Vraj Iron & Steel Ltd IPO

Both of its existing manufacturing facilities are concentrated in a single region i.e. Raipur and Bilaspur, Chhattisgarh. Further its Expansion Project is also being implemented at Bilaspur, Chhattisgarh and hence the company faces geographical concentration related risks.

100% of its revenue is from sale of the company steel products such as TMT Bars, MS Billets, Sponge Iron & others related items. Volatility in the demand and pricing in the iron and steel industry is common and is cyclical in nature. A decrease in steel prices may have a material adverse effect on its business, results of operations, prospects and financial condition.

The company has had experienced negative cash flows from operating, investing and financing in the recent past, and its may have negative cash flows in the future. The company net cash flow for the period / years are set forth in the table below.

Capital expenditure to the tune of Rs. 1,295 million required towards the "Expansion Project" at Bilaspur would be funded out of the Net Proceeds of the Issue. Hence, the company has not made any alternate arrangements for the same. Any shortfall in raising / meeting the same could adversely affect its growth plans, operations and financial performance.

Total capital expenditure for the Expansion Project is Rs.1,645 million and we have incurred Rs. 1,020 million till June 03, 2024. The company has not yet placed orders / made payment in relation to Rs. 625 million to be incurred for the Expansion Project. Any delay in placing the orders or inability of the vendors to provide the plant and machineries or complete the civil and related works etc. in a timely manner, or at all, the same may result in time and cost over-runs.

If the company is unable to successfully implement its Expansion Project, including Captive Power Plant, the company's results of operations and financial condition could be adversely affected.

A majority of its Directors of the Company do not have prior experience of being a director of a public listed company.

The company does not have long-term agreements with its customers and the company derives a significant portion of its revenues from its top 10 (ten) customers. The loss of, or a significant reduction in the revenues the company receive from, one or more of these customers which would have a material adverse effect on its business, results of operations and financial condition.

Its Directors and the company Promoter, namely, Gopal Sponge and Power Private Limited have provided personal and corporate guarantees to certain loan facilities availed by it, which if revoked may requires alternative arrangements guarantees, repayments of amounts due or termination of the facilities. Total sanctioned and outstanding amount of such loans are Rs.1,651.33 million and Rs. 492.99 million.

Its lenders have charge over the company movable and immovable properties in respect of finance availed by it. Its inability to meet the company obligations under our debt financing arrangements could adversely affect its business, results of operations and cash flows.