Pranik Logistics Ltd

Risks

• The Company does not own the premises through which its conduct the company`s business operations.

• Its business heavily relies on the expertise and guidance of the company`s Directors and Key Managerial Personnel to ensure sustained success. The loss of any of them could have a significant impact on the company.

• There is outstanding litigation pending against its Promoters which, if determined adversely, could affect the company`s business, results of operations and financial condition.

• The company does not own any technology for operating its business and currently the company relies on the technology provided by its client. Further any disruption or failures of technological systems may affect its operations.

• The company depends on its top customers for a significant portion of its revenues. The loss of a major customer or significant reduction in demand from any of the company major customers may adversely affect its business, financial condition, results of operations and prospects.

• The Company has negative cash flows from its operating, investing and its financing activities in the current and past years, details of which are given below. Sustained negative cash flow could impact on its growth and business.

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

• The company depends on third parties to acquires vehicles utilized in its transportation operations. Further, market instability, including changes in fuel costs may adversely impact the company`s operations and financial performance.

• The restated financial statements have been provided by peer reviewed chartered accountants who are not statutory auditors of the Company.

• Its top five states contribute its major revenue for the period ended June 30, 2024, and year ended 31st March 2024, 2023, 2022. Any loss of business from one or more of these states may adversely affect its revenues and profitability.

• Its present promoters of the Company are first generation entrepreneurs.

• A major portion of its expenses is incurred in freight & Forwarding charges that are included in the head "other expenses". The company Inability to effectively reduce and control these expenses may adversely impact its profitability in the future.

• Improper handling of goods at its facilities could damage the company reputation and have an adverse effect on its business, results of operations and financial condition.

• Its may not be able to acquires warehouses and other logistics facilities in desirable locations that are suitable for its expansion at commercially reasonable prices and the company expansion plans may be delayed or affected by various factors.

• The company does not have any single software/technology to manage its day-to-day business activities such as warehouse, inventory, transportation and operations. Failures to manage its resources could have an adverse effect on the company profitability, cash flow and liquidity.

• Accidents could result in the slowdown or stoppage of its operations and could also cause damage to life and property.

• Its business is dependent on the road network in India and the company ability to utilize its vehicles in an uninterrupted manner. Any disruptions or delays in this regard could adversely affect it and lead to a loss of reputation and/ or profitability.

• Its business is affected by prevailing economic conditions in India and indirectly affected by changes in consumer spending capacity in the sectors the company serve within India.

• Changing regulations in India could lead to new compliance requirements that are uncertain.

• The company is unable to locate the form SH-7 filed during the financial year ended March 31, 2017, for subdivision of share capital.

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

• Its inability to deliver products in a timely manner may affect the company reputation and business prospects.

• Its transportation operations depend on the company ability to generate sufficient transportation volumes to achieve acceptable profit margins or avoid losses.

• The company experience the effects of seasonality, which may result in its operating results fluctuating significantly.

• The Company requires a significant amount of working capital for continuing growth. Its inability to meet its working capital requirements may adversely affect the company results of operations.

• Its employees are key to the company`s business. Thus, Employees Benefit expenses constitute a major portion of its expenses. Such a significant increase in this cost could lead to lower profitability.

• If the company fails to maintain an effective system of internal controls, the company may not be able to successfully manage or accurately report its financial risk.

• The average cost of acquisition of Equity Shares by its Promoters is lower than the issue price.

• The Company may not have complied with certain statutory provisions of the Companies Act, 2013. Such non-compliances / lapses may attract penalties and prosecution against the Company and its directors which could impact on the financial position of the Company to that extent.

• One of its Promoter Mr. Pranav Sonthalia was a director in the company Shriram Translogistic Pvt. Ltd. And liable under Section 164(2) of the Companies Act, 2013 for non-filling of financial statements or annual returns for a continuous period of three years leading to non-compliance and disqualification from holding the position of director in the past.

• Business operation and stability depends on many factors, its may not be able to effectively implement the company`s business and growth strategy.

