1. The Company has passed through an incidence of litigation involving dispute inter-se its Promoters in which two of the Directors of the Company were charged with carrying out certain competing activities in their personal company that poses a conflict of interest to the Company and as such were proposed to be removed from the Board of Directors of the Company. The matter was escalated to NCLT and subsequently the same was amicably settled between the Promoters and Promoter Group and a settlement agreement was executed. The company cannot assure that such instance will not occur in future, which may adversely affect its business prospects and results of operations.
2. The Company, its Directors and its Promoters are party to certain legal and regulatory proceedings,
including criminal proceedings against one of its Promoter Director. These legal and regulatory
proceedings are pending at different levels of adjudication before various courts and regulatory
authorities. Any adverse decision in such proceedings may have a material adverse effect on its business, financial condition, cash flows and results of operations.
3. Its business is dependent on the company single manufacturing facility, and the company is subject to certain risks in its manufacturing process. Any slowdown or shutdown in the company manufacturing operations could have an adverse effect on its business, financial condition and results of operations.
4. The company present business operations and revenues comprising of speciality cables and the proposed business operations under Train Control Products and Solutions are substantially dependent on Indian Railways and Naval (Defence) manufacturing units. Any adverse change in policy of the Ministry of Railways may adversely affect its business and results of operations.
5. The company is dependent on and derive a substantial portion of its revenue from a limited number of customers. Cancellation or orders by customers or delay or reduction in their orders could have a material adverse effect on its business, results of operations and financial condition.
6. The company do business with its customers on purchase order basis or through tenders issued by them from time to time and do not have long-term contracts with most of them. Further, its business in the speciality cables division tends to vary from quarter to quarter based on the timing of release of various tender.
7. Most of its customer agreements generally contains a liquidated damage charges clause for delay or non delivery of the E-beam Cables. The company has in the past and may in the future incur additional costs or liquidated damages in the event of disputes, claims, defects or delays, which could adversely affect its business, financial condition, profitability and cash flows.
8. The company is subject to strict quality requirements, customer inspections and audits, and any failures to comply with quality standards may lead to cancellation of existing and future orders and could negatively impact its reputation and the company's business and results of operations and future prospects.
9. Its programming and software development under Train Control Systems division is complex and
technologically advanced and could have unknown defects or errors as the same is yet to undergo and complete field trial requirement of RDSO. Any failures to achieve desired results under field trails may result in dis-qualification of its product developed and may require it to undertake fresh investments for rectification of the errors which may adversely impact its financial position.
10. Any asset impairment could adversely affect its financial condition and results of operations.