ESDS net working capital turned negative on GPU advance

ESDS reported net working capital of negative ₹1,028.466 crore at March 31, 2026, against positive ₹105.359 crore a year earlier. ESDS said the principal reason was an advance from an enterprise customer incorporated outside India for a new graphics processing unit, or GPU, as a service project, rather than an ordinary operating-cycle change.

Why did ESDS net working capital turn negative?

ESDS net working capital turned negative primarily because of the advance received for a new GPU-as-a-Service project in Fiscal 2026. GPU-as-a-Service means supplying graphics processing unit computing capacity as a service. ESDS identified the enterprise customer incorporated outside India and the project advance as the primary reason for the movement from positive ₹105.359 crore at March 31, 2025 to negative ₹1,028.466 crore at March 31, 2026.

ESDS defines net working capital as total current assets less cash and cash equivalents, bank balances other than cash and cash equivalents, and total current liabilities excluding current borrowings. This is a non-GAAP financial measure, meaning it is not specified under Indian Accounting Standards, or Ind AS. The definition is material because ESDS excluded cash and cash equivalents of ₹1,253.385 crore at March 31, 2026 from its calculation.

The Fiscal 2026 result therefore does not represent a conventional comparison of all current assets against all current liabilities. The disclosed customer advance changed the balance-sheet inputs used in ESDS's defined measure, while cash and cash equivalents rose from ₹60.680 crore at March 31, 2025 to ₹1,253.385 crore at March 31, 2026. The negative result would persist only if the relevant current-asset and current-liability mix, including customer advances, remained at comparable levels.

How much did ESDS's working-capital position change?

ESDS's net working capital declined by ₹1,133.825 crore between March 31, 2025 and March 31, 2026. The measure had already declined from ₹140.769 crore at March 31, 2024 to ₹105.359 crore at March 31, 2025. ESDS attributed the earlier decline to increases in billed trade receivables and cash and cash equivalents driven by business growth.

ESDS's total current assets increased by ₹1,243.394 crore from March 31, 2025 to March 31, 2026, while total current liabilities increased by ₹1,176.898 crore over the same period. Total assets rose 195.43% to ₹1,937.904 crore at March 31, 2026 from ₹655.951 crore a year earlier, primarily because cash and cash equivalents increased. The larger current-liability balance, combined with the exclusion of cash under the company's definition, produced the negative net working-capital figure.

What do ESDS's receivable and payable days show?

ESDS's operating-cycle metrics moved in Fiscal 2026, but they do not by themselves explain the negative net working-capital result. Trade receivables days fell to 79 days in Fiscal 2026 from 101 days in Fiscal 2025, while trade payables days increased to 108 days from 84 days. Net working-capital days, defined as trade receivables days less trade payables days, changed to negative 29 days from positive 17 days.

Trade receivables days are calculated using year-end trade receivables divided by annual revenue from operations and multiplied by the number of days in the year. Trade payables days use trade payables less provision for expenses, divided by other expenses less specified non-cash items, multiplied by the number of days in the year. ESDS rounded all day figures to the nearest whole day, making the reported Fiscal 2026 negative 29 days a timing metric rather than the same measure as net working capital.

Billed trade receivables increased to ₹102.126 crore at March 31, 2026 from ₹99.756 crore at March 31, 2025, while unbilled trade receivables rose to ₹63.393 crore from ₹43.728 crore. Trade payables increased to ₹38.893 crore from ₹29.026 crore. ESDS said the Fiscal 2026 payables-days movement reflected liquidity management, alignment of supplier payment cycles and timely payments to vendors.

Why does the GPU advance have a different liquidity profile?

The disclosed advance makes the Fiscal 2026 negative balance project-specific rather than solely an indication of routine collection and payment practices. ESDS identified one enterprise customer incorporated outside India and one new GPU-as-a-Service project as the primary driver of the decline to negative ₹1,028.466 crore. The disclosure does not quantify the advance or set out its payment, delivery or continuation terms.

ESDS states that working-capital needs may increase if customer agreements provide reduced advance payments or longer payment schedules. According to ESDS, either development could increase trade receivables, short-term borrowings and the cost of working-capital funding. ESDS also expects net working capital to increase as revenue from operations increases, so it has not presented negative net working capital as a permanent operating objective.

The company's capital requirements provide further context for the advance. Additions to property, plant and equipment were ₹83.823 crore in Fiscal 2026, after ₹113.422 crore in Fiscal 2025 and ₹21.662 crore in Fiscal 2024. ESDS says its cloud-computing infrastructure and data-centre equipment require substantial procurement and installation expenditure, and future funding needs may vary with delays, expenses, regulatory changes and technological upgrades.

What commitments could require ESDS to deploy liquidity?

ESDS has continuing data-centre commitments alongside its equipment spending. Three of its five data centres, in Bengaluru, Mohali and Noida, operate under master-service agreements with Software Technology Parks of India, or STPI. ESDS also proposes to establish a Kolkata data centre on STPI premises under a master-service agreement.

The Bengaluru, Mohali and Noida agreements require ESDS to pay the higher of a minimum annual charge or 18% of the relevant data centre's annual revenue, subject to their stated terms. Payments to STPI were ₹7.201 crore in Fiscal 2026, equal to 1.53% of revenue from operations, compared with ₹6.682 crore, or 1.85%, in Fiscal 2025. The proposed Kolkata agreement also provides for the higher of ₹1.80 crore annually or 18% of annual revenue for its first two financial years after the data centre goes live, followed by a 5% compounded annual increase in the minimum charge.

ESDS says additional capital requirements may be funded through debt, equity securities or a combination of both. Current borrowings stood at ₹14.500 crore at March 31, 2026, down from ₹22.116 crore at March 31, 2025. ESDS states that debt financing would increase interest and repayment obligations and could add covenants, while an equity issue could dilute then-current shareholders.

Conclusion

ESDS's Fiscal 2026 net working-capital movement combines a defined non-GAAP calculation with a disclosed project advance. The negative ₹1,028.466 crore balance followed positive balances of ₹105.359 crore in 2025 and ₹140.769 crore in 2024, while the company excluded ₹1,253.385 crore of cash and cash equivalents from the measure. Receivable days fell to 79 and payable days rose to 108, but the overseas GPU-as-a-Service customer advance was the stated primary cause of the larger shift.

The next disclosed factors to watch are customer payment structures and ESDS's expansion commitments. ESDS says reduced advances or longer payment schedules could increase its working-capital requirement, while the proposed Kolkata data centre carries an initial minimum STPI charge of ₹1.80 crore per year or 18% of annual revenue, whichever is higher. Equipment investment, customer advances and the timing of that planned data-centre operation will affect how the Fiscal 2026 liquidity position develops.