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The COVID-19 pandemic and the resulting deterioration of general economic conditions has in the past financial years affected its business and may continue to materially affect the company business, results of operations, financial condition, and / or its cash flows in future periods.
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The Company is dependent on external suppliers for its product requirements. Any delay or failure on the part of the external suppliers to deliver products, may materially and adversely affect its business, profitability and reputation.
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A large part of its revenues is dependent on a limited number of brands. The loss of any of its major brands or a decrease in the supply or volume from such brands, will materially and adversely affect the company revenues and profitability.
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There are certain proceedings involving the Company, its Promoters which if determined against its, may have an adverse effect on the company business, cash flows and results of operations.
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The company propose to use Rs. 133.87 crores of the Net Proceeds of the Issue towards opening of new stores / warehouse. The company is yet to purchase real estate or enter into long-term leasehold arrangements or enter into rental agreements at locations suitable for new stores for its expansion in relation to setting up and operation of its proposed new stores / warehouse. In case the company is unable to open the stores / warehouse in a timely manner as mentioned in the chapter "Objects of the Issue", its may fall short of the revenue targets of the Company and this would have an adverse effect on its business, financial condition, results of operations and growth prospects.
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The company operate in a competitive industry and its market share may be adversely impacted in case the company do not keep ourselves appraised of the latest consumer trends and technology and if the company fail to compete effectively in the markets in which its operate.
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The company plan to expand into new geographies and may be exposed to significant liability and could lose some or all of its investment in such regions, as a result of which its business, financial condition and results of operations could be adversely affected.
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Competition from online retailers who are able to offer products at competitive prices and are also able to offer wide range of products may adversely affect its business and the company financial condition, results of operations and cash flows.
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Its presently do not own the trademark or logo under which the company currently operate and if third parties, including its current or future competitors are able to circumvent its protection measures which are put in place for the protection of trademark, logo and intellectual property and other proprietary rights, the company business and reputation would be adversely affected.
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The company business is highly dependent on the brand owners effectively maintaining, promoting or developing their brands and maintaining standard quality products including launching new electronic products at regular intervals. In case any of its brand partners is unable to do so, the company sales would get impacted which would have an adverse impact on the operations and financial performance of the Company.
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Its Promoters, Directors and Key Managerial Personnel of the Company and Subsidiaries may enter into ventures that may lead to real or potential conflicts of interest with its business which in turn may materially adversely impact its business, financial condition, results of operations and cash flows.
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Its inability to promptly identify and respond to changing customer preferences or evolving trends may decrease the demand for its merchandise among the company customers, which may adversely affect its business.
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Its stores are concentrated mainly in Telangana and Andhra Pradesh, and its generate all the company retail sales from its stores in these states. Any adverse developments affecting its operations in these states could have an adverse impact on its revenue and results of operations.
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The company follow a cluster-based approach while opening new stores. If this approach leads to new store cannibalizing sales of the other existing stores, it may lead to lower revenues, which could have a material adverse effect on its business.
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The Company being in the retail sector requires significant amount of working capital for a continued growth. Major portion of its working capital is utilized towards inventory. Its inability to meet the company working capital requirements may have an adverse effect on its results of operations.
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Revenue generated from mobiles segment constitutes majority of its sales revenue. Any sudden fall in the revenues from the mobiles segment may adversely affect its financial condition and profitability.
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Its may in the future face potential liabilities from lawsuits or claims from third parties, should they perceive any deficiency in the products the company sell in its stores. The company may also face the risk of legal proceedings initiated against the Company which may result in loss of business and reputation.
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Any failure to maintain quality of customer service, products and deal with customer complaints and to further attract and retain customers and maintain consistency in customer service could materially and adversely affect its business and operating results.
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The Company`s business relies on the reliable performance of its information technology systems and any interruption or abnormality in the same may have an adverse impact on its business operations and profitability.
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The company operate its registered office, stores and warehouses from premises that are taken by it on a leasehold basis. The company inability to renew the lease agreements or any adverse impact on the title or ownership rights of its landlords in relation to such premises, may impede the company effective operations.
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If the company is unable to purchase real estate or enter into long-term leasehold arrangements or enter into rental agreements at locations suitable for new stores or warehouses for its expansion at terms commercially beneficial to it, it may adversely affect its expansion and growth plans.
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Some of its lease agreements may have certain irregularities because of which the company may be unable to effectively enforce its leasehold rights which may have a material and adverse impact on the business of the Company.
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Some of its lease agreements have expired and have not been renewed at the time of filing this DRHP. Such non-renewal of lease may affect its business as its may be unable to carry out its business at such locations and this may have a material and adverse impact on the business of the Company.
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Reliance has been placed on declarations and an affidavit furnished by Pavan Kumar Bajaj, its Promoter, for details of his profile included in this Draft Red Herring Prospectus.
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The company Subsidiary has incurred losses in some prior periods and may do so in the future, which could have a material adverse effect on its business, prospects, financial condition, cash flows and results of operations.
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Its inability to continue to implement the company marketing and advertising initiatives and brand building exercises could adversely affect its business and financial condition.
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Its revenue from online sales is marginal and there can be no assurance that the online sales strategy will be successful in the future.
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Its retail sales largely depend on its brand reputation and any harm to the company brand or reputation may adversely affect its business, financial condition, cash flows and results of operations.
