 Best 5 Successful IPOs of India

1 Sigachi Industries Limited

2 Vibhor Steel Tubes Limited

3 Paras Defence And Space Technologies Limited

4 BLS E-Services Limited

5 Tata Technologies Limited

INDUSTRY OVERVIEW
The information in this section is derived from the report dated August 2021, (the “CARE
Report”) prepared by Care Advisory, a division of CARE Advisory Research and Training
Limited (“CART or CARE Advisory”), except for other publicly available information as cited in
this section. Neither we nor any other person connected with the Issue has verified the
information in the CARE Report or other publicly available information cited in this section.
Prospective investors are advised not to unduly rely on the CARE Report. Industry sources and
publications generally state that the information contained therein has been obtained from
sources generally believed to be reliable, but their accuracy, completeness and underlying
assumptions are not guaranteed and their reliability cannot be assured and accordingly,
investment decisions should not be based on such information. The information in this section
must be read in conjunction with the sections titled “Risk Factors” and “Our Business” beginning
on pages 24 and 153, respectively.

The Global Economy

The global economy is projected to grow 6.0 percent in 2021 and 4.9 percent in 2022. The 2021
global forecast is unchanged from the April 2021 WEO, but with offsetting revisions. Prospects
for emerging market and developing economies have been marked down for 2021, especially for
Emerging Asia. By contrast, the forecast for advanced economies is revised up. These revisions
reflect pandemic developments and changes in policy support. The 0.5 percentage-point upgrade
for 2022 derives largely from the forecast upgrade for advanced economies, particularly the
United States, reflecting the anticipated legislation of additional fiscal support in the second half
of 2021 and improved health metrics more broadly across the group.
IMF estimated growth in the advanced economies group of 5.1% in CY 2021. Among advanced
economies, the United States is expected to surpass its pre-COVID GDP level this year CY 2021,
while many others in the group will return to their pre-COVID levels only in CY 2022. The
United Statesis projected to return to end-of-2019 activity levels in the first half of 2021 and
Japan in the second half. In the euro area and the United Kingdom, activity is expected to remain
below end-of-2019 levels into 2022. The gaps can be traced back to differences in behavioral and
public health responses to infections, flexibility and adaptability of economic activity to low
mobility, preexisting trends, and structural rigidities predating the crisis. In 2021 the advanced
economic growth rate is projected to strengthen to 5.1%. The US economy contracted by - 3.5%
in 2020, and projected to grow at 6.4 % in 2021. Euro area is expected to reflect a sharp recovery
of 4.4% by the end of 2021.

Among emerging market and developing economies, growth is forecasted at 6.7 % in CY 2021
and 5.0% in CY 2022

The Indian Economy

On April 21, CARE Ratings had projected GDP growth to be 10.2% for FY22 on the assumption
that the lockdowns would be rolled back in June. The spread of infection has also affected
workers in various businesses in this round which is directly affecting companies. Supply chains
are being affected this time due to workers getting infected unlike the first wave in CY 2020
whenthere were restrictions on the movement of goods. Therefore, there is a double whammy
due tothe second wave - of a lockdown as well as personal health of workers.

Under these conditions CARE Ratings do believe that there will be a push back to the unlock
process which can be only moderate even in July and will pick up only in August assuming the
worst is behind us in June.

In fact, it is assumed that the loss in June and part of July will be comparable to the previous
months due to the spread of the virus in the interiors. Also based on the progress of the
vaccination programme, it does appear that there will be significant delays in meeting targets and
the nation will still be in the first gear mode in June with movement to the second starting
earliest in July.

Hence Q1 of this year will be stressed out to a large extent with July showing mixed signs. There
are 3mn active cases which can be affecting broadly over 10mn families. There have been
cumulative discharges of around 19mn people which will affect at least 60-70mn families. This
can potentially also affect the purchasing power of families and hence unlike last year when the
pent-up demand theory worked to a certain extent, this time it will be dormant. These people
would have spent considerable amounts of money on medical treatment and unless in the top
echelons of income would not be in a position to spend more this time after the infection
incidence abates. The sheer numbers this time will delay the demand revival process this year.
Under these assumptions, GDP growth for FY22 will be 9.2% with a downward bias as against
10.2% projected in April.

Movement in CARE Ratings forecasts for GDP growth (%)

GDP in FY21 was Rs 1.34 trillion that was to increase to Rs 1.48-Rs 1.49 trillion as per CARE
Ratings March forecast. The GDP level in real terms will be Rs 1.46 trillion based on 9.2%
growth. The lower growth in GDP compared to our initial estimate of 11.2% would mean a loss
of Rs 2.68 trillion in real terms or Rs 3.89 trillion in nominal terms.

In real terms the growth would be:

− Agriculture 3.3-3.5%, Industry 9.5-10% and Services 9-9.5%.

This in turn will also have fiscal implications.

The Budget had targeted a nominal GDP of Rs 222.87 trillion. The fiscal deficit was estimated at
Rs 15.07 trillion accordingly. With real GDP growth falling by Rs 2.68 trillion, nominal GDP
would now be reduced to Rs 218.98 trillion with a loss of nearly Rs 3.9 trillion of income.
Further, with GDP growth slowing down by 2% points, the overall tax revenue to the Centre will
come down from Rs 15.45 trillion to Rs 15.11 trillion, which is a shortfall of Rs 340 billion. Last
month, the government has already announced an outlay of Rs 250 billion on account of the free
food programme for 800mn people (which would be at Rs.5 kg/month). This additional cost
combined with the potential decline in tax revenue will mean an increase in deficit by Rs 590
billion. The revised fiscal deficit under ceteris paribus conditions would be Rs 15.66 trillion or
7.15% of GDP. This is assuming that the government spends the additional Rs 250 billion
outside the budget and does not channel the same from an existing allocation.

Statistics for Indian Economy is provided below: Gross Domestic Product (GDP) is the sum of
private consumption, gross investment in the economy, government investment, government
spending and net foreign trade (difference between exports and imports). Sectorial GDP Growth

is as under:
Gross value added (GVA) is the measure of the value of goods and services produced in an
economy. GVA gives picture of supply side where as GDP represents consumption Sector wise
GVA profile and growth estimates for FY22:

CARE Rating estimates that GVA will increase by 10.2% in FY22 over -6.5% in FY21. This is
based on the normal monsoon assumption which will lead to stable agricultural output.

• Agriculture will continue to grow by a stable rate based on steady kharif and rabi harvests.
There are no unfavorable signs of an El Nino developing which is an early positive sign.

• The industrial sector will witness buoyancy with mining, manufacturing and construction
registering double digit growth rates over negative growth in FY21

Industrial Growth - Industrial production contracted by -8.6% during FY2020-21 as compared to

- 0.8% contracted in FY 2019-20.
Industrial production rose by 22.4% in Mar due to favorable base as the government imposed
nationwide lockdown in year ago period in the country due to spread of COVID-19 infection.
Factory production came higher than market estimates of 20% led by strong growth in
manufacturing and electricity output. Manufacturing sector grew by 25.8% in Mar as the
expansion in activity remained better than expected. In terms of industries, 20 out of 23
industrygroups showed expansion during the month. Electricity sector output grew by 22.5%
while mining output growth remained low at 6.1% due to -21.9% contractionsin coal production
and -3.1% decline in natural gas output during Mar’21. On use based, capital
goods/infrastructure expanded by 41.9%/31.2% on the favorable base of - 38.8%/-24.3%
contraction in year ago period. Consumer durablessector grew by 54.9% and non-durables at
27.5% on favorable base.

Growth in Per Capita GDP, Income and Final Consumption

dropped by 8.9% in FY 2020-21. The per capita private final consumptionexpenditure (PFCE),
that represents consumer spending, dropped by 10.4% in FY 2020-21.
About Sigachi Industries Limited
Incorporated in 1989, Sigachi Industries is engaged in manufacturing of Microcrystalline
Cellulose (MCC) which is widely used as an excipient for finished dosages in the
pharmaceutical industry. MCC has varied applications in the pharmaceutical, food,
nutraceuticals, and cosmetic industries. The company manufactures MCC of various grades
ranging from 15 microns to 250 microns and the major grades of MCC manufactured and
marketed by the company are branded as HiCel and AceCel. Presently, the company
manufactures 59 different grades of MCC at the manufacturing units, situated in Hyderabad and
Gujarat. The company has an in-house R&D division equipped with the necessary facilities to
carry out all necessary trials to develop new molecules from concept to commissioning.

The company has received various quality certifications and operates 3 manufacturing units
namely, Unit I situated at Hyderabad, and two manufacturing units, Unit II and Unit III situated
at Jhagadia and Dahej, in Gujarat. As of March 31, 2021, company's total MCC manufacturing
capacity is 13,128 MTPA from three locations.

