Royal Arc Electrodes Ltd IPO

The company revenue is dependent on the domestic market since, it contributes significantly to its total revenue from operations. Any adverse changes in the conditions affecting domestic market could adversely affect its business, results of operations and financial condition.

The company operates only one manufacturing facility and therefore, any localized social unrest, natural disaster, or breakdown of services, in and around its manufacturing facility or any disruption in production at, or shutdown of the company manufacturing facility could have a material adverse effect on its business and financial condition.

The company may faces several risks associated with the proposed expansion in its existing manufacturing facility, which could hamper the company growth, prospects, cash flows and business and financial condition.

The company depends on outside parties for adequate and timely supply of raw materials at commercially acceptable prices. Any disruptions, delay or increase in prices of such material may have a material adverse effect on its business.

The company inability to collect receivables and default in payment from its customers could result in the reduction of the company profits and affect the company cash flows.

The company has significant working capital requirements. If its unable to borrow or raise additional financing or furnish bank guarantees or performance bank guarantees in future, it would adversely impact its business, cash flows and results of operations.

The company is dependent on limited number of suppliers for its raw materials required in the company operations. Further, its top 10 (ten) suppliers constituted amounting Rs. 2354.20 Lakhs, Rs. 4,948.28 Lakhs, Rs. 3,998.30 Lakhs, Rs. 2,800.64 Lakhs representing 68.36%, 71.81%, 64.36%, and 57.08%, respectively of total purchases during the six months period ended September 30, 2024, Fiscal 2024, Fiscal 2023, and Fiscal 2022 respectively. Its business is dependent on the company continuing relationships with its suppliers and any deterioration in the company relations with any of them could materially and adversely affect its business, results of operations, cash flows and financial condition.

The company derives a significant portion of its revenue from a few 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 its products may adversely affect the company business, results of operations, financial condition and cash flows.

Commercialization and market development of new products may take longer time than expected and / or may involve unforeseen business risks. Its inability to successfully diversify the company product offerings of may adversely affect its growth and negatively impact the company profitability.

If the company fails to manage its growth effectively, its may be unable to execute the company business plan or maintain high levels of service and satisfaction, and its business, results of operations, cash flows and financial condition could be adversely affected.