Sambhv Steel IPO

Backward integrated facility in India.

Strategically located manufacturing plants resulting in operational efficiencies.

Strong process innovation and execution capabilities allowing us to produce value-added products.

Widespread, well connected distribution network across India.

Well-positioned to take advantage of the growing demand for quality ERW steel pipes and tubes.

Experienced Promoters and management team with vast experience in the steel industry.

Track record of healthy financial performance.

Under-utilization of its manufacturing capacities and an inability to effectively utilize the company expanded manufacturing capacities could have an adverse effect on its business, future prospects and future financial performance.

An increase in the cost of or a shortfall in the availability of its key raw materials such as iron ore, coal, iron ore pellets, sponge iron and mild steel scrap from its suppliers could have a material adverse effect on its business, results of operations, profitability and margins, cash flows and financial condition.

The company depends on certain key suppliers for certain raw materials and have not entered into definitive supply agreements with most of its suppliers. A failures by its suppliers to meet their obligations may affect the availability and cost of raw materials, which may adversely affect its business, results of operations, profitability and margins, cash flows and financial condition. Further volatility in the raw material prices and its inability to pass on the increase in cost of raw materials to the customers may impact its results of operations, profitability and margins.

Its financing arrangements contain restrictive covenants. This may limit the company ability to pursue its business and limit the company flexibility in planning for, or reacting to, changes in its business or industry including the company plans for expansion and diversification.

The company derives a substantial portion of its revenue from the sale of ERW pipes and tubes and any loss of sales due to reduction in demand for its products could adversely affect its business, financial condition, results of operations and cash flows. Further, the company inability to successfully diversify its product offerings may adversely affect its growth and negatively impact its profitability.

Any disruption or shortage of essential utilities could disrupt its manufacturing operations and increase the company production costs, which could adversely affect its results of operations.

Its return on capital employed has constantly declined. A further decline could adversely affect its business, financial condition, results of operations and cash flows.

Its existing and proposed manufacturing facilities and Registered and Corporate Office are located in Chhattisgarh and any adverse changes in the conditions affecting the region can adversely impact its business, results of operations, profitability and margins, cash flows and financial condition.

Its revenues are concentrated in north and west India. Any adverse changes in the conditions affecting these regions and its inability to grow the company business in new geographic markets may adversely impact its business, results of operations, profitability and margins, cash flows and financial condition.

Its existing manufacturing facilities are critical to the company business operations. The unexpected shutdown or slowdown of operations at its operational manufacturing facilities could have a material adverse effect on its business, results of operations, profitability and margins, cash flows and financial condition.

Its business is dependent on certain key distributors and direct customers. A decrease in the revenue the company earn from such key distributors and direct customers and an inability to expand or effectively manage its distributor network, or any disruptions in the company distribution network could adversely affect its business, results of operations, profitability and margins, cash flows and financial condition.

The company faces substantial competition from other structural steel tubes, pipes and steel producers. Its inability to compete effectively could result in the loss of customers and market share, which may affect its business.

There have been certain instances of delays in payment of employee state insurance contributions, employee provident fund contributions and other statutory dues by the Company in the nine-month period ended December 31, 2024 and in Fiscals 2024, 2023 and 2022. Inability to make timely payment of its statutory dues could requires the company to pay interest and penalty on the delay in payment of statutory dues which could adversely affect its business, the company results of operations and financial condition.

If the company is unable to implement its expansion plans or retain demand for new product lines, its business, results of operations, profitability and margins, cash flows and financial condition could be adversely affected.

Its may requires financing to support the company current operations, expansion plans or adapt to changes in business conditions, but its may not be able to obtain additional financing on favorable terms or at all. The company inability to obtain additional financing on acceptable terms and in a timely manner could adversely affect its business, results of operations, profitability and margins, cash flows and financial condition.

The company enter into certain related party transactions in the ordinary course of its business and the company cannot assure you that such transactions will not adversely affect its business, results of operations, profitability and margins, cash flows and financial condition.

