Akums Drugs

Risks

• Its manufacturing units and research and development centres are concentrated in Haridwar, Uttarakhand and the company is exposed to risks originating from economic, regulatory, political and other changes in this region, including natural disasters, which could adversely affect its business, results of operations and financial condition.

• Any slowdown or shutdown in its manufacturing and research and development operations could have an adverse effect on its business, results of operations, financial condition and cash flows.

• Any manufacturing or quality control concerns or its inability to deliver products on a timely basis, or at all, could result in the cancellation of purchase orders, breaches of relevant agreements, and termination of agreements by its clients and distributors, which could have an adverse effect on its business, results of operations, financial condition and cash flows.

• Its manufacturing units are subject to periodic inspections and audits by regulatory authorities and clients. The company may be subject to regulatory action which may damage its reputation leading to an adverse effect on the company`s business, results of operations, financial condition and cash flows.

• The company relies on domestic and international third-party suppliers for the supply of raw materials and any delay, interruption or reduction in such supply could adversely affect its business, results of operations, financial condition and cash flows.

• The Company had issued Equity Shares to more than 49 investors in the past, which may have been in non-compliance with the Companies Act, 1956.

• The company import some of its raw materials from China and other countries and source its remaining raw materials domestically. Any delay, interruption or reduction in the supply of such raw materials could adversely affect its business, financial condition and results of operations.

• Its success depends on the company`s ability to successfully develop and commercialize new products in a timely manner. Any failures to do so could adversely affect its business, results of operations and financial condition.

• Certain of its corporate records, filings and instruments of transfer are not traceable. Its cannot assure you that no legal proceedings or regulatory actions will be initiated against the company in the future in relation to any such discrepancies.

• The company has incurred losses in the past and may incur losses in the future.

• The company has had negative cash flows from investing activities during the Financial Year 2024. Negative cash flows over extended periods, or significant negative cash flows in the short term, could affect its ability to operate the company`s business and implement its growth plans.

• A portion of the Net Proceeds may be utilized for repayment or pre-payment of a loan availed by its Subsidiary from Citibank N.A., which is an affiliate of Citigroup Global Markets India Private Limited, one of the BRLMs.

• The active pharmaceutical ingredient ("API") manufacturing unit of its Subsidiary, Pure and Cure Healthcare Private Limited, has been subject to regulatory actions by the Punjab Pollution Control Board in relation to non-compliance with conditions stipulated in the environmental approvals granted.

• Its business requires significant capital expenditure. If the company is unable to have access to capital, it may adversely affect its business, results of operations, cash flows and financial condition.

• Its inability to collect receivables and instances of payment default by its clients could result in the reduction of the company`s profits and affect its cash flows, adversely affecting business, results of operations, financial condition and cash flows.

• Its business is dependent on the sale of products to a limited number of clients for a significant portion of its revenues. The loss of one or more such clients or the deterioration of their financial condition or prospects could adversely affect its business, results of operations and financial condition.

• Its insurance coverage may not be sufficient or adequate to cover its losses and liabilities. If the company suffer a large uninsured loss or an insured loss that significantly exceeds its insurance coverage, its business, results of operations, financial condition and cash flows may be adversely affected.

• Its inability to meet the company obligations, including financial and other covenants under its debt financing arrangements could adversely affect the company`s business, financial condition, cash flows and results of operations.

• The Indian pharmaceutical market is subject to extensive regulation and its failures to comply with the existing and future regulatory requirements in the pharmaceutical market could adversely affect its business, results of operations and financial condition.

• Its inability to successfully implement the company`s business plan and growth strategy could have an adverse effect on its business, results of operations, financial condition and cash flows.

• The company has received various notices from regulatory authorities in India alleging instances of non-compliances, including with respect to certain violations of Companies Act, Employees` Provident Fund and Miscellaneous Provisions Act, 1952, Drugs and Cosmetics Act, 1940 and other applicable law by the Company and Subsidiaries in the past. Failures to defend these proceedings successfully may have an adverse effect on its business operations, financial condition, and reputation.

• The degree certificates of the educational qualifications of one of its Directors and certain Senior Management Personnel are not traceable.

• There have been certain instances of delays in payment of statutory dues by the Company and its Subsidiary in the past. Any failures or delay in payment of such statutory dues may expose it to statutory and regulatory action, as well as significant penalties, and may adversely impact its business, results of operations, cash flows and financial condition.

• Its EBITDA margin, profit after tax margin, return on equity and return on capital employed have fluctuated significantly during the Financial Years 2024, 2023 and 2022.

• Its operations are labour intensive, and its may be subject to strikes, work stoppages or increased wage demands by the company employees, which could adversely affect its business, results of operations and financial condition.

• The company relies on third party providers to carry out clinical trials on products introduced by it. While the company does not have direct control over such trials, any occurrence of non-compliance with applicable regulations, or any errors or omissions during the trial process could adversely affect its business, results of operations and financial condition.

• Its inability to accurately forecast demand for the company products and manage its inventory may have an adverse effect on its business, results of operations, financial condition and cash flows.

• Its inability to adopt new technologies could adversely affect the company`s business, results of operations, cash flows and financial condition.

