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All its manufacturing facilities are situated at Pithampur, Madhya Pradesh resulting in concentration in a single region. Any interruption for a significant period of time, in these facilities may in turn adversely affect its business, financial condition and results of operations.
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There is an increased awareness towards controlling pollution and many economies including India have joined in the efforts to ban plastic product. In case any plastic packaging products manufactured by it are banned in India or in any of the markets where the company export its products, it could have a material and adverse effect on its business and results of operations.
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The Company`s name may suggest involvement in agro business, leading to misconceptions among investors.
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The Company has negative cash flows from its operating, investing and financing activities in the past years, details of which are given below. Sustained negative cash flow could impact on its growth and business.
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Increased revenue may not necessarily lead to higher margins, as they are affected by raw material costs, finance expenses, and other operational costs.
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Poly Propylene granules, Poly Propylene (LDPE) and High-Density Polyethylene (HDPE) of different grades is its primary raw material constituting a significant percentage of the Company`s total expenses. The business is susceptible to adverse impacts from fluctuations in crude oil prices affecting polymer costs, and risks associated with foreign exchange movements during polymer imports. Additionally, increases in raw material prices, supply shortages, and cost overruns pose potential adverse effects on its operations. Increases in the prices of raw materials, their availability, quality and cost overruns could have adverse effect on the company.
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Heavy reliance on short-term raw material contracts, coupled with exposure to price fluctuations and lack of hedging policies, poses a significant threat. The Company is further subject to uncertainties in the supply of raw materials and there is no assurance that its suppliers will continue to sell raw materials to it as per the company requirements. This could impact the business and financial performance of the Company.
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The Company has lapsed /delayed in making the required filings under Companies Act, 2013 and under the applicable provisions of Companies Act, 1956.
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Majority portion of its domestic sales are derived from the western zone and any adverse developments in this market could adversely affect its business.
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The volatile fluctuations in crude oil prices, particularly during events like COVID-19 and the Russia-Ukraine war, can result in substantial changes in manufacturing costs and gross profit margins within the FIBC market, ultimately impacting the company`s financial position.
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The company requires a number of approvals, NOCs, licences, registrations and permits in the ordinary course of its business. Some of the approvals are required to be transferred in the name of Shree Tirupati Balajee Agro Trading Company Limited from Shree Tirupati Balajee Agro Trading Company Private Limited pursuant to name change of the company and any failures or delay in obtaining the same in a timely manner may adversely affect its operations.
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In addition to the existing indebtedness the Company or its Subsidiaries, may incur further indebtedness during the course of business. The company cannot assure that the Company or its Subsidiaries would be able to service the existing and/ or additional indebtedness.
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While the Company will receive proceeds from the Fresh Issue, it will not receive any proceeds from the Offer for Sale portion.
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The company has not received a few requirements with respect to persons forming part of its Promoter Group.
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Its business operations are working capital oriented. The company inability to obtain and / or maintain sufficient cash flow, credit facilities and other sources of funding in a timely manner to meet its requirements of working capital or payment of its debts, could adversely affect the company`s operations.
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Its business depends on the company manufacturing facilities in Pithampur, Madhya Pradesh. The manufacturing facilities are susceptible to operational risks and failures to timely redress the issues could adversely affect its business or results of operations.
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Under-utilization of its manufacturing capacities and an inability to effectively utilize the company expanded manufacturing capacities could have an adverse effect on its business, future prospects and future financial performance.
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The company has entered into lease agreement for its registered office, Corporate Office and manufacturing facility, if the company could not comply with certain conditions of the lease which may adversely affect its business operations.
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Its industry is labour intensive, and its business operations may be materially adversely affected by strikes, work stoppages or increased wage demands by its employees.
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The company is exposed to foreign currency exchange rate fluctuations, which may harm its results of operations, impact the company`s cash flows and cause its financial results to fluctuate.
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Its Business is highly concentrated on the sale of bulk packaging products, particularly FIBC, exposes the company to vulnerability, as any downturn or disruption in this segment could significantly impact overall financial performance and stability.
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A significant portion of its revenues are dependent on its exports to the company`s international customers. The Company generates major portion of sales from its operations in certain countries especially USA, Germany, Sweden, UK, Spain, France, Australia, Canada, Lithuania and Singapore. Any failures to fulfil the requirements of its international customers may adversely affect the company`s revenues, result of operations and cash flows.
