Sethsawaria Built 90% Pre-IPO Stake Through Conversions

Sethsawaria Poly Fab LLP, a limited liability partnership, built a 90.00% pre-IPO stake in the company through three loan or liability conversions, a 50:1 bonus issue and promoter share transfers. Sethsawaria held 1,32,53,340 of the company’s 1,47,25,214 equity shares before the offer.

How did Sethsawaria build its 90% pre-IPO stake?

Sethsawaria built its 90% pre-IPO stake through five recorded transactions between March 2024 and March 2026. Its first recorded allotment was 7,380 equity shares through a loan conversion in March 2024 at an issue price of Rs 338.75 per share, including the Rs 10 face value. The 7,380 shares represented 24.68% of the 29,903 shares issued in that conversion, which also allotted shares to Anil Kumar Maheshwari, Pankaj Kumar Maheshwari and Sujata Maheshwari.

Sethsawaria received a further 1,04,830 shares on March 22, 2025 through conversion of an outstanding liability at Rs 668 per share. The entire 1,04,830-share allotment went to Sethsawaria, increasing its cumulative holding from 7,380 to 1,12,210 shares. A loan or liability conversion replaces an amount owed by the company with newly issued equity shares instead of a cash subscription.

On March 31, 2025, the company issued 1,06,41,650 bonus shares in a 50:1 ratio, or 50 additional equity shares for every share held on the record date. Sethsawaria received 56,10,500 bonus shares, taking its holding to 57,22,710 shares. The company said the bonus issue capitalised reserves and surplus available for distribution under its unaudited balance sheet as of February 28, 2025, and did not use revaluation reserves.

What moved ownership from individual promoters to Sethsawaria?

The September 30, 2025 transfers moved 36,59,899 shares from the two individual promoters to Sethsawaria at Rs 10 per share. Pankaj Kumar Maheshwari transferred 20,60,243 shares and Sujata Maheshwari transferred 15,99,656 shares. Together, those transferred shares equalled 24.85% of the eventual pre-offer capital of 1,47,25,214 shares.

The transfers reduced Pankaj’s cumulative holding from 26,49,252 shares to 5,89,009 shares, while Sujata’s holding fell from 21,88,665 shares to 5,89,009 shares. Sethsawaria’s holding rose from 57,22,710 to 93,82,609 shares after receiving the two tranches. The disclosed transactions therefore consolidated ownership within the promoter group rather than bringing in an outside shareholder.

A March 23, 2026 liability conversion produced the final large increase in Sethsawaria’s holding. The company allotted 38,70,731 shares to Sethsawaria at Rs 41 per share, including the Rs 10 face value, taking its cumulative stake to 1,32,53,340 shares. The company reported that all issued equity shares were fully paid from their allotment dates and that no convertible instruments were outstanding at the draft prospectus date.

How concentrated was ownership before the offer?

Sethsawaria held 90.00% of pre-offer paid-up capital, while Pankaj and Sujata each held 4.00%. The three named promoters together held 1,44,31,358 shares, or 98.00% of the 1,47,25,214 shares outstanding. Anil Kumar Maheshwari, classified as promoter group, held 2,93,556 shares or 2.00%, leaving only 200 shares classified as public holdings.

The formal pre-offer shareholding pattern reported 1,47,25,014 shares under the promoter and promoter-group category and 200 shares held by two public shareholders. Sudha Daga and Saroj Karnani held 100 shares each, with the public category described as negligible. The company had seven shareholders, and all 1,47,25,214 equity shares were held in dematerialised form.

Sethsawaria’s ownership was lower one year before the draft prospectus filing, at 57,22,710 shares or 38.86% of paid-up capital. At that point, Pankaj held 26,49,552 shares or 17.99%, and Sujata held 21,88,665 shares or 14.86%. The September 2025 transfers and the March 2026 liability conversion changed the LLP’s reported stake from 38.86% to 90.00%.

What do the share terms and lock-in rules mean for this ownership?

Sethsawaria’s 90.00% equity stake also represented 90.00% of voting rights because the company has one class of equity shares and each Rs 10 share carries one vote. The company reported no partly paid shares, warrants, depository receipts or convertible securities at the draft prospectus date. No alternative class of security could therefore alter the pre-offer voting position shown in the shareholding table.

The company reported that no promoter or promoter-group shares were pledged or otherwise encumbered at the draft prospectus date. It also said that all pre-initial public offering equity shares would be locked in before listing on NSE EMERGE, the small and medium enterprises platform of the National Stock Exchange of India. A lock-in is a period during which securities cannot be transferred, subject to the applicable regulatory provisions.

Under the disclosed Securities and Exchange Board of India Issue of Capital and Disclosure Requirements regulations, 20.00% of fully diluted post-offer capital held by promoters must be locked in for three years from allotment. Of promoter holdings exceeding the minimum promoter contribution, 50% is to be locked in for two years and the remaining 50% for one year. The draft prospectus stated that the detailed promoter lock-in table would be updated in the red herring prospectus.

Conclusion

Sethsawaria’s 90.00% ownership resulted from a defined sequence of equity issuances and promoter transfers, not one acquisition. The LLP received 7,380 shares in the 2024 loan conversion, 1,04,830 shares in the March 2025 conversion, 56,10,500 bonus shares, 36,59,899 transferred shares at Rs 10 each and 38,70,731 shares in the March 2026 conversion. That sequence left Pankaj and Sujata with 4.00% each before the offer.

The next ownership update is the post-offer shareholding pattern, which the company said it would file one day before listing. The company also disclosed no proposal to alter its capital structure through a share split or consolidation in the six months from the issue opening, although its board may consider equity issuance after listing for an acquisition, merger, joint venture, regulatory compliance or another purpose requiring approvals.