LCC Projects reclassified supplier bills into short-term debt

LCC Projects Limited, referred to here as LCC Projects, reported Rs 794.368 crore of short-term borrowings at March 31, 2026, compared with Rs 666.101 crore a year earlier. Its disclosed supplier-financing arrangement reclassifies participating trade payables into borrowings without an immediate cash payment, while receivables, unbilled revenue and retention balances also expanded.

Why did LCC Projects reclassify supplier bills into short-term debt?

LCC Projects reclassified supplier bills because trade payables entering its supplier-financing programme are moved from trade payables to current borrowings. The company describes the accounting entry as non-cash at the time of reclassification, because it has not made a cash payment when the payable joins the arrangement.

The arrangement is intended for micro, small and medium enterprises, or MSME, suppliers. LCC Projects has agreements with TReDS and Receivable Exchange of India Limited, which connect the buyer, seller and participating financing banks for factoring or reverse factoring of invoices. The company says the mechanism is intended to pay MSME suppliers by their statutory due dates while providing LCC Projects with working-capital financing.

Reverse factoring is a supplier-finance arrangement in which a financier pays a supplier against an approved buyer invoice and the buyer settles the financier later. LCC Projects’ accounting treatment means the later obligation is presented as a borrowing rather than continuing as a trade payable. At March 31, 2026, the balance sheet reported Rs 260.539 crore of trade payables and Rs 794.368 crore of short-term borrowings.

How much short-term debt did LCC Projects report?

LCC Projects’ short-term borrowings rose by Rs 128.267 crore in the year to March 31, 2026, driven principally by loans repayable on demand. Loans repayable on demand were Rs 720.184 crore, while current maturities of long-term loans were Rs 74.184 crore.

The detailed borrowing schedule listed Rs 406.925 crore across five purchase-invoice discounting and vendor-bill discounting facilities at March 31, 2026. It recorded Rs 74.689 crore with A-Treds, Rs 144.146 crore with Reliable Exchange of India, Rs 47.968 crore with Poonawalla Fincorp, Rs 90.572 crore under SBIC EVAS Facility and Rs 49.550 crore under BOB SCF.

The listed facilities have short repayment cycles, making continued collections and refinancing relevant to the funding structure. A-Treds and Reliable Exchange of India had cycles of 30 to 90 days, Poonawalla Fincorp and BOB SCF had terms up to 120 days, and SBIC EVAS had a 180-day cycle. The supplier-financing disclosure does not state that every listed invoice-discounting balance was reclassified under the reverse-factoring arrangement.

How did receivables and unbilled revenue affect LCC Projects’ funding need?

LCC Projects’ working-capital balances increased as more funds were represented by receivables, unbilled revenue, retention money and construction inventory. These four balances totalled Rs 1,521.235 crore at March 31, 2026, compared with Rs 995.577 crore at March 31, 2025.

Unbilled revenue is a contract asset, meaning revenue has been recognised before the company has raised an invoice. Under Indian Accounting Standard 115, or Ind AS 115, LCC Projects recognised Rs 3,577.561 crore of construction contract revenue in the year ended March 31, 2026 and raised invoices of Rs 3,504.469 crore. The Rs 73.092 crore difference contributed to the movement in the contract-asset balance.

Retention money also rose sharply, reaching Rs 283.309 crore from Rs 83.063 crore. LCC Projects says its customer terms generally include mobilisation advances, monthly progress payments with credit periods of 45 to 90 days, and retention released at project completion; in some cases, bank or corporate guarantees replace retention. The release timetable for retention therefore affects when these recorded balances turn into cash.

What do LCC Projects’ collection and security disclosures show?

LCC Projects reported that Rs 452.851 crore of gross trade receivables were less than six months old at March 31, 2026, while Rs 8.608 crore were between six months and one year. No gross trade receivables were reported in ageing buckets beyond one year, and the expected-credit-loss allowance declined to Rs 5.638 crore from Rs 6.165 crore at March 31, 2025.

The company says the majority of its receivables are from government authorities, and government-promoted agencies generated 90.59% of revenue in the year ended March 31, 2026, compared with 82.34% in the previous year. Its credit-loss assessment uses a provision matrix that considers receivable age, liquidity-risk factors, historical experience and forward-looking information. Collection timing can nevertheless be affected by claims, disputes, approvals and customer ability to pay.

Working-capital loans are secured by a first pari passu charge over present and future current assets, including inventories, work in progress, receivables, margin-money deposits and security deposits. Pari passu means secured lenders rank equally over the charged assets. Construction material and trade receivables are specifically hypothecated to banks against working-capital facilities.

The security package also includes a mortgage over certain identified immovable properties, a second charge on movable fixed assets, personal guarantees and a corporate guarantee from Dom’s Delicious Private Limited. Bank working-capital borrowing rates ranged from 6.83% to 10.70% per annum at March 31, 2026 and were linked to bank base rates, Treasury-bill rates or the marginal cost of funds-based lending rate, known as MCLR.

How near-term are LCC Projects’ funding obligations?

LCC Projects had Rs 794.368 crore of borrowings contractually due within one year at March 31, 2026, up from Rs 666.101 crore a year earlier. The liquidity schedule also placed Rs 259.424 crore of trade payables and Rs 284.404 crore of other financial liabilities within one year, taking these three categories to Rs 1,338.196 crore.

The comparable within-one-year total for borrowings, trade payables and other financial liabilities was Rs 847.233 crore at March 31, 2025. The increase reflects not only higher short-term debt but also a rise in current other financial liabilities to Rs 284.404 crore from Rs 78.055 crore, largely including security deposits and retention money of Rs 269.914 crore.

LCC Projects’ fund-based banking facilities are generally repayable on demand, subject to annual renewal and periodic rollovers of 90 or 180 days. The company disclosed Rs 670 crore of sanctioned limits in its detailed short-term borrowing schedule and said that its move from a multiple-banking structure to a consortium arrangement was in progress. These terms make facility renewal, lender access and cash conversion material to the continued use of short-tenor funding.

Conclusion

LCC Projects’ supplier-finance accounting shifts participating supplier obligations into borrowings, helping explain the presentation of Rs 794.368 crore in short-term debt at March 31, 2026. The borrowing increase occurred alongside a Rs 525.658 crore rise in the combined balances of receivables, unbilled revenue, retention money and construction inventory, linking funding needs to the conversion of project activity into billings and cash.

The next disclosed developments to watch are the transition to a consortium banking arrangement and the renewal of demand facilities that roll over every 90 or 180 days. The pace of invoicing, customer collections and release of retention balances will determine whether the expanded working-capital asset base can support obligations that include invoice-discounting facilities with repayment cycles of 30 to 180 days.