Afcons Infrastr.

Strong Track Record of Timely Execution of Large-Scale, Complex and High-Value Projects.

Large Order Book and Strong Financial Performance.

Collaboration among Internal Teams and with JV counterparties, and a Strategic Equipment Base leading to Strong Execution Capabilities.

Knowledge Management and Innovation Practices.

Experienced Leadership Team with Shapoorji Pallonji Group parentage.

Strong Risk Management, Project Selection and Dispute Resolution Processes.

If the company fails to qualify for, or win new contracts from project owners, its business, financial condition, result of operations, prospects and cash flows could be adversely affected.

The company`s business significantly depends on projects awarded by government or government-owned customers, which subjects the company to a variety of risks. Such projects contributed to 69.80% of the company`s Orders Book as of June 30, 2024.

Its business is capital intensive. If the company experience insufficient cash flows or are unable to access suitable financing to meet working capital requirements and loan repayment obligations, its business, financial condition and results of operations could be adversely affected.

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

If any of the company projects are terminated prematurely, its may not receive payments due to us, which could adversely affect its business, financial condition and results of operation.

The company is required to furnish bank guarantees as part of its business. The company`s inability to arrange for such guarantees or the invocation of such guarantees may adversely affect its cash flows and financial condition.

Some of its contracts are the subject of legal and arbitration proceedings. An adverse outcome from any such legal proceedings could adversely affect its business, financial condition and results of operation.

Its international operations and the company strategy to further grow these operations expose us to complex management, legal, tax, operational and economic risks, and exchange rate fluctuations, which could adversely affect its business, financial condition and results of operations.

Its actual cost incurred in completing a project may vary substantially from the assumptions underlying its bid. The company may be unable to recover all or some of the additional expenses incurred, which could adversely affect its financial condition, results of operation and cash flows.

Its projects are exposed to various risks and other uncertainties, and the company risk management and project selection framework may be inadequate, which may adversely affect its business, results of operations and financial condition.

Its Promoters have encumbered some of their Shares in the Company in favour of certain lenders and a debenture trustee. In the event that any of these encumbrances are enforced, it may dilute the shareholding of its Promoters, which could adversely affect the company`s business and reputation.

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.

A significant portion of its Order Book is attributable to certain large customers and to projects located in India, and its business and profitability is dependent on the company ability to win projects from such customers.

The company depends significantly on contract labour and an inability to access contract labour at reasonable costs at its project sites may adversely affect the company business.

Any inability to manage its employees, equipment base or inventory could result in shortages or underutilization, which could adversely affect the company profitability.

Certain of its Group Companies have not consented to the inclusion of, nor have they provided, information or any confirmations or undertakings pertaining to themselves, which are required to be disclosed in relation to Group Companies under the SEBI ICDR Regulations in this Draft Red Herring Prospectus. Consequently, the company cannot assure you that the disclosures relating to such Group Companies are complete or up-to-date.

The company has entered into related party transactions with Eureka Forbes Limited ("EFL") in Fiscal 2021, pursuant to which EFL was required to be categorized as one of its Group Companies. However, SEBI pursuant to its letter dated March 27, 2024, acceded to the exemption sought for by the Company with respect to EFL under Regulation 300(1)(c) of the SEBI ICDR Regulations with respect to the disclosure of information and confirmations required from group companies under the SEBI ICDR Regulations.

Its customers may face challenges in securing project financing, resulting in delays in execution or cancellation of projects, which may adversely affect its business, financial condition and results of operations.

The company faces competition from other infrastructure construction companies. If the company is unable to compete for and win projects, its business, prospects and financial condition could be adversely affected.

The Company has received an inspection letter from the office of Regional Director (Western Region), Ministry of Corporate Affairs ("RD"), pursuant to which the RD has ordered an inspection of the books of accounts and other books and papers of the Company. Any adverse outcome of the inspection may have an impact on its reputation and subject the Company to penalties.

The audit reports issued in relation to the Restated Consolidated Financial Information for the six month period ended September 30, 2023 and the Financial Years 2023, 2022 and 2021, contain certain matters of emphasis.

The Company has entered into joint venture agreements with other parties for execution of projects. Any non-compliance with the terms of these joint venture agreements may result in adverse action against the Jointly Controlled Operation and the Company by the governmental authorities / concessioning authority.

Its inability to meet the company obligations, including financial and other covenants under its debt financing arrangements and any delay in obtaining consent for it lenders may limit the company ability to pursue its business and could adversely affect its business, financial condition, results of operations and cash flows.

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

There are factual inaccuracies in certain of its corporate records and corporate filings. Further, certain of its historical corporate and secretarial records are not traceable. The company cannot assure you that regulatory proceedings or actions will not be initiated against it in the future which may impact its financial condition and reputation and the company will not be subject to any penalty imposed by the competent regulatory authority in this regard.

There are outstanding legal proceedings involving the Company, Subsidiaries, Promoters and Directors. Any adverse decision in such proceedings may adversely affect its business, financial condition and results of operations.

For supply of certain construction materials, the company relies on suppliers. Inadequate or interrupted supply or sub-standard quality of construction materials could adversely affect its reputation, business and results of operations.

If the company is unable to manage attrition and attract and retain skilled professionals, it may adversely affect its business prospects, reputation and future financial performance.

The failure of a JV counterparty or consortium member to perform its obligations could impose additional financial and performance obligations resulting in reduced profits or, in some cases, significant losses, and it may adversely affect its business, results of operations and financial condition.