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The Statutory Auditors have included certain qualifications in their reporting under The Companies (Auditors Report) Order, 2016 ("CARO") on its audited standalone financial statements for the Fiscal 2021, 2020 and 2019.
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There have been delays and defaults in payment of statutory dues of the Company. Such delays and defaults may lead to penalties being levied on the Company.
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There has been a substantial increase in the bad debts and sales return in Fiscal 2021 as compared to previous years. Such increase in the bad debts may affect its profitability.
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The company purchase inventory in anticipation of sales, and if its fail to manage the company inventory effectively during that period, its business and results of operations could be adversely affected.
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The company depend on third parties for a major portion of its transportation needs. Any disruptions may adversely affect its operations, business and financial condition.
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The company do not have in-transit insurance for the products that are delivered to its customers by the transport agent. The Company is liable for any damages that are caused to the products in such a process. Such losses can adversely affect its profitability and the Company`s reputation.
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The company operations could be adversely affected by strikes, work stoppages, demands for increased wages or any other kind of employee dispute. Such disruptions could lead to loss of business thereby impacting its revenues significantly.
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Its ability to attract customers is dependent on the location of the company stores and any adverse development impairing the success and viability of its stores could adversely affect the company business, financial condition and results of operations.
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Its inability to manage losses due to fraud, employee negligence, theft or similar incidents may have an adverse impact on its profitability and the company reputation.
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The Company may not be able to grow at the same rate as it has done in the previous Financial Years. Any inability on its part to manage the company growth or implement its strategies effectively could have a material adverse effect on its business, results of operations and financial condition.
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The Company`s financing costs increased in Fiscal 2021 as compared to Fiscal 2020. The increase in financing costs may increase its cost of doing business and adversely affect the company profitability.
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The Company has unsecured loans that may be recalled by the lenders at any time.
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Its growth strategy to expand into new geographic areas exposes it to certain risks, which if the company is unable to manage, may have a material adverse effect on its operations.
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Its funding requirements and proposed deployment of the Net Proceeds have not been appraised by a bank or a financial institution and if there are any delays or cost overruns, its may have to incur additional cost to fund the project because of which its business, financial condition and results of operations may be adversely affected.
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Its business is subject to seasonal and cyclical volatility due to which there may be fluctuation in the sales of products which could lead to higher closing inventory position, which may adversely affect its business.
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The Company depends on the knowledge and experience of its Promoters and other Key Managerial Personnel for the company growth. The loss of their services may have a material adverse effect on its business, financial condition and results of operations.
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Any inability or failure on its part to control the company attrition rate or recruit fresh talent may have an adverse effect on its operations and business.
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Its agreements with various banks for financial arrangements contain restrictive covenants for certain activities and if the company is unable to get their approval, it might restrict its scope of activities and impede the company growth plans.
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Its business is operating under various laws which require it to obtain approvals from the concerned statutory/regulatory authorities in the ordinary course of business, and if the company is unable to obtain these approvals and the renewals, its business operations could be adversely affected thereby impacting its revenues and profitability.
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The Company has applied for registration of certain trademarks in its name. Until such registrations are granted, its may not be able to prevent unauthorised use of such trademarks by third parties, which may lead to the dilution of its goodwill.
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This Draft Red Herring Prospectus contains information from an industry report prepared by CRISIL, commissioned by it for the purpose of the Offer for an agreed fee. The accuracy, reliability or completeness of third-party statistical, financial and other industry information in this Draft Red Herring Prospectus is not guaranteed.
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The Company has not paid any dividends in the past and itsmay not be able to pay dividends in the future.
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Its inability to procure and/or maintain adequate insurance cover in connection with the company business may adversely affect its operations and profitability.
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Its Promoters namely Karan Bajaj and Pavan Bajaj and Renu Bajaj, a member of the company Promoter Group, have provided personal guarantees for loans availed by it. The Company has also given certain bank guarantees In event of default of the debt obligations, the personal guarantees and the bank guarantees may be invoked thereby adversely affecting its Promoters` ability to manage the affairs of the Company and its Company`s profitability and consequently this may impact its business, prospects, financial condition and results of operations.
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Its Promoters are co-borrowers to a working capital facility availed by the Company. In event of default of the debt obligations, its Promoters will have to bear the liability, which may adversely affect the Promoters` ability to manage the affairs of the Company.
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Its Promoters hold Equity Shares and have interests in its performance in addition to their normal remuneration or benefits and reimbursement of expenses incurred.
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The Company has entered into, and will continue to enter into, related party transactions which may not always enable it to achieve the most favourable terms.
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Its Promoters and Promoter Group will continue to have significant shareholding in the Company after the Issue, which will allow them to exercise significant influence over the Company.
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Significant differences exist between Ind AS used to prepare its financial information and other accounting principles, such as U.S. GAAP and IFRS, which may affect investors` assessments of the Company`s financial condition.
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Any negative cash flows in the future would adversely affect its cash flow requirements, which may adversely affect the company ability to operate its business and implement the company growth plans, thereby affecting its financial condition.
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The company has contingent liabilities on its balance sheet, as per the company restated consolidated financials, as at March 31, 2021. If any of these contingent liabilities actually occur, they may adversely impact its profitability and may have a material adverse effect on its results of operations and financial condition.
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Its may not maintain profitability in the future.