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There are certain criminal litigations against its Promoter and Directors. In case these cases are decided against its Promoter and the other accused, it will cause loss of reputation of the company and that may affect its business, operations and financial conditions.
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Its business operations relies significantly on the continuous and timely supply of products from Silkflex Polymers Sdn. Bhd (`Silkflex Malaysia`) from whom the company purchase 74.86%, 96.04%, 97.81% and 96.48% of the total purchases for the period ended December 31, 2023 and for the financial years ended March 31, 2023, 2022 and 2021, respectively. Any discontinuation of same will adversely impact its overall performance and profitability.
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Termination or non-renewal of the Silkflex Agreements by Silkflex Polymers Sdn. Bhd. or any material modification to the existing terms under such agreements adverse to its interest will materially and adversely affect the company`s ability to continue its business and operations and its future financial performance.
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The company has certain outstanding litigation against it, an adverse outcome of which may adversely affect its business, reputation and results of operations.
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The company depends on the success of its relationships with its customers. The company`s top ten customers contribute majority of its revenues from operations. If one or more of such customers choose not to source their requirements from it, its business, financial condition and results of operations may be adversely affected.
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The company could become liable to customers, suffer adverse publicity and incur substantial costs as a result of defects in silkflex products, which in turn could adversely affect its business operations and its sales could be diminished if the company is associated with negative publicity.
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The Company has made an application for conversion of agricultural land located in Village: Gothada, Taluka: Savli, District: Vadodra of Revenue Survey/ Block No.: 590 paiki2/paiki1 New Tenure, Gujarat, India (2999.99 Sq. mt.) and the same is under process. Any delay in getting approval from relevant government authorities will impact its business plans.
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The company has certain outstanding litigation against its Promoter, an adverse outcome of which may adversely affect the company`s business, reputation and results of operations.
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Inventories and trade receivables form a major part of its current assets. Failure to manage the company inventory and trade receivables could have an adverse effect on its sales, profitability, cash flow and liquidity.
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The Company has entered into related party transactions in the past and may continue to enter into related party transactions in the future, which may potentially involve conflicts of interest with the equity shareholders.
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The Company`s failure to provide the quality standards of the products could adversely impact its business, results of operations and financial condition.
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The company proposes to deploy a part of the Net Proceeds towards acquisition of land.
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The company requires working capital for its smooth day-to-day operations of business and any discontinuance or its inability to acquire adequate working capital timely and on favourable terms may have an adverse effect on its operations, profitability and growth prospects.
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Delays or defaults in client payments could result in a reduction of its profits.
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Certain agreements may not have been duly stamped at the time of execution as a result of which they may not be enforceable, which in turn, may adversely affect its operations.
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Its trading activities are exposed to fluctuations in the prices of traded goods.
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Improper storage, processing and handling of its products could damage the company inventories and, as a result, have an adverse effect on its business, results of operations and cash flows.
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Failure or disruption of its information technology systems may adversely affect the companay`s business, financial condition, results of operations, cash flows and prospects.
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The company is highly dependent on its promoters, directors and key managerial personnel for its business. The loss of or its inability to attract or retain such persons could have a material adverse effect on its business performance, results of operations, financial condition and cash flows.
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The company is dependent on third party transportation providers for the delivery of its products. Accordingly, continuing increases in transportation costs or unavailability of transportation services for them, as well the extent and reliability of Indian infrastructure may have an adverse effect on its business, financial condition, results of operations and prospects.
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The average cost of acquisition of Equity Shares by its Promoters is lower than the Issue price determined in consultation with Lead Manager in accordance with the SEBI ICDR Regulations.
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Within the parameters as mentioned in the chapter titled "Objects of the Issue" beginning on page 80 of this Prospectus, 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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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, business operations and financial condition.
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The company intend to utilise a portion of the Net Proceeds for funding its capital expenditure requirements. The company is yet to place orders for 100% of the plant and machineries for its proposed object, as specified in the Objects of the Issue chapter. Any delay in placing orders or procurement of such plant and machineries may delay the schedule of implementation and may also lead to increase in price of these plant & machineries, further affecting its revenue and profitability.
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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.
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The company generates its major portion of sales from its operations in certain geographical regions especially, West Bengal, Tamil Nadu, Punjab and Gujarat. Any adverse developments affecting its operations in these regions could have an adverse impact on its revenue and results of operations.
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The Company had negative cash flows in the past years, details of which are given below. Sustained negative cash flow could impact its growth and business.
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The Company is subject to foreign exchange control regulations which can pose a risk of currency fluctuation.
