Milestone Gears Limited IPO

Our business is dependent on certain key customers, and our top 10 customers contributed 92.96%, 94.43%, 96.42% and 98.35% of our revenue from sale of products in the three months ended June 30, 2025 and Fiscals 2025, 2024 and 2023, respectively. The loss of revenue from our top 10 customers could have an adverse impact on our business, results of operations, financial condition and cash flows.

We generate a significant portion of our revenue from sale of certain product categories, namely bull gears, transmission gears and transmission shafts, rear axles and internal ring gears that accounted for 91.78%, 90.74%, 91.08% and 87.50% of our revenue from sale of products in the three months ended June 30, 2025 and in Fiscals 2025, 2024 and 2023, respectively. If we experience a slowdown in demand for these products, our business, results of operations, financial condition, and cash flows may be adversely affected.

We do not have any long-term binding contracts with our suppliers for the procurement of raw materials. We typically place orders with them in advance of our anticipated requirements. In the three months ended June 30, 2025 and Fiscal 2025, 2024, and 2023, the cost of raw materials purchased from our top three suppliers accounted for 80.00%, 83.51%, 73.69%, and 76.58% of our total purchases, respectively. Any interruption in the availability of raw materials or any disruption, breakdown or shutdown of our suppliers or any instability of our supplier base could adversely impact our operations.

Our business and profitability is substantially dependent on the availability and cost of our raw materials, i.e., alloy steel from our suppliers. Our cost of raw materials and components consumed accounted for 48.06%, 48.15%, 46.20%, and 53.59% of our total expenses in three months ended June 30, 2025, Fiscal 2025, 2024 and 2023 and volatility and unavailability caused by various external conditions or any disruption to the timely and adequate supply of raw materials, or volatility in the prices of raw materials may adversely impact our business, results of operations, financial condition and cash flows.

Its business is dependent on the performance of certain sectors particularly tractors, which accounted for 83.30%, 82.70%, 79.24% and 80.35% of the company sale of products in the three months ended June 30, 2025 and in Fiscals 2025, 2024 and 2023. Seasonal or economic cyclicality coupled with reduced demand in the tractor sector may have a material adverse effect on its business, results of operations and financial condition.

Its derives a portion of the company revenue from operations from export sales. In the three months ended June 30, 2025 and in Fiscals 2025, 2024, and 2023, our revenue from sale of products from outside India accounted for 10.94%, 9.43%, 12.25%, and 15.06% of its revenue from sale of products, respectively. the company inability to handle risks associated with its export sales, including the imposition of tariffs or other anti-outsourcing legislation, could adversely affect the company sales to customers in foreign countries, its results of operations, financial condition and cash flows.

Its currently avail benefits under certain export promotion schemes. In order to continuously avail the benefits, the company is required to export goods of a defined amount. Any failures in meeting the obligations, may adversely affect the company business operations and its financial condition.

Its manufacturing facilities (including our Registered Office) are concentrated in Northern India and largely operate on leasehold land, exposing it to location-specific risks and uncertainties relating to renewal or loss of leasehold rights.

The company does not have agreements having commitment on part of its customers to purchase or place orders with it. If the company customers choose not to source their requirements from it, there may be a material adverse effect on its business, results of operations, financial condition and cash flows.

While the company has experienced an increase in its profit from Rs. 140.65 million in Fiscal 2023 to Rs. 220.64 million in Fiscal 2025, the company revenue from operations has declined from Rs. 6,129.38 million in Fiscal 2023 to Rs. 5,301.69 million in Fiscal 2025. We may not be able to increase its revenue from operations, gross margins or effectively execute the company growth strategies in the future, which could have an adverse effect on its business, results of operations and financial condition.