Megatherm

Risks

• Its loan agreements requires its Corporate Promoter to pledge Equity Shares of the Company with lenders. Any breach by the Company of certain covenants under the financing agreements may entitle these lenders to exercise their rights under the financing agreements and reduce the shareholding of its Corporate Promoter, which may adversely affect the company business.

• The company significantly depends upon few of the raw material suppliers for manufacturing of induction heating and melting products and transformers. Volatility in the supply and pricing of its raw materials may have an adverse effect on the company business, financial condition and results of operations.

• The company may not be able to realize the amounts, partly or at all, reflected in its Order Book which may materially and adversely affect itd business, prospects, reputation, profitability, financial condition and results of operation.

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

• The company is subject to strict performance requirements, including, but not limited to, quality and delivery, by its customers, and any failure by it to comply with these performance requirements may lead to the cancellation of existing and future orders, recalls or warranty and liability claims.

• The company depends on the large industries for selling of its products which may effects its revenue from operation and profits.

• Substantial portion of its revenues has been dependent upon few customers. The loss of any one or more of its major customer would have a material adverse effect on its business, cash flows, results of operations and financial condition.

• Its Group Company have incurred losses in past and any operating losses in the future could adversely affect the results of operations and financial conditions of its group company.

• Delays or defaults in client payments could affect its operations.

• Product designing is very important part for its equipment for which its relies on the company team and third party consultant. Any loss or error by these employees or consultants may have an adverse effect on its equipment and operations.

• The trademark used by the Company is registered in the name of its Corporate Promoter i.e. Megatherm Electronics Private Limited and the company have not entered into any exclusive agreement for usage of the trademarks.

• Its Corporate Promoters and Group Company is engaged in the similar line of business as of the Company. There are no non-compete agreements between the Company and such entities. Its cannot assure that its Promoters will not favour the interests of such entities over its interest or that the said entities will not expand which may increase the company competition and may adversely affect business operations and financial condition of the Company.

• The company`s business and the company financial condition would be materially and adversely affected if its fail to obtain new purchase orders and contracts.

• Proper functionality and efficient working of the induction melting, hardening equipment and transformers manufactured by it play an integral role in the operations of its customers any issue in functioning of these equipment may significantly impact the company`s finances and reputation.

• The company does not own the Registered Office and certain other place of business from where its operate the company business activities. Any dispute in relation to use of the premises would have a material adverse effect on its business and results of operations.

• There are certain outstanding legal proceedings involving the Company, Promoters, Directors and Group Companies. Any failure to defend these proceedings successfully may have an adverse effect on its business prospects, reputation, financial conditions and result of ongoing operations.

• Fluctuations in the exchange rate of foreign currencies could result in currency transactions losses.

• Its Group company namely EMT Megatherm Private Limited have in the past entered into a compromise settlement with the Bank. However, the company have made the payment towards the compromise amount and have received no dues certificate from the Bank.

• The Company has not yet placed orders for machineries and equipment required by it for expansion of its manufacturing facility. Any delay in placing the orders or supply of plant and machinery may result in time and cost overruns, and may affect its profitability.

• Activities involving the company`s manufacturing process can be dangerous and can cause injury to people or property in certain circumstances. A significant disruption at its manufacturing facility may adversely affect the company production schedules, costs, sales, and ability to meet customer demand.

• If the company is unable to retain and hire skilled employees, or to maintain good relations with its workforce, its business and financial condition may be adversely affected.

• The company continued operations are critical to its business and are subject to operating risks such as breakdown or failure of machinery, disruption to power sources or any temporary shutdown of its manufacturing facilities, in the event of which, the company business, results of operations, financial condition and cash flows can be adversely affected.

• The Company operates under several statutory and regulatory permits, licenses and approvals. Its inability to obtain, renew or maintain the statutory and regulatory licenses, permits and approvals required to operates its business may have an adverse effect on the company business & operations.

• The company induction heating and melting equipment business and transformer business is dependent on growth in the metal and steel industry, that may contribute to fluctuations in its results of operations and financial condition.

• Certain of its agreements may be inadequately stamped or may not have been registered as a result of which the company operations may be adversely affected.

• Failure or disruption of its information technology may adversely affect the company business, financial condition, results of operations and prospects.

• Its failure to identify and understand evolving industry trends and preferences may adversely affect its business.

• The company participate and operates in competitive markets and may face competition from different players in the market which may have an adverse effect on its business, cash flows, financial condition and results of operations.

• Its growth depends on the company expertise and initiatives to develop new products and/or improve its existing products and if the company does not succeed its may suffer loss of its competitive advantage.

• The company have experienced significant growth in the past few years, and if its unable to sustain or manage its growth, the company`s business, results of operations and financial condition may be adversely affected.

• There are certain discrepancies/errors noticed in some of its corporate records relating to forms filed with the Registrar of Companies and other provisions of Companies Act, 1956/2013. Any penalty or action taken by any regulatory authorities in future, for non-compliance with provisions of corporate and other law could impact the reputation and financial position of the Company to that extent.

• The company net cash flows from financing and investing activities have been negative in some years in the past. Any negative cash flow in the future may affect its liquidity and financial condition.

• Any adverse revision to its credit rating by rating agencies may adversely affect the company ability to raise additional financing and the interest rates and other commercial terms at which such funding is available.

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

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

• Loans availed by the Company has been secured on personal guarantees of its Director. The company business, financial condition, results of operations, cash flows and prospects may be adversely affected in case of invocation of any personal guarantees provided by its Directors.

• Ineffective execution of marketing programs and reduced marketing expenditure could have an adverse effect on its sales.

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

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

• The Company in the past has entered into Related Party Transactions and may continue to do so in future also, which may affect its competitive edge and better bargaining power if entered with non- related parties resulting into relatively more favourable terms and conditions and better margins.

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

• The company depends on third-parties for its transportation needs. Any disruptions may adversely affect its operations, business and financial condition.

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

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

• The company deploy advanced technologies in the manufacturing, designing and installation of induction heating and melting products and ttransformers. Any incapability to adopt a new technology or change in the requirement of a particular technology by the government authorities may affect its position.

• 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.

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

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

• 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 its profitability adversely.

• The company ability to pay any dividends will depends upon future earnings, financial condition, cash flows, working capital requirements and capital expenditures.

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

• There is no monitoring agency appointed by the Company to monitor the utilization of the Issue proceeds.

• Any future issuance of Equity Shares, or convertible securities or other equity linked securities by it and any sale of Equity Shares by its significant shareholders may dilute your shareholding and adversely affect the trading price of the Equity Shares.

• Its Promoters 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 Issue price of its Equity Shares may not be indicative of the market price of the company Equity Shares after the Issue and the market price of its Equity Shares may decline below the issue price and you may not be able to sell your Equity Shares at or above the Issue Price.

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