Aeron Composites

Risks

• Its business is capital intensive in nature. If the company is unable to raise additional funds whenever required, or on terms acceptable to it, the company may be required to scale down or abandon its expansion & growth plans and/or reduce capital expenditures and the size of its operations, any of which could materially and adversely affect its business, financial position and results of operations.

• The company derives a significant portion of its revenues and a portion of the company expenditures from various countries outside India. Any adverse developments in these markets along with fluctuations in Exchange rates, may negatively impanct its results of operations.

• Increase in the prices of raw materials and labour could have an adverse effect on its business, results of operations and financial condition.

• The company is primarily dependent upon few key suppliers within limited geographical location for procurement of raw materials. Any disruption in the supply of raw materials from such selective suppliers and geographical location could have a material adverse effect on its business operations and financial conditions.

• The company plan relating to establishment of its new manufacturing unit in Mehsana district of Gujarat, is subject to the risk of unanticipated delays in implementation and the company may requires to temporarily shut down its production operations while shifting to the new manufacturing unit which could have an impact on the production operations of the Company.

• The Company, Directors, Promoters and Group Companies are parties to certain legal proceedings. Any adverse decision in such proceedings may have a material adverse effect on its business, results of operations and financial condition.

• If there are delays in setting up the Proposed manufacturing unit or if the costs of setting up and the possible time or cost overruns related to the Proposed manufacturing unit or the purchase of plant and machinery for the Proposed manufacturing unit are higher than expected, it could have a material adverse effect on its financial condition, results of operations and growth prospects.

• The Company is yet to place orders for the machinery for the expansion of the proposed manufacturing unit. Any delay in placing orders or procurement of such machinery may delay the schedule of implementation and possibly increase the cost of commencing operations.

• Under-utilization of its manufacturing capacities and an inability to effectively utilize the company existing manufacturing capacities could have an adverse effect on its business, future prospects and future financial performance.

• The Company is in the process of making application for change in name in some of the permits, licenses and approvals, which are under Company`s former name. Failures to update the same in a timely manner may adversely affect its operations and financial conditions.

• The company relies on its in-house designing and engineering team for production of FRP Products. Loss of employee(s) may have an adverse effect on the production of desired quality products which may adversely affect results of its business operations and financial condition.

• A notable portion of its revenue is from limited number of customers, the loss of such customers, the deterioration of their financial position or prospects, or a reduction in their demand for its products could affect the company business, financial position and future prospects of the Company.

• Its historical performance is not indicative of the company`s future growth or financial results and its may not be able to sustain its historical growth rates.

• Excessive dependence on HDFC Bank Limited and Yes Bank Limited in respect of loan facilities obtained by the Company.

• Changes in technology render its current fleet of equipment obsolete and require the company to make substantial capital investments.

• Its Business is dependent on the company`s manufacturing unit. Any disruption, breakdown or failures of machinery, disruption to power sources or any temporary shutdown of its manufacturing unit, may have a material adverse effect on its business, results of operations, financial condition and cash flows.

• Its operating results could be materially harmed if the company is unable to accurately forecast customer demand for its products or manage the company inventory.

• The company depends on its customers and any decrease in revenues or sales from any one of its key customers may adversely affect the company`s business and results of operations.

• The Promoters (including Promoter Group) and Directors hold almost 100% of the Equity Shares of the Company and are therefore interested in the Company`s performance in addition to their remuneration and reimbursement of expenses.

• The company does not own the registered office & manufacturing unit and marketing office from which the company carry out its business activities. In case of nonrenewal of rent agreements or any dispute in relation to usage of the said premise, its business and results of operations can be adversely affected.

• The company is subject to strict quality requirements and are consequently required to incur significant expenses to maintain its product quality. Any failures to comply with such quality standards may lead to cancellation of existing and future orders which may adversely affect its reputation, financial conditions, cash flows and results of operations.

• Its Group Company i.e. Chamak Polymers Private Limited operates in the similar line of business as it, which may lead to conflict of interest.

• Its insurance coverage may not be adequate to protect it against all potential losses to which the company may be subject and this may have a material effect on its business and financial condition.

• Its Group Company had incurred losses and had negative net worth in past and any operating losses in the future could adversely affect the results of operations and financial conditions of its group company.

• 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.

• The company may be subject to risks associated with product warranty. In case any product warranty getting materialized due to product defect, its may be subject to additional cost, product liability claims or loss of future purchase orders from customers which may affect its business and results of operations.

