United Cotfab

Risks

• There are outstanding legal proceedings involving the Company, Promoters, Directors, and Group Companies. Any adverse decision in such proceedings may have a material adverse effect on its business, results of operations and financial condition.

• The company has a very limited operating history of its manufacturing operations, which may make it difficult for investors to evaluate its historical performance or future prospects.

• There may be potential conflict of interests between the Company and other group Companies / entities or enterprises promoted by its Promoters or directors or in which the company promoters / directors may be interested.

• The Company is dependent on few numbers of customers for sales. The loss of any of this large customer may affect our revenues and profitability.

• The Company is dependent on few suppliers for purchase of product. Loss of any of these large suppliers may affect our business operations.

• The Company in the past has entered into Related Party Transactions and may continue to do so in future also, which may affect its competitive edge and better bargaining power if entered with non-related parties resulting into relatively more favorable terms and conditions and better margins.

• Its revenues are highly dependent on the company operations in geographical region of state of Gujarat & Maharashtra. Any adverse development affecting its operations in these regions could have an adverse impact on its business, financial condition and results of operations.

• Its business requires the company to obtain and renew certain registrations, licenses and permits from government and regulatory authorities and the failure to obtain and renew them in a timely manner may adversely affect its business operations and some of the approvals are required to be transferred in the name of United Cotfab Limited`.

• The Company have incurred losses in past and any operating losses in the future could adversely affect the results of operations and financial conditions of the company. The Company have incurred losses in past in the previous years as per the Restated Financial Statements and the same are summarized as under.

• In its restated financials as at March 31, 2024, the company has a contingent liability related to export commitments. Failure to meet these commitments under the Export Promotion Capital Goods (EPCG) scheme may result in the imposition of penalties.

• The company has acquired Land from Promoter Director in the past 5 years.

• Its business is dependent and will continue to depend on the company`s manufacturing facilities, and the company is subject to certain risks in its manufacturing process such as the breakdown or failure of equipment, industrial accidents, severe weather conditions and natural disasters.

• The Company has availed unsecured loans which are repayable on demand. Any demand from lenders for repayment of such unsecured loans, may adversely affect its cash flows.

• Its lenders have charge over the company movable and immovable properties in respect of finance availed by it.

• If the company is unable to service its debt obligations in a timely manner or to comply with various financial and other covenants and other terms and conditions of its financing agreements, it may adversely affect the company`s business, prospects, results of operations and financial condition.

• The company is subject to the restrictive covenants of banks in respect of the Loan/Credit Limit and other banking facilities availed from them.

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

• Its operations are subject to high working capital requirements. The company`s inability to maintain sufficient cash flow, credit facilities and other sources of funding, in a timely manner, or at all, to meet requirement of working capital or pay out debts, could adversely affect its operations.

• The company has not yet applied for registration of its name and logo and the company does not own the "corporate logo" legally as on date.

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

• The company is dependent on its Promoters, its senior management and other key personnel, and the loss of, or its inability to attract or retain, such persons could affect its business, results of operations, financial condition and cash flows.

• Its Business requires deployment of labour and depend on availability of labour. In case of unavailability of such labour, its business operations could be affected.

• Its success depends on the company`s ability to attract and retain its key management personnel. If the company is unable to do so, it would adversely affect its business and results of operations.

• 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.

• In addition to regular remuneration, other benefits and expense reimbursement its Promoters, Directors, key managerial personnel or senior management hold a vested interest in the Company; to the extent of their shareholding and associated dividend entitlements. They also have a stake in transactions involving the company, whether with themselves individually or with its group companies/entities. The Company in future may enter in related party transactions subject to necessary compliances.

• All of its revenue from operations are generated from India. Any adverse development affecting its operations in India could have an adverse impact on the company`s business, financial condition and results of operations.

• The company may faces foreign exchange risks that could adversely affect its results of operations and cash flows.

• The company could be adversely affected due to misconduct or errors of its employees that are difficult to detect and any such incidents could adversely affect its financial condition, results of operations and reputation.

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

• Its ability to pay any dividends will depends upon future earnings, financial condition, cash flows, working capital requirements and capital expenditures. Moreover, the company might not sustain historical dividend levels moving forward.

• There is no monitoring agency appointed by the Company to monitor the utilization of the Issue proceeds.

• After the completion of the Issue, its Promoters and members of Promoter Group will continue to collectively hold substantial shareholding in the Company.

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

• Any future issuance of its Equity Shares may dilute prospective investors` shareholding, and sales of its Equity Shares by the company`s major shareholders may adversely affect the trading price of its Equity Shares.

• The Issue price of its Equity Shares may not be indicative of the market price of the company`s Equity Shares after the Issue and the market price of its 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.

• The Objects of the Issue for which funds are being raised, are based on its management estimates and the same have not been appraised by any bank or financial institution or any independent agency. The deployment of funds in the project is entirely at its discretion, based on the parameters as mentioned in the chapter titled as "Objects of the Issue".

• Industry information included in this Prospectus has been derived from an industry sources. There can be no assurance that such third-party statistical, financial and other industry information is complete, reliable or accurate.

• In the event there is any delay in the completion of the Issue, or delay in schedule of implementation, there would be a corresponding delay in the completion of the objects of this Issue which would in turn affect its revenues and results of operations.

• The company has not identified any alternate source of raising the funds required for the object of the Issue and the deployment of funds is entirely at its discretion and as per the details mentioned in the section titled "Objects of the Issue".

• 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`s Equity Shares.