Technichem Organics Ltd

Multi-product capability.

Established infrastructure and integrated production with cost efficiencies.

Core Focus on consistent R&D, value engineering and to leverage complex chemistry and technology.

Focus on Quality, Environment, Health and Safety.

Experienced Promoters and management team.

Supply Chain Efficiency.

Long standing relationships with diversified customers across geographies.

The company is highly dependent on certain key customers for a substantial portion of its revenues and the company does not have long term contracts with all of these customers. Loss of relationship with any of these customers may have a material adverse effect on its profitability and results of operations.

The company depends on a certain supplier for its raw materials required for its operations and the company does not have long-term agreements with suppliers for its raw materials and an increase in the cost of, or a short fall in the availability or quality of such raw materials could have an adverse effect on its business, financial condition and results of operations.

The company has certain outstanding litigation against it, an adverse outcome of which may adversely affect the company business, reputation and results of operations.

The company does not possess patents for its processes, which may result in inadequate protection of its intellectual property rights. This could potentially have a substantial adverse effect on its business and operational outcomes.

Its business is dependent and will continue to depends on the company manufacturing facilities, and its subject to certain risks in the company manufacturing process. Any slowdown or shutdown in its manufacturing operations or strikes, work stoppages or increased wage demands by its workers that could interfere with the company operations could have an adverse effect on its business, financial condition and results of operations.

The Company had negative cash flows in the past years, details of which are given below. Sustained negative cash flow could impact its growth and business.

Its operations are dependent on the company R&D capabilities and an inability to continue to design complex chemistries may adversely affect its business.

The company generate its major portion of sales from its operations in certain geographical regions especially, Gujarat, Maharashtra, Telangana and Haryana. Any adverse developments affecting the company operations in these regions could have an adverse impact on its revenue and results of operations.

The Restated Financial Statements have been provided by Peer Reviewed Chartered Accountants who is not Statutory Auditor of the Company.

Its Registered Office is not owned by it taken on rental basis. If the company is unable to renew existing rental agreements or relocate its operations on commercially reasonable terms, there may be a material adverse effect on its business, financial condition, results of operations and cash flows could be adversely affected.

Information relating to historical installed capacity of its manufacturing facility included in this Red Herring Prospectus is based on various assumptions and estimates and its future production and capacity utilization may vary. Under-utilization of its manufacturing capacity and an inability to effectively utilize the company expanded manufacturing facilities may have an adverse effect on its business, future prospects and future financial performance.

A significant proportion of its revenues are derived from Pharma chemicals, High Performance Pigment and Speciality chemicals, Specialty Chemicals, Coating chemicals, and any reduction in the demand for such products could have an adverse effect on its business, results of operations and financial condition.

Its reliance on certain industries for a significant portion of the company sales could have an adverse effect on its business.

The company derives a huge portion of its revenues from exports and are subject to risk of international trade.

Its existing manufacturing facility are concentrated in a single region i.e., Khambhat in the state of Gujarat and therefore, any localized social unrest, natural disaster or breakdown of services or any other natural disaster in and around Gujarat and the inability to operate and grow its business in this particular region may have an adverse effect on the company business, financial condition, results of operations, cash flows and future business prospects.

Majority of its Revenue from operation is derived from the company manufacturing of its own speciality chemicals and intermediates. Any disruption would have a material adverse effect on its business, results of operations and financial position of the company.

The company has significant working capital requirements. If its experience insufficient cash flows from its operations or are unable to borrow to meet the company working capital requirements, it may materially and adversely affect its business, cash flows and results of operations.

The Company logo "Technichem" is not registered with Registrar of Trademark; any infringement of our brand name or failures to get it registered may adversely affect its business. Further, any kind of negative publicity or misuse of its brand name could hamper the company brand building efforts and its future growth strategy could be adversely affected.

The Company has availed unsecured loans that may be recalled by the lenders on demand.

The company has certain contingent liabilities, which, if they materialize, may adversely affect its results of operations, financial condition and cash flows.

There are certain discrepancies/errors/delay filings 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 or any other law could impact the financial position of the Company to that extent.

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

Its success largely depends upon the knowledge and experience of the company Promoters, Directors, Key Managerial Personnel and Senior Management as well as its ability to attract and retain personnel with technical expertise. Any loss of its Promoter, Directors, Key Managerial Personnel, Senior Management or its ability to attract and retain them and other personnel with technical expertise could adversely affect its business, financial condition and results of operations.

If the company fails to maintain an effective system of internal controls, its may not be able to successfully manage, or accurately report, its financial risks. Despite the company internal control systems, its may be exposed to operational risks, including fraud, petty theft and embezzlement, which may adversely affect the company reputation, business, financial condition, results of operations and cash flows.

Its investments in new products may not be successful and may be less profitable or may be loss-making or newly developed products may replace its existing products and our research and development efforts may not yield new products, processes and solutions consistently to enable it to remain competitive.

Failures or disruption of its information technology systems may adversely affect the company business, financial condition, results of operations, cash flows and prospects.

The specialty chemicals industry is capital intensive, and its may need to seek additional financing in the future to support its growth strategies. Any failures to raise additional financing could have an adverse effect on its business, results of operations, financial condition and cash flows.

