Aeroflex

Global flexible flow solutions provider operating in huge addressable market, catering to diverse industry segments

Export oriented business model;

Primary manufacturer of flexible flow solutions (Make in India with no listed peers with advance manufacturing facility and R&D infrastructure);

High entry and exit barriers;

Experienced and dedicated senior team across key functions.

Experienced and dedicated senior team across key functions with strategic corporate promoter.

The company exports its products to various countries and the export operations of the Company contribute more than 80% of Revenue from Operations. On account of the aforesaid, its may be subject to significant import duties or restrictions of the relevant jurisdictions. Further, adverse fluctuation in foreign exchange rate, unavailability of any fiscal benefits or our inability to comply with related requirements may have an adverse effect on our business and results of operations.

The company in the usual course of business do not enter into long-term contracts with suppliers for its raw materials and an increase in the cost of, or a shortfall in the availability or quality of such raw materials, in a timely manner or at all, could have an adverse effect on its business and results of operations.

The company business is dependent and will continue to depend on its single manufacturing facility, and its subject to certain risks in that behalf. Any slowdown or shutdown in the company manufacturing operations could have an adverse effect on its business, financial condition and results of operations.

The Company requires significant amounts of working capital and significant portion of the company working capital is consumed in trade receivables and inventories. Its inability to meet the company working capital requirements including failure to realise receivables and inventories may have an adverse effect on its results of operations and overall business.

The company in the usual course of business do not have long term contracts with most of its customers and rely on purchase orders for delivery of its product and they may cancel or modify their orders, change production quantities, delay production or change their sourcing strategy. 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.

If the company fail to effectively implement its production schedules, the company business and results of operations may be materially and adversely affected.

The geographical concentration of its exports to certain countries and the inability to operate and grow its business in such countries may have a material adverse effect on its business, financial condition, results of operations, cash flows and future business prospects.

The markets in which its customers operate are characterized by sectors specific to the industries which its cater to and their changing preferences and other related factors including lower manufacturing costs and therefore as a result we may be affected by any disruptions in the industry. Its profitability, business and commercial success is significantly dependent on its ability to successfully anticipate the industry and customer requirements and utilize its resources to enhance and develop the company products that efficiently satisfy and meet its client`s specific requirements in a timely manner. Any failure on its part to do so, may have an impact on the reputation of its products, which could have an adverse effect on its revenue, reputation, financial conditions, results of operations and cash flows.

If the products its manufacture are found to be deficient, its may lose the company customers and may be subject to product liability claims or claims alleging deficiency which may also cause damage to its reputation and/or adversely affect its results of operations and financial condition.

The company depend on third parties for the supply of raw material and delivery of products. A disruption in the supply of raw materials or failure of its suppliers to meet their obligations could impact its production and increase the company costs.

The company inability to successfully further diversify its products may adversely affect its growth and negatively impact its profitability.

The company has had experienced negative cash flows from operations in the recent past, and its may have negative cash flows in the future.

A shortage or non-availability of essential utilities such as electricity, water and gas could affect its manufacturing operations and have an adverse effect on its business, results of operations and financial condition.

The industry segments in which its operate being fragmented and diversified, its face competition from other large and small global and domestic players, which may affect its business operations and financial conditions.

The Company has unsecured loan that may be recalled by the lender at any time.

The company Promoter is involved in a tax proceedings which is currently pending. Any adverse decision in the proceeding may render its Promoter liable to penalty and/or monetary compensation and may adversely affect its business and results of operations.

The company funding requirements and proposed deployment of the Net Proceeds are based on management estimates and its have not entered into any definitive arrangements to utilize certain portions of the Net Proceeds of the Issue and have not been independently appraised by a bank or a financial institution Any variation in the utilisation of the Net Proceeds would be subject to certain compliance requirements, including prior shareholders` approval.

The company is dependent on its management team, number of Key Managerial Personnel and persons with technical expertise and the loss of or its inability to attract or retain such persons could adversely affect its business, results of operations and financial condition.

The company financing agreements impose certain restrictions on its operations, and its failure to comply with operational and financial covenants may adversely affect its reputation, business and financial condition.

This Draft Red Herring Prospectus contains information from an industry report which its have paid for and commissioned from D&B, appointed by the Company pursuant to an engagement letter dated March 22, 2023. There can be no assurance that such third-party statistical, financial and other industry information is either complete or accurate.

If the company is unable to sustain or manage its growth, its business, results of operations, financial condition and cash flows may be materially adversely affected.

The company require a number of approvals, NOCs, licences, registrations and permits in the ordinary course of its business.

The Company has in the past entered into related party transactions and may continue to do so in the future. There can be no assurance that such transactions, individually or in the aggregate, will not have an adverse effect on the Company`s financial condition and results of operations.

The company is unable to trace some of its historical records. Consequently, its may be subject to regulatory actions and penalties for any such non-compliance and its business, financial condition and reputation may be adversely affected.

The company do not have documentary evidence for the educational qualification and experience proof of one of its Directors, included in "The company Management" in this Draft Red Herring Prospectus.

The company Promoter and other persons have extended guarantees for loan facilities availed by the Company. Revocation of any or all of these guarantees may adversely affect its business operations and financial condition.

The Offer Price, market capitalization to total income multiple, market capitalization to earnings multiple, price to earnings ratio and enterprise value to EBITDA ratio based on the Offer Price of the Company, may not be indicative of the market price of the Equity Shares on listing.

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

Any inability to protect its intellectual property or any claims that the company infringe on the intellectual property rights of others could have a material adverse effect on it.

The Company requires to renew number of approvals, licenses, registrations and permits to develop and operate its business and operations and any failure or delay to obtain or renew them in a timely manner may adversely affect its operations and results.

An inability to maintain adequate insurance coverage in connection with its business and Manufacturing Unit may adversely affect its operations and profitability.

The outbreak and after-effects of COVID-19, or outbreak of any other severe communicable disease could have a potential impact on its business, financial condition, cash flows and results of operations.

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

The industry in which its operate is labour intensive and its manufacturing operations may be materially adversely affected by strikes, work stoppages or increased wage demands by its employees or those of its suppliers.

The company ability to pay dividends 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.

Employee fraud or misconduct could harm it by impairing its ability to attract and retain clients and subject it to significant legal liability and reputational harm.

The Company will not receive any proceeds from the offer for sale by the Promoter Selling Shareholder and Promoter Group Selling Shareholder.

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.

The Company`s future funding requirements, in the form of further issue of capital or other securities and/or loans taken 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.