Avana Electrosystems Ltd IPO

The company's intend to set up its integrated manufacturing unit on land taken on leave and license from Karnataka Industrial Areas Development Board (KIADB) and a part of the IPO proceeds is proposed to be utilised for the same. As per the lease agreement entered with KIADB, there are certain prescribed conditions and timelines pertaining to commencement and completion of work. The Company was required to start the commercial productions by June 01, 2020. Our Company didn't start the commercial production by the given date. Subsequently, the company has been granted one year extension of time by KIADB for the commercial productions i.e. till May 22, 2026. In case the company fails to start its commercial production by May 22, 2026,the company may face consequences of non-adherence of the terms and conditions of KIADB, which could have an adverse impact on its growth plans and the company's business and financial condition.

The company has not identified any alternate source of funding to meet its capital expenditure requirements and hence any failures or delay on the company's part to mobilize the required resources or any shortfall in the Net Issue proceeds may delay the implementation schedule.

The company derives a significant portion of its revenue from operations from limited number of customers, and the loss of one or more such customers, the deterioration of their financial condition or prospects, or a reduction in their demand for the company's products could adversely affect its business, results of operations, financial condition and cash flows. Any adverse change in the business relationship with one or more of the company's top 5 and top 10 customers, including a reduction in order volume, changes in contract terms, delayed payments, or termination, could materially and adversely affect its revenue, cash flows, and overall financial performance.

A significant portion of its revenue from operations is generated from three states (Madhya Pradesh, Maharashtra and Karnataka). Any adverse development affecting the company's business operations in these regions could have a negative impact on its revenue and results of operations.

The company depends on the Tender / Government Orders from State owned Power Distribution and Transmission Companies, Private Players engaged in panel manufacturing / EPC Contractors and Dealers for selling of the company's products. The company's significant dependence on Private Players for supply of its products may affect the company's revenue from operation and profits.

The company's reliance for raw materials/components is highly dependent on a few limited numbers of suppliers and the loss of one or more such suppliers, the deterioration of their financial condition or prospects, or higher demand from its competitors could adversely affect the company's supplies from these suppliers. Any adverse change in its business relationship with one or more of the company's top 5 and top 10 suppliers, including a reduction in materials supplied, changes in supply terms, changes in payment terms, or termination of its orders, could materially and adversely affect the company's revenue, cash flows, and overall financial performance and also expose it to risks of supply disruptions, pricing volatility which may adversely impact our production schedules and financial performance.

The company does not possess the information, consents, confirmations, or undertakings from the immediate relative (R. Manoharan -father-in-law) of one of our Promoters i.e., S. Vinod Kumar. R. Manoharan is considered as a part of the Promoter Group as per Regulation 2(1)(pp) of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018, and the details of him, along with any entities associated with him as part of the Company's "promoter group", are required to be disclosed in the Offer Documents.

The company is subject to strict quality requirements by its customers any product defect issues, and any failures by it to comply with these requirements may lead to the cancellation of existing and future orders, recalls and product rejections.

The company does not own both its manufacturing units and the Registered Office from where the company operates. Both our manufacturing units including registered office has been taken on lease basis. Further, the lease deed of its manufacturing units is not registered.

The Company may face the likelihood of time overrun and cost overrun during the relocation of its two manufacturing units into one integrated unit is subject to various risks and uncertainties, and any time overrun, cost overrun or failures in implementation may adversely affect the company's business, financial condition, and results of operations