Kahan Packaging

Risks

• The company derives significant portion of the revenue from limited number of customers, the loss of one or more such customers, the deterioration of their financial position or prospects, or a reduction in their demand for the products could adversely affect its business, financial position and future prospects of the Company.

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

• Majority of the revenue is dependent on single business segment i.e. woven fabrics. An inability to anticipate or adapt to evolving upgradation of products or inability to ensure product quality or reduction in the demand of such products may adversely impact the revenue from operations and growth prospects.

• The company is primarily dependent upon few key suppliers for procurement of raw materials. Any disruption in the supply of the raw materials or fluctuations in their prices could have a material adverse effect on its business operations and financial conditions.

• The company requires certain approvals, licenses, registrations and permits to operate the business, and failure to obtain or renew them in a timely manner or maintain the statutory and regulatory permits and approvals required to operate the company business may adversely affect its operations and financial conditions.

• The company has had certain inaccuracy in relation to regulatory filings to be made with the RoC and the company has made noncompliances of certain provision under applicable laws.

• The restated financial statements have been provided by peer reviewed chartered accountants who is not statutory auditor of the Company.

• The company don`t own the registered office and factory-II from which the company carry out its business activities. In case of nonrenewal of rent agreements or dispute in relation to use of the said premise, our business and results of operations can be adversely affected.

• The company has not registered the trademarks which its using for the business. The company may be unable to protect its intellectual property or knowhow from third party infringement which could harm the brand and services.

• The company operates in a price sensitive industry wherein the purchasing decisions of consumers are highly influenced by the product price. Its inability to continue to offer the products at competitive prices may adversely affect its business, results of operations and financial condition.

• Introduction of alternative packaging materials caused by change in technology or consumer preferences may affect demand for its existing products which may adversely affect the company financial results and business prospects.

• Inventories and trade receivables form a major part of the current assets. Failure to manage the company inventory and trade receivables could have an adverse effect on its net sales, profitability, cash flow and liquidity.

• Under-utilization of the company manufacturing capacities and an inability to effectively utilize its existing manufacturing capacities could have an adverse effect on the business, future prospects and future financial performance.

• The company insurance coverage may not be adequate to protect us against certain operating hazards and this may have a material adverse effect on its business.

• The Company, Promoters and Directors are parties to certain legal proceedings. Any adverse decision in such proceedings may have a material adverse effect on its business, results of operations and financial condition.

• The company`s appoint contract labour for carrying out certain of the operations and its may be held responsible for paying the wages of such labourers, if the independent contractors through whom such workers are hired default on their obligations, and such obligations or non- availability of such labourers could have an adverse effect on the results of operations and financial condition.

• The contingent liabilities as stated in the company Restated Financial Statements could affect its financial condition.

• The company face competition from other large and established competitors, and its may fail to compete successfully against existing or new competitors, which may reduce the demand for the company products which may lead to reduced prices, operating margins, profits and further result in decline in revenue.

• The company has not received NOC from its lender for undertaking the initial public offer of equity shares.

• Adverse publicity regarding the company products could negatively impact it.

• As the continue to grow, the company may not be able to effectively manage its growth and the increased complexity of the company business, which could negatively impact its brand and financial performance.

• There is an increased awareness towards controlling pollution and many economies including India have joined in the efforts to ban plastic product. In case any plastic packaging products manufactured by it are banned in India or in any of the markets where its export the products, it could have a material and adverse effect on its business and results of operations.

• The company has incurred indebtedness which exposes it to various risks which may have an adverse effect on its business and results of operations.

• The company operations are subject to high working capital requirements. The company inability to maintain an optimal level of working capital required for its business may impact the company operations adversely.

• The company has in the past entered into related party transactions and may continue to do so in the future. There can be no assurance that such transactions, individually or in the aggregate, will not have an adverse effect on the Company`s financial condition and results of operations.

• The company`s continued operations at its manufacturing facilities are critical to the business and any disruption, breakdown or failure of machinery, disruption to power sources or any temporary shutdown of the company manufacturing facility, may have a material adverse effect on its business, results of operations, financial condition and cash flows.

• The company is heavily dependent on the Promoters and Key Managerial Personnel for the continued success of its business through their continuing services and strategic guidance and support.

• Compliance with, and changes in, safety, health and environmental laws and labour regulations may adversely affect the company business, prospects, financial condition and results of operations.

• Dependence upon third party transportation services for supply and transportation of the products are subject to various uncertainties and risks, and delays in delivery may result in rejection of products by customer.

• The average cost of acquisition of Equity Shares by the Promoters, is lower than the face value of Equity Share.

• The Company has during the preceding one year from the date of the Draft Prospectus allotted Equity Shares at a price which may be lower than the Issue Price.

• The company has experienced negative operating cash flows in the past. Any operating losses or negative cash flows in the future could adversely affect its results of operations and financial conditions.

• The company Promoter and the Promoter Group will jointly continue to retain majority shareholding in the Company after the issue, which will allow them to determine the outcome of the matters requiring the approval of shareholders.

• The company Promoters, Directors and Promoter Group members/entities have provided personal guarantees for loan facilities obtained by the Company, and any failure or default by the Company to repay such loans in accordance with the terms and conditions of the financing documents could trigger repayment obligations on them, which may impact their ability to effectively service their obligations as the Promoters/ Directors and thereby, impact its business and operations.

• Excessive dependence on Bank of India in respect of loan facilities obtained by the Company.

• The company may require further equity issuance, which will lead to dilution of equity and may affect the market price of the Equity Shares or additional funds through incurring debt to satisfy the capital needs, which its may not be able to procure and any future equity offerings by it.

• The company has not identified any alternate source of funding and hence any failure or delay on the part to mobilize the required resources or any shortfall in the Issue proceeds may delay the implementation schedule.

• The Objects of the Issue for which funds are being raised have not been appraised by any bank or financial institution. Any variation between the estimation and actual expenditure as estimated by the management could result in execution delays or influence the company profitability adversely.

• Information relating to the production capacities and the historical capacity utilization of the production facilities included in this Draft Prospectus is based on certain assumptions and has been subjected to rounding off, and future production and capacity utilization may vary.

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

• The Company has unsecured loans which are repayable on demand. Any demand from lenders for repayment of such unsecured loans may adversely affect of the cash flows.

• Fraud, theft, employee negligence or similar incidents may adversely affect the company results of operations and financial condition.

• Relevant copy of educational qualification of one of the directors is not traceable.

• The company is subject to restrictive covenants under the credit facilities that limit its operational flexibility.

• 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.

• The company ability to pay dividends in the future will depend upon its future earnings, financial condition, cash flows, working capital requirements, capital expenditure and restrictive covenants in the financing arrangements.

• Certain key performance indicators for certain listed industry peers included in this Draft Prospectus have been sourced from public sources and there is no assurance that such financial and other industry information is complete.

• Certain data mentioned in this Draft Prospectus has not been independently verified.

• Any Penalty or demand raised by statutory authorities in future will affect the financial position of the Company.

• Any future issuance of Equity Shares may dilute your shareholdings, and sale of the Equity Shares by the major shareholders may adversely affect the trading price of the Equity Shares.