KOLKATA, MONDAY, NOVEMBER 18, 2024 FOLLOW US ON TWITTER & FACEBOOK. APP AVAILABLE ON APP STORE & PLAYSTORE WWW.FINANCIALEXPRESS.COM VOL 34 NO. 14, 20 PAGES, `12.00 (NORTH EAST STATES `12 & ANDAMAN `17.00) P U B L I S H E D F R O M : A H M E D A B A D , B E N G A L U R U , C H A N D I G A R H , C H E N N A I , H Y D E R A B A D , K O C H I , K O L K A TA , L U C K N O W, M U M B A I , N E W D E L H I , P U N E READ TO LEAD THIS IS A PUBLIC ANNOUNCEMENT FOR INFORMATION PURPOSES ONLY AND IS NOT A PROSPECTUS ANNOUNCEMENT AND DOES NOT CONSTITUTE AN INVITATION OR OFFER TO ACQUIRE, PURCHASE OR SUBSCRIBE TO SECURITIES. NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION DIRECTLY OR INDIRECTLY OUTSIDE INDIA. INITIAL PUBLIC OFFER OF EQUITY SHARES ON THE MAIN BOARD OF THE BSE LIMITED (“BSE”) AND THE NATIONAL STOCK EXCHANGE OF INDIA LIMITED (“NSE”, AND TOGETHER WITH THE BSE, “STOCK EXCHANGES”) IN COMPLIANCE WITH CHAPTER II OF THE SECURITIES AND EXCHANGE BOARD OF INDIA (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2018, AS AMENDED (“SEBI ICDR REGULATIONS”). ENVIRO INFRA ENGINEERS LIMITED (Please scan this QR code to view the RHP) Our Company was originally incorporated as ‘Enviro Infra Engineers Private Limited’ a private limited company under the Companies Act, 1956 at Delhi, pursuant to a certificate of incorporation dated June 19, 2009 issued by the Registrar of Companies, National Capital Territory of Delhi and Haryana. Thereafter on April 1, 2010, our Company took over the business of partnership firm, M/s Enviro Engineers. Thereafter, name of our Company was changed from ‘Enviro Infra Engineers Private Limited’ to ‘Enviro Infra Engineers Limited’ consequent to conversion of our Company from private to public company, pursuant to a special resolution passed by the shareholders of our Company on July 19, 2022 and a fresh certificate of incorporation consequent to change of name was issued by the Registrar of Companies, Delhi (“RoC”) on August 8, 2022. For further details on the changes in the name and registered office of our Company, see “History and Certain Corporate Matters” on page 266 of the red herring prospectus dated November 16, 2024 (“RHP or Red Herring Prospectus”) filed with the ROC. Registered Office: Unit No 201, Second Floor, Plot No. B, CSC/OCF-01, RG Metro Arcade, Sector -11, Rohini, Delhi North West 110085, India; Tel: +91 11 4059 1549; Contact Person: Piyush Jain, Company Secretary and Compliance Officer, E-mail: cs@eiepl.in; Website: www.eiel.in; Corporate Identity Number: U45200DL2009PLC191418 OUR PROMOTERS: SANJAY JAIN, MANISH JAIN, RITU JAIN AND SHACHI JAIN INITIAL PUBLIC OFFERING OF UP TO 4,39,48,000 EQUITY SHARES OF FACE VALUE OF ` 10 EACH (“EQUITY SHARES”) OF ENVIRO INFRA ENGINEERS LIMITED (“OUR COMPANY” OR “ISSUER”) FOR CASH AT A PRICE OF ` [●] PER EQUITY SHARE (INCLUDING A PREMIUM OF ` [●] PER EQUITY SHARE) (“OFFER PRICE”) AGGREGATING UP TO ` [●] LAKHS (“OFFER”). THE OFFER COMPRISES A FRESH ISSUE OF UP TO 3,86,80,000 EQUITY SHARES AGGREGATING UP TO ` [●] LAKHS (“FRESH ISSUE”) AND AN OFFER FOR SALE OF UP TO 21,34,000 EQUITY SHARES AGGREGATING UP TO ` [●] LAKHS BY SANJAY JAIN, UP TO 21,34,000 EQUITY SHARES AGGREGATING UP TO ` [●] LAKHS BY MANISH JAIN, UP TO 5,00,000 EQUITY SHARES AGGREGATING UP TO ` [●] LAKHS BY RITU JAIN AND , UP TO 5,00,000 EQUITY SHARES AGGREGATING UP TO ` [●] LAKHS BY SHACHI JAIN (COLLECTIVELY, “PROMOTER SELLING SHAREHOLDERS” AND SUCH OFFER FOR SALE BY THE PROMOTER SELLING SHAREHOLDERS, “OFFER FOR SALE”). THE OFFER INCLUDES A RESERVATION OF UP TO 1,00,000 EQUITY SHARES, AGGREGATING UP TO ` [●] LAKHS CONSTITUTING UP TO [●]% OF THE POST-OFFER PAID-UP EQUITY SHARE CAPITAL, FOR SUBSCRIPTION BY ELIGIBLE EMPLOYEES (“EMPLOYEE RESERVATION PORTION”). THE OFFER LESS THE EMPLOYEE RESERVATION PORTION IS HEREINAFTER REFERRED TO AS THE