Denta Water and Infra Solutions Limited IPO: Check IPO Date, Lot Size, Price & Details

Introduction:

Denta Water and Infra Solutions Limited, commonly known as "Denta Water," has emerged as one of the key players in the field of water engineering, procurement, and construction (“EPC”) services. With a meritorious track record in infrastructure project installations, including groundwater recharging through recycled water, Denta Water has been a contributor to addressing the rising demand for water-related solutions in the country. Their notable achievements encompass pivotal projects like the Byrapura and Hiremagaluru LIS Project, Karagada LIS Project, and others, primarily executed through lift irrigation systems.Denta Water secured contracts for lift irrigation projects in various regions, such as Makali, Makali Hosahalli, Krishnapura, Karnataka and neighbouring villages in the Channapatna Taluk of Ramanagar District, Karnataka.

In addition, it also undertakes construction projects in the field of railways and highways. It is one of the few companies in India having experience and expertise in the design, installation, commissioning, operations and maintenance of groundwater recharging using recycled water. As of the date of this Red Herring Prospectus, the company water management projects are concentrated in the state of Karnataka and it has completed 32 water management projects (as main contractors and sub-contractors) and is  presently undertaking 11 water management projects, which are in various stages of implementation. Its services for any given project include any one or a combination of (i) preliminary investigations and reconnaissance; (ii) feasibility studies, (iii) planning and project formulation; (iv) field surveys and testing of soil; (v) design; (vi) tender bidding consultancy; (vii) project management and construction supervision; (viii) formulation of operation and maintenance guidelines; (ix) engineering procurement consultancy, turnkey projects; etc. regarding water management projects.

IPO Details:

Objectives of Issue:

• To meet working capital requirements of the Company
• General corporate purposes, subject to the applicable laws

Key Strengths:

• Focused Approach- The Company has focused on particular segments since incorporation. It is majorly concentrated in GWR (Water Management), Irrigation, O&M pertaining to water projects. The projects which the Company undertakes are either through joint venture, sub-contract basis or direct in the State of Karnataka. Focussing on selected segment aids it with a competitive advantage at the time of award evaluation
• Efficient business model- The company has adopted an asset-light business model while purchasing equipment which are critical to the construction activities of the projects undertaken by the Company. Its asset-light business model allows it to keep its capital requirement low and in turn help it to reduce its maintenance costs of equipment. It typically assigns a part of the work to the sub-contractors who provide the company with manpower along with the equipment support.

Risks:

• Over Dependence on one- The company operations are primarily located in Karnataka and all the projects executed by the company and projects under execution are all based in Karnataka. Due to this company is overly dependent on Karnataka state for its operations. Any inadequate budget allocations in the state of Karnataka or shift in focus in Karnataka could adversely affect the revenue of the company.
• Delay in execution of projects- Typically, the projects are subject to specific completion schedule requirements. Failure to adhere to contractually agreed timelines could lead to forfeiture of security deposits, payment of liquidated damages and/ or its performance guarantees being invoked. While there were no overruns in the past the company is currently experiencing time overruns in 10 of its 17 ongoing projects, however, applications have been made to the respective authorities for an extension of the timeline.
• Dependency on Joint Ventures- The company has entered into joint venture arrangements for certain of its projects, wherein it has defined roles and responsibilities in respect of various project undertakings. Any failure to identify and form alliances and failure by third parties to fulfill their obligations may adversely impact its ability to bid for and obtain projects in the future. Suppose its joint venture partners fail to perform their obligations satisfactorily. In that case, it may have to make additional investments and/or provide additional services to ensure the adequate performance and delivery of contracted services. Non-performance by any of the joint venture partners or consortium partners may expose it to significant financial and co-operational liabilities.

Financial Snapshot:

KPI comparison with Industry Peers