Raksan’s Working-Capital Gap Is Projected to Triple by FY28

Raksan Transformers Limited projects a working-capital gap of Rs 120.02 crore for FY28, nearly three times the Rs 44.83 crore reported for FY26. The estimate reflects projected receivables of Rs 131.78 crore, inventory of Rs 51.91 crore and shorter supplier-credit periods, after more than 50% of FY26 revenue came from government customers.

Why is Raksan’s working-capital gap projected to triple by FY28?

Raksan’s working-capital gap is projected to rise from Rs 44.83 crore at 31 March 2026 to Rs 120.02 crore at 31 March 2028. Working-capital gap means total current assets less total current liabilities, representing the operating funding required after short-term obligations are deducted. Raksan reported gaps of Rs 8.86 crore at 31 March 2024 and Rs 24.70 crore at 31 March 2025, before the FY28 estimate.

The projected increase results from current assets rising faster than current liabilities. Raksan estimates total current assets of Rs 187.81 crore for FY28, compared with Rs 101.32 crore in FY26, while current liabilities are forecast to increase to Rs 67.79 crore from Rs 56.48 crore. Trade receivables account for Rs 58.57 crore of the Rs 86.49 crore increase in current assets between FY26 and FY28, while inventory accounts for Rs 27.00 crore.

Raksan says the projected gap will increase alongside expected growth in operations and revenue. Its transformer business is project- and order-based, so larger order volumes and expanded manufacturing capacity are expected to require more materials before production and more funds tied up while customer payments are pending. The FY28 projection therefore depends on the company achieving the operational growth assumed in its estimates.

Why are receivables Raksan’s largest projected funding need?

Raksan expects receivables to remain the largest component of its working-capital requirement because transformer orders involve inspection, testing and acceptance before final approval. Raksan recorded FY26 revenue from operations of Rs 363.11 crore, of which more than 50% came from government customers. Trade receivables stood at Rs 73.21 crore on 31 March 2026, equivalent to a receivable cycle of about 74 days.

Raksan’s debtor days rose to 74 days in FY26 from 59 days in FY25 and 46 days in FY24. The company attributes the longer cycle to multi-level inspection, testing, acceptance procedures and, in some cases, third-party inspection after transformer delivery. The disclosure identifies government customers as contributing more than half of FY26 revenue, but does not separately state their collection period relative to non-government customers.

Raksan estimates debtor days of 80 for both FY27 and FY28. The company plans to expand its power and distribution transformer portfolio, strengthen its presence in government business and increase its non-government corporate customer base, where it may need to offer credit terms to remain competitive. On these assumptions, trade receivables are projected to rise to Rs 98.97 crore in FY27 and Rs 131.78 crore in FY28.

How will inventory and faster supplier payments widen the gap?

Raksan expects inventory to increase as its expansion requires a higher minimum stock level for raw materials, work in progress and finished goods. Inventory holding days were 51 in FY24, fell to 29 in FY25 and were 32 in FY26. The company estimates inventory days of 37 in FY27 and 40 in FY28, taking inventory from Rs 25.91 crore in FY26 to Rs 36.11 crore and Rs 51.91 crore, respectively.

Raksan also expects supplier credit to cover a smaller share of operating requirements. Trade payable days declined from 70 in FY24 to 57 in FY25 and 55 in FY26, and are projected at 50 days in FY27 and 46 days in FY28. Although trade payables are forecast to increase from Rs 43.52 crore in FY26 to Rs 59.33 crore in FY28, that increase is smaller than the projected rise in receivables over the same period.

Raksan says it intends to settle supplier dues faster to negotiate rates, obtain cash discounts and support uninterrupted supplies. The relevant transformer inputs include cold-rolled grain-oriented steel, copper, aluminium, transformer oil and core components, which the company says are subject to price volatility and supply constraints. Raksan recognised delayed-payment interest for micro, small and medium enterprise vendors of Rs 24,000 in FY26, compared with Rs 23.66 lakh in FY25 and Rs 11.70 lakh in FY24.

How does Raksan plan to fund the FY28 requirement?

Raksan plans to deploy Rs 35 crore of net offer proceeds for working-capital requirements and fund the balance through borrowings when required. The board considered the working-capital object at its meeting on 3 August 2026. The deployment schedule provides Rs 27 crore in FY27 and Rs 8 crore in FY28, rather than funding the entire projected working-capital gap from offer proceeds.

The funding pattern estimates Rs 56.08 crore from short-term borrowings and internal accruals in FY27, alongside Rs 27 crore of offer proceeds, to cover the projected Rs 83.08 crore gap. For FY28, it estimates Rs 112.02 crore from short-term borrowings and internal accruals plus Rs 8 crore of offer proceeds, equalling the Rs 120.02 crore projection. Continued access to internal cash generation and short-term funding must therefore accompany the proposed offer allocation.

Raksan states that none of the offer objects has been appraised by a bank, financial institution or independent third party. If offer proceeds are insufficient or actual requirements rise, the company may use internal accruals, additional debt, borrowings or unsecured loans. ACER Credit Rating Private Limited has been appointed as monitoring agency for gross-proceeds utilisation, with reporting to the Audit Committee and stock exchanges on a half-yearly basis.

What could change Raksan’s FY28 working-capital projection?

Raksan’s FY28 estimate depends on revenue and operations growing as projected while debtor days stay near 80, inventory days reach 40 and creditor days fall to 46. Changes in customer credit terms, raw-material lead times, production requirements or supplier pricing could alter the funds tied up in current assets. The company specifically links the forecast to larger order volumes, longer customer credit terms and higher transformer-manufacturing capacity.

The company expects production at its proposed manufacturing unit to begin in December 2026. That schedule matters because the working-capital projection assumes the planned expansion in manufacturing operations, while the company says its project requirements are based on management estimates and available quotations. It also states that cost escalation or a shortfall in proceeds may require internal accruals, borrowings or unsecured loans.

Conclusion

Raksan’s projected Rs 120.02 crore FY28 gap reflects a widening difference between operating assets and current liabilities. Receivables are expected to rise as the collection cycle moves from 74 days in FY26 to 80 days, while inventory rises and payable days decline from 55 to 46. The result is a projected requirement that is nearly three times the FY26 gap.

The next disclosed operating milestone is the planned December 2026 start of production at the new manufacturing unit, followed by Rs 27 crore of scheduled working-capital deployment in FY27. The relevant measures to track are whether receivable days, inventory holdings and supplier-payment terms follow the stated assumptions, and whether short-term borrowings and internal accruals provide the Rs 56.08 crore projected for FY27 and Rs 112.02 crore for FY28.