Epack Durable Ltd IPO

Risks

• A significant portion of its revenue is generated from certain key customers, and the loss of one or more such customers, the deterioration of their financial condition or prospects, or a reduction in their requirement for its products could adversely affect its business, results of operations, financial condition and cash flows.

• The company customers do not make long-term commitments to it and may cancel or change their production requirements. Such cancellations or changes may adversely affect its financial condition, cash flows and results of operations.

• The company`s business is dependent on its manufacturing facilities, and its subject to certain risks in the company manufacturing process. Any slowdown or shutdown in its manufacturing operations could have an adverse effect on its business, financial condition and results of operations.

• If the company is unable to introduce new products and respond to changing customer requirements, including due to changing customer preferences and regulatory requirements in a timely and effective manner, the demand for its products may decline, which may have an adverse effect on its business, results of operations and financial condition.

• The company RAC business is subject to seasonal variations and cyclicality that could result in fluctuations in its results of operations.

• The company is subject to precise technical specifications and quality requirements. Its failure to comply with the quality standards and technical specifications prescribed by such customers may lead to loss of business from such customers and could negatively impact its reputation, which would have an adverse impact on its business prospects and results of operations.

• Pricing pressure from customers may adversely affect its gross margin, profitability and ability to increase the company prices.

• The company depends on third parties for the supply of raw materials and such parties could fail to meet their obligations, which may have a material adverse effect on its business, results of operations and financial condition.

• Any reduction in or termination of tax incentives the company enjoy or change in other favorable government policies may affect its business, results of operations, cash flows and financial condition.

• If the company fail to effectively implement its production schedules, or the company manufacturing operations suffer unanticipated or prolonged interruption, its business and results of operations may be materially and adversely affected.

• If the products the company manufacture experience quality defects or if the manufacturing services its provide are found to be deficient, the company may lose its customers and may be subject to product liability claims or claims alleging deficiency in service, which may also cause damage to its reputation and/or adversely affect the company results of operations and financial condition.

• The company`s inability to effectively manage its growth strategy could have an adverse effect on its business, results of operations and financial condition.

• The company is subject to environmental, health and safety regulations, which may increase its compliance costs. If the company fail to obtain, maintain or renew the licenses, permits and approvals required to operate its business, or fail to comply with applicable laws, the company business, results of operations and financial condition may be adversely affected.

• If the company does not continue to invest in new technologies and equipment, its technologies and equipment may become obsolete and its cost of production may increase relative to the company competitors, which would have an adverse effect on its ability to compete, results of operations, financial condition and prospects.

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

• The company is dependent on its Promoters, Directors and other Key Managerial Personnel and Senior Management, including other employees with technical expertise. Any loss of or its inability to attract or retain such persons could adversely affect its business, results of operations and financial condition.

• The company face foreign exchange risks that could adversely affect its results of operations.

• Under-utilization of its manufacturing capacities may have an adverse effect on the company business, future prospectus and future financial performance.

• The company failure in maintaining its quality accreditations and certifications may negatively impact its brand and reputation.

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

• The company engage contract labour for its manufacturing operations. In the event of non-availability of such contract labour or any adverse regulatory orders, it may have a material adverse impact on its operations.

• The company inability to meet its obligations, including financial and other covenants under the company debt financing arrangements could adversely affect its business and results of operations.

• The company manufacturing facilities and Registered and Corporate Office are located on premises taken on a leave and license basis. There can be no assurance that these leave and license agreements will be renewed upon termination or that the company will be able to obtain other premises on leave and license basis on same or similar commercial terms or at all.

• The company has significant planned capital expenditure, and such expenditure may not yield the benefits its anticipate.

• The company Statutory Auditors have included a qualification in the auditor`s report on its audited standalone financial statements and audited consolidated financial statements for the Fiscal ended March 31, 2022.

• The company Statutory Auditors and previous statutory auditors have included certain emphasis of matters and certain observations in their auditor`s report on its audited standalone financial statements for Fiscals ended March 31, 2023 and March 31, 2021, and on its audited consolidated financial statements for Fiscal ended March 31, 2023, and the annexure to the auditor`s reports as required under the Companies (Auditor`s Report) Order, 2020, in respect of the Company and its Material Subsidiary.

• 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 and financial condition.