Objects of the Issue (Sigachi Industries IPO Objectives)

The net proceed from the IPO will be utilized towards the following purposes;

1. Funding capital expenditure:

a. for expansion of production capacity for MCC at Dahej, Gujarat 28.15 crores
b. for expansion of production capacity for MCC at Jhagadia, Gujarat 29.24 crores
c. funding capital expenditure to manufacture CCS at the Proposed Unit 32.29 crores

2. General corporate purposes

Sigachi Industries IPO Review (Apply)

[Dilip Davda] The company has been faring well and paying dividends. The issue is reasonably
priced based on its financial performance and the virtual monopolistic nature of business, it is
poised for bright prospects. Due to the small size of the IPO, the initial listing will be in the T
group that may curtail speculative moves. Investors may consider an investment with a medium
to long term perspective.

Sigachi Industries IPO Subscription Status (Bidding Detail)

The Sigachi Industries IPO is subscribed 101.91 times on November 3, 2021 5:00:00 PM. The
public issue subscribed 80.49 times in the retail category, 86.51 times in the QIB category, and
172.43 times in the NII category.
INDUSTRY OVERVIEW

The information contained in this section is prepared by CARE Advisory Research and Training
Limited (CareEdge Research) which was appointed by our Company vide engagement letter
dated July 04, 2023 has been exclusively commissioned and paid for by our Company in
connection with the Issue. CARE Advisory Research and Training Limited is an independent
agency and has no relationship with our Company, its Subsidiary, Promoters, Directors, or the
Book Running Lead Manager as on the date of this Red Herring Prospectus. For risks in relation
to commissioned reports.

1. Economic Outlook

1.1 Global economy outlook As per the International Monetary Fund (IMF)’s World Economic
Outlook growth projections released in July 2023, the global economic growth for CY221 stood
at 3.5% on a year-on-year (y-o-y) basis, down from 6.3% in CY21 due to disruptions resulting
from the Russia-Ukraine conflict and higher-than-expected inflation worldwide. On the other
hand, the global economic growth for CY23 is projected to slow down further to 3.0%, attributed
to compressing global financial conditions, expectant steeper interest rate hikes by major central
banks to fight inflation, and spill-over effects from the Russia-Ukraine conflict, with gas supplies
from Russia to Europe expected to remain tightened. Whereas growth in CY24 is projected to
remain broadly stable at 3.0%, with notable shifts across regions. For the next 5 years, the IMF
projects world economic growth in the range of 3.0%-3.2% on a y-o-y basis.
Advanced Economies Group

The major advanced economies registered GDP growth of 2.7% in CY22, down from 5.4% in
CY21, which is further projected to decline to 1.5% in CY23. This forecast of low growth
reflects increased central bank interest rates to fight inflation and the impact of the Russia-
Ukraine war. About 93% of advanced economies are projected to witness declined GDP growth
in CY23. In addition, this is further expected to decline to 1.4% in CY24.

One of the major countries from this group is the United States. The United States registered
GDP growth of 2.1% in CY22 compared to 5.9% in CY21. Whereas, growth for CY23 and
CY24 is projected at 1.8% and 1.0%, respectively. This is reflective of declining real disposable
incomes and savings impacting consumer demand with higher interest rates taking a toll on
spending.

Further, the Euro Area registered GDP growth of 3.5% in CY22 compared to 5.3% in CY21.
However, the boost from the reopening of the economy after the pandemic appears to be fading.
For CY23 and CY24, the growth is projected at 0.9% and 1.5%, respectively. The accelerated
pace of rate increases by the Bank of England and the European Central Bank has tightened the
financial conditions, resulting in the cooling of demands in the housing sector and beyond.
Emerging market and developing economies group

For the emerging market and developing economies group, GDP growth stood at 4.0% in CY22,
compared to 6.8% in CY21. This growth is further projected at 4.0% in CY23 and 4.1% in
CY24. The anticipated improvement in GDP growth in CY24 is attributed to the anticipation of
gradual recovery. Whereas about 61% of economies, expected to progress rapidly in CY23,
project stable growth. While the remaining economies, including the lowincome countries, are
expected to progress slower.

Further, in China, growth is expected to pick up to 5.2% with the full reopening in CY23 and
subsequently moderate in CY24 to 4.5%. Whereas, India’s GDP projections for CY23 and CY24
stand at 6.1% and 6.3%, respectively, with resilient domestic demands despite external
headwinds.
The Indonesian economy is expected to register growth of 5% both in CY23 and CY24 with a
strong recovery in domestic demands, a healthy export performance, policy measures, and
normalization in commodity prices. In CY22, Saudi Arabia was the fastest-growing economy in
this peer set with 8.7% growth. The growth is accredited to robust oil production, non-oil private
investments encompassing wholesale and retail trade, construction and transport, and surging
private consumption. Saudi Arabia is expected to grow at 1.9% and 2.8% in CY23 and CY24,
respectively. On the other hand, Brazil is expected to project a moderate economic growth of
2.1% in CY23 due to headwinds of inflation. However, recovery is expected in the medium term
with a sound financial system, large cash buffers with the public sector, and adequate
international reserves.

Despite the turmoil in the last 2-3 years, India bears good tidings to become a USD 5 trillion
economy by CY27. According to the IMF dataset on Gross Domestic Product (GDP) at current
prices, the GDP has been estimated to be at USD 3.4 trillion for CY22 and is projected to reach
USD 5.2 trillion by CY27. India’s expected GDP growth rate for coming years is almost double
compared to the world economy.

Besides, India stands out as the fastest-growing economy among the major economies. The
country is expected to grow at more than 6% in the period of CY24-CY28, outshining China’s
growth rate. Accordingly, the Indian economy is paving its way towards becoming the largest
economy globally. Currently, it is the third-largest economy globally in terms of Purchasing
Power Parity (PPP) with a ~7% share in the global economy, with China [~18%] on the top
followed by the United States [~15%].
Purchasing Power Parity is an economic performance indicator denoting the relative price of an
average basket of goods and services that a household needs for livelihood in each country.
Despite COVID-19’s impact, high inflationary and interest rates globally, and the geopolitical
tensions in Europe, India has been a major contributor to world economic growth.

1.2 Indian Economy Outlook

1.2.1 GDP growth and Outlook

Resilience to external shocks remains critical for near-term outlook

India’s GDP grew by 9.1% in FY22 and stood at Rs. 149.3 trillion despite the pandemic and
geopolitical RussiaUkraine spillovers. In Q1FY23, India recorded 13.2% y-o-y growth in GDP,
largely attributed to improved performance by the agriculture and services sectors. Following
this double-digit growth, Q2FY23 witnessed 6.3% y-o-y growth, while Q3FY23 registered 4.5%
y-o-y growth. The slowdown during Q2FY23 and Q3FY23 compared to Q1FY23 can be
attributed to the normalization of the base and a contraction in the manufacturing sector’s output.
Subsequently, Q4FY23 registered broad-based improvement across sectors compared to Q3FY23
with a growth of 6.1% y-o-y. The investments, as announced in the Union Budget 2022-23 on
boosting public infrastructure through enhanced capital expenditure, have augmented growth and
encouraged private investment through large multiplier effects in FY23. Supported by fixed
investment and higher net exports, GDP for full-year FY23 was valued at Rs. 160.1 trillion
registering an increase of 7.2% y-o-y.

Furthermore, in Q1FY24, the economic growth accelerated to 7.8%. The manufacturing sector
maintained an encouraging pace of growth, given the favourable demand conditions and lower
input prices. The growth was supplemented by a supportive base alongside robust services and
construction activities.

GDP growth outlook

• During FY24, strong agricultural and allied activity prospects are likely to boost rural demands.
However, El Nino is being predicted in the current fiscal which may lead to deficit rainfall in the
country and impact agricultural output. However, a rebound in contact-intensive sectors and
discretionary spending is expected to support urban consumption.
• Strong credit growth, resilient financial markets, and the government’s continual push for
capital spending and infrastructure are likely to create a compatible environment for investments.
• External demand is likely to remain subdued with a slowdown in global activities, thereby
indicating adverse implications for exports. Additionally, heightened inflationary pressures and
resultant policy tightening may pose a risk to the growth potential.

Taking all these factors into consideration, in August 2023, the RBI in its bi-monthly monetary
policy meeting estimated a real GDP growth of 6.5% y-o-y for FY24.

1.2.2 Gross Value Added (GVA)

Gross Value Added (GVA) is the measure of the value of goods and services produced in an
economy. GVA gives a picture of the supply side whereas GDP represents consumption.

Industry and Services sector leading the recovery charge

• The gap between GDP and GVA growth turned positive in FY22 (after a gap of two years) due
to robust tax collections. Of the three major sector heads, the service sector has been the fastest-
growing sector in the last 5 years.

• The agriculture sector was holding growth momentum till FY18. In FY19, the acreage for the
rabi crop was marginally lower than the previous year which affected the agricultural
performance. Whereas FY20 witnessed growth on account of improved production. During the
pandemic-impacted period of FY21, the agriculture sector was largely insulated as timely and
proactive exemptions from COVID-induced lockdowns to the sector facilitated uninterrupted
harvesting of rabi crops and sowing of kharif crops. However, supply chain disruptions impacted
the flow of agricultural goods leading to high food inflation and adverse initial impact on some
major agricultural exports. However, performance remained steady in FY22.

