Gala Precision Engineering IPO: Here are 10 key risks from the RHP you should know before investing

Gala Precision Engineering IPO: The Initial public Offering began on September 2 and will end on September 4 with a price range of ₹503-529 per share. Here are 10 key risks from the Red Herring Prospectus (RHP) you should know before investing

10 Key risks from the RHP

1.The loss of any of key customers or significant reduction in production and sales of, or demand for our production Gala Precision Engineering significant customers may adversely affect its business, results of operations and financial condition.

2. Gala Precision Engineering ltd does not have long term contracts or exclusive arrangements with any of its suppliers, and a significant increase in the cost of, or a shortfall in the availability, or deterioration in the quality, of such input materials could have an adverse effect on its business and results of operations.

3. Gala Precision Engineering business is dependent on the performance of the application industries with a large portion of revenue being derived from a select few of application industries. Any downturn in the application industries can adversely impact its business, results of operations, cash flow and financial condition of the company

4.Gala Precision Engineering is involved in certain legal proceedings, and an adverse outcome in any such proceedings may adversely affect its business, financial condition and growth strategy

5. Gala Precision Engineering have entered into transactions with related parties. These or any future related party transactions may potentially involve conflicts of interest and there can be no assurance that Gala Precision Engineering could not have achieved better terms, had such arrangements been entered into with unrelated parties.

Next Five key risks

6. Gala Precision Engineering operations are subject to varied business risks and company’s insurance cover may prove inadequate to cover the economic losses of the company.

7. Certain of its immovable properties, including its registered and corporate office, are leased. If Gala Precision Engineering are unable to renew existing leases or relocate its operations on commercially reasonable terms, there may be an adverse effect on its business, financial condition and operations.

8. Gala Precision Engineering is dependent on third party transportation for the delivery of raw materials and finished products and any disruption in their operations or a decrease in the quality of their services could adversely affect its business and results of operation.

9. Gala Precision Engineering business is manpower intensive. Its business may be adversely affected by work stoppages, increased wage demands by its employees, or increase in minimum wages across various states, and if company is unable to engage new employees at commercially attractive term.

10. Gala Precision Engineering has a high working capital requirement and if the Company is unable to raise sufficient working capital the operations of Company will be adversely affected.

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