Durlax Top

Risks

• The company is dependent on a few customers for a major part of its revenues. Further the company does not enter into long-term arrangements with its customers and any failure to continue its existing arrangements could adversely affect the company`s business and results of operations.

• The company does not have long term agreements with suppliers for its raw materials and an increase in the cost of or a shortfall in the availability of such raw materials could have an adverse effect on its business, results of operations and financial condition.

• Under-utilization of its production capacities could have an adverse effect on its business, future prospects and future financial performance.

• The majority of its operative income is derived from the domestic market and any adverse developments in this market could adversely affect its business.

• The company does not enter into long-term arrangements with its distributors and any failure to continue its existing arrangements could negatively affect its business and results of operations.

• The Company, its Promoters and its Directors are party to certain legal proceedings. Any adverse outcome in such proceedings may have an adverse impact on its reputation, business, financial condition, results of operations and cash flows.

• Its contingent liabilities as stated in its Restated Financial Statements could affect the company financial condition.

• The company may not be able to identify or effectively respond to evolving preferences, expectations or trends in a timely manner and a failure to derive the desired benefits from its product development efforts may impact its competitiveness and profitability.

• Its Manufacturing Facility is located in vapi, Gujarat and therefore, any localized social unrest, natural disaster or breakdown of services or any other natural disaster in Gujarat or any disruption in production at, or shutdown of, its manufacturing unit could have material adverse effect on its business and financial condition.

• The company has not received consents and information pertaining to certain Promoter Group members which are required to be disclose in relation to the promoter Group in the Draft Red Herring Prospectus. Therefore, the disclosure made in the DRHP are limited to the information available in the public domain.

• The company`s ability to grow the company business depends on its relationships with its distributors and the community of appliers and any adverse changes in these relationships, or its inability to enter into new relationships and thereby expand its distribution network, could negatively affect its business and results of operations.

• Its business is working capital intensive. If the company experience insufficient cash flows from its operations or are unable to borrow to meet its working capital requirements, it may materially and adversely affect its business and results of operations.

• Information relating to the installed production capacity and capacity utilization of its production Units included in this Draft Red Herring Prospectus are based on various assumptions and estimates and future production and capacity may vary.

• The company has incurred borrowings from commercial banks and an inability to comply with repayment and other covenants in its financing agreements could adversely affect its business and financial condition.

• The company is dependent on third-party transportation providers for the supply of raw materials and delivery of its finished products.

• The company requires high working capital for its smooth day to day operations of business and any discontinuance or its inability to acquire adequate working capital timely and on favourable terms may have an adverse effect on its operations, profitability and growth prospects.

• The Company has reported certain negative cash flows from its operating activities on the basis of Restated Financial Statements, details of which are given below. Sustained negative cash flow could impact its growth and business in the future.

• The company is subject to government regulations and if its fails to obtain, maintain or renew our statutory and regulatory licenses, permits and approvals required to operate its business, results of operations and cash flows may be adversely affected.

• There have been some instances of delays in filing of statutory and regulatory dues in the past with the various government authorities.

• Its inability to collect receivables from its customers or default in payment by them could result in the reduction of the company profits and affect its cash flows.

• A significant portion of its domestic sales are derived from the western zone and any adverse developments in this market could adversely affect its business.

• There have been instances in the past where the company has not made certain regulatory filings with the RoC and there were certain instances of discrepancies in relation to certain statutory filings and corporate records of the Company.

• The company has entered into and may continue to enter into related party transactions and there can be no assurance that such transactions have been on favourable terms.

• Its funds requirements are based on internal management estimates, wherever possible, and have not been appraised by any bank or financial institution. Any increase in the actual deployment of funds may cause an additional burden on its finance plans. The company has not entered into definitive agreements to utilize its Offer proceeds.

• The Company has presently applied for renewal of trademark registration for those trademarks whose registration has expired due to efflux of time and under which the company currently operate and if third parties infringe the trademark, logo and intellectual property that the company use, its business and reputation would be adversely affected.

