Highway Infrastructure Ltd IPO

We derive significant portion of revenue from operations from our tollway collection business which is primarily undertaken for and awarded by the NHAI. Further, most of our revenue in the EPC Infra business is from public sector customers. The loss of any of our contracts, particularly in our tollway collection business may have a material and adverse effect on our business and financial results.

Our business is relatively concentrated in certain specific parts of India and any adverse development in such parts of India may adversely affect our business, results of operations and financial condition.

The contracts awarded by NHAI are typically for a standard period of one year. Such limited tenures with limited scope of extension or roll-over may limit over revenue collection and have a material effect on our business and results of operations.

Our business is capital driven. If we experience insufficient cash flows to meet required payments on our debt and funding working capital requirements, there may be an adverse effect on the results of our operations.

Our Promoters and certain of our Key Managerial Personnel may have interest in entities, which are engaged in lines of business similar to that of our Company including our Group Companies which have objects similar to that of our Company. Any conflict of interest which may occur between our business and the activities undertaken by such entities could adversely affect our business and prospects.

We have entered and may continue to enter into projects with our related parties such as our Group Companies and Subsidiary, which may involve conflicts of interest.

Working capital involves frequent and ongoing funds movements as per the requirement. The projected working capital represents funds in motion and are relatively difficult to be monitored and may not always be used as projected.

Working capital projections made by our Company are based on our management`s assumptions and estimated working capital requirements. A substantial amount of Offer Proceeds out of the Fresh Offer is intended to be used for working capital. We may require alternate funding in Fiscal 2026 post the utilization of Net Proceeds and if our Company is unable to raise sufficient working capital, the operations of our Company will be adversely affected.

Our Company will not receive any proceeds from the Offer for Sale.

The proforma consolidated financial information included in this Red Herring Prospectus has been certified by Independent Chartered Accountant who is not the statutory auditor of our Company and may not accurately reflect our results of operations, financial position and cash flows.

Pursuant to the terms of our EPC Infra projects, government entities are required to acquire or license or secure rights of way over, tracts of land or to hand over unencumbered land, free of encroachments to us. Delays in any of the foregoing or inability to obtain good title to any plot of land, may result in delay of project implementation prescribed by the relevant contract and cause consequent delays in commencement of construction or termination of the contract and may result in our business planning, strategies, growth, financial condition and results of operations getting affected.

Any delay or default in payment from our customers in our EPC Infra business and real estate business could result in the reduction of our profits and affect our cash flows.

We have in the past entered into related party transactions and may continue to do so in the future.

Our Promoters have certain direct interests in the Company other than their remuneration drawn as Directors, such as the lease of the Registered Office and purchase of land. There can be no assurance that our Promoter will maintain the terms of the lease agreement and there cannot be any guarantee that the Promoter cannot exercise a termination or re-negotiation of the terms of the lease deed that may adversely affect the operations of our Company.

Our Company had negative cash flow during certain Fiscals. Sustained negative cash flow could adversely impact our business, financial condition and results of operations.

There may be delays in implementation and completion within stipulated time in relation to our ongoing project, forthcoming projects and any future projects and we may also undergo cost overruns in relation to our projects, which may have an adverse effect on our business, financial condition and results of operations.

Any material deviation between the actual traffic volume, our forecasted traffic volume and projected expenses based on which we bid for a toll-based project, could have an adverse effect on our business, results of operations, cash flows and financial condition.

Our business is subject to seasonal and other fluctuations that may affect our cash flows and business operations.

We have contingent liabilities which could materially and adversely affect our business, results of operations and financial condition.

Our Promoters and Company have provided personal guarantee respectively to secure certain of our loan facilities, which if revoked or invoked may require alternative guarantees, repayment of amounts due or termination of the facilities.

We rely on third parties, including contractors and sub-contractors, to complete certain projects and any failure arising from the non-performance, late performance or below par performance by such third parties, failure by a third-party subcontractor to comply with applicable laws, to obtain the necessary approvals, or provide services as agreed in the contract could affect the completion of our contracts resulting in penalties or other losses.

We are required to provide security deposits to secure our contracts in the tollway collection business and EPC Infra projects. Any failure to complete the project or any dispute in the contract, disruption or stoppage of work may result in forfeiture of such security deposit.

There have been certain instances of delay in payment of EPF, ESIC & PT contributions/ amounts by our Company. We may be subject to regulatory actions and penalties for such delays which may have an adverse effect on our business & financial condition.

The agreements governing our Company`s indebtedness contain conditions and restrictions on our operations, additional financing and capital structure.

Our Directors do not have any prior experience of being a director in any other listed company in India and this may present certain potential challenges for our Company.

We are dependent on third parties for the supply of raw materials, services and finished goods.

We cannot assure you that the construction of our projects, delivery of our services and maintenance of the same will be free from any defects.

We operate in a highly regulated industry, and compliance with applicable safety, health, environmental and other governmental regulations. Failure to obtain or renew approvals, licenses, registrations and permits to operate our business in a timely manner, or at all, and any violations of existing regulations may adversely affect our business, financial condition, results of operations and cash flows.

We may be unable to identify or acquire new projects and our bids for new projects may not always be successful, which may affect our business growth.

The growth and success of our EPC infra business is dependent mainly on the quality of our construction, experience and proficiency of our skilled labour with the capability and know-how of delivering such project in the optimal quality within the stipulated time. Failure to provide such quality service along with hiring and retaining of experienced and/or skilled labour may have an adverse effect on our brand, reputation and credibility and in turn will have an adverse effect on our growth and profitability.

