Cyient DLM

Risks

• The company business is dependent on the sale of its products to certain key customers. The loss of any of the company key customers or loss of revenue from sales to its customers could have a material adverse effect on the company business, results of operations, financial condition and cash flows.

• The company order book may not be indicative of its future growth rate or new business orders the company will receive in the future. Further, its may not realize all of the revenue expected from our order book.

• The company is highly dependent on its Promoter and its management team and key personnel and the loss of any key team member may adversely affect its business performance.

• The company depend on third party suppliers for raw materials and components, which are on a purchase order basis. Such suppliers may not perform, or be able to perform their conditions in a timely manner, or at all and any delay, shortage, interruption, reduction in the supply of or volatility in the prices of raw materials on which the company relies may have a material adverse effect on its business, results of operations, financial condition and cash flows.

• Any failure to compete effectively in the highly competitive EMS industry could have a material adverse effect on its business, results of operations, financial condition and cash flows.

• The markets in which its customers compete are characterized by sectors specific to the industries which the company cater to, and their rapidly changing preferences and other related factors including lower manufacturing costs and therefore as a result its may be affected by any disruptions in the industry.

• Any decline in the value of investments of the Company, present and future, could have a material adverse effect on its business, results of operations, financial condition and cash flows.

• There may be problems with the products its design through the design team of the company Promoter, manufacture or service that could result in liability claims against it, reduced demand for our services and damage to the company reputation.

• The global nature of its operations exposes it to numerous risks that could materially adversely affect its business, results of operations, financial condition and cash flows.

• Any defaults or delays in payment by a significant portion of its customers, may have an adverse effect on business, results of operations, financial condition and cash flows.

• 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 funding requirements and proposed deployment of the Net Proceeds are based on management estimates and its has not entered into any definitive arrangements to utilize certain portions of the Net Proceeds of the Issue. Its has relied on the quotations received from third parties for estimation of the cost for its capital expenditure requirements and have not been independently appraised by a bank or a financial institution.

• The company Promoter will continue to retain significant shareholding in the Company after the Issue, which will allow it to exercise control over it.

• The company manufacturing facilities, Registered Office and Corporate Office are located on land parcels that are not owned by it and are held by the company on a leasehold basis. In the event its lose or are unable to renew such leasehold rights, its business, results of operations, financial condition and cash flows may be adversely affected.

• COVID-19 has had, and could continue to have, an adverse effect on its business, results of operations, financial condition and cash flows.

• Unplanned slowdowns or shutdowns of its manufacturing operations could have an adverse effect on the company business, results of operations, financial condition and cash flows.

• The strict quality requirements required to be complied with by its result in the company incurring significant expenses to maintain its product quality. Any failure in maintaining the company quality accreditations and certifications may negatively impact its brand and reputation may adversely affect its business, results of operations, financial condition, cash flows and reputation.

• The company insurance coverage may not be adequate to protect its against all potential losses or to satisfy potential claims, which may have an adverse effect on its business, results of operations, financial condition and cash flows.

• This Draft Red Herring Prospectus contains information from an industry report which its have paid for and commissioned from Frost & Sullivan, appointed by the Company pursuant to an engagement letter dated November 19, 2022. There can be no assurance that such third-party statistical, financial and other industry information is either complete or accurate.

• The company failure to keep its technical knowledge confidential could erode the company competitive advantage.

• In the event that its Net Proceeds to be utilised towards inorganic growth initiatives are insufficient for the cost of its proposed inorganic acquisitions, its may have to seek alternative forms of funding.

• The company has incurred losses in recent financial years.

• The company has, in the preceding one year, issued Equity Shares at a price which could be lower than the Issue Price. The price at which its has issued Equity Shares during the last one year from the date of this Draft Red Herring Prospectus may not be indicative of the Issue Price.

• Non-compliance with and changes in, safety, health, environmental and labour laws and other applicable regulations, may adversely affect its business, results of operations, financial condition and cash flows.

• Foreign exchange fluctuations may adversely affect its earnings and profitability.

• Cyber risk and the failure to maintain the integrity of its operational or security systems or infrastructure, or those of the company customers or other third parties with which its conduct business, could have a material adverse effect on its business, results of operations, financial condition and cash flows.

• The company do not own the "Cyient" trademark or the trademark to its logo. The company has entered into a Trade-Name License Agreement with its Promoter for the usage of the "Cyient" trademark, and the trademark license agreement may be terminated under certain circumstances.

• The company is dependent on third parties for the transportation and timely delivery of its products to customers.

• There are outstanding legal proceedings involving the Company, one of its Directors and the company Promoter and adverse outcomes in such proceedings may negatively affect its business, results of operations, financial condition and cash flows.

• The company is highly dependent on its Mysuru facility for a significant portion of the company revenue from operations and its manufacturing facilities are geographically concentrated. Any disruption in its Mysuru facility may adversely affect its business, results of operations, financial condition and cash flows.

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

• A downgrade in its credit rating could adversely affect the company ability to raise capital in the future.

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

• The activities carried out at its manufacturing facilities can cause injury to people or property in certain circumstances.

• The Company has availed unsecured loans from its Promoter, some of which may be recalled by the company Promoter at any time and the Company may not have adequate funds to make timely payments or at all.

• The company may be affected by strikes, work stoppages or increased wage demands by its employees that could interfere with the company operations.

• The company is required to comply with certain restrictive covenants under its financing agreements. Any non-compliance may lead to, amongst others, suspension of further drawdowns, which may adversely affect its business, results of operations, financial condition and cash flows.

• The company engage contract workers for carrying out certain functions of its business operations. In the event of non-availability of such contract workers at reasonable cost, any adverse regulatory orders or any default on payments to them by the agencies could lead to disruption of the manufacturing facilities and its business operations.

• The company may undertake or may be forced to undertake certain onerous contractual obligations with some of its customers.

• The company ability to pay dividends in the future will depend on its earnings, financial condition, profit after tax available for distribution, cash flow, cash balance, debt-raising capacity, liquidity and return ratios and restrictive covenants of its financing arrangements.

• Some of the company corporate records, including those relating to allotments of its Equity Shares in the past, are not traceable.

• Some of its Directors and the company Promoter have interests other than reimbursement of expenses incurred and normal remuneration or benefits in the Company.

• The company Directors or Promoter may enter into ventures that may lead to real or potential conflicts of interest with its business.

• Certain Non-GAAP financial measures and other statistical information relating to its operations and financial performance have been included in this Draft Red Herring Prospectus. These Non-GAAP financial measures are not measures of operating performance or liquidity defined by Ind AS and may not be comparable with those presented by other companies.

• A portion of the Net Proceeds may be utilised for repayment or prepayment of certain working capital facilities availed by the Company from Axis Bank Limited, which is an affiliate of Axis Capital Limited, one of the BRLMs.