Kasturi Metal Composite Ltd IPO

We are primarily dependent upon few key suppliers within limited geographical location for procurement of raw materials. Any disruption in the supply of raw materials from such selective suppliers and geographical location could have a material adverse effect on our business operations and financial conditions.

Substantial portion of our revenues has been dependent upon few customers. The loss of any one or more of our major customer would have a material adverse effect on our business, cash flows, results of operations and financial condition.

Our Company does not have long-term agreements with suppliers for input materials. A significant increase in the cost or shortfall in the availability of such materials, along with price fluctuations, could adversely impact our business, financial condition, and operational results.

Our Company is yet to place orders for the machinery for the expansion of the proposed manufacturing unit. Any delay in placing orders or procurement of such machinery may delay the schedule of implementation and possibly increase the cost of commencing operations.

Our Business is dependent on our manufacturing unit. Any disruption, breakdown or failure of machinery, disruption to power sources or any temporary shutdown of our manufacturing unit, may have a material adverse effect on our business, results of operations, financial condition and cash flows.

Company derives significant portion revenue from manufacturing of Steel Fiber and any reduction in the demand of such products could have an adverse effect on the business, results of operations and financial condition.

We operate in a labor-intensive industry and are subject to stringent labor laws and any strike, work stoppage or increased wage demand by our employees or any other kind of disputes with our employees could adversely affect our business, financial condition, results of operations and cash flows.

We generate our major portion of turnover from our operations in certain geographical regions and any adverse developments affecting our operations in these regions could have an adverse impact on our revenue and results of operations.

Our Company is party to certain legal proceedings. Any adverse decision in such proceedings may have a material adverse effect on our business, results of operations and financial condition.

The Company has encountered certain issues and discrepancies in its corporate records and regulatory compliance, which present potential risks.

Changes in technology render our current fleet of equipment obsolete and require us to make substantial capital investments.

Our Company and Our Subsidiary operates under several statutory and regulatory approvals in respect of our operations. Failure to obtain or maintain licenses, registrations, permits and approvals may affect our business and results of operations.

We derive a limited portion of our revenues from various countries outside India. Any adverse developments in these markets, along with fluctuations in exchange rates, may negatively impact our results of operations.

Geographical concentration of our manufacturing facilities may adversely affect our operations, business and financial condition.

We are subject to strict quality requirements and are consequently required to incur significant expenses to maintain our product quality. Any failure to comply with such quality standards may lead to cancellation of existing and future orders which may adversely affect our reputation, financial conditions, cash flows and results of operations.

Any failure to protect or enforce our rights to own or use trademarks and brand names and identities could have an adverse effect on our business and competitive position.

Certain Offices of the company and Our subsidiary operates from a premise taken by us/Our Subsidiary on lease basis. If we/our subsidiary are unable to comply with the terms of the lease deed, the same may adversely affect our Company`s/Our Subsidiary`s ability to operate its current operations thus affecting its financial performance.

Our Subsidiary is dependent upon third parties for manufacture and supply of substantially all of our products with which we do not have long term contracts or exclusive supply arrangements. Any delay or failure on the part of such vendors to deliver products, may adversely affect our business, profitability and reputation.

Our failure to adapt to technological developments or industry trends could affect the performance and features of our products, and reduce our attractiveness to our customers.

Our Company had negative cash flows in the past, details of which are given below. Sustained negative cash flow could impact our growth and business. We have experienced negative cash flows in the past which have been set out below.

Our Company may not be successful in penetrating new export markets.

Dependence upon transportation services for supply and transportation of our products are subject to various uncertainties and risks, and delays in delivery may result in rejection of products by customer.

Since our incorporation in the year 2005, we have expanded our business, scale of operations and delivered variety of products, creating our position in the steel fiber and steel wool fiber products. However, we face competitive pressures in our business in the future and our inability to compete effectively would be detrimental to our business and prospects for future growth.

Our insurance coverage may not be adequate to protect us against all potential losses to which we may be subject and this may have a material effect on our business and financial condition.

Risks associated with recent acquisition and revenue dependence on our subsidiary.

Our profitability and business operations is significantly dependent on our ability to successfully anticipate the industry and client requirements. Any failure on our part to do so, may have an impact on our operations, which could have an adverse effect on our revenue, reputation, financial conditions, results of operations and cash flows.

Our historical performance is not indicative of our future growth or financial results and we may not be able to sustain our historical growth rates.

Our operating results could be materially harmed if we are unable to accurately forecast customer demand for our products or manage our inventory.

Any Penalty or demand raised by statutory authorities in future will affect our financial position of the Company.

