Shiv Texchem

Risks

• The company derives a significant part of its revenue from a group of select products. If the company fails to offer any of these products, its business, financial condition and results of operations may be adversely affected.

• The company is dependent on limited number of suppliers for supply of its traded products and the company has not made any long term supply arrangement with its suppliers. In an eventuality where the company suppliers are unable to deliver it the required materials in a time-bound manner it have a material adverse effect on its business operations and profitability.

• The company does not have long term agreements with its customers and relies on purchase orders for delivery of its products. Loss of one or more of its customers or a reduction in their demand for the company products could adversely affect its business, results of operations and financial condition.

• Its operations are heavily dependent on industries where products are supplied, which includes paints and coatings, printing inks, agro-chemical products, specialty polymers, pharmaceuticals products, specialty industrial chemicals, etc.

• Its business is working capital intensive involving high level of inventories and trade receivables. The company requires substantial financing for its business operations. The company indebtedness and the conditions and restrictions imposed on by its financing arrangements could adversely affect the company ability to conduct its business.

• There are pending litigations against the Company, certain of its Promoters, and its Directors. Any adverse decision in such proceedings may render it/them liable to liabilities/penalties and may adversely affect its business, results of operations and financial condition.

• Its inability to accurately forecast demand or price for the company products and to manage its inventory may adversely affect the company business, results of operations and financial condition.

• The company has certain contingent liabilities which may adversely affect its financial condition.

• The company has experienced negative cash flows from operation activities in the prior periods.

• The company has partially hedged or in some cases not hedged its foreign currency exposure, which may cause a negative impact to its business and financial conditions in case of fluctuations of foreign currency.

• The company is dependent on third party transportation providers for the supply and distribution of its products. Any failures or delay in such transportation and logistics arrangements could materially affect its business, the company operations and financial condition.

• Any positive development in import substitution policies may lead to decrease in its import capabilities, decreasing the company`s business opportunity and impacting its cash flow.

• Quality of product is very important in its industry and the success of the Company is dependent on the quality of its product and any failures to source products with desired quality may have an adverse effect on its reputation and business.

• Its insurance coverage may not be adequate to protect the company against certain operating and financial loss and this may have a material adverse effect on its business and cash flow.

• 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.

• The Company`s logo is not registered as on date of Red Herring Prospectus. 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.

• Its registered office and storage facilities premises are being utilised by it on leasehold basis and the company is subject to terms and conditions imposed on it by the lessor. In any event the company is unable to renew such leasehold rights, its business, financial condition and results of operations may be adversely affected.

• Its success depends in large part upon the company management team and skilled personnel and its ability to attract and retain such people. The loss of key personnel may have an adverse effect on its business, results of operations, financial condition, cash flow and growth prospects.

• Its business operates on a high volume, low margin model, which may impact the company profit margins and affect its cashflows.

• The company is required to obtain, renew or maintain statutory and regulatory permits, licenses and approvals to operate its business operations, and any delay or inability in obtaining, renewing or maintaining such permits, licenses and approvals could result in an adverse effect on its results of operations. The company is also required to be in compliance with various laws that are applicable to it, and any noncompliance may have a material adverse effect on its business, financial condition or results of operation.

• Any penalty or demand raised by statutory authorities in future will affect its financial position of the Company.

• The company is dependent on credit facilities from banks, to fund its business operations. Any event where the company is unable to obtain, renew or enhance credit limits from the banks, or repay such facilities obtained, would affect its financial position and credit standing.

• The company has presented certain supplemental information of its performance and liquidity which is not prepared under or required under Indian GAAP.

• Certain sections of this Red Herring Prospectus disclose information from the industry report which has been commissioned and paid for by its exclusively in connection with the Issue and any reliance on such information for making an investment decision in the Issue is subject to inherent risk.

• Its funding requirements and the proposed deployment of Net Proceeds are not appraised by any independent agency and 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.

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

• Some of its loan agreements contain restrictive covenants which may adversely affect the company`s business, results of operations and financial condition.

• As of June 30, 2024, its total borrowings amounted to Rs.27,085.63 lakhs which also included unsecured loans aggregating to Rs.3,829.89 lakhs from related parties, which may be recalled at any time and the Company may not have adequate funds to make timely payments or at all.

• Its Promoters have provided personal and/or corporate guarantees for loan facilities obtained by the Company, and any failures 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 its business and operations.

• Its ability to pay dividends in the future will depends on a number of factors, including the company profit after tax for the respective fiscal year, its capital requirements, the company financial condition, its cash flows and applicable taxes, including payment of dividend distribution tax.