Sedemac Mechatro IPO

While we have maintained consistent growth in our business and financial metrics during the three months ended June 30, 2025, and Fiscals 2025, 2024 and 2023, there can be no assurances that we will continue to experience such growth going forward which could have an adverse impact on our business, cash flows and results of operations.

Our Company may not be successful in implementing its strategies, which may adversely affect our business, cash flows, results of operations and future prospects.

We have capital expenditure and working capital requirements to support our growth, innovation, and operational continuity. If we are unable to secure required financing when needed, our operations and future prospects may be materially and adversely affected.

Insufficient warranty reserves to cover future claims could adversely affect our financial condition, results of operations and business prospects.

Risks relating to the protection and enforcement of our intellectual property may materially and adversely impact our business, operations, and future prospects.

We have incurred indebtedness and an inability to comply with repayment and other covenants in our financing agreements could adversely affect our business, results of operations, cash flows and financial condition.

We are exposed to counterparty credit risk. As at June 30, 2025, March 31, 2025, 2024 and 2023, trade receivables from our top 10 customers were Rs. 631.99 million, Rs. 412.01 million, Rs. 257.12 million, and Rs. 131.19 million, respectively. Any delay in receiving payments or non-receipt of payments may adversely impact our business, financial condition, cash flows and results of operations.

We are dependent on third parties for transportation and timely delivery of our products to customers. Any significant disruption or failure by these providers, including one-time events such as strikes, port closures, or other logistical issues could result in delivery delays and increased costs, materially affecting our business.

We require to obtain, renew and maintain certain statutory and regulatory licenses, permits and approvals in the ordinary course of business, and the failure to obtain or retain them in a timely manner may materially adversely affect our operations.

Our Registered and Corporate office and current operational manufacturing facilities are located on leased premises. There can be no assurance that such lease agreements will be renewed upon termination or that we will be able to obtain other premises on lease on the same or similar commercial terms.

Our inability to accurately forecast demand and effectively manage inventory exposes us to interconnected risks that may adversely affect our business, financial condition, results of operations, and cash flows.

Exchange rate fluctuations may adversely affect our business, financial conditions, cash flows and results of operations.

Use of open-source software in our products may expose us to increased risks, including potential intellectual property claims and obligations that could adversely affect our business, reputation, and financial performance.

As at June 30, 2025, we had contingent liabilities of Rs. 28.26 million that has been disclosed in our Restated Financial Information, which if they materialize, may adversely affect our results of operations, cash flows and financial condition.

We have entered and will continue to enter into related party transactions in the ordinary course of our business, and we cannot assure you that such transactions (individuals or in aggregate) will not have an adverse effect on our results of operation and financial condition.

Our Statutory Auditors` audit reports for Fiscals 2025 and 2024 and the examination report to our Restated Financial Information have included certain observations on certain matters specified in the Companies (Audit and Auditors) Rules, 2014 and Companies Auditor`s Report Order, 2020 for Fiscal 2025. If similar modifications and comments are included in the Statutory Auditors` reports for our financial statements in the future, it could adversely affect our financial condition, cash flows and results of operations.

There have been minor delays in payment of tax deducted at source / tax collected source (other than salary) during the three months ended June 30, 2025, and Fiscals 2025 and 2024. Any delay in payment of statutory dues by our Company in future, may result in imposition of penalties and in turn may have an adverse effect on our Company`s business, results of operations, financial condition and cash flows.

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

Impairment and discontinuation of capitalised projects may have a material adverse effect on our business, financial condition, results of operations, and growth prospects.

Information Technology failures could disrupt our product development and operations which could have an adverse impact on our business operations and financial performance.

If we experience a cyber security breach or other security incident or unauthorized parties otherwise obtain access to our customers data, we may be perceived as not being secure, our reputation may be harmed, demand for our products may reduce and we may incur significant liabilities.

Certain of our corporate records are not traceable. We cannot assure you that any regulatory proceedings or actions will not be initiated against us in the future and we will not be subject to any penalty imposed by the competent regulatory authority in this regard.

Reliance on imported machinery exposes us to risks that could adversely affect our operations, financial condition, and results.

Our insurance coverage may not be adequate, or we may incur uninsured losses or losses in excess of our insurance coverage which may impact on our financial condition, cash flows and results of operations.

High customer concentration in the domestic market, resulting from our anchor customer-focused strategy, exposes us to specific risks that may adversely affect our business, financial condition, and results of operations.

