R K Fashion Accessories Sees Working-Capital Cycle Reach 107 Days

R K Fashion Accessories projects that its working-capital cycle will reach 107 days in FY2027, from 64 days in FY2026, as inventory is projected to increase 125.93% to Rs 17.69 crore. The plan assumes more finished-goods stock for expanded showrooms and a reduction in supplier-credit days to 63 from 83.

Why is R K Fashion Accessories projecting a 107-day working-capital cycle?

R K Fashion Accessories projects a 107-day working-capital cycle for both FY2027 and FY2028, compared with 64 days in FY2026. The cycle measures the time that cash is tied up in trade receivables and inventory after allowing for trade-payable credit from suppliers. Its FY2027 assumptions are 26 debtor days, 144 inventory days and 63 creditor days, producing a 107-day cycle.

The projected increase follows a marked change over the prior three financial years. R K Fashion Accessories reported a negative 41-day cycle in FY2024, followed by 31 days in FY2025 and 64 days in FY2026. In FY2024, 95 creditor days exceeded the combined 54 days of receivables and inventory, whereas the FY2027 projection assumes that receivables and inventory will exceed supplier credit by 107 days.

The FY2027 and FY2028 figures are Board-approved projections under a resolution dated May 6, 2026, not audited results. R K Fashion Accessories says the funding plan may be revised for changes in its financial condition, strategy, raw-material and labour costs, logistics, taxes, regulation, market conditions or project configuration.

How will showroom inventory extend R K Fashion Accessories' cycle?

Showroom inventory is the principal reason R K Fashion Accessories expects its working-capital cycle to extend to 107 days. Total inventory is projected to rise from Rs 7.83 crore in FY2026 to Rs 17.69 crore in FY2027, then to Rs 20.41 crore in FY2028. Inventory holding days are projected to rise from 117 to 144 in FY2027 before edging down by one day in FY2028.

Finished goods are expected to account for most of the inventory commitment. R K Fashion Accessories projects finished-goods inventory of Rs 12.88 crore in FY2027, equal to 72.82% of total inventory, and Rs 14.58 crore in FY2028, or 71.44%. Finished-goods holding days are projected to increase from 62 in FY2026 to 102 in FY2027 and 103 in FY2028, even as raw-material days decline from 34 to 25 and then 24.

The projected stock build is attached to three Kolkata locations. The proposed business-to-business, or B2B, showroom in Ezra Street is expected to require about Rs 4 crore of finished-goods inventory, based on the stock held at the existing Bagree Market shop. The business-to-consumer, or B2C, showroom at Rash Behari Avenue started ground-floor operations in April 2026, and its first three additional retail floors are expected to need about Rs 2.40 crore of inventory, or Rs 80 lakh per floor. The expanded Bagree Market B2B shop is expected to require another Rs 2.50 crore.

R K Fashion Accessories says B2C retail requires ready inventory across designs, categories and price points for display and sale, and that inventory turnover is lower in B2C than B2B. The company also plans to deliver some bulk orders in batches rather than waiting until all items are ready for one delivery. The 107-day cycle therefore depends on the new and expanded locations maintaining the planned level of stock while generating the sales envisaged in the projections.

Can faster collections offset R K Fashion Accessories' larger stock requirement?

Faster collections are projected to reduce the cycle by only four days in FY2027, insufficient to offset the 27-day increase in inventory holding. Trade-receivable days are projected to decline from 30 days in FY2026 to 26 days in FY2027 and 25 days in FY2028. R K Fashion Accessories attributes the lower day count to planned collection measures and a greater B2C mix, where it says cash is generally realised immediately.

Trade receivables are projected to fall from Rs 3.42 crore in FY2026 to Rs 3.25 crore in FY2027, before increasing to Rs 6.63 crore in FY2028. R K Fashion Accessories attributes the FY2028 increase to full-year B2B operations and a larger base of wholesale customers receiving credit. The company expects the B2C sales mix to help keep receivable days at 25 despite the higher absolute balance.