We are subject to restrictive covenants under our credit facilities that limit our operational flexibility.

Compliance with and changes in safety, health and environmental laws and regulations may adversely affect our business, prospects, financial condition and results of operations.

Our business is dependent on key industries, and any downturn in these sectors may adversely affect our operations and financial performance.

We are heavily dependent on our Promoters and Key Managerial Personnel for the continued success of our business through their continuing services and strategic guidance and support.

Information in relation to our installed capacity and capacity utilization of our manufacturing facilities included in this Draft Red Herring Prospectus is based on various assumptions and estimates, and future production and capacity utilization may vary.

Activities involving our manufacturing process can cause injury to people or property in certain circumstances. A significant disruption at any of our manufacturing facility may adversely affect our production schedules, costs, sales and ability to meet customer demand.

We could be harmed by employee misconduct or errors that are difficult to detect and any such incidences could adversely affect our financial condition, results of operations and reputation.

We may not be successful in implementing our business strategies.

Loans availed by Our Company has been secured on personal guarantees of our Director. Our business, financial condition, results of operations, cash flows and prospects may be adversely affected in case of invocation of any personal guarantees provided by our Directors.

Our lenders have charge over properties in respect of finance availed by us.

Adverse publicity regarding our products could negatively impact us.

Fraud, theft, employee negligence or similar incidents may adversely affect our results of operations and financial condition.

Our contingent liabilities and commitments as stated in our Restated Financial Statements could affect our financial condition.

We have in the past entered into related party transactions and may continue to do so in the future. There can be no assurance that such transactions, individually or in the aggregate, will not have an adverse effect on our Company`s financial condition and results of operations.

If we fail to maintain an effective system of internal controls, we may not be able to successfully manage or accurately report our financial risk.

Our ability to pay any dividends will depend upon future earnings, financial condition, cash flows, working capital requirements and capital expenditures.

Any future issuance of Equity Shares, or convertible securities or other equity linked securities by us and any sale of Equity Shares by our significant shareholders may dilute your shareholding and adversely affect the trading price of the Equity Shares.

Certain data mentioned in this Draft Red Herring Prospectus has not been independently verified.

The average cost of acquisition of Equity Shares by our Promoters, is lower than the face value of Equity Share.

Our Promoters and the Promoter Group will jointly continue to retain majority shareholding in our Company after the issue, which will allow them to determine the outcome of the matters requiring the approval of shareholders.

The Issue price of our Equity Shares may not be indicative of the market price of our Equity Shares after the Issue and the market price of our Equity Shares may decline below the issue price and you may not be able to sell your Equity Shares at or above the Issue Price.

Industry information included in this Draft Red Herring Prospectus has been derived from industry sources. There can be no assurance that such third-party statistical, financial and other industry information is complete, reliable or accurate.

We have issued Equity Shares during the last one year at a price that will be below the Issue Price.

Significant differences exist between Indian GAAP and other accounting principles, such as Ind AS, IFRS and U.S. GAAP, which may be material to investors` assessments of our financial condition, result of operations and cash flows.

There is no guarantee that the Equity Shares issued pursuant to the Issue will be listed on the SME Platform of BSE (BSE SME) in a timely manner or at all.

The Objects of the Issue for which funds are being raised have not been appraised by any bank or financial institution. Any variation between the estimation and actual expenditure as estimated by the management could result in execution delays or influence our profitability adversely.

We may be subject to surveillance measures, such as the Additional Surveillance Measures (ASM) and the Graded Surveillance Measures (GSM) by the Stock Exchanges which may adversely affect trading price of our Equity Shares.

We may require further equity issuance, which will lead to dilution of equity and may affect the market price of our Equity Shares or additional funds through incurring debt to satisfy our capital needs, which we may not be able to procure and any future equity offerings by us.

The Equity Shares have never been publicly traded, and, after the Issue, the Equity Shares may experience price and volume fluctuations, and an active trading market for the Equity Shares may not develop. Further, the price of the Equity Shares may be volatile, and you may be unable to resell the Equity Shares at or above the Issue Price, or at all.

QIBs and Non-Institutional Bidders are not permitted to withdraw or lower their Bids (in terms of quantity of Equity Shares or the Bid Amount) at any stage after submitting a Bid and Individual Investors are not permitted to withdraw their Bids after Bid/Issue Closing Date.

The company is primarily dependent upon few key suppliers within limited geographical location for procurement of raw materials. Any disruption in the supply of raw materials from such selective suppliers and geographical location could have a material adverse effect on its business operations and financial conditions.

