Deepa Jewellers funds 36-day credit with one-day supplier terms

Deepa Jewellers had a 36-day customer credit cycle in Fiscal 2026 while its suppliers generally gave one day of credit. Combined with 18 inventory days, this produced a 53-day net working-capital cycle and coincided with Rs 14.73 crore of net cash used in operating activities.

Why does Deepa Jewellers have a 36-day customer credit cycle?

Deepa Jewellers gives customers materially longer credit than it receives from suppliers. The company said its standard customer credit periods generally range from 25 to 45 days, while the credit period offered by suppliers is generally one day. Trade receivables, or unpaid customer invoices, were Rs 252.36 crore in Fiscal 2026, equal to 13.10% of revenue from operations, up from Rs 131.733 crore, or 9.43%, in Fiscal 2025.

Deepa Jewellers' debtor days rose to 36 in Fiscal 2026 from 29 in Fiscal 2025, after 32 days in Fiscal 2024. Debtor days are calculated by dividing 365 by the ratio of revenue from operations to average trade receivables at the start and end of the period. The measure is an average collection indicator, rather than a statement that every customer receives 36 days of credit.

Deepa Jewellers also remains exposed to payment delays through certain electronic vendor financing scheme, or e-VFS, arrangements. Under e-VFS, a bank pays the company on behalf of a customer, but the bank can recover a defaulted invoice amount from Deepa Jewellers if the customer does not pay within the agreed period. The company said outstanding customer payments did not materially affect it in Fiscal 2026, Fiscal 2025 or Fiscal 2024, but delayed collections or customer defaults could affect cash flow.

How large is Deepa Jewellers' payment mismatch?

Deepa Jewellers had a 35-day gap between its 36 trade-receivable days and one trade-payable day in Fiscal 2026. Trade payable days measure the average period for paying suppliers, using cost of goods sold and average trade payables. Supplier payment days remained at one in Fiscal 2024, Fiscal 2025 and Fiscal 2026, while receivable days moved from 32 to 29 and then 36.

Deepa Jewellers' 53-day cycle shows that cash is committed both to customer credit and inventory. Inventory holding days fell from 22 in Fiscal 2024 to 18 in Fiscal 2026, reducing the reported time gold and jewellery were held. However, the four-day rise in receivable days from Fiscal 2025, with supplier payment terms unchanged, meant the overall cycle was four days longer than Fiscal 2025.

Deepa Jewellers reported net working capital of Rs 344.019 crore in Fiscal 2026, versus Rs 213.395 crore in Fiscal 2025 and Rs 158.15 crore in Fiscal 2024. Net working capital is current assets less current liabilities. The increase measures the capital committed to short-term operating assets after short-term liabilities, not cash generation or profitability.

What does supplier concentration mean for Deepa Jewellers' funding needs?

Deepa Jewellers buys gold bullion from a concentrated supplier base while generally paying suppliers within one day. Its top 10 suppliers accounted for Rs 1,602.193 crore, or 91.81% of total purchases, in Fiscal 2026. That compared with Rs 1,084.593 crore, or 82.32%, in Fiscal 2025, and Rs 958.283 crore, or 96.89%, in Fiscal 2024.

The largest supplier represented Rs 421.988 crore, or 24.18%, of Fiscal 2026 purchases. Deepa Jewellers typically procures gold through purchase orders as needed and has no long-term contracts with Reserve Bank of India, or RBI, registered bullion banks, independent bullion dealers, the India International Bullion Exchange, or IIBX, or exchange customers. Supply continuity, quantity, quality and the timing of purchases therefore depend on counterparties and prevailing conditions.

Deepa Jewellers' sourcing mix shifted in Fiscal 2026. Gold exchanged by customers supplied 739.04 kilograms, or 56.73%, of 1,302.64 kilograms sourced, while independent bullion dealers supplied 498.60 kilograms, or 38.28%. In Fiscal 2025, IIBX supplied 425.10 kilograms, or 26.11%, but the company reported no IIBX sourcing in Fiscal 2026; changes in source availability can affect replenishment timing and procurement costs.

How did the credit cycle affect Deepa Jewellers' operating cash flow?

Deepa Jewellers reported net cash used in operating activities of Rs 14.73 crore in Fiscal 2026 and Rs 9.864 crore in Fiscal 2025, after generating Rs 4.845 crore in Fiscal 2024. The company attributed the two negative operating cash flow years primarily to growth-driven increases in inventory, trade receivables and income-tax payments, including interest. Its disclosure does not attribute the entire outflow to customer credit alone.

Revenue from operations rose to Rs 1,926.676 crore in Fiscal 2026 from Rs 1,397.01 crore in Fiscal 2025 and Rs 1,024.568 crore in Fiscal 2024. Trade receivables increased by Rs 120.627 crore between Fiscal 2025 and Fiscal 2026. When higher sales require larger receivable and inventory balances before customers pay, the timing difference requires funding through cash, borrowings or working-capital facilities.

Deepa Jewellers had utilised Rs 82.979 crore of fund-based working-capital facilities as of July 31, 2026, against total sanctioned working-capital facilities of Rs 115 crore, comprising fund-based and non-fund-based facilities. It also had a sanctioned Rs 100 crore sub-limit under gold metal loans, subject to RBI conditions. The company said gold metal loans carry lower interest rates than other working-capital loans, making the financing mix relevant to interest costs.

What must hold for Deepa Jewellers' funding gap to narrow?

Deepa Jewellers' funding gap would narrow if receivables are collected faster, supplier credit is retained, inventory days decline without missed orders, or financing remains sufficient for the cycle. Inventory days fell to 18 in Fiscal 2026 from 21 in Fiscal 2025, and the company said it replenishes inventory daily. Gold-price movements and demand forecasting, however, can affect the inventory it needs to finance.

Deepa Jewellers plans to use working capital for gold procurement and for maintaining and scaling inventory, while setting up a 6,696-square-foot in-house manufacturing facility in Hyderabad. The company also opened a Vijayawada sales office and disclosed plans for an additional Bangalore sales office in Fiscal 2027. These expansion plans require inventory and operating funding before any resulting customer collections are received.

Conclusion

Deepa Jewellers' 36-day customer credit cycle, one-day supplier credit and 18-day inventory period show why revenue growth can consume cash despite lower inventory days. The net working-capital cycle was 53 days in Fiscal 2026, matching Fiscal 2024 and exceeding Fiscal 2025 by four days, while operating cash flow was negative for a second consecutive year.

The disclosed Hyderabad facility and planned Bangalore sales office in Fiscal 2027 make receivable days, operating cash flow and working-capital facility availability relevant measures to monitor. Deepa Jewellers has said it may need additional financing as it expands, but the availability and cost of that funding depend on credit conditions, lender terms and its creditworthiness.