Denta Water IPO

Established expertise in water management projects with special focus on ground water recharging.

Expertise in in-house designing and engineering of water management infrastructure projects.

Strong management team.

Strong order book.

Established track record for project execution.

Efficient business model.

In the past, one of its Promoters, C Mruthyunjaya Swamy, in the capacity as a secretary of the Public Works Department, Karnataka, has been subjected to enquiry by the Lokayukta Police, Bangalore ("Lokayukta") and initiation of certain legal proceedings by the Enforcement Directorate against him, which was subsequently disposed off. Although Mr. C Mruthyunjaya Swamy is currently retired from the services of Government of Karnataka, there is no assurance that legal proceedings will not be reopened by Lokayukta or any other relevant authority against him. Any further development in the above-mentioned legal proceedings or other authorities may adversely affect its business, results of operations and financial condition.

Certain untraceable persons have filed complaints with SEBI and other authorities against the Company and its Promoter, C Mruthyunjaya Swamy, with allegations including indulging in corrupt practices, misusing of authority by its Promoter while being in public service and influencing the government officers in awarding the contracts to the Company, among others. There is no assurance that the Company or SEBI or other authorities does not receive similar complaints in future. Any further development in similar complaints filed with SEBI or other authorities may adversely affect its business, results of operations and financial condition.

Its revenue contribution from government clients has increased from 18.25% in FY 2023 to 63.40% as of FY 2024, and the company currently relies substantially on its government clients for the company revenues.

The Company relies heavily on the Government of Karnataka for its business. 83.98% of its revenue from operations in six months period ended September 30, 2024, is from Government of Karnataka.

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

The company is significantly dependent on the procurement of projects. Its revenue and earnings are dependent upon award of new contracts which the company cannot directly control. If its fail to secure new contracts on a continual basis, the company operating results may be materially and adversely affected, and its may be unable to secure projects or maintain the company growth it may impact the company profitability and subsequently its revenues, and business operations.

Contracts awarded by the Government of Karnataka ("GoK`) may provide GoK with the right to terminate the contract for convenience, without any reason which may impact its business operations, profitability and results of operations.

There is an outstanding litigation against its Promoter, Sowbhagyamma. Any adverse decision in such proceedings may render it / them liable to liabilities / penalties and may adversely affect its business, results of operations and financial condition.

The immediate relatives of its promoters, who are deemed to be a part of the Promoter Group under the SEBI ICDR Regulations have not provided consent, information or any confirmations or undertakings pertaining to themselves which are required to be disclosed as part of the Promoter Group in this Red Herring Prospectus.

The company has experienced high attrition rate in respect of its Directors and Key Managerial Personnel. In particular, two Chief Financial Officers have resigned in the past one year. Its may not be able to retain such persons in future which could adversely affect the company business, results of operations, financial conditions and cash flows.

The company enter into joint ventures arrangements for completion of its projects which may expose it to additional liabilities on account of the company partners` failures or underperformance and any premature termination of which, may adversely affect its business, reputation, financial condition and results of operations.

The company derives a significant part of its revenue from some customers. If one or more of such customers choose not to source their requirements from it or to terminate the company contracts, its business, cash flows, financial condition and results of operations may be adversely affected.

The company current order book may not necessarily translate into future income in its entirety. Some of its current orders may be modified, cancelled, delayed, put on hold or not fully paid for by its customers, which could adversely affect the company business, financial condition, results of operations and future prospects.

The company has experienced negative cash flows from operating activities in the past. Any negative cash flows in the future would adversely affect its cash flow requirements, which may adversely affect its ability to operate the company business and implement its growth plans, thereby affecting its financial condition.

The company relies on a limited number of suppliers for its raw material, loss of these suppliers may have an adverse effect on its business, results of operations and financial conditions.

In addition to executing projects on a contracting basis, the company also undertake sub-contracting projects, which may involve additional conditions and requirements. Failures to comply with these conditions could result in early termination or penalties imposed by the contractor, potentially adversely affecting its cash flows, business operations, and financial performance.

The company derives a significant portion of its revenue from its water management business through a bidding process and there can be no assurance that projects for which the company bid will be awarded to it and recorded in its Order Book or that the company will actually realize revenues from such projects as a result of which its financial condition would be materially and adversely affected.

The company failures to successfully implement its expansion plan to North India and other parts of South India could adversely affect its business and results of operations.

The company business is heavily dependent on procurement of construction materials from its suppliers. The company does not have long-term agreements with its suppliers of construction material and any increase in the cost of, or a shortfall in the availability of, such construction materials could have an adverse effect on its business and results of operations.

Its Statutory Auditors have included certain emphasis of matters in the company Restated Financial Information.

The company could incur additional cost or loss in revenue in connection with its failures to comply with all the company commitments of its contracts.

