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Revenue concentration risk
What it is
Dependence on a small number of customers for most revenue. In Indian mining and drilling equipment this typically means Coal India, ONGC, Oil India and a handful of large private miners
The risk is not customer credit quality but the pricing power and order timing that concentration confers
Impact on industries
- A single customer's capex deferral or tender delay removes a large revenue block with no offsetting demand elsewhere
- Concentrated buyers negotiate hard and standardise specifications, so the supplier cannot differentiate its way out of price competition
- Payment terms and inspection regimes are set by the buyer, which lengthens the working capital cycle
- The same concentration makes demand highly visible - published capex plans and tender pipelines give planning certainty a fragmented market cannot
- Diversification into exports, private miners or adjacent applications is the standard response, and progress is the metric to watch