Dhoot Transmission IPO: 71 pc of revenue from top 5 customers, confidential data leak, other key risks
Mumbai, Aug 11
Dhoot Transmission Ltd has opened its initial public offering with the company highlighting several risks such as customer concentration, cybersecurity and others in its red herring prospectus.
According to the RHP, the company's dependence on a handful of customers remains high. Its top five customers accounted for 71.56 per cent of total operating revenue in FY26, compared with 71.18 per cent in FY25 and 66.17 per cent in FY24.
The company said it does not have long-term supply agreements with these customers and supplies products based on the requirements of original equipment manufacturers (OEMs).
Customers also retain the right to terminate contracts, creating a potential risk to business and revenue if orders are curtailed or discontinued.
Dhoot Transmission also disclosed that it was subjected to a cyberattack during FY25. According to the company, the incident resulted in the leakage of major data, including confidential information related to product designs and pricing.
While the company said the incident prompted management to strengthen its systems and increase investments in cybersecurity, it cautioned that there can be no assurance that such measures would completely prevent future cyber incidents.
The company further identified related-party transactions as a significant risk. These transactions include product sales, rent, commissions, purchases of fixed assets and reimbursement of expenses.
Dhoot Transmission said shareholders had approved a related-party transaction in FY24 involving the sale of current assets worth about Rs 57.42 crore and immovable assets, including land and buildings, worth about Rs 23.75 crore to its subsidiary, Dhoot Auto-Components Pvt Ltd.
From time to time, the company's board has approved higher annual transaction limits with key associate entities to support intra-group supply and logistics requirements.
Moreover, the company cannot assure shareholders that the terms of such related-party transactions will always be favourable to the company.
Additionally, the company's public issue opened for retail investors from August 10 to August 12.
The price band has been fixed at Rs 829-871 per share with a lot size of 17 shares.
— IANS
Reader Comments
The cyberattack data leak is concerning - product designs and pricing leaked! Even after strengthening systems, they admit there's no guarantee. In today's digital age, cybersecurity should be top priority for any company. 🙏
These related-party transactions are always suspicious. Selling assets worth Rs 57 crore to their own subsidiary? Retail investors should be very careful before putting money in such IPOs. Our hard-earned money deserves better transparency.
The price band of Rs 829-871 seems quite high given all these risks. Customer concentration, cyberattacks, related party transactions... why take such risks when there are better opportunities in the market? Let the smart money chase this one. 😐
As a small investor, I appreciate the company being upfront about risks in the RHP. But honestly, 71% dependence on top 5 customers is risky business. My father always said - invest in companies with diverse client base. This one seems fragile.
Interesting to see Indian auto-component companies navigating these challenges. The related party transactions and customer concentration are common in this sector. Would like to see how management addresses these going forward. The 17 share lot size suggests they expect good retail participation.
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