Substantial portion of its revenues has been dependent upon few customers. The loss of any one or more of its major customer would have a material adverse effect on the company`s business, cash flows, results of operations and financial condition.

The Company does not have long-term agreements with suppliers for input materials. A significant increase in the cost or shortfall in the availability of such materials, along with price fluctuations, could adversely impact its business, financial condition, and operational results.

The Company is yet to place orders for the machinery for the expansion of the proposed manufacturing unit. Any delay in placing orders or procurement of such machinery may delay the schedule of implementation and possibly increase the cost of commencing operations.

Risks associated with recent acquisition and revenue dependence on the company`s subsidiary.

The company`s Business is dependent on its manufacturing unit. Any disruption, breakdown or failures of machinery, disruption to power sources or any temporary shutdown of its manufacturing unit, may have a material adverse effect on the company`s business, results of operations, financial condition and cash flows.

The Company had negative cash flows in the past, details of which are given below. Sustained negative cash flow could impact its growth and business.The company has experienced negative cash flows in the past which have been set out below.

Company derives significant portion revenue from manufacturing of Steel Fiber and any reduction in the demand of such products could have an adverse effect on the business, results of operations and financial condition.

The company`s Restated Financial Statements for the financial year ended March 31, 2023 (Standalone) and the financial year ended March 31, 2024 (consolidated) of Kasturi Metals Composite limited, as included in this Red Herring Prospectus, have undergone certain modifications and updates.

The company`s contingent liabilities and commitments as stated in our Restated Financial Statements could affect its financial condition.

The company operates in a labor-intensive industry and are subject to stringent labor laws and any strike, work stoppage or increased wage demand by its employees or any other kind of disputes with the company`s employees could adversely affect its business, financial condition, results of operations and cash flows.

The company generates the company`s major portion of turnover from its operations in certain geographical regions and any adverse developments affecting the company`s operations in these regions could have an adverse impact on its revenue and results of operations

The Company is party to certain legal proceedings. Any adverse decision in such proceedings may have a material adverse effect on its business, results of operations and financial condition.

The Company has encountered certain issues and discrepancies in its corporate records and regulatory compliance, which present potential risks.

Changes in technology render the company`s current fleet of equipment obsolete and require the company to make substantial capital investments.

The Company and its Subsidiary operates under several statutory and regulatory approvals in respect of the company`s operations. Failures to obtain or maintain licenses, registrations, permits and approvals may affect its business and results of operations.

The company derives a limited portion of the company`s revenues from various countries outside India. Any adverse developments in these markets, along with fluctuations in exchange rates, may negatively impact its results of operations.

Geographical concentration of the company`s manufacturing facilities may adversely affect its operations, business and financial condition.

The company is subject to strict quality requirements and are consequently required to incur significant expenses to maintain its product quality. Any failures to comply with such quality standards may lead to cancellation of existing and future orders which may adversely affect the company`s reputation, financial conditions, cash flows and results of operations.

Any failures to protect or enforce its rights to own or use trademarks and brand names and identities could have an adverse effect on the company`s business and competitive position.

Certain Offices of the company and the company`s subsidiary operates from a premise taken by the company/the company`s Subsidiary on lease basis. If the company/the company`s subsidiary are unable to comply with the terms of the lease deed, the same may adversely affect our Company`s/the company`s Subsidiary`s ability to operate its current operations thus affecting its financial performance.

The company`s Subsidiary is dependent upon third parties for manufacture and supply of substantially all of its products with which the company does not have long term contracts or exclusive supply arrangements. Any delay or failures on the part of such vendors to deliver products, may adversely affect its business, profitability and reputation.

The company`s failures to adapt to technological developments or industry trends could affect the performance and features of its products, and reduce the company`s attractiveness to its customers.

The company`s Entry into New Overseas Markets May Involve Significant Operational, Regulatory, and Geopolitical Challenges

Dependence upon transportation services for supply and transportation of its products are subject to various uncertainties and risks, and delays in delivery may result in rejection of products by customer.

Since the company`s incorporation in the year 2005, the company has expanded its business, scale of operations and delivered variety of products, creating the company`s position in the steel fiber and steel wool fiber products. However, the company face competitive pressures in the company`s business in the future and its inability to compete effectively would be detrimental to its business and prospects for future growth.

The company`s insurance coverage may not be adequate to protect the company against all potential losses to which the company may be subject and this may have a material effect on its business and financial condition.

The company`s profitability and business operations is significantly dependent on its ability to successfully anticipate the industry and client requirements. Any failures on the company`s part to do so, may have an impact on its operations, which could have an adverse effect on the company`s revenue, reputation, financial conditions, results of operations and cash flows.

