lumax auto technologies limited - Securities and Exchange Board of ...

Lumax Auto Technologies Limited
change as well. A significant change in India’s economic liberalization and deregulation policies
could disrupt the Company’s business and economic conditions in India. South Asia has, from
time to time, experienced instances of civil unrest and hostilities among neighbouring countries,
if it continues to happen in future then it will affect our Company and the industry as a whole.
The present government is formed by coalition of several parties. Due to which if there is any
instability in the government then it might affect the industry and our Company.
Changes in domestic tax laws
Any change in tax laws in India particularly in come tax might lead to increased tax liability of
the Company thereby putting pressures on profitability.
After this Issue, the price of our Equity Shares may be highly volatile, or an active trading
market for our Equity Shares may not develop.
The prices of our Equity Shares on the Indian stock exchanges may fluctuate after this Issue as a
result of several factors, including:
� our results of operations and performance;
� perceptions about our future performance or the performance of auto component
companies generally;
� performance of our competitors in the industry and the perception in the market about
investments in the auto component sector;
� adverse media reports on the Company or the industry;
� changes in the estimates of our performance or recommendations by financial analysts;
� significant development in India’s fiscal and environmental regulations.
There has been no public market for our Equity Shares and the prices of our Equity Shares
may fluctuate after this Issue. There can be no assurance that an active trading market for our
Equity Shares will develop or be sustained after this Issue, or the prices at which our Equity
Shares are initially traded will correspond to the prices at which our Equity Shares will trade
in the market subsequent to this Issue. Our share price is likely to be volatile and may
decline.
Valuation Methodology
There is no standard methodology or accounting practices in the auto component industry. The
current valuations may not be sustainable in the future and may also not reflect the future
valuation of the Industry.
A slowdown in economic growth in India could cause our business to suffer.
The Indian economy has shown sustained growth over the last few years with gross domestic
products (“GDP”) growing at 6.9% in fiscal 2005 and 8.5% in fiscal 2004. In its mid-term review
of annual policy published on October 25, 2005, the RBI stated that its GDP growth forecast for
fiscal 2006 is between 7.0% to 7.5% as a result of a pick-up in agricultural output and increased
momentum in other sectors, and its inflation forecast for fiscal 2006 is between 5.0% to 5.5%.
However, any slowdown in the Indian economy could reduce consumer/institutional spend
and adversely affect our financial performance.
Any change in the regulatory environment in relation to manufacturing in the country or for
marketing its products within and outside the country will significantly impact our business.
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