Dudani Retail Limited directs ₹6.967 crore to cash needs, debt

Dudani Retail Limited says working-capital constraints kept revenue relatively stable through FY 2025-26 by limiting raw-material purchases, inventory and product expansion. Dudani Retail plans to allocate ₹3.967 crore of net proceeds to working capital and ₹3 crore to repay a cash-credit facility, a combined ₹6.967 crore of ₹9.259 crore in net proceeds.

Why did Dudani Retail's revenue remain relatively stable?

Dudani Retail says constrained working capital limited bulk procurement of raw materials, inventory maintenance, product expansion and its ability to serve a wider customer base during the three years through FY 2025-26. Working capital is the excess of current assets over current liabilities that supports day-to-day operations, and the company says the constraint restricted its capacity to scale operations, diversify products and meet demand through e-commerce platforms.

The company’s working-capital model reflects the funding required for its operating cycle. Dudani Retail designs, manufactures, sources and supplies apparel and allied products, including women’s ethnic and fusion wear, and trades in men’s wear. Its Jaipur, Rajasthan facility carries out cutting, stitching, finishing, quality control and dispatch, while processes including dyeing, printing and embroidery are outsourced as of the prospectus date.

Inventory holding days, calculated as closing inventory divided by cost of goods sold multiplied by the number of days in the period, increased from 199 days in FY 2023-24 to 356 days in FY 2024-25 and 386 days in FY 2025-26. Dudani Retail estimates 271 inventory days for FY 2026-27, while trade-receivable, or debtor, days are projected at 44 days, compared with 56 days in FY 2025-26.

Dudani Retail says its inventory consists of raw materials, work-in-progress and finished goods, all of which must be funded before products are sold or receivables are collected. The company also says it generally makes advance or prompt payments to suppliers to secure material quality, timely deliveries and commercial terms. That practice limits the extent to which supplier credit can finance inventory purchases.

How large is Dudani Retail's working-capital requirement?

Dudani Retail estimates a ₹19.7476 crore working-capital gap for FY 2026-27, compared with ₹14.9732 crore in FY 2025-26 and ₹9.7635 crore in FY 2023-24. The company attributes the projected increase to a larger scale of operations, higher raw-material procurement, inventory maintenance, supplier advances and trade receivables.

The gap is calculated by deducting total current liabilities from total current assets. Inventory is projected to be the largest FY 2026-27 current asset at ₹15.617 crore, or nearly 73% of estimated total current assets of ₹21.3747 crore. Estimated trade receivables are ₹4.5205 crore, while total current liabilities are ₹1.6271 crore.

Dudani Retail funded the FY 2025-26 gap with ₹10.6832 crore of internal accruals and ₹4.29 crore of short-term borrowings. For FY 2026-27, it estimates ₹14.8294 crore from internal accruals, ₹95.12 lakh from short-term borrowings and ₹3.967 crore from the initial public offering, or IPO. Internal accruals would therefore remain the main planned source, while IPO proceeds would fund about one-fifth of the estimated FY 2026-27 gap.

How will Dudani Retail use IPO proceeds for working capital and debt?

Dudani Retail plans to use ₹3.967 crore of net proceeds for working-capital requirements of existing and proposed operations, and ₹3 crore to repay or prepay borrowings. The two allocations total ₹6.967 crore, or about 75% of ₹9.259 crore in planned net proceeds after issue-related expenses of ₹1.2854 crore.

The company had sanctioned fund-based working-capital facilities of ₹5.40 crore as of the prospectus date, of which ₹4.8195 crore was utilised on March 31, 2026. The repayment allocation relates to a Kotak Mahindra Bank Limited cash-credit loan sanctioned on January 25, 2025. A cash-credit facility is a revolving bank borrowing designed to finance working-capital needs.

Kotak Mahindra Bank sanctioned the facility at ₹4.75 crore for working-capital purposes, and Dudani Retail reported ₹3.4813 crore outstanding on September 9, 2026. The proposed ₹3 crore repayment would not eliminate the reported outstanding balance if it remained unchanged until repayment. Dudani Retail says the repayment is expected to reduce overall interest cost and provide funding headroom, but the prospectus does not quantify an interest saving.

Dudani Retail reported no bridge loan intended to be repaid from issue proceeds as of the prospectus date. However, it says it may draw amounts under overdraft or cash-credit arrangements to finance additional working-capital requirements until completion of the issue. This means the company’s funding position before deployment can still depend on lender facilities.

What must happen for Dudani Retail's working-capital plan to support growth?

Dudani Retail’s plan requires deployment of ₹9.259 crore in net proceeds during FY 2026-27, alongside estimated internal accruals of ₹14.8294 crore and ₹95.12 lakh in short-term borrowings. The company states that its funding estimates have not been appraised by a bank or financial institution and may change with financial conditions, business strategy, market conditions, costs or other commercial factors.

The company links additional liquidity to a broader middle-income product range, higher inventory availability, faster order fulfilment, wider e-commerce distribution, offline retail channels, licensed manufacturing and institutional supply. These initiatives depend on managing inventory near the estimated 271-day holding period and collecting trade receivables within the estimated 44 days. Dudani Retail provides no revenue or margin forecast for these initiatives.

A separate ₹79.20 lakh allocation is intended to fund two new computerised embroidery machines at the Jaipur facility. The equipment is expected to require about 1,000 square feet within Dudani Retail’s existing 18,714.922-square-foot premises. The August 18, 2026 quotations were valid until January 17, 2027, and no order had been placed when the prospectus was filed.

Dudani Retail says in-house embroidery is intended to reduce reliance on third-party job workers, improve quality consistency and shorten production turnaround time. The proposed machines would replace an outsourced process, but their contribution depends on procurement, installation and operationalisation. The company says delays in procuring or operationalising assets, or in obtaining approvals, could defer deployment of unutilised proceeds into subsequent fiscal years.

Conclusion

Dudani Retail presents working capital as both a stated constraint on revenue through FY 2025-26 and the largest specific operating use of its net IPO proceeds. The ₹3.967 crore working-capital allocation and ₹3 crore cash-credit repayment alter the financing mix for an estimated ₹19.7476 crore FY 2026-27 funding gap, although internal accruals of ₹14.8294 crore remain the largest planned funding source.

The next disclosed developments are deployment of net proceeds during FY 2026-27 and the proposed purchase of ₹79.20 lakh in embroidery equipment. Dudani Retail says unutilised proceeds may be carried into the following fiscal year, while allocations may be revised for changes in business conditions, costs or financing needs in accordance with applicable law.