Sham Foam Ltd.

The Company, its Promoters, and Directors are involved in various legal proceedings, including civil litigation, criminal tax proceedings, and regulatory actions, with a total material amount of Rs 232.14 lakhs. An adverse outcome may have an adverse impact on the Company's reputation, business, financial condition, results of operations, and cash flows.(Legal and Regulatory)

The Company's revenues are significantly dependent on a limited number of customers, with the top 10 customers contributing 25.06%, 26.83%, and 28.02% of revenue from operations for the fiscal years ended March 31, 2026, March 31, 2025, and March 31, 2024, respectively. The loss of one or more significant customers or a reduction in business from them could have a material adverse effect on the business, financial condition, results of operations, cash flows, and future prospects.(Customer Concentration)

The Company's manufacturing facility and registered office are located on leased premises. If the lease agreements are terminated, revoked, or cannot be renewed on commercially reasonable terms, the Company may suffer significant disruptions to its operations and incur considerable costs to relocate.(Operational)

The Company has reported negative cash flows in certain financial years, with a Net Cash Flow for the Year of Rs (105.37) lakhs for FY 2024-25 and Rs 218.09 lakhs for FY 2023-24. Negative cash flows in the future could adversely affect the Company's financial condition and results of operations.(Financial)

The Company's cost of materials consumed, including changes in inventories and purchases, was Rs 7,270.04 lakhs for the period ended March 31, 2026, representing 78.75% of revenue from operations. The amount spent for the procurement of raw materials from the top ten suppliers was 78.56% of total purchases for the period ended March 31, 2026. Volatility in the supply and pricing of these raw materials, or failure by suppliers to meet their obligations, may have an adverse effect on the business, cash flows, financial condition, and results of operations.(Supply Chain)

The Company has not entered into long-term agreements with its customers, and the success of its business is significantly dependent on maintaining good relationships with them. There is no guarantee that the Company will retain the business of its existing key customers or maintain the current level of business with each of them.(Customer Concentration)

The Company is exposed to payment delays and/or defaults by its major customers. If such events or circumstances occur, the Company's financial performance and operating cash flows may be adversely affected.(Credit Risk)

The Company has not experienced any conflict of interest between the lessor of the immovable properties which are significant for the Company, with the Company, its directors, shareholders, promoter, promoter group, and key managerial personnel. However, any potential future conflict of interest, if any, may adversely impact the operations of the Company.(Operational)