• There may be potential conflict of interests related to business of the company between the Company and other entities promoted by its directors or Promoter Group Members/ Entities.

• Its success is dependent on the company management team, key managerial personnel and skilled manpower. Its inability to attract and retain key personnel or the loss of services of its key personnel may have an adverse effect on the company business prospects.

• Inability to meet the quality standard norms prescribed by the central and state governments could result in the sales of its products being banned or suspended or becoming subject to significant compliance costs, which could have a material adverse effect on its business growth and prospects, results of operations, financial condition, and cash flows.

• Stringent environmental, health and safety laws and regulations or stringent enforcement of existing environmental, health and safety laws and regulations may result in increased liabilities and increased capital expenditures.

• Its manufacturing activities are dependent on the delivery of adequate and uninterrupted supply of electrical power at a reasonable cost. Any shortage or any prolonged interruption or increase in the cost of power could adversely affect its business, result of operations, financial conditions and cash flows.

• The Company does not have any documentary evidence for the education qualifications of one of its Directors i.e. Mr. Lalit Suthar.

• Industry information included in this Red Herring Prospectus has been derived from publicly available industry reports and/or websites. There can be no assurance that such third-party statistical financial and other industry information is either complete or accurate.

• Its Promoters, Directors and Key Managerial Personnel may have interest in the Company, other than remunerations and/or reimbursement of expenses incurred.

• Its Promoter and members of the Promoter Group will continue jointly to retain majority control over the Company after the offer, which will allow them to determine the outcome of matters submitted to shareholders for approval.

• Its may be subject to unionization, work stoppages or increased labour costs, which could adversely affect its business and results of operations.

• Its inability to accurately forecast demand or price for the company products and manage its inventory may adversely affect the company`s business, results of operations, financial condition and cash flows.

• Its may be subject to significant risks and hazards when operating and maintaining its Units, for which the company insurance coverage might not be adequate.

• Restrictions on import of raw materials may adversely impact its business and results of operations.

• The industry segment in which the company operate being fragmented, its faces competition from other players, which may affect the company`s business operations and financial conditions.

• Changes in technology may affect its business by making the company Units or equipment less competitive.

• Its Promoters has provided personal guarantee for loans availed by it. In the event of default of the debt obligations, the personal guarantees may be invoked thereby adversely affecting its Promoter`s ability to manage the affairs of the Company and the Company`s profitability and consequently this may impact its business, prospects, financial condition and results of operations.

• The Company`s management will have flexibility in utilizing the Net Proceeds from the Offer. The deployment of the Net Proceeds from the Offer is being monitored by the Audit Committee and not an independent monitoring agency.

• Any variation in the utilization of the Net Proceeds as disclosed in this Red Herring Prospectus shall be subject to certain compliance requirements, including prior approval of the shareholders of the Company.

• The company has not paid any dividends in the past Financial Years. Its ability to pay dividends in the future will depends upon future earnings, financial condition, cash flows, working capital requirements and capital expenditures.

• Its Equity Shares have never been publicly traded and may experience price and volume fluctuations following the completion of the Offer, an active trading market for the Equity Shares may not develop, the price of its Equity Shares may be volatile and you may be unable to resell your Equity Shares at or above the Offer Price or at all.

• Rights of shareholders under Indian laws may be more limited than under the laws of other jurisdictions.

• A third party could be prevented from acquiring control of our Company because of anti-takeover provisions under Indian law.

• There are restrictions on daily weekly monthly movement in the price of the equity shares, which may adversely affect the shareholder`s ability to sell for the price at which it can sell, equity shares at a particular point in time.

• The requirements of being a listed company may strain its resources and distract management.

• A third party could be prevented from acquiring control of the Company because of anti-takeover provisions under Indian law.

• There are restrictions on daily weekly monthly movement in the price of the equity shares, which may adversely affect the shareholder`s ability to sell for the price at which it can sell, equity shares at a particular point in time.

• The requirements of being a listed company may strain its resources and distract management.