We generated 7.81%, 5.65%, 2.37% and 4.05% of our revenue from operations for the three months ended June 30, 2025, and Fiscals 2025, 2024 and 2023 from sales made to the United States. Imposition of tariff on Indian goods, including generators and controllers sold by us, may significantly increase the cost of our exports to the United States, which may potentially reduce our competitiveness and profit margins.

Loss of independent certifications and accreditations may materially harm our business, reputation, and financial performance.

Failures in internal control systems could cause operational errors which may have an adverse impact on our profitability.

Our business may be adversely affected by work stoppages, increased wage demands by our employees, or an increase in minimum wages across various states, and if we are unable to engage new employees at commercially attractive terms.

Our Company is or may be involved in certain legal proceedings and any adverse outcomes in such proceedings may have a material adverse effect on our reputation, business, results of operations, cash flows and financial condition.

Transitional risks associated with our new manufacturing facilities could adversely impact our operations, sales, and financial condition.

Replacement of ageing equipment and its impact on our depreciation expense may adversely affect our financial results.

Information relating to our annual installed capacity, annual average available capacity, actual production and the capacity utilization of our manufacturing facilities included in this Draft Red Herring Prospectus is based on various assumptions and estimates. Undue reliance on the capacity information or historical capacity utilization data for our current manufacturing facilities included in this Draft Red Herring Prospectus.

Under-utilization or misalignment of our manufacturing capacities with market demand, and an inability to effectively utilize our expanded and proposed manufacturing capacities, could have an adverse effect on our business, growth prospects, financial performance and cash flows.

Sub-optimal manufacturing processes could result in lower yields, higher costs, and adversely affect our profitability and competitiveness.

Our ability to access capital at attractive costs depends on our credit ratings. Non-availability of credit ratings or a poor rating may restrict our access to capital and thereby adversely affect our business, financial conditions, cash flows and results of operations.

Our Promoters, certain of our Directors, Key Managerial Personnel and Senior Management Personnel may have interests other than reimbursement of expenses incurred and normal remuneration or benefits.

Some of our Directors do not have prior experience of holding a directorship in a company listed on the Stock Exchanges which may subject us to adverse regulatory actions if we are not able to comply with applicable laws, resulting in an impact on the price of our Equity Shares.

Certain of our existing and future Shareholders together may be able to exert significant influence over our Company after completion of the Offer, which may limit your ability to influence the outcome of matters submitted for approval of our Shareholders.

Our Company has not paid and may not be able to pay dividends in the future.

We have issued Equity Shares during the preceding twelve months at a price which may be below the Offer Price.

Our Company will not receive any proceeds from the Offer for Sale.

This Draft Red Herring Prospectus contains information from third parties, including an industry report prepared by an independent third-party research agency, CRISIL Intelligence, which we have commissioned and paid for to confirm our understanding of our industry exclusively in connection with the Offer and reliance on such information for making an investment decision in the Offer is subject to inherent risks.

We have in this Draft Red Herring Prospectus included certain non-generally accepted accounting principle financial measures and certain other industry measures related to our operations and financial performance. These non-GAAP measures and industry measures may vary from any standard methodology that is applicable across the industry in which we operate and therefore may not be comparable with financial or industry related statistical information of similar nomenclature computed and presented by other companies.

Significant differences exist between Ind AS and other accounting principles, such as U.S. GAAP and IFRS, which investors may be more familiar and may consider them material to their assessment of our financial condition.

The average cost of acquisition of Equity Shares by our Promoters and Selling Shareholders may be less than the Offer Price.

The Offer Price, market capitalization to revenue multiple and enterprise-value-to-EBITDA ratio based on the Offer Price of our Company, may not be indicative of the market price of our Company on listing or thereafter.

The company has a high degree of revenue concentration with a small number of customers, particularly, a key customer, TVS Motor Company Limited ("TVS Motor"), which contributed 75.48%, 80.46%, 83.46% and 79.05% of the company`s revenue from operations for the nine months ended December 31, 2025, Fiscals 2025, 2024 and 2023, respectively, which exposes us to significant business risk if demand from these customers reduces or commercial relationships change which could have a significant negative effect on the company`s business, profitability, and cash flows.

