Godavari Biorefineries Ltd

Risks

• The company depends on a few suppliers for supply of a significant portion of raw materials (excluding sugarcane). Any failures to procure such raw materials from these suppliers may have an adverse impact on its manufacturing operations and results of operations.

• The company derives a significant portion of its revenue from a few customers and the loss of one or more such customers, the deterioration of their financial condition or prospects, or a reduction in their demand for its products may adversely affect the company`s business, results of operations, financial condition and cash flows.

• The company derives a significant portion of its revenue from a few products. The company results of operations may be adversely affected if revenue from such products decline.

• SEBI has in the past directed the Company to refund amounts received pursuant to certain allotments to Sameerwadi Sugarcane Farmers` Welfare Trust or to pro rata distribute Equity Shares, to beneficiaries of the Sameerwadi Sugarcane Farmers` Welfare Trust.

• The company is dependent on certain third party manufacturers for the sale of products under its retail brand ivana`. Any disruption in such third party manufacturers` ability to supply these products or their failures to meet the quality standards or delivery timelines could adversely affect its business, financial condition and results of operations.

• The company is dependent on the availability of sugarcane, molasses and feedstock for the manufacturing of its products in the sugar, distillery and cogeneration segments. Any shortage of sugarcane, molasses and feedstock may adversely affect its operations, growth prospects and results of operations.

• There are certain outstanding legal proceedings involving the Company and some of its Promoters and Directors. Failures to defend these proceedings successfully may have an adverse effect on its business prospects, financial condition, results of ongoing operations and reputation.

• The company has availed certain unsecured borrowings which may be recalled by its lenders at any time.

• Its failures in maintaining the company quality accreditations and certifications may negatively impact its brand and reputation.

• Its sugar, distillery and cogeneration segments are dependent on the availability of sugarcane which is subject to seasonal vagaries, adverse weather conditions, crop disease and pest attacks that may adversely affect crop yields impact the availability and quality of sugarcane and feedstock which may have an adverse impact on its business, financial condition and results of operations.

• A significant portion of its revenue from the sale of ethanol is dependent on the sales to oil marketing companies pursuant to the ethanol blended petrol programme instituted by the Government of India. Any adverse change in the policies of the Government of India in this regard, would have an adverse effect on its revenue, results of operations and financial condition.

• Its inability to set and/or control the prices of sugarcane, ethanol and sugar may impact its results of operations and profitability.

• The company has contingent liabilities and capital commitments which have not been provided for in its balance sheet.

• Its efforts to introduce new products are dependent on the success of the company research and development initiatives. Its inability to successfully develop and commercialise new products in a timely manner could adversely impact its business, growth and financial condition.

• Its business in the sugar, distillery and cogeneration segments are subject to seasonal variations that could result in fluctuations in its results of operations.

• Any social unrest, natural disaster or any other natural disaster in and around its Manufacturing Facilities or any disruption in production at, or shutdown of, its Manufacturing Facilities or breakdown of machinery could have a material adverse effect on its business and financial condition.

• Bio chemicals industry requires significant capital and its may need to seek additional financing in the future to support its growth strategies.

• The company has significant power and water requirements and any disruption to power or water sources could increase its production costs and adversely affect its results of operations.

• Certain sections of this Draft Red Herring Prospectus disclose information derived from a third party industry report, exclusively commissioned and paid for by the Company and any reliance on such information for making an investment decision in the Offer is subject to inherent risks.

• If the company is experience insufficient cash flows to fund its working capital requirements or if the company is not able to provide collateral to obtain letters of credit and bank guarantees in sufficient quantities, there may be an adverse effect on its business, cash flows and results of operations.

• The company does not own the `Somaiya Group` trademarks and its ability to use these trademarks, names and logos may be impaired.

• The company has experienced delays in payment of certain statutory dues including provident fund contributions, employee state insurance corporation contributions, tax deducted at source, goods and services tax and gratuity, in the past. Any such delays may have an adverse impact on its financial condition and cash flows.

• Its audited standalone and consolidated financial statements for Fiscal 2024 have not been approved by the Shareholders of the Company.

• Its funding requirements and the proposed deployment of Net Proceeds are not appraised by any independent agency are based on management estimates and may be subject to change based on various factors, some of which beyond its control. Any changes in the estimated funding requirements could affect its business and results of operations.

• Implementation of its growth strategies is subject to various risks and uncertainties and its inability to execute such strategies within budgeted costs and timelines could adversely affect its business, financial condition and results of operations.

• Its estimates of production volumes may not correspond to the actual demand for the company products.

• The company is dependent on third party transportation and logistics providers. Any disruptions in logistics and transportation or significant increase in freight charges could adversely affect its business, financial condition and results of operations.

• Its international operations exposes it to risks of imposition of international trade barriers including in jurisdictions in which the company operates and seek to operate, which could adversely affect its business and results of operations.

• A portion of its revenues are denominated in foreign currencies. As a result, the Company is exposed to foreign currency exchange risks.

• The benefit from certain export incentives from the Government of India and certain other benefits, which if withdrawn or modified may have an adverse impact on its results of operations.

• Its Promoters and certain of the company Directors are interested in entities from whom the company has acquired certain land.