Further, in Q1FY23 and Q2FY23, the agriculture sector recorded a growth of 2.4% and 2.5%,
respectively, on a y-o-y basis. Due to uneven rains in the financial year, the production of some
major Kharif crops, such as rice and pulses, was adversely impacted thereby impacting the
agriculture sector’s output. In Q3FY23 and Q4FY23, the sector recorded a growth of 4.7% and
5.5%, respectively, on a y-o-y basis. Overall, the agriculture sector performed well despite
weather-related disruptions, such as uneven monsoon and unseasonal rainfall, impacting yields
of some major crops and clocked a growth of 4% y-o-y in FY23, garnering Rs. 22.3 trillion. In
Q1FY24, this sector expanded at a slower pace of 3.1% compared to a quarter ago. Going
forward, rising bank credit to the sector and increased exports will be the drivers for the
agriculture sector. However, a deficient rainfall may impact the reservoir level weighing on
prospects of rabi sowing. A downside risk exists in case the intensity of El Nino is significantly
strong.

• The industrial sector projected a CAGR of 4.7% for the period FY16 to FY19. From March
2020 onwards, the nationwide lockdown due to the pandemic significantly impacted industrial
activities. In FY20 and FY21, this sector felt turbulence due to the pandemic and recorded a
decline of 1.4% and 0.9%, respectively, on a y-o-y basis. With the opening up of the economy
and resumption of industrial activities, it registered 11.6% y-o-y growth in FY22, albeit on a
lower base.

The industrial output in Q1FY23 jumped 9.4% on a y-o-y basis. However, in the subsequent
quarter, the sector witnessed a sharp contraction of 0.5% due to lower output across the mining,
manufacturing, and construction sectors. This was mainly because of the poor performance of the
manufacturing sector, which was marred by high input costs. In Q3FY23, the sector grew
modestly by 2.3% y-o-y. The growth picked up in Q4FY23 to 6.3% y-oy owing to a rebound in
manufacturing activities and healthy growth in the construction sector. Overall, the industrial
sector is estimated to be valued at Rs. 45.2 trillion registering 4.4% growth in FY23. The
industrial sector grew by 5.5% in Q1FY24. The industrial growth was mainly supported by
sustained momentum in the manufacturing and construction sectors. Within manufacturing (as
captured by IIP numbers), industries such as pharma, non-metallic mineral products, rubber,
plastic, metals, etc., witnessed higher production growth during the quarter.

• The services sector recorded a CAGR of 7.1% for the period FY16 to FY20, which was led by
trade, hotels, transport, communication, and services related to broadcasting, finance, real estate,
and professional services. This sector was the hardest hit by the pandemic and registered an 8.2%
y-o-y decline in FY21. The easing of restrictions aided a fast rebound in this sector, with 8.8% y-
o-y growth witnessed in FY22.

In Q1FY23 and Q2FY23, this sector registered a y-o-y growth of 16.3% and 9.4%, respectively,
on a lower base and supported by a revival in contact-intensive industries. Further, the services
sector continued to witness buoyant demand and recorded a growth of 6.1% y-o-y in Q3FY23.
Supported by robust discretionary demands, Q4FY23 registered 6.9% growth largely driven by
the trade, hotel, and transportation industries. Overall, benefitting from the pent-up demand, the
service sector was valued at Rs. 20.6 trillion and registered growth of 9.5% y-o-y in FY23.
Whereas in Q1FY24, the services sector growth jumped to 10.3%. Within services, there was a
broad-based improvement in growth across different sub-sectors. However, the sharpest jump
was seen in financial, real estate, and professional services. Trade, hotels, and transport sub-
sectors expanded at a healthy pace gaining from strength in discretionary demand. Accordingly,
steady growth in various service sector indicators like air passenger traffic, port cargo traffic,
GST collections, and retail credit are expected to support the services sector.
About Vibhor Steel Tubes Limited
Founded in 2003, Vibhor Steel Tubes Limited manufactures, exports and supplies steel pipes and
tubes to various heavy engineering industries in India.

The company's product portfolio includes:

 ERW pipes for application in water transport, oil, gas and other non-toxic supplies.
 Hot-dipped galvanized pipes for application in agriculture and infrastructure.
 Hollow section pipes in square and rectangular forms.
 Primer painted pipes
 Crash barriers for application in railways, highways, and roads.

Objects of the Issue (Vibhor Steel Tubes IPO Objectives)

The net proceeds of the Issue less the issue-related expenses (Net Proceeds) are proposed to be
utilised in the following manner:

1. Funding of working capital requirements of the company; and

2. General corporate purposes.

Vibhor Steel Tubes IPO Review (May apply)

[Dilip Davda] The company is primary supplier of tubes and pipes to Jindal Pipes Ltd. and has
a long term contract of around 6 years as of now. Asa claimed by the management, this contract
is not exclusive and the company has liberty to sell products in the open markets. The company
has posted growth in its top and bottom lines for the reported periods. Based on FY24 annualized
earnings, the issue appears fully priced. Well-informed investors may park funds for the medium
term.

Vibhor Steel Tubes IPO Subscription Status (Bidding Detail)

The Vibhor Steel Tubes IPO is subscribed 320.05 times on February 15, 2024 7:02:00 PM. The
public issue subscribed 201.52 times in the retail category, 191.41 times in the QIB category, and
772.49 times in the NII category.
INDUSTRY OVERVIEW

Unless noted otherwise, the information in this section has been obtained or derived from the
F&S Report prepared by F&S, who was appointed on July 16, 2021, and commissioned and paid
for by our Company in connection with the Offer. All information contained in the F&S Report
has been obtained by Frost & Sullivan from sources believed by it to be accurate and reliable.
Although reasonable care has been taken by Frost & Sullivan to ensure that the information in
the F&S Report is tru e, such information is provided ‘as is’ without any warranty of any kind,
and F&S in particular, makes no represent ation or warranty, express or implied, as to the
accuracy, timeliness or completeness of any such information. All information and estimates
contained herein must be construed solely as statements of opinion, and Frost & Sullivan shall
not be liable for any losses incurred by users from any use of this publication or its contents.

Industry sources and publications generally state that the information contained therein has been
obtained from sources believed to be reliable, but their accuracy, completeness and underlying
assumptions are not guaranteed and their reliability cannot be assured. Industry sources and
publications are also prepared based on information as of specific dates and may no longer be
current or reflect current trends. Industry sources and publications may also base their
information on estimates, projections, forecasts and assumptions that may prove to be incorrect.
Accordingly, investors should not place undue reliance on, or base their investment decision on
this information.

Macroeconomic Outlook

Global economy

As per the March 2021 update of the World Economic Outlook (“WEO”) published by the
International Monetary Fund (“IMF”), global growth was projected to be 6% in 2021 and 4.4%
for 2022. The current estimates are more optimistic than the projection published in October
2020 and represent an upward revision of 0.8% and 0.2% respectively for 2020 -2021.The
revision reflects better-than anticipated second quarter GDP outturns, mostly in advanced
economies, where activity began to improve sooner than expected after lockdowns were scaled
back in May and June, as well as indicators of a stronger recovery in the third quarter (Source:
Frost & Sullivan).Many countries have provided large-scale macroeconomic support to alleviate
the economic blow, which has contributed to a recent stabilization in financial markets. Central
banks in advanced economies have cut policy rates and taken other far-reaching steps to provide
liquidity and to maintain investor confidence. In many EMDEs, central banks have also eased
monetary policy. The fiscal policy support that has been announced already far exceeds that
enacted during the 2008-09 global financial crisis (Source: Frost & Sullivan, World Bank). The
global growth for the world, the advanced economies and EMDEs is set out in the table below:

After the rebound in 2021, global growth is expected to gradually slow to about 3.3% into the
medium term. This implies only limited progress towards catching up to the path of economic
activity for 2020 –25 projected before the pandemic for both advanced and emerging market and
developing economies (Source: Frost & Sullivan, IMF).

Indian economy

The COVID-19 pandemic and associated responses have adversely affected workforces,
consumer sentiment, economies and financial markets around the world, including in India. In
order to contain the spread of the COVID-19 pandemic, the GoI along with State Governments
declared a lockdown of the country, including severe travel and transport restrictions and a
directive to all citizens to shelter in place, unless essential. The lockdown required private,
commercial and industrial establishments to remain temporarily closed.

