Premier Energies

Risks

• Its revenue from operations is dependent upon a limited number of customers and the loss of any of these customers or loss of revenue from any of these customers could have a material adverse effect on its business, financial condition, results of operations and cash flows.

• The business and prospects of the Company is dependent on the success of two products namely, solar cells and modules, and therefore their continued success is necessary for its business and prospects.

• Its manufacturing facilities are located in the state of Telangana, India, which exposes its operations to potential geographical concentration risks arising from local and regional factors which may adversely affect its operations and in turn its business, results of operations and cash flows.

• The company incurred losses of Rs.(144.08) million and Rs.(133.36) million in Fiscals 2022 and 2023, respectively, and any similar losses in the future may adversely affect its business, financial condition and cash flows.

• Most of its Subsidiaries have incurred losses at some point in the last three Fiscals and the three months ended June 30, 2024, and any similar losses in the future may adversely affect its business, financial condition and cash flows. This includes Premier Energies Global Environment Private Limited, the Subsidiary to which the Net Proceeds will be applied.

• The company had negative cash flows of Rs(155.29) million in Fiscal 2023 and Rs.(410.48) million in the three months ended June 30, 2024 and may continue to have negative cash flows in the future.

• Under-utilization of its manufacturing capacities and an inability to effectively utilize its expanded and proposed manufacturing capacities could have an adverse effect on the company`s business, prospects, financial performance and cash flows.

• Expansion of its annual installed capacity despite existing underutilization may adversely affect its business, financial condition and results of operations if there is insufficient demand for the company products.

• The Company experienced a significant decline in actual production and annual installed capacity of solar modules in the past three Fiscals and the three months ended June 30, 2024. Should similar decreases occur in the future, its business, financial condition and results of operations may be adversely affected.

• The proceeds from the Offer for Sale will be paid to the Selling Shareholders.

• In the past, the company failed to comply with certain provisions of the Foreign Exchange Management Act, 1999 and also with the Companies (Prospectus and Allotment of Securities) Rule, 2014, and had to compound such non-compliances. The company cannot assure you that there will be no such non-compliances in the future and that the Company, Subsidiaries, its Directors or the directors of the company`s Subsidiaries will not be subject to any penalty or any additional payments.

• The company has significant working capital requirements and its inability to meet such working capital requirements may have an adverse effect on its results of operations.

• The company faces intense competition in its markets, and its may lack sufficient financial or other resources to maintain or improve its competitive position.

• The company is unable to trace some of its historical corporate records including in relation to certain allotments, changes in its registered office and appointment of directors. The company cannot assure you that no legal proceedings or regulatory actions will be initiated against the Company in the future in relation to these matters, which may impact its financial condition and reputation.

• The company has in the past entered into a number of related party transactions and may continue to enter into related party transactions that may involve conflicts of interest.

• Its success depends on the company ability to retain and attract qualified senior management and other key personnel, and if the company is not able to retain them or recruit additional qualified personnel, its may be unable to successfully develop the company`s business.

• The company is dependent on projects awarded by government entities and public sector undertakings. In the event the company is unable to secure such projects, its business, results of operations and financial condition may be adversely affected.

• The company bid for engineering, procurement and construction (EPC) projects through a competitive bidding process, and its may not be able to qualify for, compete or win such projects, which could adversely affect its business prospects, cash flows and results of operations.

• Its Subsidiary, Premier Solar Powertech Private Limited, has availed unsecured borrowings which had an outstanding amount of Rs. 21.07 million as of June 30, 2024 and may be recalled by the lender at any time.

• There are various risks associated with solar cell and solar module manufacturing. If such risks materialize, its business, financial condition and results of operations, among others, could be adversely affected.

• The company has experienced a sudden change in revenue from operations, restated profit / (loss) and total borrowings in the past three Fiscals and the three months ended June 30, 2024.

• Its ability to access capital at attractive costs depends on the company credit ratings. Non -availability of credit ratings or a poor rating may restrict its access to capital and thereby adversely affect the company`s business, financial conditions, cash flows and results of operations.

