Deepak Builders

Risks

• Its revenue is majorly concentrated from projects undertaken or awarded by government, semi- government and government-controlled entities. Any adverse changes in the government policies may lead to its contracts being foreclosed, terminated, restructured or renegotiated, which may have a material effect on its business and results of operations.

• Its portfolio of projects is concentrated in certain large-scale projects. Any delay or impediment to such projects may have adverse impact on its financial position.

• While the company has a diversified geographical presence, its project portfolio has historically been concentrated in Punjab, India and any changes affecting the policies, laws and regulations or the political and economic environment in the region may adversely impact its business, financial condition and results of operations.

• The company derives a significant portion of its revenues from a limited number of clients. The loss of any significant clients may have an adverse effect on its business, financial condition, results of operations, and prospects.

• Construction & Infrastructure Projects are typically awarded to it on satisfaction of prescribed qualification criteria and following a competitive bidding process. Its business and the company financial condition may be adversely affected if new Construction & Infrastructure Projects are not awarded to it or if contracts awarded to the company is prematurely terminated.

• The company may have certain contingent liabilities and its financial condition and profitability may be adversely affected if any of these contingent liabilities materialize.

• Its business is working capital intensive involving relatively long implementation periods. If the company experience insufficient cash flows to enable it to make required payments on its debt or fund working capital requirements, there may be an adverse effect on its results of operations.

• Its order Book may not be representative of its future results and the company actual income may be significantly less than the estimates reflected in its order book, which could adversely affect its business, financial condition, results of operations and prospects.

• The Company and its Promoters Directors are involved in litigation proceedings that may have a material adverse outcome.

• The company own and rent equipment and mobilize such equipment at the beginning of each project resulting in increased fixed and operating costs to the Company. In the event the company is not able to generate adequate cash flows it may have a material adverse impact on its operation.

• Its ability to access capital at attractive costs depends on the company credit ratings. Non-availability of credit ratings or a poor rating may restrict its access to capital and thereby adversely affect the company business and results of operations.

• The company relies on third parties, including sub-contractors, to complete certain portion of its projects and any failure arising from the non-performance, late performance or below par performance by such third parties, failure by a third-party subcontractor to comply with applicable laws, to obtain the necessary approvals, or provide services as agreed in the contract could affect the completion of its contracts resulting in penalties or other losses.

• Its ongoing projects are exposed to various implementation risks and uncertainties and may be delayed, modified or cancelled for reasons beyond its control, which may adversely affect the company`s business, financial condition and results of operation.

• The company is required to furnish bank guarantees as part of its business. The company`s inability to arrange such guarantees or the invocation of such guarantees may adversely affect its cash flows and financial condition.

• The company has sustained negative cash flows from operating activities in the past and may experience earnings declines or operating losses or negative cash flows from operating activities in the future.

• The company operates in the construction industry where there are low entry barriers and is highly competitive. Its failure to successfully compete may adversely affect its business, financial condition, results of operations and prospects.

• The company does not own the premises where its Registered and Corporate Office are located.

• The company reliance on raw material suppliers for its business operations exposes it to a variety of risks which could materially disrupt its operations.

• The company is required to obtain, renew or maintain statutory and regulatory permits, licenses and approvals to operate its business, and any delay or inability in obtaining, renewing or maintaining such permits, licenses and approvals could result in an adverse effect on its results of operations.

• The company is dependent upon the experience and skill of its promoter, management team and key managerial personnel and senior management personnel. Loss of its Promoter or the company`s inability to attract or retain such qualified personnel, this could adversely affect its business, results of operations and financial condition.

• The company may be exposed to liabilities arising from defects during construction, which may adversely affect its business, financial condition, results of operations and prospects.

• Its business is subject to seasonal variations and the company may not able to accurately forecast its project schedule which could have an adverse effect on the company cash flows, business, results of operations and financial condition.

• Bidding for a contract involves various management activities such as detailed project study and cost estimations. Inability to accurately estimate the cost may lead to a reduction in the expected rate of return and profitability estimates.

• The company may not be able to collect receivables due from its clients, in a timely manner, or at all, which may adversely affect the company`s business, financial condition, results of operations and cash flows.

• Delays in the completion of its projects or cost overruns, could have an adverse effect on the company`s cash flows, business, results of operations and financial condition.

• The company is exposed to the risks of malfunctions or disruptions of information technology systems.

• Its business is manpower intensive and any unavailability of the company employees or shortage of contract labour may have an adverse impact on its cash flows and results of operations.

• Its funding requirements and the deployment of Net Proceeds are based on management estimates and have not been independently appraised. Any variation in the utilisation of Net Proceeds of the Fresh Issue as disclosed in this Draft Red Herring Prospectus shall be subject to compliance requirements, including prior shareholders` approval.

• Its operations may be adversely affected in case of industrial accidents, physical hazards and similar risks at its construction sites, which could expose it to material liabilities, loss in revenues and increased expenses.

• Its insurance coverage may not be sufficient or may not adequately protect it against all or any hazards, which may adversely affect the company`s business, results of operations and financial condition.

