Mamata Machinery IPO

Significant increases or fluctuations in prices of, or shortages of, or delay or disruption in supply of primary materials could affect its estimated costs, expenditures and timelines which may have a material adverse effect on its business, financial condition, results of operations and cash flows.

The company is heavily dependent on the performance of the FMCG, Food & Beverage and Consumer Industry. Any slowdown in these end-use industries or any other adverse changes in the conditions affecting the plastic processing and converting and packaging machines market can adversely impact its business, financial condition, results of operations, cash flows and prospects.

For the three month period ended June 30, 2024 and for the Fiscal 2024, 2023 and 2022 the inventory level days were 880 days, 255 days, 282 days and 291 days respectively, failure to maintain optimal inventory levels could increase its operating costs or lead to unfulfilled customer orders, either of which could have an adverse effect on its business, financial condition, results of operations and prospects.

The company faces significant competitive pressures in its industry, although in Fiscal 2024 the Company emerged as seventh largest exporter of packaging machines from India and contributed 3% of market share of total export of Packaging Machineries. Its inability to compete effectively would be detrimental to the company business and prospects for future growth.

Any negative cash flows in the future would adversely affect its cash flow requirements, which may adversely affect the company ability to operate its business and implement the company growth plans, thereby affecting its financial condition.

The company derives a significant portion of its revenue from operations from sales outside India which contributed an average of 67.64% of total revenue for the previous three Fiscals out of which business through its wholly owned subsidiary contributed to average of 37.03% of total revenue for the previous three Fiscals, any adverse developments in these markets could adversely affect its business.

The company derives a significant portion of its revenue from operations from our top ten customers which represented an average of 30.76% for the previous three Fiscals. Loss of any of these customers or a reduction in purchases by any of them could adversely affect its business, results of operations and financial condition.

Majority of its business comes from export business. The company revenue from operations from sales located outside India represented 70.42%, 65.28%, 71.52% and 66.13% for three month period ended June 30, 2024 and Fiscal 2024, Fiscal 2023 and Fiscal 2022 respectively. Any disruptions in its export business could adversely affect the company business, financial condition, cash flows, and results of operations.

The Company was incorporated in 1979 and certain documents filed by it with the RoC and certain corporate records and other documents, are not traceable. Its cannot assure you that such forms or records will be available at all or any time in the future.

The Company, Subsidiary, Directors, Promoters and Group Companies are or may be involved in certain legal and regulatory proceedings. Any adverse decision in such proceedings may have a material adverse effect on its business, financial condition, cash flows and results of operations.

Its Promoters and members of Promoter Group will continue to collectively hold majority of the shareholding in the Company, which will allow them to influence the outcome of matters requiring shareholder approval.

The entire offering is through Offer for Sale by the Promoter Selling Shareholders, the Company will not receive any proceeds from the Offer for Sale.

Partial or complete bans on packaging material in respect to its products may severely impact the company business and future business prospects.

The Company has outstanding trade payable to certain MSMEs. Any such delay in payment to MSME trade payables beyond 45 days may attract penal provisions under the applicable laws.

The company has in the past entered into related party transactions and may continue to do so in the future.

The company is exposed to foreign currency fluctuation risks, particularly in relation to import of raw materials which represented 5.68% of its revenue from operations for Fiscal 2024 and export of products and services which represented 65.28% of its revenue from operations for Fiscal 2024 and the company does not hedge its foreign currency risk, which may adversely affect the company results of operations, financial condition and cash flows.

The company`s business is subject to significant revenue concentration in the second half of a fiscal and its may not be able to forecast the company project schedule which could have an adverse effect on its cash flows, business, results of operations and financial condition.

Trademark "Mamata" is registered in the name of one of its Promoters, Mahendra Patel, and the company is dependent on its trademark licence agreements with him which also includes a clause for payment of consideration of 1% of net sales to him in future subject to the shareholders approval. If the trademark licence agreements are terminated, its may consequently lose access to its trade name AMATA`, which could materially and adversely impact its business, results of operations and financial condition.

The long useful life and high durability of machineries manufactured by the Company may lead to lower sales potential moving forward.

Its revenue from operations for the three month period ended June 30, 2024 and Fiscals 2024, 2023 and 2022 stood at Rs. 276.20 million, Rs.2,366.11 million, Rs.2,008.65 million and Rs.1,922.47 million respectively. Although its revenue from operations have been growing year on year, the company cannot assure that the same will continue for the upcoming fiscals.

The company relies on the continued operations of its manufacturing facilities and any slowdown, shutdown or disruption in its manufacturing facilities may be caused by natural and other disasters causing unforeseen damages which may lead to disruptions in its business and operations, which in turn could have an adverse effect on its business, results of operations, financial condition and cash flows.