The company is subject to strict quality requirements, regular inspections and audits, and the success and wide acceptability of its products is largely dependent upon its quality controls and standards. Any failures to comply with quality standards may adversely affect its business prospects and financial performance, including cancellation of existing and future orders.

The company is subject to certain risks consequent to its operations involving the manufacture, usage and storage of various hazardous chemicals.

The company has not yet placed orders in relation to the funding Capital Expenditure towards setting up of a new plant named as "Plant -4" which is proposed to be financed from the Issue proceeds of the IPO. In the event of any delay in placing the orders, may result in time and cost over-runs and our business, prospects and results of operations may be adversely affected.

Within the parameters as mentioned in the chapter titled "Objects of this Issue" beginning on page 86 of this Red Herring Prospectus, the Company`s management will have flexibility in applying the proceeds of the Issue. The fund requirement and deployment mentioned in the Objects of this Issue have not been appraised by any bank or financial institution.

The company has not made any alternate arrangements for meeting its capital requirements for the Objects of the Issue. Further 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, business operations and financial condition.

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.

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

The company face competition from both domestic as well as multinational corporations and its inability to compete effectively may have a material adverse impact on the company business, results of operations and financial condition.

Its investments in new products may not be successful and may be less profitable or may be loss-making.

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

The company is dependent on third-party transportation providers for the supply of raw materials and finished products. Accordingly, continuing increases in transportation costs or unavailability of transportation services for them, as well the extent and reliability of Indian infrastructure may have an adverse effect on its business, financial condition, results of operations and prospects.

Its operations may be adversely affected in case of industrial accidents at any of its production facilities.

The Company is prone to public liability claims as its deal in hazardous products / chemical, liabilities incurred if any, as a result of an untoward event have the potential to materially impact the financial position of the Company.

Its commercial success depends on the success of the company customer`s products with end consumers. Any decline in the demand for its customer`s products would adversely impact the demand for its products.

As the company continue to grow, its may not be able to effectively manage the company growth and the increased complexity of its business, which could negatively impact the company brand and financial performance.

The company has significant power and fuel requirements and any disruption to power sources could increase its production costs and adversely affect the company results of operations and cash flows.

The company operates in chemical industry which is highly regulated sector and if the company fails to comply with the regulations prescribed by the authorities of the jurisdictions in which its operate, the company business, results of operations, cash flows and financial condition could be adversely affected.

The company is subject to increasingly stringent environmental, health and safety laws, regulations and standards. Noncompliance with and adverse changes in health, safety, labour, and environmental laws and other similar regulations to its manufacturing operations may adversely affect the company business, results of operations and financial condition.

There are certain discrepancies and non-compliances noticed in some of its financial reporting and/or records relating to filing of returns and deposit of statutory dues with the taxation and other statutory authorities.

Certain corporate records and regulatory filings of the Company are not traceable.

If any of the products of its customers cause, or are perceived to cause, severe side effects, its reputation, revenues and profitability could be adversely affected.

Its financing agreements contain covenants that limit the company flexibility in operating its business. If the company is not in compliance with certain of these covenants and are unable to obtain waivers from the respective lenders, its lenders may accelerate the repayment schedules, and enforce their respective security interests, leading to a material adverse effect on its business and financial condition.

Its Promoters have provided personal 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 and thereby, impact its business and operations.

Its may not be fully insured for all losses the company may incur.

In case of its inability to obtain, renew or maintain the statutory and regulatory licenses, permits and approvals required to operate its business it may have a material adverse effect on its business.

The company might infringe upon the intellectual property rights of others and may be susceptible to claims from third parties, affecting its operations and financial condition.

The company is exposed to counterparty credit risk and any delay in receiving payments or non-receipt of payments may adversely impact its results of operations.

Any increase in interest rates would have an adverse effect on its results of operations and will expose the Company to interest rate risks.

In addition to normal remuneration, other benefits and reimbursement of expenses some of its directors (including its Promoters) are interested in the Company to the extent of their shareholding and dividend entitlement in the Company.

Industry information included in this Red Herring Prospectus has been derived from industry reports. There can be no assurance that such third-party statistical, financial and other industry information is either complete or accurate.

The recent outbreak of the novel coronavirus could have a significant effect on our results of operations, and could negatively impact its business, revenues, financial condition and results of operations.

Its Promoters and members of the Promoter Group will continue jointly to retain majority control over the Company after the Issue, which will allow them to determine the outcome of matters submitted to shareholders for approval.

The average cost of acquisition of Equity Shares by its Promoters could be lower than the Issue Price to be decided by the Company in consultation with the Book Running Lead Manager in accordance with the SEBI ICDR Regulations.

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

The determination of the Price Band is based on various factors and assumptions and the Issue Price of the Equity Shares may not be indicative of the market price of the Equity Shares upon listing on the Stock Exchange.

Significant differences exist between Indian GAAP and other accounting principles, such as US GAAP and IFRS, which may be material to investors assessments of the Company`s financial condition. Its failures to successfully adopt IFRS may have an adverse effect on the price of its Equity Shares. The proposed adoption of IFRS could result in its financial condition and results of operations appearing materially different than under Indian GAAP.