NET OFFER. THE OFFER AND THE NET OFFER SHALL CONSTITUTE [●] % AND [●] % OF THE POST-OFFER EQUITY SHARE CAPITAL OF OUR COMPANY. DETAILS OF OFFER FOR SALE NAME OF SELLING SHAREHOLDER CATEGORY OF SHAREHOLDER NUMBER OF EQUITY SHARES OFFERED / AMOUNT (` IN LAKHS) Sanjay Jain Promoter Selling Shareholder Up to 21,34,000 Equity Shares aggregating up to ` [●] lakhs Manish Jain Promoter Selling Shareholder Up to 21,34,000 Equity Shares aggregating up to ` [●] lakhs 0.70 Ritu Jain Promoter Selling Shareholder Up to 5,00,000 Equity Shares aggregating up to ` [●] lakhs 0.76 Shachi Jain Promoter Selling Shareholder Up to 5,00,000 Equity Shares aggregating up to ` [●] lakhs 0.76 WEIGHTED AVERAGE COST OF ACQUISITION PER EQUITY SHARE (IN `)* 0.70 *As certified by the M/s. S S Kothari Mehta & Co. LLP, Chartered Accountants pursuant to their certificate dated November 14, 2024. We are in the business of designing, construction, operation and maintenance of Water and Wastewater Treatment Plants (WWTPs) and Water Supply Scheme Projects (WSSPs) for government authorities/bodies. The Offer is being made through the Book Building Process in accordance with Regulation 6(1) of the SEBI ICDR Regulations. QIB Portion: Not more than 50 % of the Net Offer | Non-Institutional Portion: Not less than 15% of the Net Offer | Retail Portion: Not less than 35% of the Net Offer | Employee Reservation Portion: Up to 1,00,000 Equity Shares aggregating up to ` [•] lakhs. PRICE BAND: `140 TO `148 PER EQUITY SHARE OF FACE VALUE OF `10 EACH. THE FLOOR PRICE IS 14 TIMES THE FACE VALUE OF THE EQUITY SHARES AND THE CAP PRICE IS 14.80 TIMES THE FACE VALUE OF THE EQUITY SHARES. THE PRICE TO EARNINGS RATIO (“P/E”) BASED ON DILUTED EPS FOR FINANCIAL YEAR ENDED 2024 FOR THE COMPANY AT THE UPPER END OF THE PRICE BAND IS AS HIGH AS 18.20 TIMES AND AT THE LOWER END OF THE PRICE BAND IS 17.22 TIMES AS COMPARED TO THE AVERAGE INDUSTRY PEER GROUP P/E RATIO OF 33.45 TIMES. BIDS CAN BE MADE FOR A MINIMUM OF 101 EQUITY SHARES AND IN MULTIPLES OF 101 EQUITY SHARES THEREAFTER. A DISCOUNT OF `13 PER EQUITY SHARE IS BEING OFFERED TO ELIGIBLE EMPLOYEES BIDDING IN THE EMPLOYEE RESERVATION PORTION. WEIGHTED AVERAGE RETURN ON NET WORTH FOR LAST THREE FULL FINANCIAL YEARS IS 41.44% In accordance with the recommendation of the committee of Independent Directors of our Company, pursuant to their resolution dated November 16, 2024, the above provided price band is justified based on quantitative factors/KPIs disclosed in the “Basis for Offer Price” section of the RHP vis-à-vis the weighted average cost of acquisition of primary and secondary transactions, as applicable, disclosed in the “Basis for Offer Price” section on page 139 of the RHP. In making an investment decision and purchase in the offer, potential investors must rely on the information included in the red herring prospectus and the terms of the offer, including the risks involved and not rely on any other external sources of information about the offer available in any manner. In relation to price band, potential Investors should only refer to the price band advertisement for the Offer and should not rely on any media articles/reports in relation to the valuation of the Company as these are not endorsed, published or confirmed either by the Company or by the BRLM. RISK TO INVESTORS (For details refer to section titled “Risk Factors” on page 40 of the RHP.) 1. Dependency on projects awarded by the Central and State Governments: We bid for Water and Wastewater Treatment Plants (WWTPs) & Water Supply Scheme Projects (WSSPs) funded by the Central and State Governments and derived our revenues from the contracts awarded to us. We derived ` 7841.82 lakhs, ` 20,296.00 lakhs, ` 23,378.45 lakhs and ` 20,480.62 lakhs constituting 38.22%, 27.84%, 69.15%, and 91.63% of our revenues for three