Carraro India Ltd IPO

The company derived 69.55% and 87.88% of its revenue in the six months ended September 30, 2024 and 69.37% and 85.39% of its revenue in Fiscal 2024 from the company top five and top 10 customers, respectively, and any inability to retain its key customers or attract new customers and expand the company customer network, could negatively affect its business and results of operations.

The company depends partially on other entities in the Carraro Group for its operations, such as the license of the Carraro brand, customer sourcing, procurement, R&D and general support of the company operations. The Carraro Group was its largest customer in the six months ended September 30, 2024 and 2023 and Fiscals 2024, 2023 and 2022. For the six months ended September 30, 2024 and Fiscal 2024, the company derived 33.27% and 33.91% of its total revenue from the Carraro Group and have purchased 3.81% and 4.91% of its raw materials from the Carraro Group, respectively. Any disruption in this relationship could have a material adverse impact on its operations.

The company has entered into and may continue to enter into related party transactions with the Carraro Group, Directors and Key Managerial Personnel. The company incurred 33.89% and 34.67% of its total income and 6.70% and 8.63% of the company total expenses in transactions with related parties in the six months ended September 30, 2024 and Fiscal 2024, respectively. Such transactions may require significant capital outlay and there can be no assurance that the company will be able to make a return on these transactions or investments.

Its agricultural tractor business is seasonal in nature and a decrease in its sales during some quarters could have an adverse impact on the company financial performance.

The company and certain of its Group Companies have common pursuits as they are engaged in similar business or segments within the automotive components industry and may compete with it, and that there may be conflict of interest in allocating business opportunities between the company and such Group Companies.

Its Promoters and certain of the company Directors may be involved in ventures which are engaged in the same line of activity or business as that of the Company and this may result in conflicts of interest with it. The company Directors, Key Managerial Personnel and Senior Management may have interests in the Company in addition to their remuneration and reimbursement of expenses.

The company is dependent on the performance of the tractor and construction vehicle markets, as its agricultural tractors sector and construction vehicles sector constituted 45.05% and 41.29% of its revenue from product sector only for Fiscal 2024, 49.37% and 38.43% of the company revenue for Fiscal 2023 and 50.59% and 36.12% of its revenue for Fiscal 2022, respectively. Any adverse changes in the conditions affecting the tractor or construction vehicles markets can adversely impact its business, financial condition, results of operations, cash flows and prospects.

Its EBITDA margins and PAT margins were lower than the EBITDA margins and PAT margins of the company industry peers in the six months ended September 30, 2024 and September 30, 2023 and Fiscals 2024, 2023 and 2022, as disclosed in this Red Herring Prospectus, and the company cannot assure you that its will be able to continue to improve the company EBITDA margins and PAT margins in comparison to its competitors or at all.

The company currently manufacture its axles, transmissions and gears at the company manufacturing plants in Pune, India. Any disruptions or stoppages at its manufacturing plants could adversely impact the company operations, financial condition and results of operations.

As the company derives 34.60%, 36.09%, 35.87%, 38.19% and 36.80% of its revenue from exports from the six months ended September 30, 2024 and 2023 and Fiscals 2024, 2023 and 2022, respectively, the company heavily rely on its extensive global customer base of OEM customers and the company inability to maintain the stability of its OEM customer base and attract additional customers may have a material adverse effect on its results of operations and financial condition.