• The Company has issued Equity Shares during the last twelve months at a price which may be lower than the Offer Price.

• The intellectual Property Rights used by the company are registered in the name of the company, But any infringement of third-party intellectual property rights or failures to protect its intellectual property rights may adversely affect its business.

• Its marketing and advertising activities may not be successful in increasing the popularity of the Company among customers. If its marketing or advertising initiatives are not effective, this may affect the popularity of the Company.

• Its funding requirements and proposed deployment of the Net Proceeds have not been appraised by a bank or a financial institution and if there are any delays or cost overruns, its may have to incur additional cost to fund the objects of the Issue because of which its business, financial condition and results of operations may be adversely affected.

• The company is required to maintain certain approvals and licenses required in the ordinary course of business and the failures to obtain or renew them in a timely manner or at all may adversely affect its operations.

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

• The company has not made any alternate arrangements in order to meet its capital requirements for the Objects of the Issue. Additionally, 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, operations and financial performance.

• If the company is unable to continue to innovate or if its fail to adapt to changes in the company industry, the company`s business, financial condition, cash flows and results of operations would be adversely affected.

• The Company may incur penalties or liabilities for non-compliance with certain provisions of the GST Act, Income Tax and other applicable laws in previous years.

• Its Promoters and promoter group have significant controlling interest over the Company and have the ability to direct its business and affairs; their interests may conflict with your interests as a shareholder. Further they have an interest in the Company other than reimbursement of expenses incurred or normal remuneration or benefits.

• The company has not identified any alternate source of funding and hence any failures or delay on its part to mobilize the required resources or any shortfall in the issue proceeds may delay the implementation schedule.

• Certain Agreements, deeds or licenses may be in the previous name of the company.

• Its insurance policy may not be adequate to cover all the losses which a business could incur. Any inability to maintain adequate cover from material adverse incidents may adversely affect its operation and profitability.

• Significant differences exist between Ind AS and other accounting principles, such as Indian GAAP, IFRS and U.S. GAAP, which may be material to investors` assessments of its financial condition, result of operations and cash flows.

• Fluctuation of Interest rate may adversely affect the Company`s business.

• Its ability to pay dividends in the future may be affected by any material adverse effect on its future earnings, financial condition or cash flows.

• Industry information included in this Red Herring Prospectus has been derived from various industry reports from various websites including research done by the company. The reliability on the forecasts of the reports could be incorrect and would significantly impact its operations.

• The Company`s future funding requirements, in the form of further issue of capital or other securities and/or loans that might be availed by it, may turn out to be prejudicial to the interest of the shareholders depending upon the terms and conditions on which they are raised.

• There are certain restrictions on daily movements in the price of Equity Shares, which may adversely affect a shareholder`s ability to sell, or the price at which it can sell, Equity Shares at a particular point in time.

• 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.

• Equity Shares of the Company have never been publicly traded, and after the Issue, the Equity Shares may be subject to price and volume fluctuations, and an active trading market for the Equity Shares may or may not develop. Further, the Issue Price may not be indicative of the market price of the Equity Shares after the Issue.

• Investors may be subject to Indian taxes arising out of income arising on the sale of the Equity Shares.

• QIBs and Non-Institutional Investors are not permitted to withdraw or lower their Bids (in terms of quantity of Equity Shares or the Bid Amount) at any stage after the submission of their Bid, and Retail Individual Investors are not permitted to withdraw their Bids after closure of the Bid/ Issue Closing Date.

• Sale of Equity Shares by its Promoters or other significant shareholder(s) or any future issue of Equity Shares may dilute your shareholding and adversely affect the trading price of the Equity Shares.

• Investors will not be able to sell immediately on an Indian stock exchange any of the Equity Shares they purchase in the Issue.

• Holders of Equity Shares may be restricted in their ability to exercise pre-emptive rights under Indian law and thereby may suffer future dilution of their ownership position.

• A third-party could be prevented from acquiring control of it post this Issue, because of anti-takeover provisions under Indian law.