months period ended June 30, 2024 and for Fiscals 2024, 2023, and 2022, respectively from Water and Wastewater Treatment Plants (WWTPs) and ` 11,997.99 lakhs, ` 49,669.60 lakhs, ` 8,682.67 lakhs and ` Nil lakhs constituting 58.48%, 68.14%, 25.68% and Nil% of our revenues for three months period ended June 30, 2024 and for Fiscals 2024, 2023, and 2022 respectively from 5. Water Supply Scheme Projects (WSSPs). Any reduction in the budgetary allocation or support by the Central and/or the State Governments may have a significant impact on the number of projects for which tenders may be issued by government authorities/bodies resulting in slowdown or downturn in our business prospects. Our business is directly and significantly dependent on projects awarded by them. There can be no assurance that the projects for which we bid will be tendered within a reasonable time or will ever be tendered due to change in policies of government authorities/ bodies. 2. Bidding related risk: We may not be able to qualify for, compete and win future projects, which could adversely affect our business and results of operations. Our projects are awarded through the competitive bidding process by government authorities/bodies. We have the technical and financial qualifications to bid for CETP (Common Effluent Treatment Plant) 6. projects and upto 200 MLD STP (Sewage Treatment Plant) projects. As on June 30, 2024, we are operating and maintaining 16 WWTPs and WSSPs spread across five states, whether on EPC (Engineering Procurement and Construction) or HAM (Hybrid Annuity Model) basis, which have been awarded to us following competitive bidding processes and satisfaction 7. of prescribed qualification criteria individually or along with our joint venture partners, wherever applicable. While many factors affect our ability to win the projects that we bid for, pricing is a key deciding factor in most of the tender awards. Details of bids submitted and awarded during three months period ended June 30, 2024 and Fiscals i.e. 2024, 2023 and 2022 is as under: 8. For the Fiscal/ Period June 30, 2024 Fiscal 2024 Fiscal 2023 Fiscal 2022 Total Bids submitted 1 24 26 29 80 Less: Cancelled/Awaited/ Pending Result 1 5 4 5 15 Net Bids submitted 0 19 22 24 65 Awarded 0 11 9 4 24 9. Successful Conversation of Bids (in %) 58% 41% 17% 37% Negative cash flow risk: We have experienced negative net cash flows from operating, investing and financing activities in the past and may continue to experience such negative operating cash flows in the future. The following table sets forth certain information relating to our cash flows on a restated consolidated basis for the periods indicated: Particulars 3. (` in lakhs) Particulars June 30, 2024 Fiscal 2024 Fiscal 2023 Fiscal 2022 Net cash from/ (used in) Operating Activities (10,341.12) (6,900.20) 10,108.82 4,159.63 Net cash from/ (used in) Investing Activities 2,272.64 (13,934.47) (14,100.16) (2,604.55) 10. Net cash from/ (used in) Financing Activities 8,004.00 20,683.72 4,205.33 (1,568.90) There can be no assurance that cash flows will be positive in the future and the same may adversely affect our cash flow requirements, which in turn may adversely affect our ability to operate our business and implement our growth plans, thereby affecting our financial condition. 