K2 Infragen

Risks

• Lack of Challan Record in Connection with Form Filed with the Registrar of Companies.

• Discrepancies observed in allotment dated March 29, 2016, July 18, 2016, July 30, 2016, August 3, 2016, August 16, 2016, March 26, 2017, January 20, 2019, February 14, 2019, April 27, 2019, and March 27, 2021, August 30, 2021, December 6, 2021, December 27, 2021, February 22, 2022, October 31, 2022, and December 22, 2022.

• The company business is concentrated in the state of Uttar Pradesh. As of June 30, 2023, revenue from Uttar Pradesh constitute Rs. 2,053.40 Lakhs i.e. 94% of the company is revenue for the said period. Any adverse impact in this region may adversely affect its business, results of operations and financial condition.

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

• The Company is dependent on few suppliers for purchase of product. Loss of any of these large suppliers may affect the company`s business operations.

• The company has incurred borrowings from commercial banks and high Debt Equity Ratio, which could have an adverse effect on its business and an inability to comply with repayment and other covenants in its financing agreements could adversely affect the company`s business and financial condition.

• Its projects are exposed to various implementation and other risks, including risks of time and cost overruns, and uncertainties, which may adversely affect its business, financial condition, results of operations, and prospects.

• Its business is working capital intensive involving relatively long implementation periods. The company requires substantial financing for its business operations. The company indebtedness and the conditions and restrictions imposed on by its financing arrangements could adversely affect the company`s ability to conduct its business.

• The company has certain contingent liabilities i.e. a pending litigation with Public Works Department Rajasthan.

• The company derives majority of its revenue from its Turnkey Water Supply Projects and the company financial condition would be materially and adversely affected if the company fail to obtain new contracts, or its current contracts are terminated.

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

• The Company has delayed in complying with certain statutory provisions under various laws. Such delayed compliance /lapses may attract certain penalties.

• The company is required to furnish financial and performance bank guarantees and letter of credits as part of our business. Its inability to arrange such guarantees and/or letters of credit may adversely affect its cash flows and financial condition.

• All projects the company operates have been awarded primarily through competitive bidding process. Its bids may not always be accepted. The company may not be able to qualify for, compete and win projects, which could adversely affect its business and results of operations.

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

• The company does not own registered office and the corporate office which are currently in use by the Company. Also, the company share its premises with K2 Cloud Private Limited and K2 Recyclers Private Limited.

• Its actual cost in executing a work order or in constructing a project may vary substantially from the assumptions underlying our bid. The company may be unable to recover all or some of the additional expenses, which may have a material adverse effect on its results of operations, cash flows and financial condition.

• Its business is substantially dependent on the company`s ability to accurately carryout the pre-bidding engineering studies for bidding in such projects. Any deviation during the implementation and operation of the project as compared to its pre-bid engineering studies could have a material adverse effect on its cash flows, results of operations and financial condition.

• The Company is exposed to the risk of unsecured loans, which are subject to potential recall at any time.

• The Company requires significant amounts of working capital for a continued growth. Its inability to meet the company working capital requirements may have an adverse effect on its results of operations.

• A significant part of its business transactions are with government or government agencies in India, which may expose it to risk, including additional regulatory scrutiny.

• The company has had negative cash flows in the past and it is possible that its may experience negative cash flows in the future.

• Increases in the prices of construction materials, fuel, labour and equipment could have an adverse effect on its business, results of operations and financial condition.

• The company relies on effective and efficient project management. Any adverse change in its project management procedures could affect the company`s ability to complete projects on timely basis or at all, which may cause it to incur damages for time overruns pursuant to its contracts.

• Its financial performance is dependent on the company successful bidding for new projects and the non-cancellation of projects awarded to it. If the company is not able to successfully bid for new projects, it will adversely affect its business operations and financial conditions.

• The company has not made any alternate arrangements for meeting its capital requirements for the Objects of the Issue. Further the company has 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, operations and financial performance.

• Some of its agreements may have certain irregularities.

• The company cannot assure that the construction of its projects will be free from any or all defects, which may adversely affect its business, financial condition, results of operations and prospects.

