Companies change course in good times and bad. For Zetwerk, the key turn came after it raised $150 Mn from D1 Capital Partners in August 2021 when Indian startups raised a record $42 Bn in the calendar year.
And what began as a platform to connect manufacturers to vendors and suppliers, turned into a full stack manufacturing play on the back of a bevy of acquisitions in 2021 and 2022.
The company, founded in 2018 by Amrit Acharya, Srinath Ramakkrushnan and Vishal Chaudhary, made its stock market debut today (Friday, October 23) with that full-stack promise at the centre of its pitch. No longer is this a marketplace, but a full-fledged platform that manages everything from procurement, supply, manufacturing, specifications and delivery.
While the listing itself was not at a massive premium like some other new-age tech stocks, that’s besides the point when looking at the business model and the sector.
The thesis around manufacturing remains strong for years to come as companies in key segments such as electric vehicles are looking to bring more of their component sourcing to India including in vital areas like precision machined parts. This was the opportunity that Zetwerk wanted to capture with its shift from marketplace to manufacturing.
In FY26, its revenue from operations rose 40.4% YoY to ₹15,913 Cr, from ₹11,331 Cr in the previous fiscal. Yet, its consolidated net loss widened to ₹1,606 Cr from ₹371 Cr in FY25. This loss includes an exceptional charge of ₹836 Cr from continuing operations and a ₹453 Cr impairment related to its discontinued civil infrastructure business.
Those are the realities of working in the manufacturing space. Opportunities come and go and companies have to react in terms of pivoting their operations. The impairment itself is not a major number, but what could worry investors is that adjusted EBITDA stood at a mere ₹421 Cr, translating into a margin of just 2.65% against the revenue.
Plus, cash flows present another challenge. Zetwerk’s cash outflow from operations widened to ₹682 Cr in FY26 from ₹386 Cr a year earlier, even as its manufacturing order book grew 43.4% to ₹12,370 Cr.
A larger order book offers revenue visibility, but fulfilling those orders requires the company to fund procurement, production and logistics, while managing payments to suppliers and collections from customers. Let’s dive deeper into this as this is what investors will look at.
The Two Revenue Pillars
Zetwerk operates through two main business segments: manufacturing and ecosystem. The latter operates under the Terra91 brand and supplies industrial raw materials such as steel, aluminium, copper, zinc, lead and bitumen.
The manufacturing business, which focuses on custom-made industrial products and related projects, is the largest of the two.
Together, the two businesses generated ₹15,913 Cr in revenue from continuing operations in FY26, up 40.4% YoY. Manufacturing accounted for ₹9,375 Cr, or 58.9% of revenue, while ecosystem contributed ₹6,539 Cr, or 41.1%.
Simply put, the manufacturing business earns revenue by working with third-party manufacturers and Zetwerk’s own facilities to fulfil orders across energy products, precision machined products and capital goods.
Its earnings depend on the price charged to customers relative to supplier payments, materials and fulfilment costs. More complex work, such as precision manufacturing requiring tight tolerances, can command a higher take rate than relatively less complex products.
Notably, Zetwerk doesn’t disclose these margins and fees as it is likely to depend on the product and client needs, since this is how the industry functions.
In an earlier Inc42 interview, cofounder and CEO Acharya said the company does not consider commission when accounting for revenue. He described the model instead as a take rate for services. He said rates vary across product categories depending on the complexity of the work.
The manufacturing segment reported a standalone EBITDA of ₹565 Cr in FY26, translating into a margin of 6.03%.
The other side is the ecosystem, which has grown considerably since 2022 as we indicated in the beginning.
Unlike manufacturing, where Zetwerk coordinates production, the ecosystem segment aggregates demand for industrial raw materials, procures them in bulk and resells them to customers.
Its economics are driven by the spread between procurement and selling prices, after accounting for logistics and other fulfillment costs. The segment’s Adjusted EBITDA stood at around ₹81 Cr, giving it a margin of approximately 1.24%.
The thin margin means that changes in commodity prices, sourcing costs or delivery expenses can have a significant impact on profitability, which we will see soon. Plus, the margin is considerably thinner than in manufacturing.
These segment-level margins offer a view of Zetwerk’s economics, but the company has not disclosed commission rates or order-level profitability.
Zetwerk’s revenue from operations includes the sale of products, income from construction and project contracts, sale of services and other operating revenue.
Product sales cover manufactured goods, products sourced from third-party suppliers and industrial raw materials sold through the ecosystem business. Construction and project contract income relates to projects involving broader execution responsibilities, while service revenue includes activities such as job work and related services.
Here’s the key difference from any other marketplace: Zetwerk acts as the principal in these transactions rather than simply connecting buyers and suppliers for a fee. It takes responsibility for sourcing, quality and delivery, meaning the revenue it reports reflects the value of goods and services sold, while procurement and fulfillment costs are recorded separately.
