Advanced SysTek Limited IPO

The company's business is significantly reliant on certain key customers, particularly large oil and gas PSU companies. The company has derived Rs. 2,868.90 million, Rs. 2,390.59 million, and Rs. 1,762.85 million constituting 94.91%, 94.57% and 93.65% of its revenue from operations from the company's top 10 customers during Fiscal 2026, Fiscal 2025 and Fiscal 2024, respectively. Loss of any of these customers or loss of revenue from sales to any key customers could have a material adverse effect on its business, financial condition, results of operations and cash flows.

A significant proportion of the company orders are from government related entities which award the contract through a process of tender. Its derived Rs. 2,762.20 million, Rs. 2,183.97 million, and Rs. 1,601.31 million constituting 91.39%, 86.40% and 85.07% of the company's revenue from operations during the Fiscal 2026, Fiscal 2025 and Fiscal 2024, respectively, from customers which are public sector undertakings (PSU Customers). Tenders, typically, requires pre-qualification and are awarded to the lower bidder once all other eligibility criteria are met. Its performance could be adversely affected if the company is not able to successfully bid for these contracts or required to lower its bid value.

The company is significantly reliant on a few suppliers, and the company does not enters into long-term contracts or arrangements with the company suppliers. Its cost of materials from the company's top 10 suppliers was Rs. 1,112.22 million, Rs. 884.31 million, and Rs. 582.72 million constituting 57.88%, 54.92% and 50.27% of its total cost of materials in Fiscal 2026, Fiscal 2025 and Fiscal 2024, respectively. Any loss of suppliers will have a material adverse impact on the company's business and its revenue. Further, if the company is unable to procure materials of the required quality and quantity, at competitive prices, its business, results of operations and financial condition may be adversely affected.

The company operations are significantly dependent on the petroleum, oil, gas and petrochemical industry in India and overseas in which the company provide its Industrial Automation Solutions (IA Solutions). The company has derived Rs. 2,827.57 million, Rs. 2,260.70 million and Rs. 1,679.53 million constituting 93.55%, 89.43%, and 89.23% of its revenue from operations during the Fiscal 2026, Fiscal 2025 and Fiscal 2024, respectively, from the petroleum, oil and gas industry. Any downturn in this industry may have an adverse effect on the company's business, revenue from operations and financial conditions. Further, the ongoing geopolitical tensions in West Asia may also adversely affect its business, results of operations and financial conditions.

Revenue from its Industrial Automation solutions business constitutes a significant majority of the company's revenue from operations. Its derived Rs. 2,991.87 million, Rs. 2,519.75 million, and Rs. 1,879.41 million constituting 98.99%, 99.68%, and 99.85% of the company's revenue from operations during the Fiscal 2026, Fiscal 2025 and Fiscal 2024, respectively, from its Industrial Automation business. Failures to maintain and augment the company's revenue therefrom could have a material adverse effect on its business and financial condition.

The Company had an order book of Rs. 1,934.79 million, Rs. 1,993.43 million, and Rs. 1,374.11 million, as on March 31, 2026, March 31, 2025, and March 31, 2024, was, respectively. The orders received by the Company in the past and its order book, may not be representative of the company future results and its actual income may be significantly less than the estimates, which could adversely affect the company results of operations.

Agreements with the company PSU Customers allows them to retain certain amounts i.e. retention money, which are due to the Company for a specified period. During Fiscal 2026, Fiscal 2025, and Fiscal 2024, the retention money held back by its PSU Customers was Rs. 1,026.37 million, Rs. 697.30 million, and Rs. 593.13 million, respectively. Any delay or defects in the completion of projects of the company PSU Customers may lead to non-release of such retention money which may have an adverse impact on its results of operation.

Contracts with the company customers typically carry risks such as invocation of performance bank guarantees and levy of liquidated damages. As on March 31, 2026, March 31, 2025, and March 31, 2024, the outstanding performance bank guarantees of the Company was Rs. 987.05 million, Rs. 878.22 million, and Rs. 601.84 million, respectively. Failures to execute its projects in accordance with the terms of the company contracts exposes it to these risks, which have an adverse effect on the company's business, result of operations and financial condition.

Failures to meet the quality standards required by the company customers may lead to cancellation of existing and future orders and expose it inter alia to warranty claims, including monetary liability.

The Company has a high working capital requirement. Its net working capital requirement constituted Rs. 1,989.77 million, Rs. 1,449.02 million and Rs. 947.49 million, for Fiscal 2026, Fiscal 2025 and Fiscal 2024, respectively. If the Company is unable to raise sufficient working capital, the operations of its will be adversely affected.