Acme Universal Safezone’s cycle widened as supplier credit fell

Acme Universal Safezone’s working-capital cycle widened to 75 days at March 31, 2026 from 65 days at March 31, 2024, primarily because supplier credit shortened to 58 days from 72 days. Net working capital rose to Rs 49.78 crore from Rs 37.25 crore, and the reported requirement was financed entirely through borrowings.

Why did Acme Universal Safezone’s operating cycle widen?

Acme Universal Safezone’s operating cycle widened because the decline in trade-payable days was larger than the improvement in trade-receivable days. The company defines the operating cycle as inventory holding days plus trade-receivable days less trade-payable days. At March 31, 2026, 83 inventory days plus 50 receivable days less 58 payable days resulted in a 75-day cycle.

Trade-payable days declined by 14 days, from 72 days at March 31, 2024 to 58 days at March 31, 2026. Over the same two-year period, trade-receivable days improved by three days, from 53 to 50, while inventory days were unchanged at 83 days. The reduction in supplier credit therefore outweighed the improvement in collections and lifted the operating cycle by 10 days.

Acme Universal Safezone attributes the lower payable period to reduced credit availed from suppliers and the timing of payments relative to procurement. Its procurement mainly covers raw materials and components used in safety-footwear manufacturing. A shorter cycle would require a larger improvement in inventory or receivable days than any additional reduction in payable days.

How much working capital did Acme Universal Safezone require?

Acme Universal Safezone reported net working capital of Rs 49.78 crore at March 31, 2026, compared with Rs 39.30 crore at March 31, 2025 and Rs 37.25 crore at March 31, 2024. Net working capital, defined as current assets less current liabilities, increased by Rs 12.53 crore between March 2024 and March 2026.

Current assets increased to Rs 77.42 crore at March 31, 2026 from Rs 65.87 crore at March 31, 2024, while current liabilities decreased to Rs 27.65 crore from Rs 28.62 crore. Inventory was the largest current asset at Rs 35.23 crore, followed by trade receivables of Rs 28.80 crore and other current assets of Rs 11.33 crore. Trade payables were the largest current liability at Rs 23.00 crore.

Revenue from operations rose to Rs 205.90 crore in the year ended March 31, 2026 from Rs 178.94 crore in the year ended March 31, 2024. Acme Universal Safezone reported a compounded annual growth rate, or CAGR, of 4.79% for revenue across that period. Its working-capital turnover, reported as revenue divided by average working capital in the historical table, declined to 4.10 times in FY26 from 4.75 times in FY24.

How was Acme Universal Safezone’s working capital financed?

Acme Universal Safezone’s working-capital funding table shows borrowings funded 100% of net working capital at each of the three reported year ends. At March 31, 2026, borrowings of Rs 49.78 crore exactly matched net working capital of Rs 49.78 crore, while internal accruals were reported as nil. The same presentation applied at March 31, 2025 and March 31, 2024.

Acme Universal Safezone proposes to use up to Rs 8 crore of net proceeds for incremental working-capital requirements. The company states that the balance of the requirement will be arranged from existing equity, internal accruals, and borrowings from banks and financial institutions. The Board approved the projected working-capital requirements on July 25, 2026, using management estimates and assumptions about future events and actions that may not occur.

For the year ending March 31, 2027, Acme Universal Safezone estimates net working capital of Rs 57.05 crore, financed by Rs 42 crore of borrowings, Rs 11.05 crore of internal accruals and Rs 4 crore of initial public offering, or IPO, proceeds. For the year ending March 31, 2028, the estimate is Rs 62.50 crore, funded by Rs 40 crore of borrowings, Rs 14.50 crore of internal accruals and Rs 8 crore of IPO proceeds.

Which balance-sheet items are driving Acme Universal Safezone’s requirement?

Acme Universal Safezone’s largest working-capital components were inventory and trade receivables, together accounting for Rs 64.03 crore of its Rs 77.42 crore current assets at March 31, 2026. Inventory includes raw materials, work in progress and finished goods for safety-footwear manufacturing. The company identifies leather, soles and components as inputs that require stocks through multiple production stages.

Inventory rose to Rs 35.23 crore at March 31, 2026 from Rs 29.48 crore at March 31, 2024, even as inventory days remained within an 81-to-83-day range. Trade receivables increased to Rs 28.80 crore from Rs 25.93 crore, but receivable days declined to 50 from 53. Acme Universal Safezone says its customers are primarily domestic business-to-business, or B2B, customers with generally standardised credit periods.

Other current assets increased to Rs 11.33 crore at March 31, 2026 from Rs 7.40 crore at March 31, 2024. Acme Universal Safezone defines this category as balances with government authorities, interest accrued on fixed deposits, prepaid expenses, duty-drawback receivables and corporate social responsibility credit. Advances to suppliers declined to Rs 1.87 crore from Rs 2.85 crore over the same period.

What does Acme Universal Safezone project for 2027 and 2028?

Acme Universal Safezone projects an operating cycle of 75 days for the year ending March 31, 2027 and 78 days for the year ending March 31, 2028. The FY27 estimate assumes 80 inventory days, 52 receivable days and 57 payable days. The FY28 holding-level table lists 82 inventory days, 55 receivable days and 60 payable days.

The FY28 inputs listed by Acme Universal Safezone total 77 days when applying its stated formula of inventory days plus receivable days less payable days, although the prospectus reports a 78-day operating cycle. The company’s narrative attributes the projected increase to higher receivable days and changes in payable days, while inventory is expected to remain within a comparable range. This disclosed arithmetic difference remains unresolved in the supplied information.

Acme Universal Safezone estimates inventory of Rs 40 crore in FY27 and Rs 45 crore in FY28, with trade receivables of Rs 40 crore and Rs 42 crore, respectively. Trade payables are estimated at Rs 32 crore in FY27 and Rs 33 crore in FY28. The forecast table reports working-capital turnover of 4.19 times in FY27 and 4.25 times in FY28, but defines that measure as revenue divided by net working capital, unlike the historical table’s average-working-capital denominator.

Conclusion

Acme Universal Safezone’s net working-capital requirement grew by Rs 12.53 crore between March 2024 and March 2026 as revenue increased and supplier credit shortened by 14 days. Inventory days were stable and receivable days improved by three days, but those movements did not offset the reduction in trade-payable days, resulting in a 75-day operating cycle.

The next disclosed markers are projected net working capital of Rs 57.05 crore in FY27 and Rs 62.50 crore in FY28, with up to Rs 8 crore of IPO proceeds planned for incremental requirements. The projections depend on management assumptions, and the reported FY28 operating-cycle figure of 78 days should be assessed alongside the listed 82 inventory, 55 receivable and 60 payable days.