IRM Energy Ltd IPO

Exclusivity in CNG and PNG supply in the awarded GAs.

Successful development and operation of CGD business.

Diverse customer portfolio and distribution network of CNG and PNG.

Strong parentage, experienced board and management team and strong execution team.

Technology adoption and digital initiatives for efficient and optimal operations.

Connectivity to gas pipelines and establishing cost-effective gas sourcing arrangements.

Strong financial performance and consistent growth and profitability supported by healthy operating efficiency and favorable regulations.

The company is dependent on third parties for sourcing and transportation of natural gas. As of June 30, 2023, its procured natural gas from seven suppliers which constituted 100.00% of its total quantity purchased. Any disruption in the receipt of such natural gas from these third parties, or delay or default in timely transportation of the natural gas could lead to a disruption or failure in the supply of natural gas by it, which could adversely affect its business, reputation, results of operations and cash flows.

Transporting natural gas is hazardous and could result in accidents, which could adversely affect its reputation, business, financial condition, results of operations and cash flows.

The company has issued Equity Shares during the preceding one year at a price that may be below the Issue Price.

Cadila Pharmaceuticals Limited, one of its Promoters, has provided corporate guarantees to third parties for the loans availed by the Company. In the event the Company defaults on any of the loans availed, its Promoters will be liable for the repayment obligations. Further, the Company has provided corporate guarantees to third parties for the loans availed by its Associate Companies, Farm Gas Private Limited and Venuka Polymers Private Limited. In the event any of its Associate Companies default on any of the loans availed, the Company will be liable for the repayment obligations.

Its CNG and industrial PNG supply operations account for 49.43 % and 46.86 % of its total operations (in terms of volume) for the three months ended June 30, 2023. The company is heavily reliant on its CNG and industrial PNG supply operations and any decrease in the sales, may have an adverse effect on the business, operation, financial condition and cash flows of the Company.

Its may not receive sufficient funds pursuant to the Issue for utilization of Net Proceeds towards deployment of the Objects of the Issue.

The company requires various licenses and approvals for undertaking its businesses and the failure to obtain or retain such licenses or approvals in a timely manner, or at all, may adversely affect its operations.

Its typically requires 15-18 months to generate revenue in its GAs. Any further delay in realizing revenue may affect its projections, results of operations and cash flows.

Two of its Directors are on the board of directors of a listed company whose shares have been suspended from being traded on the BSE Limited and the National Stock Exchange of India Limited, during their tenure. Further, one of its Director has been on the board of directors of a listed company which was delisted from BSE Limited, during his tenure.

Its contingent liabilities for the three months ended June 30, 2023 amount to Rs. 2,396.85 million. Its contingent liabilities, if materialized could materially and adversely affect its business, results of operations and financial condition.

Any breakdown in the network infrastructure through which its source and supply natural gas could adversely affect its business, reputation, results of operations and cash flows.

Its may be subject to risks associated with delays in construction and commissioning of its existing and new gas distribution pipelines, including any delay in meeting its MWP targets.

Certain of its Directors are on the board of directors of companies engaged in a line of business similar to its. Any conflict of interest that may occur between the company`s business and the activities undertaken by such companies could adversely affect its business, results of operations and prospects.

The company track certain operational metrics with internal systems and tools. Certain of its operational metrics are subject to inherent challenges in measurement which may adversely affect its business and reputation.

Transporting natural gas is hazardous and could result in accidents, which could adversely affect its reputation, business, financial condition, results of operations and cash flows.

The company is heavily reliant on its CNG and industrial PNG supply operations and any decrease in the sales, may have an adverse effect on the business, operation, financial condition and cash flows of the Company.

Expansion of its business is primarily dependent on GAs awarded by governmental authorities. If the company is unable to enter new markets, or if there is any adverse change in the policies of the Government, its growth prospects will be adversely affected.

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

The company contingent liabilities, if materialized could materially and adversely affect its business, results of operations and financial condition.

Its insurance coverage may not be adequate to cover all losses or liabilities that its may incur in the company business and operations.

The COVID-19 pandemic, or a similar public health threat, could adversely affect its business, financial condition, and results of operations.

The objects of the Issue for which funds are being raised and are based on management estimates and may be subject to change based on various factors, some of which are beyond its control.