The previous statutory auditor of the Company has included an emphasis of matter paragraph in their report on its audited financial statements for Fiscals 2023 and 2022 and the company Statutory Auditors have included in their report on its audited financial statements for Fiscals 2024, a `Report on Other Legal and Regulatory Requirements`. The company cannot assure that its financial information for future periods will not contain emphasis of matters, adverse remarks or observations or report on other legal and regulatory requirements.

None of its Directors are directors of listed companies and hence lack of adequate experience to address complexities associated with listed companies could have an adverse impact on its business and operations.

Conflicts of interest may arise out of business ventures in which certain of its Promoters and Directors are interested by virtue of, inter alia, shareholding and directorships. Its Promoters and a member of the company Promoter Group have entered into a non-compete agreement with the Company, for avoiding any conflict of interest between the Company and / or our Subsidiary ("Group"), and any other entity owned and controlled by its Promoters and/ or any members of the company Promoter Group ("Promoter Controlled Entities"). Any termination or variation of the non-compete agreement could result in a conflict of interest between Promoter Controlled Entities and the company.

Its insurance coverage may not be adequate to protect it against all material risks, which may adversely affect its business, results of operations and financial condition.

The company has substantial working capital requirements and may requires additional financing to meet those requirements, which could have a material adverse effect on its business, results of operations, profitability and margins, cash flows and financial conditions.

Its inability to collect receivables and default in payment from the company customers could result in the reduction of its profits and affect the company cash flows.

The company is highly dependent on its Promoters, the company Key Managerial Personnel and its Senior Management. Any inability on its part to retain or recruit skilled personnel could adversely affect its business, results of operations, profitability and margins, cash flows and financial condition.

Errors in forecasting demand for its products could result in failures to manage its inventory and misallocation of production capacity, which in turn, could lead to decreased efficiency, increased cost and lost opportunity which could have an adverse effect on its business, results of operations, profitability and margins, cash flows and financial condition.

The company is required to obtain, renew or maintain statutory and regulatory permits, licenses and approvals to operate its business, and the company may experience delays in obtaining, renewing or maintaining such licenses or permits or be unable to obtain such licenses and approvals. Its inability to obtain, maintain or renew such regulatory approvals and licenses in a timely manner or at all, may adversely affect its business, results of operations, cash flow and financial condition.

There are outstanding legal proceedings involving the Company, its Directors, its Promoters, the company Subsidiary, its KMPs and our SMPs. Any adverse outcome in such proceedings may adversely affect its reputation, business, results of operations, profitability and margins, cash flows and financial condition.

Its operations involve activities and materials which are hazardous in nature and could result in a suspension of operations and/or the imposition of civil or criminal liabilities which could adversely affect its business, results of operations, cash flow and financial condition.

The company is dependent on stable and reliable third party logistics and transportation infrastructure for the delivery of its products and raw materials. Disruption of logistics and transportation services could impair the ability of its suppliers to deliver raw materials or its ability to deliver products to the company customers and may increase its transportation costs which may adversely affect its business, results of operations, profitability and margins, cash flows and financial condition.

A few of the loans proposed to be repaid from the Net Proceeds by the Company have been availed by the Company in the recent past (i.e., within six months preceding the date of the Draft Red Herring Prospectus).

The steel industry is cyclical in nature. The pricing in the steel industry is subject to market demand, volatility and economic conditions. Fluctuations in industry dynamics including the steel prices may materially and adversely affect its business, results of operations, profitability and margins, cash flows and financial condition.

The Company is subject to certain risks, inherent in the steel pipe industry.

Its Statutory Auditors` report for Fiscal 2024 includes a `Report on Other Legal and Regulatory Requirements`. The company cannot assure that its financial information for future periods will not contain such reports.

The company depends on its product quality and our failures to maintain or enhance its product quality could have a material adverse effect on its business, results of operations, profitability and margins, cash flows and financial condition. Further, any issues with the products its manufacture could result in potential product liability claims against it and reduced demand for its products.

Its inability to maintain and protect the company brand and business reputation could adversely affect its business, results of operations, profitability and margins, cash flows and financial condition.

Its business is dependent on the performance of the industry in which the company operates or the industries in which its products are used. Economic cyclicality, reduction in demand and availability of substitute materials in these industries, in India or globally, could adversely effect its business, results of operations, profitability and margins, cash flows and financial condition.

