holder transfers shares and no further shares are issued.

What funded the bonus shares, and what was not used?

Company funded the September 2025 bonus issue by capitalising free reserves and its securities premium account. A securities premium account records amounts received above a share’s face value in earlier issuances, and Company specifically stated that no part of a revaluation reserve was used for the 60,61,856-share allotment.

Company said it has not revalued its assets since incorporation in December 2017 and has not issued equity shares, including bonus shares, by capitalising revaluation reserves. The September 2025 action therefore moved balances from free reserves and securities premium into paid-up capital rather than using an increase in asset values.

Company reported a securities premium account balance of Rs 3.68 crore before the offer, as of the draft prospectus filing date. The capital-structure disclosure does not provide a numerical split between free reserves and securities premium used for the 60,61,856 bonus shares, so the contribution from each source cannot be determined from the supplied section.

What does the larger share base mean for Company’s IPO capital structure?

Company entered the proposed offer with 68,19,588 issued, subscribed and paid-up equity shares, all fully paid and carrying a Rs 10 face value. It reported one class of share capital, no partly paid shares and no outstanding convertible instruments, so the disclosed pre-offer share count has no adjustment for convertibles.

The proposed offer comprises a fresh issue of up to 25,74,000 equity shares and an offer for sale of up to 2,74,800 shares, totalling up to 28,48,800 shares. The fresh issue would increase Company’s share count after the offer, whereas the offer for sale would transfer existing shares from the investor selling shareholder and would not increase the total shares issued.

Before the offer, Company’s promoter and promoter group held 41,59,017 shares, or 60.98% of the 68,19,588-share total. Public shareholders held 26,60,571 shares, or 39.02%, across three shareholders, while the promoter and promoter-group category contained five shareholders, leaving an eight-shareholder pre-offer register.

How does the September 2025 restructuring compare with earlier issuances?

Company’s paid-up capital before the bonus issue was built through an initial subscription and five cash private placements between December 2017 and February 2020. Initial subscribers took 5,00,000 shares at Rs 10 each on December 19, 2017, while the five placements added a combined 2,57,732 shares at Rs 388 each, taking the total to 7,57,732 shares by February 15, 2020.

The September 2025 transaction differed in both consideration and scale. The 2018 to 2020 placements were cash issuances at Rs 388 per share, whereas the 2025 allotment was a nil-price bonus issue; its 60,61,856 shares were more than 23 times the 2,57,732 shares issued through all five disclosed private placements.

Company also identified the bonus issue as the only equity issuance in the preceding year that may have been below the eventual offer price because its issue price was nil. As of the draft prospectus date, Company had no preference shares and no employee stock option scheme, employee stock purchase scheme or stock appreciation rights scheme.

Conclusion

Company’s 8:1 bonus issue converted free reserves and securities premium into paid-up equity capital before the proposed offer. The restructuring added 60,61,856 shares, changed the ownership denominator from 7,57,732 to 68,19,588 shares and retained the Rs 10 face value and single-class equity structure.

The next disclosed capital event is the proposed offer authorised by Company’s board and shareholders on October 18, 2025. The draft prospectus says post-offer capital figures and the securities premium balance will be updated after the offer price and basis of allotment are finalised, making those updates and the pre-listing shareholding pattern the next items to watch.