The company is currently dependent on the company`s two manufacturing facilities in Pune, Maharashtra, for all of its production requirements as on the date of this Red Herring Prospectus which may expose the company to regional and operational risks that could have a material adverse effect on the company`s business, results of operations, cash flows, and financial condition.

The company is exposeds to evolving, stage-specific, and proposition-specific risks which may materially and adversely affect its operations, financial condition, and prospects.

Currently, the company is significantly dependent on the mobility segment which contributed 84.63%, 85.69%, 85.64% and 80.37% of the company`s revenue from operations for the nine months ended December 31, 2025, and Fiscals 2025, 2024 and 2023, respectively. Any downturn, cyclical fluctuation, or adverse development in this segment could materially impact its business, results of operations, and financial condition.

The company`s results are affected by demand for gensets in India and globally, i.e., the industrial segment, which contributed 15.37%, 14.31%, 14.36% and 19.63% of the company`s revenue from operations for the nine months ended December 31, 2025, and Fiscals 2025, 2024 and 2023, respectively. Any sustained decline in market acceptance or a shift towards alternative energy could materially impact its business, operations, and financial condition.

The company is exposed to counterparty credit risk. As at December 31, 2025, March 31, 2025, 2024 and 2023, trade receivables from its top 10 customers were Rs. 1,384.06 million, RS. 412.01 million, RS. 257.12 million, and RS. 131.19 million, respectively. Any delay in receiving payments or non-receipt of payments may adversely impact its business, financial condition, cash flows and results of operations.

The company is significantly dependent on the company`s top 10 suppliers for primary raw materials, wherein purchases from top 10 suppliers constituted 63.63%, 63.64%, 65.63% and 63.34% of the company`s total purchases during the nine months ended December 31, 2025, and Fiscals 2025, 2024 and 2023, respectively. Any disruption, delay, or inability of these suppliers to fulfil their commitments may materially and adversely affect its production, financial performance, and growth prospects.

The company imports critical raw materials such as semiconductors and printed circuit boards from People`s Republic of China ("China"), which exposes the company to heightened supply chain and geopolitical risks that may materially affect its costs, production schedules, and business continuity and thereby the company`s business, results of operations, cash flows, and future growth prospects.

The company`s Statutory Auditors` audit reports for Fiscals 2025 and 2024 and the examination report to the company`s Restated Financial Information have included certain observations on certain matters specified in the Companies (Audit and Auditors) Rules, 2014 and Companies Auditor`s Report Order, 2020 for Fiscal 2025. If similar modifications and comments are included in the Statutory Auditors` reports for the company`s financial statements in the future, it could adversely affect its financial condition, cash flows and results of operations.

The average cost of acquisition of Equity Shares by the company`s Promoters and Selling Shareholders may be less than the Offer Price.

The company is highly dependent on sales of our ISG ECU, and integrated ECUs combining ISG and Electronic Fuel Injection Electronic Control ("ISG+EFI ECU") products in the two/three-wheeler (2/3W) industry which contributed 63.98%, 64.34%, 59.03% and 52.37% of the company`s revenue from operations during the nine months ended December 31, 2025, Fiscals 2025, 2024 and 2023, respectively. Any reduction in demand or shift to alternative technologies could materially impact the company`s business, results of operations, and financial condition.

Significant changes in the Indian two/three-wheeler (2/3W) industry arising from electrification, including shifts in component value and industry structure, could negatively impact its business, financial condition, results of operations, and growth prospects.

The company has incurred indebtedness and an inability to comply with repayment and other covenants in the company`s financing agreements could adversely affect its business, results of operations, cash flows and financial condition.

The company`s Registered and Corporate office and current operational manufacturing facilities are located on leased premises. There can be no assurance that such lease agreements will be renewed upon termination or that the company will be able to obtain other premises on lease on the same or similar commercial terms.

Use of open-source software in the company`s products may expose the company to increased risks, including potential intellectual property claims and obligations that could adversely affect its business, reputation, and financial performance.

High customer concentration in the domestic market, resulting from the company`s anchor customer-focused strategy, exposes us to specific risks that may adversely affect its business, financial condition, and results of operations.

Inability to meet consistent and timely delivery expectations of the company`s customers may have a material adverse effect on the company`s business, reputation, financial condition, results of operations, and growth prospects.

Inability to ensure the company`s product propositions remain more compelling than those of competitors may have a material adverse effect on the company`s business, financial condition, results of operations, and growth prospects.

