Saj Hotels Ltd

Risks

• The Company has incurred losses in the one out of the three previous financial years.

• The Company has had negative cash flow in the past and may continue to have negative cash flows in the future.

• The Company requires significant amount of working capital for a continued growth. Its inability to meet the company working capital requirements may have an adverse effect on its results of operations, financial condition and cash flows.

• The Company, promoters of the Company, directors of the Company and its group companies are parties to certain litigation and claims. These legal proceedings are pending at different levels of adjudication before the respective courts and regulatory authorities. Any adverse decision may make it or its promoters/directors or group companies liable to liabilities/penalties and may adversely affect its reputation, business, and financial status.

• A parcel of land on which one of its resort property is constructed (Saj in the Forest, Pench) is taken on leasehold basis under a Joint Venture arrangement. If the company is unable to comply with the terms of such arrangement, its business, results of operations, financial condition and cash flows may be adversely affected.

• One of its properties is situated in proximity to the Pench National Park, may be subject to regulatory as well as government restrictions which might adversely affect its business and financial position.

• The Company has entered into long-term lease deeds with various third parties to receive lease rentals/ license fee for the resort/ restaurant properties. If these agreements are terminated or not renewed, its business, results of operations, financial condition and cash flows may be adversely affected.

• A portion of its resort bookings originate from online travel agents and intermediaries. In the event such companies continue to gain market share compared to its direct booking channels or the company competitors are able to negotiate more favourable terms with such online travel agents and intermediaries, its business and results of operations may be adversely affected.

• Certain premises are not owned by it and are held by the company on a leasehold/ rental basis. In the event its lose or are unable to renew such leasehold rights, the company business, results of operations, financial condition and cash flows may be adversely affected.

• The company has not yet placed orders in relation to the funding Capital expenditure through civil work required for expanding of two of its properties which is proposed to be financed from the net Issue proceeds of the IPO. In the event of any delay in placing the orders, or in the event the vendors are not able to execute the contract in a timely manner, or at all, may result in time and cost over-runs and its business, prospects and results of operations may be adversely affected. Its proposed expansion plans are subject to the risk of unanticipated delays in implementation due to factors including delays in construction and cost overruns.

• Its inability to protect or use the company intellectual property rights may adversely affect its business.

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

• There are certain discrepancies in some of the corporate records relating to forms filed with the Registar of Companies (RoC).

• The company has been unable to locate certain of its historical corporate records.

• Its business is subject to seasonal and cyclical variations that could result in fluctuations in its results of operations and cash flows.

• Strategic investments, partnerships, or alliances may be difficult to integrate, and may adversely affect its financial condition and results of operation.

• The company has contingent liabilities and capital commitments. These contingent liabilities have been disclosed in its restated financial information. The company financial condition could be adversely affected if any of these contingent liabilities or capital commitments materialize.

• The company has applied for certain trademark which its using for the company`s business and are awaiting approval for the registration.

• The land parcels on which the registered office of the Company is located, has been leased out to Mahindra Holidays & Resorts India Limited. In the event there are any statutory notices and/or inspections/investigations being initiated by the relevant department at such property, its may not be able to respond to the said notice in a timely manner or at all. This may lead to non-compliance and consequents fines or penalties which may lead to adverse effect on results of operations, financial condition and cash flows.

• The land parcels on which the Corporate Office of the Company is located, is being shared between the Company and its Associate Company. The said premise is not owned by it and are held by it on a leasehold/rental basis. In the event there is a conflict between the company and its associate, it may lead to disruption in its business, results of operations, financial condition and cash flows may be adversely affected.

• The company is exposed to risks associated with the development of its resort properties. Any delay in the construction of new properties or expansion of its existing properties, or if the costs of development and the possible time or costs overruns related to proposed development or expansion are higher than expected, it may have an adverse effect on its business, results of operations, financial condition, and cash flows.

• The Objects of the Issue for which funds are being raised, are based on its management estimates and any bank or financial institution or any independent agency has not appraised the same. The deployment of funds raised through this Issue shall not be subject to any Monitoring Agency and shall be entirely at its discretion of the Management of the Company, based on the parameters as mentioned in the chapter titled "Objects of the Issue".

• The objects of the Issue include funding working capital requirements of the Company, which is based on certain assumptions and estimates.

• Any variation in the utilization of the Net Proceeds as disclosed in this Prospectus shall be subject to certain compliance requirements, including prior Shareholders` approval.

• The company has not received consent from one of its identified group entity to identify itself as a group entity of the Company.

• The Company may be subject to the risk of inaccuracies, errors or contradictions in property records and may not be able to identify or correct defects or irregularities in title to the properties which the company own, lease or intend to acquire in connection with the development or acquisition of new properties.

• The company has borrowing repayable on demand.

• Its inability to meet the company obligations, including financial and other covenants under its debt financing arrangements could adversely affect its business, financial condition, cash flows and results of operations.

• The operations of the Company are mainly carried in states of Maharashtra, Madhya Pradesh and Goa, and any adverse developments affecting these resorts or the regions in which they operate, could have an adverse effect on its business, results of operation, cash flows and financial condition. Further, its may not be able to expand and/or grow the company`s business to new geographies due to various reasons.

