Krystal Integrat

Risks

• Its revenue from operations is highly dependent upon a limited number of customers.

• A significant part of its revenue is generated from government contracts obtained through a competitive bidding process. There can be no assurance that its will qualify for, or that the company will successfully compete and win such tenders, or maintain these customer relationships.

• A significant portion of its revenues are derived from a few geographical regions and any adverse developments affecting such regions could have an adverse effect on its business, cash flows, results of operation and financial condition.

• Its business revenue from operations is concentrated in a few segments.

• Operational risks are inherent in its business as it includes rendering services in diverse environments depending on customer requirements. A failure to manage such risks including any errors, defects or disruption in its service or inability to meet expected or agreed service standards, could have an adverse impact on its business, cash flows, results of operations and financial condition.

• The company focus sectors (healthcare, education and government spending) may not grow as anticipated.

• The company has a large workforce deployed across workplaces and customer premises. Consequently, its may be exposed to service-related claims and losses or employee disruptions, as well as employee related regulatory risks, that could have an adverse effect on its reputation, business, cash flows, results of operations and financial condition.

• Its businesses are manpower intensive and the company`s inability to attract and retain skilled manpower could have an adverse impact on its growth, business and financial condition. Further, in the event its not able to manage the company attrition, its may not be able to meet the expectations of its customers, which may have an adverse impact on the company financial condition.

• Its business could be adversely affected if the company customers fail to renew their contracts with it or its fail to acquire new customers.

• The company has significant employee benefit expenses, such as workers` compensation, staff welfare expenses and contribution to provident and other funds. In case its face an increase in employee costs that the company is unable to pass on to its customers, its may be prevented from maintaining its competitive advantage and its profitability may be impacted.

• The company may be unable to perform background verification procedures on its personnel as well as on its billable employees prior to placing them with the company`s customers.

• Its revenues and profitability vary across its business segments, thereby making the company future financial results less predictable.

• The company is dependent on its vendors for the supply of equipment and products that its use in providing its services and solutions. If these vendors were to fail in meeting their obligations, its business and operations would be materially adversely affected. Further, its may also be exposed to fluctuations in the prices of certain of these products and any volatility in their pricing may have an adverse effect on its business, cash flows, financial condition and results of operations.

• Significant disruptions of information technology systems and/or ERP systems or breaches of data security could adversely affect its business. Further, its may be exposed to risks and costs associated with protecting the integrity and security of its systems as well as its customers` operational and other confidential information.

• The company may be required to receive or renew certain approvals or licenses required in the ordinary course of business or to commence new businesses. Failure to obtain or maintain or renew licenses, registrations, permits and approvals may adversely affect its business, cash flows and results of operations.

• The company is dependent on a number of key personnel, including its senior management, and the loss of, or its inability to attract or retain, such persons could adversely affect the company business, cash flows, results of operations and financial condition.

• The industries in which its operate are intensely competitive and have low barriers to entry in certain instances. Its inability to compete effectively may adversely affect its business, cash flows, results of operations and financial condition.

• There are outstanding legal proceedings involving the Company, its Promoters, its Subsidiaries and its Directors. Any adverse decision in such proceedings may render it / them liable to liabilities / penalties and may adversely affect its business, results of operations, cash flows and reputation.

• The company is subject to risks associated with its contracts, including its ability to correctly assess pricing terms, employee costs and other financial obligations, the increased complexity of its contracts and the potential early termination or change of scope of contracts by clients.

• The company does not own the trademarks and logos used in its business, including the "Krystal" trademark, and have entered into Trademark License Agreements with one of its Individual Promoters for the usage of such intellectual property rights.

• Its ability to service contracts with public sector undertakings or governmental customers may be affected by political and administrative decisions.

• Its customers may delay or default in making payments for services rendered by it. If the company is unable to collect its receivables from its customers, the company profits, cash flows and liquidity could be adversely affected.