The company has entered and will continue to enter into related party transactions in the ordinary course of the company`s business, and the company cannot assure you that such transactions (individuals or in aggregate) will not have an adverse effect on the company`s results of operation and financial condition.

Certain of the company`s corporate records are not traceable. The company cannot assure you that any regulatory proceedings or actions will not be initiated against the company in the future and the company will not be subject to any penalty imposed by the competent regulatory authority in this regard.

Information relating to the company`s annual installed capacity, annual average available capacity, actual production and the capacity utilization of the company`s manufacturing facilities included in this Red Herring Prospectus is based on various assumptions and estimates. Undue reliance on the capacity information or historical capacity utilization data for the company`s current manufacturing facilities included in this Red Herring Prospectus.

Under-utilization or misalignment of the company`s manufacturing capacities with market demand, and an inability to effectively utilize its expanded and proposed manufacturing capacities, could have an adverse effect on the company`s business, growth prospects, financial performance and cash flows.

Inability to continually generate innovative and compelling technologies or products could adversely affect its business, financial performance, and prospects for growth.

Loss of independent certifications and accreditations may materially harm the company`s business, reputation, and financial performance.

The company`s business and growth depend on the continued service and expertise of the company`s Key Management Personnel, Senior Management Personnel and engineering personnel. Loss of Key Management Personnel, or failures to attract or retain qualified talent, may adversely impact the company`s ability to innovate, execute strategies, and achieve growth.

The company`s total research and development spend as a percentage of the company`s revenue from operations for the nine months ended December 31, 2025, and Fiscals 2025, 2024 and 2023, were 6.98%, 6.74%, 9.51% and 10.28%, respectively. The company`s investments in research and development may not always lead to commercially successful outcomes, which could adversely affect its business operations, financial performance, and growth prospects.

The company`s business is directly dependent on commercial success and market acceptance of the company`s customers` end-use products. Any decline in the demand, production, or acceptance of these products could adversely affect its business, operations, financial condition, and growth prospects.

Inability to consistently meet in-field quality expectations for the company`s products could materially and adversely affect its business, financial condition, results of operations, and growth prospects.

Any failures to adequately protect the company`s proprietary technical know-how or confidential information may result in the loss of the company`s competitive advantage and could materially and adversely affect its business, results of operations, financial condition, and growth prospects.

Some of the company`s Directors do not have prior experience of holding a directorship in a company listed on the Stock Exchanges which may subject the company to adverse regulatory actions if the company is not able to comply with applicable laws, resulting in an impact on the price of the company`s Equity Shares.

Significant increases, fluctuations in prices, shortages, or delays in the supply of primary raw materials could materially and adversely affect the company`s estimated costs, expenditures, production timelines, and overall financial performance.

The Company derives a portion of its income from export incentive schemes and government grants. There can be no assurance that such incentives or grants will continue or that the company`s business will remain eligible in future.

Inability to maintain and protect the company`s reputation for reliability and quality with key customers and stakeholders could materially and adversely affect its business, prospects, and financial performance.

While the company has maintained consistent growth in the company`s business and financial metrics during the nine months ended December 31, 2025 and Fiscals 2025, 2024 and 2023, there can be no assurances that the company will continue to experience such growth going forward which could have an adverse impact on the company`s business, cash flows and results of operations.

The Company may not be successful in implementing its strategies, which may adversely affect its business, cash flows, results of operations and future prospects.

The company has capital expenditure and working capital requirements to support its growth, innovation, and operational continuity. If the company is unable to secure required financing when needed, the company`s operations and future prospects may be materially and adversely affected.

Insufficient warranty reserves to cover future claims could adversely affect the company`s financial condition, results of operations and business prospects.

Risks relating to the protection and enforcement of the company`s intellectual property may materially and adversely impact the company`s business, operations, and future prospects.

The company dependents on third parties for transportation and timely delivery of the company`s products to customers. Any significant disruption or failures by these providers, including one-time events such as strikes, port closures, or other logistical issues could result in delivery delays and increased costs, materially affecting its business.

The company requires to obtain, renew and maintain statutory and regulatory licenses, permits and approvals in the ordinary course of business, and the failures to obtain or retain them in a timely manner may materially adversely affect its operations.

The company`s inability to accurately forecast demand and effectively manage inventory exposes the company to interconnected risks that may adversely affect its business, financial condition, results of operations, and cash flows.

