1. Product concentration risk - its derived a significant portion (approximately 60%) of the company Gross Product Sales in each of the last three Fiscals from the sale of its key products and a significant portion (more than 30%) of its Gross Product Sales in Fiscal 2023 is attributable to the sale of ooden pencils'. Any decline in the Gross Product Sales of its key products in general or specifically `Wooden pencils' could have an adverse effect on its business, results of operations and financial condition.
2. Distribution risk - the company is dependent on its "General Trade" distribution network for a significant portion (more than 70.00%) of its Gross Product Sales in each of the last three Fiscals. Failure to manage its "General Trade" distribution network efficiently could have an adverse impact on its business, results of
operations and financial condition.
3. Brand and counterfeiting risk - Any deterioration of its brand image, reputation and its consumer's
awareness of the company's brand and products could have a material adverse effect on its business, results of operations and financial condition. Further, the availability of look-alikes, counterfeit products, primarily in its domestic market, manufactured by other companies and passed off as its products, could also adversely affect its goodwill and results of operations.
4. Dependence on natural resources for raw materials - Some of the raw materials used in its production
processes are natural resources and therefore the company is subject to the risk of depletion of such natural resources.
5. Supply risk - The company has not entered into any formal contracts or exclusive arrangement with its suppliers from whom its procure materials consumed by it for the company's manufacturing process. Further, its dependent on certain limited suppliers for some of its raw materials. In the event, the company is unable to procure such materials at terms favourable to it, or at all, its business, financial condition and results of operations may be adversely affected.
6. Pricing pressure from suppliers - Increase in costs of raw materials or its inability to fully pass on costs to its customers, may impact the company revenue from operations and profitability and may result in a materially adverse effect on its business, results of operations and financial condition.
7. Inability to assess consumer preference and demand - its success depends on its ability to promptly
identify and respond to changing consumer preferences or evolving trends and successfully launch new products or SKUs in the market. Failure to do so may decrease the demand for its products among its consumers, which may adversely affect its business, results of operations and financial condition.
8. Inventory risk - Failure to correctly assess the demand for its products and maintain optimal inventory levels could increase its inventory holding costs and adversely affect the company's business, results of operations and financial condition.
9. Dependence on FILA for export sale - The company is dependent on the FILA Group for its export sales (export sales to FILA Group contributing to more than 60% of its total export sales in each of the last three Fiscals). Any damage to the reputation of the FILA Group may adversely affect its business, results of operations and financial condition.
10. Loss - The Company has incurred loss in the past.