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Its historical revenues have been largely dependent on few Customers and its inability to maintain such business may have an adverse effect on its results of operations.
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The Company faces potential adverse impacts on business, financial condition, and operational results, firstly, due to the failures to uphold product quality standards and keep pace with technological advancements, secondly, defects in products may lead to liabilities, adverse publicity, and substantial costs, thereby diminishing the brand value and potentially reducing sales through negative associations.
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The Company has provided corporate guarantees in relation to facilities availed by the Subsidiaries.
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Some of its Group Companies have incurred losses in the previous Fiscals.
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The shortage or non-availability of power facilities may adversely affect its manufacturing processes and have an adverse impact on its results of operations and financial condition.
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The company has in the past entered into related party transactions and may continue to do so in the future.
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Its Promoter has extended personal guarantee in connection with some of its debt facilities to the company. There can be no assurance that such personal guarantee will be continued to be provided by its Promoters in future or can be called at any time, affecting the financial arrangements.
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The Company primarily manufactures plastic products such as FIBC Jumbo bags, woven sacks, woven fabric, and narrow fabric and its may not be able to produce bags using alternative materials to plastic.
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Its lenders have charge over its movable and immovable properties in respect of finance availed by the company.
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The company does not allocate funds towards research and development and have a dedicated research and development team working on finding alternatives to plastic for its products, which negatively impacts its business operations.
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Any increase in interest rates would have an adverse effect on its results of operations and will expose the Company to interest rate risks.
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Its lenders have imposed certain restrictive conditions on it under its financing arrangements. Under the company financing arrangements, the company is required to obtain the prior, written lender consent for, among other matters, changes in its capital structure, formulate a scheme of amalgamation or reconstruction and entering into any other borrowing arrangement. Further, the company ise required to maintain certain financial ratios.
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Any downgrade of its debt ratings could adversely affect the company`s business.
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Failures to comply with export obligation may expose it to significant import duties and other penalties.
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Any material shortage or supply interruption may lead to increased production costs, impacting the company`s ability to pass on costs to customers and adversely affecting its business.
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The Company may be subject to anti dumping duties, which may adversely impact its financial condition.
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There exists a potential conflict of interest between the Company and its Group Companies/ subsidiaries which may adversely affect its business.
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As the securities of its Subsidiary i.e. Shree Tirupati Balajee FIBC Limited is listed on SME Platform of National Stock Exchange of India Limited (NSE EMERGE), its Subsidiary is subject to certain obligations and reporting requirements under the SEBI Listing Regulations. Any non-compliances/delay in complying with such obligations and reporting requirements may render it liable to prosecution and/or penalties.
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There are certain outstanding legal proceedings involving the Company, Subsidiaries, Group Companies, Directors and Promoters. Any adverse decisions in these proceedings could impact its reputation, business and financial condition.
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The company has certain contingent liabilities that have not been provided for in the Company`s financials which, if materialized, could adversely affect its financial condition.
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Compliance with, and changes in, safety, health and environmental laws and regulations may adversely affect its business, prospects, financial condition and results of operations.
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The introduction of alternative packaging materials caused by changes in technology or consumer preferences may affect demand for its existing products which may adversely affect the company financial results and business prospects.
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Its inability to obtain, renew or maintain the company statutory and regulatory permits and approvals required to operate its business may have a material adverse effect on the company`s business, financial condition and results of operations.
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Operating within fragmented industry segments exposes it to competition from a diverse array of players, both domestic and international, ranging from large corporations to smaller entities. The dynamic nature of its business landscape means that the company contend with a multitude of competitors, each vying for market share, which may significantly impact its business operations and financial conditions.
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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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Its may not be able to derive the desired benefits from the company product development efforts. Commercialization and market development of its product particularly its new variants of FIBC products may take longer time than expected and / or may involve unforeseen business risks.
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Its Sales are on credit basis and hence receivables may be converted into bad debts due to change in economic conditions or its client`s inability to pay.
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Failures or disruption to its Information Technology and/or business resource planning systems may adversely affect its business, financial condition, results of operations, cash flows and prospects.
