Enser

Risks

• Its funding requirements and proposed deployment of the Net Proceeds of the Offer have not been appraised by a bank or a financial institution and if there are any delays in the schedule of implementation or cost overruns, its business, cash flows, financial condition and results of operations may be adversely affected.

• The company has not entered into any formal contracts or exclusive arrangement with its suppliers from whom the company procure equipment`s, plant and machinery. In the event, the company is unable to procure such items at terms favourable to it, or at all, its business, financial condition and results of operations may be adversely affected.

• The company requires a number of approvals, NOCs, licenses, registrations and permits in the ordinary course of its business. Some of the approvals are required to be transferred in the name of Enser Communications Limited from Enser Communications Private Limited pursuant to name change of the company and any failure or delay in obtaining the same in a timely manner may adversely affect its operations.

• If the company is unable to renew its existing leases or secure new leases for the company existing or premises, or offices on commercially acceptable terms, or if the company fails to comply with the terms and conditions of its leases resulting in termination of its leases, it could have a material adverse effect on the company`s business, financial condition and results of operations.

• Its present promoters of the Company are first generation entrepreneurs.

• Changes in technology may render its current technologies obsolete or require the company to make substantial capital investments. Any failure on its part to effectively address such situations, innovate and keep up with technological advancements, could adversely affect its business, results of operations, financial condition and cash flows.

• Its business is subject to volatility due to change in technology and vulnerable to failures of its information technology systems, which may contribute to fluctuations in its results of operations and financial condition.

• The company derives its significant amount of revenue from providing the service of Business Process Management and Customer Interaction Management Services. Any fall in demand of these services may adversely affect its business operations.

• The Company has negative cash flows from its operating activities, investing activities as well as financing activities in the current and past years, details of which are given below. Sustained negative cash flow could impact its growth and business.

• The company has not entered into any long term or definitive agreements with its customers. If the company customers choose not to source their requirements from it, its business, financial condition and results of operations may be adversely affected.

• The company has a history of net losses and the company anticipate increased expenses in its future. Any loss in future periods could adversely affect its operations and financial conditions and the trading price of its Equity Shares.

• Certain non-GAAP financial measures and certain other statistical information relating to its operations and financial performance like EBITDA, EBITDA Margin, Return on Capital Employed, PAT Margin, Return on Equity, Gross Fixed Assets Turnover Ratio, Gross Profit, Gross Margin and Net Debt to EBITDA have been included in this Draft Red Herring Prospectus. These non-GAAP financial measures are not measures of operating performance or liquidity defined by Accounting Standards and may not be comparable.

• Its top 5 customers contributed 65.58%, 85.99%, 92.34%and 84.54% of its total revenue from operations for the Six months period ended September 30, 2023, for the year ended March 31, 2023, for the year ended March 31, 2022 and for the year ended March 31, 2021. Any loss of business from one or more of them may adversely affect its revenues and profitability.

• Substantial portion of its revenues has been dependent upon one of the company`s main clients. The loss of them would have a material adverse effect on its business operations and profitability.

• The company operates in a competitive industry and any failure to compete effectively may result in a decline in its market share.

• The Company has availed certain secured and unsecured long-term loan facility amounting to Rs. 367.77 Lakhs that may be recallable on demand by the lender at any point of time.

• The company does not own the premises in which its registered office is located and the same is on lease arrangement. Any termination of such lease/license and/or non-renewal thereof and attachment by Property Owner could adversely affect its operations.

• The company is subject to risks associated with expansion into new geographic regions.

• The company depends on third parties for certain services. Any disruption, deficiency in service or increase in cost of such services could adversely affect its business, reputation, results of operations, cash flows and financial condition.

• The company relies on a limited number of third-party suppliers for some of its key components, services and products. Any shortage and cessation in supply from these suppliers could adversely affect its business, cash flows and results of operations.

• Its Sales cycle in relation to certain services offered to clients may require significant investments of management time and capital resources in addition to significant commitments during the implementation cycle.