India has made rapid progress in its economy since the 2000s, which resulted in reducing
absolute poverty. It is estimated that more than 90 million people were lifted out of extreme
poverty in the period 2011 -2015. Indian economy grew at very high rates since the start of the
century; however, it had started to slow down even before the pandemic recording a growth of
only 4.0 %. The slow growth was largely attributable to weakness in the financial sector and
lower growth in private consumption. The implementation of lockdown in Mar 2020 (one of the
most stringent lockdowns in the world), brought the economy to a near halt with rapid decline of
both demand and supply. Consequently, there was a contraction of - 23.9 % in Q1 2021, and -
7.5% in Q2 FY 2021. The gradual opening of the economy towards the end of 2020 resulted in
modest growth of 0.5% in Q3 and 1.6% in Q4 of FY 2021. For the full fiscal year 2020-2021,
contracting was pegged at -7.3%. The drastic second wave of COVID led to another series of
state level lockdowns, and as a result the consensus estimate of GDP growth of around 10% in
FY 2022 was reduced by-1 % by most economic agencies. RBI had also reduced the GDP
growth forecast from 10.5% to 9.5 % for FY 22 post the second wave, but has now once again
gone back to earlier estimate of 10.5% in a recent development indicating that it does not expect
the second wave to materially affect the growth rate due the localised nature of lockdowns. The
actual effect of the second wave can only be discerned in the time to come; currently the growth
forecast for FY 2022 varies between 8.3% as projected by World Bank, and 10.5% as projected
by RBI; IMF revised its forecast to 9.5%. For FY 23, the economy is expected to register a
growth of 7% and settling down to 6-6.5% in the medium term. The forecast is based on the
estimated effect of second wave, and as of now does not take into account a serious disruption by
a possible third wave of infections. A high caseload in the third wave with another series of
lockdowns could materially affect growth.

Defence industry

Global defence industry and trends Global defence spending touched $ 1.98 trillion in 2020,
which was an increase of 2.6% over such corresponding spending in 2019. The five largest
spenders, accounting for 62% of the total global spend, were the United States, China, India,
Saudi Arabia and Russia. Rise in geopolitical disputes, such as the on-going flare up between the
United States and China, was the major reason fuelling this increase in spending.

ISR solutions generally include space and defence electro optics relay visuals, enemy location
and other datasets to commanders and enable effective decision making and de-risking assets on
the ground. ISR solutions, which would generally be exclusive to advanced nations such as the
United States, are becoming ubiquitous especially in countries such as Turkey, India, and Saudi
Arabia. Further, land border management is also becoming increasingly ISR enabled.
contemporary platforms have high electronic component densities and therefore greater thermal
and electronic signatures, making it easier for defence systems to track and engage them.
Accordingly, signature reduction is gaining more precedence as a key priority in defence
equipment design and upgrades. Currently, “Shielded Electronics” and advanced cooling systems
that reduce thermal signatures are emerging as a norm in defence technology. Network centric
warfare (“NCW”) ensures that critical information gets to those who need it fast, across the chain
of command. NCW operations exploit increasing processing power, improved communication,
data transfer capabilities and cost-effective sensors. For instance, it is expected that the Indian
Army will become network centric across all echelons of command – from platoon level to
theatre level over the next decade, driving procurement of electronics intensive C4ISR
equipment.

Further, as computing power increases over the next few years, combined with the advent of
millimetre wave communications, it is expected that artificial intelligence will become more
advanced with little human oversight necessary for operations. Most new autonomous systems
are being developed with cost effectiveness in mind and therefore a large portion of the
technology and sub systems will be sourced from the commercial sector (which is more mature
than the defence sector in autonomous technologies). These solutions will be developed with the
involvement of a wide raft of tier 2 and tier 3 defence companies, which will supply specialized
subsystems such as Command, Control and Computers (C3) equipment and displays, electro
optics payloads, remote weapon mounts, communication equipment, modular weapon systems
and associated heavy engineering. Most platforms being built currently are EMP hardened
through using hardened electronics, faraday shielded construction, EMP filters and redundant
subsystems. In the future, a higher level of EMP protection that does not compromise on size and
weight parameters of defence equipment will be sought after

Geopolitics in India India shares its land borders with 7 other countries and is bounded by the
Arabian Sea to the west and the Bay of Bengal to the east. Territorial issues and a history of
conflict spanning six wars have made India ’s borders with Pakistan and China some of the most
dangerous flashpoints in existence currently. The presence of such adversaries underscores the
mandate for India to build up a credible, technology-driven military deterrence on both fronts.

In the last few years, defence postures of nations in the Indian subcontinent and China has
shifted. Cease fire violations and cross border shelling at the International Border and Line of
Control (“LoC”) have increased manifold. China ’s One Belt One Road (“OBOR”), though
ostensibly a trade initiative, is believed to have strategic geopolitical undercurrents as t he ‘String
of Pearls’ strategy to surround India with commercial establishments developed or financed by
China, which may also double up as clandestine defence establishments in the future.

Border skirmishes between China and India escalated to a high in June 2020 with confrontational
casualties occurring on both sides for the first time since the Sino Indian war.

Terrorism is a key driver of Indian Armed Forces mobilization. Despite repeated commitments to
peace talks by the leaders of India and Pakistan, attacks on the Indian Territory by terrorist
organizations continue. A diplomatic solution to the Kashmir issue does not seem plausible in the
near future and military build-up and border security deployments along the Line of Control
(“LoC”) are expected to continue.

Modernisation Program

The Indian defence modernisation has faced delays and cancellations due bureaucratic inefficiency in the
past, which has led to reduced and obsolete inventory. The current situation is untenable in face of the
increased geo-political uncertainty. Frost expects that the modernisation program will be given due
priority in the next decade. Frequent delays in acquisition, cancellation of programs, and limited capital
and revenue budget compared to the size of the armed forces have led to low level of equipment across
the Army, Navy, and Air Force. For example, the IAF currently has 30 fighter squadrons against a
sanctioned strength of 42 squadrons. Additionally, it has a very limited number of AEW aircraft and
tankers that are woefully inadequate to meet its operational demands. The Indian Navy has one carrier—
INS Vikramaditya (re-furbished Admiral Gorshkov)—and has been pitching for 2 additional carriers for a
long time. INS Vikramaditya was supplied by Russia with MiG 29 K aircraft that reportedly have a very
low level of serviceability which is adversely affecting operational capability. The IN has issued an RFI
for 56 carrier-based fighters, and the process is still ongoing. Indian Army troops suffer from shortages
even in some basic equipment. For example, a recent Comptroller Auditor General (CAG) report
indicated that there was a shortage of snow goggles, boots, jackets, and sleeping bags for the troops
stationed in high-altitude areas. In another instance, the Indian Army had issued an RFI for light air
transportable tanks in 2009, a request that is still pending. The faceoff with China in the Galwan valley
has now led to a scramble for acquiring these tanks under emergency procurement.

Russia was the primary source of military equipment for India ’s armed forces from 1960 to 2000.
Diversification of sourcing from non-Russian countries started only in the early 2000s. Most equipment
sourced in the 1980 -2000 period continues to be present in the current inventory with life extensions and
upgrades. For example, the MiG 27 was recently decommissioned in 2019 after being first inducted in
1985. A similar situation exits in the Indian Navy and Indian Army, where a major portion of inventory is
obsolete or low-technology products sourced domestically or from Russia. Additionally, the Indian armed
forces’ networking capability is extremely limited due to the diverse and vintage nature of the equipment.
The Indian armed forces and the Ministry of Defence do not have much choice but to continue the
modernisation program in view of the geo -political situation and critical shortages. The stakeholders are
increasingly paying attention to the acquisition of high -tech equipment and network-centric operations by
inducting a combination of foreign and domestic equipment. The Indian Army’s modernization effort has
been lagging behind the other two services and many projects are expected to be realized over the next 3-
7 years. The major indigenous defence platforms being developed for the Indian Army are Arjun MKIII,
Abhay Infantry Fighting Vehicle (IFV) and TATA Kestrel. For air operations, 36 Rafale fighter aircraft
were recently procured and there are immediate plans to acquire 100 additional fighter aircraft under the
strategic partnership model. This is over and above the additional procurement of 83 indigenous Tejas
Mk1 A aircraft. Recently, the IAF and Army have also processed procurement of AH-64 Apache and
Chinooks from Boeing. Major programmes of the Indian Army are:
The Indian Navy’s modernization plan has had success in integrating anti-submarine, anti-
missile, support and communication capabilities. The current focus is extensively on submarine
recapitalization and anti-submarine warfare in order to match Chinese naval capabilities.

The IAF plans to procure new fighters and trainers, and of late has been more successful in
upgrades (electronic warfare, avionics, and communication systems), as opposed to large batch
buys. $ 3.6 billion has been allocated for the procurement of aircraft such as HAL Tejas
MK1/MK1A, Dassault Rafale, Airbus C-295, HAL Light Utility Helicopter (“LUH”) and the
development of UAS. $ 1,607.41 million are allocated towards missiles and weapons systems, as
the IAF modernizes aircraft with new and more capable Beyond Visual Range missiles.
About Paras Defence And Space Technologies Limited
Paras Defence and Space Technologies are primarily engaged in the designing, developing,
manufacturing, and testing of a variety of defence and space engineering products and solutions.
The company has five major product category offerings - Defence & Space Optics, Defence
Electronics, Heavy Engineering, Electromagnetic Pulse Protection Solutions, and Niche
Technologies. Paras Defence and Space Technologies is the only Indian company with the
design capability for space-optics and opto-mechanical assemblies and is one of the leading
providers of optics for various Indian defence and space programs. The company also delivers
customized turnkey projects in the defence segment. The company has partnered with some of
the leading technology companies around the world to indigenize advanced technologies in the
defence and space sectors for the Indian market.

The company has 2 manufacturing plants in Maharashtra and is in the process of expanding its
current manufacturing facility at Nerul in Navi Mumbai.

