Smartworks Cowor IPO

Our market leadership backed by scale and steady growth.

Our ability to lease and transform entire / large properties across India`s key office clusters into amenities rich `Smartworks` branded Campuses.

Our focus on acquiring Enterprise Clients with higher Seat requirements as well as emerging mid to large Enterprises and grow with them.

Our execution capabilities backed by cost efficiencies, effective processes and technology infrastructure.

Our financial acumen and strategic execution abilities make us capital efficient, resulting in saving our equity on capital expenditure and working capital.

Our risk mitigating strategy allows us to build a financially stable business model.

During Fiscal 2025, we derived 75.19% of our Rental Revenue from our Centres located in Pune, Bengaluru, Hyderabad and Mumbai. Any adverse developments affecting such locations and Centres could have an adverse effect on our business, results of operations and financial condition.

Our business is focused on Clients who typically require over 300 Seats across multiple Centres and cities. We may not have equal negotiating power with such Clients and it may be difficult for us to find suitable replacements upon termination of agreements with such Clients, which could adversely affect our business, cash flows, results of operation and financial performance.

Our success largely depends on our ability to identify the right buildings/ properties in right locations and sourcing such Centres at the right rate of rental and other commercial terms. Any failure to do so will adversely affect our business, cash flows, results of operations and profitability.

Our Company and certain of our Subsidiaries have incurred losses and we have experienced negative cash flows in the past. We cannot assure you that we will achieve or sustain profitability and not continue to incur losses going forward.

Our Landlords may not renew leases of existing Centres with us or renegotiate terms of our leases which could adversely affect our business, cash flows, results of operation and financial performance.

We have entered into long-term fixed cost lease agreements with our Landlords, for super built-up area of 8.99 million square feet across 50 Centres across 15 cities, as of March 31, 2025. If we are unable to pay the lease rentals to our Landlords on account of failure to source Clients for workspaces within our Centres, our business, results of operations, cash flows and profitability may be adversely impacted.

We may not be able to continue to retain existing Clients, our existing Clients may prematurely terminate their agreements with us and we may not be able to attract new Clients in sufficient numbers, which could adversely affect our business, results of operations, cash flows and financial condition.

Our revenue from operations have grown at a CAGR of 38.98% from Rs. 7,113.92 million in Fiscal 2023 to Rs. 13,740.56 million in Fiscal 2025. We may not be successful in managing our growth effectively.

Our Statutory Auditors had provided a qualified opinion in our consolidated audit report on internal financial controls for Fiscal 2023. If we fail to maintain an effective system of internal controls, we may not be able to successfully manage, or accurately report, our financial risks. Despite our internal control systems, we may be exposed to operational risks, which may adversely affect our reputation, business, financial condition, results of operations and cash flows.

Our growth may be negatively impacted by macroeconomic factors, such as level of economic activity in the regions and cities in which we operate, interest rate fluctuations and emergence of alternative destinations. Additionally, a significant portion of our Rental Revenue can be attributed to Clients in the information technology industry. Any adverse change in the aforementioned macroeconomic factors or any adverse impact on the information technology industry may impact our business, results of operations and financial condition.

Certain of our Promoters had pledged the Equity Shares held by them with a security trustee under our borrowing arrangements. If our Promoters are required to repledge their Equity Shares, any invocation of such pledge by the lender could dilute the shareholding of our Promoters in our Company.

We have substantial capital expenditures and may require additional financing to meet those requirements. Our inability to obtain financing at favourable terms, or at all, may have a material adverse effect on our financial condition, results of operations and cash flows.

A downgrade in our credit rating could adversely affect our ability to raise capital in the future.

In the past our Company, certain government agencies, our Statutory Auditors and certain other persons had, received anonymous complaints about our Company, Associates, and some of our Promoters, Neetish Sarda and Harsh Binani, and certain members of the Promoter Group. There is no assurance that such anonymous complaints will not continue against our Company, Associates, Promoters, and members of the Promoter Group, which might divert the time and attention of our management

A certain portion of our new Clients originate from our arrangements with property consultants and brokers. In the event that these property consultants and brokers continues to gain market share compared to our direct booking channels or our competitors are able to negotiate more favourable terms with these property consultants and brokers, our business, cash flows and results of operations may be adversely affected.

