Sambhv Steel Tubes Ltd IPO

Under-utilization of its manufacturing capacities and an inability to effectively utilize the company expanded manufacturing capacities could have an adverse effect on its business, future prospects and future financial performance.

An increase in the cost of or a shortfall in the availability of its key raw materials such as iron ore, coal, iron ore pellets, sponge iron and mild steel scrap from its suppliers could have a material adverse effect on its business, results of operations, profitability and margins, cash flows and financial condition.

The company depends on certain key suppliers for certain raw materials and have not entered into definitive supply agreements with most of its suppliers. A failures by its suppliers to meet their obligations may affect the availability and cost of raw materials, which may adversely affect its business, results of operations, profitability and margins, cash flows and financial condition. Further volatility in the raw material prices and its inability to pass on the increase in cost of raw materials to the customers may impact its results of operations, profitability and margins.

Its financing arrangements contain restrictive covenants. This may limit the company ability to pursue its business and limit the company flexibility in planning for, or reacting to, changes in its business or industry including the company plans for expansion and diversification.

The company derives a substantial portion of its revenue from the sale of ERW pipes and tubes and any loss of sales due to reduction in demand for its products could adversely affect its business, financial condition, results of operations and cash flows. Further, the company inability to successfully diversify its product offerings may adversely affect its growth and negatively impact its profitability.

Any disruption or shortage of essential utilities could disrupt its manufacturing operations and increase the company production costs, which could adversely affect its results of operations.

Its return on capital employed has constantly declined. A further decline could adversely affect its business, financial condition, results of operations and cash flows.

Its existing and proposed manufacturing facilities and Registered and Corporate Office are located in Chhattisgarh and any adverse changes in the conditions affecting the region can adversely impact its business, results of operations, profitability and margins, cash flows and financial condition.

Its revenues are concentrated in north and west India. Any adverse changes in the conditions affecting these regions and its inability to grow the company business in new geographic markets may adversely impact its business, results of operations, profitability and margins, cash flows and financial condition.

Its existing manufacturing facilities are critical to the company business operations. The unexpected shutdown or slowdown of operations at its operational manufacturing facilities could have a material adverse effect on its business, results of operations, profitability and margins, cash flows and financial condition.