Fractal Analyt.

Risks

• Security breaches, cyber-attacks, computer viruses and hacking activities may cause material adverse effects on the company`s business, financial performance and results of operations and expose the company to liability, which could adversely affect its business and the company`s reputation.

• The company`s success depends on its ability to attract, retain and expand relationships with the company`s clients. The company derived 53.8% of its revenue from operations in the company`s Fractal.ai segment from its top-10 clients, of which one client contributed 9.8% of the company`s revenue, in Fiscal 2025.the company also derived 80.8% of its revenue from operations in the company`s Fractal.ai segment from the company`s existing "Must Win Clients" ("MWC") in Fiscal 2025. If the company cannot maintain and expand its relationships with its existing client base or add new clients, the company`s business, financial condition, cash flows and results of operations may be adversely affected.

• The company`s focus industries - consumer packaged goods and retail ("CPGR"), technology, media and telecom ("TMT"), healthcare and life sciences ("HLS"), and banking, financial services and insurance ("BFSI") contributed 39.3%, 29.9%, 13.8%, and 11.0%, respectively in Fiscal 2025 to its revenue from operations in the Fractal.ai segment. Any decrease in demand for AI solutions in these industries could adversely affect the company`s business, financial condition and results of operations.

• The company derived 65.2% of our revenue from operations from the United States of America for Fiscal 2025. The company`s global operations involve challenges and risks that could increase its expenses, adversely affect its results of operations and require increased time and attention from the company`s management.

• The company`s business depends on the quality and successful implementation of its AI solutions. Delays or failures in meeting contractual timelines or the expectation of the company`s clients may result in cost overrun, loss of business and disputes which in turn could adversely impact its business, financial condition and results of operations.

• The company`s success depends on its ability to adapt to changes in client or market preferences and to adopt new technologies. The company`s failure to do so could adversely affect its business and results of operations.

• The development and use of AI, including Gen AI, requires us to retain skilled talent. If the company fails to attract, retain, train and optimally utilize these professionals, or if there is an increase in employee costs, the company`s business may be unable to grow and its results of operations and profitability could decline.

• Internal or external fraud or misconduct by its employees or consultants could adversely affect the company`s reputation and its results of operations.

• The company`s business is subject to evolving laws regarding AI, privacy, data protection and other related matters. Many of these laws are subject to change and could result in claims, changes to the company`s business practices, monetary penalties, increased cost of operations, which may harm its business.

• The company had losses before exceptional items and tax expense in Fiscals 2024 and 2023. There is no assurance that the company will not incur losses in the future as the company expands its operations.

• The company`s pricing structures may not accurately anticipate the cost, complexity and duration of its work, which could consequently impact the company`s profitability.

• Exchange rate fluctuations may adversely affect it results of operations as a significant portion of the company`s revenues are denominated in foreign currencies and may adversely affect the value of its Equity Shares.

• The company faces ethical and reputational risks associated with the use of its AI (including Gen AI) technology and algorithms, and instances of negative publicity can affect the company`s business, financial condition, results of operations and cash flows.

• The company may not be able to prevent unauthorised use of its proprietary tools and other information and the company`s intellectual property rights may not be adequate to protect its business and competitive position. the company may also be subject to claims by third parties, which are extremely costly to defend, could require the company to pay damages and could limit its ability to use certain technologies, thereby adversely impacting the company`s results of operations and profitability.

• The company depends on the effectiveness of its marketing efforts to enhance sales of the company`s AI solutions. Any failures in the company`s marketing efforts could adversely impact its business and financial condition. Further, the company`s business depends on a strong brand and corporate reputation and if the company is not able to maintain and enhance the company`s brand, the company`s ability to grow its business and our results of operations and financial condition may be adversely affected.

• The faces intense competition in the company`s markets, and the company may lack sufficient financial or other resources to maintain or improve its competitive position and may experience reduced operating margins and loss of market share.

• If the company faces immigration or work permit restrictions in any country where the company has operations, then its business, financial condition, results of operations and prospects may be adversely affected.

• The company may fails to identify or successfully acquire target businesses and its acquisitions could prove difficult to integrate which could disrupt the company`s business and strain our resources.

• The Company, Subsidiaries, and two of its Directors are involved in certain legal proceedings. Any adverse decision in such proceedings may render the company/them liable to liabilities/penalties and may adversely affect its business, cash flows and reputation.

• Artificial general intelligence may disrupt the market and adversely affect its business model and ability to compete.

