Shanti Gold

Risks

• The company depends on the success of its relationships with its customers and the company does not have long term contracts with them. Any loss of one or more of its top customers, or the deterioration of their financial condition or prospects, or a reduction in their demand for its products, could adversely affect the company business, results of operations, financial condition and cash flows.

• A significant portion of its business operations and revenue generation is concentrated in the Southern India. This regional concentration could expose the Company to economic, cultural, geopolitical and local market risks.

• Its business is highly concentrated on the sale of 22kt CZ jewellery and is vulnerable to variations in demand and changes in consumer preference, which could have an adverse effect on its business, results of operations and financial condition.

• The company dependence on gold may expose it to market and demand fluctuations. Further, the non-availability or high cost of quality gold, may have an adverse effect on its business, results of operations, financial condition and prospects.

• The company income and sales are subject to seasonal fluctuations and lower income in a peak season may have a disproportionate effect on its results of operations.

• The Company has experienced negative net cash flow from operating activities in the past three Fiscals and six months period ended September 30, 2024 and may continue to do so in future, which could have a material adverse effect on its business, prospects, financial condition, cash flows and results of operations.

• Its business is dependent on the company`s manufacturing capabilities at its Andheri Manufacturing Facility. Unplanned slowdowns, unscheduled shutdowns or prolonged disruptions in its manufacturing operations and an inability to effectively utilize the company production capacity could have an adverse effect on its business, results of operations, cash flows and financial condition.

• The company intend to further expand its operations through setting up the Proposed Jaipur Facility and such expansion will be subject to the risks of unanticipated delays in implementation and cost overruns.

• The nature of its business requires the company to maintain sufficient inventories resulting into high inventory costs. If its unable to maintain an optimal level of inventory, including due to changes in consumer demands, the company business, results of operations and financial condition may be adversely affected.

• Its business and the demand for the company product is reliant on the success of its customers` products with end consumers, and any decline in the demand for the end-products could have an adverse impact on its business, results of operations, cash flows and financial condition.

• The company operates in a high-value commodity sector and there are certain security risks associated with the transit and delivery of gold jewellery, including potential loss or theft.

• The company does not enter into long-term agreements with suppliers for its raw materials. An increase in the cost of, or a shortfall in the availability or quality of such raw materials, in a timely manner or at all, could have an adverse effect on its business, cash flows and results of operations.

• Failures to protect the company jewellery designs and susceptibility to intellectual property infringement litigation could adversely affect its reputation, results of operations, and financial condition.

• Its may not be successful in penetrating new export markets due to cultural, economic, regulatory, or competitive factors.

• The company Statutory Auditor have, for Fiscals 2024, 2023 and 2022, included remarks in connection with the Companies (Auditor`s Report) Order, 2020 ("CARO Report").

• The company is subject to strict quality requirements, and sales of its products is dependent on the company quality controls and standards. Any failures to comply with quality standards may adversely affect its business prospects, cash flows and financial performance, including cancellation of existing and future orders.

• Any delay in payment of statutory dues by the Company in future, may result in the imposition of penalties and in turn may have an adverse effect on the Company`s business, financial condition, results of operation and cash flows.

• The Company requires significant amounts of working capital for continued growth. Its inability to meet the company working capital requirements, on commercially acceptable terms, may have an adverse impact on its business, financial condition and results of operations.

• Its Andheri Manufacturing Facility is dependent on adequate and uninterrupted supply of electricity. Any shortage or disruption in electricity or water supply may lead to disruption in operations, higher operating cost and consequent decline in its operating margins.

• Its Promoters, Directors, Key Managerial Personnel, Senior Management and the company employees, especially the members of the design and marketing teams are critical to its continued success and its may be unable to attract and retain such personnel in the future.

• Disruptions of transportation network and transportation infrastructure may have an adverse effect on its business and results of operations.

• Information relating to the installed and actual manufacturing capacity of its Andheri Manufacturing Facility and proposed installation capacity of the company Proposed Jaipur Facility included in this Draft Red Herring Prospectus are based on various assumptions and estimates. These assumptions and estimates may prove to be inaccurate and its future production and capacity may vary.

