SAH Polymers Ltd IPO

Risks

• Inadequate or interrupted supply and price fluctuation of its raw materials and packaging materials could adversely affect its business, results of operations, cash flows, profitability and financial condition.

• The Company requires significant amounts of working capital and significant portion of its working capital is consumed in trade receivables and inventories. Its inability to meet its working capital requirements including failure to realise receivables and inventories may have an adverse effect on its results of operations and overall business.

• Further any defaults or delays in payment by a significant portion of its customers, may have an adverse effect on cash flows, results of operations and financial condition.

• The Company, Group Company, Corporate promoter,Directors and Subsidioary are involved in certain litigations viz criminal, civil and tax proceedings which are currently pending at various stages. Any adverse decision in these proceedings may render its liable to various penalties and/or monetary compensation and may adversely affect its business and results of operations.

• Its success depends on its ability to build new manufacturing plant and expand its product portfolio, both of which are subject to risks and uncertainties. Delay in schedule of implementation may subject the Company to risks related to time and cost overrun which may have a material adverse effect on its business, results of operations and financial condition.

• The company has not yet placed orders for 100% in relation to the capital expenditure to be incurred for the proposed Project. In the event of any delay in placing the orders, or in the event the vendors are not able to provide the plant and machineries or complete the civil and related works etc. in a timely manner, or at all, the same may result in time and cost over-runs.

• The company generate its major portion of sales from its operations in certain geographical regions both domestic and exports. Any adverse developments affecting its operations in these regions could have an adverse impact on its revenue and results of operations.

• The company derive a portion of its revenue from certain customers, and the loss of one or more such customers, the deterioration of their financial condition or prospects, or a reduction in their demand for its products could adversely affect its business, results of operations, financial condition and cash flows.

• Its may not be able to derive the desired benefits from the company product development efforts. Commercialization and market development of its product particularly its new variants of FIBC products may take longer time than expected and / or may involve unforeseen business risks.

• The company has entered into Del Credere Associate Operated Polymers Warehouse Agreement with Indian Oil Corporation Ltd. ("IOCL"). Termination or non-renewal of the Agreement or any material modification to the existing terms under such agreement adverse to its interest will materially and adversely affect its ability to continue its business and operations and its future financial performance.

• The company has not entered into any long term or definitive agreements with its customers. If the company customers choose not to source their requirements from it, The company business, financial condition and results of operations may be adversely affected.

• Introduction of alternative packaging materials caused by changes in technology or consumer preferences may affect demand for its existing products which may adversely affect its financial results and business prospects.

• There is an increased awareness towards controlling pollution and many economies including India have joined in the efforts to ban plastic product. In case any plastic packaging products manufactured by the company banned in India or in any of the markets where its export the company products, it could have a material and adverse effect on its business and results of operations.

• The current and continuing impact of the COVID-19 pandemic on its business and operations, including its impact on the ability or desire of customers to purchase its products, may have an adverse effect on its business prospects and future financial performance.

• The company require a number of approvals, NOCs, licences, registrations and permits for setting up its new manufacturing unit as well as in the ordinary course for its existing business and any failure to obtain the same will adversely affect its operations, business and profitability.

• Its manufacturing facility is critical to its business operations and any shutdown of the company manufacturing facility may have an adverse effect on its business, results of operations and financial condition.

• The company is subject to quality requirements and any product defect issues or failure by it or the company raw material suppliers to comply with quality standards may lead to the cancellation of existing and future orders, recalls and exposure to potential product liability claims.

• The industry in which the company operate is labour intensive and its manufacturing operations may be materially adversely affected by strikes, work stoppages or increased wage demands by its employees or those of the company suppliers.

• Information relating to the installed manufacturing capacity of its manufacturing facility included in this Draft Red Herring Prospectus are based on various assumptions and estimates and future production and capacity may vary.

• Its existing and proposed manufacturing facility are concentrated in a single region i.e., Rajasthan and the inability to operate and grow its business in this particular region may have an adverse effect on its business, financial condition, results of operations, cash flows and future business prospects.

• The company has substantial capital expenditure requirements and may require additional financing to meet those requirements, which could have a material adverse effect on its results of operations, cash flows and financial condition.

• Its lenders have charge over its movable and immovable properties in respect of finance availed by it. The company inability to meet its obligations under its debt financing arrangements could adversely affect its business, results of operations and cash flows.

• The company loan agreements with various lenders have several restrictive covenants and certain unconditional rights in favour of the lenders, which could influence its ability to expand, in turn affecting its business and results of operations.

• The company appoint contract labour for carrying out certain of its operations and its may be held responsible for paying the wages of such workers, if the independent contractors through whom such workers are hired default on their obligations, and such obligations could have an adverse effect on its results of operations, cash flows and financial condition.

• Failure to manage its inventory could have an adverse effect on its net sales, profitability, cash flow and liquidity.

• The company depend on third parties for its suppliers, logistics and transportation needs. Any disruptions in the same may adversely affect its operations, business, cash flows and financial condition.

• There may have been certain instances of non-compliances and alleged non-compliances with respect to certain regulatory filings for corporate actions taken by the Company in the past. Consequently, its may be subject to regulatory actions and penalties for any such past or future non-compliance and its business, financial condition and reputation may be adversely affected.

• The industry segments in which its operate being fragmented, the company face competition from other large and small players, which may affect its business operations and financial conditions.

• The Company`s failure to maintain the quality standards of the products or keep pace with the technological developments could adversely impact its business, results of operations and financial condition.