• The company`s ability to implement AI solutions depends in part on its ability to operate with third-party services and any failure to do so could adversely impact its operations.

• the company depends on computing infrastructure operated by third parties to support some of its clients and any errors, disruption, performance problems, or failures in their or the company`s operational infrastructure could adversely affect its business, financial condition, and results of operations.

• If open source software programmers, many of whom the company does not employ, or the company`s own internal programmers do not continue to develop and enhance open source technologies, the ocmpany may be unable to develop new technologies, adequately enhance the company`s existing technologies or meet client requirements for innovation, quality and price, thereby adversely affecting its business, results of operations and financial condition.

• The company`s cash flows and results of operations may be adversely affected if the company is unable to collect on billed and unbilled receivables from clients and the company may not be able to recognize revenues, which may cause its margins to fluctuate.

• The company has incurred negative cash flows in the past. There is no assurance that the company will not incur losses in the future as the company expands its operations.

• Failures to obtain or renew the company`s statutory and regulatory licenses, approvals, consents, registrations and permissions to carry out its operations in a timely manner, or at all, may adversely affect the company`s business, financial condition, cash flows and results of operations.

• The company may be adversely affected by the evolving laws and regulations governing its business and the introduction of any new applicable laws and regulations in the jurisdictions the company operates in. Failures to comply with the existing, and changes to, laws and regulations applicable to its business could subject the Company to enforcement actions and penalties and otherwise harm its business.

• There have been inadvertent inaccuracies in certain of the company`s regulatory filings and the company has either lost or been unable to locate certain of its historical regulatory filings and corporate records. The company cannot assure you that no legal or regulatory actions will be initiated against the company in the future in relation to any such discrepancies/ inconsistencies.

• Any failures to offer quality maintenance and support services for the company`s clients may harm its relationships with the company`s clients and, consequently, the company`susiness.

• Certain of the Promoters, the company`s Directors, Key Managerial Personnel, and members of its Senior Management have interests in the Company in addition to their remuneration and reimbursement of expenses which may lead them to make decisions that is in their best individual interest which may not always be in the best interest of the Company.

• Certain Directors of the Company may be associated with ventures which may be engaged in overlapping line of business that are an alternative to its AI solutions. Any conflict of interest which may occur between the company`s business and the activities undertaken by such companies, could adversely affect the company`s business, prospects, results of operations and financial condition.

• One of the company`s Promoters, Rupa Krishnan Agrawal, does not possess adequate experience in the industry in which we operate.

• The company has entered into, and will continue to enter into, related party transactions that may potentially involve conflicts of interest and may be subject to additional approvals and compliances under applicable law.

• The company has included certain operational metrics and non-GAAP measures related to its operations and financial performance. These operational metrics and non-GAAP measures may not be comparable with financial or operational information of similar nomenclature computed and presented by other companies.

• There have been certain instances of delays in the payment of statutory dues by the Company and Subsidiaries in the past. Any delay in payment of statutory dues by the company in future, may result in the imposition of penalties and in turn may have an adverse effect on the Company`s business, financial condition, results of operation and cash flows.

• The company is required to comply with certain restrictive covenants under its financing agreements. Any non-compliance under these agreements may lead to, amongst others, accelerated repayment schedules and suspension of further drawdowns, which may adversely affect the company`s business, results of operations, financial condition and cash flows.

• The company may not be able to obtain financing on favourable terms or at all, and any failures to raise needed funds may impact its liquidity, business, cash flows, financial condition and results of operations.

• The intend to utilize a portion of the Net Proceeds for funding its capital expenditure requirements for purchase of laptops for which the company has not entered into any definitive agreement and there may be delay in placement of such orders.

• The company intends to utilize a portion of the Net Proceeds for setting up new office premises in India for which the company has not entered into any definitive arrangements and there may be delay in deployment of the Net Proceeds.

• Certain of its Subsidiaries have incurred losses in the last three Fiscals. If they continue to incur losses, the company may be required to continue providing financial support to them which may adversely affect the company`s consolidated cash flows, results of operations and financial condition. The company cannot assure you that the company`s investments will enhance their profitability or yield intended results.

• The company relies primarily on third-party insurance policies to insure its operations-related risks. If the company`s insurance coverage is insufficient for the needs of its business or the company`s insurance providers are unable to meet their obligations, the company may not be able to mitigate the risks facing the company`s business, which could adversely affect its business, financial condition and results of operations.

• The company has certain contingent liabilities in the company`s Restated Consolidated Financial Information, which may adversely affect its financial condition if they materialize.

