Jyoti CNC Auto.

Risks

• The company`s success is dependent on its relationship with it customers, and the company do not, generally enter into long term purchase contracts. This exposes it to risk emanating from the inability to retain the company established customers as its clients.

• The Company does not have long-term agreements with suppliers for its input materials and a significant increase in the cost of, or a shortfall in the availability, or deterioration in the quality, of such input materials could have an adverse effect on its business and results of operations.

• The company operates in a competitive industry. Any inability to compete effectively may lead to a lower market share or reduced operating margins.

• The company is completely reliant on third-party logistics service providers for transport of input materials and finished products.

• Any failure on its part to effectively manage the company inventory may result in an adverse effect on its business, revenue from manufacturing operations and financial condition.

• The Company has a high working capital requirement and if the Company is unable to raise sufficient working capital the operations of the Company will be adversely affected.

• The company is heavily dependent on machinery for its operations. Any break-down of its machinery will have a significant impact on the company business, financial results and growth prospects. its success and financial condition will depends on the company ability to maximise its manufacturing capacities.

• The loss, shutdown or slowdown of operations at any of the Company`s facilities could have a material adverse effect on the Company`s results of operations and financial condition.

• The company has incurred losses in the past. Losses in future could have an adverse impact on its growth prospectus and would also preclude it from undertaking actions such as declaring dividends.

• Failure to meet quality standards required by its customers for the company products and processes may lead to cancellation of existing and future orders and expose it inter alia to warranty claims, including monetary liability.

• The company source some of its input materials from international suppliers and any adverse foreign exchange fluctuation could increase the company cost of operations and affect its profitability. Further, any restriction or embargo on the sourcing of input materials from certain countries could adversely affect its business and financial condition.

• The Company operates in the capital goods industry which is sensitive to general economic downturn.

• The Company`s operations are subject to varied business risks and the Company`s insurance cover may prove inadequate to cover the economic losses of the Company.

• Delays or defaults in client payment could result in reduction of its profits.

• The company has leased and, or availed on license, the use of certain properties from which its operate the company business. There can be no assurance that the lease, and, or license agreements will be renewed upon termination or that its will be able to obtain other premises on lease on same or similar commercial terms. Further, the company do not own its Registered Office and have executed a lease agreement for use of its Registered Office.

• The company future success will depends on its ability to effectively implement the company business and growth strategies failing which its results of operations may be adversely affected.

• The company has a large work force and its employee benefit expense is one of the larger components of its fixed operating costs. An increase in employee benefit expense could reduce the company profitability. Further, its operations could be adversely affected by work stoppages or increased wage demands by its employees or any other kind of disputes with its employees.

• The company is heavily reliant on its Promoters, Key Managerial Personnel, Senior Managerial Personnel and persons with technical expertise. Failure to retain or replace them will adversely affect its business.

• The Company has in the past entered into related party transactions and may continue to do so in the future and its cannot assure you that the company could not have achieved more favourable terms if such transactions had not been entered into with related parties and that such transactions will not have an adverse effect on its financial conditions and result of operations.

• The Company may be unable to enforce its rights under some of the agreements executed by the Company on account of insufficient stamping or non-execution of some of the agreements by the counterparties to such agreements. Further, some of the contracts executed by the Company have provisions which may require it to indemnify the counterparties.

• Any failure to obtain, renew and maintain requisite statutory and regulatory permits, licenses and approvals for its operations from time to time may adversely affect the company business.

• The company has incurred significant indebtedness which exposes it to various risks which may have an adverse effect on its business, results of operations and financial conditions. Conditions and restrictions imposed on it by the agreements governing our indebtedness could adversely affect its ability to operate the company business.

• The Company, in the past, has rescheduled payments of one of its credit facilities from its lenders. the Company has, in the past, also delayed in re-payment of principal amount and interest on loan availed by the Company.

• The company does not enter into hedging transactions in respect of its foreign currency exposure and are subject to risks resulting from foreign exchange rate fluctuations. Any losses, on account of foreign currency exchange rate fluctuations may adversely affect itss business, results of operations and financial condition.

• The company Statutory Auditors have made certain comments in respect of the Company`s standalone audited financial statements for Fiscals 2023 and 2022. The company erstwhile statutory auditors have made certain comments in respect of the Company`s standalone audited financial statements for Fiscals 2021.

• The company contingent liabilities and capital commitments could materially and adversely affect its business, results of operations and financial condition.

• The Company has delayed in submission of its audited consolidated financial statement in the past. The company cannot assure you that no action will be taken against the Company.

• The company`s Audited Standalone and Consolidated Financial Statements for Fiscal 2023 have not been approved by the shareholders of the Company. The Company cannot assure you that these financial statements will be approved by its shareholders.

• COVID-19 had a material adverse effect on the machine tools industry and consequently had a potential impact on its business, financial condition and results of operations.

