Elin Electronics

Risks

• The company is highly dependent on certain key customers for a substantial portion of its revenues. Loss of relationship with any of these customers may have a material adverse effect on its profitability and results of operations.

• The COVID-19 pandemic, or a similar public health threat, could adversely affect its business, financial condition and results of operations.

• The company do not obtain firm and long-term volume purchase commitments from its customers. If its customers choose not to renew their agreements with it or continue to place orders with it, the company business and results of operations will be adversely affected.

• Its manufacturing facilities are critical to its business. Any disruption in the continuous operations of its manufacturing facilities would have a material adverse effect on its business, results of operations and financial condition.

• Its business and results of operations are dependent on the contracts that the company enter into. Any breach of the conditions under these contracts may adversely affect its business and results of operations.

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

• Its operating results may fluctuatefrom period to period or be subject to seasonality which may affect its business andfinancial condition.

• Its may not be able to optimally utilise its backward integration to enhance and support its business which may affect its operations, reputation and profitability.

• Its inability to manage the expansion of its products range, customer base and manufacturing capacities, and execute its growth strategy in a timely manner or within budget estimates, or its inability to meet the expectations to track the changing preferences of its customers or other stakeholders could have an adverse effect on its business, results of operations and financial condition.

• Its success also depends to an extent on our research and development capabilities and failure to derive the desired benefits from product research and development efforts may hurt its competitiveness and profitability.

• As on date of this Draft Red Herring Prospectus, 642,000 Equity Shares are held in physical form by three Shareholders of the Company. Further, 1,284,000 Equity Shares issued to such Shareholders pursuant to a bonus issue on September 30, 2021 have not been credited to their demat accounts, as the details of their demat accounts are not available.

• Some of its corporate records relating to allotments made by the Company, and transfers and acquisitions of Equity Shares made by its Promoters, are not traceable.

• The company source its raw material from suppliers primarily on purchase order basis. Any increase in the cost of its raw material or components, delay, interruption or reduction in the supply of raw materials to manufacture its products may adversely affect its business, results of operations, cash flows and financial condition.

• The company may be subject to financial and reputational risks due to product quality and liability issues which may have an adverse effect on itd business, financial condition and results of its operations.

• The company as well as its customers operate in a highly competitive industry. Failure to compete effectively may have an adverse impact on its business, financial condition, results of operations and prospects.

• Its may not be able to successfully develop new production processes and adopt new ODM capabilities if the company is unable to identify emerging trends and are not able to predict user preferences.

• Its production capacity may not correspond precisely to its production demand which may affect its results of operations.

• The markets in which its customers compete are characterized by consumers and their rapidly changing preferences and other related factors including lower manufacturing costs and therefore as a result its may be affected by any disruptions in the industry.

• The company operate its manufacturing facilities on land parcels that are held by it on a leasehold as well as a free hold basis.

• The company has incurred significant capital expenditure in the past and will continue to incur significant capital expenditure in the future, and such expenditure may not yield the benefits its anticipate.

• Its inability to manage its diversified operations may have an adverse effect on its business, results of operations and financial condition.

• The success of its business and operations are dependent upon certain quality accreditations which are valid for a limited time period. An inability to renew such accreditations in a timely manner, or at all, may adversely affect its business and prospects. The company is subject to quality requirements and strict technical specifications and audits by its customers.

• The company is subject to certain restrictive covenants in its financing arrangements which may limit its operational and financial flexibility, and its future results of operations and financial condition may be adversely affected if the company fail to comply with these covenants.

• The activities carried out at its manufacturing facilities can cause injury to people or property in certain circumstances.

• If companies with products that its currently manufacture or may manufacture in the future do not continue to outsource manufacturing to electronics manufacturing companies in India, its sales could be adversely affected.

• If the company fail to keep its technical knowledge and process know-how confidential, its may suffer a loss of its competitive advantage.

• Failure to maintain confidential information of its customers could adversely affect its reputation, business, financial condition and results of operations.

• The company had a negative cash flows in the past, details of which are given below. Sustained negative cash flow could impact its growth and business.

• Any defaults or delays in payment by a significant portion of its customers, may have an adverse effect on its cash flows, results of operations and financial condition.

• Its business requires it to obtain and renew certain licenses and permits from government, regulatory authorities and the failure to obtain or renew them in a timely manner may adversely affect its business operations.

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

• Its may not be able to adequately protect or continue to use its intellectual property.

• There are outstanding litigations against its Company, Promoter and Subsidiary. An adverse outcome in any of these proceedings may affect its reputation and standing and impact its future business and could have a material adverse effect on its business, financial condition, results of operations and cash flows.

• Non-compliance with increasingly stringent safety, health, environmental and labour laws and other applicable regulations, may adversely affect its business, results of operations, cash flows and financial condition.

• The company has certain contingent liabilities not provided for, and its cash flows, financial condition and profitability may be adversely affected if any of these liabilities materialise.

• The company has not entered into any definitive arrangements to utilize certain portions of the Net Proceeds of the Offer. Its funding requirements and deployment of the Net Proceeds of the Offer are based on management estimates and have not been independently appraised.

• Its business prospects and continued growth depends on its ability to access financing at competitive rates and competitive terms, which amongst other factors is dependent on its credit rating. Any downgrade of its credit ratings may restrict its access to capital and there by adversely affect its business and results of operations.

• Its Statutory Auditor have included certain emphasis of matters/ other matters paragraphs and other observations in the audit reports, including pursuant to the Companies (Auditor`s Reports) Order, 2016.

• Its may be affected by strikes, work stoppages or increased wage demands by the company employees that could interfere with its operations.

• Its operations depend on the availability of timely and cost-efficient transportation and other logistic facilities and any prolonged disruption may adversely affect its business and results of operations.

• Fraud, theft, employee negligence or similar incidents may adversely affect its results of operations and financial condition.

• The company engage contract labour for carrying out certain functions of its business operations. Any default on payments to them by the agencies could lead to disruption of the manufacturing facilities and its business operations.

• While the Company will receive proceeds from the Fresh Issue, it will not receive any proceeds from the Offer for Sale.

• Its Promoters and Promoter Group will continue to retain significant shareholding in the Company after the Offer, which will allow them to exercise significant influence over the company.

• Its ability to pay dividends in the future will depend on its earnings, financial condition, working capital requirements, capital expenditures and restrictive covenants of its financing arrangements.

• Its Promoters, Managing Director and certain Key Managerial Personnel hold Equity Shares in its Company and are therefore interested in the Company`s performance in addition to their remuneration and reimbursement of expenses.

• Certain sections of this Draft Red Herring Prospectus disclose information from an industry report commissioned by it and any reliance on such information for making an investment decision in the Offer is subject to inherent risks.

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

• The company has in the past entered into related party transactions and will continue to do so in the future and its cannot assure you that the company could not have achieved more favourable terms if such transactions had not been entered into with related parties.