Ask Automotive Ltd IPO

Well established manufacturer of safety systems and critical engineering solutions for some of India`s largest OEMs in an industry with high entry barriers.

Robust production model driven by research and development ("R&D") and design with an emphasis on: (i) advanced material knowledge to customize systems and products based on customer specifications and (ii) engineering lighter precision products.

Technology and innovation-driven manufacturing process, with an extensive suite of systems and solutions for EV and ICE sectors.

Long-standing customer relationships with both Indian and global OEM players.

Financial and return metrics demonstrating growth and efficient use of capital.

Professional management and board.

A significant portion (more than 80%) of its revenue from operations in each of the last three Fiscals is attributable to the Indian two-wheeler automotive sector. Any adverse changes in the two-wheeler automotive sector could adversely impact its business, results of operations and financial condition.

The company is dependent on its top three customers who contribute more than 50.00% of its revenue from operations with it single largest customer contributing more than 30.00% of its revenue from operations in each of the last three Fiscals. Loss of any of these customers or a reduction in purchases by any of them could adversely affect its business, results of operations and financial condition.

The company`s business and profitability is substantially dependent on the availability and cost of its raw materials, including Aluminium, and any disruption to the timely and adequate supply of raw materials, or volatility in the prices of raw materials may adversely impact its business, results of operations and financial condition.

The company depends on third parties for the supply of raw materials and do not have firm commitments for supply or exclusive arrangements with any of its suppliers. Loss of suppliers may have an adverse effect on the company business, results of operations and financial condition.

The company may not be successful in implementing its growth strategies, particularly increasing the company market share in the evolving electric vehicle market, which could have an adverse effect on its business, financial condition, cash flows and results of operations.

The company has undertaken and may continue to undertake technical collaborations, joint ventures, strategic investments, alliances and acquisitions in the future, which may be difficult to integrate and manage, exposing it to risks that could adversely affect the company business.

The company has experienced growth in recent years and may be unable to sustain its growth or manage it effectively.

The company use third-party dealers to market, sell and deliver products in the independent aftermarket ("IAM") category and are subject to risks associated with these arrangements.

The company outsource certain operations of its business such as transport, logistics and other processes to third parties. Any failure by such third parties to deliver their services could have an adverse impact on the company business.

The company manufacturing facilities are concentrated in the state of Haryana and certain products (disc brake pads and safety control cables) are manufactured only at its manufacturing facilities in Haryana. Any significant social, political, economic or seasonal disruption, natural calamities or civil disruptions in Haryana could have an adverse effect on the company business, results of operations, future cash flows and financial condition.

The company does not own its Registered Office and land on which some of the manufacturing facilities are located. A failure to renew its existing lease arrangements at commercially favourable terms or at all may have a material adverse effect on the company business, financial condition and results of operations.

Certain of the company manufacturing facilities are located within industrial development corporation premises. If the company has unable to comply with conditions of use of such land or otherwise renew existing leases for such manufacturing facilities, its may have to relocate the company operations which may have an adverse impact on the business, financial condition and operations.

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

The company has significant power, fuel and water requirements and any disruption to the supply of power, fuel or water could disrupt its manufacturing operations and increase the production costs, which could adversely affect the company results of operations.

The company proposed expansion plans relating to the manufacturing facilities in Bhiwadi, Rajasthan and Kolar, Karnataka are subject to the risk of unanticipated delays in implementation and cost overruns.

The company is dependent on contract labour and any disruption to the supply of such labour for its manufacturing facilities or the company inability to control the composition and cost of the contract labour could adversely affect its operations.

The company may be subject to industrial unrest, slowdowns and increased employee costs, which may adversely affect its business and results of operations.

The company is dependent on its manufacturing facilities and any disruption, slowdown or shutdown of the company manufacturing facilities may restrict its operations and adversely affect the company business and financial condition.

The company has been extending financial support to its Joint Venture, ASK Fras-Le Friction Private Limited, that has incurred losses in the last three Fiscals.

The company Subsidiary has negative net worth and may not be able to turn profitable in the future.

Pricing pressure from the company customers or its inability to fully pass on costs to the customer, may impact the company revenue from operations and profitability and may result in a materially adverse effect on its business, results of operations and financial condition.

Its inability to maintain appropriate levels of inventory to meet the demands of its customers may have an adverse effect on the company results of operations and financial condition.

The company has substantial capital expenditure and working capital requirements and may require additional financing to meet those requirements, which could have an adverse effect on its results of operations and financial condition.

Its inability to collect receivables in time or at all and default in payment from its customers could result in the reduction of the company profits and affect its cash flows.

The company has incurred significant indebtedness, and an inability to comply with repayment and other covenants in its financing agreements could adversely affect the company business and financial condition.

The company has entered into certain credit facilities that are repayable on demand. Any unexpected demand for repayment of such facilities by the lenders may adversely affect the company business, financial condition, cash flows and results of operations.

