CFF Fluid Control Ltd

Risks

• The Company, Group Companies, Promoters and Directors are parties to certain legal proceedings. Any adverse decision in such proceedings may have a material adverse effect on its business, results of operations and financial condition.

• The company require certain approvals and licenses in the ordinary course of business and are required to comply with certain rules and regulations to operate its business, and the failure to obtain, retain and renew such approvals and licenses or comply with such rules and regulations, and the failure to obtain or retain them in a timely manner or at all may adversely affect its operations.

• The company derives majority of its revenue from contracts with Indian Navy and associated Defence sectors. Loss of order book, contracts, and change in their requirement or fall in budget will have material adverse effect on its business, financial condition and result of operation.

• The company has not entered into any agreement with the suppliers of equipments as specified in the objects of the Issue. Further the amount allocated for purchases of equipments are based on management`s estimates.

• The company business of manufacturing and supply of components, equipments and services required by Indian Navy is significantly dependent on the technology, process and product development of such components.

• The Company has availed certain unsecured loans that may be recalled by the lenders at any time.

• The Company may have potential Conflicts of interest with its Promoter Group Entity as they are engaged in similar line of business.

• In addition to normal remuneration, other benefits and reimbursement of expenses its directors (including the company Promoters) and Key Management Personnel are interested in the Company to the extent of their shareholding and dividend entitlement in the Company. Further the company promoter has interest in its property and in past the company has entered in related party transaction with them.

• The IPO Proceeds will be used to repay a loan from the company promoter group company.

• The company Promoters and Key Managerial Person play key role in its functioning and the company heavily rely on their knowledge and experience in operating its business and therefore, it is critical for the company business that they remain associated with it.

• Most agreements that the company has entered into in connection with its business contain a penalty or liquidated damage clause for delay in the completion of a project that takes effect should the completion of a project be delayed.

• The company Balance sheet has a significant portion of Property Plant and Equipment. Any destruction, breakdown, theft its major plants or equipment or failures to repair or maintain the same may adversely affect its business, cash flows, financial condition and results of operations.

• The deployment of the Net Proceeds from the Fresh Issue are based on management estimates and have not been independently appraised by any bank or financial institution and is not subject to any monitoring by any independent agency and the Company`s management will have flexibility in utilizing the Net Proceeds from the Fresh Issue.

• The company has reported negative net cash flows in the past and may do so in the future.

• The company is dependent on a few suppliers for supply of raw materials and any major disruption to the timely and adequate supplies of its raw materials could adversely affect the company business, results of operations and financial condition.

• The company failure to keep its technical knowledge confidential could erode its competitive advantage. the company possess certain technical knowledge about its products.

• The Company is dependent on the continuing operation of its manufacturing facilities.

• The company do not own its Corporate Office which is being used by it currently.

• The company is dependent on third party transportation providers for the delivery of its products to the company customers.

• Failure in supply of electricity or power can lead to significant disruption in manufacturing process and can affect its operations.

• The company face foreign exchange risks, primarily in its import and procurement operations that could adversely affect the company results of operations.

• The company has applied for few trademarks which are pending registration. A delay in, or failure to obtain, registration may result in its inability to adequately defend intellectual property rights.

• The company cost of production is exposed to fluctuations in the prices of raw materials required for the manufacture as well as its availability.

• If the company is unable to manage its growth effectively or raise additional capital, the company business, future financial performance and results of operations could be materially and adversely affected.

• The outbreak of COVID-19 or outbreak of any other severe communicable disease could have a potential impact on its business, financial condition and results of operations.

• The statutory/ regulatory approvals for the proposed project / expansion plans will need to be applied and any delay or non-receipt of such approvals may delay the proposed project/ expansion plans.

• The Company may not be able to bring growth or successfully implement its business plan which could have an effect on the company business, results of operations and financial condition.

• Employee misconduct, errors or fraud could expose it to business risks or losses that could adversely affect the company business prospects, results of operations and financial condition.

• The company has incurred indebtedness which exposes it to various risks which may have an adverse effect on the company business and results of operations. Its may also be unable to obtain future financing to fund the company operations, expected capital expenditure and working capital requirements on favorable terms, or at all.

• Restrictions on the import of its materials and other regulations could adversely affect its business, results of operations and financial condition.

• Industrial accidents at the company manufacturing facility may adversely affect its operation.

• Any delay or defaults in receipt of payments or dues from its customers could result in a reduction of the company profits.

• The requirements of being a public listed company may strain the company resources and impose additional requirements.

• The company insurance coverage may not be sufficient or may not adequately protect it against any or all hazards, which may adversely affect the company business, results of operations and financial condition.

• The Company might be unable to meet certain delivery obligations including timelines of delivery, due to which, it could become liable to claims by customers, suffer adverse publicity and incur substantial costs, which in turn could adversely affect its results of operations.

• The company has not made any alternate arrangements for repaying the unsecured loans for the Objects of the Issue. Further its have not identified any alternate source of financing the �bjects of the Issue`.

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

• The company Promoters and Promoter Group Entity has extended personal guarantees in connection with certain of its debt facilities.

• Non-compliance with and changes in, safety, health and environmental laws and other applicable regulations, might adversely affect the Company`s results of operations and its financial condition.