The company has certain contingent liabilities which, if materialised, may adversely affect its financial condition.

Information relating to the capacity utilization of its manufacturing facilities included in this Red Herring Prospectus is based on various assumptions and estimates and future production and capacity may vary.

Its operations are labor intensive and the company manufacturing operations may be subject to strikes, work stoppages or increased wage demands by its employees or the employees of the company sub-contractors, which could adversely affect its business, results of operations, cash flow and financial condition.

Its ability to access capital at attractive costs depends on its credit ratings. Non-availability of credit ratings or a poor rating may restrict its access to capital and thereby adversely affect its business, financial conditions, cash flows and results of operations.

The company has had negative operating cash flows in the past and may continue to have negative cash flows in the future.

Its Promoters and members of the Promoter Group have provided guarantees in connection with its borrowings and the revocation of all or any of such guarantees may adversely affect its business, results of operations and financial condition.

The company is subject to risks arising from interest rate fluctuations, which could reduce its profitability and adversely affect the company business, cash results of operations, cash flows and financial condition.

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

Any disruption or failures of its technology systems may adversely affect its business and operations. Additionally, challenges in implementation of new technologies for its operations could be significant.

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

Any failures to protect and leverage its intellectual property rights could adversely affect its competitive position, business, financial condition and results of operation. Its may also inadvertently infringe on the intellectual property rights of others and infringement claims could subject it to significant liability for damages and potentially injunctive action.

Its Registered and Corporate Office and certain other properties are not owned by it. In the event that the company lose such rights or are required to renegotiate arrangements for such rights, its business results of operations, profitability and margins, cash flows and financial condition could be adversely affected. Further, certain portions of land owned by it and the company Subsidiary are agricultural land.

Its may be unable to enforce the company rights under agreements with third parties due to failures to stamp or inadequate stamping of such agreements.

The company will continue to be controlled by its Promoters and Promoter Group after the completion of the Offer and there may be a conflict of interest between the interests of its Promoters and Promoter Group and other shareholders.

Any future bonus issuances of Equity Shares are dependent upon adequate availability of reserves. Lack of adequate reserves may restrict its ability to enhance liquidity of Equity Shares.

This Red Herring Prospectus includes certain Non-GAAP Measures, financial and operational performance indicators and other industry measures related to its operations and financial performance. The Non-GAAP Measures and industry measures may vary from any standard methodology that is applicable across the Indian steel industry and, therefore, may not be comparable with financial or industry related statistical information of similar nomenclature computed and presented by other companies.

Industry information included in this Red Herring Prospectus has been derived from the CRISIL Report, which was prepared by CRISIL Intelligence and exclusively commissioned and paid for by our Company for the purposes of the Offer, and any reliance on information from the CRISIL Report for making an investment decision in the Offer is subject to inherent risks.

Its operations are subject to environmental and workers` health and safety laws. Any instances of non-compliance with such laws may have a material adverse effect on its business, results of operations, profitability and margins, cash flows and financial conditions.

The company appoint contract labor for carrying out certain of its operations and the company outsource job work to certain third parties. 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 and financial condition.

A reduction in import duties on steel products in India may lead to increased competition from foreign companies, reduce its market share and reduce margins on the company products.

The average cost of acquisition of Equity Shares held by its Promoters and the Selling Shareholders may be less than the Offer Price.

Its Promoters, the company Directors, and Key Managerial Personnel have interests in its business other than the reimbursement of expenses incurred or normal remuneration or benefits.

Its ability to pay dividends in the future will depends on the company earnings, financial condition, working capital requirements, capital expenditures and restrictive covenants of its financing arrangements.

Its revenue from operations are primarily from sales of products made in the Indian market and the company does not have extensive experience in other geographies. Any adverse changes in the conditions affecting the Indian market for its products and our inability to tap the company export potential may adversely impact its business, results of operations, profitability and margins, cash flows and financial condition.

The withdrawal/ cessation/ reversal of benefits and exemptions availed by the Company could have a material adverse effect on its business, operations, prospects or financial results.

Significant differences exist between Ind AS and other accounting principles, such as U.S. GAAP and IFRS, which investors may be more familiar with and may consider them material to their assessment of its financial condition.