• Its Andheri Manufacturing Facility, which also serves as the company Registered and Corporate Office, from where its operate, the proposed manufacturing unit, Proposed Jaipur Facility, as well as the branch offices of the Company is located on land not owned by it and have been leased to us by third parties. In the event the company lose or are unable to renew such leasehold rights, its business, financial condition, cash flows and results of operations may be adversely affected.

• There have been instances of delays in compliance with the corporate governance requirements within the prescribed timelines provided in the Companies Act by the company, and its have filed suo moto compounding applications with the RoC for these non-compliances.

• Its may not be able to successfully manage the growth of the company business if its not able to effectively implement its strategies.

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

• The company has certain contingent liabilities as stated in the Restated Financial Information, which if they materialize, may adversely affect its financial condition.

• The company is subject to environmental, health and safety laws, regulations and quality standards. Non-compliance with and adverse changes in health, safety, labour, and environmental laws and other similar regulations to its manufacturing operations may adversely affect the company business, results of operations, cash flows and financial condition.

• Any failures to obtain, renew and maintain requisite statutory and regulatory permits, licenses and approvals for the company operations from time to time may adversely affect its business.

• The company operates in a labour-intensive industry and are subject to stringent labor laws and any strike, work stoppage or increased wage demand by its employees or any other kind of disputes with the company employees could adversely affect its business, financial condition, results of operations and cash flows.

• The company has incurred significant indebtedness which exposes it to various risks which may have an adverse effect on the company business, results of operations and financial conditions. Conditions and restrictions imposed on it by the agreements governing its indebtedness could adversely affect the company ability to operate its business.

• The Company has availed unsecured borrowing which is repayable on demand.

• The Company may face adverse financial impact due to non-provision for potential decline in the value of investments.

• Its Promoters have provided personal guarantees in connection with the company borrowings. Its business, financial condition, results of operations and prospects may be adversely affected by the revocation of all or any of the guarantees provided by them in connection with its borrowings.

• The company has not yet placed orders in relation to the capital expenditure to be incurred for the project its intend to fund through the company Net Proceeds. In the event of any delay in placing the orders, or in the event the vendors are not able to provide the equipment in a timely manner, or at all, may result in time and cost over-runs and its business, prospects and results of operations may be adversely affected.

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

• Failures to maintain confidential information of the company customers could adversely affect its results of operations or damage the company reputation.

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

• Its funding requirements and proposed deployment of the Net Proceeds of the Issue have not been appraised by a bank or a financial institution, and the proposed utilization of Net Proceeds is based on, amongst others, its current business plan and management estimates, and if there are any delays or cost overruns, its business, cash flows, financial condition and results of operations may be adversely affected.

• The company Promoters have significant control over the Company and have the ability to direct its business and affairs; their interests may conflict with your interests as a shareholder.

• Inability to obtain or protect its intellectual property rights may adversely affect the company business.

• The company operates in a competitive business environment. Competition from existing players and new entrants and consequent pricing pressures and its inability to compete effectively could have a material adverse effect on its operating margins, business growth and prospects, financial condition and results of operations and may lead to a lower market share.

• The company enter into 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.

• An inability to maintain adequate insurance cover in connection with its business may adversely affect its operations and profitability.

• Its Promoters, Promoter Group, Directors, Group Companies, Key Managerial Personnel, Senior Management of ther Company may enter into ventures that may lead to real or potential conflicts of interest with its business. Further, the company Promoters and Directors have interests in the Company other than reimbursement of expenses incurred or normal remuneration or benefits. Any real or potential conflicts of interest that may arise in this regard may materially adversely impact its business, financial condition, results of operations and cash flows.

• The Company has not paid dividends during the last three Fiscals and during the current Fiscal. There can be no assurance that the Company will be in a position to pay dividends in the future. Its ability to pay dividends in the future may be affected by any material adverse effect on the company future earnings, financial condition or cash flows.

• The company has 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 biorefinery industry, and therefore may not be comparable with financial or industry related statistical information of similar nomenclature computed and presented by other companies.

