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The company operates in a heavily regulated sector and its operations are subject to environmental, health and safety regulations that could expose it to liability, increase its cost of operations or otherwise have a material adverse effect on its results of operations and could also result in enhanced compliance obligations.
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Majority of its revenue is dependent on single business segment i.e. manufacturing of fiber and yarns. Any adverse impact on sales of a product would adversely affect its operations and profitability.
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Its business depends on the company manufacturing facility and the loss of or shutdown of operations of the manufacturing facility on any grounds could adversely affect its business or results of operations. Further, the company`s business involves usage of manpower and any unavailability of its employees or any strikes, work stoppages may have an adverse impact on its cash flows and results of operations.
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The Company is dependent on a few suppliers for purchases of product/service. The loss of any of these large suppliers may affect its business operations.
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Too much Geographical concentration of its Business in one location can impact the company`s Business.
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The company faces competition in its business from organized and unorganized players, which may adversely affect its business operation and financial condition.
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The company derives a majority portion of its revenue from operations from the company top 10 customers, contributing 78.18% revenue from operations for the period ended March 31, 2024. Loss of one or more of these customers or a reduction in the amount of business the company obtain from them could have an adverse effect on its business, results of operations, financial condition and cash flows. Further, the company does not have long-term agreements with any its customers.
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There are outstanding proceedings involving the Company, Promoters and Directors. Any adverse decision in such proceedings may have an adverse effect on its business, results of operations and financial condition.
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The company has been in non-compliance of certain provisions of Companies Act, 2013, for which an application for adjudication has been filed with the ROC.
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The Company is yet to place orders for 100% of the plant & machineries for its proposed object, as specified in the Objects of the Issue. Any delay in placing orders, procurement of plant & machineries may delay its implementation schedule and may also lead to increase in price of these plant & machineries, further affecting its revenue and profitability.
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There are certain discrepancies / errors noticed in some of its corporate records relating to forms filed with the Registrar of Companies and other provisions of Companies Act, 2013. Any penalty or action taken by any regulatory authorities in future for non-compliance with provisions of corporate and other law could impact the financial position of the Company to that extent.
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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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The company has significant power requirements for continuous running of its factories. Any disruption to the company operations on account of interruption in power supply or any irregular or significant hike in power tariffs may have an effect on its business, results of operations and financial condition.
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Its business is operating under various laws which require it to obtain approvals from the concerned
statutory/regulatory authorities in the ordinary course of business and its inability to obtain, maintain or renew requisite statutory and regulatory permits and approvals for its business operations could materially and adversely affect its business, prospects, results of operations and financial condition.
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The Company has a negative cash flow in its operating activities for the period ended January 03, 2024, March 31, 2022 and March 31, 2021; Investing activities for the period ended March 31, 2024, March 31, 2023, March 31, 2022 and March 31, 2021 details of which are given below. Sustained negative cash flow could impact its growth and business.
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Its business is highly dependent on technology and any disruption or failure of its technology systems may affect the company`s operations.
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Its failure to perform in accordance with the standards prescribed in the company client contracts could result in loss of business or payment of liquidated damages.
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Its Promoter Group / Group Company is engaged in the line of business similar to the Company. There are no non-compete agreements between the Company and such Promoter Group Entity. The company cannot assure that its Promoter will not favour the interests of such entity over its interest or that the said entity will not expand which may increase its competition and may adversely affect business operations and financial condition of the Company.
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Brand recognition is important to the success of its business, and the company inability to build and maintain its brand name will harm its business, financial condition and results of operation.
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The company is in business related to chemicals which faces excessive government regulations.
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Orders placed by customers may be delayed, modified, cancelled or not fully paid for by its customers, which may have an adverse effect on the company`s business, financial condition and results of operations.
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Any fluctuations in prices of raw materials or shortage in supply of raw material for manufacturing its products, could adversely impact its business.
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The company is heavily dependent on machinery for its operations. Any break-down of the company machinery will have a significant impact on its business, financial results and growth prospects.
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The company is dependent on third party transportation providers for the delivery of raw materials and products. Accordingly, continuing increases in transportation costs or unavailability of transportation services for its products, 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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Its may not be able to realise the amounts, partly or at all, reflected in the company Order Book which may materially and adversely affect its business, prospects, reputation, profitability, financial condition and results of operation.