Its business is manpower intensive. The company business may be adversely affected by work stoppages, increased wage demands by its employees, or increase in minimum wages across various states, inability to attract or train skilled personnel and if the company is unable to engage new employees at commercially attractive terms.

The company failures to keep its technical knowledge confidential could erode the company competitive advantage.

The company appoint contract labour for carrying out certain of its ancillary operations and its may be held responsible for paying the wages of such workers, if the independent contractors through whom such workers are hired default on their obligations, and such obligations could have an adverse effect on its results of operations, cash flows and financial condition.

The company revenue is dependent on the bag and pouch making machines segment of its business. Any downturn in the bag and pouch making machines segment can adversely impact the company`s business, results of operations, cash flow and financial condition of the Company.

Its operations at the company Manufacturing Facilities could be adversely affected by strikes, work stoppages or increased wage demands by its employees or any other kind of disputes with the company employees.

Certain unsecured loans have been availed from Sharvil V Patel by its material subsidiary, Mamata Enterprises Inc, which may be recalled by lenders at any time.

The Offer Price, market capitalization to total turnover and price to earnings ratio based on the Offer Price of the Company, may not be indicative of the market price of the Equity Shares on listing or thereafter.

The company is expected to comply with quality requirements imposed by its customers and any product defect issues or failures by it or its raw material suppliers to comply with quality standards may lead to the cancellation of existing and future orders, recalls or warranty and exposure to potential product liability claims.

If the company is unable to accurately forecast customer demand for its products, the company may not be able to maintain optimum inventory levels resulting in additional strain on its resources.

If the company fails to protect, or incur significant costs in defending, its intellectual property and other proprietary rights, the company`s business, results of operation and financial condition could be materially harmed.

Improper storage, processing and handling of materials and products may cause damage to its inventory leading to an adverse effect on the company`s business, results of operations and cash flow.

Its may be exposed to counterparty credit risk in certain cases and any delay in receiving payments or non-receipt of payments may adversely impact its results of operations.

If the company is unable to maintain and enhance its brand, the sales of its products will suffer, which would have a material adverse effect on its results of operations.

The company is dependent on a number of key personnel, including its Promoters and senior management, and the loss of, or the company inability to hire, retain, train, and motivate qualified personnel could adversely affect its business, results of operations and financial condition.

The company may faces difficulties in executing its strategies including the company growth plans.

Its reliance on third parties for certain aspects of the company`s business, including raw material suppliers, transporters of its raw materials and products and logistics, exposes the company to certain risks.

The company operates in a highly competitive industry. Its also face competition from both organized and unorganized players. The company failures to compete effectively could have a negative impact on the success of its business and/or impact its margins.

If the company is unable to maintain the Average Turnaround time for products its sales, the company`s business, results of operations, cash flows and financial condition may be adversely affected.

Pricing pressure from customers may affect its gross margin, profitability and ability to increase its prices, which in turn may materially adversely affect the company`s business, results of operations and financial condition.

There are certain risks including weaknesses such as Dependence on Raw Materials, Rapid Changes in Technology and Costly Skilled Manpower and threats such as Global Competition, Raw Material Price Fluctuation and Environmental Issues in the Indian packaging machinery industry.

The company relies on a robust after-sales service network to redress customer grievances. Non- performance or underperformance of its after-sales service network could significantly harm its reputation.

The company may lose existing accreditations, fail to obtain accreditations for facilities for which the company has made applications, or fails to renew its accreditations if the company is not able to maintain or meet evolving accreditation standards.

If the company is experience insufficient cash flows to fund its working capital requirements or if the company is not able to provide collateral to obtain letters of credit and bank guarantees in sufficient quantities, there may be an adverse effect on its business, cash flows and results of operation.

Its Promoters, certain of the company Directors, Key Managerial Personnel and Senior Managerial Personnel may have interests other than reimbursement of expenses incurred and normal remuneration or benefits.

Its contingent liabilities could adversely affect the company financial condition if they materialise.

Its ability to pay dividends in the future will depends on the company future cash flows, working capital requirements, capital expenditures and financial condition.

Failures or disruption of the company IT systems may adversely affect its business, financial condition, results of operations and prospects.

Failures to obtain or renew approvals, licenses, registrations and permits to operate its business in a timely manner, or at all, may adversely affect the company`s business, financial condition, cash flows and results of operations.

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

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 industry in which the company operates, and therefore may not be comparable with financial or industry related statistical information of similar nomenclature computed and presented by other companies.

This Red Herring Prospectus contains information from industry sources including the industry report commissioned from Dun & Bradstreet on "Flexible Packaging Machinery" (the "D&B Report"). Prospective investors are advised not to place undue reliance on such information.