Tonbo Imaging India Limited IPO

The company's business is cyclical in nature on account of it being geopolitically driven and subject to government budget cycles. Further, tender-based procurement cycle results in poor revenue visibility, which may have an adverse impact on its business, financial stability, results of operations, investor confidence, and the ability to secure financing for growth or innovation.

While the company is not dependent on a single customer and the company typically have short term, non recurring contracts with a majority of the company's customers which are based on tenders, some of its customers have contributed significantly to the company's revenue from operations in the three months ended June 30, 2025 and the last three Fiscals. If its customers choose not to source their requirements from it or to terminate the company's contracts or purchase orders or tenders, the company's business, cash flows, financial condition and results of operations may be adversely affected.

The company's top ten suppliers contributed to a significant portion of the company's total expenses; 29.37%, 35.46%, 67.49% and 64.40% of its total expenses in the three months ended June 30, 2025 and Fiscals 2025, 2024 and 2023, respectively. The company is dependent on its top ten suppliers and failures to maintain the company's relationship with its suppliers could adversely affect the company's business, financial condition, results of operations and prospects.

The company dependent on limited global suppliers for critical components and other materials. The availability and cost of such critical components and materials could adversely affect its business, financial condition, results of operations and prospects.

As a global defence electronics OEM, the company's business is dependent on exports and the performance of geographies where the company supply its products. In Fiscal 2025 and 2024, 65.52% and 48.61% of the company's revenue from operations was from exports and in particular from exports to Europe. Any adverse changes in the geographies where the company supply its products could have an adverse impact on the company's business, cash flows, results of operations and financial condition.

The company operates in an industry which is highly regulated and are subject to stringent government regulations. If the company fails to comply with the applicable regulations and rules prescribed by the Government of India and the relevant statutory or regulatory bodies or fails to obtain, maintain or renew its statutory and regulatory licenses, permits and approvals required for the company's business, the company's results of operations and cash flows may be adversely affected.

The company measured against high quality standards and stringent performance requirements by its customers. Any failures by it to comply with these standards or performance requirements may lead to the cancellation of existing and future orders, recalls, liquidated damages, invocation of performance bank guarantees or warranty and indemnity or liability claims, which could adversely affect the company's reputation, business, results from operations, financial conditions and cash flows.

Any failures to protect or enforce the company's rights to own or use trademarks and brand name and identity could have an adverse effect on the company's business, goodwill and competitive position.

The company's operations are dependent on research and development ("R&D"), thus the company's inability to introduce new products and respond to changing customer preferences in a timely and effective manner, may have an adverse effect on its business, results of operations and financial condition.

The company derives a significant portion of its revenues from the sale of tactical systems, which represented 55.49%, 77.24%, 83.90%, 81.88% of the company's revenue from operations for the three months ended June 30, 2025 and Fiscals 2025, 2024, 2023, respectively. Any decline in the demand for the company's tactical systems would have an adverse effect on its business, financial condition, results of operations and cash flows.