The company is exposed to foreign currency exchange rate fluctuations which may have an adverse effect on its results of operations and the value of the Equity Shares, independent of the company operating results.

The company Statutory Auditors have included certain matters prescribed under the Companies (Auditor`s Report) Order 2020 in their report on its Restated Consolidated Financial Information as of and for Fiscals ended March 31, 2023 and 2022.

The company may not have sufficient insurance coverage to cover its economic losses as well as certain other risks, including those pertaining to litigation and claims by third parties.

The development of safety systems and critical engineering solutions involves a lengthy and expensive process with uncertain timelines and outcomes. Some of the company product or process development decisions, including R&D costs, or investments in technologies, may not meet its expectations, and its investment in such projects may be unprofitable.

The company has in the past entered into related party transactions and may continue to do so in the future, which may potentially involve conflicts of interest.

The company contingent liabilities as stated in its Restated Consolidated Financial Information could adversely affect the company financial condition.

The company is entitled to certain tax and export benefits which are subject to the policies and decisions of the Government of India.

The company is unable to trace some of its historical records including forms filed with the Registrar of Companies, Haryana.

There are certain delays in payment of statutory dues by it. Any further delay in payment of statutory dues may attract financial penalties from the respective government authorities and in turn may have an adverse impact on the company financial condition and cash flows.

The company is subject to stringent environmental laws and regulations in India, which may subject to increased compliance costs, and which may in turn result in an adverse effect on its financial condition. We also require certain licenses, permits and approvals under such laws and regulations in India in the ordinary course of business, and the failure to obtain or retain them in a timely manner may materially affect the compnay operations.

There are outstanding legal proceedings involving our Company and one of our Directors. Any adverse outcome in such proceedings may have an adverse impact on our reputation, business, financial condition, results of operations and cash flows.

The availability of counterfeit products, its failure to keep the company technical knowledge confidential, or its ability to obtain and protect the company intellectual properties may have adverse effects on its business and results of operations.

If the company inadvertently infringe upon the intellectual property rights of others, its business and results of operations may be adversely affected.

The company is subject to stringent labour laws or other industry standards and any kind of disputes with ouremployees could adversely affect its business, results of operations, financial condition and cash flows.

The company depend on the skills and experience of the Promoters, Key Managerial Personnel, Senior Management and employees with technical expertise for its business and future growth.

The Promoters and certain of the Directors (some of whom are the Key Managerial Personnel) may have interests in the Company other than reimbursement of expenses incurred or normal remuneration or benefits. Further, the company has acquired land from entities who are related to the Promoters and Directors.

The company Promoters, who are also the Directors, are promoters and directors of a company forming part of the Promoter Group, whose equity shares were suspended from being traded on, and which were subsequently voluntarily delisted from, the Calcutta Stock Exchange Limited during their tenure.

The Promoters, who are also the Directors, and members of the Promoter Group will continue to hold a significant equity stake in the Company after the Offer and their interests may differ from those of the other shareholders.

The Promoters have provided personal guarantees to lenders for certain loan facilities availed of by certain members of the Promoter Group, which if invoked may adversely affect the Promoters` ability to manage the affairs of the Company and which in turn may adversely impact the company business and operations.

The Company will not receive any proceeds from the Offer for Sale.

Product liability and other civil claims and costs incurred because of product recalls could harm the company business, results of operations and financial condition.

If there is deterioration in the reputation and market perception of the company brands, or if its sales and marketing efforts are ineffective, it could adversely affect the company sales, profitability and the implementation of its growth strategy.

The company may not be successful in penetrating new export markets which may have an adverse impact on its business, financial condition, results of operations and future prospects.

The company may not be able to detect or prevent fraud or other misconduct committed by its employees or third parties.

Failure or disruption of the company Information Technology systems may adversely affect its business, financial condition, results of operations and prospects.

The coronavirus pandemic ("COVID-19") has had an adverse effect on its business and operations, and the extent to which it may continue to do so in the future cannot be predicted.

The Company has prepared financial statements under Indian Accounting Standards. Significant differences exist between Indian Accounting Standards and other accounting principles.

This Draft Red Herring Prospectus contains information from an industry report, prepared by an independent third-party research agency, CRISIL, which we have commissioned and paid for purposes of confirming the company understanding of the industry exclusively in connection with the Offer and reliance on such information for making an investment decision in the Offer is subject to certain inherent risks.

Information relating to the company operational capacities and the historical capacity utilization of its manufacturing facilities included in this Draft Red Herring Prospectus is based on various assumptions and estimates and future production and capacity utilization may vary.

This Draft Red Herring Prospectus contains certain non-GAAP financial measures and certain other selected statistical information related to the company operations and financial performance. These non-GAAP measures and statistical information may vary from any standard methodology that is applicable across the manufacturing industry, and therefore may not be comparable with financial or statistical information of similar nomenclature computed and presented by other manufacturing companies.