Desco Infra.

Risks

• The company has certain outstanding litigation against it, an adverse outcome of which may adversely affect the company business, reputation and results of operations.

• If the company fails to qualify for, or win new work orders from its clients, the company business, financial condition, results of operations, prospects and cash flows could be adversely affected.

• The company is highly dependent on certain key customers for a substantial portion of its revenues. Loss of relationship with any of these customers may have a material adverse effect on its profitability and results of operations.

• Its revenues from projects are difficult to predict and are subject to seasonal variations.

• The Company had negative cash flows in the past years, details of which are given below. Sustained negative cash flow could impact its growth and business.

• The company generate its major portion of sales from its operations in certain geographical regions especially, Gujarat, Haryana, Uttar Pradesh and Punjab. Any adverse developments affecting its operations in these regions could have an adverse impact on the company revenue and results of operations.

• The Company has entered into related party transactions in the past and may continue to enter into related party transactions in the future, which may potentially involve conflicts of interest with the equity shareholders.

• The Company is yet to place orders for 100% of the purchase of machineries, as specified in the Objects of the Issue. Any delay in placing orders, procurement of the same may delay its implementation schedule and may also lead to increase in price of these machineries, further affecting its revenue and profitability.

• There are certain discrepancies and non-compliances noticed in some of its financial reporting and/or records relating to filing of returns and deposit of statutory dues with the taxation and other statutory authorities.

• Majority of its Revenue from operation is derived from the company city gas distribution network projects and Operations and maintenance services. Any disruption in the continuous operations of its services would have a material adverse effect on the company business, results of operations and financial.

• There are certain inadvertent errors noticed in some of its corporate records relating to forms filed with the Registrar of Companies and other provisions of Companies Act, 2013. Any penalty or action taken by any regulatory authorities in future, for non-compliance with provisions of corporate and other law could impact the reputation and financial position of the Company to that extent.

• The company failures to perform in accordance with the standards prescribed in the work orders of its clients could result in loss of business or revenue from clients.

• The company operations may be adversely affected in case of accidents at any of its operations sites.

• The company has issued Equity Shares during the last one year which may be at lower than the Issue Price.

• The company generate its major revenue of business from sales to public sector undertakings which may impact its Business.

• The Company has availed unsecured loans that may be recalled by the lenders on demand.

• Some of its contracts are the subject of legal and arbitration proceedings. An adverse outcome from any such legal proceedings could adversely affect its business, financial condition and results of operation.

• Malhar P Desai (Promoter and Whole-Time Director) and Anand Jayaramankrishnan (Independent Director) of the Company are unable to trace their educational degrees certificates and the company has relied on the affidavits furnished by them for such details of their educational details.

• Its contingent liabilities as stated in the company Restated Financial Statements could affect its financial condition.

• There may be possible conflicts of interest between it and the company Promoters or its Group Company, or with entities in which the company Promoters & directors are interested.

• Its individual Promoters play a key role in the company functioning, and the company heavily relies on their knowledge and experience in operating its business and therefore, it is critical for the company business that its Promoters and Executive Directors remain associated with it. The company success also depends upon the services of its key managerial personnel and the company ability to attract and retain key managerial personnel and its inability to attract them may affect the company operations.

• In case of its inability to obtain, renew or maintain the statutory and regulatory licenses, permits and approvals required to operate its business it may have a material adverse effect on the company business.

• The work order entered into by the company is usually standard in nature and may contain terms that favour its clients, which may enable them to terminate the company orders prematurely under various circumstances beyond its control and as such, the company has limited ability to negotiate terms and may have to accept unusual or onerous provisions.

• The company faces competition in its business from other oil and gas infrastructure companies.

• The company requires certain licenses, registrations, approvals and permits to operate the company business, failures to obtain or renew them in a timely manner or maintain the statutory and regulatory permits and approvals required to operate its business may adversely affect the company operations and financial conditions.

• In addition to normal remuneration, other benefits and reimbursement of expenses some of its directors (including the company Promoters) are interested in the Company to the extent of their shareholding and dividend entitlement in the Company.

• Its current Order Book does not guarantee full realization of future income. Some orders may be subject to modifications, cancellations, delays, holds, or partial payments by customers, which could have adverse effects on its operational results.

• Its financing agreements contain covenants that limit the company flexibility in operating its business. If the company is not in compliance with certain of these covenants and are unable to obtain waivers from the respective lenders, its lenders may accelerate the repayment schedules, and enforce their respective security interests, leading to a material adverse effect on its business and financial condition.