• The company`s Statutory Auditor has noted certain observations in auditor`s report under "Report on Other Legal and Regulatory Requirements" and in their reporting under the Companies (Auditor`s Report) Order, 2020.

• The Company will not receive the entire proceeds from the Offer. Some of its Shareholders are selling Equity Shares in the Offer and will receive proceeds as part of the Offer for Sale.

• After the completion of the Offer, certain of the company`s existing and future Shareholders may be able to exert significant influence over the Company which may limit your ability to influence the outcome of matters submitted for approval of its Shareholders.

• The company is potentially subject to anti-corruption, anti-bribery, anti-money laundering, financial and economic sanctions and similar laws, and non-compliance with such laws can subject the company to administrative, civil and criminal fines and penalties, all of which could adversely affect its business, prospects, financial condition, results of operations, and cash flows.

• The Company has issued securities during the preceding one year at a price that may be below the Offer Price.

• Certain sections of this Draft Red Herring Prospectus contain information from the Everest Report which has been commissioned and paid for by the company and any reliance on such information for making an investment decision in this offering is subject to inherent risks.

• The valuation reports obtained for acquisitions or divestments of business/undertakings, mergers, amalgamations, any revaluations of assets, etc. in the last 10 years are based on various assumptions and may not be indicative of the true value of the subject matter to which they relate.

• If the company is unable to establish and maintain effective internal controls and compliance systems, the company`s business and reputation could be adversely affected.

• The company`s offices, including our Registered Office are located on leased premises or in co-working spaces. If these leases are terminated or not renewed on terms acceptable to the company, it could have a material adverse effect on its business, financial condition and results of operations.

• If the Company is classified as a passive foreign investment company for U.S. federal income tax purposes, U.S. investors in the Offered Shares may be subject to adverse U.S. federal income tax consequences.

• Security breaches, cyber-attacks, computer viruses and hacking activities may cause material adverse effects on the company`s business, financial performance and results of operations and expose the company to liability, which could adversely affect its business and our reputation.

• The company`s success depends on its ability to attract, retain and expand relationships with the company`s clients.The company derived 54.2% of its revenue from operations in the company`s Fractal.ai segment from our top-10 clients, of which one client contributed 8.2% of its revenue, in the six months ended September 30, 2025. The company also derived 79.6% of its revenue from operations in the company`s Fractal.ai segment from its existing "Must Win Clients" ("MWC") in the six months ended September 30, 2025. If the company cannot maintain and expand its relationships with the company`s existing client base or add new clients, the company`s business, financial condition, cash flows and results of operations may be adversely affected.

• The company`s focus industries - consumer packaged goods and retail ("CPGR"), technology, media and telecom ("TMT"), healthcare and life sciences ("HLS"), and banking, financial services and insurance ("BFSI") contributed 37.5%, 27.2%, 17.0%, and 12.2%, respectively in the six months ended September 30, 2025 to the company`s revenue from operations in the Fractal.ai segment. Any decrease in demand for AI solutions in these industries could adversely affect its business, financial condition and results of operations.

• The company had a net loss in Fiscal 2024 and losses before exceptional items and tax expense in Fiscals 2024 and 2023. There is no assurance that the company will not incur losses in the future as the company expands the company`s operations.

• The Company, Subsidiaries, and two of our Directors are involved in certain legal proceedings. Any adverse decision in such proceedings may render the company/them liable to liabilities/penalties and may adversely affect its business, cash flows and reputation.

• The company derived 64.9%, 64.1%, 65.2%, 61.9% and 66.0% of its revenue from operations from the United States of America for the six months ended September 30, 2025, six months ended September 30, 2024, Fiscal 2025, Fiscal 2024 and Fiscal 2023 respectively. The company`s global operations involve challenges and risks that could increase its expenses, adversely affect the company`s results of operations and require increased time and attention from its management.

• The company`s business depends on the quality and successful implementation of its AI solutions. Delays or failures in meeting contractual timelines or the expectation of the company`s clients may result in cost overrun, loss of business and disputes which in turn could adversely impact its business, financial condition and results of operations.

• The company has incurred negative cash flows in the past. There is no assurance that the company will not incur losses in the future as the company expands the company`s operations.

• The company may be adversely affected by the evolving laws and regulations governing its business and the introduction of any new applicable laws and regulations in the jurisdictions the company operates in. Failures to comply with the existing, and changes to, laws and regulations applicable to the company`s business could subject the Company to enforcement actions and penalties and otherwise harm our business.

