KAMDHENU ISPAT LIMITED - Securities and Exchange Board of India

(b) Any disruption/ discontinuance of production by any of the franchisee’s shall affect the revenues of the Company
to the extent of non receipt of royalty income being derived from the concerned franchisee(s) and may also
result in disruption of Supply of our products in that region.
Our Company has entered into individual agreements with the franchisees to ensure strict quality control. In case
even a slight deviation in the production quality norms is observed by our Company, the agreement can be terminated
with immediate effect without any legal recourse by the other party. In such an eventuality the supplies being
affected by the franchisee shall be recouped by the Company from own production or by effecting supplies from the
Stock yards being setup by the Company or by appointment of alternative franchisee(s).
Introduction of alternative technology or consumer habits may reduce demand for our existing products
and may adversely affect our profitability and business prospects.
Our products are used in construction activities. Our customers may decide to seek alternative technology coupled
with the development of more alternatives, which may adversely affect our business and profitability if we are not
able to respond to these changes. Our ability to anticipate changes in technology and to develop and introduce new
and enhanced products successfully on a timely basis will be a significant factor in our ability to grow and to remain
competitive. We cannot assure you that we will be able to achieve the technological advances that may be necessary
for us to remain competitive or that certain of our products will not become obsolete. We are also subject to the risks
generally associated with new product introductions and applications, including lack of market acceptance and
delays in product development.
Further, any substantial change in the spending habits of consumers who are end users of where our products
are used, business of our Customers will affect which in will affect the demand for our products. Any failure
on our part to forecast and/or meet the changing demands will have an adverse effect on our business, profitability
and growth prospects.
Our Group Companies are in same line of Business
Most of our group Companies also deals in the main product of the Company i.e Steel Bars, Ingots etc. We presently
source a part of our total requirement of steel ingots/billets from these companies. These transactions are done on
prevailing market prices on commercial terms and on an arms length basis.
An inability to manage our growth could disrupt our business and reduce our profitability.
We have experienced high growth in recent times and expect our business to grow significantly in view of our plan
for expansion . We expect this growth to place significant demands on us and require us to continuously evolve and
improve our operational, financial and internal controls across the organisation. In particular, continued expansion
increases the challenges involved in:
maintaining high levels of customer satisfaction;
recruiting, training and retaining sufficient skilled management, technical and marketing personnel;
adhering to quality and process execution standards that meet customer expectations;
preserving a uniform culture, values and work environment in operations within and outside India; and
developing and improving our internal administrative infrastructure, particularly our financial, operational,
communications and other internal systems.
Any inability to manage our growth may have an adverse effect on our business and financial results.
Covenants with institutional lenders may restrict our operations and expansion ability, which may hurt our
business and results of operations and financial condition.
Certain covenants in our financing agreements with SBBJ require us to obtain approval from the financial institutions
before undertaking new projects or substantial expansion of the existing facilities, making any investments, issuing
new securities (debt or equity), making changes to our capital structure or our senior management or declaring
dividends in certain circumstances.
Pursuant to the terms of Capital Facilities extended by State Bank of Bikaner and Jaipur, the Company cannot
make payment of Dividend without their consent, issue any further shares, implement expansion plans, make
investment in other Concerns, maintain minimum net working capital, maintain minimum tangible net worth,
enter into agreements and arrangements, transfer or dispose of any undertaking, increase remuneration to
Directors or pay commission to Directors, merger or consolidation, transfer or dispose of its undertaking or any
of its capital fixed assets except in the ordinary course of business, enter into borrowing arrangements with any
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