Sudeep Pharma

Risks

• We generate a significant portion of our revenues from a limited number of customers and the loss of such customers or a decline in demand from such customers could adversely affect our business, results of operations, financial condition, and cash flows.

• We generated 66.43%, 65.84%, 67.64% and 77.01% of our revenue from operations from our pharmaceutical, food and nutrition segment, in the three months ended June 30, 2025 and Fiscals 2025, 2024 and 2023, respectively. Any adverse developments affecting this segment may adversely affect our business, results of operations, financial condition, and cash flows.

• Our Manufacturing Facilities are subject to periodic inspections and audits by regulatory authorities and customers and any manufacturing or quality control problems may subject us to regulatory action, damage our reputation and have an adverse effect on our business and results of operations.

• Three of our four Manufacturing Facilities and one of our two R&D facilities are concentrated in a single region and any adverse developments affecting this region could have an adverse effect on our business, results of operations, financial condition and cash flows.

• Any disruption, slowdown or shutdown in our manufacturing or R&D operations could adversely affect our business, results of operations, financial condition and cash flows.

• We generate a substantial portion of our revenue from operations from our export sales (58.68%, 59.27%, 64.43% and 68.45% of our revenue from operations for the three months ended June 30, 2025 and Fiscals 2025, 2024 and 2023, respectively) and any adverse developments in such regions, including the imposition of tariffs or other anti-sourcing legislation, could adversely affect our business, results of operations, financial condition and cash flows.

• If we are unable to introduce new products in a timely manner or if the products we commercialize do not perform as expected, our business, results of operations, financial condition and cash flows may be adversely affected.

• We have recently undertaken the NSS Acquisition and may undertake similar acquisitions, investments, joint ventures or other strategic alliances in the future, which if unsuccessful, may adversely affect our business, results of operations and financial condition.

• Any delay, interruption or reduction in the supply of raw materials and equipment to manufacture our products may adversely affect our business, results of operations, financial condition and cash flows.

• Our past performance may not be indicative of our future growth. We may not be successful in implementing and managing our expansion and growth strategy effectively. Further, we intend to diversify into different businesses beyond the pharmaceutical sphere, and failure to successfully implement such business ventures can negatively impact our results of operations and financial condition.

• We have not placed orders for machinery of value of Rs. 758.14 million constituting approximately 100% of the value of the total machinery to be purchased from the Net Proceeds.

• We are subject to extensive regulation from governmental and international authorities and if we fail to obtain, maintain or renew our statutory and regulatory licenses, permits and approvals required to operate, our business and results of operations may be adversely affected. Further, non-compliance with and changes in environmental, health and safety, and labor laws and other applicable regulations may adversely affect our business and results of operations.

• Our Corporate Office and certain Manufacturing Facilities are located on leased or licensed or rented premises. If these leases, leave and license agreements or rental deeds are terminated or not renewed on terms acceptable to us, it could adversely affect our business, financial condition, results of operations, and cash flows.

• Our Company, Directors, Promoters, Subsidiaries, Key Managerial Personnel and Senior Management are involved in certain legal and regulatory proceedings. Any adverse decision in such proceedings may have an adverse effect on our business, financial condition, cash flows and results of operations.

• We are unable to trace certain of our historical corporate filings with respect to certain corporate records and secretarial forms filled by us with the Registrar of Companies. We cannot assure you that no legal proceedings or regulatory actions will be initiated against our Company in the future in relation to such matters, which may adversely impact our financial condition and reputation.

• Failure to comply with applicable quality standards may result in increased product liability claims, which could adversely affect our business, financial condition, cash flows, and results of operations.

• We have witnessed negative cash flow from operating activities in the three months ended June 30, 2025. Any negative cash flows in the future would adversely affect our cash flow requirements, which may adversely affect our ability to operate our business and our financial condition.

• The RAHG Entities, who are deemed to be our Group Companies under the SEBI ICDR Regulations have not provided their consent to be identified as our Group Companies and have not provided any information in respect of themselves. We cannot assure you that complete disclosures are included in respect of such Group Companies in this Red Herring Prospectus.

• We depend on our senior management and qualified and skilled personnel, and if we are unable to recruit and retain senior management, qualified and skilled personnel, our business, financial conditions, cash flows and results of operations may be adversely affected.

• Our Promoters pledged some of the Equity Shares held by them in favour of Catalyst Trusteeship Limited, in its capacity as debenture trustee for the benefit of the debenture-holders, as security for debentures issued by our Promoter, Riva Resources Private Limited, which may be re-created in the future. Upon re-creation, any invocation of such pledge could dilute the aggregate shareholding of our Promoters, which may cause a change in control of our Company and trigger an open offer requirement under the SEBI Takeover Regulations.

• We are subject to counterparty credit risk and our inability to collect receivables in a timely manner, or at all, may have an adverse effect on our business, results of operations, financial condition and cash flows.

• Our business requires working capital and any failure in arranging adequate working capital for our operations may have an adverse effect on our business, results of operations, financial condition and cash flows.

• Our inability to accurately forecast demand for our products and manage our inventory may have an adverse effect on our business, results of operations, financial condition and cash flows.

