Defrail Technologies IPO

Defrail Technologies claims to have received approved vendor status from the Research Designs and Standards Organisation (RDSO), effective 8 July 2024, for the manufacture and supply of air brake hose couplings, brake pipes, and feed pipes. This approval allows the company to participate in the Indian Railways supply chain and bid for railway tenders. It also indicates compliance with RDSO-prescribed technical and quality standards.

The company claims to manufacture a wide range of rubber components used in the automobile, railway, and defence sectors. Its product portfolio includes hoses, seals, gaskets, bellows, and moulded components. This sectoral diversification helps reduce dependence on a single industry and limits exposure to sector-specific demand risks.

The company is ISO 9001:2015 certified for its quality management systems.

Defrail Technologies claims to have established business relationships with key customers and suppliers, supporting continuity in procurement and order flow. The company states that adherence to delivery schedules and quality requirements has resulted in repeat orders. It also claims that referrals from existing customers have contributed to customer base expansion.

The company has reported a consistent increase in profit after tax. It increased from Rs 0.88 crore in FY23 to Rs 1.43 crore in FY24 and Rs 3.42 crore in FY25.

Rubber hose and assemblies accounted for Rs 38.71 crore (99.33 percent) of the company’s revenue for the period ended September 30, 2025; Rs 59.79 crore (96.80 percent) in FY25; Rs 27.86 crore (-) in FY24, and Rs 31.32 crore (93.15 percent) (sole proprietorship) in FY23. This level of dependence makes the company’s revenue sensitive to changes in demand, customer preferences, or technological shifts affecting this product category. Any adverse decline in demand for rubber hose and assembly products could significantly impact the company’s revenue, cash flows, and financial position.

The automobile industry accounted for Rs 35.55 crore (91.22 percent) of the company’s revenue for the period ended September 30, 2025; Rs 55.74 crore (90.25 percent) in FY25; Rs 25.98 crore (-) in FY24, and Rs 30.09 crore (89.49 percent) (sole proprietorship) in FY23. This concentration exposes the company to sector-specific risks arising from regulatory changes, economic conditions, interest rate movements, and shifts in consumer demand within the Indian automobile market. Any slowdown in the automobile sector or unfavourable policy or market developments in India could negatively impact the company’s business, results of operations, and financial condition.

The top customer alone accounted for Rs 31.82 crore (81.65 percent) of the company’s revenue for the period ended September 30, 2025; Rs 51.83 crore (83.91 percent) in FY25; Rs 23.22 crore (-) in FY24, and Rs 30.32 crore (90.18 percent) in FY23. Loss of this customer, non-renewal of purchase orders, or a material reduction in demand from this client could negatively impact the company’s revenue, cash flows, and financial condition.

The top supplier alone accounted for Rs 8.57 crore (31.45 percent) of the company’s purchase material for the period ended September 30, 2025; Rs 7.16 crore (16.60 percent) in FY25; Rs 8.78 crore (-) in FY24, and Rs 15.51 crore (69.08 percent) (sole proprietorship) in FY23. Any disruption, commercial disagreement, or dispute with this vendor could affect raw material availability and pricing, which could negatively impact the company’s operations, profitability, and financial condition.

The company reported negative cash flow from operating activities amounting to Rs 1.64 crore in FY25 and Rs 0.05 crore in FY24. This was mainly due to an increase in trade receivables, short-term loans, and advances. Additionally, negative cash flow from investing activities amounted to Rs 1.10 crore for the period ended September 30, 2025; Rs 8.74 crore in FY25, and Rs 0.29 crore in FY24. This was largely driven by the purchase of property, plant, and equipment, and expenditure on capital work-in-progress. The company also reported negative cash flow from financing activities amounting to Rs 0.20 crore for the period ended September 30, 2025, due to repayment of borrowing and interest payments. Continuation of negative cash flows could constrain liquidity and adversely affect the company’s business, financial condition, and results of operations.

Haryana accounted for Rs 35.12 crore (90.14 percent) of the company’s revenue for the period ended September 30, 2025; Rs 55.73 crore (90.22 percent) in FY25; Rs 25.85 crore (-) in FY24, and Rs 30.60 crore (91.02 percent) in FY23. Any adverse political, social, economic, or geographical developments in Haryana, or any loss of business from this state, could negatively impact the company’s revenues, profitability, and financial position.

The company’s promoters and directors are involved in certain ongoing legal proceedings. Any adverse judgments in any of these cases could be detrimental to the company’s business prospects.

As of September 30, 2025, the company had outstanding financial indebtedness of Rs 11.78 crore. Any failure to service or repay these loans can harm the company’s operations and financial position.