• The company has, in the last year, issued Equity Shares at a price that could be lower than the Issue Price.

• The Company has issued bonus shares on November 18, 2024 in the proportion of 5:1, i.e., 5 Equity Shares each for every 1 Equity Share each held by existing equity Shareholders of the Company as on November 14, 2024. There can be no assurance that the Company will be in a position to declare bonus in the future. Its ability to declare and issue bonus in the future may be affected by any material adverse effect on its future earnings, financial condition or cash flows.

• Negative publicity against it, the company Promoters, Promoter group, its suppliers, the company customers or any of the company or their affiliates could cause it reputational harm and could have a material adverse effect on its business, financial condition, results of operations and prospects.

• For its business, the company relies heavily on its Promoters namely, Pankajkumar H. Jagawat, Manojkumar N. Jain and Shashank Bhawarlal Jagawat, who are its Managing Director, Whole time Director and Non-Executive Director, respectively. The company business performance may have an adverse effect by their departure or by its failure to recruit or keep them.

• The company incur significant employee benefits expense. An increase in employee costs, including on account of changes in regulations, may prevent it from maintaining its competitive advantage and may reduce the company profitability.

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

• Significant differences exist between Ind AS and other accounting principles, such as US GAAP and International Financial Reporting Standards ("IFRS"), which may affect investor`s assessment of its financial condition.

• The determination of the Price Band 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 upon listing on the Stock Exchanges.

• Pursuant to listing of the Equity Shares, its may be subject to pre-emptive surveillance measures like Additional Surveillance Measure (ASM) and Graded Surveillance Measures (GSM) by the Stock Exchanges in order to enhance market integrity and safeguard the interest of investors.

• Its top 10 customers contributed to 34.49%, 36.43% and 33.17% in the Fiscals 2025, 2024 and 2023, respectively. Any loss of one or more of the company top customers, or the deterioration of their financial condition or prospects, or a reduction in their demand for its products, could adversely affect the company business, results of operations, financial condition and cash flows.

• A significant portion of its business operations and revenue generation is concentrated in the Southern India, which contributed to 72.76% of its revenue from operations in Fiscal 2025. This regional concentration could expose the Company to economic, cultural, geopolitical and local market risks.

• Its business is highly concentrated on the sale of 22kt CZ jewellery and the company intend to utilize a portion of the Net Proceeds for undertaking capital expansion to manufacture a new line of machine-made plain gold jewellery at the Proposed Jaipur Facility. We are vulnerable to variations in demand and changes in consumer preference, which could have an adverse effect on its business, results of operations and financial condition.

• Its dependence on gold may expose the company to market and demand fluctuations. Further, the non-availability or high cost of quality gold, may have an adverse effect on its business, results of operations, financial condition and prospects.

• Its income and sales are subject to seasonal fluctuations and lower income in a peak season may have a disproportionate effect on the company results of operations.

• The Company has experienced negative net cash flow from operating activities in the past three Fiscals and may continue to do so in future, which could have a material adverse effect on its business, prospects, financial condition, cash flows and results of operations.

• Its business is dependent on the company manufacturing capabilities at our Andheri Manufacturing Facility. Unplanned slowdowns, unscheduled shutdowns or prolonged disruptions in its manufacturing operations and an inability to effectively utilize the company production capacity could have an adverse effect on its business, results of operations, cash flows and financial condition.

• The company intend to further expand its operations by utilizing a portion of the Net Proceeds for setting up the Proposed Jaipur Facility and such expansion will be subject to the risks of unanticipated delays in implementation and cost overruns.

• The Company was able to report a revenue growth of 27.61% CAGR during Fiscal 2023 to Fiscal 2025. However, its cannot assure you that the company will be able to sustain such growth in future.

• The company does not enter into long-term agreements with suppliers for its raw materials. An increase in the cost of, or a shortfall in the availability or quality of such raw materials, in a timely manner or at all, could have an adverse effect on the company business, cash flows and results of operations.

• The company has not yet placed orders in relation to the capital expenditure to be incurred for the project its intend to fund through its Net Proceeds. In the event of any delay in placing the orders, or in the event the vendors are not able to provide the equipment in a timely manner, or at all, may result in time and cost over-runs and the company business, prospects and results of operations may be adversely affected.

