A) About the Company

1. At C2C Advanced Systems Company draws their passion and strength from a deep and abiding commitment towards making India a leading player in the domain of cutting edge technologies systems for defense, security and aerospace sectors. The need to partner with global players is the most urgent need to accelerate innovations.

2. Company’s promoters / Key Managerial Personnel have over two decades of monetary and intellectual investments and innovation built capabilities that have been accepted in India and the global markets. This is an ongoing and long term journey.

3. Company’s success in selling and execution of “Combat Management System” (CMS) to Royal Malaysian Navy against stiff competition from most established global Platform players is a testament of company’s capabilities. This remains as one of the most successful capability demonstration in Intelligent platform from India.

4. Current systems in the Indian military have high levels of technology obsolescence and will need retrofits and upgrades and C2C Advanced Systems has the ability to re-engineer and revamp such legacy systems and bring them to current needs in warfare.

5. C2C Advanced Systems as the pre-eminent domain agnostic technology company focused on “Intelligent Platform” is in a very unique position to dominate this space. Company has a technological advantage over the company's existing competitors, as reflected in its higher margins and globally competitive offerings.

6. Company’s expertise in architecture design, data acquisition, data analytics and modeling, AI/ML has dual use in civilian applications. The rigorous requirements placed by Military requirements allows company to innovate for the highest levels of performance.

7. Company’s expansion strategy is to build their next domain in “Digital transformation” which is based on sensors in applications such as Industry 4.0 and transportation.

8. Company has built a revenue generating practice that focuses on three areas which are applicable in Defence/ Security as well as in Industry 4.0.

B) Objects of the IPO

The Issue comprises Fresh Issue of up to 43,62,865 Equity Shares. Company intends to utilize the proceeds of the net issue in the following manner:

(Rs. in lakhs)

C) Pre IPO round in the Company:

Last Pre-IPO done at INR 160 per share.

D) Risk factors in the Company

1. Company has a history of net losses in 2 out of the last 3 financial years and any losses or the company's inability to achieve profitability may have an adverse effect on our operations.

2. Company does not own their Registered Office from where they operate.

3. Company has experienced negative cash flow in the past and may continue to do so in the future, which

could have a material adverse effect on the business, prospects, financial condition, cash flows and results of operations.

4. As per the restated financial statements as on December 31, 2023, Company has availed a total sum of ₹ 867.95 lakhs as unsecured loans from promoters and others to meet the fund requirements of the Company. Such unsecured loan is interest bearing and may be recalled at any time.

5. Company has trade receivables amounting to ₹ 785.57 Lakhs which are more than 6 months old as at the end of December 31, 2023. Out of that ₹ 132.46 lakhs is more than 3 years old.

6. Company currently does not own any trademarks and has not registered the logo. Company cannot assure you that any third party will not misuse the brand name or logo.

7. Corporate Governance Issues:

a)  There has been a delay in the deposit of statutory dues in the recent past.

b)  There have been several instances of delay in the filing of Forms with the MCA in the recent past.

c)  Both the Independent Directors appointed by the company have not registered themselves on the independent directors database, Although they have registered themselves now, penal action could be taken by the relevant authorities which could include a monetary penalty.

d)  Company was converted into a public limited company on December 22, 2023 and post the conversion company has made four allotment of shares , viz December 26, 2023, January 29, 2024, February 13, 2024 and March 18, 2024 in the physical form, which is in violation of Section 29 of Companies Act, 2013 and Rule 9 of Companies (Prospectus and Allotment of Securities) Rules, 2024.

E) Financials of the Company: (Rs. in lakhs)

F) Valuations

F) Comparison with Peers

Q&A Document for C2C Advance Systems Management Meeting

1. Product Competitiveness

How competitive is your product in the international market?

Answer: C2C has received Malaysian certification, allowing bids for global orders, indicating strong market acceptance. If unable to supply directly to NATO countries, C2C will consider white labeling for larger corporations at a reduced cost. The forthcoming RDP (Reciprocal Defence Procurement) policy will further facilitate international opportunities by ensuring mutual participation in defence procurement between countries like the US and India.