Objects of the Issue (Paras Defence and Space Technologies

IPO Objectives)
 Fund capital expenditure requirements.
 Funding incremental working capital requirements.
 Repayment or prepayment of all or a portion of certain borrowings/outstanding loan
facilities availed by the company.
 General Corporate purposes.

Paras Defence and Space Technologies IPO Review (May apply)

[Dilip Davda] No doubt, spending on the defence and aerospace segment by the government
has been on the rise and this augurs well for this company. However, based on its financial data
the issue is fully priced discounting near term prospects. As the overall IPO size is below Rs. 250
cr. its initial listing will take place in T 2 T group limiting speculative movements. Hence cash
surplus investors may consider investing in this issue for the long term.

Paras Defence and Space Technologies IPO Subscription

Status (Bidding Detail)
The Paras Defence and Space Technologies IPO is subscribed 304.26 times on September 23,
2021 5:00:00 PM. The public issue subscribed 112.81 times in the retail category, 169.65 times
in the QIB category, and 927.70 times in the NII category.
INDUSTRY OVERVIEW

1. Macroeconomic Scenario

1.1. World economy fighting inflation surge with Indian economy facing volatile commodity
prices and tightening of liquidity. The global economy is witnessing tightening monetary
conditions in most regions. According to IMF, we are facing a broad based and sharper than
expected slowdown with high inflation across the globe. As per the IMF (World Economic
Outlook Update – April 2023), global growth prospects are estimated to fall from 3.4% in
CY2022 to 2.8% in CY2023 and then see an increase in CY2024 to 3.0%, impact of which is
expected to be witnessed in Indian economy as well. Global trade had reached a record level of
~US$32 trillion for CY2022, but its growth had turned negative during the second half of 2022.
The trade outlook for CY2023 is expected to be negatively impacted as a result of geopolitical
frictions, persisting inflation and lower global demand.

1.2. India expected to remain one of the fastest growing economies

India is expected to be the fastest-growing major economy (GDP growth, % year-on-year)

1.3. India to remain a growth outperformer globally

Despite the markdown in near-term growth, India is expected to remain a growth outperformer
over the medium run. Stronger domestic demand is expected to drive India’s growth premium
over peers in the medium run. Investment prospects are optimistic given the government’s capex
push, progress of Production-linked Incentive (PLI) scheme, healthier corporate balance sheets,
and a well-capitalised banking sector with low non-performing assets (NPAs). India is also likely
to benefit from China-plus-one policy as global supply chains get reconfigured with shifting
focus from efficiency towards resilience and friend shoring. Private consumption (~58% of
GDP) will play a supportive role in raising GDP growth over the medium run.

Factors that will shape growth in fiscal 2024

The following factors will play a prominent role:

• Some of the highlights of the Union Budget of 2023-24 are as follows

• Global slowdown to impact domestic industrial activity via the exports channel

• The one-time lift to contact-based services from domestic demand will abate next fiscal, but
government capex will stay supportive

• Tightening domestic financial conditions will hurt growth next fiscal

 to increased spends under MNREGA and irrigation programmes, direct benefit transfer (DBT),
the PM-Kisan scheme, PM Ujwala Yojana for cooking gas, PM Awas Yojana for housing, and
Ayushman Bharat scheme for healthcare. To supplement this, there has been a continuous
improvement in rural infrastructure such as electricity and roads. These government initiatives
have led to lesser leakages and higher incomes in the hands of the rural populace, thereby
enhancing their ability and willingness to spend on discretionary products and services. The
structural changes, combined with a positive macro environment, will improve rural business
prospects, provide business opportunities for the banking and financial services sector and drive
the long-term growth of the economy.

⚫ Account Aggregators framework to build a financial data ecosystem in India

The RBI launched the account aggregator system on September 2, 2021, which has the potential
to transform the MSME finance space once there is widespread adoption amongst the lending
community. These account aggregators would provide granular insights to lenders into
customers’ financial assets and their borrowing history centrally, based on customer consent.
Inclusion of additional data such as electricity bill payments and mobile recharges/bill payment
data under the purview of account aggregators would further enhance its utility.

1.4. Key growth drivers

⚫ India has world’s largest population

As per Census 2011, India’s population was ~1.25 billion, and comprised nearly 245 million
households. As of CY2022, the population is more than 1.42 billion and has surpassed China as
of January 2023 as the most populous country in the world.

India’s population growth trajectory

⚫ Rising Middle India population to help sustain growth

Proportion of Middle India (defined as households with annual income of between Rs. 0.2 to 1
million) has been on a rise over the last decade and is expected to grow further with continuous
increase in the GDP and household incomes. To illustrate, CRISIL MI&A Research estimates
that there were 41 million households in India in this category as of Fiscal 2012, and by Fiscal
2030, they are projected to increase to 181 million households translating into a CAGR of 9%
over this time period. This growth in the number of middle-income households is expected to
lead to enhanced opportunities for retail and MSME financiers as well as consumer goods
marketers. A large number of these households, which have entered the Middle-Income bracket
in the last few years, are likely to be from semi-urban and rural areas. The rise in incomes in
these areas is also evident when one observes the trend in share of deposits coming into banks.
Iddle India households witnessed high growth over fiscal 2012 to fiscal 2022

1.5. Digitisation: Catalyst for the next growth cycle

Technology is expected to play a pivotal role in taking the financial sector to the next level of
growth, by helping to surmount challenges stemming from India’s vast geography, which makes
physical footprints in smaller locations commercially unviable. Technology is conducive for
India, considering its demographic structure where the median age is less than 30 years. The
young population is tech savvy and at ease with using it to conduct the entire gamut of financial
transactions. With increasing smartphone penetration and faster data speeds, consumers are now
encouraging digitisation as they find it more convenient. Digitisation will help improve
efficiency and optimise cost. Players with better mobile and digital platforms will draw more
customers and emerge as winners in the long term.

In August 2020, RBI has announced a new licence for NUE (new umbrella entity) for retail
payments. These NUEs will innovate and compete with NPCI in setting up and managing new
payment systems in the retail space.

Mobile penetration: Higher mobile penetration, improved connectivity, and faster and cheaper
data speed, supported by Aadhaar and bank account penetration have led India to shift from
being a cash-dominated economy to a digital one. Data-savvy and younger users to drive
adoption of smartphones
⚫ Rise in 4G penetration and smartphone usage

India had 1,144 million wireless subscribers as of March 2023, and the number is growing at a
steady pace every year. The reach of mobile network, internet and electricity is continuously
expanding the subscriber footprint to remote areas leading to rising smartphone and internet
penetration in the country. Internet subscribers have risen sharply in India from 422 million
subscribers in fiscal 2017 to 866 million subscribers as of December 2022. In terms of number of
internet subscribers per 100 population, number has almost doubled from 33 in fiscal 2017 to 63
in December 2022. Average wireless data usage per month per subscriber has seen an increasing
trend over the last eight years. Per subscriber per month data usage was 0.1 GB in FY15 which
has increased to 17 GB in December 2022. This is due to increasing internet data penetration in
the country.

2. E-Governance services in India

⚫ Initiatives taken by Indian government to further penetrate usage of e-governance The “e” in e-
Governance stands for ‘electronic’.

E-Governance provides a platform to integrate solutions and services between Government to

Government (G2G), Government to Citizens (G2C), Business to Business (B2B) and
Government to Employees (G2E). E-Governance refers to the use by government agencies of
information technologies that possess ability to transform their relations with citizens,
businesses, and various arms of government resulting in better delivery of government services
to citizens, improved interactions with business and industry, citizen empowerment through
access to information, or more efficient government management. The resultant benefits are
increased transparency, less corruption, greater convenience, revenue growth, and cost
reductions.
The reason why countries around the world are increasingly opting for e-Governance is that
governance has become more complex and varied in the last few decades and more importantly,
citizens’ expectations from government have increased multiple times. Information and
Communications Technology (ICT) facilitates efficient storing and retrieval of data,
instantaneous transmission of information, processing information and data faster than the earlier
manual systems, speeding up governmental processes, taking decisions expeditiously and
judiciously, increasing transparency and enforcing accountability. It also helps in increasing the
reach of government – both geographically and demographically. Use of ICT in governance has
reached a critical point. It is no supporting tool, nor does it represent a cure for government
deficiencies or inefficiencies; it should be seen as an integral aspect of the physical functioning
of public institutions and services delivery.

Mathematically, the E-Government Development Index (EGDI) is the weighted average of

normalised scores on the three most important dimensions of e-Government, namely:

• The Scope and quality of online services as online Service Index (OSI)

• The Status of the development of telecommunication infrastructure or the Telecommunication

Infrastructure Index (TII)

• The inherent human capital or the Human Capital Index (HCI).

The Ministry of Electronics and Information Technology is working as a nodal Ministry for
Monitoring of EGovernment Development Index.

E-governance initiatives in India took a broader dimension in the mid-1990s for wider sectoral
applications with emphasis on citizen-centric services. The major ICT initiatives of the
Government included, inter alia, some major projects, such as railway computerization, land
record computerisation etc., which focused mainly on the development of information systems.
Later, many states started ambitious individual e-governance projects aimed at providing
electronic services to citizens.

