Sai Silks

Risks

• The company business is highly concentrated on the sale of women`s sarees and is vulnerable to variations in demand and changes in consumer preference, could have an adverse effect on its business, results of operations and financial condition.

• An inability to effectively market its products, or any deterioration in public perception of the company brands, could affect customer footfall and consequently adversely impact its business, financial condition, cash flows and results of operations.

• Current locations of its stores may become unattractive, and suitable new locations may not be available for a reasonable price or acceptable terms, if at all. In addition, the company is exposed to risks associated with leasing real estate and any adverse developments could materially affect its business, results of operations and financial condition. Further, the company is generated substantially all of its sales from stores located in Southern India and any adverse developments affecting its operations in these regions could have an adverse impact on the company revenue and results of operations.

• The current and continuing impact of the ongoing COVID-19 pandemic on its business and operations has been significant. The impact of the pandemic on its operations in the future, including its effect on the ability or desire of customers to visit the company stores, is uncertain and may be significant and continue to have an adverse effect on its business prospects, strategies, business, operations, the company future financial performance, and the price of its Equity Shares.

• The Proforma Financial Statements included in this Draft Red Herring Prospectus are not indicative of its future financial condition or results of operations.

• If the company is unable to maintain an optimal level of inventory, its business, results of operations and financial condition may be adversely affected.

• The company operate all of its shops, the company Registered Office, and warehouses on a leasehold basis. If its unable to comply with the terms of the leases, renew the company agreements or enter into new agreements on favorable terms, or at all, its business, results of operations and financial condition may be adversely affected.

• Quality and consistency in customer service at its stores are critical for the company success, which depend on its ability to attract and retain skilled personnel. Any failure in this respect could materially and adversely impact the company reputation, business, financial condition, cash flows and results of operations.

• The company may be subject to labour unrest, slowdowns and increased wage costs, which may have an adverse effect on its business, operations, the company cash flow and financial condition.

• The company procure its products from third-party vendors and master weavers. The company do not enter into long term formal agreements with such vendors and may not be able to procure sufficient quantities or desired quality of products from such vendors and master weavers in a timely manner or at acceptable prices, or on an exclusive basis, which may adversely affect its business, financial condition and results of operations.

• The objects of the Offer include funding working capital requirements of the Company, which are based on certain assumptions and estimates and such working capital requirements may not be indicative of the actual requirements of the Company.

• Its e-commerce business faces distinct risks, and the company failure to successfully manage those risks could have a negative impact on its profitability.

• Technology failures could disrupt its operations and adversely affect its business operations and financial performance.

• The company has entered into a business assets transfer agreement to acquire the business assets of Sai Retail India Limited. Any failure to realise the anticipated benefits of the transfer or any future acquisition, partnership or purchase that its undertake, may have an adverse effect on its business, results of operations, cash flows and financial condition.

• The company may be subject to fraud, theft, employee negligence or similar incidents which may adversely affect its results of operations and financial condition.

• The company insurance cover may not be adequate or its may incur uninsured losses or losses in excess of its insurance coverage.

• Industry information included in this Draft Red Herring Prospectus has been derived from an industry report prepared by Technopak Advisors Private Limited exclusively commissioned and paid for by it for such purpose.

• If the company is unable to raise additional capital, either through debt or equity, its business prospects could be adversely affected.

• Its Statutory Auditors have included emphasis of matters in the company audited financial statements as of and for the years ended March 31, 2021, and 2020.

• The company has incurred indebtedness and an inability to comply with repayment and other covenants in its financing agreements could adversely affect the company business and financial condition. Further, certain of its financing agreements involve variable interest rates and an increase in interest rates may adversely affect its results of operations and financial condition.

• As of March 31, 2022, the company had contingent liabilities which have not been provided for in its financial statements.

• The Company, Directors, Promoters and Group Companies are or may be involved in certain legal and regulatory proceedings. Any adverse decision in such proceedings may have a material adverse effect on its business, financial condition, cash flows and results of operations.

• Any failure in its quality control processes may have an adverse effect on the company business, results of operations and financial condition.

• Failure to obtain or renew approvals, licenses, registrations and permits to operate its business in a timely manner, or at all, may adversely affect the company business, financial condition, cash flows and results of operations.

• The company is dependent on third-party transportation providers for the delivery of its products, and any disruption in such delivery or failure by third parties to provide their services may adversely affect the company operations.

• The company dependent on its Promoters, the company senior management team, and Key Managerial Personnel, and the loss of, or its inability to hire, retain, train, and motivate qualified personnel could adversely affect its business, results of operations, and financial condition.

• The growth of online retailers and current trends of discounting and pricing strategies may adversely affect its pricing ability, which may have an adverse effect on its results of operations and financial condition.

• If any new products that the company launch are not as successful as its anticipate, the company business, results of operations and financial condition may be adversely affected.

• The company Promoter has pledged certain of his Equity Shares and entered into agreement for the pledge of shares with certain lenders. Any exercise of such pledge by the lender or enforcement of such pledge could dilute the shareholding of these Promoters, which may adversely affect its business and future prospects.

• Any downgrade in its credit ratings could increase the company borrowing costs, affect its ability to obtain financing, and adversely affect the company business, results of operations and financial condition.

• The company growth and profitability depend on the level of consumer confidence and spending in India.

• If the company is unable to protect credit card or debit card data or any data related to any other electronic mode of payment, or any other personal information that the company collect from customers, its reputation could be significantly harmed.

• Its may be unable to adequately protect the company intellectual property and may be subject to risks of infringement claims.

• The company is dependent on sales through third party online market place. Its business, results of operations and financial condition could suffer if the company fail to maintain relationships with such third parties.

• The company funding requirements and proposed deployment of the Net Proceeds are based on management estimates and may be subject to change based on various factors, some of which are beyond its control.

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

• The company business is subject to seasonality. Lower revenues in the festive period of any Fiscal may adversely affect its business, financial condition, results of operations and prospects.

• The company Promoters, certain of its Directors and Key Managerial Personnel are interested in the Company`s performance in addition to their remuneration and reimbursement of expenses.

• The average cost of acquisition of Equity Shares by the Promoters and Selling Shareholders may be less than the Offer Price.

• The company enter into certain related party transactions in the ordinary course of its business and the company cannot assure you that such transactions will not have an adverse effect on its results of operation and financial condition.

• The company Promoters and Promoter Group will continue to exercise significant influence over it after completion of the Offer.

• The Company may not be able to pay dividends in the future. Its ability to pay dividends in the future will depend upon its future earnings, financial condition, cash flows, working capital requirements and capital expenditures and the terms of its financing arrangements.

• The company in this Draft Red Herring Prospectus included certain non-GAAP financial measures and certain other industry measures related to its operations and financial performance. These non-GAAP measures and industry measures may vary from any standard methodology that is applicable across the Indian retailing industry, and therefore may not be comparable with financial or industry related statistical information of similar nomenclature computed and presented by other companies.