We do not own the land and buildings/ properties at any of our Centres. Any defect in the title and ownership of the land and buildings/ properties or non-compliance of applicable law by Landlords in respect of our Centres, may lead to adverse effect on our business, cash flow, results of operations and financial condition.

We have entered, and will continue to enter, into related party transactions which may involve conflicts of interest. Further, our Individual Promoters, Directors and Key Managerial Personnel have interests in us other than reimbursement of expenses incurred and normal remuneration or benefits.

We have not entered into any definitive arrangements to utilize certain portions of the Net Proceeds of the Offer and our funding requirements may be subject to change on account of commercial and other technical factors.

We rely on our Client relationships, reputation and brand, to grow our business. Any negative Client experience may impact our ability to retain or attract Clients, which will adversely affect our business, results of operations, cash flows and financial condition.

A certain portion of our Rental Revenue is derived from a limited number of Clients including Enterprise Clients and multi-city Clients. If any of the top 20 Clients prematurely terminate their agreements with us or do not renew their agreements or if we fail to retain such Clients, our business, revenues, cash flows, results of operations, and financial condition may be adversely affected.

We intend to enter into the managed contracts model which will require us to identify and partner with Landlords and third parties to manage the commercial workspaces owned/leased by such Landlords/third parties. We have also recently entered into a variable rental contract with a Landlord. We cannot assure you that the transition to such new business models may achieve the intended results.

The lease agreements with our Landlords and certain of our agreements with our Clients are required to be stamped in accordance with the relevant state stamp duty legislation and registered under the Registration Act, 1908. Any failure to register and/or appropriately pay stamp duty on such agreements may affect our ability to enforce such agreements

We face significant competitive pressures in our business. Our inability to compete effectively would be detrimental to our business, growth and results of operations.

Our operations entail certain fixed expenses, and our inability to reduce such costs during periods of low demand for workspaces may have an adverse effect on our business, results of operations, cash flows and financial condition.

Our financing agreements contain covenants that limit our flexibility in operating our business. If we are not in compliance with these covenants and are unable to obtain waivers from the respective lenders, our lenders may call an event of default and accelerate the repayment of the debt and enforce security/ collateral, leading to an adverse effect on our business, cash flows, financial condition and results of operations.

Any failure by us in the future to successfully integrate acquired assets into our existing operations and realise the anticipated benefits on time, or at all, could adversely affect our business, financial condition, cash flows, results of operations and prospects.

Our Company and some of our Promoters, Directors and Key Managerial Personnel are involved in certain legal proceedings. Any adverse decision in such proceedings may render us/them liable to claims/penalties and may adversely affect our business, financial condition, results of operations and cash flows.

Operational risks are inherent in our business as it includes rendering services which meet quality standards consistently across our Centres. A failure to manage such risks could have an adverse impact on our business, results of operations, cash flows and financial condition.

We are exposed to risks associated with the development and fit-out process of the spaces we occupy. If any of these risks materialise, it may affect adversely our business and financial condition.

Our operations are dependent on our ability to attract and retain qualified personnel, including our Key Managerial Personnel and Senior Management and any inability on our part to do so, could adversely affect our business, results of operations and financial condition.

Any failure of our information technology systems could adversely affect our business and our operations.

The objects of the Fresh Issue for which the funds are being raised have not been appraised by any bank or financial institutions. Any variation in the utilization of our Net Proceeds as disclosed in this Red Herring Prospectus would be subject to certain compliance requirements, including prior Shareholders` approval.

Post the filing of the DRHP, certain complaints have been made against our Company, certain of our Promoters and members of the Promoter Group by certain persons including anonymous persons/person using pseudonyms to inter alia SEBI, the BRLMs and certain statutory/governmental authorities. Such complaints may adversely affect our reputation and business. There is no assurance that such anonymous complaints will not continue against our Company, Promoters and members of the Promoter Group which might divert the time and attention of our management.