Our Company, our Subsidiary, Promoters and Directors are involved in certain legal proceedings and potential litigation. Any adverse decision in such proceedings may render us/them liable to liabilities/penalties and may adversely affect our business and results of operations.

There may have been certain instances of delay in filings with respect to certain regulatory filings for corporate actions taken by our Company in the past. Consequently, we may be subject to regulatory actions and penalties for any such past or future delays and our business, financial condition and reputation may be adversely affected.

Our insurance may be insufficient to cover all losses associated with our business operations.

We may fail to protect our intellectual property rights and may be exposed to misappropriation and infringement claims by third parties, either of which may have a material adverse effect on our business and reputation.

Our projects in our tollway collection and EPC Infra businesses are awarded on a competitive tender bidding process which include certain prescribed pre-qualification criteria. If we are unable to bid for or fail to win such tenders, our business and our financial condition may be adversely affected.

Increase in the prices of construction materials, fuel, labour and equipment could have an adverse effect on our EPC Infra business, results of operations and financial conditions.

The toll collection systems in India relies and runs on manual cash collection, online collection or FASTag collection process leading to inefficiencies and potential revenue leakage if operated without proper internal controls and verification. Leakage in our toll collection projects or inadvertencies in collection may adversely affect our revenues and earnings and could adversely affect our results of operations, cash flows and financial condition.

If we are unable to keep pace with technological changes, new equipment and service introductions, evolving industry standards, our business and financial condition may be adversely affected.

The industries in which we operate are competitive and have barriers to entry in certain instances. Our inability to compete effectively may adversely affect our business, cash flows, results of operations and financial condition.

Our toll collection business is subject to traffic congestion due to increased traffic volumes that may affect our cash flows and business operations.

Certain toll collection systems in India still rely on manual collection process leading to inefficiencies and potential revenue leakage. Should we participate in tenders for securing toll collection rights in such toll operations, the cost of implementing new technologies for collection of tolls and monitoring our projects could be significant and could adversely affect our results of operations, cash flows and financial condition.

The lack of seamless interoperability between toll collection systems and operators can lead to traffic congestion, user dissatisfaction, and reduced toll revenues.

Leakage of the tolls collected at our respective toll booths may adversely affect our revenues and earnings.

The growth of our business is largely dependent on understanding the market and implementing and executing the correct business strategy accordingly. Any failure on our part to implement and execute the required business strategy in the correct manner may have an adverse effect on our business and results of operations.

Political and other agitations against the collection of tolls may affect our ability to collect tolls over prolonged periods, which could have a material, adverse effect on our business, results of operation and financial condition.

We face intense competition from other service providers in the similar area of business. If we are unable to compete effectively, our business, results of operations and cash flows may be materially and adversely affected.

Due to the nature of our agreements and projects, we may be subjected to claims and counterclaims. Any adverse outcome of any such claim or counterclaim may have an adverse effect on our results of operations and profitability.

Our business depends on our Promoters and key managerial personnel and our ability to attract and retain key personnel. Any attrition rate of our key managerial personnel may affect our business growth.

Our business is dependent on various Government entities and could be adversely affected if there are adverse changes in the policies adopted by such Government entities.

Our EPC business is significantly dependent on long-term financing and capital investment. Any failure in managing long-term financing and capital investment may have an adverse effect on the timelines of completing any EPC project and may have an adverse effect on our financial position and revenue growth.

Our business is dependent on rising operational costs, complex regulatory compliance. Any failure on our part to maintain such evolving changes and customer expectations may have an adverse effect on our financial stability.

Due to the nature of our contract business, we may be subject to certain disputes in certification or completion of the work that may lead to a dispute by adjudicating forums. Any adverse outcome of any such claim or counter claim may have an adverse effect on our profitability.

The Objects of the Offer have not been appraised by any bank or financial institution. Our funding requirements and proposed deployment of the Net Proceeds are based on management estimates and may be subject to change based on various factors, some of which may be beyond our control. Any variation in the utilization of the Net Proceeds or in the terms of the conditions as disclosed in this Red Herring Prospectus would be subject to certain compliance requirements, including prior shareholders` approval.

Some of our Directors do not have significant experience in our line of business.

We may be subject to fraud, theft, employee negligence or similar incidents.

The lack of seamless interoperability between toll collection systems and operators can lead to traffic congestion, user dissatisfaction, and reduced toll revenues.

We may be subject to labour unrest and slowdowns.

Despite the government`s continuous support by way of financing and amendments in the Public-Private Partnerships (PPP) model framework, few challenges still persist for the road sector, which in turn may affect the growth and profitability of our business.

Certain sections of this Red Herring Prospectus disclose information from an industry report commissioned by us from CareEdge Research, which is an independent third-party entity and is not related to the Company, its Promoters or Directors, in any manner whatsoever. Any reliance on such information for making an investment decision in the Offer is subject to inherent risks.

Our management will have broad discretion over the use of the Net Proceeds.

Our Promoters, who are also our Directors, hold Equity Shares in our Company and are therefore interested in our Company`s performance.

Our Promoters and members of our Promoter Group will continue to retain control over our Company after completion of the Offer, which will allow them to influence the outcome of matters submitted for approval of our shareholders.

We cannot assure payment of dividends on the Equity Shares in the future.