Fractal Industries IPO

Fractal Industries claims to operate a technologically advanced Warehouse Management System (WMS) that provides real-time visibility across the entire inventory lifecycle, from raw materials to finished goods ready for dispatch. The system automates warehouse processes such as inwarding, quality checks, picking, and packing, and uses barcode-based tracking to improve process accuracy and reduce order fulfilment time. The WMS is designed to handle a high volume of SKUs and is integrated with major online marketplaces, enabling unified inventory management across multiple sales channels.

The company claims to have developed dedicated processes for managing reverse logistics in the apparel e-commerce segment, where return rates are relatively high. Returned items undergo structured inspection and grading, with refurbishment activities such as steaming, stain removal, and minor repairs carried out where feasible. According to the company, these processes help make saleable returned products available for resale within a short turnaround time.

Fractal Industries claims to have embedded quality control measures across raw material inspection, work-in-progress stages, finished goods, and warehouse operations. The company states that its quality assurance processes combine manual checks with automated tracking systems to monitor compliance with marketplace requirements. This end-to-end inspection framework is intended to reduce defects and rejections across manufacturing and fulfilment activities.

The top customer accounted for Rs 37.11 crore (78.45 percent) (consolidated) of the company’s revenue for the period ended September 30, 2025; Rs 75.20 crore (88.01 percent) (standalone) in FY25; Rs 25.25 crore (50.57 percent) (consolidated) in FY24; and Rs 68.37 crore (76.90 percent) (consolidated) in FY23. Failure to retain this key client, loss of business from this customer, or failure to secure new customers through marketplaces could adversely affect the company’s revenue, operations, and financial condition.

The top supplier accounted for Rs 3.24 crore (11.80 percent) (consolidated) of the company’s total purchases for the period ended September 30, 2025; Rs 2.89 crore (6.36 percent) (standalone) in FY25; Rs 4.60 crore (8.66 percent) (consolidated) in FY24; and Rs 7.60 crore (9.21 percent) (consolidated) in FY23. Any disruption in supplies, deterioration in supplier relationships, or inability to source materials of similar quality and prices from alternative suppliers could hurt the company’s procurement, operations, and financial performance.

The company and its promoters are involved in certain ongoing legal proceedings. The company’s business prospects could be hit in case of adverse judgments in any of these cases.

The company reported negative cash flow from operating activities amounting to Rs 3.52 crore (standalone) in FY25 and Rs 10.01 crore (consolidated) in FY24. This was primarily due to increases in trade receivables, inventories, loans and advances, and working capital requirements, despite reporting operating profit before working capital adjustments. The company also reported negative cash flow from investing activities amounting to Rs 0.12 crore (consolidated) for the period ended September 30, 2025; Rs 0.43 crore (standalone) in FY25; Rs 4.86 crore (consolidated) in FY24; and Rs 2.88 crore (consolidated) in FY23. This was mainly on account of capital expenditure on property, plant, and equipment. Furthermore, the company reported negative cash flow from financing activities amounting to Rs 2.85 crore (consolidated) for the period ended September 30, 2025, largely due to repayment of long-term and short-term borrowings and interest payments. Persistence of such cash outflows or increased funding requirements could adversely affect the company’s liquidity, operations, and financial position.

Gujarat accounted for Rs 18.37 crore (38.84 percent) (consolidated) of the company’s total revenue for the period ended September 30, 2025; Rs 2.40 crore (2.81 percent) (standalone) in FY25; Rs 28.39 crore (56.84 percent) (consolidated) in FY24; and Rs 60.43 crore (67.96 percent) (consolidated) in FY23. Adverse economic conditions, regulatory changes, disruptions in business activity, or a reduction in spending by customers in Gujarat could adversely affect the company’s revenue, operations, and financial condition.

Fractal Industries’ operations are highly dependent on the availability and pricing of raw materials such as fabrics and accessories, which are largely procured from third-party suppliers. The company sources a significant portion of its raw materials from the spot market and generally does not enter into long-term supply contracts, exposing it to fluctuations arising from global commodity trends, currency movements, supply-demand imbalances, and regulatory changes. Any sustained increase in raw material costs or inability to pass on such cost escalations to customers could adversely affect the company’s margins, production schedules, and overall financial performance.

As of September 30, 2025, the company had outstanding financial indebtedness of Rs 24.62 crore. Failure to service or repay these loans could harm the company’s operations and financial position.