• Its industry is competitive and the company`s inability to compete effectively may adversely affect its business, results of operations, financial condition and cash flows.

• The COVID-19 pandemic impacted its business and operations and any similar occurrence in the future may have a similar adverse effect on the company business, operations and its future financial performance.

• The company may undertake joint ventures or such other strategic alliances which may be difficult to integrate and manage. Further, its partners may not perform their obligations satisfactorily and their interests may differ from ours, which could have a material adverse effect on its business and results of operations.

• The company intend to utilise a portion of the Net Proceeds for funding its capital expenditure requirements for setting up of and expansion of the company manufacturing facilities and if the costs of setting up and the possible time or cost overruns related to these projects are higher than expected, it could have a material adverse effect on its financial condition, results of operations and growth prospects. Further, any variation in the utilisation of our Net Proceeds may be subject to certain compliance requirements, including prior shareholders` approval.

• The company insurance policies may not be adequate to cover all losses incurred in its business. An inability to maintain adequate insurance cover to protect it from material adverse incidents in connection with its business may adversely affect the company operations and profitability.

• Any inability to protect its intellectual property or any claims that we infringe on the intellectual property rights of others could have a material adverse effect on it.

• The company has been given permission to use the trademarks `EPACK` and`, which are owned by EPACK Polymers Private Limited, one of its Group Companies and a member of the company Promoter Group,and are exposed to the risk that its use of these trademarks may be affected by events beyond the company control and that EPACK Polymers Private Limited may prevent it from using them in the future.

• The company operates separate business verticals and its inability to manage the company diversified operations may have an adverse effect on its business, results of operations and financial condition.

• The company has substantial power, water and fuel requirements and any disruption to power, water or fuel sources could increase its production costs and adversely affect its results of operations.

• The company has certain contingent liabilities which, if materialized, may adversely affect its financial condition.

• 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 with the equity shareholders.

• Certain sections of this Draft Red Herring Prospectus disclose information from the industry report which has been commissioned and paid for by it exclusively in connection with the Offer and any reliance on such information for making an investment decision in the Offer is subject to inherent risk.

• There are outstanding legal proceedings against the Company, its Directors, the company Promoters and its Subsidiary and adverse outcomes in such proceedings may negatively affect its business, results of operations and financial condition.

• Information relating to the installed manufacturing capacity and capacity utilization of its manufacturing facilities included in this Draft Red Herring Prospectus are based on various assumptions and estimates and future production and capacity may vary.

• The company funding requirements and proposed deployment of the Net Proceeds are based on management estimates and have not been independently appraised by a bank or a financial institution, and may be subject to change based on various factors, some of which are beyond its control. Further, any variation in the utilization of the Net Proceeds would be subject to certain compliance requirements, including prior shareholders` approval.

• The company Promoters and certain Directors hold Equity Shares in the Company and are therefore interested in the Company`s performance in addition to their normal remuneration and reimbursement of expenses.

• Failures in internal control systems could cause operational errors which may have an adverse impact on its profitability.

• Employee misconduct could harm it and is difficult to detect and deter.

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

• The company has issued specified securities during the last 12 months at a price that may be lower than the Offer Price.

• The company Promoters have provided personal guarantees for loan facilities availed by the Company and certain members of the Promoter Group who are also its Group Companies, and may provide additional guarantees in the future. Any failure or default in repaying such loans could trigger repayment obligations on its Promoter, which may also impact the company Promoters` ability to effectively service their obligations as its Promoters and thereby, adversely impact the company business and operations.

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

• The company Promoters and some of its Directors may have interest in entities, which are in businesses similar to its and this may result in conflict of interest with it.

• Reliance has been placed on declarations, affidavits, and marksheets furnished by some of the company Directors, Key Managerial Personnel, and Senior Management, for disclosures related to their educational qualifications included in this Draft Red Herring Prospectus.

• The Company has availed an unsecured loan which is repayable on demand. Any demand from lenders for repayment of such unsecured loans may adversely affect its business, cash flows, financial condition and results of operations.

• The company`s ability to pay dividends in the future will depend on its earnings, financial condition, working capital requirements, capital expenditures and restrictive covenants of its financing arrangements.

• The company has sustained negative cash flows from operating activities in the past and may experience earnings declines or operating losses or negative cash flows from operating activities in the future.

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