Nityas Gems Plans Rs 70 Crore Working-Capital Deployment

Nityas Gems plans to deploy Rs 70 crore of net proceeds from its fresh issue into working capital in Fiscal 2027. The planned deployment supports an estimated Rs 110.31 crore working-capital requirement, up from Rs 44.95 crore in Fiscal 2026, as inventory and customer receivables are projected to increase while supplier payment periods shorten.

How will Nityas Gems use Rs 70 crore of IPO proceeds?

Nityas Gems will use Rs 70 crore of net fresh-issue proceeds to fund incremental working-capital requirements in Fiscal 2027. The prospectus schedules the entire Rs 70 crore working-capital deployment for Fiscal 2027, while the amount reserved for general corporate purposes had not been finalised when the red herring prospectus was filed.

Nityas Gems states that general corporate purposes cannot exceed 25% of gross issue proceeds under the Securities and Exchange Board of India Issue of Capital and Disclosure Requirements Regulations. The Rs 70 crore allocation is therefore a specified use of proceeds, whereas any balance for general corporate purposes will depend on the final issue price and net proceeds.

Nityas Gems operates in the design, manufacture and distribution of 18-karat and 14-karat lab-grown diamond studded gold jewellery. Its predominantly business-to-business model supplies retailers, wholesalers and trade partners, requiring the company to buy fine gold and other materials upfront while extending customer credit in the ordinary course of business.

The Fiscal 2027 funding estimate is based on Nityas Gems' business plan, management estimates, current market conditions and a chartered accountant's certificate. The company states that the estimate has not been appraised by a bank, financial institution or other independent agency, and changes in business conditions, access to capital, interest rates or exchange rates could require a rescheduling of expenditure.

Why is Nityas Gems' working-capital requirement increasing?

Nityas Gems estimates its working-capital requirement will rise to Rs 110.31 crore in Fiscal 2027 from Rs 44.95 crore in Fiscal 2026. Working capital is current assets minus current liabilities, meaning the estimate measures cash tied up in operating assets after short-term operating obligations are deducted.

Nityas Gems projects current assets to increase by Rs 60.35 crore between Fiscal 2026 and Fiscal 2027, while current liabilities are estimated to decline by Rs 5.01 crore. That combination produces the Rs 65.36 crore increase in the working-capital requirement because a larger operating-asset base receives less offset from short-term liabilities.

The working-capital requirement had already risen from Rs 6.77 crore in Fiscal 2024 to Rs 25.11 crore in Fiscal 2025 and Rs 44.95 crore in Fiscal 2026. In Fiscal 2026, Nityas Gems funded Rs 8.99 crore through short-term borrowings from banks and others, and Rs 35.96 crore through internal accruals and equity.

What inventory and receivables assumptions support the plan?

Nityas Gems estimates inventory of Rs 72.87 crore and trade receivables of Rs 44.68 crore in Fiscal 2027, compared with Rs 41.05 crore and Rs 16.06 crore, respectively, in Fiscal 2026. Inventory and receivables together account for Rs 60.43 crore of the Rs 60.35 crore projected rise in total current assets, offset by a Rs 0.08 crore reduction in other current assets.

The prospectus narrative gives a different Fiscal 2027 trade-receivables figure of Rs 46.68 crore, while the detailed estimated working-capital table gives Rs 44.68 crore. The table's Rs 44.68 crore figure reconciles with total current assets of Rs 118.46 crore when added to inventory of Rs 72.87 crore and other current assets of Rs 0.92 crore; the source does not explain the discrepancy.

Nityas Gems links the higher inventory to its plan to serve larger, volume-driven customers, broaden its design portfolio and expand geographic reach through customer engagement across multiple cities. Inventory includes fine gold, alloys, lab-grown diamonds and finished goods, with the company stating that ready designs and finished products support display, customer conversion and faster order execution.

Trade-receivable holding days are estimated at 31 days in Fiscal 2027, compared with 22 days in Fiscal 2026, 24 days in Fiscal 2025 and 16 days in Fiscal 2024. Nityas Gems expects longer credit terms for larger customers to support customer acquisition, order volumes and retention, making timely collections and projected sales growth necessary to the estimate.

How do supplier payment terms increase the cash requirement?

Nityas Gems estimates trade payables will decline to Rs 4.96 crore in Fiscal 2027 from Rs 8.17 crore in Fiscal 2026. Trade payables are amounts owed to suppliers, so the lower projected balance means supplier credit will finance a smaller share of the company's inventory purchases.

Trade-payable holding days are estimated at seven days in Fiscal 2027, down from 10 days in Fiscal 2026, eight days in Fiscal 2025 and 14 days in Fiscal 2024. Nityas Gems attributes the limited supplier credit to procurement of fine gold, which generally requires upfront or advance payment, and says it intends to settle suppliers faster to obtain cash discounts on raw-material purchases.

Inventory holding days are projected at 57 in Fiscal 2027, compared with 59 in Fiscal 2026 and 30 in Fiscal 2024. Nityas Gems calculates inventory, receivables and payables days using average balances divided by revenue from operations and multiplied by 365 days, so the projected holding levels depend on the revenue assumptions in the Fiscal 2027 plan.

Revenue from operations rose from Rs 53.65 crore in Fiscal 2024 to Rs 207.05 crore in Fiscal 2026, an increase of 285.90%, according to the company's inventory justification. Nityas Gems says its inventory days rose from 30 to 59 over the same period as it scaled operations and expanded product and design offerings.

What financing and monitoring arrangements will apply?

Nityas Gems' Fiscal 2027 estimated funding pattern lists Rs 70 crore of net proceeds from the fresh issue and Rs 40.31 crore of internal accruals and equity. These two amounts equal the estimated Rs 110.31 crore working-capital requirement, while the short-term-borrowings line in the estimated table is left blank.

Nityas Gems states that fresh-issue proceeds are not intended to repay short-term borrowings. The company also states that it had not raised bridge loans from any bank or financial institution that were proposed to be repaid from net proceeds as of the red herring prospectus date.

CARE Ratings Limited has been appointed as the monitoring agency under Regulation 41 of the Securities and Exchange Board of India Issue of Capital and Disclosure Requirements Regulations. Nityas Gems says the monitoring report will be placed before its Audit Committee, and the company will make quarterly disclosures to the Audit Committee on the use and application of net proceeds under Regulation 32(3) of the Securities and Exchange Board of India Listing Regulations.

Pending use after listing and trading approvals, Nityas Gems says net proceeds will be deposited only with scheduled commercial banks approved by its Board. The company also states that proceeds will not be used for buying, trading or dealing in shares of another listed company or for equity-market investments.

Conclusion

Nityas Gems' Rs 70 crore working-capital deployment is designed to finance a higher level of inventory and customer credit, alongside faster supplier payments. The Fiscal 2027 estimate reflects a shift from Rs 44.95 crore of working capital in Fiscal 2026 to Rs 110.31 crore, with projected inventory of Rs 72.87 crore and receivables of Rs 44.68 crore driving the required cash.

The next disclosed points to watch are the final prospectus treatment of the conflicting Fiscal 2027 receivables figures of Rs 46.68 crore and Rs 44.68 crore, and the planned Fiscal 2027 deployment schedule. CARE Ratings Limited's monitoring reports and Nityas Gems' required Audit Committee disclosures are intended to show whether proceeds are used for the stated working-capital purpose.