• Its engineering, procurement and construction (EPC) contracts may include provisions permitting its customers to terminate the agreement at their convenience. If such agreements are terminated, its business, financial condition and results of operations may be adversely affected.

• Improper storage, processing and handling of materials and products may cause damage to the company inventory leading to an adverse effect on its business, results of operations and cash flows.

• An increasing amount of its income is derived from the company export of solar modules and cells which its in the process of expanding. Such expansion plans and exports may be dependent on the policies passed by the governments of export countries and any unfavorable change in such policies may adversely affect its business.

• The company has certain contingent liabilities and capital commitments which have been disclosed in its Restated Consolidated Financial Information, which if they materialize, may adversely affect its results of operations, cash flows and financial condition.

• Its manufacturing processes for solar cells and solar modules currently relies significantly on nonrenewable energy sources. Such reliance could result in increased costs, affect compliance and harm its reputation if the company fails to transition to renewable energy sources.

• Restrictions or import duties levied on raw materials the company use in its manufacturing operations may adversely affect the company`s business prospects, financial performance and cash flows.

• Orders in its order book may be delayed, modified or cancelled, which may have an adverse impact on its business, results of operations and cash flows.

• The company import machinery from overseas and the same is subject to certain risks which may adversely affect its business, results of operations, financial condition and cash flows.

• Certain of its agreements with the company key customers have onerous terms which could result in termination if breached which in turn could have a material adverse effect on its business, financial condition, results of operations and cash flows.

• Changes in the price of solar modules, solar cells, wafers and other raw materials due to changes in demand or other factors may have a material adverse effect on its business, financial condition and results of operations.

• The continued decrease in prices for renewable energy products such as solar cells and solar modules may adversely affect its business, financial condition and results of operations.

• The typical duration of the agreements the company enter into is 60 to 120 days and there are no long term agreements that the company has entered into for major raw materials. An inability on the part of its suppliers to supply, in a timely manner, the desired quality and quantity of materials and components, may adversely affect its operations.

• The company must comply with restrictive covenants under its financing agreements, non-compliance with which can lead to accelerated repayment and suspension of future drawdowns, adversely affecting its business, results of operations, financial condition and cash flows.

• Growing its business through acquisitions or joint ventures may subject the company to additional risks that may adversely affect its business, financial condition, cash flows, results of operations and prospects.

• Its business has grown rapidly in recent periods, and the company may not be able to sustain its rate of growth in the future.

• Any variation in the utilization of the Net Proceeds would be subject to certain compliance requirements, including prior Shareholders` approval.

• If inflation were to rise in India, the company might not be able to increase the prices of its products and services at a proportional rate in order to pass costs on to the company customers and its profits might decline.

• The company corporate office, branch offices, warehouses and guest houses are located on leased premises. There can be no assurance that its lease or rental agreements will be renewed upon termination or that the company will be able to lease other premises on the same or similar commercial terms.

• Its Promoters, Directors, Key Managerial Personnel and Senior Management may have interests other than reimbursement of expenses incurred and receipt of remuneration or benefits from the Company. Certain of its Promoters and Directors may have interests in entities, which are in businesses similar to its and this may result in conflict of interest with the company.

• Its Promoters and Promoter Group will continue to exercise significant influence over the Company after completion of the Offer.

• The Company cannot assure payment of dividends on the Equity Shares in the future.

• There are outstanding litigation proceedings involving the Company, Subsidiaries and Directors. Any adverse outcome in such proceedings may have an adverse impact on its reputation, business, financial condition, results of operations and cash flows.

• The company may be unable to benefit from government policies like the Modified Special Incentive Package Scheme, Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors and various other policies.

• Exchange rate fluctuations may adversely affect its results of operations.

• The company is exposed to credit risk from its customers and the recoverability of the company trade receivables is subject to uncertainties.