• The company has availed unsecured loans which may be recalled by its lenders, at any time.

• The Company may not be able to secure additional funding in the future. In the event the Company is unable to obtain sufficient funding, it may delay the Company`s growth plans and have a material adverse effect on the business, cash flows and financial condition of the Company.

• A downgrade in its credit ratings, may affect the Company`s ability to avail of debt and could also impact the trading price of the Equity Shares.

• The company operations are subject to manufacturing risk and causing fatal injury to personnel including death and destruction of property and consequent imposition of civil and criminal penalties.

• The company operations are dependent on research and development. If its unable to continuously develop new products or optimise its processes then the company ability to grow, including by expanding its presence across different end-user industries, and, or, compete effectively, might be compromised, which would have an adverse impact on its business and financial condition.

• The Company has in the past not made filings with ROC for a shareholders` resolution for the appointment of two of its Independent Directors. The Company has also made certain delayed filings with the RoC and RBI. In addition, the board resolution, and the RoC form for change in its Registered Office is not available in the company records.

• The Company, in the past, has delayed in the payment of statutory dues.

• The company Promoters and Promoter Group will, even after the completion of the Issue, continue to be its largest Shareholders and can influence the outcome of resolutions, which may potentially involve conflict of interest with the other Shareholders.

• The company Promoters and some of its Directors and Key Managerial Personnel have interests in the Company other than reimbursement of expenses incurred and normal remuneration or benefits.

• Conflicts of interest may arise out of common pursuits between the Company and its Group Companies.

• Inability to obtain or protect the company intellectual property rights may adversely affect its business.

• Regulatory, legislative or self-regulatory developments regarding privacy and data security matters could adversely affect its ability to conduct the company business and impact its financial condition.

• There are certain outstanding legal proceedings involving thee Company, Promoters, Directors, and Subsidiaries which, if determined against it, could have a material adverse effect on its business, cash flows, financial condition and results of operations.

• Health, safety and environmental matters, including compliance with environmental laws and remediation of contamination, could result in substantially increased capital requirements and operating costs.

• The Company intends to utilise a portion of the Net Proceeds of the Issue towards the long term working capital requirements of the Company which are based on certain assumptions and estimates.

• Any material deviation in the utilisation of Issue Proceeds shall be subject to applicable law.

• The Company has not paid dividends in the last 3 Fiscals and during the current Fiscal. There can be no assurance that the Company will be in a position to pay dividends in the future.

• This Draft Red Herring Prospectus contains information from an industry report prepared by F&S which the Company has commissioned and paid for.

• Certain non-GAAP financial measures and certain other statistical information relating to the company operations and financial performance like Gross Profit, Gross Profit Margin, EBITDA, EBITDA Margin, Return on Capital Employed, PAT Margin, Return on Equity and Gross Fixed Assets Turnover Ratio 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.

• The objects of the Issue for which funds are being raised have not been appraised by any bank or financial institution and are based on management estimates.

• The Company may have issued Equity Shares during the preceding one year at a price lower than the Issue Price.

• The Equity Shares have never been publicly traded and the Issue may not result in an active or liquid market for the Equity Shares. Further, the price of the Equity Shares may be volatile, and you may be unable to resell the Equity Shares at or above the Issue Price.

• The requirements of being a publicly listed company may strain the Company`s resources.

• Any further issuance of Equity Shares, or convertible securities or other equity linked instruments by it may dilute your shareholding.

• Sale of Equity Shares by the Promoters and Promoter Group in future may adversely affect the market price of the Equity Shares.

• There are restrictions on daily movements in the trading price of the Equity Shares, which may adversely affect a shareholder`s ability to sell Equity Shares or the price at which Equity Shares can be sold at a particular point in time.

• The determination of the Price Band and Issue Price 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 after the Issue. Further, the current market price of some securities listed pursuant to certain previous issues managed by the BRLMs is below the respective issue price.

• There is no guarantee that the Equity Shares will be listed on the BSE and the NSE in a timely manner or at all.

• Holders of Equity Shares may be restricted in their ability to exercise pre-emptive rights under Indian law and thereby suffer future dilution of their ownership position.

• QIBs and Non-Institutional Investors are not permitted to withdraw or lower their Bids (in terms of quantity of Equity Shares or the Bid Amount) at any stage after submitting a Bid.

• A third party could be prevented from acquiring control of our Company because of anti-takeover provisions under Indian law.

• The Issue Price, market capitalization to total income multiple, market capitalization to earnings multiple, price to earnings ratio and enterprise value to EBITDA ratio based on the Issue Price of the Company, may not be indicative of the market price of the Equity Shares on listing.

• The Company may be subject to pre-emptive surveillance measures like Additional Surveillance Measure (ASM) and Graded Surveillance Measures (GSM) by the Stock Exchanges in order to enhance market integrity and safeguard the interest of investors, once the Equity Shares of the Company are listed.