• Its performance depends to a large extent on the efforts and abilities of its Promoters, Directors, Key Managerial Personnel and Senior Management. The loss of or diminution in the services of one or more of its Promoters, Directors or Key Managerial Personnel could have a material adverse effect on its business, financial condition and results of operations.

• Failures to retain its technical personnel and other skilled employees or attract such additional skilled personnel could have a material adverse effect on its business, financial condition and results of operations.

• Restrictions imposed in the secured credit facilities and its other outstanding indebtedness may limit the company ability to operate its business and to finance the company future operations or capital needs.

• The company extend credit to harvesting and transport contractors, farmers and cultivators from whom the company purchase sugarcane. There is no assurance that such persons will be able to repay it, within the agreed timeframe or at all.

• Some of the raw materials that the company use as well as its finished products are corrosive and flammable and requires technical handling, storage and packaging. While the company take adequate care and follow all relevant safety measures, there is a risk of fire and other accidents, at its Manufacturing Facilities, and warehouses. Any accidents may result in loss of property of the Company and/or disruption in the manufacturing processes which may have a material adverse effect on its results of operations, cash flows and financial condition.

• Its insurance coverage may not be sufficient or adequate to protect it against all material hazards, which may adversely affect its business, results of operations, financial condition and cash flows.

• Its business may expose it to potential product liability claims and recalls, which could adversely affect its financial condition and performance.

• The company is required to obtain, renew or maintain certain material statutory and regulatory permits and approvals required to operate its business, and if the company fails to do so in a timely manner or at all, its may be unable to operate its business effectively and the company results of operations may be adversely affected.

• The company is subject to environmental, health and safety regulations, which may increase its compliance costs. Further, the company requires certain approvals and licenses in the ordinary course of business, and the failure to obtain or retain them in a timely manner may materially adversely affect its operations.

• Its facilities are subject to client inspections and quality audits and any failures on its part to meet their expectations or to comply with the quality standards set out in its contractual arrangements, could result in the termination of its contracts and adversely affect the company`s business, results of operations, financial condition and cash flows.

• The Company was incorporated in 1956 and certain documents filed by it with the RoC and certain corporate records and other documents, are not traceable. While the company has conducted a search with the RoC, in respect of the unavailability of such forms and other records, its cannot assure you that such forms or records will be available at all or any time in the future.

• The company operates in a competitive business environment. Competition from existing players and new entrants and consequent pricing pressures with respect to any or all of its products could have a material adverse effect on the company`s business, financial condition and results of operations.

• Any disruption to the steady and regular supply of workforce for its operations, including due to strikes, work stoppages or increased wage demands by its workforce or any other kind of disputes with the company workforce or its inability to control the composition and cost of its workforce could adversely affect its business, cash flows and results of operations.

• If the company is unable to protect its intellectual property and technical know-how against third party infringement or breaches of confidentiality or are found to infringe on the intellectual property rights of others, it could have a material adverse effect on its business, results of operations and financial condition.

• Inability to successfully collaborate with third parties in relation to certain of its research and development activities may result in a material adverse effect on its business, financial condition and results of operations.

• Any failures of or disruption in its information technology systems including a disruption related to cybersecurity or non-compliance with data protection, privacy or information security laws could adversely affect its business and the company`s operations.

• The company relies on its distribution network for sale of various products. A failures to maintain or significant disruptions to its distribution network may have an adverse impact on its business, financial condition and results of operations.

• The company has in the past entered into related party transactions and may continue to do so in the future.

• The company does not own its Registered and Corporate Office and certain portion of the Sameerwadi Manufacturing Facility. Any termination or failures by it to renew the lease agreements in a favourable and timely manner, or at all, could adversely affect its business and results of operations.

• Loss-making Subsidiaries may impact on its profitability on a consolidated basis.

• Its Promoters and Promoter Group will be able to exercise significant influence and control over the Company after the Offer and may have interests that are different from those of its other shareholders.

• Certain Promoters, Directors, Key Managerial Personnel and Senior Management are interested in the Company`s performance in addition to their remuneration and reimbursement of expenses.

• Its Individual Promoter and one of the company Corporate Promoters have interest in entities which are in businesses similar to its and this may result in conflict of interest with the company.

• The Company`s ability to pay dividends in the future will depends on a number of factors, including but not limited to the Company`s earnings, capital requirements, contractual obligations, applicable legal restrictions and overall financial position.

• Any downward revision of its credit ratings could result in an increase in the interest rates the company would pay on any new borrowings and could decrease its ability to borrow as much money as the company requires to finance its business.

• Pursuant to listing of the Equity Shares, its may be subject to pre-emptive surveillance measures like Additional Surveillance Measure ("ASM") and Graded Surveillance Measures ("GSM") by the Stock Exchanges in order to enhance market integrity and safeguard the interest of investors.

• Any variation in the utilisation of the Net Proceeds would be subject to certain compliance requirements, including prior shareholders` approval.

• The proceeds from the Offer for Sale component of the Offer shall be received directly by the Selling Shareholders.

• Certain non-GAAP financial measures and certain other statistical information relating to its operations and financial performance like EBITDA have been included in this Draft Red Herring Prospectus. These non-GAAP financial measures are not measures of operating performance or liquidity defined by Ind AS and may not be comparable.