• Certain of its customer contracts can be terminated by its customers without cause and with or without penalty, which could negatively impact its revenue and profitability.

• The company investments in technology systems may not yield intended results. The cost of implementing technologies for its operations could be significant and could adversely affect its business, cash flows, results of operations and financial condition.

• Its financing agreements contain covenants that limit the company flexibility in operating its business. The company inability to meet its obligations, including financial and other covenants under its debt financing arrangements could adversely affect its business, cash flows, results of operations and 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 have an adverse effect on its business.

• Its business requires significant amounts of working capital. Its may not be able to obtain future financing on favourable terms or at all or furnish bank guarantees in the future. If the company experience insufficient cash flows from its operations or are unable to borrow funds to meet its working capital requirements, it may materially and adversely affect its business and results of operations.

• The company is subject to risks arising from interest rate fluctuations, which could reduce its profitability and adversely affect its business, cash flows, financial condition and results of operations.

• Its insurance coverage may not be sufficient or may not adequately protect it against all material hazards, which may adversely affect its business, cash flows, results of operations and financial condition.

• The company is unable to trace certain documents in relation to regulatory filings, corporate actions taken by the Company and have made certain delayed or inaccurate statutory form filings with the RoC in the past and are delayed in filing of other statutory forms with the RoC. Consequently, its may be subject to adverse regulatory actions and penalties for any past or future non-compliance and its business, financial condition and reputation may be adversely affected.

• The company face risks related to health epidemics and pandemics such as COVID-19 which could adversely affect its business.

• Although it will be subject to monitoring, its management will have broad discretion in how the company apply the Net Proceeds, including interim use of the Net Proceeds, and there is no assurance that the objects of the Offer will be achieved within the time frame expected or at all, or that the deployment of the Net Proceeds in the manner intended by it will result in any increase in the value of your investment.

• The company intend to utilise Rs. 100 million from the Net Proceeds for funding its capital expenditure requirements towards purchase of new machinery, for which the company has not placed any orders or entered into any definitive agreements.

• Its Statutory Auditors have included certain observations for Fiscals 2021, 2022 and 2023 in their reporting under the Companies (Auditors Report) Order, 2020.

• The company has not paid any dividends in the past and its ability to pay dividends in the future will depend on its earnings, financial condition, working capital requirements, the performance of its acquired businesses, capital expenditures and restrictive covenants of its financing arrangements.

• Its contingent liabilities not provided for as per Ind AS 37, as disclosed in its Restated Consolidated Financial Information could adversely affect its financial condition.

• The premises for its registered office, training centre, branch offices, warehouses and certain other properties used by it held by the company on a leasehold basis, which subjects it to certain risks.

• This Draft Red Herring Prospectus contains information from an F&S Report which its have commissioned and paid for, from Frost & Sullivan. There can be no assurance that such third -party statistical, financial and other industry information is either complete or accurate.

• If its fail to maintain an effective system of internal controls, its may not be able to successfully manage, or accurately report, the company financial risks.

• The average cost of acquisition of Equity Shares by the Promoter Selling Shareholder may be less than the Offer Price.

• The company has experienced negative cash flows from, investing and financing activities in previous periods and cannot assure you that its will not experience negative cash flows in future periods. Negative cash flows may adversely affect its financial condition, results of operations and prospects.

• The company may need to change the company pricing models as and when necessary to compete successfully and an inability to do so could have an adverse effect on its business, cash flows, financial condition and results of operations.

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

• Certain non-GAAP financial measures and certain other statistical information relating to its operations and financial performance 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.

• Its Corporate Promoter will continue to retain significant shareholding in the Company after the Offer, which will allow it to exercise significant influence over it.

• Certain of its Promoters, Directors, Key Managerial Personnel and members of Senior Management may have interests in it other than reimbursement of expenses incurred and normal remuneration or benefits.

• Conflicts of interest may arise out of common business objects between the Company and its Promoters, Group Companies, and certain of the members of its Promoter Group.