Vibhor Steel

Risks

• The average price/earnings ("P/E") ratio of the listed industry peer set was x as on while its P/E ratio will be at premium of times at the higher price band and times at the lower price band. The trading price of its Equity Shares may fluctuate based on a comparison of the P/E ratio of the listed industry peer set and the Company.

• The Company has reported certain negative cash flows from its financing activity and investing activity, details of which are given below. Sustained negative cash flow could impact its growth and business.

• The Company, its Promoters/Director and its Group Companies 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.

• Covid-19 or the outbreak of any other severe communicable disease could have a potential impact on its business, financial condition and results of operations.

• The Company has entered into long-term agreements with Jindal Pipes Limited purchasing its Products.

• The Company has entered into long-term agreements with Steel Authority of India Limited ("Raw Material Supplier").

• The company has certain contingent liabilities, which, if materialized, may affect its financial condition and results of operations.

• Its business is working capital intensive. If the company experience insufficient cash flows to meet required payments on its working capital requirements, there may be an adverse effect on the results of its operations.

• Its profitability and results of operations may be adversely affected in the event of any disruption in the supply of raw materials or increase in the price of materials, fuel costs, labour or other inputs.

• Trade Receivables and Inventories form a substantial part of its current assets. Failure to manage the same could have an adverse effect on its net sales, profitability, cash flow and liquidity.

• The company own plant & machinery, resulting in increased fixed costs to the Company. In the event the company is not able to generate adequate cash flows it may have a material adverse impact on its operations.

• This Draft Red Herring Prospectus contains information from an industry report which was prepared by CARE Advisory Research and Training Limited (Care Edge Research), which is paid and commissioned by the Company, pursuant to an engagement with the Company.

• Its failure to accurately forecast and manage inventory could result in an unexpected shortfall and/ or surplus of raw materials, equipment and manpower, which could affect its business and financial condition.

• The Company has availed Rs. 382.97 lakhs as unsecured loan which are repayable on demand. Any demand from the lenders for repayment of such unsecured loan may affect its cash flow and financial condition.

• Its Promoters have provided personal guarantees for the company borrowings to secure its loans. Its business, financial condition, results of operations, cash flows and prospects may be adversely affected by the revocation of all or any of the personal guarantees provided by its Promoters and members of Promoters Group in connection with the Company`s borrowings.

• In addition to normal remuneration, other benefits and reimbursement of expenses of some of its Directors (including its Promoters) and Key Management Personnel are interested in the Company to the extent of their shareholding and dividend entitlement in the Company.

• Some of its borrowings carry restrictive covenants or conditions and could affect its ability to manage its business operations.

• Any variation in the utilisation of the Net Proceeds of the Fresh Issue as disclosed in this Draft Red Herring Prospectus shall be subject to certain compliance requirements, including prior Shareholders` approval.

• Compliance with, and changes in, safety, health and environmental laws and various labour, workplace related laws and regulations, including terms of the approvals granted to it, may increase its compliance costs and as such adversely affect the company business, prospects, results of operations and financial condition.

• Its manufacturing process requires its labourers to work under potentially dangerous circumstances. In the event of any accidents, the Company may be held liable for damages and penalties which may impact the financials of the Company.

• The average cost of acquisition of Equity Shares by its Promoters is lower than the floor price.

• Any adverse revision to its credit rating by rating agencies may adversely affect its ability to raise additional financing and the interest rates and other commercial terms at which such funding is available.

• The company is exposed to the risks of malfunctions or disruptions of information technology systems.

• A portion of its revenues and expenses are denominated in foreign currencies. As a result, the company is exposed to foreign currency exchange risks and regulatory changes in foreign exchange management which may adversely impact its results of operations.

• A slowdown or shutdown in its manufacturing operations could have an adverse effect on its business, results of operations, financial condition and cash flows.

• The company may receive customer complaints and as a result may face product recalls, product liability claims and legal proceedings, if the quality of its Products does not meet its customers` expectations, in which case the company`s business and revenues, and ultimately its reputation, could be negatively affected.

• A shortage or unavailability of electricity or water could affect its manufacturing operations and have an adverse effect on its business, results of operations and financial condition.

• Its Group Company have incurred losses during recent financial years.

• The pricing in the steel industry is subject to market demand, volatility and economic conditions. Fluctuations in steel prices may have a material adverse impact on its business, results of operations, prospects and financial conditions.

• It is difficult to predict its future performance, or compare its historical performance between periods, as the company revenue fluctuates significantly from period to period.

• The company have in the past entered into related party transactions and may continue to do so in the future, which may potentially involve conflicts of interest with the equity shareholders. There can be no assurance that such transactions, individually or in the aggregate, will not have an adverse effect on its financial condition and results of operations.

• If the company is unable to establish and maintain an effective internal controls and compliance system, its business and reputation could be adversely affected.

• Employee misconduct, errors or fraud could expose it to business risks or losses that could adversely affect its business prospects, results of operations and financial condition.

• Its funding requirements and deployment of the Fresh Issue proceeds are based on management estimates and have not been independently appraised by any bank or financial institution.

• Any failure to protect or enforce its rights to own or use its trademark could have an adverse effect on the company`s business and competitive position.

• Its Promoters and Promoters Group will continue to exercise control post completion of the Issue and will have considerable influence over the outcome of matters.

• Its benefit from the company relationship with its Promoters and its business and growth prospects may decline if the company cannot benefit from this relationship in the future.

• Its insurance coverage may not be sufficient or may not adequately protect it against any or all hazards, which may adversely affect its business, results of operations and financial condition.

• There is no guarantee that its Equity Shares will be listed on the BSE and the NSE in a timely manner or at all.

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

• The requirements of being a listed company may strain its resources.

• Pursuant to listing of the Equity shares, its may be subject to pre-emptive surveillance measures like additional Surveillance Measures ("ASM") and Graded surveillance Measures ("GSM") by the Stock Exchanges in the order to enhance market integrity and safeguard the interest of the investors.

• If there is any change in tax laws or regulations, or their interpretation, such changes may significantly affect our financial statements for the current and future years, which may have a material adverse effect on its financial position, business and results of operations.

• Its ability to pay dividends in the future will depend upon future earnings, financial condition, cash flows, working capital requirements and capital expenditures and there can be no assurance that its will be able to pay dividends in the future.