Shellz India’s working-capital cycle reached 198 days in June

Shellz India Limited’s working-capital cycle reached 198 days for the three months ended June 30, 2026, calculated from 185 inventory days, 98 receivable days and 85 payable days. Shellz India plans to deploy Rs 23 crore of net IPO proceeds to cover its projected Fiscal 2027 incremental working-capital gap.

Why did Shellz India’s working-capital cycle reach 198 days?

Shellz India’s working-capital cycle reached 198 days in the three months ended June 30, 2026 because inventory and receivables remained outstanding longer than the credit received from suppliers. The cycle is calculated as inventory days plus trade receivable days minus trade payable days: 185 plus 98 minus 85. Shellz India calculated the June 2026 holding periods using 91 days, making them comparable with annual periods.

The calculated cycle increased from 154 days in Fiscal 2024 to 151 days in Fiscal 2025 and 172 days in Fiscal 2026. Inventory days increased in every period, from 126 days in Fiscal 2024 to 149 days in Fiscal 2025, 175 days in Fiscal 2026 and 185 days in the June 2026 quarter. Shellz India said the higher Fiscal 2026 inventory level reflected stock built before production scales at its new manufacturing facility.

Inventory days compare average inventory with cost of goods sold, while receivable days compare average trade receivables with revenue from operations. Payable days compare average trade payables with cost of goods sold. Shellz India defines cost of goods sold as materials consumed, changes in finished-goods and work-in-progress inventory, power and utilities, and rental costs.

What is tying up Shellz India’s operating cash?

Shellz India had Rs 129.50 crore of operational current assets and Rs 54.78 crore of current liabilities at June 30, 2026, resulting in working-capital requirements of Rs 74.71 crore. Inventory was the largest operating-current-asset component at Rs 69.26 crore, or about 53% of operational current assets. Trade receivables were Rs 53.27 crore, making stock turnover and customer collection material to the funding requirement.

Working-capital requirements rose from Rs 65.85 crore at March 31, 2025 to Rs 72.40 crore at March 31, 2026 and Rs 74.71 crore at June 30, 2026. June 2026 inventory of Rs 69.26 crore was below Rs 69.85 crore at March 2026, but trade receivables increased by Rs 5.30 crore to Rs 53.27 crore. Shellz India excluded advances towards machinery of Rs 23.48 crore from operational current assets at June 2026.

Shellz India funded Rs 45.52 crore, or about 61%, of its June 2026 working-capital requirement through borrowings from banks, financial institutions and non-banking financial companies. Secured loans from related parties supplied Rs 14.99 crore, while internal accruals and equity supplied Rs 14.21 crore, down from Rs 19.66 crore at March 2026. Cash and cash equivalents of Rs 52.42 lakh and short-term borrowings of Rs 58.61 crore were excluded from the working-capital presentation.

How will Rs 23 crore of IPO proceeds fund Shellz India’s gap?

Shellz India proposes to use Rs 23 crore of net IPO proceeds in Fiscal 2027 for incremental working-capital requirements. The board approved projected requirements for Fiscal 2027 and Fiscal 2028 in a resolution dated March 25, 2026. Shellz India projects total working-capital requirements of Rs 95.15 crore in Fiscal 2027 and Rs 115.43 crore in Fiscal 2028, compared with Rs 72.40 crore at March 31, 2026.

The Fiscal 2027 projection represents an increase of Rs 22.75 crore, or 31.42%, from Fiscal 2026, according to Shellz India’s working-capital schedule. The company projects Rs 46.66 crore of funding from banks, financial institutions and non-banking financial companies, Rs 12.07 crore of unsecured related-party loans, and Rs 13.41 crore of internal accruals and equity. The remaining Rs 23 crore is the stated gap proposed to be met from net IPO proceeds.

The proposed funding is linked to Shellz India’s planned shift of manufacturing from Delhi to Sonipat, Haryana, alongside manufacturing and distribution expansion. Shellz India says the funds are intended for sugar, cocoa-based ingredients, flour, edible oils, flavours, packaging and other raw materials, plus production, storage and distribution expenses. The company markets baked confectionery, chocolates, jellies, puddings and sugar candies under the Hugs and Tosca brands.

Which operating assumptions must Shellz India meet?

Shellz India’s projected funding plan requires materially shorter holding periods even as total working-capital requirements increase. Inventory days are projected to decline from 175 in Fiscal 2026 to 155 in Fiscal 2027 and 141 in Fiscal 2028. Trade receivable days are projected to decline from 79 to 60 and then 49, while trade payable days are expected to contract from 82 to 53 and then 34.

Those assumptions produce calculated working-capital cycles of 162 days in Fiscal 2027 and 156 days in Fiscal 2028. The Fiscal 2027 calculation is 10 days below Fiscal 2026’s 172 days, while the Fiscal 2028 calculation is 16 days lower. The lower cycles depend on improved production planning and throughput at Sonipat, faster collections and changes in procurement terms, rather than extended supplier credit.

Shellz India said inventory efficiency is expected to improve as its new facility gains production scale and operating efficiency. The company manufactured more than 300 stock-keeping units, or SKUs, across confectionery and snack categories as at March 2026. Minimum order quantities for printed laminates, cartons and jars, together with summer jellies, winter chocolate products and all-weather baked snacks, require inventory for seasonal production and distribution availability.

Shellz India expects receivable days to decline through higher throughput from existing distributors, shorter collection cycles in private labelling and e-commerce, and improved credit discipline. The company expects payable days to decline because it plans more direct procurement from manufacturers and imports of cocoa products, specialty fats and gelling agents, which can require shorter payment terms, including advance payments and letters of credit. These assumptions mean projected cycle improvement must be achieved despite reduced supplier-payment time.

Conclusion

Shellz India’s Rs 23 crore working-capital proposal addresses an operating cycle in which inventory and receivables absorbed Rs 122.53 crore at June 30, 2026, compared with Rs 34.12 crore of trade payables. The June 2026 calculated cycle of 198 days was above the 172-day Fiscal 2026 calculation, while working-capital requirements increased to Rs 74.71 crore.

The next development to watch is whether Shellz India delivers its Fiscal 2027 and Fiscal 2028 holding-period assumptions during the Sonipat transition. Shellz India projects inventory days of 155 and 141, receivable days of 60 and 49, and payable days of 53 and 34; CARE Ratings Limited has been appointed to monitor gross-proceeds utilisation quarterly until full use.