31.

business. Further, changes in consumer preferences, regulatory or industry requirements or in
competitive technologies may render certain of our products obsolete or less attractive. Our ability to
anticipate changes in technology and regulatory standards and to successfully develop and introduce new
and enhanced products on a timely basis is a significant factor in our ability to remain competitive.
However, there can be no assurance that we will be able to develop or secure the necessary technological
knowledge that will allow us to develop our product portfolio in this manner. If we are unable to obtain
such knowledge in a timely manner, or at all, we may be unable to effectively implement our strategies,
and our business and results of operations may be adversely affected. Moreover, we cannot assure you
that we will be able to achieve the technological advancements 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, delays in product development and failure of products to operate
properly. For instance, our product development to meet the BS VI emission norms may not be accepted
by our customers. Our failure to successfully develop and produce new products, or a failure by our
customers to successfully launch new programs, could materially adversely affect our prospects and
results of operations.

Our manufacturing facilities are subject to various operating risks and any shutdown of our
manufacturing facilities may have an adverse effect on our business, results of operations and
financial condition.

Our manufacturing facilities are subject to various operating risks, such as:

. breakdown or failure of equipment, power supply or processes;

. performance below expected levels of efficiency;

° natural disasters and pandemic;

. industrial accidents; and

. need to comply with the directives of relevant government authorities.

Any such events may cause an unplanned shutdown or temporary or sustained slowdown in our
production, or may require us to incur significant compliance or remediation costs, which we may not be
able to completely or sufficiently or at all pass on to customers or recover through insurance in all events.
For example, as part of cost control and optimization measures, our Company decided to shut its
manufacturing facility located in Malumichampatti in August 2019 and shifted the same to our facility
located in Arasur village. Further, in December 2016, the cyclonic storm Vardah disrupted operations at
our Sriperumbudur facility for a day. However, there was no financial impact on our Company due to
such shifting of facility or disruption of operations. Recently, on account of the government imposed
lockdown in India due to COVID-19 pandemic, operations at all of our manufacturing facilities were
temporarily shut down and we were required to follow protocols as suggested by regulatory authorities
which impacted our ability to operate our manufacturing facilities at optimum utilizations. For details on
the impact on our business operations due to COVID-19, see “Business - Impact of COVID-19 on our
business operations” on page 187.

Our foundry related operations are inherently risky and requires individuals to work under potentially
high risk circumstances. For example, if improperly handled, molten metal can cause personal injury or
loss of life of employees or other persons, and cause damage to our properties and the properties of others
and the imposition of civil or criminal liabilities. We could also face claims and litigation filed on behalf
of persons alleging injury as a result of occupational exposure to hazards at our facilities.

 

Further, the assembly lines of our customers rely significantly on the timely delivery of our components
and our ability to provide an uninterrupted supply of our products is critical to our business. Certain of
our customers may terminate their relationships with us or seek to impose penalties on component
manufacturers like us, or may initiate arbitration or legal proceedings against us, for stoppage in any of
their critical operations or assembly lines and damages sought, potentially or allegedly on account of
delayed delivery or a defect or deficiency in the products or services delivered by us.

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