The company`s historical performance is not indicative of its future growth or financial results and the company may not be able to sustain its historical growth rates.

The company`s operating results could be materially harmed if the company is unable to accurately forecast customer demand for the company`s products or manage its inventory.

Any Penalty or demand raised by statutory authorities in future will affect its financial position of the Company.

The company is subject to restrictive covenants under its credit facilities that limit the company`s operational flexibility.

Compliance with and changes in safety, health and environmental laws and regulations may adversely affect its business, prospects, financial condition and results of operations.

The company`s business is dependent on key industries, and any downturn in these sectors may adversely affect its operations and financial performance.

The company is heavily dependent on its Promoters and Key Managerial Personnel for the continued success of the company`s business through their continuing services and strategic guidance and support.

Information in relation to the company`s installed capacity and capacity utilization of its manufacturing facilities included in this Red Herring Prospectus is based on various assumptions and estimates, and future production and capacity utilization may vary.

Activities involving its manufacturing process can cause injury to people or property in certain circumstances. A significant disruption at any of the company`s manufacturing facility may adversely affect its production schedules, costs, sales and ability to meet customer demand.

The company could be harmed by employee misconduct or errors that are difficult to detect and any such incidences could adversely affect its financial condition, results of operations and reputation.

The company may not be successful in implementing its business strategies.

Loans availed by the Company has been secured on personal guarantees of its Director.The company`s business, financial condition, results of operations, cash flows and prospects may be adversely affected in case of invocation of any personal guarantees provided by its Directors.

The company`s lenders have charge over properties in respect of finance availed by the company.

Adverse publicity regarding its products could negatively impact the company.

Fraud, theft, employee negligence or similar incidents may adversely affect its results of operations and financial condition

The company has in the past entered into related party transactions and may continue to do so in the future. There can be no assurance that such transactions, individually or in the aggregate, will not have an adverse effect on the Company`s financial condition and results of operations.

If the company fails to maintain an effective system of internal controls, the company may not be able to successfully manage or accurately report its financial risk.

The company`s ability to pay any dividends will depend upon future earnings, financial condition, cash flows, working capital requirements and capital expenditures.

Any future issuance of Equity Shares, or convertible securities or other equity linked securities by the company and any sale of Equity Shares by its significant shareholders may dilute your shareholding and adversely affect the trading price of the Equity Shares.

Certain data mentioned in this Red Herring Prospectus has not been independently verified.

The average cost of acquisition of Equity Shares by its Promoters, is lower than the face value of Equity Share.

The company`s Promoters and the Promoter Group will jointly continue to retain majority shareholding in the Company after the issue, which will allow them to determine the outcome of the matters requiring the approval of shareholders.

The Issue price of its Equity Shares may not be indicative of the market price of the company`s Equity Shares after the Issue and the market price of its Equity Shares may decline below the issue price and you may not be able to sell your Equity Shares at or above the Issue Price.

Industry information included in this Red Herring Prospectus has been derived from industry sources. There can be no assurance that such third-party statistical, financial and other industry information is complete, reliable or accurate.

The company has issued Equity Shares during the last one year at a price that will be below the Issue Price.

Significant differences exist between Indian GAAP and other accounting principles, such as Ind AS, IFRS and U.S. GAAP, which may be material to investors` assessments of its financial condition, result of operations and cash flows.

There is no guarantee that the Equity Shares issued pursuant to the Issue will be listed on the SME Platform of BSE (BSE SME) in a timely manner or at all.

The Objects of the Issue for which funds are being raised have not been appraised by any bank or financial institution. Any variation between the estimation and actual expenditure as estimated by the management could result in execution delays or influence its profitability adversely.

The company may be subject to surveillance measures, such as the Additional Surveillance Measures (ASM) and the Graded Surveillance Measures (GSM) by the Stock Exchanges which may adversely affect trading price of its Equity Shares.

The company may require further equity issuance, which will lead to dilution of equity and may affect the market price of its Equity Shares or additional funds through incurring debt to satisfy the company`s capital needs, which the company may not be able to procure and any future equity offerings by the company.

The Equity Shares have never been publicly traded, and, after the Issue, the Equity Shares may experience price and volume fluctuations, and an active trading market for the Equity Shares may not develop. Further, the price of the Equity Shares may be volatile, and you may be unable to resell the Equity Shares at or above the Issue Price, or at all.

Any of the Bidders are not permitted to withdraw or lower their Bids (in terms of quantity of Equity Shares or the Bid Amount) at any stage after submitting a Bid.