Panchatv Bharat Projects 140% Rise in Working-Capital Needs

Panchatv Bharat projects that its net working-capital requirement will rise 140.2% to Rs 20.7323 crore in FY 2025-26 from Rs 8.6322 crore in FY 2024-25. The estimate is based on a planned 90-day net working-capital cycle, higher inventory and advances, and a projected reduction in supplier credit to 35 days.

Why is Panchatv Bharat's working-capital requirement rising by 140%?

Panchatv Bharat expects the requirement to increase because projected current assets rise while current liabilities decline. Total current assets are estimated at Rs 28.232 crore for FY 2025-26, compared with Rs 19.8819 crore in FY 2024-25, while total current liabilities are projected to fall to Rs 7.4997 crore from Rs 11.2485 crore. Net working capital, defined in the offer document as current assets less current liabilities after excluding cash and cash equivalents and short-term borrowings, is therefore projected at Rs 20.7323 crore.

The projected increase follows two earlier rises, but at a faster rate. The requirement increased 69.8% from Rs 3.5645 crore in FY 2022-23 to Rs 6.0518 crore in FY 2023-24, then 42.6% to Rs 8.6322 crore in FY 2024-25. Panchatv Bharat attributes the FY 2025-26 projection partly to an April 2, 2025 lease agreement giving it exclusive rights to use machinery and the lessor's premises, which is intended to increase production capacity and support the business plan.

The FY 2025-26 funding table identifies Rs 11.50 crore of issue proceeds for working capital and Rs 9.2322 crore from internal cash accruals and short-term borrowings. Those two stated components total Rs 20.7322 crore, while the table presents total sources of finance as Rs 21.9261 crore. The difference between the displayed total sources and the stated working-capital requirement is not explained in the supplied disclosure.

How does a 90-day cash cycle change Panchatv Bharat's funding need?

Panchatv Bharat expects its net working-capital days to lengthen to 90 in FY 2025-26 from 70 in FY 2024-25. The measure represents current-asset holding days less current-liability holding days, calculated over 365 days; current-asset days use revenue from operations, while current-liability days use purchase cost including direct expenses. A longer cycle means cash is expected to remain tied up in stock, customer balances and advances for longer relative to supplier financing.

Inventory days are projected at 80, up from 77 in FY 2024-25 and 59 in each of FY 2022-23 and FY 2023-24. Panchatv Bharat says it needs raw materials such as yarn, dye chemicals and accessories, as well as work in progress, or WIP, and finished goods. Its planned buffer stock is intended to reduce procurement lead times and avoid supply disruptions during higher-demand periods, but that strategy requires more cash before dispatch and collection.

Trade receivable days are estimated to improve to 45 from 49, yet receivables are still projected to rise to Rs 9.2466 crore from Rs 8.5804 crore as operations expand. Panchatv Bharat cites focused monitoring and digital tracking of outstanding dues, while saying new markets and newly onboarded customers may receive longer credit in the initial relationship-building phase. The projected reduction in collection days must occur for the 45-day assumption to hold.

Which balance-sheet items are creating the largest cash call?

Panchatv Bharat's inventory is the largest projected current-asset component, increasing by Rs 4.2942 crore to Rs 14.9854 crore in FY 2025-26. Short-term loans and advances are projected to rise by Rs 2.5655 crore to Rs 3.00 crore, mainly for advance booking of raw materials, advance tax and staff claims. Other current assets, including prepayments related to insurance, rent and service contracts, are projected to increase from Rs 17.46 lakh to Rs 1 crore.

Supplier financing is expected to move in the opposite direction. Trade payables are projected to fall to Rs 5.6117 crore from Rs 9.2872 crore, and payable days are expected to contract to 35 from 56. Panchatv Bharat says it intends to make prompt settlements to strengthen vendor relationships and obtain cash discounts and other commercial benefits. This reduction in supplier credit is a major reason the net cash requirement rises even though receivable days are projected to decline.

The FY 2024-25 inventory profile also shows where funds were held at March 31, 2025. Of total inventory of Rs 10.6912 crore, Rs 6.1614 crore was less than six months old, Rs 3.2312 crore was aged six to 12 months and Rs 1.2985 crore was raw material aged 12 to 24 months. Finished goods accounted for Rs 3.2226 crore and WIP accounted for Rs 5.066 crore, linking the cash requirement to manufacturing and production stages as well as completed fabric.

How substantial are Panchatv Bharat's receivables and existing borrowings?

Panchatv Bharat had trade receivables of Rs 8.5804 crore at March 31, 2025, of which Rs 5.4833 crore, or about 64%, was less than six months old. The remaining Rs 3.0971 crore included Rs 69.80 lakh due in six to 12 months, Rs 91.94 lakh due in 12 to 24 months, Rs 63.60 lakh due in 24 to 36 months and Rs 84.38 lakh outstanding for 36 months or more. Panchatv Bharat considers all of these receivables good and recoverable.

The age profile means collection performance remains relevant despite the projected reduction to 45 receivable days. At March 31, 2025, balances older than one year totalled Rs 2.3992 crore, or about 28% of total receivables. Panchatv Bharat's plan assumes its collection practices and digital monitoring will contain the receivables cycle while it expands sales to new markets and bulk buyers.

Panchatv Bharat also reported Rs 3.6965 crore of outstanding indebtedness under secured working-capital facilities at March 31, 2025. It funds most working-capital needs through bank financing and internal accruals. If issue proceeds fall short or actual funding needs increase, Panchatv Bharat says it may use internal accruals and/or further borrowings, making the projected cash cycle relevant to future financing requirements.

Conclusion

Panchatv Bharat's projected Rs 20.7323 crore working-capital requirement reflects a business plan combining higher production capacity, 80 days of inventory and Rs 3.00 crore of advances with faster payment to suppliers. The planned 90-day net cycle is 20 days longer than FY 2024-25, and the proposed Rs 11.50 crore allocation represents 60.53% of net issue proceeds of Rs 19 crore.

The next disclosures to watch are whether Panchatv Bharat deploys the entire Rs 19 crore of net proceeds in FY 2025-26 as planned and whether the 45-day receivables and 35-day payable assumptions materialise. The estimates are based on management projections and were not appraised by a bank, financial institution or independent agency; Panchatv Bharat says they may be revised for market conditions, competition, vendor negotiations or other external factors.