JNK

Risks

• The company derives a significant portion of its revenue from orders which are contracted to the company by Contracting Customers, any failure to obtain new contracts may impact its revenue from operations, cash flows and financial conditions materially and adversely.

• The number of orders the company has received in the past, the company current Order Book and its growth rate may not be indicative of the number of orders the company will receive in future. The order wins and any delays in execution of its orders expose it to time and cost overruns and variability in revenue, materially and adversely impacting the company revenue from operations, cash flows and financial conditions.

• The company is unable to trace some of the historical records and there have been certain instances of regulatory non-compliances in the past. Its may be subject to regulatory actions and penalties for any such past or future non- compliance or delays and its business, financial condition and reputation may be adversely affected.

• The company has derived majority of its revenues from its Corporate Promoter, JNK Global and use their experience and technology support for select projects. Any kind of dissociation with JNK Global may have an adverse impact on its business, results of operations and cash flows.

• Availability and cost of raw materials may adversely affect its business, results of operations, financial condition and cash flows. Also, the company does not enter into any long-term contracts with its suppliers.

• Any downside in the capital expenditure of oil and gas, petrochemical and fertilizers industry would create an adverse impact on its revenue from operations, cash flows and financial conditions.

• The company derives a majority portion of its revenues from sales of Heating Equipment. Loss or decline in the demand of such Heating Equipment may result in an adverse effect on its business, revenue from operations and financial condition.

• The company is subject to various laws and regulations, including environmental and health and safety laws and regulations. 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, its business, results of operations and financial condition may be adversely affected.

• The company is an asset light Company wherein its outsource its fabrication process to third-party fabricators for most of the company projects which presents numerous risks.

• Its market capitalization to revenue from operations multiple, market capitalization to tangible assets multiple and enterprise value to EBITDA multiple at the Offer Price may not be indicative of the market price of its Equity Shares on listing or thereafter.

• Its failures to expand geographically may have an adverse effect on the company`s business, financial condition and results of operations.

• The company does not have any trademark or logo registered in its name. The company use the logo and trademark of one of its Corporate Promoters, JNK Global, pursuant to the Co-operation Agreement dated May 17, 2023 and consent letter dated July 20, 2023. Any default in the contractual obligations or termination of the Co-operation Agreement or revocation of the consent would prohibit it from using the trademark and logo and may have an adverse impact on its business.

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

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

• Conflicts of interests may arise out of the business ventures in which one of its Corporate Promoters and Directors are interested.

• The Company has a high working capital requirement and working capital projections made by the Company are based on its management`s assumptions. The company may require alternate funding in Fiscal 2024 and Fiscal 2025 post the utilization of Net Proceeds and if the Company is unable to raise sufficient working capital, the operations of the Company will be adversely affected.

• The company is subject to strict performance requirements and delivery within scheduled timelines and any failure by it to comply with these performance requirements may lead to the invocation of performance bank guarantee and liability claims.

• The Company has significant working capital requirements. If the company has to borrow or raise additional financing or furnish bank guarantees or performance bank guarantees in future, it would adversely impact its business, cash flows and results of operations.

• The company has borrowed and may raise additional financing for its operations. The company have furnished personal guarantee and corporate guarantee that have been provided by its Promoters, for the company working capital requirements/ funding requirements. If its Promoters withdraw/ don`t provide such guarantees in future, it will adversely impact its funding and may impact thd company`s business, cash flows and results of operations.

• The company is dependent on its Promoters, Directors, 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.

• A majority of its Directors does not have a prior experience of directorship in any of the companies listed on recognized stock exchange, therefore, they will be able to provide only a limited guidance in relation to the affairs of the Company post listing.

• The trading volume and market price of the Equity Shares may be volatile following the Offer.

• Its expansion into new business lines may not be successful.

• The immediate relatives of one of its Promoters, who are deemed to be a part of the Promoter Group under Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements), 2018 have not provided consent, information or any confirmations or undertakings pertaining to themselves which are required to be disclosed in relation to a member of the Promoter Group in this Red Herring Prospectus.

• 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.

• Its business subjects it to certain risks due to the company`s operations in multiple jurisdictions.

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

• Bidding for a tender involves cost estimations for the bidding process. Inability to accurately estimate the cost or match the prices quoted by its competitors, may lead to loss of tender creating an adverse impact on the company`s business, results of operations, financial condition and cash flows.

• The company carry out in-house fabrication at some leased facilities and any slowdown or shutdown in its manufacturing operations could have an adverse effect on the company`s business, financial condition and results of operations.

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

• Certain sections of this 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.

• The company does not have any research and development ("R&D") facility and may have to relies on one of its Corporate Promoters, JNK Global, for any new technological development.

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

• There are outstanding legal proceedings involving the Company, Promoters, and Directors. Any adverse outcome in such legal proceedings may affect its business, results of operations and financial condition.

• The company`s business may be subject to labour conflicts, strikes, or other types of conflicts with its workforce and the company third-party fabricators which may adversely impact on its business, results of operations and financial condition.

• 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.

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

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

• Failure or any disruption of its IT systems, may adversely affect the company`s business, financial condition, results of operations and prospects.

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

• Its funding requirements and proposed deployment of the Net Proceeds are not appraised by any independent agency and are based on management estimates and may be subject to change based on various factors, some of which are beyond its control.

• Any variation in the utilization of the Net Proceeds would be subject to certain compliance requirements, including prior shareholders` approval.

• The company may be unable to detect, deter and prevent all instances of fraud or other misconduct committed by its employees which may have a material adverse effect on the company`s business, results of operations and financial condition.

• As on December 31, 2023, the company conduct majority of its business through its facilities situated at Mundra, Gujarat and Jajpur, Odisha. Its Facility at Mundra, Gujarat may have low capacity utilization that could adversely affect the company`s results of operations.

• Non-GAAP measures presented in this Red Herring Prospectus may have limitations as analytical tools, may vary from any standard methodology applicable across the Heating Equipment industry, and may not be comparable with financial or statistical information of similar nomenclature presented by other peer companies.

• The Company has issued Equity Shares during the last 12 months at a price which may be lower than the Offer Price.

• The continuing impact of the COVID-19 pandemic on its business and operations is uncertain and it may be significant and continue to have an adverse effect on the company`s business, operations and its future financial performance.