FUTURA POLYESTERS LIMITED - IDBI Capital

adversely affect our perception with suppliers, customers, regulators, employees and the public, which could in
turn affect our financial condition and business performance. While we maintain general insurance against these
liabilities, the insurance proceeds may not be adequate to fully cover the substantial liabilities, lost revenues or
increased expenses that we might incur.
28. As per the loan agreements entered into by us with our lenders, there are certain restrictions on us, which
may hamper our future business growth and business policies.
We have entered into agreements for availing financial facilities from various lenders. Certain covenants in
these agreements require us to obtain approval/ permission from our lenders. These covenants include, amongst
others, implementation of any scheme of expansion / diversification / renovation / capital expenditure,
formulation of any scheme of amalgamation or reconstruction, undertaking of guarantee obligation, any change
in our capital structure, among others. We cannot assure that these approvals would be forthcoming when we
apply for the same.
Accordingly, we are required to obtain prior consent from our lenders for the Issue. We are yet to obtain the
consent of IDBI Bank Limited, one of our lenders, for this Issue, for which we have applied.
For further details in this regard, please refer chapter titled “Financial Indebtedness” beginning on page 46 of
the Draft Letter of Offer
29. Our agreements with certain commission agents have certain exclusivity clauses
Our agreements with certain of our commission agents bind us with exclusivity clauses. These exclusivity
clauses pertain to, among others(varying from agreement to agreement) the geographical coverage of markets,
products to be sold in certain markets or products sold to certain customers. We cannot assure that we would
continue to be compliance with the exclusivity terms in these agreements, and any breach of the same may
expose us to risk of termination of contract and legal proceedings. These exclusivity terms may adversely affect
our ability to expand our business in the areas/products covered by the relevant agreement, which may have a
consequent adverse impact on our business, financial condition and results of operations.
30. Agreements entered into by our Company with the commission agents are not stamped. Further, agreements
with commission agents outside India are enforceable outside India.
Agency agreements entered into by us with our commission agents have not been stamped. The effect of nonstamping
is that the document is not admissible as evidence in legal proceedings, and parties to that agreement
may not be able to legally enforce to same, except after paying a penalty for inadequate stamping.
Further, our agreements with commission agents outside India provide for venue for arbitration and/or
jurisdiction in Courts outside India, including in the United Kingdom. The legal and other costs that we may
incur in initiating and/or defending any actions arising out of such contracts could be significantly higher
outside India than in India. Further, we may not always be able to enforce/execute judgments obtained in
foreign courts/tribunals against the counterparties.
31. Our Company has not achieved the projections as promised in our earlier rights issues
Our Company has made rights issues in the years 1988, 1993 and 2004, in which respect, certain
projections/promises made in the rights issue offer document in 1993 were not fulfilled. For futher details, refer
to paragraph titled “Details of Public / Rights Issues” beginning on 213 of the Draft Letter of Offer.
External Risk Factors:
1. A slowdown in economic growth in India could cause our business to suffer.
Our performance and growth are dependent on the health of the Indian economy. The economy could be
adversely affected by various factors such as political or regulatory action, including adverse changes in
liberalization policies, social disturbances, terrorist attacks and other acts of violence or war, natural calamities,
interest rates, commodity and energy prices and various other factors. Any slowdown in the Indian economy
may adversely impact our business and financial performance and the price of our Equity Shares.
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