Though these e-governance projects were citizen-centric, they could make less than the desired
impact due to their limited features. The isolated and less interactive systems revealed major
gaps that were thwarting the successful adoption of e-governance along the entire spectrum of
governance. They clearly pointed towards the need for a more comprehensive planning and
implementation for the infrastructure required to be put in place, interoperability issues to be
addressed etc., to establish a more connected government. The national level e-governance
programme called National e-Governance Plan (NeGP) was initiated in 2006. There were 31
Mission Mode Projects under National eGovernance Plan covering a wide range of domains viz.
agriculture, land records, health, education, passports, police, courts, municipalities, commercial
taxes, and treasuries etc. 24 Mission Mode Projects have been implemented and started
delivering either full or partial range of envisaged services.

Considering the shortcomings in National e-Governance Plan that included lack of integration
amongst Government applications and databases, low degree of government process re-
engineering, scope for leveraging emerging technologies like mobile and cloud etc., the
Government of India conceptualized ‘eKranti’ or NeGP 2.0. All new and ongoing e-governance
projects as well as the existing projects, which are being revamped, are in accordance with the
key principles of e-Kranti namely ‘Transformation and not Translation’, ‘Integrated Services and
not Individual Services’, ‘Government Process Reengineering (GPR) to be mandatory in every
MMP’, ‘ICT Infrastructure on Demand’, ‘Cloud by Default’, ‘Mobile First’, ‘Fast Tracking
Approvals’, ‘Mandating Standards and Protocols’, ‘Language Localization’, ‘National GIS (Geo-
Spatial Information System)’, ‘Security and Electronic Data Preservation’. The portfolio of
Mission Mode Projects has increased from 31 to 44 MMPs. Many new social sector projects
namely Women and Child Development, Social Benefits, Financial Inclusion, Urban
Governance eBhasha etc., have been added as new MMPs under e-Krant

⚫ Major trends in global e-governance space

Governments all over the globe are making efforts towards the full digitalization of government
services, giving users the ability to complete virtually all types of transactions entirely online. At
global level, e-governance development has seen an uptick which is largely attributable to the
progress made in strengthening telecommunications infrastructure and developing human capital.
Countries in Africa have made significant improvements in their telecommunications
infrastructure, building a robust foundation for accelerating the transition to digital government.
Challenges remain, however, as the cost of mobile broadband subscriptions as a percentage of
per capita gross national income remains significantly higher in Africa than in other parts of the
world.

While advancement in e-government development remains strongly correlated with national

income, there are some notable exceptions which indicates that income level of the country
matters but is not the sole factor determining the level of e-government development. High-
income countries have already reached a relatively high level of services provision, whereas low-
income and lower-middle-income countries lack sufficient resources for investment in the
development of online services. Low-income countries struggle with investing in human capital
development which restricts the overall penetration of e-governance.

Most countries have taken effort to build “one-stop-shop” portals for the online provision of
different government services. Business-related services such as registration, licensing and filing
company taxes are among the five government services offered most frequently. The next most
offered online services include applying for government vacancies and business licences,
requesting birth, death, and marriage certificates, and paying utility bills. The number of
countries providing information and services through smartphone applications, SMS and/or
mobile browsers has been rapidly increasing. The health sector saw the most significant increase,
largely owing the widespread adoption of digital solutions in response to the Covid-19 pandemic,
but growth was also evident for the justice sector, the education sector, and the social protection
sector. To summarise, progress is being made in e-government development by the countries
globally at a mild pace. The Covid-19 pandemic has heightened the importance of digital
transformation, not least because Governments must be able to deliver public services despite
restrictions on physical interaction and to reach remote, marginalized, vulnerable and other
underserved populations so that no one is left behind. Countries that are already at a more
advanced stage of e-government development tend to perform better in public services delivery
than those with resource limitations or underdeveloped telecommunications infrastructure and
human capital development.

⚫ Performance of countries provisioning government services online Mathematically, the E-

Government Development Index (EGDI) is the weighted average of normalised scores on the
three most important dimensions of e-Government, namely:

• The Scope and quality of online services as Online Service Index (OSI)

• The Status of the development of telecommunication infrastructure or the Telecommunication

Infrastructure Index (TII)

• The inherent human capital or the Human Capital Index (HCI). The composite value of each
component index is normalized to fall within the range of 0 to 1, and the overall EGDI is derived
from taking the arithmetic average of the three component indices with 1 corresponding to the
highest-rated member state in respective component and 0 to the lowest. The OSI is further
aligned with Local Online Service Index (LOSI) by categorizing the assessment questions into 5
discrete thematic areas forming 5 subindices: services provision (SP), e-participation (EPI),
institutional framework (IF), content provision (CP), and technology (TEC)- with the OSI
calculated based on the normalized values for each subindex. The weight of each thematic area is
45%, 35%, 10%, 5% and 5% respectively

About BLS E-Services Limited

Incorporated in April 2016, BLS-E Services Limited is a digital service provider that offers
Business Correspondence services to major banks in India, Assisted E-Services, and E-
Governance Services at the grassroots level in India.

The company's service offerings can be categorized into three parts (i) Business Correspondents
Services; (ii) Assisted E-services; and (iii) E-Governance Services.
The company being a subsidiary of BLS International Services Limited provides visa, passport,
consular, and other citizen services to state and provincial governments across Asia, Africa,
Europe, South America, North America, and the Middle East through its technology-enabled
platform. It is the only listed company engaged in this domain in India.

By 31st March 2023, the merchant network had grown to 92,427 in order to serve the
underserved and unserved populations in hard-to-reach areas.

Objects of the Issue (BLS E-Services IPO Objectives)

The company proposes to utilise the Net Proceeds towards funding the following objects:

1. Strengthening the technology infrastructure to develop new capabilities and consolidating

the existing platforms;
2. Funding initiatives for organic growth by setting up of BLS Stores;
3. Achieving inorganic growth through acquisitions; and
4. General Corporate Purposes

BLS E-Services IPO Review (Apply)

[Dilip Davda] BEL is a one-point technology enabled digital service provider and providing
almost all related services under one roof. Considering “Digital India” move by the government,
this company has very bright prospects going forward. Based on annualized FY24 earnings,
though the issue appears fully priced, it has bright prospects ahead with major infra in place.
Investors may park funds for the medium to long term rewards.

BLS E-Services IPO Subscription Status (Bidding Detail)

The BLS E-Services IPO is subscribed 162.38 times on February 1, 2024 7:02:00 PM. The
public issue subscribed 236.53 times in the retail category, 123.30 times in the QIB category, and
300.05 times in the NII category.

INDUSTRY OVERVIEW

The information in this section is derived from the report titled “ER&D Market Deep Dive With
A Focus on Automotive, Aerospace, Industrial and Transportation, Construction & Heavy
Machinery” dated October 16, 2023, prepared and issued by Zinnov Management Consulting
Private Limited (“Zinnov Report”), which has been commissioned and paid for by us, pursuant
to a statement of work executed on August 16, 2023, only for the purposes of understanding the
industry exclusively in connection with the Offer. A copy of the Zinnov Report will be made
available on the website of our Company at www.tatatechnologies.com/investor-relations/ from
the date of filing of this Red Herring Prospectus until the Bid/Offer Closing Date. Neither we nor
any of our Promoter, Directors, Key Managerial Personnel or Senior Management Personnel are
related parties of Zinnov Management Consulting Private Limited (“Zinnov”). The information
included in this section includes excerpts from the Zinnov Report and may have been re-ordered
by us for the purposes of presentation. There are no parts, data or information (which may be
relevant for the Offer), that have been left out or changed in any manner. Unless otherwise
indicated, all financial, operational, industry and other related information derived from the
Zinnov Report and included herein with respect to any particular year refers to such information
for the relevant financial year.

Global ER&D Services Industry Overview

Global Engineering Research & Development (“ER&D”) Services Industry

ER&D services is defined as the set of services offered to enterprises on activities which involve
the process of designing and developing a device, equipment, assembly, platform, or application
such that it may be produced as a product for sale through software development or a
manufacturing process. The ER&D services are broadly broken down into software, embedded,
and mechanical engineering services as shown below:

Players in the ER&D services industry typically focus on the design, development, testing,
rollout, and maintenance aspects of the product and process development chain, and not on mass
manufacturing. The ER&D services market is comprised of product engineering services and
process engineering services. Product engineering services most commonly address the product
development lifecycle for companies, while process engineering services involve services to
assist in the production of facilities and processes that produce value-added outputs and
components through plant design engineering, manufacturing engineering, industrial
engineering, and process control systems

The ER&D services provided across the various industry verticals are set out below:

Global ER&D Spend & Addressed ER&D Market

Global ER&D Services Spend

In 2022, ER&D spending continued its upward trend, marking another significant year of steady
growth. Enterprises, committed to sustaining innovation while funding it through cost
optimization and productivity improvements, have maintained their focus on future-proofing and
transformation, with an intensified emphasis on digital engineering. The engineering services
and technology solutions industries are marked by rapid technological changes, evolving
industry standards, shifting client preferences, and the introduction of new products and services.
Currently, global ER&D spending is estimated at $1,811 billion (₹1,48,676 billion). The current
macro environment presents a complex landscape, with inflation peaking in certain countries and
persistent concerns about ongoing global recessionary pressures, alongside sustainability and
energy challenges. However, as companies strive for strategic endurance, there is a renewed
focus on investments in innovation, and ER&D spending is expected to remain resilient,
continuing its steady growth trajectory. Out of the $1,811 billion (₹1,48,676 billion) ER&D
market in 2022, $810 billion (₹66,498 billion) was attributed to digital engineering spending.
This mainly comprised of spending on new-age technologies like the Internet of Things (“IoT”),
blockchain, 5G, augmented reality, virtual reality, cloud engineering, digital thread initiatives,
advanced analytics, embedded engineering and generative artificial intelligence (“AI”), among
others. Additionally, digital engineering spending is expected to grow at a compound annual
growth rate (“CAGR”) of approximately 16% from 2022 to 2026.