This is precisely the turn that Zetwerk’s 2021 fundraise and subsequent expansion allowed.
Zetwerk’s Big Opportunity
Having said that, as we mentioned in the beginning, the problem for the company is that it operates with razor thin margins. Even as the adjusted EBITDA margin has improved year-on-year, it’s still not quite robust enough.
Fulfilling industrial orders starts with a substantial procurement bill and procurement costs almost always escalate when there is a disparity in the order book. The key thing for Zetwerk will be to double down in one or two categories which will allow it to maximise the arbitrage revenue.
Economies of scale will drive arbitrage revenue in the manufacturing business, especially when Zetwerk owns and controls the procurement side of the business. So manufacturing cannot drive profits on its own and Zetwerk will have to flesh out both sides of the business at the same time.
Owning procurement removes third-party broker fees, distributor markups, and structural inefficiencies. The company captures the full margin that middle-men usually take.
Add to that, sourcing inputs from low-cost regions which allows you to absorb fixed costs of logistics, customs, and compliance.
And as the procurement side of the business scales up, Zetwerk will also have leverage for exclusive, long-term low-price contracts.
But it’s not a flick of the switch, buying in extreme bulk can exponentially increase warehousing, insurance, and inventory carrying costs. Moreover, commodity price volatility is another factor since companies can get locked in to massive forward contracts even as market price shifts. So any arbitrage advantage gets flipped here.
In FY26, the company spent ₹9,880 Cr on purchases of stock-in-trade and another ₹3,964 Cr on materials consumed, making these its two largest expense heads. Together, they accounted for nearly 86% of its total expenses of ₹16,142 Cr.
Purchases of stock-in-trade largely represent goods bought from suppliers and resold to customers. This expense head rose 45.3% YoY to ₹9,880 Cr in FY26 from ₹6,800 Cr in the previous fiscal.
The cost of materials consumed includes materials used in manufacturing and project contracts — which increased 31% YoY to ₹3,964 Cr in the fiscal under review from ₹3,036 Cr. The two expense heads reflect the procurement-heavy nature of Zetwerk’s business, where revenue growth requires the company to source goods, materials and manufacturing capacity to meet customer orders.
Why Revenue Growth Is Not Translating Into Cash
Zetwerk’s cash flow numbers point to the pressure of achieving the balance between procurement and manufacturing. In FY26, its net cash outflow from operating activities widened to ₹682 Cr from ₹386 Cr in FY25, even as its manufacturing order book grew 43.3% year-on-year (YoY) to ₹12,370 Cr.
A growing order book provides visibility into future business, but it does not immediately translate into cash in the bank. Zetwerk still needs to source materials, pay suppliers and coordinate production to fulfil orders, while customer payments may come in only after goods are delivered or project milestones are met.
This gap between spending on fulfillment and collecting revenue can tie up cash as the business expands.
The company’s procurement-heavy model means it’s particularly important that Zetwerk gets this balance right. As order volumes rise, the company may need to deploy more working capital to support the procurement, manufacturing and fulfillment needs, even if each order itself is profitable.
The challenge is therefore not simply to grow revenue or expand the order book, but to wring out inefficiencies in terms of arbitrage price, production bottlenecks and generally save costs through tech and AI.
This will help the company mitigate the risks of delayed cash inflows and receivables. In FY26, Zetwerk’s trade receivables increased by ₹336 Cr, while its other financial and current assets rose by ₹715 Cr.
Zetwerk’s ability to improve cash conversion will depend on how efficiently it manages inventory, supplier terms, production timelines, fulfillment and customer collections as it scales. Converting the order book pipeline into cash remains a big test of its business model.
Which is why Zetwerk is looking to capture more value by taking on design and engineering responsibilities, rather than simply manufacturing products to customer specifications.
Its original design manufacturing (ODM) contracts accounted for 13.93% of manufacturing gross merchandise value (GMV) in FY26. Such work can offer better margins because it involves design and co-development, while also making customer relationships harder to replace.
Zetwerk is also trying to balance its supplier network with greater control over complex manufacturing. It operated 26 manufacturing facilities across four countries as of June 2026, while continuing to rely on third-party manufacturers for most of its manufacturing business.
Products sourced from third-party suppliers accounted for 80.46% of manufacturing segment revenue in FY26, down from 96.51% in FY24. This suggests that Zetwerk is gradually reducing its dependence on external capacity, but has not moved away from the model that helped it scale without investing in every stage of production.
But is scale alone enough to improve profitability? And now as a public company, Zetwerk will have to answer this tricky question.
[Edited By Nikhil Subramaniam]
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