Lalithaa Jewellery Mart Limited IPO

We face significant competition in the Indian jewellery market. Our market share in the southern states in India may get adversely affected due to change in market trends, pricing and customer preferences, and we risk losing substantial portion of our customers which will adversely affect our business, financial condition, results of operations and prospects.

We have expanded our stores footprint from 38 stores in Fiscal 2022, to 56 stores as on December 31, 2024 in 46 cities across the States of Telangana, Andhra Pradesh, Tamil Nadu, Karnataka and the Union Territory of Puducherry. If we are unable to effectively manage or expand our retail network and operations or pursue our growth strategies, we may not achieve the expected level of profitability which may adversely affect our business prospects, financial condition and results of operations.

As of December 31, 2024, we operated our Manufacturing Facilities with 474 Karigars employed by our Company and 89 Karigars employed by Asita Jewellery Manufacturing Private Limited ("Asita") for manufacturing of our products. These Karigars who are on the rolls of our Company and Asita, manufactured 81.88%, 79.78%, 82.15%, 86.47% of our total products available for sale for the nine-month period ended December 31, 2024, Fiscal 2024, Fiscal 2023 and Fiscal 2022, respectively. Further, we have entered into short term agreements with 278 Karigars (as of December 31, 2024), on a non-exclusive basis, for manufacture and supply of jewellery. Our Company is dependent on these Karigars for manufacturing our products and any disruptions at our Manufacturing Facilities, or loss of these Karigars or failure of these Karigars to adhere to the relevant quality standards may have a negative effect on our reputation, business and financial condition.

Timely procurement of gold, our key raw material, as well as the quality and the price at which they are procured, play an important role in the successful operation of our business. The prices and availability of gold depend on factors beyond our control, including general economic conditions, competition, production levels and regulatory factors such as import duties. The non-availability or volatility in the cost of gold and absence of hedging facilities may have an adverse effect on our business, results of operations, financial condition and prospects.

We operate 56 stores in 46 cities across states of Andhra Pradesh, Karnataka, Tamil Nadu, Telangana and Union Territory of Puducherry. As of December 31, 2024, we have 22 stores in Andhra Pradesh, 20 stores in Tamil Nadu, 7 in Karnataka, 6 in Telangana and 1 in Puducherry. Due to the geographic concentration of a l l ( 1 0 0%) our stores in the southern regions of India, our results of operations and financial condition are subject to fluctuations in regional economic conditions.

Our inventories as a percentage of our revenue from operations as of December 31, 2024 and as of Fiscals 2024, 2023 and 2022 were 42.34%, 25.57%, 26.08% and 31.31%, respectively. Our results of operations are dependent on our ability to effectively manage our inventory. Our inability to accurately forecast demand or effectively manage our inventory may have an adverse effect on our business, financial condition, results of operations and cash flows.

Our Company, Subsidiaries, Promoters, Directors, Key Managerial Personnel and Senior Management are involved in certain legal and regulatory proceedings. Any adverse decision in such proceedings may have an adverse effect on our business, financial condition, cash flows and results of operations.

Our Company requires significant amounts of capital for business operations. Further, we may need to obtain additional financing in the normal course of business from time to time as we expand our operations. We may not be successful in obtaining additional funds in a timely manner and/or on favourable terms including rate of interest, primary security cover, collateral security, terms of repayment, or at all. Our inability to meet our capital requirements, on commercially acceptable terms, may have an adverse impact on our business, financial condition and results of operations.

We have experienced negative cash flows from operating activities in previous periods and cannot assure you that we will not experience negative cash flows in future periods. Negative cash flows may adversely affect our financial condition, results of operations and prospects.

We are dependent on our top 10 suppliers of raw materials who contribute more than 72.00% of our total cost of raw materials in each of the nine months period ended December 31, 2024 and last three Fiscals and the loss of any of these suppliers or interruptions in the supply of raw materials could adversely affect our business, results of operations and financial condition.