• Under-utilization of our facilities could have an adverse effect on our business, results of operations and financial condition.

• We are exposed to risks in relation to the supply of our products, particularly through third party transportation. A failure to deliver our products to our customers in an efficient and reliable manner could have an adverse effect on our business, results of operations, cash flows and financial condition.

• Our operations could be adversely affected by strikes or increased wage demands by our employees or any other kind of disputes with our employees.

• The pharmaceutical industry in which we operate is highly competitive. If we cannot respond adequately to the competition we expect to face, we will lose market share and our profits will decline, which will adversely affect our business, financial condition and results of operations.

• Our operations involve activities and materials which are hazardous in nature and could result in a suspension of operations, injury to our personnel, emission of pollutants and/or the imposition of civil or criminal liabilities which could adversely affect our business, results of operations, cash flow and financial condition.

• Certain of our Subsidiaries have incurred losses or have negative net worth. If our subsidiaries continue to incur losses or have negative net worth, we may be required to continue providing financial support to them, which may have an adverse effect on our results of operations, financial condition and cash flows.

• Delay/ default in payment of statutory dues may attract penalties and in turn have an adverse impact on our financial condition.

• We may be subject to pricing pressure from our customers, which could have an adverse effect on our business, cash flows, results of operations and financial condition.

• We are subject to risks arising from exchange rate fluctuations.

• Our operations are dependent on adequate and uninterrupted external supply of electricity, fuel, and water. Any disruption or shortage in electricity, fuel or water may lead to disruption in operations, higher operating cost and consequent decline in our operating margins.

• Failure of our information technology infrastructure or any breach of our information technology systems may adversely affect our business, results of operations and financial condition.

• Failure to maintain confidential information of our customers could adversely affect our business, results of operations, cash flows and financial condition or damage our reputation.

• We may be subject to employee misconduct, fraud, theft, employee negligence or similar incidents which may adversely affect our business, results of operations, cash flows and financial condition.

• Failures in internal control systems could cause operational errors which may have an adverse impact on our profitability.

• Certain supporting records evidencing exact years of experience of some of our Independent Directors are not traceable.

• There are no peer group companies listed in India which are in the same line of business as our Company. Further, to our knowledge, there are no listed international peers in the same line of business as our Company which are comparable to us. Therefore, investors must rely on their own examination of accounting ratios of our Company for the purposes of investment in this Offer.

• Our reliance on certain senior management personnel who are employed through third-party agents may expose us to operational and compliance risks, and any disruption in their services could adversely affect our business, results of operations, cash flows and financial condition.

• Negative publicity against us, our Promoters, Promoter Group, our customers or any of our or their affiliates could cause us reputational harm and could have an adverse effect on our business, results of operations, cash flows and financial condition.

• We have incurred indebtedness and an inability to comply with repayment and other covenants in our financing agreements could adversely affect our business, results of operations, cash flows and financial condition.

• Any failure to protect our intellectual property rights could adversely affect our competitive position, business, financial condition and results of operation.

• If we inadvertently infringe on the intellectual property rights of others, our business and results of operations may be adversely affected.

• Our failure to keep our technical knowledge confidential could erode our competitive advantage.

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

• We have in the past entered into related party transactions and may continue to do so in the future.

• Our Promoters will continue to hold a significant equity stake in our Company after the Offer and their interests may differ from those of the other shareholders.

• Certain sections of this Red Herring Prospectus disclose information from the F&S Report which is a paid report and commissioned and paid for by us exclusively in connection with the Offer and any reliance on such information for making an investment decision in the Offer is subject to inherent risks.

• Information relating to the installed manufacturing capacity and capacity utilisation of our facilities included in this Red Herring Prospectus are based on various assumptions and estimates. These assumptions and estimates may prove to be inaccurate and our future production and capacity may vary.

• Our Promoters, Directors, Key Management Personnel and Senior Management may have interests in our Company and Subsidiaries other than reimbursement of expenses incurred and normal remuneration or benefits.

• Certain non-GAAP financial measures relating to our operations and financial performance have been included in this Red Herring Prospectus. These non-GAAP financial measures are not measures of operating performance or liquidity defined by Ind AS and may not be comparable.

• Our funding requirements and proposed deployment of the Net Proceeds of the Offer have not been appraised by a bank or a financial institution and if there are any delays or cost overruns, our business, cash flows, financial condition and results of operations may be adversely affected.

• Any variation in the utilization of the Net Proceeds as disclosed in this Red Herring Prospectus shall be subject to certain compliance requirements, including prior approval of the shareholders of our Company.

• Our ability to pay dividends in the future will depend upon our future earnings, financial condition, cash flows, working capital requirements and capital expenditures and the terms of our financing arrangements.

• The average cost of acquisition of Equity Shares for our Selling Shareholders may be lower than the Offer Price.

• We have issued Equity Shares during the preceding 12 months at prices that may be lower than the Offer Price.

• Our Directors or Promoters may enter into ventures that may lead to conflicts of interest with our business.

• Our Company will not receive any proceeds from the Offer for Sale. Our Selling Shareholders will receive the proceeds from the Offer for Sale.

• Some of our Directors do not have the experience of being a director on the board of a listed company.