Ajwa Projects Limited earmarks Rs 9.35 crore for loans

Ajwa Projects Limited plans to earmark Rs 9.35 crore of IPO net proceeds for loan repayment or prepayment, against Rs 9.43 crore outstanding at September 30, 2026. The allocation represents 36.12% of expected Rs 25.88 crore net proceeds and targets seven facilities, principally working-capital and inventory-financing borrowings.

How much of Ajwa Projects' IPO will go to loan repayment?

Ajwa Projects plans to allocate Rs 9.35 crore to repayment or prepayment of borrowings in financial year 2026-27. The proposed amount is the largest stated use of the expected Rs 25.88 crore in net proceeds, ahead of Rs 8.10 crore for equipment and transport assets, Rs 4 crore for working capital and Rs 4.43 crore for general corporate purposes.

The Rs 9.35 crore allocation comes from net proceeds attributable to the fresh issue, not the offer for sale. The offer's gross proceeds are estimated at Rs 38.05 crore, including Rs 7.60 crore from shares offered for sale; Ajwa Projects will not receive that sale consideration. Estimated offer expenses of Rs 4.57 crore and the offer-for-sale proceeds leave expected net proceeds of Rs 25.88 crore.

Ajwa Projects describes the allocation as an estimate rather than a fixed repayment schedule. Its board and audit committee approved the fund requirements on October 19, 2026, but no bank, financial institution or external agency has appraised the planned deployment. The company says requirements may change with its financial position, business strategy, costs, interest rates, taxes, regulations and market conditions.

Which Ajwa Projects loans would the repayment target?

Ajwa Projects intends to use the allocation against seven disclosed facilities with combined outstanding balances of Rs 9.43 crore as of September 30, 2026. These include a vehicle loan, cash-credit and overdraft facilities, an unsecured term loan, and short-term inventory and supply-chain financing. An IndusInd Bank working-capital term loan had no outstanding balance and no proposed repayment on that date.

Unsecured facilities accounted for Rs 6.08 crore, or about 64.5%, of the Rs 9.43 crore disclosed balance, while secured facilities accounted for Rs 3.35 crore. Ajwa Projects proposes to repay Rs 6.02 crore of unsecured facilities and Rs 3.34 crore of secured facilities. The Rs 9.35 crore proposed repayment is Rs 7.87 lakh below the disclosed outstanding total.

The largest listed facility is a Colama Commercial Co. Ltd unsecured term loan, with Rs 3.88 crore outstanding and Rs 3.85 crore proposed for repayment. The 36-month working-capital loan carries a stated 14.00% interest rate and monthly instalments of Rs 17.42 lakh. Its terms prohibit full or partial prepayment until the third monthly instalment is repaid, while part payment is permitted once a year subject to approval.

Why does Ajwa Projects' loan mix matter for repayment?

Ajwa Projects' repayment plan is concentrated in unsecured working-capital and inventory facilities carrying stated interest rates between 11.50% and 14.00%. Besides the Colama term loan, the company proposes Rs 1.17 crore against Rs 1.20 crore outstanding under L&T Finance's short-term inventory-financing loan at 13.00%, and Rs 99.50 lakh against Rs 99.89 lakh outstanding under Mintifi Finserve Private Limited's short-term inventory-financing loan at 11.50%.

The plan also includes Rs 2.94 crore for an IndusInd Bank cash-credit or overdraft facility with Rs 2.95 crore outstanding at 9.15%, and Rs 33 lakh for a Punjab National Bank overdraft with Rs 33.07 lakh outstanding at 9.30%. Cash credit and overdraft facilities provide working-capital funding, while the L&T and Mintifi facilities fund dealer financing and a working-capital supply chain, respectively.

Ajwa Projects says repayment or prepayment is intended to reduce outstanding indebtedness and debt-servicing costs, while allowing internal accruals to be used for business investment. That outcome depends on the repayment being completed under lender conditions and on the company retaining enough liquidity after replacing some debt-backed funding with IPO proceeds and internal accruals.

What could change before Ajwa Projects repays the loans?

Ajwa Projects may change the facilities repaid because loan balances can move after instalments, refinancing, fresh drawdowns or further disbursements. If listed loans are repaid or refinanced before the prospectus is filed, or the company obtains additional credit facilities, the company may apply IPO proceeds to repay or prepay refinanced, additional or further-drawn facilities.

The company also allows its board to shift repayment scheduled for financial year 2026-27 into a subsequent financial year. If spending on an object is lower than planned, the balance may be used for general corporate purposes, subject to applicable Securities and Exchange Board of India Issue of Capital and Disclosure Requirements regulations. Surplus funds from one object may also fund another object requiring additional money, subject to applicable law.

Prepayment and foreclosure charges will be funded from internal accruals, not IPO net proceeds, under Ajwa Projects' undertaking dated October 5, 2026. D G M S & Co., the statutory auditors, certified on October 5, 2026 that the listed loans were used for their stated purposes. The company also says no unsecured loans from directors or related parties are proposed to be repaid from net proceeds.

How does repayment fit Ajwa Projects' working-capital needs?

Ajwa Projects is combining Rs 9.35 crore of debt repayment with Rs 4 crore of IPO funding for working capital. Net working-capital requirements rose from Rs 8.99 crore at March 31, 2024 to Rs 24.98 crore at March 31, 2026, and then to Rs 27.73 crore for the period ended June 30, 2026. The company projects Rs 34 crore of net working-capital requirements for the year ending March 31, 2027.

Trade receivables increased to Rs 24.55 crore at June 30, 2026 from Rs 20.68 crore at March 31, 2026, while inventory rose to Rs 8.12 crore from Rs 5.87 crore. Trade-receivable days increased from 82 days in financial year 2023-24 to 178 days in the period ended June 30, 2026. The projected Rs 34 crore requirement includes Rs 4 crore from IPO proceeds, Rs 66 lakh of existing bank borrowings and Rs 25.41 crore of internal accruals or existing net worth.

Ajwa Projects separately plans Rs 8.10 crore for equipment, transport vehicles and other assets used in fabrication, erection, piping, pressure-equipment installation and civil works. Vendor quotations total Rs 8.11 crore, but the company had placed no orders and entered no definitive vendor agreements as of the prospectus date. Any increase arising from freight, installation, packaging or forwarding is to be funded through internal accruals.

Conclusion

Ajwa Projects' proposed Rs 9.35 crore loan repayment would address nearly all of the Rs 9.43 crore in disclosed facilities at September 30, 2026, with unsecured working-capital and inventory funding making up about two-thirds of the outstanding amount. The proposal is therefore a funding-structure measure alongside the Rs 4 crore working-capital allocation and Rs 8.10 crore equipment plan.

The next item to watch is the updated facility table in the final prospectus, because Ajwa Projects permits changes for repayments, refinancing, new facilities and further drawdowns before filing. All Rs 25.88 crore of expected net proceeds are currently scheduled for deployment in financial year 2026-27, although the board may shift a planned repayment into a subsequent financial year under the disclosed plan.