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Amira Nature Foods (ANFIF) Risk Analysis

Public companies are required to disclose risks that can affect the business and impact the stock. These disclosures are known as “Risk Factors”. Companies disclose these risks in their yearly (Form 10-K), quarterly earnings (Form 10-Q), or “foreign private issuer” reports (Form 20-F). Risk factors show the challenges a company faces. Investors can consider the worst-case scenarios before making an investment. TipRanks’ Risk Analysis categorizes risks based on proprietary classification algorithms and machine learning. Amira Nature Foods disclosed 52 risk factors in its most recent earnings report. Amira Nature Foods reported the most risks in the “Production” category.

Risk Overview Q1, 2018

Source: the company's latest filing for the period ended Mar 31, 2018, filed Oct 16, 2018

Risk Distribution
52Risks
Sector Avg.Finance & CorporateTech & InnovationLegal & RegulatoryProductionAbility to SellMacro & Political
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Risk Change Over Time

No filing history is available.

Risks removedRisks addedRisks changedAmira Nature Foods Risk Factors
Risk Changed (1)
  • Debt & Financing - Risk 1
    If we are unable to amend our agreements with Amira India's existing lenders or refinance the existing debt, we may be unable to implement our business strategy and the lenders may cause us to sell assets to repay the existing debt, any of which could have a material adverse effect on our business, results of operations and financial condition.

    On January 23, 2018, Amira India received approval of a license from the Directorate of Town & Country Planning of Haryana India to convert nine acres of its approximately 17 wholly owned acres of real estate property from factory use to residential use. Amira India applied for the license in early 2017 for all 17 acres and the license for the remaining eight acres is pending. In connection with the receipt of the license, Amira India will begin the planned process of re-locating its existing manufacturing facility to a new location. The conversion of the zoning of this portion of Amira India's real estate from factory to residential use requires Amira India's existing lenders to amend and/or refinance the existing debt of Amira India to include the re-zoned real estate as collateral. Our discussions with Amira India's existing lenders regarding an amendment to the terms of the existing debt agreements or a refinance are ongoing and we have already proposed them to reclassify the debt between real estate and working capital. If we are unable to amend our agreements with Amira India's existing lenders or refinance the existing debt as proposed, we may be unable to implement our business strategy and the lenders may cause us to sell assets to repay the existing debt, any of which could have a material adverse effect on our business, results of operations and financial condition.

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Risk Highlights Q1, 2018

Main Risk Category
Production
With 15 Risks
Number of Disclosed Risks
52
-3
From last report
S&P 500 Average: 32
Recent Changes
1Risks added
4Risks removed
1Risks changed
Since Mar 2018
Number of Risk Changed
1
-1
From last report
S&P 500 Average: 1

Risk Word Cloud

we rely upon independent third party transportation providers for substantially all shipments through our supply chain and are subject to increased shipping costs as well as the potential inability of our third party transportation providers to deliver on a timely basis.subject to increased shipping coststhe price we charge for our basmati rice depends largely on the prevailing wholesale market price; lower market prices may harm our results of operations and financial condition.our basmati rice depends largelythe terms of our existing debt agreements may restrict our ability to operate and grow our business.restrict our ability to operatewe may incur significant costs to comply with environmental, health and safety laws and regulations; failure to comply could expose us to significant liabilities.incur significant costs to complywe derive a significant portion of our income from international sales of basmati rice, other specialty rice and other food products, which may be dependent upon the economies and government policies of the key countries to which we sell our products; any unfavorable change in such economies or government policies may harm our business.significant portion of our incomeinsiders have substantial control over us; ownership by insiders of our ordinary shares and ownership by our chairman and chief executive officer of direct and indirect equity interests in amira india give rise to conflicts of interest with our public shareholders.chief executive officer of directwe may become subject to lawsuits or indemnity claims, including those related to class action suits, product contamination and product liability, which could harm our business and results of operations.related to class action suitswe have incurred and will continue to incur increased costs as a result of being a public company.continue to incur increased costswe may incur significant costs to comply with environmental, health and safety laws and regulations; failure to comply could expose us to significant liabilities.expose us to significant liabilitiesterrorist acts and other acts of violence involving india or other neighboring countries could significantly harm our operations directly, or may result in a more general loss of customer confidence and reduced investment in these countries that reduces the demand for our products.significantly harm our operations directly

Risk Factors Full Breakdown - Total Risks 52

Manufacturing3 | 5.8%
  • Manufacturing - Risk 1
    Improper storage, processing and handling of our paddy or rice could damage our inventories and, as a result, harm our business and results of operations.

