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Changes in market trends, fashion and consumer preferences and increase in competition that are largely beyond its control could adversely affect its business, financial condition, results of operations and prospects.
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The company is highly dependent upon a limited number of suppliers. 76.45%, 52.04%, 49.81% and 53.71% of its Total Purchases are derived from its top 10 suppliers for the quarter ended June 30, 2023 and Fiscal Years ended on March 31, 2023, 2022 and 2021.
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The company derives 70.46%, 66.15%, 51.60% and 47.17% of its revenue from top 10 customers during the period ended on September 30, 2023, and fiscal ended on March 31, 2023, 2022 and 2021. If one or more of such customers choose not to source their requirement from it, the company`s business, financial condition and result of operation may be adversely affected.
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The company does not have long term agreements with suppliers for its raw materials and packaging material and an increase in the cost of, or shortfall in the availability or quality of such raw materials and packaging material could have an adverse effect on its business, financial condition and result of operation.
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Its reliance on six major products comprises the substantial sales and any factor affecting the sales of these major products could have an adverse effect on its business.
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The company operate in a highly competitive and fragmented industry.
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Properties, on which the company has its registered office and manufacturing facilities, are not owned by it. Any termination or dispute in relation to this lease/ rental agreement may have an adverse effect on its business operations and results thereof.
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There are pending litigations against the company and certain Directors and any adverse decision in these proceedings may render it/them liable to liabilities/penalties and may adversely affect its business, result of operations and financial conditions.
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The company is required to maintain certain licenses, approvals, registrations, consents and permits in the ordinary course of business. Failure to obtain the requisite approvals result in non-compliance and therefore, affect its business operations, financial condition, result of operations and prospects.
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The company has in the past entered into transactions with related parties and may continue to do so in the future. These or any future related party transactions may potentially involve conflicts of interest and there can be no assurance that its could not have achieved better terms, had such arrangements been entered into with unrelated parties.
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The Company requires significant amounts of working capital for continued growth. Its inability to meet its working capital requirements may have an adverse effect on the company results of operations. Further, failure to manage its inventory could have an adverse effect on the company sales, profitability, cash flow and liquidity.
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The company has negative cash flow from operating activity, investing activity and financing activities in some of the previous years as per the restated financial statement.
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Its manufacturing capacities may not reach their installed capacity and its may also be unable to effectively utilize its expanded manufacturing capacities.
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Delays or defaults in payments from its customers could result in reduction of the company profits.
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Its may suffer a loss of income if the company products/designs are duplicated by its competitors.
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Its trademarks are not registered and as such the company may not be able to effectively protect its intellectual property.
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The Company has unsecured loans which are repayable on demand. Any demand from lenders for repayment of such unsecured loans, may adversely affect its cash flows.
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Its cost of production is exposed to fluctuations in the prices of raw material like gray cloth, running dye/printed fabric.
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Its Group Companies are authorized to carry on similar line of business as that of the Company which may lead to real or potential conflicts of interest for its Promoters or Directors.
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Its insurance policies does not cover all risks, specifically risks like product defect/liability risk, loss of profits and terrorism. In the event of the occurrence of such events, its insurance coverage may not adequately protect it against possible risk of loss.
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Its Promoters and members 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.
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Its manufacturing unit is dependent on adequate and uninterrupted supply of electricity. Any shortage or non-availability of such essential utilities could lead to disruption in operations, higher operating cost and consequent decline in its operating margins.
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The company is subject to strict quality requirements, regular inspections and audits and sale of product depends on its quality control and standards. Any failure to comply with quality standards may adversely affect its business prospects and financial performance, including cancellation of existing and future orders.
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The company neither enter into any agreement with its customers nor do the company has fixed customer base. There can be no assurance that its may get repeat order flows from its customers.
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Its sales and profitability could be harmed if the company is unable to maintain or improve its brand image. Further any negative publicity with respect to its products could adversely affect its brand, business, financial condition and results of operations.
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Its manufacturing operations may be materially adversely affected by strikes; work stoppages or increased wage demands by its employees or any kind of dispute with its employees could adversely affect its business and results of operations.
