Company Earmarks Rs 18.66 Crore for Rising Working Capital

Company has earmarked Rs 18.66 crore of net initial public offering (IPO) proceeds for incremental working-capital requirements through December 31, 2027, while projecting a Rs 62.97 crore requirement in Fiscal 2028. The increase reflects larger projected inventory, trade receivables and other current assets, alongside lower supplier-credit periods.

Why is Company earmarking IPO proceeds for working capital?

Company is allocating Rs 18.66 crore of net IPO proceeds to incremental working-capital requirements in Financial Year 2026-27 and Financial Year 2027-28 up to December 31, 2027. Working capital is current assets less current liabilities, and it funds inventory, amounts due from customers and operating payments. Company says the balance requirement will be met through bank working-capital facilities and internal accruals.

Company’s stated need follows revenue growth from Rs 15.38 crore in Fiscal 2023 to Rs 21.53 crore in Fiscal 2024, a 39.97% increase. Revenue then rose 123.88% to Rs 48.20 crore in Fiscal 2025 and reached Rs 66.67 crore in Fiscal 2026, representing 38.32% year-on-year growth. Company attributes the earlier increase mainly to its in-house packaging unit and organic growth in its printing and labelling unit.

Company’s Fiscal 2027 and Fiscal 2028 plan depends on additional IPO funds, factory-capacity expansion and organic growth. The Rs 18.66 crore allocation is therefore one source within the funding plan, rather than the full projected requirement. Its use will depend on the operating plan proceeding and on Company continuing to access working-capital facilities and internal accruals.

How much is Company’s working-capital requirement expected to rise?

Company projects total working-capital requirements to rise from Rs 33.03 crore in audited Fiscal 2026 to Rs 48.13 crore in estimated Fiscal 2027 and Rs 62.97 crore in projected Fiscal 2028. The requirement grows because projected current assets rise faster than current liabilities. Fiscal 2028 would be Rs 29.94 crore above the Fiscal 2026 level.

Company projects current assets to increase by Rs 31.15 crore between Fiscal 2026 and Fiscal 2028, while current liabilities would be Rs 1.79 crore lower in Fiscal 2028 than in Fiscal 2026. Current liabilities are expected to decline to Rs 24.36 crore in Fiscal 2027 before increasing to Rs 25.48 crore in Fiscal 2028. That combination widens the funding gap despite projected improvements in operating-cycle days.

The Board approved the Fiscal 2027 and Fiscal 2028 business plan and estimated funding on September 4, 2026. I G R and Co., Chartered Accountants and Peer Review Auditor, certified the working-capital estimates and projections dated September 4, 2026. The historical Fiscal 2024 to Fiscal 2026 figures were derived from restated financial information.

Which assets are driving Company’s working-capital increase?

Inventory and trade receivables account for most of Company’s projected increase in current assets by Fiscal 2028. Inventory is projected to rise from Rs 23.94 crore in Fiscal 2026 to Rs 39.32 crore in Fiscal 2028, while trade receivables are expected to increase from Rs 34.47 crore to Rs 44.23 crore. Other current assets are projected to rise from Rs 1.88 crore to Rs 7.90 crore.

Company’s inventory includes paper and paperboard, packaging materials, inks, chemicals, adhesives, laminates, films and other printing and packaging raw materials. Inventory days, meaning the average period inventory is held before use in manufacturing or conversion into sales, are projected to decline from 131 days in Fiscal 2026 to 115 days in Fiscal 2027 and 112 days in Fiscal 2028. Inventory balances still rise because the projections assume a larger scale of operations.

Trade receivable days measure the average time Company takes to collect payment after a sale. Company projects those days will fall from 189 in Fiscal 2026 to 130 in Fiscal 2027 and 126 in Fiscal 2028, citing customer-base diversification, new customer acquisition and improved credit terms with existing customers. Receivables nevertheless increase by Rs 9.76 crore over the Fiscal 2026 to Fiscal 2028 period, requiring collections to improve while sales and outstanding balances grow.

How do shorter supplier-credit periods affect Company’s plan?

Company expects shorter supplier-credit periods to raise the capital required for operations by reducing the offset provided by trade payables. Trade payable days, or the average period taken to settle supplier and vendor dues, are projected to fall from 116 days in Fiscal 2026 to 72 days in Fiscal 2027 and 65 days in Fiscal 2028. Paying earlier relative to purchases reduces reliance on supplier funding.

Trade payables are projected to decline from Rs 21.20 crore in Fiscal 2026 to Rs 19.51 crore in Fiscal 2027, then increase to Rs 22.82 crore in Fiscal 2028. Company says it historically accepted minimal cash discounts on inventory purchases to obtain extended supplier credit, given its longer working-capital cycle and constrained liquidity. Its plan is to strengthen supplier relationships, diversify vendors and reduce reliance on extended credit periods.

Company’s Fiscal 2028 assumptions are 51 payable days below Fiscal 2026, 63 fewer receivable days and 19 fewer inventory days. Company links the inventory forecast to improved planning, procurement efficiencies and onboarding suppliers able to provide shorter raw-material lead times. The projections therefore require execution of collection, procurement and supplier-management measures, not only the availability of financing.

How will Company fund the projected working-capital requirement?

Company’s disclosed funding plan combines IPO proceeds, short-term borrowings and internal accruals. Short-term borrowings are projected to increase from Rs 14.99 crore in Fiscal 2026 to Rs 17.83 crore in Fiscal 2027 and remain at Rs 17.83 crore in Fiscal 2028. Internal accruals are projected to rise from Rs 18.04 crore to Rs 21.46 crore and then Rs 35.33 crore across the same three fiscal years.

The Fiscal 2027 funding pattern shows Rs 17.83 crore of short-term borrowings and Rs 21.46 crore of internal accruals against a Rs 48.13 crore requirement. For Fiscal 2028, the corresponding figures are Rs 17.83 crore, Rs 35.33 crore and Rs 62.97 crore. Company identifies the Rs 18.66 crore IPO allocation as the additional funding planned through December 31, 2027.

Company says it may use internal accruals and seek debt lenders if net proceeds are insufficient or the estimated cost of the issue objects increases. It had not raised bridge loans from a bank or financial institution for repayment from IPO proceeds as of the red herring prospectus date. Pending deployment, Company says net proceeds will be deposited only with scheduled commercial banks included in the Second Schedule of the Reserve Bank of India Act, 1934.

Conclusion

Company’s Rs 18.66 crore working-capital allocation supports a plan under which current assets increase faster than current liabilities. The projected Rs 62.97 crore requirement in Fiscal 2028 is based on higher inventory, receivables and other current assets, even as Company expects faster inventory turnover and customer collections. Earlier supplier payments also reduce the financing contribution from trade payables.

The disclosed Fiscal 2027 and Fiscal 2028 plan makes inventory days of 115 and 112, receivable days of 130 and 126, and payable days of 72 and 65 key measures to watch. Company says its Board and management will monitor net-proceeds use through the audit committee, with half-yearly disclosures to the audit committee and statutory-auditor certificates filed with quarterly financial results until the proceeds are fully utilized.