• Its business, results of operations and financial condition may be adversely affected if the company is unable to enhance or maintain its brand image.

• The company export its products to regulated and semi-regulated markets and a failures to comply with the regulatory and other requirements of such markets could have an adverse effect on its business, financial condition, results of operations and cash flows.

• The company is subject to the risk of loss due to fire, accidents and other hazards as its manufacturing, and research and development processes utilize materials that are highly flammable and hazardous. Any failures to comply with existing and future regulatory requirements or non-compliance with and changes in, safety, health, environmental and labour laws and other applicable regulations, could adversely affect its business, results of operations, financial condition and cash flows.

• Any failures to comply with existing and future regulatory requirements or non-compliance with and changes in, environmental compliance laws, regulations and other requirements, could adversely affect its business, results of operations, financial condition and cash flows.

• The company operates in a market that is highly competitive to provide outsourced pharmaceutical manufacturing services, particularly for formulations, to clients in India and other jurisdictions.

• There are certain factors particular to the industry its operates in that drive the company results of operations and business and its failures to account for these factors or implement them in its business could adversely affect its business, results of operations, financial condition and cash flows.

• Its employees and clients may engage in misconduct or other improper or illegal activities, including misrepresentation, noncompliance with regulatory requirements and breach of contractual obligations.

• Its international business exposes the company to complex management, legal, tax and economic risks, which could adversely affect its business, results of operations and financial condition.

• There are outstanding legal proceedings involving the Company and certain of its Promoters, its Subsidiaries and the company`s Directors.

• The Company has received a summon from the Directorate of Enforcement, Ministry of Finance, Government of India in relation to Parabolic Drugs Limited.

• Its Managing Director has received a summon from the Directorate of Enforcement, Ministry of Finance, Government of India in relation to the financial transactions undertaken by the Company with Temova Pharma Limited.

• The Company may be subject to complaints filed in various forums including SEBI, which may incur reputational, business and operational loss to the Company.

• The Company and Subsidiaries are subject to notices from the drug inspectors, alleging sub-standard quality of its products.

• The Company and Subsidiaries are subject to notices from the National Pharmaceutical Pricing Authority, Department of Pharmaceuticals, Ministry of Chemicals and Fertilizers, Government of India, New Delhi, alleging sale of products above the ceiling price.

• The Company and Subsidiaries are subject to notices from the National Pharmaceutical Pricing Authority, Department of Pharmaceuticals, Ministry of Chemicals and Fertilizers, Government of India, New Delhi upon the non-availability of its products.

• If any of its products cause, or are perceived to cause, side effects, its business, results of operations and financial condition could be adversely affected.

• Its may pursue strategic acquisitions for inorganic growth. However, the integration of such acquisitions could result in operating difficulties, dilution and other adverse consequences.

• The failures, inadequacy or breach of its information technology systems or the company`s business processes regarding confidential information and other data, unauthorized access to its confidential information or violations of data protection laws could have an adverse effect on its business, results of operations, financial condition and cash flows.

• The company is dependent on its individual Promoters, Senior Management Personnel and Key Managerial Personnel, and the loss of or its inability to attract or retain such persons could adversely affect its business, results of operations, financial condition and cash flows.

• The company is dependent upon third-party transportation providers for supply of its branded and generic formulations to distributors. Any delay, interruption or reduction in such supply could adversely affect its business, results of operations, financial condition and cash flows.

• The company is dependent upon third-party transportation providers for supply of its branded and generic formulations to distributors. Any delay, interruption or reduction in such supply could adversely affect its business, results of operations, financial condition and cash flows.

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

• Its ability to pay dividends in the future will depends on its earnings, financial condition, working capital requirements, capital expenditures and restrictive covenants of its financing arrangements.

• If the company fails to establish and maintain effective internal control over its financial reporting, its may have misstatements in the company financial statements and its may not be able to report its financial results in a timely manner and as a result current and potential investors could lose confidence in its financial reporting.

• The company may be unable to obtain and maintain the intellectual property rights for its brands or protect its proprietary information.

• Reforms in the healthcare industry and the uncertainty associated with pharmaceutical pricing, reimbursement and related matters, including risks associated with periodic inspections and audits by regulatory authorities and clients, could adversely affect the marketing, pricing and demand for its products and its credit ratings.

• One of its individual Promoters does not have adequate educational qualifications.

• The company will be controlled by its Promoters and members of the Promoter Group so long as they hold a majority of the Equity Shares, which will allow them to influence the outcome of certain matters submitted for approval of its Shareholders and their interests may differ from those of the other Shareholders.

• The company has in the past entered into related party transactions and may continue to do so in the future. Its cannot assure you that the company could not have achieved more favourable terms had such transactions not been entered into with related parties.

• The interests of its Promoters and Directors may cause conflicts of interest in the ordinary course of its business.

• The company lease its Registered Office, its Corporate Office and 10 out of 15 of the company`s manufacturing units. Any termination or failures by it to renew the lease arrangements for such offices or units in a timely manner and on competitive terms, or at all, could adversely affect its business, financial condition, results of operations and cash flows.