• Delays in completion of its current and future projects and time overrun could have adverse effect on the company business prospects and results of operations.

• Within the parameters as mentioned in the chapter titled "Objects of the Issue" beginning on page 116 of this Red Herring Prospectus, the Company`s management will have flexibility in applying the proceeds of this Issue. The fund requirement and deployment mentioned in the Objects of this Issue have not been appraised by any bank or financial institution.

• The company requires working capital for its smooth day-to-day operations of business and any discontinuance or its inability to acquire adequate working capital timely and on favourable terms may have an adverse effect on its operations, profitability and growth prospects.

• The company has not made any alternate arrangements for meeting its capital requirements for the Objects of the Issue. Further the company had not identified any alternate source of financing the Objects of the Issue. Any shortfall in raising / meeting the same could adversely affect its growth plans, business operations and financial condition.

• The deployment of funds raised through this Issue shall not be subject to any Monitoring Agency and shall be purely dependent on the discretion of the management of the Company.

• The average cost of acquisition of Equity Shares by its Promoters could be lower than the Issue Price to be decided by the Company in consultation with the Book Running Lead Manager in accordance with the SEBI ICDR Regulations.

• Its business operations may be adversely affected due to misconduct or errors from employees. Such incidences could adversely affect the company financial condition, results of operations and reputation.

• Failures to successfully implement its business strategies may materially and adversely affect the company business, prospects, financial condition and results of operations.

• Its Registered Office and other properties used for business operations are not owned by it and are taken on rental basis. If the company is unable to renew existing rental agreements or relocate its operations on commercially reasonable terms, there may be a material adverse effect on oitsbusiness, financial condition, results of operations and cash flows could be adversely affected.

• The company agreement for obtaining office containers on rent are not stamped as a result of which its title to such properties may be faulty.

• The company Promoters have provided personal guarantees for loan facilities obtained by the Company, and any failures or default by the Company to repay such loans in accordance with the terms and conditions of the financing documents could trigger repayment obligations on them, which may impact their ability to effectively service their obligations as its Promoters and thereby, impact the company business and operations.

• The company is required to furnish financial and performance bank guarantees as part of its business. The company inability to arrange such guarantee or the invocation of such guarantees may result in forfeiture of bid security or earnest money deposit and termination of the relevant contract thereby affecting results of its operations, financial condition and other prospects.

• The logo "DISCO INFRATECH LTD" has been registered under the name of the company. Any failure to protect its intellectual property could have a material adverse effect on the company business. Its and may also in the future be, subject to intellectual property infringement claims, which may be expensive to defend and may disrupt its business.

• Any increase in interest rates would have an adverse effect on its results of operations and will expose the Company to interest rate risks.

• Inaccurate estimation of risks, revenues, or costs for a project could negatively impact its profitability and operational results. Actual costs during project execution may significantly deviate from bid assumptions, leading to challenges in recovering additional expenses and potentially having a material adverse effect on its operational results, cash flows, and financial condition.

• The Company`s activities are labour intensive and depend on availability of labour. In case of unavailability of such labour, its business operations could be affected.

• Employee misconduct including fraud, theft, employee negligence, misuse of confidential data or similar incidents may adversely affect the results of operations and financial condition.

• Failures or disruption of its information technology systems may adversely affect the company business, financial condition, results of operations, cash flows and prospects.

• Its insurance coverage may not adequately protect the company against all losses or the insurance coverage may not be available for all the losses as per the insurance policy, which could adversely affect business, financial condition and results of operations.

• Industry information included in this Red Herring Prospectus has been derived from industry reports. There can be no assurance that such third-party statistical, financial and other industry information is either complete or accurate.

• The recent outbreak of the novel coronavirus could have a significant effect on its results of operations, and could negatively impact the company business, revenues, financial condition and results of operations.

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

• Its ability to pay dividends in the future will depends upon the company future earnings, financial condition, cash flows, working capital requirements, capital expenditure and restrictive covenants in its financing arrangements.

• Significant differences exist between Indian GAAP and other accounting principles, such as US GAAP and IFRS, which may be material to investors assessments of the Company`s financial condition. Its failures to successfully adopt IFRS may have an adverse effect on the price of its Equity Shares. The proposed adoption of IFRS could result in the company financial condition and results of operations appearing materially different than under Indian GAAP.

• The determination of the Price Band is based on various factors and assumptions and the Issue Price of the Equity Shares may not be indicative of the market price of the Equity Shares upon listing on the Stock Exchange.