Dhariwalcorp

Risks

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

• The company depends on the success of its relationships with its customers. The company derives a significant part of its revenue from the company major customers and the company does not have long term contracts with these customers. If one or more of such customers choose not to source their requirements from it, its business, financial condition and results of operations may be adversely affected.

• The company is exposed to counterparty credit risk and any delay in receiving payments or non-receipt of payments may adversely impact its results of operations.

• The company is subject to quality requirements and any product defect issues or failures by it 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 company may not be able to accurately manage its inventory, this may adversely affect its goodwill and business, financial condition and results of operations.

• The Company`s failures to maintain the quality standards of the products or keep pace with the technological developments could adversely impact its business, results of operations and financial condition.

• In case of its inability to obtain, renew or maintain the statutory and regulatory licenses, permits and approvals required to operate its business it may have a material adverse effect on the company`s business.

• There are certain discrepancies and non- compliances noticed in some of its financial reporting and/or records relating to filing of returns with the taxation and other statutory authorities.

• The company has certain outstanding litigation against it, an adverse outcome of which may adversely affect its business, reputation and results of operations.

• 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.

• Changes in technology may render its current technologies obsolete or requires the company to make substantial capital investments.

• The Company has entered into related party transactions in the past and may continue to enter into related party transactions in the future, which may potentially involve conflicts of interest with the equity shareholders.

• Certain premises including its registered office, wax processing unit and warehouses are not owned by it and the company has only lease rights over such premises. In the event the company lose such rights or are required to negotiate it, its cash flows, business, financial conditions and results of operations could be adversely affected.

• The land on which the Centralized warehousing facility shall be established is owned by the promoters of the Company.

• There can be a change in prices of raw material imported by the company from foreign countries which can lead to losses to the company.

• The company is dependent on its warehousing services for the delivery of the company finished goods and supply of its products and any disruption in their operations or a decrease in the quality of their services could affect its Company`s reputation and results of operations.

• There are certain discrepancies/errors/delay filings noticed in some of its corporate records relating to forms filed with the Registrar of Companies and other provisions of Companies Act, 2013. Any penalty or action taken by any regulatory authorities in future, for non- compliance with provisions of corporate or any other law could impact the financial position of the Company to that extent.

• The company faces significant competition in its business which could adversely affect the company operations and its profitability.

• Its business may expose the company to potential product liability claims, which could adversely affect its results operation, goodwill and the market ability of the company products.

• Any increase in interest rates would have an adverse effect on its results of operations and will expose the Company to interest rate risks.

• Its loan agreements with various lenders have several restrictive covenants and certain unconditional rights in favour of the lenders, which could influence its ability to expand, in turn affecting its business and results of operations.

• Unsecured loans taken by the Company can be recalled by the lenders at any time.

• The company has taken guarantees from its directors in relation to debt facilities provided to it.

• The Company had negative cash flows in the past years, details of which are given below. Sustained negative cash flow could impact its growth and business.

• The Company requires significant amounts of working capital for a continued growth. Its inability to meet the company working capital requirements may have an adverse effect on its results of operations.

• The company has not yet placed orders in relation to the funding Capital Expenditure towards construction of warehouse which is proposed to be financed from the Issue proceeds of the IPO. In the event of any delay in placing the orders, or in the event the vendors are not able to provide the equipment in a timely manner, or at all, may result in time and cost overruns and its business, prospects and results of operations may be adversely affected. Its proposed expansion plans via one of its warehouse facilities are subject to the risk of unanticipated delays in implementation due to factors including delays in construction, obtaining regulatory approvals in timely manner and cost overruns.

• Its may not be fully insured for all losses the company may incur.

• Failures or disruption of the company IT, automation systems may adversely affect its business, financial condition and results of operations.

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

• Its success largely depends upon the knowledge and experience of its Promoters, Directors, its Key Managerial Personnel and Senior Management as well as the company ability to attract and retain personnel with technical expertise. Any loss of its Promoter, Directors, Key Managerial Personnel, Senior Management or its ability to attract and retain them and other personnel with technical expertise could adversely affect its business, financial condition and results of operations.

