Sona Machinery

Risks

• The company has very short span of operating history as company.

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

• The agriculture sector is seasonal in nature. The company experience the effects of seasonality, which may result in its operating results fluctuating significantly and also, reduce its sales.

• The company does not have long-term agreements with suppliers for its raw materials and an increase in the cost of, or a shortfall in the availability or quality of such raw materials could have an adverse effect on its business, financial condition and results of operations.

• If there are delays in setting up the Proposed Facilities or if the costs of setting up and the possible time or cost overruns related to the Proposed Facilities or the purchase of plant and machinery for the Proposed Facilities are higher than expected, it could have a material adverse effect on its financial condition, results of operations and growth prospects.

• Its business is dependent on the company manufacturing unit, and the loss or shutdown of operations of its manufacturing unit may have a material adverse effect on its business, results of operations, cash flows and financial condition.

• The company requires certain approvals, licenses, registrations and permits to operate its business, and failure to obtain or renew them in a timely manner or maintain the statutory and regulatory permits and approvals required to operate its business may adversely affect its operations and financial conditions.

• The company does not own the registered office, manufacturing unit and warehouse from which the company carry out its business activities. In case of nonrenewal of rent agreements or dispute in relation to use of the said premise, its business and results of operations can be adversely affected.

• The company has not registered the trademarks which its using for the company`s business in the name of the company.

• A significant portion of its revenue is generated from its sales of milling & grading equipments and material handling equipments. The loss of customers who purchase these equipments, or a significant reduction in the production and sales of, or demand for said equipments may adversely affect its business, financial condition, results of operations and prospects.

• Its business and financial conditions may be impacted by changes or slowdown in the agricultural sector.

• The company has had certain inaccuracy in relation to regulatory filings to be made with the RoC and the company has made noncompliances of certain provision under applicable laws.

• The company relies on after-sales service network to redress customer grievances. Non-performance or underperformance of its aftersales service network could significantly harm the company reputation.

• Inventories and trade receivables form a major part of its current assets. Failure to manage its inventory and trade receivables could have an adverse effect on its net sales, profitability, cash flow and liquidity.

• Its insurance coverage may not be adequate to protect the company against certain operating hazards and this may have a material adverse effect on its business.

• The Proposed Project being implemented by it is large in context of the Company`s current scale of operations. Its may face several risks on account of implementation of the company Proposed Project.

• The Company, Promoters and Directors are parties to certain legal proceedings. Any adverse decision in such proceedings may have a material adverse effect on its business, results of operations and financial condition.

• The company is subject to competition from both organized and unorganized players in the market, which may significantly affect the fixation and realization of the price for its product, which may adversely affect its business operation and financial condition.

• Adverse publicity regarding its products could negatively impact the company.

• Its contingent liabilities as stated in its Restated Financial Statements could affect the company financial condition.

• The company has experienced negative operating cash flows in the past. Any operating losses or negative cash flows in the future could adversely affect its results of operations and financial conditions.

• The implementation of the proposed project is at a very preliminary stage. The schedule of implementation may be delayed and as a result thereof, its may face operational delays. This may have an adverse effect on its business operations and the company return on investments.

• If the company is not able to successfully manage its growth, the company`s business and results of operations may be adversely affected.

• Under-utilization of its manufacturing capacities and an inability to effectively utilize its existing manufacturing capacities could have an effect on its business, future prospects and future financial performance.

• Changes in technology may render its current technologies obsolete or require the company to make substantial investments.

• The company has incurred indebtedness which exposes it to various risks which may have an effect on its business and results of operations.

• The company has in the past entered into related party transactions and may continue to do so in the future. There can be no assurance that such transactions, individually or in the aggregate, will not have an adverse effect on the Company`s financial condition and results of operations.

• Certain of its investments may be subject to market risk and the company has not made any provisions for a possible decline of the value of such investments.

• The company is heavily dependent on its Promoters and Key Managerial Personnel for the continued success of its business through their continuing services and strategic guidance and support.

• 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.

• Dependence upon transportation services for supply and transportation of its products are subject to various uncertainties and risks, and delays in delivery may result in rejection of products by customer.

• The company may not be successful in implementing its business strategies.

• The average cost of acquisition of Equity Shares by its Promoter, is lower than the face value of Equity Share.

• Its Promoter and the Promoter Group will jointly continue to retain majority shareholding in the Company after the issue, which will allow them to determine the outcome of the matters requiring the approval of shareholders.

• Its industry is labour intensive and the company`s business operations may be materially adversely affected by strikes, work stoppages or increased wage demands by its employees or those of the company`s suppliers.

• The company is exposed to foreign currency fluctuation risks, particularly in relation to export of products, which may affect its results of operations, financial condition and cash flows.

• Its historical performance is not indicative of the company future growth or financial results and its may not be able to sustain the company`s historical growth rates.

• Loans availed by the Company has been secured on personal guarantees of its directors.

• The company may requires further equity issuance, which will lead to dilution of equity and may affect the market price of its Equity Shares or additional funds through incurring debt to satisfy its capital needs, which its may not be able to procure and any future equity offerings by the company.

• The company has not identified any alternate source of funding and hence any failure or delay on its part to mobilize the required resources or any shortfall in the Issue proceeds may delay the implementation schedule.

• The Objects of the Issue for which funds are being raised have not been appraised by any bank or financial institution. Any variation between the estimation and actual expenditure as estimated by the management could result in execution delays or influence its profitability adversely.

• Information relating to its production capacities and the historical capacity utilization of the company production facilities included in this Draft Red Herring Prospectus is based on certain assumptions and has been subjected to rounding off, and future production and capacity utilization may vary.

• Relevant copy of educational qualification of one of its directors is not traceable.

• The activities carried out at its manufacturing facilities can cause injury to people or property in certain circumstances.

• Fraud, theft, employee negligence or similar incidents may adversely affect its results of operations and financial condition.

• The company is subject to restrictive covenants under its credit facilities that limit the company operational flexibility.

• 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 ability to pay dividends in the future will dependa upon its future earnings, financial condition, cash flows, working capital requirements, capital expenditure and restrictive covenants in its financing arrangements.

• Certain data mentioned in this Draft Red Herring Prospectus has not been independently verified.

• Any Penalty or demand raised by statutory authorities in future will affect financial position of the Company.

• Any future issuance of Equity Shares may dilute your shareholdings, and sale of the Equity Shares by its major shareholders may adversely affect the trading price of the company Equity Shares.

• There is no guarantee that the Equity Shares issued pursuant to the Issue will be listed on the Emerge Platform of NSE Platform in a timely manner or at all.

• 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.