• The company`s Statutory Auditor has noted certain observations in auditor`s report under "Report on Other Legal and Regulatory Requirements" and in their reporting under the Companies (Auditor`s Report) Order, 2020.

• The company`s success depends on its ability to adapt to changes in client or market preferences and to adopt new technologies. The company`s failures to do so could adversely affect its business and results of operations.

• The development and use of AI, including Gen AI, requires the company to retain skilled talent. If the company fails to attract, retain, train and optimally utilize these professionals, or if there is an increase in employee costs, the company`s business may be unable to grow and its results of operations and profitability could decline.

• Internal or external fraud or misconduct by the company`s employees or consultants could adversely affect its reputation and the company`s results of operations.

• The company`s cash flows and results of operations may be adversely affected if the company is unable to collect on billed and unbilled receivables from clients and the company may not be able to recognize revenues, which may cause the company`s margins to fluctuate.

• One of its Promoters, Rupa Krishnan Agrawal, does not possess adequate experience in the industry in which the company operates.

• The company is required to comply with certain restrictive covenants under its financing agreements. Any noncompliance under these agreements may lead to, amongst others, accelerated repayment schedules and suspension of further drawdowns, which may adversely affect the company`s business, results of operations, financial condition and cash flows.

• The company intend to utilize a portion of the Net Proceeds for funding its capital expenditure requirements for purchase of laptops for which the company has not entered into any definitive agreement and there may be delay in placement of such orders.

• There have been certain instances of delays in the payment of statutory dues by the Company and Subsidiaries in the past. Any delay in payment of statutory dues by the company in future, may result in the imposition of penalties and in turn may have an adverse effect on the Company`s business, financial condition, results of operation and cash flows.

• The company intend to utilize a portion of the Net Proceeds for setting up new office premises in India for which the company has not entered into any definitive arrangements and there may be delay in deployment of the Net Proceeds.

• The company has certain contingent liabilities in our Restated Consolidated Financial Information, which may adversely affect its financial condition if they materialize.

• The company has included certain operational metrics and non-GAAP measures related to its operations and financial performance. These operational metrics and non-GAAP measures may not be comparable with financial or operational information of similar nomenclature computed and presented by other companies.

• The company`s business is subject to evolving laws regarding AI, privacy, data protection and other related matters. Many of these laws are subject to change and could result in claims, changes to its business practices, monetary penalties, increased cost of operations, which may harm the company`s business.

• The company`s pricing structures may not accurately anticipate the cost, complexity and duration of its work, which could consequently impact the company`s profitability.

• Exchange rate fluctuations may adversely affect the company`s results of operations as a significant portion of its revenues are denominated in foreign currencies and may adversely affect the value of the company`s Equity Shares.

• The company faces ethical and reputational risks associated with the use of our AI (including Gen AI) technology and algorithms, and instances of negative publicity can affect its business, financial condition, results of operations and cash flows.

• The company may not be able to prevent unauthorized use of its proprietary tools and other information and the company`s intellectual property rights may not be adequate to protect its business and competitive position. The company may also be subject to claims by third parties, which are extremely costly to defend, could require the company to pay damages and could limit its ability to use certain technologies, thereby adversely impacting the company`s results of operations and profitability.

• The company depends on the effectiveness of its marketing efforts to enhance sales of the company`s AI solutions. Any failures in the company`s marketing efforts could adversely impact its business and financial condition. Further, the company`s business depends on a strong brand and corporate reputation and if the company is not able to maintain and enhance its brand, the company`s ability to grow its business and our results of operations and financial condition may be adversely affected.

• The company faces intense competition in the company`s markets, and the company may lack sufficient financial or other resources to maintain or improve the company`s competitive position and may experience reduced operating margins and loss of market share.

• If the company faces immigration or work permit restrictions in any country where the company has operations, then he company`s business, financial condition, results of operations and prospects may be adversely affected.

• The company may fails to identify or successfully acquire target businesses and he company`s acquisitions could prove difficult to integrate which could disrupt its business and strain he company`s resources.

• Artificial general intelligence may disrupt the market and adversely affect the company`s business model and ability to compete.

• The company`s ability to implement AI solutions depends in part on its ability to operate with third-party services and any failures to do so could adversely impact its operations.

• The company depends on computing infrastructure operated by third parties to support some of its clients and any errors, disruption, performance problems, or failures in their or he company`s operational infrastructure could adversely affect its business, financial condition, and results of operations.