Key Drivers Of Growth In ER&D Spending:

Focus on sustainability

With sustainability taking on a more important role in developmental plans, global enterprises
have clearly defined timelines and targets to incorporate carbon net zero and/or carbon neutrality.
This has led to an enhanced focus on energy-efficient product design and clean energy transition
for operations across industries. Countries across the globe are announcing plans to phase out
internal combustion engines (“ICE”) powered vehicles, with electrification-powered modes of
transport expected to replace them. Across industries, electrification is expected to be at the core
of sustainable decarbonization, offering the most effective way to cut carbon dioxide emissions
from end-use sectors such as heating and cooling, transport, and industrial applications.
Shrinking Innovation Cycles

As consumers evolve, the market is forced to produce more innovative products to meet their
demands at a faster pace. This has led to shortened product lifespans and rapidly shrinking
product innovation cycles. Over the period from 2022 to 2026, automakers are projected to
introduce an annual average of 61 new models, which is 50% more than the average number of
new models introduced in the preceding two decades.

Digital Thread

Digital technologies are changing the way the manufacturing sector is developing, building, and
servicing products around the globe. These technologies create value by connecting machines
through a ‘Digital Thread’ across the value chain—making it possible to generate, securely
organize, and draw insights from disparate sources of data. Product lifecycle management
(“PLM”), manufacturing execution systems (“MES”), and enterprise resource planning (“ERP”)
solutions are the fundamental aspects of product realization. The cornerstone of any ‘Digital
Thread’ is strong digital integration across the digital foundation of any manufacturing
enterprise, which includes PLM, ERP, and MES. Additionally, challenges faced in
manufacturing operations such as the lack of collaboration between complex and scattered
infrastructure, lack of flexibility due to individual dependency on separate platforms, restrained
decision-making due to the lack of integration between channels and restricted data visibility due
to the lack of centralized monitoring platforms and high costs of connectors are further driving
the need for integration. This information technology(“IT”)/operational technology convergence
enables real-time manufacturing insights about a product’s performance and use – from design to
production, sale, use, and disposal. Accordingly, many large manufacturing firms are increasing
their focus on factory automation by leveraging the industry 4.0 technology stack. The need for
‘Digital Thread’ is further accentuated by macro factors like supply chain disruptions, capital re-
allocation needs owing to demand swings, reconfiguration of management and manufacturing
flows due to remote work and increasing focus on the environmental impact of manufacturing.

Growing Product Complexity

Technology advancements are accelerating at a rapid pace across industries, leading to an

increasing level of product complexity – from the development phase to aftermarket support. For
example, in the automotive industry, digital technologies have percolated across the value chain
in the wake of changing consumer patterns. Connected experiences, for instance, have replaced
driving experience as a car-maker’s primary source of competitive advantage. Car-makers are
also investing towards digitizing their sales and services operations while offering a range of
add-on services such as battery-as-a-service (“BaaS”) and overthe-air updates.

Advent of Generative AI

The rise of generative AI is spurring a wave of fresh investments as companies aim to enhance
engineering efficiency and pioneer intelligent products and services. While still in its infancy,
generative AI carries profound transformative potential, ready to reshape entire industries. This
surge in innovation is fueled by increased funding, paving the way for numerous cuttingedge
applications. This technology is on the verge of transforming business operations and products,
heralding a new era of innovation and efficiency.

ER&D Spend of Z1000 Enterprises

Zinnov defines Z1000 enterprises as the top 1000 global ER&D spenders across more than 20
verticals. The global ER&D spend is highly consolidated with the Z1000 enterprises, which
account for approximately 85% of the overall ER&D market. Further, the top 100 Z1000
enterprises account for 48% of the overall global ER&D spend. The next 100 Z1000 ER&D
spenders account for 11% of the overall ER&D spend, while the remaining 800 Z1000 ER&D
spenders account for 26% of the aggregate ER&D spend.

Impact of Macro Factors on ER&D Spending

In an ever-evolving global economic landscape, ER&D spending stands at the intersection of

numerous macro factors that shape its trajectory. While macroeconomic factors such as rising
inflation, geopolitical tensions, and recessionary scenarios can affect resource allocation and
expenditures across enterprises, a common theme can be observed across industries: a
commitment to strategic resilience. This commitment shows up as a renewed focus on
innovation. Companies are channeling greater investments into ER&D projects as they strive for
continuous innovation, ultimately insulating ER&D spending from the impacts of these
macroeconomic forces.

The impact of certain factors is noticeable in service-led industries like banking, financial service
and insurance (“BFSI”) and retail. High inflation scenarios, leading to interest rate hikes, can
broadly affect consumer spending, and the BFSI sector has also felt the repercussions of the
global banking crises. The COVID-19 pandemic has further highlighted the fragility of global
supply chains. Moreover, factors such as the Ukraine conflict, changes in national trade
agreements, and ongoing regional and international economic challenges pose significant hurdles
for the global retail industry.

However, these factors are expected to have a lesser impact on manufacturing-driven sectors.
The automotive sector, benefiting from the pricing power of original equipment manufacturers
(“OEMs”), the rise of electric vehicles (“EVs”), and adept management of supply chain
bottlenecks, is poised to weather these macroeconomic factors with greater resilience. The
aerospace sector is experiencing a notable resurgence following the challenges brought about by
the COVID-19 pandemic. Further, with air travel gradually rebounding and global demand for
aviation services increasing, aerospace companies are reinvigorating their research and
development (“R&D”) efforts around the areas of autonomous flight and digital thread, among
others.

In conclusion, across industries, there is a shared pursuit of strategic resilience, evident in a

renewed commitment to innovation. This focus is expected to sustain ER&D spending, steering
it along a steady growth path amidst the ever-evolving economic landscape.

ER&D Spend Across Industry Verticals:

Manufacturing-led verticals (automotive, industrial, aerospace, defense, etc.)

Manufacturing-led verticals have been the largest contributors, and account for close to half of
the global ER&D spending. In terms of the expenditure, the automotive sector is the largest
manufacturing ER&D vertical, and the second largest ER&D vertical overall, accounting for
approximately 10% of global ER&D spend for 2022.

Hi Tech-led verticals (Software & Internet, Semiconductor, Telecom, etc.)

Hi Tech-led verticals currently account for 40% of the global ER&D spend. Software and
internet is the largest ER&D vertical, accounting for approximately 20% of global ER&D spend
and is among the fastest growing verticals.

Services-led verticals (BFSI, Healthcare Payers & Providers, Media & Entertainment, etc.)

Services-led verticals account for 12% of global ER&D spend, primarily driven by digital
engineering investments. Though they currently make up the smallest portion of the ER&D
spend pie, they are the fastest growing category.

The chart below sets out the ER&D expenditure across the various industry verticals:
ER&D Spend By Geographic Distribution

North America has the highest share of global ER&D spend and is expected to grow the fastest –
due to the higher penetration of software and internet firms in the region. The Asia Pacific
(“APAC”) region led by increased ER&D spending by SouthEast Asian enteprises and high
digital engineering spend from hi-tech enterprises has surpassed Western Europe in ER&D
spending.

China accounts for more than a tenth of the global ER&D spending with automotive,
semiconductor, telecom and software and internet accounting for approximately 50% of the
region’s spend. China is also the largest market for battery electric vehicles (“BEVs”), with
companies like BYD and Nio continuously increasing their R&D expenditure.

The chart below sets out the ER&D expenditure of North America, Western Europe and APAC

Global ER&D Services Addressed Market

The ER&D services addressed market refers to the sum of the ER&D expenditure by global
capability centers (“GCCs”) and the ER&D expenditure outsourced to third-party engineering
service providers (“ESPs”). The global ER&D addressed market was pegged at $170-180 billion
(₹13,956-14,777 billion) in 2022 – which was an increase from $145-155 billion (₹11,904-
12,725 billion) in 2021, and accounts for approximately 10% of the overall ER&D spend. Of the
$170-180 billion (₹13,956- 14,777 billion), $65-70 billion (₹5,336-5,747 billion) is accounted
for by GCCs, and they are expected to witness a steady growth of seven-nine percent to reach
$90-95 billion (₹7,389-7,799 billion) by 2026. The outsourced ER&D spend to thirdparty ESPs
was at $105-110 billion (₹8,620-9,031 billion) in 2022 and is poised to reach $165-170 billion
(₹13,546-13,956 billion) in 2026, growing at a rate of 11-13%.