• There may have been certain instances of non-compliances with respect to certain corporate actions taken by the Company in the past. Consequently, its may be subject to regulatory actions and penalties.

• There are certain instances of delays in payment of statutory dues. Any delay in payment of statutory dues or non-payment of statutory dues in dispute may attract financial penalties from the respective government authorities, which may have an adverse impact on its financial condition and cash flows.

• The Board of Directors of the Company comprises of the Promoters.

• Certain sections of this Draft Red Herring Prospectus disclose information from the D&B Report which have been commissioned and paid for by it exclusively in connection with the Offer and any reliance on such information for making an investment decision in the Offer is subject to inherent risks.

• Its Promoters and members of the Promoter Group will continue jointly to retain majority control over the Company after the Offer, which will allow them to determine the outcome of matters submitted to shareholders for approval.

• Employee misconduct, errors or fraud could expose it to business risks or losses that could adversely affect business prospects, results of operations and financial condition.

• The company may not be able to successfully manage the growth of its operations and execute its growth strategies which may have an adverse effect on its business, financial condition, results of operations and future prospects.

• The company is subject to restrictive covenants under its financing agreements that could limit its flexibility in managing the company`s business or to use cash or other assets.

• The company is subject to risks arising from interest rate fluctuations, which could reduce the profitability of its projects and adversely affect our business, financial condition and results of operations.

• Its Promoters have been categorised as co-borrower for loans availed by it, and in the event the same is enforced against its Promoters, it could adversely affect its Promoters` ability to manage the affairs of the Company.

• Its Promoters and members of the Promoter Group, have mortgaged their personal properties and provided personal guarantee for its borrowings to secure its credit facilities. The company`s business, financial condition, results of operations, cash flows and prospects may be adversely affected by the revocation of all or any of the personal guarantees provided by its Promoter in connection with our Company`s borrowings.

• The company has entered into certain credit facilities that are repayable on demand. Any unexpected demand for repayment of such facilities by the lenders may adversely affect its business, financial condition, cash flows and results of operations.

• The company may not be able to adequately protect its intellectual property, which could harm the value of the company brand and services.

• The Company will not receive any proceeds from the Offer for Sale.

• Its Promoter Directors are interested in the Company, in addition to regular remuneration or benefits and reimbursement of expenses.

• Its in-house integrated model may fail which may affect the company operations, reputation and profitability.

• The average cost of acquisition of Equity Shares by its Promoters could be lower than the floor price.

• If the company is unable to establish and maintain an effective internal controls and compliance system, its business and reputation could be adversely affected.

• Its operations are subject to environmental, health and safety laws and regulations.

• Its inability to maintain Class I- (Super) contractor registrations in connection with the company`s business may adversely affect its operations and profitability.

• Its Promoter holds interest in the Promoter Group entities some of which is authorised to undertake business activities which are similar to the business conducted by the Company.

• The company has in past entered into related party transactions and its may continue to do so in the future.

• The Company has not declared any dividends in the three Fiscal preceding the date of this Draft Red Herring Prospectus. Its ability to pay dividends in the future will depend upon the company`s future earnings, financial condition, cash flows, working capital requirements and capital expenditures.

• Certain corporate records and documentary evidence are not traceable.

• There are entities in India using the name "Deepak" that are unrelated to the Company. Any failure to differentiate between the Company and other unrelated entities by third parties may have an adverse effect on its business.

• Its Statutory Auditor has included an emphasis of matters in the company Restated Financial Statements.

• Subsequent to the listing of the Equity Shares, the company may be subject to surveillance measures, such as the Additional Surveillance Measures and the Graded Surveillance Measures by the Stock Exchanges in order to enhance the integrity of the market and safeguard the interest of investors.

• The Equity Shares have never been publicly traded, and, after the Offer, the Equity Shares may experience price and volume fluctuations, and an active trading market for the Equity Shares may not develop. Further, the price of the Equity Shares may be volatile, and you may be unable to resell the Equity Shares at or above the Offer Price, or at all.

• The Offer price of its Equity Shares may not be indicative of the market price of its Equity Shares after the Offer and the market price of the company`s Equity Shares may decline below the Offer Price and you may not be able to sell your Equity Shares at or above the Offer Price.

• Any future issuance of Equity Shares, or convertible securities or other equity linked securities by the Company may dilute your shareholding and any sale of Equity Shares by its Promoters or members of its Promoter Group may adversely affect the trading price of the Equity Shares.

• Fluctuation in the exchange rate between the Indian Rupee and foreign currencies may have an adverse effect on the value of our Equity Shares, independent of its operating results.

• Rights of shareholders under Indian laws may be more limited than under the laws of other jurisdictions.

• QIB and Non-Institutional Investors are not permitted to withdraw or lower their Bids (in terms of quantity of Equity Shares or the Bid Amount) at any stage after submitting a Bid.

• The company has in this Draft Red Herring Prospectus included certain non-GAAP financial measures and certain other industry measures related to its operations and financial performance. These non-GAAP measures and industry measures may vary from any standard methodology that is applicable across the India industry, and therefore may not be comparable with financial or industry related statistical information of similar nomenclature computed and presented by other companies.