Kaka Industries

Risks

• The company has a limited operating and financial history, which makes it difficult to accurately assess its future growth prospects. Further, the company restated financial statements for Fiscal 2020 (June 21, 2019 to March 31, 2020) and Fiscal 2021 and 2022 are not comparable due to the Company`s formation in June 2019.

• The company operate 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 compay products at competitive prices may adversely affect its business, results of operations and financial condition.

• The company face competition, including 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 face competition from substitutes of its products and if consumers` preferences for any of these substitutes increases it could lead to a reduction in the demand for the company products, which could have a material adverse effect on its business, financial condition and results of operations.

• Majority of the company revenue is dependent on single business segment i.e. polymer based profiles. An inability to anticipate or adapt to evolving upgradation of these products or inability to ensure product quality or reduction in the demand of these products may adversely impact the company 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 these raw materials or fluctuations in their prices could have a material adverse effect on its business operations and financial conditions.

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

• 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 has not complied with certain statutory provisions of the Companies Act, 2013. Such non-compliance may attract penalties against the Company which could impact the financial position of it to that extent.

• Demand for the company products (polymer-based profile sheets) is closely tied to the levels of residential and non-residential construction activity in India. Any reduction in the activity in one or both of these markets could have a material adverse effect on its business, results of operations and financial condition.

• The company do not own the registered office, manufacturing facilities and godowns from which its carry out the company business activities. In case of nonrenewal of rent agreements or dispute in relation to use of the said premise, the company business and results of operations can be adversely affected.

• Substantial portion of the company revenues has been dependent upon few customers, with which its do not have any firm commitments. The loss of any one or more of the company major customer would have a material adverse effect on its business, cash flows, results of operations and financial condition.

• The company have not registered the trademarks which its are using for the company business. If its are unable to protect our intellectual property against third party infringement or are found to infringe on the intellectual property rights of others, it could have a material adverse effect on the company business, results of operations and financial condition.

• Setting up of a new manufacturing facility requires substantial capital outlay before the company realize any benefits or returns on investments.

• The company is subject to strict quality requirements and are consequently required to incur significant expenses to maintain its product quality. Any failure to comply with such quality standards may lead to cancellation of existing and future orders which may adversely affect the company reputation, financial conditions, cash flows and results of operations.

• The company continued operations at the manufacturing facilities are critical to its 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.

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

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

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

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

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

• The company future success depends on its ability to promote the company brand and protect its reputation. The company failure to establish and promote its brand and any damage to the reputation will hinder the compay growth.

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

• The company business operations are majorly concentrated in certain geographical regions and any adverse developments affecting its operations in these regions could have a significant impact on the company revenue and results of operations.

• One of the Group Company has incurred losses in the past, which could not be perceived positively by external parties.

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

• 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.

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

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

• The company has not made any provision for decline in the value of investments made by its Company. Any significant decline in the value of investments made by the company may impact its financial results and condition.

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

• Failure to effectively manage labour or failure to ensure availability of sufficient labour could affect the business operations of the Company.

• The Promoters (including Promoter Group) and Directors hold 95.32% of the Equity Shares of the Company and are therefore interested in the Company`s performance in addition to their remuneration and reimbursement of expenses.

• The company Promoters, Directors and Promoter Group members/entities have provided personal guarantees for loan facilities obtained by its 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 company Promoters/ Directors and thereby, impact its business and operations.

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

• The company has not identified any alternate source of funding and hence any failure or delay on its 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 company production capacities and the historical capacity utilization of the production facilities included in this Draft Red Herring Prospectus is based on certain assumptions and has been subjected to rounding off, and future production and capacity utilization may vary.

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

• Relevant copies of educational qualification of four of the company directors are not traceable.

• The company is subject to restrictive covenants under its credit facilities that limit the company 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 will continue to be controlled by the Promoters after the completion of the Issue.

• 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 company financing arrangements.

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

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

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

• The company cannot guarantee the accuracy or completeness of facts and other statistics with respect to India, the Indian economy and industry in which we operate contained in the Draft Red Herring Prospectus.

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