The company have in the past entered into related party transactions and may continue to do so in the future, which may potentially involve conflicts of interest with the equity shareholders.

Any variation in the utilisation of the Net Proceeds would be subject to certain compliance requirements, including prior shareholders` approval.

This Draft Red Herring Prospectus contains information from an industry report prepared by CRISIL exclusively commissioned and paid for by it for such purpose.

After the completion of the Issue, its Promoters will continue to collectively hold substantial shareholding in the Company.

An inability to comply with repayment and other covenants in the financing agreements could adversely affect its business, financial condition, cash flows and credit rating.

The company requires various licenses and approvals for undertaking its businesses and the failure to obtain or retain such licenses or approvals in a timely manner, or at all, may adversely affect its operations.

The company have issued Equity Shares during the preceding one year at a price that may be below the Issue Price.

The company Directors, KMPs and SMPs may have interests other than reimbursement of expenses incurred and normal remuneration or benefits in the Company.

The company have not yet placed orders in relation to the capital expenditure to be incurred towards development of the City Gas Distribution network in the Geographical Areas of Namakkal and Tiruchirappalli. In the event of any delay in placing the orders, or in the event the vendors are not able to provide the equipment in a timely manner, or at all, may result in time and cost over-runs and its business, prospects and results of operations may be adversely affected.

Its failure to manage growth effectively may adversely impact its business, prospects, financial condition and results of operations.

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

Certain premises including its registered and corporate office, certain branch offices and its customer care centers are not owned by it and the company have only lease rights over such premises. In the event its lose such rights or are required to negotiate it, its cash flows, business, financial conditions and results of operations could be adversely affected.

A portion of the Net Proceeds may be utilized for repayment or pre-payment of certain loans availed by the Company from Bank of Baroda, who is related to one of its BRLMs.

The company operations could be adversely affected by strikes, work stoppages or increased wage demands by its employees or any other kind of disputes with the company employees or contract workers.

Cadila Pharmaceuticals Limited, one of its Promoters, has provided corporate guarantees to third parties for the loans availed by the Company. In the event the Company defaults on any of the loans availed, its Promoters will be liable for the repayment obligations. Further, the Company has provided corporate guarantees to third parties for the loans availed by Farm Gas Private Limited and Venuka Polymers Private Limited, its Associate Companies. In the event the company Associate Companies default on any of the loans availed, the Company will be liable for the repayment obligations.

Reliance has been placed on a declaration and an affidavit furnished by Rabindra Nath Nayak, its Non-Executive Independent Director, for details of his profile included in this Draft Red Herring Prospectus.

Any downgrade in its credit ratings could increase the company borrowing costs, affect its ability to obtain financing, and adversely affect the company business, results of operations, cash flows and financial condition.

There are clerical errors in some of its secretarial and corporate records.

Disproportionate increases of re-instatement charges may adversely affect its profitability.

Its may not be successful in its technological adoptions, which may lead to an adverse effect on its reputation, business, results of operations and cash flows.

Its track certain operational metrics with internal systems and tools. Certain of its operational metrics are subject to inherent challenges in measurement which may adversely affect its business and reputation.

Its failure to manage growth effectively may adversely impact its business, prospects, financial condition and results of operations.

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

Its operations could be adversely affected by strikes, work stoppages or increased wage demands by its employees or any other kind of disputes with the company employees or contract workers.

Reliance has been placed on a declaration and an affidavit furnished by Rabindra Nath Nayak, its Non-Executive Independent Director, for details of his profile included in this Red Herring Prospectus.

Any downgrade in its credit ratings could increase its borrowing costs, affect the company ability to obtain financing, and adversely affect its business, results of operations, cash flows and financial condition.

There are clerical errors in some of its secretarial and corporate records.

Disproportionate increases of re-instatement charges may adversely affect its profitability.

The Company has availed an unsecured term loan from HDFC Bank Limited, one of the Book Running Lead Managers appointed in connection with the Issue, the proceeds of which have been deployed towards capital expenditure incurred in connection with the development of the City Gas Distribution network in the Geographical Areas of Namakkal and Tiruchirappalli, in Fiscal 2023 and Fiscal 2024.