Company’s equity base grew 22-fold before proposed IPO

Company’s equity base grew 22-fold from 1,960,784 shares before its March 2026 restructuring to 43,137,248 shares afterward. The increase combined a two-for-one subdivision on March 13, 2026 and a March 16, 2026 bonus issue of 39,215,680 shares, which alone expanded the post-split base 11-fold.

How did Company’s equity base grow 22-fold before the proposed IPO?

Company’s equity base grew 22-fold because it first doubled its shares through a subdivision and then issued 10 bonus shares for every existing post-split share. Before the restructuring, Company had 1,960,784 fully paid-up equity shares with a face value of Rs 10 each. After both actions, it had 43,137,248 fully paid-up equity shares with a face value of Rs 5 each.

The March 16, 2026 bonus issue was the larger component of the change. Company allotted 39,215,680 fully paid-up Rs 5 shares to existing shareholders in a 1:10 ratio, meaning 10 additional shares for each share held. The ratio produced an 11-fold share count from the post-subdivision base of 3,921,568 shares, while the full 22-fold comparison includes the preceding two-for-one subdivision.

What changed in Company’s capital structure in March 2026?

Company changed its capital structure in two distinct steps approved by its board on February 20, 2026 and by shareholders at an extraordinary general meeting on March 13, 2026. The first step subdivided every Rs 10 equity share into two Rs 5 equity shares, converting 1,960,784 shares into 3,921,568 shares without changing paid-up equity capital of Rs 1.960784 crore.

Company’s second step was the bonus issue on March 16, 2026, which raised paid-up equity capital by the nominal value of the new shares. The 39,215,680 bonus shares at Rs 5 each added Rs 19.60784 crore of paid-up capital, taking the total to Rs 21.568624 crore. Company’s authorised capital was 60,000,000 Rs 5 shares, or Rs 30 crore, leaving 16,862,752 authorised shares unissued before the proposed public issue.

The subdivision and the bonus issue had different mechanical effects. A subdivision changes the denomination and number of shares while leaving paid-up capital unchanged, whereas a bonus issue capitalises reserves into additional fully paid-up shares. Company identifies the March 16 transaction as its only bonus issue since incorporation and states that all issued equity shares were fully paid-up.

Why does Company’s expanded equity base matter for ownership?

Company’s bonus issue did not by itself change the proportional ownership of holders because every existing shareholder received the same 10-for-one allotment. Company reported 49 equity shareholders and 43,137,248 fully paid-up shares as of the red herring prospectus date. Its shareholding pattern showed no partly paid-up shares, depository-receipt shares, locked-in shares or pledged shares.

Company’s promoters and promoter group held 25,061,520 shares, or 58.10% of pre-issue equity capital, while 46 public shareholders held 18,075,728 shares, or 41.90%. That division is the ownership structure after the bonus issue and before the proposed public issue. A later transfer or fresh issue, rather than the proportional bonus issue, would be required to change those percentages.

Company’s ownership was concentrated among its larger holders. Rajnikant Lallubhai Chanchad held 22,440,000 shares, representing 52.02% of pre-issue equity capital, and Wealthwave Capital Trust-Wealthwave Capital Fund held 2,200,000 shares, or 5.10%. The 14 shareholders listed with holdings of at least 1% collectively held 38,448,520 shares, or 89.13% of Company’s equity capital.

How should Company’s per-share history be compared after the bonus issue?

Company’s historical per-share figures need adjustment for both the March 13 subdivision and the March 16 bonus issue. One Rs 10 share outstanding before the restructuring became two Rs 5 shares through the subdivision and, assuming participation, 22 Rs 5 shares after the 10-for-one bonus issue. Comparing an unadjusted pre-restructuring per-share number with the 43,137,248-share base would therefore mix different share counts.

Company states that its weighted average acquisition-price disclosures were adjusted for the subdivision and bonus issue. The weighted average acquisition cost for all equity shares transacted during the last one year preceding the red herring prospectus was Rs 32.67 per share, compared with Rs 18.42 for the preceding 18 months and Rs 14.30 for the preceding three years. These are adjusted figures rather than values on the former Rs 10-share basis.

Company also reported average acquisition costs of Rs 3.43 per share for Rajnikant Lallubhai Chanchad’s 22,440,000 shares and Rs 11.82 per share for Sonalben Rajnikant Chanchad’s 1,716,000 shares. The prospectus says these calculations were adjusted for both corporate actions. A note on page 133 refers to a “1:1” issue but also specifies 10 shares for every one share; the allotment table and 39,215,680-share total support the 1:10 ratio.

What could change Company’s share base after the proposed public issue?

Company’s share base could rise further if the proposed public issue is fully allotted. The capital structure provides for an issue of 14,456,000 new Rs 5 equity shares, which would increase the stated pre-issue base of 43,137,248 shares. The supplied table leaves the post-issue share count and aggregate nominal value subject to finalisation of allotment.

Company distinguishes the proposed public issue from the March 16 bonus issue through their mechanisms. The bonus issue distributed shares to existing shareholders in a fixed ratio, while the proposed issue would add new equity shares through an offer. Existing holders’ percentages after allotment would therefore depend on the final number of shares allotted against the 14,456,000-share proposal.

Company reported a securities premium account of Rs 4.062 crore before the issue. The post-issue securities premium is not specified because it depends on the final issue price and allotment. Company also states that it does not propose a pre-IPO placement, so the supplied disclosure does not identify another placement that would alter the stated pre-issue equity base.

Conclusion

Company’s March 2026 restructuring transformed its share count from 1,960,784 Rs 10 shares into 43,137,248 Rs 5 shares. The two-for-one subdivision accounted for the first doubling without changing paid-up capital, while the 39,215,680-share bonus issue accounted for the subsequent 11-fold expansion from the post-split base and raised paid-up capital to Rs 21.568624 crore.

The next disclosure to watch is the final post-issue capital structure following allotment of the proposed 14,456,000 shares. Company has not filled in the final issue price, post-issue share count, securities premium or post-issue ownership percentages, and those figures will determine the dilution of the reported 58.10% promoter and promoter-group holding.