Benefits Of Outsourcing To ESPs

Some of the benefits of outsourcing ER&D services to third-party ESPs are:

• Cost Savings: Outsourcing reduces expenditure with set pre-defined expectations in terms of
work description, compensation, and timelines.

• Flexibility: Outsourcing helps with strategic utilization of resources. A resource can be billed
when there is a definitive task that needs special support. Accordingly, both parties can draft
their terms and work accordingly as per mutual consensus.

• Involvement: Most outsourced tasks are independent of in-house core processes. The
involvement is minimal and, on a task-to-task basis, where the brief is already outlined.
• Time and Scalability: Outsourcing is highly scalable in terms of ad-hoc or hourly tasks. It is
especially beneficial during peak times, when work pressure is high and tasks are time-bound,
among other things.

ER&D Spend Addressed Through GCCs

With increasing reliance on global talent for building scalable engineering teams, enterprises
have set up GCCs to strengthen their technology and ER&D capabilities. Key considerations for
setting up a GCC in a country include talent availability to build scalable engineering teams,
presence of a mature technology ecosystem, ease of doing business, and the ability to build
teams at affordable costs. India and China are key locations for offshore in-house ER&D centers,
accounting for more than 60% of the total $65-70 billion (₹5,336-5,747 billion) GCC spend.
More than 85% of the top 50 ER&D spenders have GCCs in India owing to its software
engineering maturity and digital talent availability.

ER&D Spend Outsourced To Third-Party ESPs

Industry trends and technological advancements are transforming the way companies develop
and manage products as well as their ability to provide engaging user experiences, leading to
changes in business models, operations, and supply chains. As the pace of innovation
accelerates, enterprises across industries are turning to trusted third-party ESPs for support.
These service providers with comprehensive end-to-end capabilities help enterprises upgrade and
service existing products and processes, as well as develop new products and processes to better
compete and drive competitive differentiation.

The emergence of cloud and 5G exponentially increases compute power and network speeds that
enable greater innovation. Moreover, advancements in AI, machine learning, and Software 2.0
(machine-written code) have enabled products such as autonomous vehicles to become a reality.
The pace of innovation has forced enterprises to increase reliance on the ESP ecosystem. Given
the emergence of the aforementioned market trends around embedded and digital engineering,
there has been significant increase in investments in these areas. This in turn, has made new
product development dynamic.

Both traditional/established and new-energy enterprises are leveraging the ESP ecosystem. The
demand from traditional enterprises is primarily focused on addressing capacity requirements as
they look to balance their R&D investments between traditional and new products and services.
As enterprises focus on building new core capabilities, they carve-out traditional products
through end-to-end relationships with service providers. Verification & validation, product
sustenance, and end of life management offer the highest outsourcing opportunity. At the same
time, new-energy enterprises require capacity and experience across domain areas and are open
to leveraging the ESP ecosystem for ER&D outsourcing initiatives. The key growth drivers for
increased outsourcing opportunities include:

Need for Skilled Talent: Increasing focus on sustainability, embedded and digital engineering,
Digital Thread, and factory automation has made new product development dynamic and more
challenging. Shortage of skilled talent in these domains has accelerated the adoption of
outsourcing to third-party ESPs by multiple large manufacturing firms.

Shortening Product Development Timelines: Rapid advancement of technology and faster

innovation has translated to a drastic reduction in product development timelines. This increases
the need for partnership with experienced third-party ESPs with end-to-end capabilities in
traditional as well as new-age products.

Faster Time to Market: To realize faster time-to-market, enterprises are increasingly relying on
the presence of a skilled workforce which is geographically diversified to ensure round-the-clock
product innovation and development. Cost Savings: Driven by cost reduction and product
lifecycle pressures, OEMs are increasingly focused on developing effective outsourcing
strategies that drive significant improvement in global engineering and ER&D operations. At the
same time, they also look to leverage cost-arbitrage benefits from ESPs based out of low-cost
countries like India and Romania.

Since the onset of COVID-19, global OEMs have gained confidence in remote and hybrid-
working models which in turn will translate to an increased propensity towards outsourcing as
they realize the benefits driven by access to global talent pools across time zones.

Comparison Between IT Services and ER&D Services Outsourcing

The nature of ER&D services compared to IT services is quite distinct and differentiated because
of its decision makers, focus areas, and outsourcing maturity. ER&D services have a higher
headroom for growth and outpaces the traditional IT Services industry. The key differentiator for
ER&D specialists is their strong domain knowledge. Their pointed focus on translating their
niche ER&D prowess into business is expected to help them outgrow IT generalists. Further,
ER&D services require a higher onshore mix and a trust and track record due to the involved
nature of business. Owing to the high maturity of IT-BPM (Information Technology and
Business Process Management) outsourcing, and the nascent maturity of ER&D outsourcing,
there exists a longer runway for the ER&D industry to deliver stronger growth as compared to
the IT services industry.
About Tata Technologies Limited
Founded in 1994, Tata Technologies Limited provides product development and digital solutions
to Original Equipment Manufacturers (OEMs) and their Tier-1 suppliers.

Tata Technologies has two business verticals:

1. Services: This involves outsourcing engineering services and digital transformation services to
global manufacturing customers to help them conceptualize, design, develop, and deliver better
products.
2. Technology solutions: This involves the resale of third-party software applications, including
software and solutions for product lifecycle management (PLM), as well as the provision of
value-added services such as consulting, implementation, system integration, and support. In
addition, the company offers Phygital (physical plus digital) educational solutions, that help
public and private institutions and companies improve their manufacturing skills in the latest
engineering and manufacturing technologies through the development of curriculum and centers
of excellence via the company's proprietary iGetIT platform.

As of September 30, 2023, the company has 19 global delivery centers in North America,
Europe, and Asia Pacific.

As at September 30, 2023, the company employed 12,451 people, including 11,608 full-time
employees and 843 temporary workers.

Objects of the Issue (Tata Technologies IPO Objectives)

The objects of the Offer are:

1. Achieve the benefits of listing the Equity Shares on the Stock Exchanges;
2. Carry out the Offer for Sale of up to 95,708,984 Equity Shares by the Selling
Shareholders.

Tata Technologies IPO Review (Apply)

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investments and also known as investors friendly group. This IPO after a gap of 19 yrs., 5
months became the talk of the town ever since it filed DRHP. It has posted growth in its top and
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group share at the offered price for the medium to long-term rewards. The issue is reasonably
priced indicating “Tata” legacy. Investors should not miss this opportunity of investment for the
medium to long-term rewards.

Tata Technologies IPO Subscription Status (Bidding Detail)

The Tata Technologies IPO is subscribed 69.43 times on November 24, 2023 7:02:00 PM. The
public issue subscribed 16.50 times in the retail category, 203.41 times in the QIB category, and
62.11 times in the NII category.
What is IPO?

An IPO, or Initial Public Offering, is the process through which a private company becomes
publicly traded on a stock exchange. In an IPO, shares of the company are sold to institutional
investors and the general public for the first time. This allows the company to raise capital by
issuing new shares, and it also provides early investors and employees with an opportunity to sell
their shares and potentially realize gains.

The IPO process typically involves a series of steps, including selecting investment banks to
underwrite the offering, preparing financial statements and disclosure documents for regulatory
approval, determining the offering price and number of shares to be sold, and marketing the
offering to potential investors. Once the IPO is completed and the company's shares begin
trading on the stock exchange, they can be bought and sold by investors on the open market

Why IPO is Brought up ?

An Initial Public Offering (IPO) is brought up in the market primarily for a few reasons:

1. Capital Infusion: One of the primary reasons companies go public is to raise capital. By
offering shares to the public, the company can raise significant funds that can be used for
various purposes such as expansion, research and development, debt repayment, or
acquisitions.
2. Liquidity for Existing Shareholders: Going public provides an opportunity for existing
shareholders, such as founders, early investors, and employees, to monetize their
investments and holdings. Once a company is publicly traded, these stakeholders can sell
their shares on the stock exchange, providing them with liquidity.
3. Brand Visibility and Prestige: Becoming a publicly traded company often increases a
company's visibility and credibility in the market. It can enhance the company's brand
image and provide a level of prestige, which may attract customers, partners, and even
potential employees.
4. Currency for Acquisitions and Partnerships: Publicly traded companies have an
advantage when it comes to making acquisitions or entering into partnerships. Their
shares can be used as currency for mergers and acquisitions, allowing them to grow and
diversify their business more easily.
5. Employee Incentives: Going public can also be a way to incentivize employees through
stock-based compensation. Stock options and other equity incentives become more
valuable and liquid once the company is publicly traded, which can help attract and retain
top talent.

Overall, an IPO is a significant event for a company and is usually pursued when the company's
management believes that the benefits of being a publicly traded company outweigh the costs
and challenges associated with going public.