    We typically store paddy in covered warehouses or in bags placed on open-air, raised plinths (or platforms) and processed rice in covered warehouses. In the event our paddy is not appropriately stored, handled and processed, spoilage may reduce the quality of the paddy and the resulting processed rice. Even if paddy is appropriately stored on open-air plinths, above-average rains may still harm the quality and value of paddy stored in this manner. In addition, the occurrence of any mistakes or leakage in the rice storage process may harm the yield, quality and value of our rice, leading to lower revenue.

  • Manufacturing - Risk 2
    The development of our new processing facility is subject to various risks; we may not be able to complete the facility as planned or on schedule.

    As part of our growth strategy, we intend to develop a new processing facility in India. We estimate the cost to be approximately $64 million in total and we intend to rely on outside funding for this facility. Our plans remain subject to certain potential problems and uncertainties, including availability of financing, increased costs of equipment or manpower, completion delays due to the need to find an appropriate location for the facility at acceptable costs, a lack of required equipment, financing permits or approvals or other factors, defects in design or construction, changes in laws and regulations or other governmental action, cost overruns, accidents, natural calamities and other factors, many of which may be beyond our control. Any delays in completing this facility could result in our loss or delayed receipt of revenue, as well as increases in financing and construction costs. Our proposed expansion will also require significant time and resources from our management team. Any failure by us to meet revenue or income targets may require us to reconsider our development plans. If these plans do not proceed as planned, our business, results of operations and financial condition may be harmed. Even if completed, our new processing facility may not yield the expected or desired benefits in terms of process and cost efficiencies, or an expansion in our business. We will also incur additional fixed costs from the new facility, and may not be able to timely reduce these or other fixed costs in response to a decline in revenue, which would harm our results of operations and profitability.

  • Manufacturing - Risk 3
    Our inability to meet the quality requirements of our customers or to anticipate and adapt to changes in the market demand for our products could reduce demand for our products and harm our sales.

    Our results of operations and growth strategy depend upon the demand for Basmati rice and our other food products in the Indian and international markets. Demand for our products depends primarily on consumer-related factors such as demographics, local preferences and food consumption trends and macroeconomic factors such as general economic condition and the level of consumer confidence. We are also subject to regulation by the countries or regions where our customers are located, such as the European Union ("EU") and the United States ("US" or the "U.S."), relating to the quantity, quality, characteristics and variety of the Basmati rice and other food products sold there. Authorities may upgrade or change these regulations from time to time. Our international customers often require that the rice we sell matches their quality standards and conduct sample checks on our products. The results from their sample checks may not reflect the quality of the rice we deliver to them and the rice we sell to them may not comply with their quality specifications or requirements. If our customers' sample checks identify any deficiencies in our rice, they will generally have the right to return the entire batch we sold to them. Consumer preferences often change over time, and, if we are not able to anticipate, identify or develop and market products that respond to changes in consumer preferences, demand for our products may decline. We must, on a regular basis, keep pace with the quality requirements and consumer preferences of our Indian and international customers, invest continuously in new technology and processes to provide the desired quality product and continually monitor and adapt to the changing market demand. Any failure to meet the quality requirements of our customers or to anticipate and adapt to changes in market demand could harm our business, results of operations and financial condition.

Employment / Personnel3 | 5.8%
Supply Chain4 | 7.7%
Costs5 | 9.6%

See a full breakdown of risk according to category and subcategory. The list starts with the category with the most risk. Click on subcategories to read relevant extracts from the most recent report.