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Introduction of alternative technology in manufacturing by its competitors may reduce demand for the company existing products and may adversely affect its profitability and business prospects.
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The company has not entered into long-term contracts with its major customers and typically operate on the basis of purchase orders, which could adversely impact its revenues and profitability.
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Its success depends in large part upon the company qualified personnel, including its senior management, directors and key personnel and its ability to attract and retain them when necessary.
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The company has applied for registration of its name and logo but does not own the trademark legally as on date. Its may be unable to adequately protect the company intellectual property. Furthermore, its may be subject to claims alleging breach of third-party intellectual property rights.
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The Company shall complete the land to equity registry upon completion of IPO through the funds raised from it.
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The company has been recently converted into public limited company and any non-compliance with the provisions of Companies Act, 2013 may attract penalties against the Company which could impact its financial and operational performance and reputation.
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Its business strategies and expansion plans may be subject to various unfamiliar risks and may not be successful.
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Misconduct or errors by manpower engaged by it could expose the company to business risks or losses that could adversely affect its business prospects, results of operations and financial condition.
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General economic and market conditions in India and globally could have a material adverse effect on its business, financial condition, cash flows, results of operations and prospects.
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Major fraud lapses of internal control, system failures, theft, employee negligence or similar incidents could adversely impact the company`s business.
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Its Promoters, Directors and Key Management Personnel have interest in the Company, other than
reimbursement of expenses incurred or remuneration.
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The company has entered into related party transactions in the past and may continue to do so in the future.
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The company has had certain inaccuracy in relation to regulatory filings and the company has made non-compliances of certain provision under applicable law.
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The nature of its business exposes it to liability claims and contract disputes and the company indemnities may not adequately protect it. Any liability in excess of its reserves or indemnities could result in additional costs, which would reduce its profits.
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The average cost of acquisition of Equity Shares by the Promoters may be less than the Issue Price.
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Its insurance coverage may not adequately protect the company against losses, and successful claims against it that exceed its insurance coverage could harm its results of operations and diminish the company financial position.
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There are no alternate arrangements for meeting its requirements for the Objects of the Issue. Any shortfall in raising / meeting the same could adversely affect its growth plans, operations and financial performance.
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Delays or defaults in payments from its clients could result into a constraint on the company cash flows. The efficiency and growth of its business depends on timely payments received from the company clients.
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Its actual results could differ from the estimates and projections used to prepare its financial statements.
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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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Its future funds requirements, in the form of fresh issue of capital or securities and/or loans taken by it, may be prejudicial to the interest of the shareholders depending upon the terms on which they are eventually raised.
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Certain documents in relation to work experience for one of its directors prior to joining the company Company are not available and therefore due to insufficient documentary evidence those experiences are not included in his brief profile in the Draft Red Herring Prospectus.
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Some of the KMPs are associated with the Company for less than one year.
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Industry information included in this Red Herring Prospectus has been derived from industry reports
commissioned by it for such purpose. There can be no assurance that such third-party statistical, financial and other industry information is either complete or accurate.
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There is no guarantee that its Equity Shares will be listed on the Stock Exchanges in a timely manner or at all.
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The deployment of funds raised through this Issue shall not be subject to any Monitoring Agency and shall be purely dependent on the discretion of the management of the Company.
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The requirements of being a public listed company may strain its resources and impose additional requirements.
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There are restrictions on daily/weekly/monthly movements in the price of the Equity Shares, which may adversely affect a shareholders` ability to sell, or the price at which it can sell, Equity Shares at a point in time.
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After this Issue, the price of the Equity Shares may be highly volatile, or an active trading market for the Equity Shares may not develop.
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You will not be able to sell immediately on Stock Exchange any of the Equity Shares you purchase in the Issue until the Issue receives appropriate trading permissions.
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The Issue price of its Equity Shares may not be indicative of the market price of its Equity shares after the issue.
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Sale of Equity Shares by its Promoters or other significant shareholder(s) may adversely affect the Trading price of the Equity Shares.