• Its business is dependent on the regulatory and policy environment affecting the renewable energy sector in India. The company is also subject to imposition of basic customs duty under the Customs Act, 1962 of 25% on solar cells and 40% on modules with effect from April 1, 2022 and 10% on solar glass with effect from October 1, 2024.

• The company intend to utilize a portion of the Net Proceeds towards investment in its Subsidiary, Premier Energies Global Environment Private Limited, for funding its capital expenditure requirements in relation to the expansion of its manufacturing capacities in the form of a 4 GW TOP Con cell line and 4 GW solar module line. The company has not entered into any definitive arrangements in this regard which may result in unanticipated delays in implementation, cost overruns and other risks and uncertainties. Its funding requirements and deployment of the Net Proceeds of the Offer are based on management estimates and a project cost vetting report from RCT Solutions GmbH, both of which have not been independently appraised by any bank or financial institution.

• The cost estimates for the Project have been derived from a project cost vetting report issued by RCT Solutions GmbH which may not be accurate. Reliance on potentially inaccurate estimates may result in cost overruns which could adversely affect its financial condition, results of operations and liquidity.

• Counterparties to its agreements may not fulfil their obligations, which could have a material adverse effect on the company`s business, prospects, financial condition, results of operations and cash flows.

• An inability to produce quality products that addresses the needs of its customers or adopt new solar technologies and in an effective and timely manner may adversely affect its business, results of operations and cash flows.

• An inability to accurately forecast demand or price for its products and manage the company inventory may adversely affect its business, results of operations, financial condition and cash flows.

• Implementing its growth strategy and the company`s business operations will depend on its ability to maintain access to multiple funding sources on acceptable terms.

• Any defects or deficiencies in its products may cause it to incur additional expenses and warranty costs, damage the company reputation and cause its sales to decline.

• The company is dependent on third-party transportation providers for the transport of raw materials for its manufacturing process and delivery of the company finished products.

• The loss of accreditation for its manufacturing facilities and operations could damage its reputation, business, results of operations and cash flows.

• The company is required to provide bank guarantees and performance guarantees under certain contracts and letters of credit for its suppliers` payments.

• Any unscheduled or prolonged disruption of its manufacturing operations could materially and adversely affect the company`s business, financial condition, results of operations and cash flows.

• An inability to provide adequate customer support and ancillary services may adversely affect its relationship with the company existing and prospective customers, and in turn its business, results of operations and financial condition.

• The company may not be able to adequately protect its intellectual property.

• The company may infringe the intellectual property rights of others and its may face claims that may be costly to defend and/or limit its ability to use such technology in the future, which may have a material adverse effect on its business, financial condition and results of operations.

• Its may be subject to significant risks and hazards when constructing, operating and maintaining its manufacturing facilities, for which the company`s insurance coverage might not be adequate.

• Changes in technology may render its current technologies obsolete or require the company to make substantial capital investments.

• If the company is unable to establish and maintain effective internal controls and compliance systems, its business and reputation could be adversely affected.

• The company is dependent on its Promoters, Directors, Key Managerial Personnel and Senior Management and the loss of any key team member may adversely affect its business performance.

• Industry information included in this Red Herring Prospectus has been derived from an industry report commissioned by it, and paid for by the company for such purpose.

• Its may be subject to unionization, work stoppages or increased labor costs, which could adversely affect its business, cash flows and results of operations. The company also have a large number of contract laborers, numbering 3,278 as of June 30, 2024, resulting in increased costs to the Company.

• The company has included certain Non-GAAP Measures, industry metrics and key performance indicators related to its operations and financial performance in this Red Herring Prospectus that are subject to inherent measurement challenges. These Non-GAAP Measures, industry metrics and key performance indicators may not be comparable with financial, or industry-related statistical information of similar nomenclature computed and presented by other companies. Such supplemental financial and operational information is therefore of limited utility as an analytical tool for investors and there can be no assurance that there will not be any issues or such tools will be accurate going forward.

• Any failures or disruption of its information technology systems could adversely impact the company`s business and operations.