INOX India IPO opens: 10 key risks from RHP to consider before subscribing

Ten key risks highlighted by  INOX India in its Red Herring Prospectus, or RHP, include–

1. INOX India business is dependent and will continue to depend on its manufacturing facilities, and the company is subject to certain risks in its manufacturing process such as the breakdown or failure of equipment, industrial accidents, severe weather conditions and natural disasters.

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2. INOX India is dependent on and derives a substantial portion of its revenue from a limited number of customers. Cancellation by customers or delay or reduction in their orders could have a material adverse effect on its business, results of operations and financial condition.

3. INOX India relies on a number of third party suppliers for its key components, materials and stock-in-trade as well as customer support services including product repairs and returns. Any shortfall in the supply of its components and raw materials or an increase in its component or raw material costs, or other input costs, may adversely affect the pricing and supply of its products and have an adverse effect on its business, results of operations and financial condition.

4. The contracts in INOX India order Book may be adjusted, cancelled or suspended by its customers and, therefore its Order Book is not necessarily indicative of its future revenues or profit.

5. INOX India manufacturing facilities are located in Gujarat and in the Union Territory of Dadra and Nagar Haveli exposing it to regulatory and other geography specific risks such as labour unrests, terrorist attacks, other acts of violence and occurrence of natural and man-made disasters.

6. INOX India does not own the name “INOX” and its inability to comply with the terms and conditions of the Name License Agreement and subsequent termination thereof may adversely impact its. business, results of operations and financial condition.

7. Cryogen leakage from equipment poses health hazards, and INOX India may be exposed to potential warranty claims, product recalls and returns, and product liability claims which could adversely affect its business, results of operations and financial condition.

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8. A slowdown in INOX India exports due to tariffs and trade barriers and international sanctions could adversely affect its business, results of operations and financial condition.

9. INOX India may be subject to labour unrest, slowdowns and increased wage costs, which may adversely affect its business, results of operations and financial condition.

10. INOX India operations are subject to environmental and workers’ health and safety laws and regulations. INOX India may have to incur material costs to comply with these regulations or suffer material liabilities or damages in the event of an incidence or non-compliance of environment and other similar laws and regulations which may have a material adverse effect on its reputation, business, results of operations and financial condition.

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Published: 14 Dec 2023, 10:20 AM IST