4. Dependence on designing, engineering and construction teams for project execution: We rely on our in-house designing, engineering and construction teams for project execution. Loss of employee(s) may have an adverse effect on the execution of our projects. We have a team of 180 engineers who are supported by third-party consultants including labour contractors, raw material suppliers and industry experts including project management consultant appointed by the government authority to supervise the project, ensure compliance and quality standards laid down by the industry and government agencies & departments. The attrition rate of our employees deployed in the executive functions like management, administration, design & 11. development, etc has been set out below: For the Fiscal/ Period June 30, 2024 Fiscal 2024 Fiscal 2023 Fiscal 2022 Employees at the beginning of the Fiscal 140 105 92 56 Employees at the end of the Fiscal 150 140 105 92 Average number of employees 145 122.5 98.5 74 Employees left during the year 4 9 8 7 12. Attrition rate (in %) 2.76% 7.35% 8.10% 9.50% The attrition rate of our employees deployed in the operational functions like civil construction, site supervision, fabrication, housekeeping, etc has been set-out below: Attrition Rate Attrition Rate Employees at the beginning of the Fiscal Employees at the end of the Fiscal June 30, 2024 781 787 For the Fiscal/ Period Fiscal 2024 Fiscal 2023 523 357 781 523 Fiscal 2022 273 357 13. For the Fiscal/ Period June 30, 2024 Fiscal 2024 Fiscal 2023 Fiscal 2022 Average number of employees 784 652 440 315 Employees left during the year 176 316 247 175 Attrition rate 22.45% 48.47% 56.14% 55.56% Working capital intensive business: Our business is working capital intensive. A significant amount of working capital is required to finance the purchase of raw materials, equipment, mobilization of resources and other work on projects before payment is received from clients. Our working capital requirements may increase if we undertake larger or additional projects. The working capital requirement involves providing of performance bank guarantees for the work awarded to our Company for which cash margin has to be provided. If we experience insufficient cash flows to meet required payments on our working capital requirements, there may be an adverse effect on the results of our operations. Our Company’s working capital requirements for the three months period ended June 30, 2024 and Fiscals 2024, 2023 and 2022 on the basis of our restated standalone financial statements amount to ` 47,086.59 lakhs, ` 37,876.80 lakhs, ` 12,339.79 lakhs and ` 7,573.22 lakhs, respectively. Attrition Rate OFS related risk: Our Company will not receive any proceeds from the Offer for sale portion which constitutes 11.99% of the offer size. The Promoter Selling Shareholders shall be entitled to the proceeds from the Offer for sale portion after deducting applicable Offer related expenses and relevant taxes thereon. Risk related to execution of projects: Our Order Book means estimated contract value of the unexecuted portion of our existing assigned EPC/ HAM contracts and is an indicator of visibility of our future revenue and it may not be representative of our future results and our actual income may be significantly less than the estimates reflected in our Order Book, which could adversely affect our results of operations. As of June 30, 2024, our Order Book includes 21 WWTPs and WSSPs with aggregate value of ` 1,90,628.06 lakhs. Risk in relation to government policy initiatives: Failure to capitalize on government policy initiatives in the water and wastewater treatment market include financial risks and implementation risks. We are presently executing 5 projects under the Atal Mission for Rejuvenation and Urban Transformation, 5 projects under the Jal Jeevan Mission and 1 project under the National Mission for Clean Ganga and 2 projects for Namami Gange Programme. Any failure or delay on our part to capitalise on these opportunities due to lack of experience, financial or management ability or capability may adversely affect our growth prospects and plans. Dependency on joint ventures partners: We rely on joint venture partners for selective government projects bids and execution of awarded projects. The failure of a joint venture partner to perform