SJP Ultrasonics’ net working capital more than doubles

SJP Ultrasonics’ net working capital more than doubled to Rs 18.21 crore in FY 2026 from Rs 6.91 crore in FY 2024. The increase reflected current assets growing to Rs 32.89 crore, led by Rs 16.43 crore of inventory, faster than current liabilities, which reached Rs 14.68 crore.

Why did SJP Ultrasonics’ net working capital more than double?

SJP Ultrasonics’ net working capital more than doubled because current assets increased faster than current liabilities over the three financial years ended March 31. Net working capital, calculated as current assets less current liabilities, rose from Rs 6.91 crore in FY 2024 to Rs 14.72 crore in FY 2025 and Rs 18.21 crore in FY 2026.

Current assets increased by Rs 17.88 crore between FY 2024 and FY 2026, from Rs 15.01 crore to Rs 32.89 crore. Current liabilities increased by Rs 6.58 crore over the same period, from Rs 8.10 crore to Rs 14.68 crore. This difference meant that the company had more funds tied up in operating assets after accounting for short-term obligations.

The largest annual increase occurred in FY 2025, when net working capital rose by Rs 7.81 crore from FY 2024. The FY 2026 increase was Rs 3.49 crore, but the reported requirement was 2.64 times the FY 2024 amount. Continued expansion in the requirement would depend on the pace at which inventory, receivables and advances are converted into cash relative to new current-asset commitments.

How did inventory and receivables affect the requirement?

Inventory was SJP Ultrasonics’ largest current asset in all three reported years and rose by Rs 7.64 crore over two years. Inventory increased from Rs 8.79 crore in FY 2024 to Rs 10.60 crore in FY 2025 and Rs 16.43 crore in FY 2026, accounting for about half of FY 2026 current assets of Rs 32.89 crore.

SJP Ultrasonics states that inventory management requires estimates of customer demand, potential orders and supply requirements. The company reported no past instance of overestimation or underestimation of inventory during the reporting period. However, it also states that an incorrect demand estimate could result in product shortages or excess inventory, either of which could affect sales, cash flow and liquidity.

Trade receivables rose sharply in FY 2025 before declining in FY 2026. Receivables increased from Rs 4.05 crore in FY 2024 to Rs 11.63 crore in FY 2025, then fell to Rs 9.78 crore in FY 2026. The FY 2026 balance was Rs 1.84 crore below FY 2025 but remained Rs 5.73 crore above FY 2024.

SJP Ultrasonics says most sales are based on customer orders and require assessment of customer creditworthiness and suitable payment terms. Delays in collections, bad debts or write-offs could limit its ability to procure raw materials and make payments when due. The company makes provisions for bad debts primarily on receivable ageing and customer-specific circumstances, while stating that timely customer payments cannot be assured.

How did short-term funding change as current assets expanded?

SJP Ultrasonics’ short-term borrowings increased from Rs 6 lakh in FY 2024 to Rs 56.23 lakh in FY 2025 and Rs 5.68 crore in FY 2026. The Rs 5.62 crore increase over two years shows that short-term borrowings became a larger component of current-liability funding as working-capital requirements expanded.

Other current-liability categories changed less sharply than short-term borrowings. Trade payables were Rs 1.83 crore in FY 2024, Rs 2.57 crore in FY 2025 and Rs 2.40 crore in FY 2026. Other current liabilities moved from Rs 4.78 crore in FY 2024 to Rs 5.25 crore in FY 2025 before returning to Rs 4.79 crore in FY 2026, while short-term provisions rose from Rs 1.42 crore to Rs 1.81 crore over the two-year period.

Current liabilities rose 81.2% between FY 2024 and FY 2026, compared with a 119.1% rise in current assets. As a result, additional short-term borrowing and other current liabilities did not fully offset the higher investment in inventory, receivables and short-term loans and advances. Short-term loans and advances rose from Rs 86.06 lakh in FY 2024 to Rs 5.93 crore in FY 2026.

SJP Ultrasonics states that additional debt could increase interest and repayment obligations and introduce covenants that limit access to operating cash flows. It also states that equity issuance could dilute shareholding. These are disclosed potential funding outcomes, while the prospectus identifies funding working-capital requirements as an object of the issue based on management estimates and assumptions.

What could increase SJP Ultrasonics’ working-capital requirement further?

Customer-payment practices could increase SJP Ultrasonics’ working-capital requirement because the company supplies products and services directly without taking advance payments or security deposits against orders. A payment delay, cancellation or default can therefore leave resources committed to an order while the related cash receipt remains uncertain.

SJP Ultrasonics identifies customer defaults, force majeure conditions and the non-availability of bank or financial-institution funding as factors that could alter future working-capital needs. It also identifies possible large cash outflows from environmental liabilities, litigation costs, adverse political conditions, foreign-exchange risks and liability claims. The company cautions that its future working-capital estimates may not indicate actual future requirements.

Cash and bank balances declined even as the current-asset base expanded. Cash and bank balances fell from Rs 1.08 crore in FY 2024 to Rs 1.03 crore in FY 2025 and Rs 47.89 lakh in FY 2026. For the FY 2026 pattern to persist without a further rise in net working capital, inventory would need to align with orders, receivables would need to be collected on time and short-term funding would need to remain available.

SJP Ultrasonics also estimates Rs 13.22 crore of capital expenditure for machinery intended to enhance its in-house manufacturing facility and production efficiency. The company had received third-party quotations but had not placed orders for 100% of the proposed machinery. It states that supplier pricing, regulatory and environmental factors could make actual costs exceed the management estimate and affect liquidity.

Conclusion

SJP Ultrasonics’ FY 2026 financial position shows that operating growth required a larger investment in current assets than could be offset by current liabilities. Inventory increased by Rs 7.64 crore between FY 2024 and FY 2026, receivables remained Rs 5.73 crore above their FY 2024 level, and short-term borrowings increased by Rs 5.62 crore as net working capital rose by Rs 11.30 crore.

The next point to watch is execution of the disclosed plan to use issue proceeds for working-capital requirements alongside the management-estimated Rs 13.22 crore machinery programme. The unresolved factors are the timing of customer payments without advances or security deposits, conversion of inventory into sales, and availability of short-term funding if requirements rise further.