The expansion follows a rise in the company's operating scale through FY2026. Revenue from operations rose from Rs 13.28 crore in FY2024 to Rs 17.77 crore in FY2025 and Rs 30.36 crore in FY2026. Net working-capital requirement moved from negative Rs 77.01 lakh in FY2024 to Rs 1.43 crore in FY2025 and Rs 7.48 crore in FY2026, equivalent to 24.65% of FY2026 revenue compared with 8.05% in FY2025.

Why will quicker supplier payments increase R K Fashion Accessories' funding need?

Quicker supplier payments are projected to add to R K Fashion Accessories' funding need because trade-payable days are expected to fall by 20 days, from 83 in FY2026 to 63 in FY2027. The company says it plans to use issue proceeds to optimise working capital and accelerate supplier payments, with the objective of obtaining better vendor terms. Trade-payable days are projected to decline again to 61 in FY2028.

The absolute payable balance is projected to increase initially because procurement is expected to support new showrooms. Trade payables are projected at Rs 8.47 crore in FY2027, compared with the Rs 3.88 crore balance cited for FY2026, before declining to Rs 6.39 crore in FY2028. R K Fashion Accessories links the FY2028 decline to earlier supplier payments, stabilised showroom operations and lower outsourced-processing payables after its planned plating facility starts operations.

R K Fashion Accessories expects the proposed Baruipur, Kolkata plating facility to complete and commence production by September 2027, subject to realisation of issue proceeds. The facility has an estimated cost of Rs 8.80 crore, comprising Rs 5.83 crore of civil work and Rs 2.97 crore of machinery. The company says in-house plating is expected to reduce transit time from outsourced work and hasten conversion of work-in-progress into finished goods, although licences including pollution-control consents, factory registration and fire approval remain to be obtained at appropriate stages.

How does R K Fashion Accessories propose to fund the larger requirement?

R K Fashion Accessories projects net working capital of Rs 12.34 crore in FY2027 and Rs 18.79 crore in FY2028, up from Rs 7.48 crore in FY2026. FY2027 current assets are projected at Rs 24.76 crore against current liabilities of Rs 12.42 crore. For FY2028, current assets are projected at Rs 33.37 crore and current liabilities at Rs 14.57 crore.

The disclosed FY2027 funding pattern includes Rs 1.81 crore from the fresh issue and Rs 10.53 crore from internal sources, with no bank borrowing shown. R K Fashion Accessories has also earmarked Rs 5.60 crore of issue proceeds specifically for inventory for proposed showrooms and stores. The FY2028 requirement of Rs 18.79 crore is shown as funded from internal sources, with no working-capital gap to be funded by the issue.

The company has allocated Rs 5.37 crore from issue proceeds for the proposed Ezra Street B2B showroom and Rs 2.48 crore for completing B2C stores in Kolkata. If net proceeds are insufficient or costs increase, R K Fashion Accessories says it may use internal accruals, general corporate-purpose funds or additional debt. General corporate-purpose use cannot exceed 15% of gross fresh-offer proceeds or Rs 10 crore, whichever is lower, under Securities and Exchange Board of India Issue of Capital and Disclosure Requirements regulations.

Conclusion

R K Fashion Accessories' projected 107-day working-capital cycle reflects a deliberate change in its operating model: larger finished-goods holdings for B2B and B2C locations, lower receivable days and shorter supplier-payment periods. The concentration of finished goods at 72.82% of projected FY2027 inventory means the outcome depends principally on the stocking and sales requirements of the expanded showroom network.

The next disclosed milestones are completion of the remaining Rash Behari Avenue retail work, commencement of the proposed Ezra Street showroom and the expected September 2027 start of the Baruipur plating facility. The projections remain conditional on issue-proceeds realisation, market and cost conditions, and the required statutory approvals for the proposed facility.