• If open source software programmers, many of whom the company does not employ, or he company`s own internal programmers do not continue to develop and enhance open source technologies, the company may be unable to develop new technologies, adequately enhance its existing technologies or meet client requirements for innovation, quality and price, thereby adversely affecting he company`s business, results of operations and financial condition.

• Failures to obtain or renew the company`s statutory and regulatory licenses, approvals, consents, registrations and permissions to carry out its operations in a timely manner, or at all, may adversely affect he company`s business, financial condition, cash flows and results of operations.

• There have been inadvertent inaccuracies in certain of he company`s regulatory filings and the company has either lost or been unable to locate certain of its historical regulatory filings and corporate records. The company cannot assure you that no legal or regulatory actions will be initiated against the company in the future in relation to any such discrepancies/ inconsistencies.

• Any failures to offer quality maintenance and support services for the company`s clients may harm its relationships with he company`s clients and, consequently, he company`s business.

• One of its Promoters, and also he company`s Whole-time Director and group chief executive and executive vicechairman, Srikanth Velamakanni, had pledged some of his Equity Shares in favor of 360 ONE Prime Limited. In the event that any encumbrance is enforced, it may dilute the shareholding of its Promoter, which could adversely affect the company`s business and reputation. Additionally, post Offer, the company`s Promoters will hold less than 20% of the post-Offer Equity Share capital of the Company and the shortfall of the minimum promoter contribution will be met by GLM Family Trust, one of he company`s Shareholders.

• Certain of its Promoters, he company`s Directors, Key Managerial Personnel, and members of its Senior Management have interests in the Company in addition to their remuneration and reimbursement of expenses which may lead them to make decisions that is in their best individual interest which may not always be in the best interest of the Company.

• Certain Directors of the Company may be associated with ventures which may be engaged in overlapping line of business that are an alternative to he company`s AI solutions. Any conflict of interest which may occur between our business and the activities undertaken by such companies, could adversely affect its business, prospects, results of operations and financial condition.

• The has entered into, and will continue to enter into, related party transactions that may potentially involve conflicts of interest and may be subject to additional approvals and compliances under applicable law.

• The company may not be able to obtain financing on favorable terms or at all, and any failures to raise needed funds may impact its iquidity, business, cash flows, financial condition and results of operations.

• Certain of its Subsidiaries have incurred losses in the six months ended September 30, 2024, and in the last three Fiscals. If they continue to incur losses, the company may be required to continue providing financial support to them which may adversely affect the company`s consolidated cash flows, results of operations and financial condition. The company cannot assure you that its investments will enhance their profitability or yield intended results.

• The company relies primarily on third-party insurance policies to insure its operations-related risks. If the company`s insurance coverage is insufficient for the needs of its business or the company`s insurance providers are unable to meet their obligations, the company may not be able to mitigate the risks facing its business, which could adversely affect the company`s business, financial condition and results of operations.

• The Company will not receive the entire proceeds from the Offer. Some of our Shareholders are selling Equity Shares in the Offer and will receive proceeds as part of the Offer for Sale.

• After the completion of the Offer, certain of its existing and future Shareholders may be able to exert significant influence over the Company which may limit your ability to influence the outcome of matters submitted for approval of its Shareholders.

• The company is potentially subject to anti-corruption, anti-bribery, anti-money laundering, financial and economic sanctions and similar laws, and non-compliance with such laws can subject the company to administrative, civil and criminal fines and penalties, all of which could adversely affect its business, prospects, financial condition, results of operations, and cash flows.

• The Company has issued securities during the preceding one year at a price that may be below the Offer Price.

• Certain sections of this Red Herring Prospectus contain information from the Everest Report which has been commissioned and paid for by the company and any reliance on such information for making an investment decision in this offering is subject to inherent risks.

• The valuation reports obtained for acquisitions or divestments of business/undertakings, mergers, amalgamations, any revaluations of assets, etc. in the last 10 years are based on various assumptions and may not be indicative of the true value of the subject matter to which they relate.

• If the company is unable to establish and maintain effective internal controls and compliance systems, the company business and reputation could be adversely affected.

• The company`s offices, including our Registered Office are located on leased premises or in co-working spaces. If these leases are terminated or not renewed on terms acceptable to the company, it could have a material adverse effect on its business, financial condition and results of operations.

• If the Company is classified as a passive foreign investment company for U.S. federal income tax purposes, U.S. investors in the Offered Shares may be subject to adverse U.S. federal income tax consequences.

• U.S. persons who hold 10% or more of the total voting power or value of the Company may be subject to U.S. federal income taxation on its undistributed earnings.