its obligations could impose additional financial and performance obligations resulting in reduced profits or, in some cases, significant losses from the joint venture and may have an adverse effect on our business, results of operations and financial condition. In the event that a claim, arbitration award or judgement is awarded against the consortium, we may be responsible for the entire claim. As on June 30, 2024, we have developed 9 WWTPs and WSSPs across India in past seven (7) years through our Joint Ventures aggregating to ` 33,373.00 lakhs. Further, our Water and Wastewater Treatment Plants (WWTPs) projects and Water Supply Scheme Projects (WSSPs) projects to be developed through our joint ventures comprises of 66,454.15 lakhs constituting 34.86% of our Order Book as of June 30, 2024. Risk in relation to change in technology: We use advanced technologies as required by the government authorities/ bodies for the relevant project type. However, there is possibility that we may miss a market opportunity if we fail to invest, or invest too late, or would be unable to upgrade ourselves with the technology and it may affect our position to bid for Water and Wastewater Treatment Plants (WWTPs) & Water Supply Scheme Projects (WSSPs). Presently, we are using Sequential Batch Reactors (SBR) to meet the stringent norms prescribed by the National Green Tribunal (NGT). A recent technological advancement by our Company is to provide High Rate Anaerobic Digestor (HRAD) followed by SBR, along with BNR (Biological Nutrient Removal) removal even at low BOD concentrations. Further, we are offering MBBR (Moving Bed Biological Reactor) in various combinations like IFAS in already existing/ partly build systems, to use existing the infrastructure to its maximum by avoiding major civil works, and provide cost effective and viable solutions, meeting the effluent norms at the same time. We also use conventional water treatment process in the water supply scheme projects. Risk in relation to Operation and Maintenance of projects: Contracts awarded by the Government Authorities/Bodies nowadays include operation and maintenance (O&M) of the installed project for certain number of years. If we fail to undertake Operation and Maintenance (O&M) works or if there is any deficiency of service regarding these works in the projects installed by us pursuant to and as per the relevant contractual requirements, we may be subject to penalties or even termination of our contracts, which may have a material adverse effect on our reputation, business, financial condition, results of operations and cash flows. As on June 30, 2024, our O&M Order Book presently has 40 projects of an aggregate value of ` 75,397.06 lakhs having a term from 1 year to 15 years out of which operation and maintenance activities of 16 projects is ongoing. Geographical concentration risk: We are presently executing projects in eight (8) states namely, Gujarat, Rajasthan, Delhi, Jharkhand, Karnataka, Uttar Pradesh, Chattisgarh and Madhya Pradesh. Further, the development of WWTPs and WSSPs in these diverse geographies may be challenging on account of our lack of familiarity with the social, political, economic and cultural conditions of these regions, language barriers, difficulties in staffing and managing operations and our reputation in such regions. We may also encounter additional unanticipated risks and significant competition in these diverse geographical areas with different projects which may adversely affect our business, operations, and financial condition. Risk in relation to raw material: We are vulnerable to the risk of rising and fluctuating raw materials prices, steel and cement, which are determined by demand and supply conditions in the global and Indian markets. Any unexpected price Continued on next page... Kolkata