1. Customer concentration risk - its top five customers contributed a significant portion (more than 68.00% in each of the three month period ended June 30, 2023 and the previous three Fiscals) of its revenues. The loss of a major customer or reduction in demand for its products from any of its major customers may adversely
affect the company's business, financial condition, results of operations and prospects.
2. End-user industry risk - Demand for its products is linked to growth and trends in sales of vehicles by the company's customers. Decline in sales of its customers may adversely affect the demand for the company products which in turn would adversely impact its business, financial condition, results of operations and prospects.
3. Product concentration risk - its derives a substantial portion of the company's revenue (more than 30% in each of the three month period ended June 30, 2023 and Fiscal 2023 and more than 10% in each of Fiscal 2022 and Fiscal 2021) from the sale of trailer axle and suspension assemblies for medium and heavy commercial vehicles ("M&HCV"). Further, its top three product segments accounted for more than 90% of its revenues for the above periods. Any reduction in demand for its key products would have a material adverse effect on its business, financial condition, results of operations and cash flows.
4. Manufacturing facility disruption risk - its manufacturing facilities are subject to operating risks. Any shutdown of its manufacturing facilities of its existing or future manufacturing facilities or other production problems caused by unforeseen events may reduce sales and adversely affect its business, cash flows, results of operations and financial condition.
5. Manufacturing facility geographical concentration - its manufacturing facilities are located in the same geographical location and any disruptions in its manufacturing process due to local and regional factors could have an adverse effect on its business, financial condition and results of operations.
6. Product quality risk - the company is subject to strict quality requirements and any product defect issues or failure by it to comply with quality standards could adversely affect its business, results of operations, cash flows and financial condition.
7. Lack of long-term contracts - the company does not have firm commitment agreements with its customers. If its customers choose not to source their requirements from it, there may be a material adverse effect on its business, financial condition, cash flows and results of operations.
8. Inventory management risk - If the company fail to accurately predict the demand for its products or if customers vary or cancel production orders, its may incur costs associated with excess inventory, including towards raw material charges, elongated working capital cycle and storage costs, any or all of which can adversely impact its financial results, profitability and future prospects.
9. Product pricing risk - Pricing pressure from customers may adversely affect its gross margin, profitability and ability to increase the company prices.
10. Raw material sourcing risk - the company depends on a limited number of third parties for the supply of raw materials and failure by its suppliers to meet their obligations may cause change in availability and cost of raw materials which may adversely affect its business, financial condition, results of operations and prospects.