Borana Weaves IPO

Any failures to obtain approval/licenses or permits to operate the Proposed Unit 4, may adversely affect its business, financial condition, cash flows and results of operations.

As of December 31, 2024, more than 98% of its revenue from the company customers is derived from customers based in Gujarat and the company does not have long-term agreements with them. Any changes or cancellations of purchase orders from them or its inability to forecast demand for its products may adversely affect its business, results of operations and financial condition.

Its Registered and Corporate Office, manufacturing units, and 90.00% of suppliers of its raw material, POY Yarn, as of the nine months period ended December 31, 2024 are majorly located in Gujarat 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 which may affect the state of Gujarat.

The Company has a limited operating history, as the Company commenced its operation in 2020 and its may not be able to continue to grow at its historical rate of growth.

Any variation in the utilization of the Net Proceeds would be subject to certain compliance requirements, including prior shareholders` approval.

Information relating to the installed and actual manufacturing capacity of its units included in this Red Herring Prospectus are based on various assumptions and estimates. These assumptions and estimates may prove to be inaccurate and its future production and capacity may vary.

The company procure raw material, POY Yarn, from members of the Promoter Group. Termination of such arrangement, or non-performance of obligations under such arrangement, may impact its business, financial condition, cash flows and results of operations.

The company enter into related party transactions in the ordinary course of its business and the company cannot assure you that such transactions will not have an adverse effect on its results of operation and financial conditions.

The company incur significant employee benefits expense. An increase in employee costs, including on account of changes in regulations, may prevent it from maintaining its competitive advantage and may reduce its profitability.

Its funding requirements and proposed deployment of the Net Proceeds of the Issue have not been appraised by a bank or a financial institution and if there are any delays or cost overruns, its business, cash flows, financial condition and results of operations may be adversely affected.

There is an outstanding legal proceeding involving one of its Independent Director. Any adverse outcome in such proceeding may have an adverse impact on its reputation, business, results of operations, cash flows and financial condition.

In the past there have been a regulatory action initiated against certain of its Promoters and members of the company Promoter Group.

Its business is heavily dependent on the sale of grey fabric, which had contributed to 84.24% of its revenue from operations in the nine months ended December 31, 2024. Any reduction in the sale of grey fabric, or its ability to produce and sell grey fabric, or the price at which the company is able to sell grey fabric, may have an adverse effect on its business, results of operations, cash flows and financial condition.

There has been an instance of delay in obtaining the required environmental consent and authorization for its Unit 3 in the past. Any such delay in obtaining the applicable approvals and licenses in the future could lead to regulatory penalties, operational delays and adverse financial impact.

If the company is unable to predict customer demands and maintain optimum inventory level there may be an adverse effect on its results of operations, financial condition, and cash flows.

The company has incurred significant indebtedness which exposes it to various risks which may have an adverse effect on its business, results of operations and financial conditions. Conditions and restrictions imposed on it by the agreements governing its indebtedness could adversely affect its ability to operate the company business.

Its Promoters, Promoter Group, Directors, Group Companies, Key Managerial Personnel, Senior Management of the Company may enter into ventures that may lead to real or potential conflicts of interest with its business. Further, its Promoters and Directors have interests in the Company other than reimbursement of expenses incurred or normal remuneration or benefits. Additionally, some of its Group Companies, namely R&B Denims Limited, Ricon Textile Private Limited and Arham Weaves Private Limited are enabled under their memorandum of association to carry on similar activities as those of the Company. Any real or potential conflicts of interest that may arise in this regard may materially adversely impact its business, financial condition, results of operations and cash flows.

Its business and the demand for the company product is reliant on the success of its customers` products with end consumers, and any decline in the demand for the end-products could have an adverse impact on its business, results of operations, cash flows and financial condition.

Its business is dependent on the company manufacturing units and the company is subject to certain related risks. Unplanned slowdowns, unscheduled shutdowns or prolonged disruptions in its manufacturing operations or under - utilization of its manufacturing capacities and an inability to effectively utilize its expanded production capacity could have an adverse effect on its business, results of operations, cash flows and financial condition.

The company depends upon its major suppliers for procurement of raw material, POY Yarn, however, the company does not have longterm agreements with its suppliers. Any changes or cancellations of supply of POY Yarn by them owing to absence of formal arrangement, or a shortage of POY Yarn in the market may have an adverse impact on business, financial condition and results of operations.

Its Registered and Corporate office and all the company existing manufacturing units from where the company operates, as well as the proposed manufacturing unit, Proposed Unit 4, have been acquired on lease basis from the members of its Promoter Group, including its Promoters. There can be no assurance that the lease agreements will be renewed upon termination or that the company will be able to obtain other premises on lease on same or similar commercial terms.

The Company is capital intensive, and its may requires significant financing to support its growth strategies and expansion plans. Any failures to raise additional financing could have an adverse effect on its business, results of operations, financial condition and cash flows.

Any delays and/or defaults in customer payments could result in increase of working capital investment and/or reduction of the Company`s profits, thereby affecting its operation and financial condition.

The Company has experienced negative cash flow in the past and may continue to do so in future, which could have a material adverse effect on its business, prospects, financial condition, cash flows and results of operations.

Its manufacturing units are dependent on adequate and uninterrupted supply of electricity and water. Any shortage or disruption in electricity or water supply may lead to disruption in operations, higher operating cost and consequent decline in its operating margins.

Any delay in payment of statutory dues by the Company in future, may result in the imposition of penalties and in turn may have an adverse effect on the Company`s business, financial condition, results of operation and cash flows.