• The company requires certain approvals, licenses, registrations and permits to operate its business, and failures to obtain or renew them in a timely manner or maintain the statutory and regulatory permits and approvals required to operate its business may adversely affect the company`s operations and financial conditions.

• The company is subject to competition from both organized and unorganized players in the market, which may significantly affect the fixation and realisation of the price for its product, which may adversely affect the company`s business operation and financial condition.

• Failures to protect its intellectual property rights may adversely affect the company competitive business position, financial condition and profitability.

• Compliance with and changes in safety, health and environmental laws and regulations may adversely affect its business, prospects, financial condition and results of operations.

• The company is heavily dependent on its Promoter and Key Managerial Personnel for the continued success of its business through their continuing services and strategic guidance and support.

• The company has in the past entered into related party transactions and may continue to do so in the future.

• Its Contingent Liability and Commitments could affect the company`s financial position.

• If the company is not able to successfully manage its growth, its business and results of operations may be adversely affected.

• Adverse publicity regarding its products could negatively impact the company.

• The average cost of acquisition of Equity Shares by its Promoters, is lower than the face value of Equity Share.

• The company has issued Equity Shares in the last 12 months at a price which could be lower than the Issue Price.

• Its may be subject to labour unrest, operating risks, slowdowns, increased wage costs, and shut-downs.

• Dependence upon transportation services for supply and transportation of its products are subject to various uncertainties and risks, and delays in delivery may result in rejection of products by customer.

• The company has incurred significant indebtedness which exposes it to various risks which may have an adverse-effect on its business and results of operations.

• 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 you may not be able to sell your Equity Shares at or above the Issue Price.

• Its operations are dependent on a significant number of contract labour and an inability to access adequate labour at reasonable costs at its sites across India may adversely affect the company`s business prospects and results of operations.

• The Company may not be successful in penetrating new export markets.

• Loans availed by the Company has been secured on personal guarantees of its Director. The company`s business, financial condition, results of operations, cash flows and prospects may be adversely affected in case of invocation of any personal guarantees provided by its Directors.

• 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.

• Fraud, theft, employee negligence or similar incidents may adversely affect its results of operations and financial condition.

• Its lenders have charge over immovable and movable properties in respect of finance availed by it.

• The company has not identified any alternate source of funding and hence any failures or delay on its part to mobilize the required resources or any shortfall in the Issue proceeds may delay the implementation schedule.

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

• The company may not be able to sustain effective implementation of its business and growth strategy.

• The company is subject to the restrictive covenants of banks in respect of the Loans/ Credit Limits and other banking facilities availed from them.

• The Objects of the Issue for which funds are being raised, are based on its management estimates and has not been appraised by any bank or financial institution or any independent agency.

• Information relating to its production capacities and the historical capacity utilization of the company production facilities included in this Red Herring Prospectus is based on certain assumptions and has been subjected to rounding off, and future production and capacity utilization may vary.

• Its ability to pay any dividends will depends upon future earnings, financial condition, cash flows, working capital requirements and capital expenditures.

• The Equity Shares have never been publicly traded, and, after the Issue, the Equity Shares may experience price and volume fluctuations, and an active trading market for the Equity Shares may not develop. Further, the price of the Equity Shares may be volatile, and you may be unable to resell the Equity Shares at or above the Issue Price, or at all.

• The company is exposed to the risks of malfunctions or disruptions of information technology systems.

• There is no monitoring agency appointed by the Company to monitor the utilization of the Issue proceeds.

• Its Promoter and the Promoter Group will jointly continue to retain majority shareholding in the Company after the issue, which will allow them to determine the outcome of the matters requiring the approval of shareholders.

• Any future issuance of Equity Shares may dilute your shareholdings, and sale of the Equity Shares by its major shareholders may adversely affect the trading price of the company Equity Shares.

• The company cannot guarantee the accuracy or completeness of facts and other statistics with respect to India, the Indian economy and industry in which the company operates contained in the Red Herring Prospectus.

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

• There is no guarantee that the Equity Shares issued pursuant to the Issue will be listed on the SME Platform of National Stock Exchange of India Limited in a timely manner or at all.

• QIBs and Non-Institutional Bidders 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 and Retail Individual Investors are not permitted to withdraw their Bids after Bid/Issue Closing Date.