• The company has incurred significant indebtedness which exposes it to various risks which may have an adverse effect on its business, results of operations and financial conditions. Conditions and restrictions imposed on it by the agreements governing the company indebtedness could adversely affect its ability to operate the company business.

• The Company requires significant amounts of working capital for continued growth and the company intend to utilise Rs.2,000.00 million from the total Net Proceeds towards funding its working capital requirements. The company inability to meet its working capital requirements, on commercially acceptable terms, may have an adverse impact on the company business, financial condition and results of operations.

• Its funding requirements and proposed deployment of the Net Proceeds of the Issue have not been appraised by a bank or a financial institution, and the proposed utilization of Net Proceeds is based on, amongst others, the company current business plan and management estimates, and if there are any delays or cost overruns, its business, cash flows, financial condition and results of operations may be adversely affected.

• For its business, the company relies heavily on its Promoters namely, Pankajkumar H. Jagawat, Manojkumar N. Jain and Shashank Bhawarlal Jagawat, who are its Managing Director, Whole time Director and Non-Executive Director, respectively. The company business performance may have an adverse effect by their departure or by its failures to recruit or keep them.

• The company operates in a high-value commodity sector and there are certain security risks associated with the transit and delivery of gold jewellery, including potential loss or theft.

• The nature of its business requires the company to maintain sufficient inventories resulting into high inventory costs. If the company is unable to maintain an optimal level of inventory, including due to changes in consumer demands, its business, results of operations and financial condition may be adversely affected.

• Its business and the demand for the company product is reliant on the success of its customers` products with end consumers, and any decline in the demand for the end-products could have an adverse impact on the company business, results of operations, cash flows and financial condition.

• Failures to protect its jewellery designs and susceptibility to intellectual property infringement litigation could adversely affect the company reputation, results of operations, and financial condition.

• Its may not be successful in penetrating new export markets due to cultural, economic, regulatory, or competitive factors.

• Its Statutory Auditor have, for Fiscals 2025, 2024 and 2023, included remarks in connection with the Companies (Auditor`s Report) Order, 2020 ("CARO Report").

• The company is subject to strict quality requirements, and sales of its products is dependent on the company quality controls and standards, which has resulted in certain instances of its products being returned by the company customers. Any failures to comply with quality standards may adversely affect its business prospects, cash flows and financial performance, including cancellation of existing and future orders.

• Any delay in payment of statutory dues by the Company in future, may result in the imposition of penalties and in turn may have an adverse effect on the Company`s business, financial condition, results of operation and cash flows.

• Its Andheri Manufacturing Facility is dependent on adequate and uninterrupted supply of electricity. Any shortage or disruption in electricity or water supply may lead to disruption in operations, higher operating cost and consequent decline in its operating margins.

• Its Promoters have significant control over the Company and have the ability to direct our business and affairs; their interests may conflict with your interests as a shareholder.

• Its Promoters, Directors, Key Managerial Personnel, Senior Management and the company employees, especially the members of the design and marketing teams are critical to its continued success and the company may be unable to attract and retain such personnel in the future.

• Disruptions of transportation network and transportation infrastructure may have an adverse effect on its business and results of operations.

• Its capacity utilization at the company Andheri Manufacturing Facility was 58.00%, 50.53% and 53.36% during Fiscals 2025, 2024 and 2023, respectively. Information relating to the installed and actual manufacturing capacity of its Andheri Manufacturing Facility and proposed installation capacity of the company Proposed Jaipur Facility included in this Red Herring Prospectus are based on various assumptions and estimates. These assumptions and estimates may prove to be inaccurate and its future production and capacity may vary.

• Its Andheri Manufacturing Facility, which also serves as the company Registered and Corporate Office, from where the company operates, the proposed manufacturing unit, Proposed Jaipur Facility, as well as the branch offices of the Company are located on land not owned by it and have been leased to us by third parties. In the event the company lose or are unable to renew such leasehold rights, its business, financial condition, cash flows and results of operations may be adversely affected.