• The company is subject to a variety of risks relating to owning real estate assets including changes in local markets or neighbourhoods, lack of liquidity of real estate assets, uncertainty of market conditions, legal proceedings or regulatory actions by statutory authorities, which may have an adverse impact on its business and operations.

• The Company`s insurance coverage may not be adequate to protect it against all material hazards which may result in monetary loss, and affect its business, results of operations and financial condition.

• Certain of its Promoters, Directors and Group companies are engaged in business activities which are similar in nature to those undertaken by the Company, or have interests in other companies, which are in businesses similar to its, which may result in conflicts of interest. Further, the company does not enjoy contractual protection by way of a non-compete or other agreement or arrangement with its promoters/directors/group companies.

• Its business is capital intensive and may requires additional financing to meet those requirements, which could have an adverse effect on its results of operations, cash flows and financial conditions.

• Its business is manpower intensive. It may be adversely affected by work stoppages, increased wage demands by its employees, or an increase in minimum wages, and if the company is unable to engage new employees at commercially attractive terms, it could adversely affect its business, financial condition, cash flows and results of operations.

• Employee misconduct, errors or fraud could expose it to business risks or losses that could adversely affect its business prospects, results of operations and financial condition.

• Any failures on its part to manage operational risks inherent in the company`s business could adversely affect its business, results of operations and financial condition.

• Failures in internal control systems could cause operational errors which may have an adverse effect on its reputation, business, results of operations, financial condition and cash flows.

• Several expenses incurred in its operations are relatively fixed in nature, and the company inability to effectively manage such expenses may have an adverse effect on its business, results of operations, cash flows and financial condition.

• The company relies on independent contractors for construction and renovation of its properties and any failures on their part to perform their obligations could adversely affect its business, results of operations, and cash flows.

• The company depends on third parties for certain operations of its business. Any failures by such third parties to adequately perform their services could have an adverse impact on its business, results of operations, cash flows and financial condition.

• The company is dependent on a constant flow of key supplies and any disruption to supply could affect its business. Any such increase in their costs will adversely affect its profitability and financial performance.

• Its promoters have stood as a guarantor for loan facilities obtained by the third party.

• The company success depends heavily upon its Promoter, Directors, and Key Managerial Personnel for their continuing services, strategic guidance, and financial support. Its success depends heavily upon the continuing services of Promoter & Directors who are the natural person in control of the Company. The company depends on the skills and experience of its Promoters, Directors and Key Managerial Personnel for its business and future growth.

• Majority of its Directors does not have prior experience of directorship in any of companies listed on recognized stock exchanges, therefore, they will be able to provide only a limited guidance in relation to the affairs of the Company post listing.

• Upon completion of the Issue, its Promoter / Promoter Group may continue to retain significant control, which will allow them to influence the outcome of matters submitted to the shareholders for approval.

• In addition to normal remuneration, other benefits and reimbursement of expenses, its Directors (including the company Promoter) and Key Managerial Personnel are interested in the Company to the extent of their shareholding and dividend entitlement in the Company.

• The Company in the past has entered into related party transactions and may continue to do so in the future, which may potentially involve conflicts of interest with the equity shareholders.

• Any failures to maintain the quality and hygiene standards of the food products that the company offer will adversely affect its business. The company is further exposed to risks of slow-moving perishable stock, and any failures in maintaining quality standards may have an adverse effect on its business and operations.

• The Company`s failures to maintain the quality standards of the services or keep pace with the technological developments could adversely impact its business, results of operations and financial condition.

• Failures or disruption of its Information Technology and/or business resource planning systems may adversely impair its ability to provide services, which could damage the company reputation and hence, impact its business, financial condition, results of operations, cash flows and prospects.

• Negative customer experiences or negative publicity surrounding its resort properties could have an impact on ability to source customers. Thus, its may also incur higher expenses towards business promotion in the future, to source more customers which may have an adverse impact on its business and financial condition.

• If the company is unable to manage its growth effectively or if its estimates or assumptions used in developing the company strategic plan are inaccurate or the company is unable to execute its strategic plan effectively, the company`s business and prospects may be materially and adversely affected.

• Managing employee benefit pressures in India may prevent it from sustaining its competitive advantage which could adversely affect the company`s business prospects and future financial performance.

• Its ability to pay dividends in the future will depends upon the company`s future earnings, financial condition, cash flows, working capital requirements, capital expenditure and restrictive covenants in its financing arrangements.

• The average cost of acquisition of Equity Shares by its Promoter may be lower than the Issue Price.

• The average P/E of the listed peer set is 27.25 while the company`s P/E will be 22.41, i.e. at premium of 0.82 times at the Issue price.

• The Issue Price of its Equity Shares may not be indicative of the market price of the company Equity Shares after the Issue and the market price of its Equity Shares may decline below the Issue Price and investors may not be able to sell the Equity Shares at or above the Issue Price.

• Certain data mentioned in this Prospectus has not been independently verified.

• The requirements of being a publicly listed company may strain its resources.