Our ancillary businesses may not achieve desired growth and yield desired returns.

Our inability to protect or use our intellectual property rights may adversely affect our business.

In the event we fail to obtain, maintain or renew our statutory and regulatory licenses, permits and approvals required to operate our business, including due to any default on the part of the owners of the properties we lease and manage, our business, cash flows and results of operations may be adversely affected.

We are subject to government regulation in the jurisdictions in which we operate. Any non-compliance by our Landlords or us with, or changes in, regulations applicable to us or Landlords may adversely affect our business, results of operations, cash flows and financial condition.

Any inability to expand our business into new regions and markets in India or the sub-optimal performance of our new Centres could adversely affect our business, prospects, results of operations, financial condition and cash flows.

The flexible workspace segment in which our Company operates, faces certain threats and challenges which are inherent to the segment. If we are unable to mitigate the risks posed by such threats and challenges, our business, cash flows, results of operation, financial performance and prospects for future growth could be adversely impacted.

Our operations could be adversely affected by strikes, work stoppages or increased wage demands by our employees or any other kind of disputes with our employees.

Some of our Directors may not have prior experience as directors of companies listed on recognized stock exchanges in India.

Our insurance coverage may not be adequate to protect us against all potential losses, which may have a material adverse effect on our business, financial condition, cash flows and results of operations.

Our debt-equity ratio (no. of times) was 2.90, 6.87 and 8.84 for the Fiscals 2025, 2024, and 2023, respectively. A high debt-equity ratio adversely affects our ability to obtain loans from lenders, which may impact our ability to maintain our current growth and adversely affect our business, results of operations and financial condition.

We have certain contingent liabilities, which, if they materialise, may adversely affect our results of operations, financial condition and cash flows.

There have been certain instances of delays in payment of statutory dues by our Company. Any delays in payment of statutory dues may attract financial penalties from the respective government authorities and in turn may have a material adverse impact on our financial position and cash flows.

We may be held responsible for paying the wages of the contract labourers we engage, if the independent contractors through whom such workers are hired default on their obligations, and such obligations could have an adverse effect on our results of operations, cash flows and financial condition.

We are exposed to a variety of risks associated with safety, security and crisis management.

We have commissioned an industry report from CBRE, which has been used for industry related data in this Red Herring Prospectus and such information is subject to inherent risks.

Our Registered Office and Corporate Office are situated in our Centres in New Delhi and Gurugram on leased premises and our inability to renew such lease agreements may adversely affect our business, results of operations and financial condition.

Our Promoters will continue to retain significant shareholding in our Company after the Offer, which will allow them to exercise influence over us.

The determination of the Price Band is based on various factors and assumptions and the Offer Price of the Equity Shares may not be indicative of the market price of the Equity Shares upon listing on the Stock Exchanges. Further, the current market price of some securities listed pursuant to initial public offerings which were managed by the Book Running Lead Managers in the past, is below their respective issue prices.

We will not receive any proceeds from the Offer for Sale portion.

The average cost of acquisition of Equity Shares of our Promoters and the Selling Shareholders may be lower than the Offer Price.

Our Company has issued Equity Shares during the preceding one year at a price that may be below the Offer Price. Further, the Offer Price may be higher than the price at which Equity Shares were transferred by an existing Shareholder in the Secondary Sale (as defined below).

Our business and profitability depends on the performance of the commercial real estate market in India. Any fluctuations in the commercial real estate market may have an adverse effect on our business, results of operations and financial condition.

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

We have presented certain supplemental information of our performance and liquidity which is not prepared under or required under Ind AS.

Significant differences exist between Ind AS and other accounting principles, such as US GAAP and International Financial Reporting Standards ("IFRS"), which investors may be more familiar with and consider material to their assessment of our financial condition.

Pursuant to listing of the Equity Shares, we may be subject to pre-emptive surveillance measures like Additional Surveillance Measure (ASM) and Graded Surveillance Measures (GSM) by the Stock Exchanges in order to enhance market integrity and safeguard the interest of investors.