• There have been instances of delays in compliance with the corporate governance requirements within the prescribed timelines provided in the Companies Act by it, and the company has filed suo moto compounding applications with the RoC for these non-compliances.

• Its may not be able to successfully manage the growth of the company business if the company is not able to effectively implement its strategies.

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

• The company has certain contingent liabilities as stated in the Restated Financial Information, which if they materialize, may adversely affect its financial condition.

• The company is subject to environmental, health and safety laws, regulations and quality standards. Non-compliance with and adverse changes in health, safety, labour, and environmental laws and other similar regulations to its manufacturing operations may adversely affect the company business, results of operations, cash flows and financial condition.

• Any failures to obtain, renew and maintain requisite statutory and regulatory permits, licenses and approvals for its operations from time to time may adversely affect the company business.

• The Company operates in a business environment where orders are fulfilled based on customer and seasonal demand.

• The company operates in a labour-intensive industry and are subject to stringent labor laws and any strike, work stoppage or increased wage demand by its employees or any other kind of disputes with the company employees could adversely affect its business, financial condition, results of operations and cash flows.

• The Company has availed unsecured borrowing which is repayable on demand.

• The Company may face adverse financial impact due to non-provision for potential decline in the value of investments.

• Its Promoters have provided personal guarantees in connection with the company borrowings. Its business, financial condition, results of operations and prospects may be adversely affected by the revocation of all or any of the guarantees provided by them in connection with its borrowings.

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

• Failures to maintain confidential information of its customers could adversely affect the company results of operations or damage its reputation.

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

• Inability to obtain or protect the company intellectual property rights may adversely affect its business.

• The company operates in a competitive business environment. Competition from existing players and new entrants and consequent pricing pressures and its inability to compete effectively could have a material adverse effect on the company operating margins, business growth and prospects, financial condition and results of operations and may lead to a lower market share.

• The company enter into 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.

• An inability to maintain adequate insurance cover in connection with our business may adversely affect its operations and profitability.

• Its Promoters, Promoter Group, Directors, Group Companies, Key Managerial Personnel, Senior Management of the Company may enter into ventures that may lead to real or potential conflicts of interest with its business. Further, the company Promoters and Directors have interests in the Company other than reimbursement of expenses incurred or normal remuneration or benefits. Any real or potential conflicts of interest that may arise in this regard may materially adversely impact its business, financial condition, results of operations and cash flows.

• The Company has not paid dividends during the last three Fiscals. There can be no assurance that the Company will be in a position to pay dividends in the future. Its ability to pay dividends in the future may be affected by any material adverse effect on its future earnings, financial condition or cash flows.

• The company has in this 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 jewellery industry, and therefore may not be comparable with financial or industry related statistical information of similar nomenclature computed and presented by other companies.

• The company has, in the last year, issued Equity Shares at a price that could be lower than the Issue Price.

• The Company has issued bonus shares on November 18, 2024 in the proportion of 5:1, i.e., 5 Equity Shares each for every 1 Equity Share each held by existing equity Shareholders of the Company as on March 31, 2025. There can be no assurance that the Company will be in a position to declare bonus in the future. Its ability to declare and issue bonus in the future may be affected by any material adverse effect on its future earnings, financial condition or cash flows.

• Negative publicity against it, the company Promoters, Promoter group, its suppliers, the company customers or any of its or their affiliates could cause it reputational harm and could have a material adverse effect on its business, financial condition, results of operations and prospects.

• The company incur significant employee benefits expense. An increase in employee costs, including on account of changes in regulations, may prevent it from maintaining the company competitive advantage and may reduce its profitability.

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

• Significant differences exist between Ind AS and other accounting principles, such as US GAAP and International Financial Reporting Standards ("IFRS"), which may affect investor`s assessment of its financial condition.

• The determination of the Price Band 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 upon listing on the Stock Exchanges.

• Pursuant to listing of the Equity Shares, its may be subject to pre-emptive surveillance measures like Additional Surveillance Measure (ASM) and Graded Surveillance Measures (GSM) by the Stock Exchanges in order to enhance market integrity and safeguard the interest of investors.