• Its Directors and Promoters are not involved and may in the future, be involved in certain legal proceedings, which, if determined adversely, may adversely affect its business and financial condition.

• The company relies on effective and efficient project management. Any adverse change in its project management procedures could affect the company ability to complete projects on timely basis or at all, which may cause it to incur damages for time overruns pursuant to its contracts.

• The company is dependent upon the experience and skill of its management team and a number of KMPs and senior management personnel. If the company is unable to attract or retain such qualified personnel, this could adversely affect its business, results of operations and financial condition.

• Compliance with, and changes in, environmental, health and safety laws and regulations or stringent enforcement of existing environmental, health and safety laws and regulations may result in increased liabilities and increased capital expenditures may adversely affect its cash flows, business results of operations and financial condition.

• The company operates in an extremely competitive industry and failure to successfully compete could result in loss of one or more of its significant customers and may adversely affect the company`s business.

• Its insurance coverage may not be adequate to protect the company against certain losses and this may have a material adverse effect on its business.

• Its projects are exposed to various implementation risk and other uncertainties which may adversely affect its business, results of operations and financial condition.

• The company has entered into certain related party transactions and may continue to do so.

• The company cannot assure you that its will be able to successfully execute the company`s growth strategies, which could affect its business prospects, results of operations and financial condition.

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

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

• The company requires various statutory and regulatory permits and approvals in the ordinary course of its business, and the company failure to obtain, renew or maintain them in a timely manner may adversely affect its operations.

• Its operations are subject to risks of mishaps or accidents that could cause damage or loss to life and property and could also result in loss or slowdown in its business.

• Its business is subject to seasonal and other fluctuations that may affect the company cash flows and business operations.

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

• Any failure to maintain quality control systems for its services could have a material adverse effect on the company`s business, reputation, results of operations and financial condition.

• Its operations are dependent on a significant number of contract labour and an inability to access adequate contract labour at reasonable costs at its project sites across India may adversely affect the company`s business prospects and results of operations.

• The Company`s management will have flexibility in utilizing the Net Proceeds from the Offer. The deployment of the Net Proceeds from the Offer is being monitored by the Audit Committee.

• The companyy is dependent on its Promoters, management team, a number of Key Managerial Personnel and persons with technical expertise and the loss of or its inability to attract or retain such persons could adversely affect its business, results of operations and financial condition.

• Its Promoters have provided guarantees 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.

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

• The BRLM has relied on declarations, undertakings and affidavits for some of the Directors, Promoter and KMPs to include their details in this Red Herring Prospectus.

• General economic and market conditions in India and globally could have a material adverse effect on its business, financial condition, cash flows, results of operations and prospects.

• There are certain outstanding legal proceedings pending against the Company and Directors. Any adverse outcome in any of these proceedings may adversely affect its profitability and reputation and may have an adverse effect on its results of operations and financial condition.

• Major fraud, lapses of internal control or system failures could adversely impact the Company`s business.

• The company faces intense competition in its businesses, which may limit its growth and prospects. The Company faces significant competition from other companies.

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

• Its inability to manage growth could disrupt the company`s business and reduce its profitability. The company propose to expand the company`s business activities in coming financial years.

• If the company is unable to source business opportunities effectively, its may not achieve the company financial objectives.

• The company is subject to restrictive covenants under its financing agreements that could limit the flexibility the company has to manage its business.

• Its inability to collect receivables and default in payment from the company`s customers could result in the reduction of its profits and affect its cash flows.

• Its inability to identify and understand evolving industry trends and consumer preferences, and to provide new services to meet its customers` demands may adversely affect the company`s business.

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

• Certain Promoters and Directors are interested in the Company`s performance in addition to their remuneration and reimbursement of expenses.

• Any future acquisitions, joint ventures, partnerships, strategic alliances, tie-ups or investments could fail to achieve expected synergies and may disrupt its business and harm the results of operations and the company financial condition.

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

• The price of its Equity Shares may be volatile, or an active trading market for the company Equity Shares may not develop.

• The Issue price of its Equity Shares may not be indicative of the market price of the company 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.

• In the event there is any delay in the completion of the Issue, there would be a corresponding delay in the completion of the objects / schedule of implementation of this Issue which would in turn affect its revenues and results of operations.