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The company has certain outstanding litigation against it, an adverse outcome of which may adversely affect its business, reputation and results of operations.
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Any disruptions to the supply, or increases in the pricing, of the raw materials, may adversely affect the supply and pricing of its products and, in turn, adversely affect the company`s Business, Cash Flows, Financial Condition and Results of Operations.
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Any slowdown or shutdown of its Manufacturing operations at the company`s Manufacturing Facilities could have an adverse effect on its Business, Financial Condition and Results of Operations.
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Its existing manufacturing facility is concentrated in a single region i.e., Mumbai, Maharashtra and any inability to operate and grow its business in this particular region may have an adverse effect on its business, financial condition, results of operations, cash flows and future business prospects.
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The company generates its major portion of sales from its operations in certain geographical regions especially, Gujarat, Dadra & Nagar Haveli and Maharashtra. Any adverse developments affecting its operations in these regions could have an adverse impact on its revenue and results of operations.
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The Company is reliant on the demand from the pharmaceutical industry for a significant portion of its revenue. Any downturn in the pharmaceutical industry or an inability to increase or effectively manage the company sales could have an adverse impact on the Company`s business and results of operations.
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The company does not have long-term agreements with suppliers for its raw materials and any shortfall in the availability or quality of such raw materials could have an adverse effect on its business, financial condition and results of operations.
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The company depends on the success of its relationships with the company`s customers. Its derives a significant part of its revenue from the company`s top 10 customers and the company does not have long term contracts with these customers. If such customers choose not to source their requirements from it, its business, financial condition and results of operations may be adversely affected.
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The industry in which the company operates is labour intensive and its manufacturing operations may be materially adversely affected by strikes, work stoppages or increased wage demands by its employees or those of the company suppliers.
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The restated financial statements have been provided by peer reviewed chartered accountants who is not statutory auditor of the Company.
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Its expansion into new product categories and business verticals and a substantial increase in the number of products offered may expose it to new challenges and more risks.
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The company requires working capital for its 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.
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The company is highly dependent on its Promoters, Key Managerial Personnel and its Senior Management Personnel for the company`s business. The loss of or its inability to attract or retain such persons could have a material adverse effect on its business performance.
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Pressure from Customers with regards to pricing may affect its Gross Margins, Profitability and ability to Increase the company Prices.
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Its ability to anticipate changes in Customer Preferences, and Industry trends to meet customers` demands and any variations in the Government Regulations/policies or Technology Upgradation is a significant factor to remain competitive, any failure to identify and understand the trends may materially adversely affect its Business.
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The Company had negative cash flows in the past years, details of which are given below. Sustained negative cash flow could impact its growth and business.
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Its failure to maintain optimum inventory levels could adversely affect the company`s business, financial condition, results of operation and cash flow.
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Its Registered Office is not owned by it. In the event the company lose such rights, its business, financial condition and results of operations and cash flows could be adversely affected.
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The company is subject to various laws and extensive government regulations and if its fail to obtain, maintain or renew the company statutory and regulatory licenses, permits and approvals required in the ordinary course of its business, including environmental, health and safety laws and other regulations, its business financial condition, results of operations and cash flows may be adversely affected.
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The company has been recently converted as a Company and any non-compliance with the provisions of Companies Act, 2013 and any provisions, rules and regulation under any other Act may attract penalties against the Company which could impact its financial and operational performance and reputation.
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The company intends to utilise a portion of the Net Proceeds for funding its capital expenditure requirements. The company is yet to place orders for 41.78% of the Plant and machineries at its existing manufacturing facility for the company proposed object, as specified in the Objects of the Issue chapter. Any delay in placing orders or procurement of such plant and machineries may delay the schedule of implementation and may also lead to increase in price of these plant & machineries, further affecting its revenue and profitability.
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The Company has entered into related party transactions in the past and may continue to enter into related party transactions in the future, which may potentially involve conflicts of interest with the equity shareholders.
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Improper storage, processing and handling of its raw materials, work products and finished products could damage the company`s inventories and, as a result, have an adverse effect on its business, results of operations and cash flows.
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Inventories and trade receivables form a major part of its current assets. Failure to manage the company`s inventory and trade receivables could have an adverse effect on its sales, profitability, cash flow and liquidity.
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Failured or disruption of its information technology systems may adversely affect its business, financial condition, results of operations, cash flows and prospects.