The company is subject to anti-bribery, anti-corruption and sanctions laws and regulations.

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.

Its business is subject to fluctuations due to seasonal, climatic and other factors.

The company relies on third parties, including sub-contractors, to complete certain projects and any failure arising from non-performance, delayed performance or inadequate quality in the performance of work by such third parties, or a failure by third-party subcontractors to comply with applicable laws, to obtain the necessary approvals, or provide services on agreed terms, could adversely affect its business, financial condition, results of operations and cash flows.

The company depends on its Promoters and Promoter Group, and upon completion of the Offer, its Promoters and Promoter Group will continue to retain control over it.

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

Its business development efforts involve considerable time and expense, and the company revenues may not justify expenses incurred towards business development efforts.

Obsolescence, destruction, theft, and breakdowns of its equipment or failures to repair or maintain equipment may adversely affect its business, cash flows, financial condition and results of operations.

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.

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

Any failure to protect its intellectual property rights may adversely affect the company business, financial condition and results of operation.

The company incur significant employee benefits expense. An increase in employee costs, including on account of changes in regulations, may prevent it from maintaining its competitive advantage and may reduce the company profitability.

The strength of the "Afcons" brand is crucial to its success, and the company may not succeed in continuing to maintain and develop its brand.

Its ability to operate the company business, maintain its competitive position and implement the company`s business strategy is dependent to a significant extent on its Key Managerial Personnel and other executives.

Its insurance coverage may be inadequate, which could have an adverse effect on its financial condition and results of operations.

The company has certain contingent liabilities and commitments that may adversely affect its financial condition.

The company has entered into, and will continue to enter into, related-party transactions which may potentially involve conflicts of interest.

Its Registered Office has been mortgaged in favour of SBICAP Trustee Company Limited as security for certain facilities.

Certain premises used by the company is not registered in its name and are located on leased premises. There can be no assurance that these lease agreements will be renewed upon termination or that the company will be able to obtain other premises on lease on same or similar commercial terms.

The COVID-19 pandemic, or any future pandemic or widespread public health emergency, could impact its business, financial condition, cash flows and results of operations.

If the company is unable to establish and maintain an effective system of internal controls and compliances, its businesses and reputation could be adversely affected.

Its ability to pay dividends in the future will depends upon future earnings, financial condition, cash flows, working capital requirements, capital expenditures and restrictive covenants in the company financing arrangements.

The company has issued Equity Shares during the preceding 12 months from the date of this Draft Red Herring Prospectus at a price which may not be indicative of the Offer Price.

Its Promoters and Directors are engaged in the similar line of business activities as those undertaken by the Company, which may result in conflict of interest.

Failure, inadequacy or breach of its IT systems or unauthorized access to the company confidential information could adversely affect its business, financial condition, cash flows and results of operations.

Its ability to invest in foreign subsidiaries or joint ventures is constrained by applicable restrictions under Indian overseas investment laws as well as laws of the relevant international jurisdictions, which could adversely affect its business prospects and international growth strategy.

Certain sections of this Draft Red Herring Prospectus contain information from the Fitch Report which has been commissioned by it and any reliance on such information for making an investment decision in this Offer is subject to inherent risks.

Certain Non-GAAP financial measures and other statistical information relating to its operations and financial performance have been included in this Draft Red Herring Prospectus. These Non- GAAP financial measures are not measures of operating performance or liquidity defined by Ind AS and may not be comparable with those presented by other companies.

The company incur significant depreciation and amortisation expenses, which could adversely affect its results of operations.

A portion of the Net Proceeds may be utilized for prepayment and / or re-payment of all, or a portion of, certain outstanding borrowings availed by the Company from State Bank of India, which is an affiliate of one of the Book Running Lead Managers, i.e., SBI Capital Markets Limited.

One of it`s group companies and a member of the Promoter Group, Shapoorji Pallonji Finance Private Limited ("SPFPL") is registered as a non-banking financial company not accepting public deposits with the RBI and is subject to periodic inspections by the RBI, and any non-compliance with observations made by the RBI during these inspections could result in penalties and restrictions being imposed on SPFPL.

The SP Group relies on dividends from its Company as a source of income and cash flows. Any reduction or delay in the declaration or payment of dividends by the Company may adversely affect the financial position and liquidity of the SP Group.

Certain amounts which have been recognized as contract assets relate to uncertified work or contract variations which are under arbitration. its may be required to write-off such assets if the company clients does not certify such work or if arbitration proceedings are not decided in its favor.

Certain government authorities are seeking royalties / penalty payments from the company for the alleged illegal use of minerals (Murrum) in the construction of a project. The company has filed a writ petition challenging such royalties / penalty payments. If the company writ petition is not allowed, its may be required to pay such royalties / penalties, which may adversely affect its results of operations and financial condition.

The Company is subject to risks relating to fluctuations in prices of raw materials on overseas projects.

A part of the company Order Book is in early stages of execution and may be subject to delays, cancellations,cost overruns or disputes, which could adversely affect its business, financial condition and results of operations.

The company may not be able to recognize unbilled revenues in a timely manner or at all, which may adversely affect its financial condition and results of operations.

The company may faces difficulties in collecting amounts awarded to the company in arbitration proceedings, which may adversely affect its cash flows and financial condition.

The Company may faces difficulties in meeting its trade payables obligations, which could adversely affect the company liquidity, reputation and business relationships.

The Company has had negative cash flows in the past and may have negative cash flows in the future.