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Informist, Monday, Sept. 28, 2026

NEW DELHI – SG Encon Ltd. has filed a draft red herring prospectus with the Securities and Exchange Board of India for an initial public offering comprising a fresh issue of up to 7.19 million shares with a face value of INR 10 each and an offer for sale of up to 1.37 million shares. Promoters Rajiv Gandhi and Pankaj Setia will each sell up to 685,650 shares under the offer-for-sale component.

SG encon plans to use INR 426.69 million of the net proceeds of the exercise to fund working capital requirements and INR 322.78 million for capital expenditure requirements, i.e., for purchase of machinery or equipment. The remaining will be channelled towards general corporate purposes.   

SG Encon provides integrated end-to-end telecommunication infrastructure services and also undertakes construction services and underground utility infrastructure projects for sectors such as oil and gas, water, and sewerage. It primarily derives its revenue from the telecommunication segment, particularly through operation and maintenance services. The company recorded a net profit of INR 228.85 million for the financial year 2025-26 (Apr-Mar) on revenue of INR 2.87 billion, as per the restated financial statement. 

Outlining the risk factors, SG Encon said any slowdown in the telecom sector could be detrimental for the company as it derives a brute majority of its revenue through telecom services, which accounted for 98.62% of its revenue from operations for FY26, 99.05% for FY25, and 98.60% for FY24. Geographically, the operations are concentrated in North India, particularly across states such as Punjab, Haryana, Uttar Pradesh, Delhi, and Rajasthan. SG Encon is also dependent on its top-10 suppliers and service providers for more than one-fourth of its raw material and service requirements. In terms of customers, the top-10 contributed 99.63% of the company's revenue from operations for FY26, 99.92% for FY25, and 99.96% for FY24.

SG Encon warned that it has recorded negative cash flow from operating activities in the past and may continue to do so in the future. It recorded negative net cash flow of INR 18.37 million for FY26, INR 20.71 million for FY25, and INR 28.74 million for FY24. The company also cautioned that it has entered into related party transactions in the past and may continue to do so in the future, which may involve conflicts of interest with the shareholders. 

The company has no outstanding litigation proceedings. The company owes a total of INR 158.01 million to 446 material creditors, including micro, small, and medium enterprises, and other creditors.

The offer is being made through the book building process. Not more than 50% of the shares will be reserved for qualified institutional investors and at least 15% will be set aside for non-institutional bidders. At least 35% of the offer will be allocated to retail investors. Marwadi Chandarana Intermediaries Brokers Pvt. Ltd. is the book-running lead manager for the exercise, and MAS Services Ltd. is the registrar. (Shakshi Jain)

Edited by Himanshi Gupta

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