• The company failures to manage growth effectively may adversely impact its business, prospects, financial condition and results of operations.

• Pricing pressure from customers may affect its gross margins and ability to increase the company prices, which in turn may adversely affect its revenue from operations, profits and cash flows.

• Its inability to effectively manage the company growth or to successfully implement its business plan and growth strategies could have an adverse effect on its business, results of operations and financial condition. The success of its business will depends greatly on the company ability to effectively implement its business and growth strategies.

• Any inability to address changing industry standards and consumer trends may adversely affect its business, results of operations and financial condition.

• 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.

• Within the parameters as mentioned in the chapter titled "Objects of this Issue" beginning on page 74 of this Draft Red Herring Prospectus, the Company`s management will have flexibility in applying the proceeds of the Issue. The fund requirement and deployment mentioned in the Objects of this Issue have not been appraised by any bank or financial institution.

• Its Promoters and members of the Promoter Group will continue jointly to retain majority control over the Company after the Issue, which will allow them to determine the outcome of matters submitted to shareholders for approval.

• The Company logo "Dhariwal Corp Ltd" is not registered with Registrar of Trademark; any infringement of its brand name or failures to get it registered may adversely affect its business. Further, any kind of negative publicity or misuse of its brand name could hamper the company brand building efforts and its future growth strategy could be adversely affected.

• The company might infringe upon the intellectual property rights of others and any misappropriation of its intellectual property could harm its competitive position.

• Employee misconduct including misuse of confidential data and failures to maintain confidentiality of information could harm it and is difficult to detect and deter.

• Industry information included in this Draft Red Herring Prospectus has been derived from industry reports. There can be no assurance that such third-party statistical, financial and other industry information is either complete or accurate.

• If the company is unable to establish and maintain an effective internal controls and compliance system, its business and reputation could be adversely affected.

• Its Directors, Key Managerial Personnel and Senior Management may have interests other than reimbursement of expenses incurred and normal remuneration or benefits in the Company.

• The determination of the Price Band is based on various factors and assumptions and the Issue Price of the Equity Shares may not be indicative of the market price of the Equity Shares upon listing on the Stock Exchange.

• Its Equity Shares have never been publicly traded, and may experience price and volume fluctuations following the completion of the Issue. Further, its Equity Shares may not result in an active or liquid market and the price of its Equity Shares may be volatile and you may be unable to resell your Equity Shares at or above the Issue Price or at all.

• The company has issued Equity Shares during the last one year at a price below the Issue Price.

• There is no guarantee that the Equity Shares issued pursuant to the Issue will be listed on the NSE Emerge in a timely manner or at all.

• Any future issuance of Equity Shares may dilute your shareholding and sale of its Equity Shares by the company Promoters or other shareholders may adversely affect the trading price of the Equity Shares.

• There are restrictions on daily weekly monthly movement in the price of the equity shares, which may adversely affect the shareholder`s ability to sell for the price at which it can sell, equity shares at a particular point in time.

• Investors may be subject to Indian taxes arising out of capital gains on the sale of the Equity Shares.

• Significant differences exist between Indian GAAP and other accounting principles, such as US GAAP and IFRS, which may be material to investors assessments of the Company`s financial condition. Its failures to successfully adopt IFRS may have an adverse effect on the price of its Equity Shares. The proposed adoption of IFRS could result in its financial condition and results of operations appearing materially different than under Indian GAAP.

• Foreign investors are subject to foreign investment restrictions under Indian law that limits its ability to attract foreign investors, which may adversely impact the market price of the Equity Shares.

• Its depends on skilled personnel and if the company is unable to recruit and retain skilled personnel, its ability to operate or grow its business could be affected.

• The company generates its major portion of sales from its operations in certain domestic market. Any adverse developments affecting its operations in these regions could have an adverse impact on its revenue and results of operations.

• The company is dependent on its warehousing services for the delivery of the company finished goods and supply of its products and any disruption in their operations or a decrease in the quality of their services could affect the Company`s reputation and results of operations.