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Its success largely depends upon the continuing services, strategic guidance and financial support of the promoters, directors and its senior management as well the company`s ability to attract and retain skilled personnel. Any loss of its directors, senior management or its ability to attract and retain them and other skilled personnel could adversely affect its business, financial condition and result of operations.
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Modernization and technology upgradation can render the existing technology and machinery redundant and obsolete.
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The agreements governing its indebtedness contain conditions and restrictions on the company operations, additional financing and capital structure.
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The company depends on third parties for a major portion of its transportation needs. Any disruptions may affect its operations, business and financial condition.
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If the company is unable to establish and maintain an effective system of internal controls and compliances, its business and reputation could be adversely affected.
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Within the parameters as mentioned in the chapter titled `Objects of the Issue` beginning on page 95, 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.
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Its inability to successfully implement some or all the company`s business strategies in a timely manner or at all could have an adverse effect on its business. Further, its inability to effectively manage any of these issues may adversely affect its business growth and, as a result, impact the company`s businesses, financial condition and result of operations.
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There have been certain inadvertent inaccuracies, delay and non-compliances with respect to certain regulatory filings and corporate actions taken by the Company. Consequently, its may be subject to regulatory actions and penalties for any past or future non-compliance and its business and financial condition may be adversely affected.
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Improper storage, processing and handling of materials and products may cause damage to its inventory leading to an adverse effect on the company`s business, results of operations and cash flows.
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The average cost of acquisition of Equity Shares by its Promoters could be lower than the floor price.
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The company has not made any alternate arrangements for meeting its capital requirements for the Objects of the Issue. Further the company has not identified any alternate source of financing the `Objects of the Issue`. Any shortfall in raising / meeting the same could adversely affect its growth plans, operations and financial performance.
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Its future funds requirements, in the form of issue of capital or securities and/or loans taken by it, may be prejudicial to the interest of the shareholders depending upon the terms on which they are eventually raised.
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In addition to standard remuneration or benefits and reimbursement of expenses, Its Promoters, Directors and key managerial personnel are interested in the Company to the extent of their shareholding, dividend entitlement and lease rent received, in the Company.
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There is no monitoring agency appointed by the Company and the deployment of funds are at the discretion of its Management and its Board of Directors, though it shall be monitored by the Audit Committee.
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Its Promoters 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.
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Industry information included in this Draft Red Herring Prospectus has been derived from publicly available industry reports and/or websites. There can be no assurance that such third-party statistical, financial and other industry information is either complete or accurate.
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Subsequent to the listing of the Equity Shares, its may be subject to surveillance measures, such as the Additional Surveillance Measures and the Graded Surveillance Measures by the Stock Exchanges in order to enhance the integrity of the market and safeguard the interest of investors.
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There are restrictions on daily / weekly / monthly movements in the price of the Equity Shares, which may adversely affect a shareholder`s ability to sell, or the price at which it can sell, Equity Shares at a particular point in time.
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The Equity Shares have never been publicly traded, and, after the Issue, the Equity Shares may experience price and volume fluctuations, and an active trading market for the Equity Shares may not develop. Further, the price of the Equity Shares may be volatile, and you may be unable to resell the Equity Shares at or above the Issue Price, or at all.
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After this Issue, the price of the Equity Shares may be highly volatile, or an active trading market for the Equity Shares may not develop.
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The Issue price of its Equity Shares may not be indicative of the market price of its Equity Shares after the Issue and the market price of the company Equity Shares may decline below the Issue price and you may not be able to sell your Equity Shares at or above the Issue Price.
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You will not be able to sell immediately on Stock Exchange any of the Equity Shares you purchase in the Issue until the Issue receives appropriate trading permissions.
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QIB and Non-Institutional investors are not permitted to withdraw or lower their Bids (in terms of quantity of Equity Shares or the Bid Amount) at any stage after submitting the Bid.
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Sale of Equity Shares by its Promoter or other significant shareholder(s) may adversely affect the trading price of the Equity Shares.
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The occurrence of natural or man-made disasters or outbreak of global pandemics, such as the COVID- 19 pandemic, could adversely affect its results of operations, cash flows and financial condition. Hostilities, terrorist attacks, civil unrest and other acts of violence could adversely affect the financial markets and its business.
