Carraro India Limited - IPO

1. We derived 69.55% and 87.88% of our revenue in the six months ended September 30, 2024 and 69.37% and 85.39% of our revenue in Fiscal 2024 from our top five and top 10 customers, respectively, and any inability to retain our key customers or attract new customers and expand our customer network, could negatively affect our business and results of operations.

2. We depend partially on other entities in the Carraro Group for our operations, such as the license of the Carraro brand, customer sourcing, procurement, R&D and general support of our operations. The Carraro Group was our largest customer in the six months ended September 30, 2024 and 2023 and Fiscals 2024, 2023 and 2022. For the six months ended September 30, 2024 and Fiscal 2024, we derived 33.27% and 33.91% of our total revenue from the Carraro Group and have purchased 3.81% and 4.91% of our raw materials from the Carraro Group, respectively. Any disruption in this relationship could have a material adverse impact on our operations.

3. We have entered into and may continue to enter into related party transactions with the Carraro Group, Directors and Key Managerial Personnel. We incurred 33.89% and 34.67% of our total income and 6.70% and 8.63% of our total expenses in transactions with related parties in the six months ended September 30, 2024 and Fiscal 2024, respectively. Such transactions may require significant capital outlay and there can be no assurance that we will be able to make a return on these transactions or investments.

4. Our agricultural tractor business is seasonal in nature and a decrease in our sales during some quarters could have an adverse impact on our financial performance.

5. We and certain of our Group Companies have common pursuits as they are engaged in similar business or segments within the automotive components industry and may compete with us, and that there may be conflict of interest in allocating business opportunities between us and such Group Companies.

6. Our Promoters and certain of our Directors may be involved in ventures which are engaged in the same line of activity or business as that of our Company and this may result in conflicts of interest with us. Our Directors, Key Managerial Personnel and Senior Management may have interests in our Company in addition to their remuneration and reimbursement of expenses.

7. We are dependent on the performance of the tractor and construction vehicle markets, as our agricultural tractors sector and construction vehicles sector constituted 45.05% and 41.29% of our revenue from product sector only for Fiscal 2024, 49.37% and 38.43% of our revenue for Fiscal 2023 and 50.59% and 36.12% of our revenue for Fiscal 2022, respectively. Any adverse changes in the conditions affecting the tractor or construction vehicles markets can adversely impact our business, financial condition, results of operations, cash flows and prospects.

8. Our EBITDA margins and PAT margins were lower than the EBITDA margins and PAT margins of our industry peers in the six months ended September 30, 2024 and September 30, 2023 and Fiscals 2024, 2023 and 2022, as disclosed in this Red Herring Prospectus, and we cannot assure you that we will be able to continue to improve our EBITDA margins and PAT margins in comparison to our competitors or at all.

9. We currently manufacture our axles, transmissions and gears at our manufacturing plants in Pune, India. Any disruptions or stoppages at our manufacturing plants could adversely impact our operations, financial condition and results of operations.

10. As we derive 34.60%, 36.09%, 35.87%, 38.19% and 36.80% of our revenue from exports from the six months ended September 30, 2024 and 2023 and Fiscals 2024, 2023 and 2022, respectively, we heavily rely on our extensive global customer base of OEM customers and our inability to maintain the stability of our OEM customer base and attract additional customers may have a material adverse effect on our results of operations and financial condition.