2. Market Competition - What sets your pricing strategy apart from competitors?

Answer: C2C's competitive edge in pricing is due to lower labor costs in India and capitalizing on previously developed technologies. These factors allow C2C to offer their systems for $4 million, significantly below the $12-$18 million charged by competitors.

3. Industry Entry Barrier- Why can't competitors like Data Patterns, Zentech, or Paras Defence easily replicate your IP?

Answer: Developing the sophisticated IP that C2C has mastered over more than 10 years poses significant challenges. Despite attempts by former employees to transfer systems to Paras Defence, they failed to produce viable outcomes, highlighting the complex and proprietary nature of C2C's technology.

4. Development Timeline - How long does it currently take to build your software and become operational?

Answer: The development and operationalization of our software take a minimum of 6-7 years.

5. Cost Structure-  How does SG&A change with employee growth?

Answer: SG&A costs are expected to double from 12 Cr with 130 employees to 24 Cr with 300 employees, reflecting increased operational scale and fixed costs. 6. Pricing Analysis

6. Why is your product significantly cheaper than those of your competitors?

Answer: Our lower cost structure is due to efficient use of local resources and prior investments in technology development, allowing us to offer competitive pricing while maintaining quality. 7. Future Technology Investments

7. Are you planning to explore technologies like Li-Fi?

Answer: Currently, C2C does not plan to invest in Li-Fi or similar technologies, preferring to focus on core areas of expertise and gradually expanding the R&D budget as the company scales.

8. Expansion Plans-  What are your plans for expanding the experience facility?

Answer: C2C plans to invest approximately 18 Cr to expand the existing facilities to enhance operational capabilities and accommodate growth.

9. Quality Assurance Processes - Can you describe your code testing and review processes?

Answer: The CTO oversees the review process for any software upgrades. Code is re-evaluated and sent back for revisions if necessary, ensuring quality and reliability before final deployment.

10. Employee Management - How does attrition impact your company, and how do you manage it?

Answer: Attrition primarily affects junior-level positions, which are relatively easy to fill. The senior management team, deeply loyal and with a stake in the company, remains stable. 11. Days Sales Outstanding (DSO)

11. What are your DSO metrics and targets for improvement?

Answer: The current DSO stands between 190-210 days, with plans to reduce it to 90-120 days, improving cash flow efficiency. 12. Inventory and Maintenance

12. How do you manage inventory and maintenance for your software?

 Answer: C2C employs a just-in-time inventory strategy. Software maintenance is minimal but available when needed, with charges applied for significant upgrades. 13. Vendor Management

13. Who are your main suppliers and vendors?

Answer: Vendors like Mistral are key, along with various global suppliers for FPGA boards and other systems crucial for integration.

14. Logistics and Shipping - How do you handle logistics and shipping costs?

Answer: Shipping is primarily managed through air cargo, which does not significantly impact overall costs.

15. IPO Proceeds - How will the proceeds from the IPO be utilized?

Answer: The IPO proceeds are designated for working capital (44 Cr), capital expenditures for the experience facility (18 Cr), and general corporate purposes.

16. Cash Flow Forecasts - What percentage of your PAT is expected to convert into cash flows?

Answer: Approximately 45-50% of the PAT will be converted into cash flows, with the remainder carried forward to the next term. 17. Promoter's Stake Post-IPO

17. What will be the promoter's stake after the IPO?

Answer: The promoter's stake will be approximately 57-58%, with a commitment to not reducing it below 51%.

18. Funding for Future CapEx - Will future capital expenditures be funded through internal accruals?

Answer: Yes, the company plans to fund future CapEx from internal accruals and will consider external funding only for synergistic acquisitions. This Q&A document captures the essence of C2C Advance Systems' strategic, operational, and financial aspects discussed in the management meeting.