As at December 31, 2025, we had contingent liabilities of Rs.28.26 million that has been disclosed in the company`s Restated Financial Information, which if they materialize, may adversely affect its results of operations, cash flows and financial condition.

There have been minor delays in payment of tax deducted at source / tax collected source (other than salary) during the nine months ended December 31, 2025, and Fiscals 2025 and 2024. Any delay in payment of statutory dues by the Company in future, may result in imposition of penalties and in turn may have an adverse effect on the Company`s business, results of operations, financial condition and cash flows.

Fraud, theft, employee negligence or similar incidents may adversely affect its results of operations and cash flows.

Impairment and discontinuation of capitalised projects may have a material adverse effect on the company`s business, financial condition, results of operations, and growth prospects.

Information Technology failures could disrupt its product development and operations which could have an adverse impact on the company`s business operations and financial performance.

If the company experiences a cyber security breach or other security incident or unauthorized parties otherwise obtain access to the company`s customers data, we may be perceived as not being secure, the company`s reputation may be harmed, demand for the company`s products may reduce and the company may incur significant liabilities.

Reliance on imported machinery exposes the company to risks that could adversely affect its operations, financial condition, and results.

The company`s insurance coverage may not be adequate, or the company may incur uninsured losses or losses in excess of the company`s insurance coverage which may impact on the company`s financial condition, cash flows and results of operations.

The company generateds 8.64%, 5.65%, 2.37% and 4.05% of its revenue from operations for the nine months ended December 31, 2025, and Fiscals 2025, 2024 and 2023 from sales made to the United States. Tariffs imposed by the United States on Indian goods, including generators and controllers sold by the company, may significantly increase the cost of the company`s exports to the United States and reduce its competitiveness and profit margins, and there is uncertainty regarding the implementation and impact of the proposed U.S.-India interim trade agreement.

Failures in internal control systems could cause operational errors which may have an adverse impact on the company`s profitability.

The company`s business may be adversely affected by work stoppages, increased wage demands by the company`s employees, or an increase in minimum wages across various states, and if the company is unable to engage new employees at commercially attractive terms.

The Company is or may be involved in legal proceedings and any adverse outcomes in such proceedings may have a material adverse effect on the company`s reputation, business, results of operations, cash flows and financial condition.

Transitional risks associated with the company`s new manufacturing facilities could adversely impact its operations, sales, and financial condition.

Replacement of ageing equipment and its impact on the company`s depreciation expense may adversely affect its financial results.

Sub-optimal manufacturing processes could result in lower yields, higher costs, and adversely affect its profitability and competitiveness.

The company`s ability to access capital at attractive costs depends on the company`s credit ratings. Non-availability of credit ratings or a poor rating may restrict its access to capital and thereby adversely affect the company`s business, financial conditions, cash flows and results of operations.

The company`s Promoters, certain of the company`s Directors, Key Managerial Personnel and Senior Management Personnel may have interests other than reimbursement of expenses incurred and normal remuneration or benefits.

Certain of the company`s existing and future Shareholders together may be able to exert significant influence over the Company after completion of the Offer, which may limit your ability to influence the outcome of matters submitted for approval of the company`s Shareholders.

The Company has not paid and may not be able to pay dividends in the future.

The company has issued Equity Shares during the preceding twelve months at a price which may be below the Offer Price.

The Company will not receive any proceeds from the Offer for Sale.

This Red Herring Prospectus contains information from third parties, including an industry report prepared by an independent third-party research agency, CRISIL Intelligence, which we have commissioned and paid for to confirm the company`s understanding of its industry exclusively in connection with the Offer and reliance on such information for making an investment decision in the Offer is subject to inherent risks.

The company has in this Red Herring Prospectus included certain non-generally accepted accounting principle financial measures and certain other industry measures related to the company`s operations and financial performance. These non-GAAP measures and industry measures may vary from any standard methodology that is applicable across the industry in which the company operates and therefore may not be comparable with financial or industry related statistical information of similar nomenclature computed and presented by other companies.

Significant differences exist between Ind AS and other accounting principles, such as U.S. GAAP and IFRS, which investors may be more familiar and may consider them material to their assessment of the company`s financial condition.

The Offer Price, market capitalization to revenue multiple and enterprise-value-to-EBITDA ratio based on the Offer Price of the Company, may not be indicative of the market price of the Company on listing or thereafter.