• The company is subject to foreign currency exchange rate fluctuations which could have a material and adverse effect on its results of operations and financial conditions.

• The company export its products in 6 regions. Any change in law or any other adverse events affecting these countries could have a significant adverse impact on its export orders and consequently on its results from operations.

• The orders placed by customers may be delayed, modified or cancelled, which may have an adverse effect on its business, financial condition and results of operations. Further any defaults or delays in payment by a significant portion of its customers, may have an adverse effect on cash flows, results of operations and financial condition.

• Any increase in interest rates would have an adverse effect on its results of operations and will expose the Company to interest rate risks.

• Its manufacturing activities are subject to certain hazards, which can cause injury to people or property in certain circumstances. Such accidents could cause a significant disruption at its manufacturing facilities and these disruptions may adversely affect its production schedules, costs, sales and ability to meet customer demand.

• Its may be unable to comply with changes in environmental, health and safety, labour laws and other applicable regulations.

• If the company is not able to obtain, renew or maintain its statutory and regulatory licenses, registrations and approvals required to operate its business, it may have a material adverse effect on its business, results of operations and financial condition.

• Compliance with, and changes in, safety, health and environmental laws and labour regulations may adversely affect its business, prospects, financial condition and results of operations.

• Pricing pressure from customers may affect its gross margins and ability to increase its prices, which in turn may adversely affect the company revenue from operations, profits and cash flows.

• The company has experienced negative cash flows from operations in the recent past, and its may have negative cash flows in the future.

• The company has certain contingent liabilities that have not been provided for in the Company`s financials which if materialised, could adversely affect its financial condition.

• The company is dependent on its key management team as well as its mid-to-senior personnel and the company success depends in large part upon its Promoters. The loss of or its inability to attract or retain such persons could materially adversely affect its business performance.

• Its Registered Office and manufacturing facility, corporate office and processing unit are located on leased premises. If the company is unable to renew these leases or relocate on commercially suitable terms, it may have a material adverse effect on its business, results of operation and financial condition.

• Its may be unable to protect its intellectual property or know how from third party infringement which could harm its brand and services.

• Failure or disruption to its Information Technology and/or business resource planning systems may adversely affect its business, financial condition, results of operations, cash flows and prospects.

• Its inability to effectively manage its growth or to successfully implement its business plan and growth strategies could have an adverse effect on its business, results of operations and financial condition. The success of its business will depend greatly on its ability to effectively implement the company business and growth strategies.

• Any inability to address changing industry standards and consumer trends may adversely affect its business, results of operations and financial condition.

• The Company has availed unsecured loans from Holding company/Corporate promoter and Associated concerns, which may be recalled on demand.

• Its Promoter, director and member of the Promoter Group have provided personal guarantees to certain loan facilities availed by it, which if revoked may require alternative guarantees, repayment of amounts due or termination of the facilities.

• Reliance has been placed on declarations and affidavits furnished by its Director for details of his profile included in this Draft Red Herring Prospectus.

• Its insurance may not be adequate to cover all risks, specifically risks like product defect/liability risk, loss of profits and loss due to terrorism. In the event of the occurrence of such events, its insurance coverage may not adequately protect it against possible risk of loss.

• Italica Furniture Private limited, its Group Company and Fibcorp Polyweave Private Limited, its Subsidiary is carrying on business activities similar to the company business. This may be a potential source of conflict of interest for it and which may have an adverse effect on its business, financial condition and results of operations.

• The company has in the past entered into related party transactions and may continue to do so in the future.

• Its 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 its financing arrangements.

• Certain of its Directors hold Equity Shares in the Company and are therefore interested in the Company`s performance in addition to their remuneration and reimbursement of expenses.

• Its funding requirements and the proposed deployment of Net Proceeds have not been appraised by a public financial institution or a scheduled commercial bank and its management will have broad discretion over utilization of the Net Proceeds.

• The company is required to obtain and maintain certain regulatory approvals in respect of its operations. Failure to obtain or maintain licenses, registrations, consents, permits and approvals may adversely affect its business and results of operations.

• The company is heavily dependent on machinery for its operations and any disruption to the same may cause interruption in business.

• There may be changes in the estimated project cost.

• Its may be unable to enforce its rights under some of the company agreements with counterparties on account of insufficient stamping and non- registration or other reasons.

• The company has not made any alternate arrangements for meeting its capital requirements for the Objects of the Issue. Any shortfall in raising / meeting the same could adversely affect its growth plans, operations and financial performance.

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

• If the company is unable to source business opportunities effectively, its may not achieve the company financial objectives.

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

• An inability to renew quality accreditations in a timely manner or at all, or any deficiencies in the quality of its products may adversely affect its business prospects and financial performance.

• Within the parameters as mentioned in the chapter titled `Objects of the Issue`, the Company`s management will have flexibility in applying the proceeds of this Issue. The fund requirement and deployment mentioned in the Objects of this Issue have not been appraised by any bank or financial institution.

• 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.

• Its Promoters and members of the Promoter Group will continue jointly to retain majority control over the Company after the Issue, which will allow them to determine the outcome of matters submitted to shareholders for approval.

• The company could be harmed by employee misconduct or errors that are difficult to detect and any such incidences could adversely affect its financial condition, results of operations and reputation.

• The company has incurred indebtedness and are yet to obtain NOC / Consent from its lenders, and an inability to comply with repayment and other covenants in its financing agreements could adversely affect its business and financial condition.