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The company appoint contract labour for carrying out certain of its operations and its may be held responsible for paying the wages of such workers, if the independent contractors through whom such workers are hired default on their obligations, and such obligations could have an adverse effect on its results of operations, cash flows and financial condition.
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The company depends on certain brand names and its corporate name and logo that its may not be able to protect and/or maintain. If the company is unable to protect its intellectual property and proprietary information, or if the company inadvertently infringe the intellectual property rights of others, its business, financial condition, cash flows and results of operations may be adversely affected.
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Its revenues are highly dependent on clients concentrated in the packaging of products and manufacturing sector. An economic slowdown or factors affecting this segment may have an adverse effect on its business, financial condition and results of operations.
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The Company is dependent on third party transportation providers for the delivery of its goods and any disruption in their operations or a decrease in the quality of their services could affect the Company`s reputation and results of operations.
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Its insurance coverage may not be adequate.
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The Company has unsecured loans which are repayable on demand. Any demand loan from lenders for repayment of such unsecured loans, may adversely affect its cash flows.
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The company has not made any alternate arrangements for meeting its capital requirements for the Objects of the Offer. Further the company has not identified any alternate source of financing the "Objects of the Offer". Any shortfall in raising / meeting the same could adversely affect its growth plans, operations, and financial performance.
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Its ability to pay dividends and issuance of bonus shares in the future will depend upon its future earnings, financial condition, cash flows, working capital requirements, capital expenditure and restrictive covenants in its financing arrangements.
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The Company`s management has been given discretion in deploying the proceeds from the Offer. The absence of a bank or financial institution`s appraisal for the fund requirement and deployment, coupled with the potential for changes in assumptions, market conditions, or the company`s strategy, poses uncertainty regarding the effective utilization of the funds, exposing investors to the risk of idle funds or a variance in the stated objects of the Offer without shareholder authorization.
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Its future funds requirements, in the form of 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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Its success depends largely upon the services of the company Directors, Promoter and other Key Managerial Personnel and its ability to attract and retain them. Demand for Key Managerial Personnel in the industry is intense and its inability to attract and retain Key Managerial Personnel may affect the operations of the Company.
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In addition to normal remuneration or benefits and reimbursement of expenses, some of its Promoter,
Directors and key managerial personnel are interested in the Company to the extent of their shareholding and dividend entitlement in the Company.
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Its primary business activity involves the manufacturing of Flexible Intermediate Bulk Containers (FIBC) bags, a sector characterized by low entry barriers, intense competition, fluctuating raw material prices, laborintensive processes and regulatory risks that could impact its operations.
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Its Promoter will continue jointly to retain majority control over the Company after the Offer, which will allow them to determine the outcome of matters submitted to shareholders for approval. This leads to concentrated promoter ownership and control.
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The company is susceptible to volatility of prices of its products, including due to competitive products.
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Its may not be successful in implementing the company`s business strategies.
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The company relies extensively on its systems, including quality assurance systems, products processing systems and information technology systems, the failures of which could adversely affect its business, prospects, results of operations and financial condition.
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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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The company has issued Equity Shares in the last twelve months, the price of which may be lower than the Offer Price.
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Pursuant to listing of the Equity Shares, its may be subject to pre-emptive surveillance measures like Additional Surveillance Measure ("ASM") and Graded Surveillance Measures ("GSM") by the Stock
Exchanges in order to enhance market integrity and safeguard the interest of investors.
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The Offer Price of its Equity Shares may not be indicative of the market price of its Equity Shares after the Offer and the market price of the company Equity Shares may decline below the Offer Price and you may not be able to sell your Equity Shares at or above the Offer Price.
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The average cost of acquisition of Equity Shares by its Promoter could be lower than the floor price.
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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.
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Rights of shareholders of companies under Indian law may be less extensive than under the laws of other jurisdictions.
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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 submitting a Bid.
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The requirements of being a listed company may strain its resources.
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Its Equity Shares, having not been previously traded publicly, may undergo fluctuations in both price and volume subsequent to the completion of the offer, there is a risk that they may not establish an active or liquid market, contributing to potential volatility in their pricing. Further, any future issuance of Equity Shares, convertible securities, or other equity-linked securities by the company may result in dilution of existing shareholders` holdings and the trading price of Equity Shares may be adversely affected by sales of shares by major shareholders.
