Rachit Prints

Risks

• Our Company is dependent on few numbers of customers for sales. Loss of any of this large customer may affect our revenues and profitability.

• We have long-term agreements with two of our top 10 customers only, the loss of one or more of them or a reduction in their demand for our products could adversely affect our business, results of operations, financial condition and cash flows.

• Our Company is dependent on few suppliers for purchase of raw material. Loss of any of these large suppliers may affect our business operations.

• We have experienced negative cash flows in relation to our operating activities, investing activities and financing activities for the Financial Year 2022 - 23, 2023 - 24 and 2024 - 25. Any negative cash flows in the future would adversely affect our results of operations and financial condition.

• Our Company has experienced multiple instances of minor delays in filing of returns required under the CGST Act, 2017, the Employees` Provident Fund and Miscellaneous Provisions Act, 1952 and Employee State Insurance.

• Our Company was incorporated in the year 2003 and some of our corporate records including forms filed with the Registrar of Companies are not traceable. Certain forms we cannot assure you that these forms filings will be available in the future or that we will not be subject to any penalties imposed by the relevant regulatory authority in this respect which may impact our financial condition and reputation.

• We do not own our Registered Office & our manufacturing facility and we have only lease rights over such premise. In the event we lose such rights or are required to negotiate it, our cash flows, business, financial conditions and results of operations could be adversely affected.

• Our existing manufacturing facility is concentrated in a single region i.e., Meerut, Uttar Pradesh and the inability to operate and grow our business in this particular region may have an adverse effect on our business, financial condition, results of operations, cash flows and future business prospects.

• Our business is working capital intensive. If we experience insufficient cash flows to meet required payments on our working capital requirements, there may be an adverse effect on the results of our operations.

• We have experienced fire outbreak in our manufacturing facility on May 10, 2017. We regularly work with flammable materials and activities in our operation which can be dangerous and could cause injuries to people or property.

• Our Company has lodged the Insurance claim in the past. Our insurance coverage may not be adequate to protect us against all material risks.

• In our Audited Financial Statements for the Financial Year 2022-23, our Company did not make any provision for gratuity payment as required under The Payment of Gratuity Act, 1972. However, in the Restated Standalone Financial Statements, the impact of provision for gratuity payment on the Profits earned by the Company has been shown in Annexure-6 "Restated Summary Statement of Reconciliation of Restated Profit/(Loss) To Profit/ (Loss) as per Audited Financial Statements".

• We have in the past entered into related party transactions and may continue to do so in the future, which may potentially involve conflicts of interest with the equity shareholders.

• Our lender has charge over our immovable property and stocks in respect of finance availed by us.

• Our inability to collect receivables and default in payment from our customers could result in the reduction of our profits and affect our cash flows.

• Trade Receivables and Inventories form a substantial part of our current assets. Failure to manage our inventory could have an adverse effect on our business, results of operations, cash flows and financial condition.

• Our business depends on the performance of its information technology systems and any interruption or abnormality in the same may have an impact on our business operations and profitability.

• We do not have long-term agreements with suppliers for our raw materials and an increase in the cost of, or a shortfall in the availability or quality of such raw materials could have an adverse effect on our business, financial condition and results of operations.

• We are dependent on third-party transportation providers for the supply of raw materials and delivery of our finished products.

• We are dependent on a number of key personnel, including our management, and the loss of or our inability to attract or retain such persons could adversely affect our business, results of operations and financial condition.

• Our Independent Directors do not have qualification and experience related to the business of our Company.

• A shortage or non-availability of electricity or water or fuel may affect our manufacturing operations and have an adverse effect on our business, results of operations and financial condition.

• We cannot assure you that the Objects of the Issue will be achieved within the expected time frame, or at all, and any variation in the utilisation of the Net Proceeds would be subject to certain compliance requirements, including prior shareholders` approval.

• One of our Certificate i.e Import Export Certificate is in erstwhile name.

• Our operations are subject to environmental, health and safety laws and regulations.

• Our Promoters and Promoters Group will continue to exercise control post completion of the Issue and will have considerable influence over the outcome of matters.

• In addition to normal remuneration, other benefits and reimbursement of expenses of some of our Directors (including our Promoters) and Key Management Personnel are interested in our Company to the extent of their shareholding and dividend entitlement in our Company.

• Our Company is involved in certain legal proceedings. Any adverse decision in such proceedings may have a material adverse effect on our business, results of operations and financial condition.

• Any negative publicity or defect in product quality may cause our Company substantial costs which in turn could adversely affect our goodwill and our sales could be diminished.

• Any failure to protect or enforce our rights to own or use our trademark could have an adverse effect on our business and competitive position.

• Improper storage, processing and handling of our raw materials, work products and products could damage our inventories and, as a result, have an adverse effect on our business, results of operations and cash flows.

• Our business is dependent on our manufacturing facility and we are subject to certain risks in our manufacturing process. Any slowdown or shutdown in our manufacturing operations or under-utilization of our manufacturing facility could have an adverse effect on our business, operations and financial condition.

• Our ability to pay dividends will depend upon future earnings, financial condition, cash flows, working capital requirements, capital expenditures and other factors.

• The requirements of being a publicly listed company may strain our resources.

• Changes in latest technology or requirement of machinery based on business opportunity may adversely affect our Company`s results of operations and its financial condition.

• We face competition in our business from domestic competitors. Such competition would have an adverse impact on our business and financial performance.

• Our inability or failure to maintain a balance between optimum inventory levels and our product offering may adversely affect our business, results of operations and financial condition.

• We are subject to risk of fraud, theft, embezzlement by our employees, contractors and customers, employee negligence or similar incidents may adversely affect our results of operations and financial condition.

• The average cost of acquisition of Equity Shares by our Promoters is lower than the floor price.

• There is no monitoring agency appointed by our Company and the deployment of funds are at the discretion of our Management and our Board of Directors, though it shall be monitored by our Audit Committee.

• Applicants to this Issue are not allowed to withdraw their Applications after the Bid/Issue Closing Date.

• The determination of the Issue Price is based on various factors and assumptions and the Issue Price of the Equity Shares may not be indicative of the market price of the Equity Shares after the Issue.

• Industry information included in this Red Herring Prospectus has been derived from the Industry Analysis of the Home Textile Sector-Emphasis on Printed and Knitted Fabrics ("D&B Report", which was prepared by Dun & Bradstreet ("Dun & Bradstreet") and exclusively commissioned and paid for by our Company for the purposes of the Issue, and any reliance on information from the Report for making an investment decision in the Issue is subject to inherent risks.