New Delhi, Aug 14 : Svatantra Microfin Ltd -- promoted by Ananya Birla and Antimatter Media Pvt Ltd -- has filed draft papers with the Securities and Exchange Board of India (SEBI) to raise up to Rs 3,000 crore through an initial public offering but the draft red herring prospectus (DRHP) highlights several business, operational and governance risks.

Among major concerns flagged in the DRHP is the company's significant dependence on unsecured lending. As of March 31, unsecured microfinance loans accounted for 88.56 per cent of its assets under management (AUM).

The company primarily serves low-income households earning up to Rs 3 lakh annually, a borrower segment that is generally more vulnerable to economic shocks and income disruptions.

It also remains heavily reliant on cash-based collections despite ongoing digitisation efforts. Cash collections represented 79.22 per cent of total collections in FY26, exposing the business to risks including fraud, theft, cash handling errors and misappropriation.

In addition, the DRHP further revealed substantial negative operating cash flows. Net cash used in operating activities widened sharply to Rs 5,392.6 crore in FY26 from Rs 427 crore in FY25 -- an increase of 1,160 per cent -- primarily due to accelerated loan disbursements and growth in the lending book.

The company cautioned that expanding lending operations could continue to result in negative operating cash flows going forward.

Apart from that, geographical concentration poses another challenge as nearly 68 per cent of Svatantra Microfin's AUM is concentrated in five states -- Bihar, Uttar Pradesh, Maharashtra, Karnataka and Madhya Pradesh.

Svatantra Microfin is also facing trademark litigation in the Delhi High Court. Ratnaafin Capital and Ratnaafin Enterprise have filed a civil suit alleging trademark and logo infringement, seeking an injunction and damages of Rs 2 crore.

The DRHP also noted that corporate promoter Antimatter Media Pvt Ltd does not have adequate experience in the microfinance business, a factor that may raise governance and oversight concerns among investors.

Employee retention remains another area of concern. The company reported a full-time employee attrition rate of 39.22 per cent in FY26, following 41.47 per cent in FY25, highlighting persistent workforce turnover within a labour-intensive microfinance model.

Moreover, the proposed IPO comprises a fresh issue of equity shares worth up to Rs 1,500 crore and an offer for sale (OFS) of up to Rs 1,500 crore by existing shareholders.

The company may also undertake a pre-IPO placement of up to Rs 300 crore, which would reduce the size of the fresh issue.

/IANS