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Industry information included in this Prospectus has been derived from industry reports. There can be no assurance that such third-party statistical, financial and other industry information is either complete or accurate.
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The company faces significant competitive pressures from other players in its business as the industry segments in which the company operates being fragmented, its inability to compete effectively would be detrimental to its business and prospects for future growth.
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There are certain discrepancies/errors noticed in some of its corporate records relating to forms filed with the Registrar of Companies and other provisions of Companies Act, 2013. Some of its corporate records are not traceable. Any penalty or action taken by any regulatory authorities in future, for non-compliance with provisions of
corporate and other law could impact the reputation and financial position of the Company to that extent.
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The company does not own the premises in which its branch offices and warehouses are located and the same are on leasehold basis. Any termination of such agreement and/or non-renewal thereof or are required to negotiate it, its cash flows, business, financial conditions and results of operations could adversely affect.
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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.
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In addition to normal remuneration, other benefits and reimbursement of expenses some of its directors (including its Promoters) are interested in the Company to the extent of their shareholding and dividend entitlement in the Company.
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The company depends on skilled personnel and if the company is unable to recruit and retain skilled personnel, its ability to operates or grow the company`s business could be affected.
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If the company is unable to manage its growth effectively and further expand into new markets its business, future financial performance and results of operations could be materially and adversely affected.
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The company may not be fully insured for all losses its may incur.
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Certain agreements /deeds are in the previous name of the Company.
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Its Promoter, Tushar Lalitkumar Sanghavi has registered trade mark `UNAXOL` and has also applied for registration of trade mark `SILKFLEX` in his personal name.
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The possibility of counterfeit or fake products could result in liability issues and harm its reputation.
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The Company`s logo "SILKFLEX`/ "UNAXOL" is not registered with Registrar of Trademark; any infringement of its brand name or failure to get it registered may adversely affect its business. Further, the company Promoter, Tushar Lalitkumar Sanghavi has registered the `UNAXOL` in his personal name and also applied for registration of trade mark `Silkflex` in his personal name.
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The company is subject to various laws and extensive government regulations and if the company fail to obtain, maintain or renew its statutory and regulatory licenses, permits and approvals required in the ordinary course of its business, including environmental, health and safety laws and other regulations, its business financial condition, results of operations and cash flows may be adversely affected.
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If the company fails to keep its technical knowledge and process know-how confidential, the company may suffer a loss of its competitive advantage.
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Pricing pressure from customers may adversely affect its gross margin, profitability and ability to increase the company prices.
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The Company has availed unsecured loans from its directors and directors` relatives, which may be recalled on demand.
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Its Promoters cum Directors have provided personal guarantees for loan facilities obtained by the Company, and any failure or default by the Company to repay such loans in accordance with the terms and conditions of the financing documents could trigger repayment obligations on them, which may impact their ability to effectively service their obligations as its Promoters/Directors and thereby, impact the company`s business and operations.
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Its financing agreements contain covenants that limit the company flexibility in operating its business. If the company is not in compliance with certain of these covenants and are unable to obtain waivers from the respective lenders, its lenders may accelerate the repayment schedules, and enforce their respective security interests, leading to a material adverse effect on its business and financial condition.
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The company might infringe upon the intellectual property rights of others and may be susceptible to claims from third parties, affecting its operations and financial condition.
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Any increase in interest rates would have an adverse effect on its results of operations and will expose the Company to interest rate risks.
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If the company fails to maintain an effective system of internal controls, its may not be able to successfully manage, or accurately report, its financial risks. Despite its internal control systems, the company may be exposed to operational risks, including fraud, petty theft and embezzlement, which may adversely affect its reputation, business, financial condition, results of operations and cash flows.
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The company is exposed to counterparty credit risk and any delay in receiving payments or non-receipt of payments may adversely impact its results of operations.
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Its Promoters and Promoter Group will continue to retain a majority shareholding in the Company after the Issue, which will allow them to exercise significant influence over the company.
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Its ability to pay dividends in the future will depends upon its future earnings, financial condition, cash flows, working capital requirements, capital expenditure and restrictive covenants in its financing arrangements.
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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 upon listing on the Stock Exchange.
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Significant differences exist between Indian GAAP and other accounting principles, such as US GAAP and IFRS, which may be material to investors assessments of the Company`s financial condition. Its failure to successfully adopt IFRS may have an adverse effect on the price of its Equity Shares. The proposed adoption of IFRS could result in its financial condition and results of operations appearing materially different than under Indian GAAP.