Its Promoters, Directors and regular supply of workforce for the company operations are critical to its continued success and its may be unable to attract and retain such personnel in the future.

High attrition rate of permanent employees may impact its business operations, productivity, financial performance and growth.

In the past, credit ratings issued by CARE Ratings Limited for certain facilities obtained by the company has been marked with the status "Issuer Not Cooperating".

The Company had issued bonus shares on June 22, 2024 in the proportion of 500:1, i.e., 500 Equity Shars each for every 1 Equity Share each held by existing equity Shareholders of the Company as on June 20, 2024. There can be no assurance that our Company will be in a position to declare bonus in the future. Its ability to declare and issue bonus in the future may be affected by any material adverse effect on its future earnings, financial condition or cash flows.

Its current growth strategies include capturing market opportunities in the growing synthetic fibre industry and plan to incur capital expenditure by setting up a new manufacturing unit, Proposed Unit 4. However, its capital expenditure may not result in an increase in revenue from operations.

Its may not be able to successfully manage the growth of the company business if the company is not able to effectively implement its strategies.

The company has contingent liabilities, amounting to Rs. 982.36 lakhs as of December 31, 2024, that have not been provided for in its financial statements, which if they materialize, may adversely affect its financial condition.

The company is subject to environmental, health and safety laws, regulations and standards. Non-compliance with and adverse changes in health, safety, labour, and environmental laws and other similar regulations to its manufacturing operations may adversely affect its business, results of operations, cash flows and financial condition.

Any failures to obtain, renew and maintain requisite statutory and regulatory permits, licenses and approvals for its operations from time to time may adversely affect its business.

The company operates in a labour-intensive industry and are subject to stringent labour laws and any strike, work stoppage or increased wage demand by its employees or any other kind of disputes with the company employees could adversely affect its business, financial condition, results of operations and cash flows.

The Company is dependent on state government subsidies for electricity and interest the elimination or reduction of which may reduce the economic benefits of its existing business and its opportunities to develop or expand its business.

Certain of the members of its Promoter Group, including the company Promoters, have provided personal guarantees in connection with its borrowings. The company business, financial condition, results of operations and prospects may be adversely affected by the revocation of all or any of the guarantees provided by them in connection with its borrowings.

The company has not yet placed orders in relation to the capital expenditure to be incurred for the project the company intend to fund through its Net Proceeds. In the event of any delay in placing the orders, or in the event the vendors are not able to provide the equipment in a timely manner, or at all, may result in time and cost over-runs and its business, prospects and results of operations may be adversely affected.

Its proposed capacity expansion plan by way of setting up of new production unit is subject to the risk of unanticipated delays in implementation and cost overruns.

Industry information included in this Red Herring Prospectus has been derived from an industry report prepared by Dun & Bradstreet exclusively commissioned and paid for by it for such purpose.

Any significant delay in receiving equipment and machinery purchased from outside India could impact its business, operations, cash flows and financial conditions.

Its Promoters have significant control over the Company and have the ability to direct its business and affairs; their interests may conflict with your interests as a shareholder.

Inability to obtain or protect its intellectual property rights may adversely affect its business.

The company operates in a competitive business environment. Competition from existing players and new entrants and consequent pricing pressures and its inability to compete effectively could have a material adverse effect on its operating margins, business growth and prospects, financial condition and results of operations and may lead to a lower market share.

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

An inability to maintain adequate insurance cover in connection with its business may adversely affect its operations and profitability.

Its Promoters have subscribed to, and purchased, Equity Shares, at a price which could be below the Issue Price. The average cost of acquisition of Equity Shares by our Promoters could also be lower than the Issue Price.

The Company has not paid dividends during the last three Fiscals and during the current Fiscal. There can be no assurance that the Company will be in a position to pay dividends in the future. Its ability to pay dividends in the future may be affected by any material adverse effect on its future earnings, financial condition or cash flows.

The company has in this Red Herring Prospectus included certain non-GAAP financial measures and certain other industry measures related to its operations and financial performance. These non-GAAP measures and industry measures may vary from any standard methodology that is applicable across the Indian bio refinery industry, and therefore may not be comparable with financial or industry related statistical information of similar nomenclature computed and presented by other companies.

The company has, in the last year, issued Equity Shares at a price that could be lower than the Issue Price.

Negative publicity against it, the company Promoters, Promoter group, its suppliers, its customers or any of its or their affiliates could cause it reputational harm and could have a material adverse effect on its business, financial condition, results of operations and prospects.

For its business, the company relies heavily on its Promoters namely, Mangilal Ambalal Borana, Ankur Mangilal Borana and Rajkumar Mangilal Borana, who are the Chairman and Managing Director, Executive Director and Chief Executive Officer, and Executive Director and Chief Financial Officer, respectively. Its business performance may have an adverse effect by their departure or by its failures to recruit or keep them.

If the company is unable to establish and maintain an effective internal controls and compliance system, its business and reputation could be adversely affected.

Significant differences exist between Ind AS and other accounting principles, such as US GAAP and International Financial Reporting Standards ("IFRS"), which may affect investor`s assessment of its financial condition.

The determination of the Price Band is based on various factors and assumptions and the Issue Price of the Equity Shares may not be indicative of the market price of the Equity Shares upon listing on the Stock Exchanges.

Pursuant to listing of the Equity Shares, its may be subject to pre-emptive surveillance measures like Additional Surveillance Measure (ASM) and Graded Surveillance Measures (GSM) by the Stock Exchanges in order to enhance market integrity and safeguard the interest of investors.