• Limitations in Ensuring Customer Satisfaction with Employee Services.

• Security breaches and any disruption to our information technology could adversely impact its business.

• Unauthorized disclosure of sensitive or confidential client and client`s customer data, whether through a breach of its computer systems or otherwise, could expose the company to protracted and/or costly litigation and cause it to lose clients.

• The company faces substantial competition in the BPM services business, both from Indian and international companies, which may adversely affect its revenues.

• The company could be harmed by employee fraud, theft, negligence, misconduct or similar incidents or errors that are difficult to detect and any such incidences could adversely affect its financial condition, results of operations and reputation.

• The Objects of the Issue for which funds are being raised, are based on its management estimates and any bank or financial institution or any independent agency has not appraised the same. The deployment of funds in the project is entirely at its discretion, based on the parameters as mentioned in the chapter titles "Objects of the Issue".

• Its Logo `enser` is not registered. In case of no registration the company`s brand building efforts may be hampered which might lead to an adverse effect to its business.

• The company may not have sufficient insurance coverage to cover all possible losses.

• In addition to its own data centre, The company also relies on third-party data centres and cloud computing providers, and any interruption or delay in service from these facilities could impair the delivery of its platform and products and adversely impact the company`s business and results of operations.

• Technological changes, evolving customer requirements and emerging industry trends may affect its business, may render its current technologies obsolete and may require it to make substantial capital investments.

• The Company has entered into certain related party transactions and may continue to do so in the future.

• The Company, Promoters, and Directors are involved in certain legal and regulatory proceedings. Any adverse decision in such proceedings may have a material adverse effect on its business, financial condition, cash flows and results of operations.

• Delay in making any Statutory payments viz. Tax Deducted at Source, Income Tax, Good and Service Tax, Employee Provident Fund, ESIC or any other Statutory dues which may attract any penalty or demand raised by statutory authorities in future will affect financial position of the Company.

• The average cost of acquisition of Equity Shares by its Promoter is lower than the issue price.

• Some of its Directors (including promoter) hold equity shares in the company and therefore interested in the company`s performance in addition to their remuneration and reimbursement of expenses.

• The Company may incur penalties or liabilities for non-compliances with certain provisions of the Companies Act and other applicable laws in the last three (3) Years.

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

• The company is unable to trace some of its historical records including forms filed with the Registrar of Companies.

• Its success depends largely on the company`s senior management and other key personnel and its ability to attract and retain them.

• Any disruption to the steady and regular supply of workforce for its operations, including due to strikes, work stoppages or increased wage demands by its workforce or any other kind of disputes with its workforce or the company`s inability to control the composition and cost of its workforce could adversely affect its business, cash flows and results of operations.

• There is no monitoring agency appointed by the Company and the deployments of funds are at the discretion of its Management and its Board of Directors, though it shall be monitored by the Audit Committee.

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

• The company have issued Equity Shares during the preceding twelve months at a price which may be below the Offer Price.

• Its future funds requirements, in the form of fresh issue of capital or securities and/or loans taken by it, may be prejudicial to the interest of the shareholders depending upon the terms on which they are eventually raised.

• Delay in raising funds from the IPO could adversely impact the growth rate.

• The requirements of being a public listed company may strain its resources and impose additional requirements.

• The company cannot assure you that its equity shares will be listed on the NSE Emerge in a timely manner or at all, which may restrict your ability to dispose of the equity shares.

• Sale of Equity Shares by its Promoters or other significant shareholder(s) or any future issue of Equity Shares may dilute your shareholding and adversely affect the trading price of the Equity Shares.

• The company may not be successful in implementing its business strategies.

• The company operates in highly competitive markets and its inability to compete effectively may lead to lower market share or reduced operating margins, and adversely affect its results of operations.

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

• There are restrictions on daily movements in the price of the Equity Shares, which may adversely affect a shareholder`s ability to sell, or the price at which it can sell, Equity Shares at a particular point in time.

• After this Issue, the price of the Equity Shares may be highly volatile, or an active trading market for the Equity Shares may not develop.

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