The company faces certain competitive pressures from the existing competitors and new entrants in both public and private sector. Increased competition and aggressive bidding by such competitors is expected to make its ability to procure business in future more uncertain which may adversely affect its business, financial condition and results of operations.

A large part of its business transactions is with government entities or agencies, which may expose it to risk, including additional regulatory scrutiny, delayed receipt of collectibles and pricing pressure.

The company failures to recover adequately on claims against project owners for payment could have a material adverse effect on it.

The company could be adversely affected if its fails to keep pace with technical and technological developments.

Misconduct by employees, agents or partners or the company failures to comply with laws or regulations could weaken its ability to win contracts, which could result in reduced revenues and profits.

The company is dependent on the expertise of its Promoter, particularly C Mruthyunjaya Swamy, and Directors and its skilled workforce and the company inability to retain them may result in adverse effect on its business, financial condition and the results of operations.

The company is experiencing time overrun in 10 out of 17 of its ongoing projects.

The Company does not have any documentary evidence for the past experience of certain of its Directors.

The company execute certain of its projects through unincorporated joint ventures.

Certain bank guarantees that the company has availed of contain undertakings, conditions and restrictive covenants which could restrict its ability to conduct the company business and operations.

The company project may be materially adversely affected by strikes, work stoppages or increased wage demands by its employees or those of the company suppliers.

Its operations are subject to hazards and other risks and could expose it to material liabilities, loss in revenues and increased expenses.

The company depends on various third parties, including its contractors and independent service providers, over whom its may have no control.

The company insurance coverage may not adequately protect it 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.

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

The company business, financial condition, results of operations, cash flows and prospects could be materially and adversely affected if the company is unable to successfully execute some of its business activities (including those of the company joint ventures) and growth strategies and manage its growth effectively.

The Company has delayed in goods and services tax ("GST") Return Filings, employee provident fund ("EPF"), professional tax and employees state insurance corporation ("ESIC") payments and such delayed compliance may attract additional late fees against the company which could impact the financial position of it to that extent. Any non-compliance or delays in GST return filings and EPF payments may expose it to penalties from the regulators.

Its business is subject to seasonal fluctuations that may restrict the company ability to carry on project activities thereby adversely affecting its revenues and business operations.

The company inability to obtain, renew or maintain its statutory and regulatory permits and approvals required to operate the company businesses may adversely affect its business, financial condition, results of operation and cash flows.

While the name and logo used by it for the company business is registered, its inability to protect its intellectual property from third party infringement may adversely affect its business and prospects.

The company maintain a workforce based upon current and anticipated workloads. If the company does not receive future contract awards or if these awards are delayed, additional employee cost may be incurred.

Conditions and restrictions imposed on it by the agreements governing the company indebtedness and its inability to meet its obligations, including financial and other covenants under its debt financing arrangements could adversely affect the company business, results of operations and cash flows.

Its Promoters have provided guarantees in connection with our borrowings. The company business, financial condition, results of operations and prospects may be adversely affected by the revocation of all or any of the guarantees provided by its Promoters in connection with the Company`s borrowings.

The company is heavily dependent on various heavy construction equipment at its sites. Any unscheduled, unplanned or prolonged disruption or break-down of its equipment could adversely affect its business, financial results and growth prospects.

The objects of the Issue include funding working capital requirements of the Company which are based on certain assumptions and estimates.

Its inability to successfully implement some or all the company business strategies in a timely manner or at all could have an adverse effect on its business. Further, the company inability to effectively manage any of these issues may adversely affect its business growth and, as a result, impact the company businesses, financial condition and results of operations.

Its Promoters and certain of the company Directors may be interested in the Company other than remuneration and reimbursement of expenses.

Its may not be able to secure additional funding in the future. In the event the Company is unable to obtain sufficient funding, it may delay its growth plans and have a material adverse effect on its business, cash flows and financial condition.

The company has 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 Shareholders.

The company has a high working capital requirement and if its unable to raise sufficient working capital the company operations will be adversely affected.

Certain sections of this Red Herring Prospectus contain information from Marketysers Global Report, which has been commissioned and paid for by the Company as well as the and the IISc Report and any reliance on such information for making an investment decision in the Issue is subject to inherent risks.

Its funding requirements and the proposed deployment of Net Proceeds have not been appraised by any bank or financial institution or any other independent agency and are based on management estimates.

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

The requirements of being a publicly listed company may strain its resources.

The company cannot assure payment of dividends on the Equity Shares in the future. Its ability to pay dividends in the future will depends upon its earnings, financial condition, cash flows and capital requirements.

The average cost of acquisition of Equity Shares held by its Promoters may be less than the Issue Price.

The company will continue to be controlled by its Promoters after the completion of the Issue.

Negative publicity could damage its reputation and adversely impact business and financial results.