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Its Promoters have provided personal guarantees for credit facilities obtained by the Company, and any failure or default by the Company to repay such loans in accordance with the terms and conditions of the financing documents could trigger repayment obligations on them, which may impact their ability to effectively service their obligations as its Promoters/Directors and thereby, impact the company`s business and operations.
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The company faces significant competitive pressures from other players in its business as the industry segments in which the company operates being fragmented, its inability to compete effectively would be detrimental to its business and prospects for future growth.
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The Company has availed unsecured loans from non-banking financial companies("NBFC") and Banks, and our directors, which may be recalled on demand.
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The Company logo " GSM" is not registered with Registrar of Trademark; any infringement of its brand name or failure to get it registered may adversely affect its business. Further, any kind of negative publicity or misuse of its brand name could hamper the company brand building efforts and its future growth strategy could be adversely affected.
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The company is dependent on third party transportation providers for the delivery of its raw material and products. Accordingly, continuing increases in transportation costs or unavailability of transportation services for them, as well the extent and reliability of Indian infrastructure may have an adverse effect on its business, financial condition, results of operations and prospects.
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The company has significant power and fuel requirements and any disruption to power sources could increase its production costs and adversely affect the company results of operations and cash flows.
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The company regularly work with activities in its operation which can be dangerous and could cause injuries to people or property.
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The company has not made any alternate arrangements for meeting its capital requirements for the Objects of the Issue. Further the company has not identified any alternate source of financing the Objects of the Issue. Any shortfall in raising / meeting the same could adversely affect its growth plans, business operations and financial condition.
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If the company fail to keep its technical knowledge and process know-how confidential, the company may suffer a loss of its competitive advantage.
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Within the parameters as mentioned in the chapter titled "Objects of the Issue" beginning on page 69 of this Draft Prospectus, the Company`s management will have flexibility in applying the proceeds of this Issue which shall be as per the applicable laws. The fund requirement and deployment mentioned in the Objects of this Issue have not been appraised by any bank or financial institution.
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Its insurance coverage may not adequately protect the company against all material hazards.
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Information relating to historical installed capacity of its manufacturing facility included in this Draft Prospectus is based on various assumptions and estimates and its future production and capacity utilization may vary. Under-utilization of its manufacturing capacity and an inability to effectively utilize the company manufacturing facilities may have an adverse effect on its business and future financial performance.
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The company has a substantial amount of outstanding indebtedness, which requires significant cash flows to service and subject to certain covenants that limit its flexibility in operating its business. If the company is not in compliance with certain of these covenants and are unable to obtain waivers from the respective lenders, its lenders may accelerate the repayment schedules, and enforce their respective security interests, leading to a material adverse effect on its business and financial condition.
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If the company fails to maintain an effective system of internal controls, its may not be able to successfully manage, or accurately report, the company financial risks. Despite its internal control systems, the company may be exposed to operational risks, including fraud, petty theft and embezzlement, which may adversely affect its reputation, business, financial condition, results of operations and cash flows.
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The company could be harmed by employee misconduct or errors that are difficult to detect and any such incidences could adversely affect its financial condition, results of operations and reputation.
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Its Promoters and Promoter Group will continue to retain a majority shareholding in the Company after the Issue, which will allow them to exercise significant influence over it.
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The company has a very limited operating history of its manufacturing operations, which may make it difficult for investors to evaluate the company historical performance or future prospects.
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The present promoter of the Company are first generation entrepreneurs.
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In addition to normal remuneration, other benefits and reimbursement of expenses some of its directors (including its Promoters) are interested in the Company to the extent of their shareholding and dividend entitlement in the Company.
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Industry information included in this Draft Prospectus has been derived from industry reports. There can be no assurance that such third-party statistical, financial and other industry information is either complete or accurate.
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Its ability to pay dividends in the future will depends upon the company future earnings, financial condition, cash flows, working capital requirements, capital expenditure and restrictive covenants in its financing arrangements.
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The determination of the Issue Price is based on various factors and assumptions and the Issue Price of the Equity Shares may not be indicative of the market price of the Equity Shares upon listing on the Stock Exchange.
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The average cost of acquisition of Equity Shares by its Promoters could be lower than the Issue price determined in consultation with Lead Manager in accordance with the SEBI ICDR Regulations.
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Significant differences exist between Indian GAAP and other accounting principles, such as US GAAP and IFRS, which may be material to investors assessments of the Company`s financial condition. Its failure to successfully adopt IFRS may have an adverse effect on the price of its Equity Shares. The proposed adoption of IFRS could result in its financial condition and results of operations appearing materially different than under Indian GAAP.