FAQ

What are “Risk Factors”?
Risk factors are any situations or occurrences that could make investing in a company risky. The Securities and Exchange Commission (SEC) requires that publicly traded companies disclose their most significant risk factors. This is so that potential investors can consider any risks before they make an investment. They also offer companies protection, as a company can use risk factors as liability protection. This could happen if a company underperforms and investors take legal action as a result. It is worth noting that smaller companies, that is those with a public float of under $75 million on the last business day, do not have to include risk factors in their 10-K and 10-Q forms, although some may choose to do so.
How do companies disclose their risk factors?
Publicly traded companies initially disclose their risk factors to the SEC through their S-1 filings as part of the IPO process. Additionally, companies must provide a complete list of risk factors in their Annual Reports (Form 10-K) or (Form 20-F) for “foreign private issuers”. Quarterly Reports also include a section on risk factors (Form 10-Q) where companies are only required to update any changes since the previous report. According to the SEC, risk factors should be reported concisely, logically and in “plain English” so investors can understand them.
How can I use TipRanks risk factors in my stock research?
Use the Risk Factors tab to get data about the risk factors of any company in which you are considering investing. You can easily see the most significant risks a company is facing. Additionally, you can find out which risk factors a company has added, removed or adjusted since its previous disclosure. You can also see how a company’s risk factors compare to others in its sector. Without reading company reports or participating in conference calls, you would most likely not have access to this sort of information, which is usually not included in press releases or other public announcements. A simplified analysis of risk factors is unique to TipRanks.
What are all the risk factor categories?
TipRanks has identified 6 major categories of risk factors and a number of subcategories for each. You can see how these categories are broken down in the list below. 1. Financial & Corporate Accounting & Financial Operations - risks related to accounting loss, value of intangible assets, financial statements, value of intangible assets, financial reporting, estimates, guidance, company profitability, dividends, fluctuating results. Share Price & Shareholder Rights – risks related to things that impact share prices and the rights of shareholders, including analyst ratings, major shareholder activity, trade volatility, liquidity of shares, anti-takeover provisions, international listing, dual listing. Debt & Financing – risks related to debt, funding, financing and interest rates, financial investments. Corporate Activity and Growth – risks related to restructuring, M&As, joint ventures, execution of corporate strategy, strategic alliances. 2. Legal & Regulatory Litigation and Legal Liabilities – risks related to litigation/ lawsuits against the company. Regulation – risks related to compliance, GDPR, and new legislation. Environmental / Social – risks related to environmental regulation and to data privacy. Taxation & Government Incentives – risks related to taxation and changes in government incentives. 3. Production Costs – risks related to costs of production including commodity prices, future contracts, inventory. Supply Chain – risks related to the company’s suppliers. Manufacturing – risks related to the company’s manufacturing process including product quality and product recalls. Human Capital – risks related to recruitment, training and retention of key employees, employee relationships & unions labor disputes, pension, and post retirement benefits, medical, health and welfare benefits, employee misconduct, employee litigation. 4. Technology & Innovation Innovation / R&D – risks related to innovation and new product development. Technology – risks related to the company’s reliance on technology. Cyber Security – risks related to securing the company’s digital assets and from cyber attacks. Trade Secrets & Patents – risks related to the company’s ability to protect its intellectual property and to infringement claims against the company as well as piracy and unlicensed copying. 5. Ability to Sell Demand – risks related to the demand of the company’s goods and services including seasonality, reliance on key customers. Competition – risks related to the company’s competition including substitutes. Sales & Marketing – risks related to sales, marketing, and distribution channels, pricing, and market penetration. Brand & Reputation – risks related to the company’s brand and reputation. 6. Macro & Political Economy & Political Environment – risks related to changes in economic and political conditions. Natural and Human Disruptions – risks related to catastrophes, floods, storms, terror, earthquakes, coronavirus pandemic/COVID-19. International Operations – risks related to the global nature of the company. Capital Markets – risks related to exchange rates and trade, cryptocurrency.