Chatha Foods

Risks

• The company intend to utilize a portion of the Net Proceeds for setting up the Proposed Manufacturing Facility at Village Tofhapur, Tehsil Dera Bassi, Distt SAS Nagar, Mohali, Punjab, India ("Proposed Manufacturing Facility"). The company is yet to place orders for plant and machinery and apply for requisite government approvals for the Proposed Manufacturing Facility. If the company is unable to commission its Proposed Manufacturing Facility without time and cost overruns or unable to adhere to the schedule of implementation, it may adversely affect its business, results of operations and financial condition.

• The purchase of land by the Company for setting up the Proposed Manufacturing Facility is subject to compliance with certain terms and conditions. Failure to comply with such conditions could adversely affect its business and financial condition.

• The company derives a substantial portion of its revenue from the sale of products in the non-vegetarian segment. Any loss of business in this segment may adversely affect its business, results of operations, financial conditions and cash flows.

• The company Registered Office and godowns/ warehouses are not owned by the Company.

• Its Promoter have extended personal guarantees and personal properties as collateral security with respect to various loan facilities availed by the Company. Revocation of any or all of these personal guarantees may adversely affect its business operations and financial condition.

• The company has not entered into any arrangements for alternate source of raising the funds required for its "Objects of the Issue". Any shortfall in raising/meeting the same could adversely affect its growth plans, operations and financial performance.

• The Company has reported negative cash flow in the past. Any negative cash flows in the future would adversely affect its cash flow requirements, which may adversely affect the company`s ability to operate its business and implement the company`s growth plans, thereby affecting its financial condition.

• Its Manufacturing Facility and operations are concentrated in Mohali region and any adverse developments affecting this region could have an adverse effect on its business, results of operations and financial condition.

• As on date the company has not obtained any of the approvals, clearances and permissions as may be required from the relevant authorities for the Proposed Manufacturing Facility. In the event the company is unable to obtain such approvals and permits, its business, results of operations, cash flows and financial condition could be adversely affected.

• The company may not be able to adequately protect its intellectual property, which may result in the inability to prevent its competitors from developing, using or commercializing products that are functionally equivalent or similar to its products.

• The company derives a significant revenue from few of its customers and loss of one or more such customers or a reduction in demand for its products could adversely affect the company`s business, results of operations, financial condition and cash flows.

• In the event the company is found not to be in compliance with any applicable regulations in relation to the regulatory filings or corporate actions, its may be subject to regulatory actions or penalties for any such possible non-compliance and its business, financial condition and reputation may be adversely affected.

• There can be no assurance that the objects of the Issue will be achieved within the time frame anticipated or at all, or that the deployment of the Net Proceeds in the manner intended by it will result in any increase in the value of your investment. Further, the plan for deployment of the Net Proceeds has not been appraised by any bank or financial institution.

• The company is subject to stringent quality control requirements and any product defect issues or failure by us or its suppliers to comply with quality standards may lead to the cancellation of existing and future orders, recalls and exposure to potential product liability claims.

• The orders placed by customers may be delayed, modified or cancelled, which may have an adverse effect on its business, financial condition and results of operations.

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

• Any shortage, disruption or non-availability of power and water may adversely affect operations and have an adverse impact on its business, results of operations and financial condition.

• The information in the Industry Section is derived from publically available information and its have commissioned and paid for an industry report for the disclosures made in the chapter titled "Industry Overview" and made disclosures on the basis of the data provided in the same and such data has not been independently verified by the company.

• Its business depends on processing of raw materials and any loss of or shutdown of operations on any grounds could adversely affect its business or results of operations.

• The company does not have long term agreements with suppliers for its raw materials and an increase in the cost of or a shortfall in the availability of such raw materials could have an adverse effect on its business, results of operations and financial condition.

• If the company is not able to obtain, renew or maintain its statutory and regulatory licenses, registrations and approvals required to operates its business, it may have a material adverse effect on its business, results of operations and financial condition.

• If its cutomers fail to identify and effectively respond to changing preferences and spending patterns or changing trendsof their end consumers in a timely manner, the demand for its products could decrease, causing its business, results of operations, financial condition and cash flows to be adversely affected.

• The success of its business depends substantially on its management team and operational workforce. its inability to retain them could adversely affect its businesses.

• The launch of new brands or products that prove to be unsuccessful could affect its growth plans which could adversely affect its business, financial condition, cash flows and results of operations.

• The company operates in a highly competitive industry. Its also face competition from both domestic as well as multinational corporations. Its failure to compete effectively could have a negative impact on the success of its business and/or impact its margins.

• Product liability claims and product recalls could harm its reputation, business, financial condition, cash flows and results of operations.

• The company inability to manage its growth may disrupt its business and reduce the company profitability.

• Some of its agreements may be under stamped or inadequately stamped and if any financial or judicial implication arises out of the same it may have an adverse effect on the Company`s business and reputation.

• The company may not be able to accurately manage its inventory, this may adversely affect the company`s business, financial condition and results of operations and reputation.

• Its inability to effectively manage or expand its distribution network may have an adverse effect on its business, results of operations and financial condition.

• Its Promoters and members of the Promoter Group have significant control over the Company and have the ability to direct its business and affairs; their interests may conflict with your interests as a shareholder.

• The average cost of acquisition of Equity Shares held by its Promoter could be significantally lower than the Issue Price.

• In addition to its existing indebtedness for the company existing operations, its may incur further indebtedness during the course of business. Its cannot assure that its would be able to service its existing and/ or additional indebtedness.

• 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.

• The requirement of funds in relation to the objects of the Issue has not been appraised by any bank or financial institution.

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

• The Equity Shares have never been publicly traded and the Issue may not result in an active or liquid market for the Equity Shares.

• The Company has not paid dividends on Equity Shares in the past and its ability to pay dividends in the future will depends upon future earnings, financial condition, cash flows, working capital requirements, capital expenditures and restrictive covenants in its financing arrangements.

• Its future fund requirements, in the form of further issue of capital or securities and/or loans taken by it, may be prejudicial to the interest of the Shareholders depending upon the terms on which they are eventually raised.

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