Gig delivery partners may disrupt operations, warns Shadowfax in UDRHP

Shadowfax relies heavily on its crowdsourced network of over 2 lakh delivery partners, none of whom are tied by exclusive contracts, revealed the UDRHP

A disruption in the supply of gig delivery partners could significantly affect operations, trigger financial losses, and expose Shadowfax Technologies to increased business risks, the Flipkart-backed logistics provider warned in its updated Draft Red Herring Prospectus (UDRHP).  Notably, Shadowfax relies heavily on its crowdsourced network of over 2 lakh delivery partners, none of whom are tied by exclusive contracts, leaving its business vulnerable to fluctuations in workforce availability, revealed the UDRHP.

 

As Shadowfax prepares for its ₹1,900-crore initial public offering (IPO), expected to launch next week, the company is targeting a valuation of around ₹7,400 crore, according to a PTI report. The public issue comprises both a fresh issue of shares and an offer for sale (OFS).

 

Among the investors participating in the offer for sale (OFS) are Flipkart Internet, Eight Roads Investments Mauritius II Limited, NewQuest Asia Fund IV (Singapore), Nokia Growth Partners IV, L.P., International Finance Corporation (IFC), Mirae Asset–Naver New Growth Fund I, Mirae Asset–GS Retail New Growth Fund I, Qualcomm Asia Pacific, Kunal Bahl and Rohit Kumar Bansal, as disclosed in the DRHP.

Gig delivery partners may disrupt operations

In its UDRHP, Shadowfax stated that it relies on its crowdsourced network of delivery partners, with whom it does not have any exclusive arrangements. Any change in the supply of delivery partners, the company said, could disrupt business operations, lead to additional losses, and expose it to additional risks.

 

“We rely on our crowdsourced network of delivery partners, comprising 205,864 average quarterly unique transacting delivery partners as of September 30, 2025, with whom we do not have any exclusive arrangements, for certain aspects of our business. Any change to the supply of delivery partners may disrupt our business operations, lead to additional losses, and expose us to additional risks,” the company said.

 

Among other risks, the company highlighted its dependence on third-party franchisees for a portion of its last-mile deliveries.

 

“We depend on third-party franchisees for a portion of our last-mile deliveries, and any failure in their performance or disruptions in our business relationships with them could adversely impact our service quality, financial performance, and reputation,” the UDRHP stated.

 

The logistics solutions provider also flagged risks related to its leased infrastructure. “We lease all our logistics facilities as of September 30, 2025, and some of our lease agreements may have certain irregularities. Failure to renew our leases or to locate desirable alternatives for our facilities could materially and adversely affect our business,” it said.

DRHP outlines other risks

Shadowfax further highlighted that it incurred losses aggregating ₹11.88 crore and ₹142.64 crore in the financial years 2024 and 2023, respectively, and reported negative cash flows from operating, investing, and financing activities during certain periods.

 

“We may continue to experience losses and negative cash flows in the future as we anticipate increased expenses,” said the company. 

Shadowfax further said that while revenue from operations grew from ₹1,415.12 crore in FY23 to ₹2,485.13 crore in FY25, historical growth rates may not reliably forecast future performance.   Any failure to manage growth or execute strategies effectively could impede expansion and materially affect its business and future prospects," said the company.

 

The company also highlighted its reliance on a scaled and unified network infrastructure comprising 4,299 touchpoints across first-mile and last-mile centres and sort centres, supported by more than 3.50 million square feet of operational space and covering 14,758 pin codes as of September 30, 2025. Any disruption to this network could adversely impact business operations, financial condition, and cash flows.

 

Further, Shadowfax warned that mishandling of goods by delivery partners may lead to operational inefficiencies and client dissatisfaction, affecting its business, financial condition, and results of operations.

 

The company also flagged concentration risks related to its commercial relationships. Its largest client contributed 48.91 per cent, 51.23 per cent, 48.00 per cent, 59.23 per cent, and 59.52 per cent of revenue from operations for the six-month periods ended September 30, 2025, and September 30, 2024, and for the financial years 2025, 2024, and 2023, respectively. The loss of any such key commercial relationships could adversely affect its business, Shadowfax said.

 

Additionally, the company noted risks associated with cash-on-delivery transactions. Some clients prefer this payment method, which requires Shadowfax to act as a limited agent for brands, merchants, and quick-commerce platforms, exposing it to operational challenges and potential cash-related risks, according to the UDRHP.