Swastika Infra allocates Rs 90 crore for working capital

Swastika Infra plans to deploy Rs 90 crore of initial public offering, or IPO, net proceeds in Fiscal 2027 for incremental working capital, after using Rs 38.09 crore from its pre-IPO placement for the same purpose. Projected retention money of Rs 230.14 crore makes contract-linked cash requirements a central part of the funding plan.

Why is Swastika Infra allocating Rs 90 crore for working capital?

Swastika Infra is allocating Rs 90 crore for working capital because its Fiscal 2027 plan projects net working-capital requirements of Rs 415.97 crore, up from Rs 255.63 crore in Fiscal 2026. Engineering, procurement and construction, or EPC, contracts require funding for materials, receivables, client retention money, margin deposits and work completed but not yet billable.

The Rs 90 crore allocation is to come from net proceeds of the fresh issue, whose gross proceeds are up to Rs 129 crore after the pre-IPO placement reduced the revised fresh-issue size. The offer for sale will not provide proceeds to Swastika Infra. The balance of net proceeds is proposed for general corporate purposes, which cannot exceed 25% of gross fresh-issue proceeds under the Securities and Exchange Board of India, or SEBI, Issue of Capital and Disclosure Requirements, or ICDR, Regulations.

Working capital was also the disclosed use of the pre-IPO funds. Swastika Infra placed 24,24,242 equity shares with 78 allottees for Rs 40 crore, incurred Rs 1.91 crore of placement expenses and recorded Rs 38.09 crore of net proceeds. The company says those proceeds have been used for working-capital requirements, producing identified working-capital funding of Rs 128.09 crore from the placement and IPO proceeds.

The Fiscal 2027 schedule calls for the Rs 90 crore to be deployed in that fiscal rather than into a separately identified plant, acquisition or fixed-asset project. Swastika Infra says its estimates are based on management's business plan, market conditions and commercial considerations, and have not been appraised by a bank, financial institution or independent agency.

How much of Swastika Infra's working capital is retention money?

Swastika Infra projects retention money of Rs 230.14 crore in Fiscal 2027, equal to about 42% of estimated current assets of Rs 549.16 crore. Retention money is an amount clients retain under contractual terms and release when contractual requirements are met. The Fiscal 2027 estimate is Rs 70.12 crore above the Rs 160.02 crore reported in Fiscal 2026 and is the largest projected current-asset item.

Trade receivables are projected to rise to Rs 147.53 crore in Fiscal 2027 from Rs 114.98 crore in Fiscal 2026, while margin money is projected to rise to Rs 57.53 crore from Rs 35.55 crore. Margin money comprises fixed deposits maintained against bank facilities used for guarantees and letters of credit. Unbilled revenue, meaning work carried out but not yet due for billing under contract milestones, is also projected at Rs 57.53 crore.

The Fiscal 2027 model projects current assets to increase by Rs 153.65 crore from Fiscal 2026 while current liabilities decline by Rs 6.68 crore. Receivables, retention money and unbilled revenue together total Rs 435.20 crore, or about 79% of projected current assets, concentrating the forecast in customer billing, contractual release and completed-work balances.

Swastika Infra also uses bank funding alongside equity and internal accruals. As of July 31, 2026, current and non-current borrowings totalled Rs 128.34 crore, while non-fund-based facilities totalled Rs 218.10 crore. Non-fund-based facilities support instruments such as bank guarantees and letters of credit without immediate cash borrowing, although they can require margin deposits.

What assumptions must hold for Swastika Infra's Fiscal 2027 working-capital plan?

Swastika Infra's Fiscal 2027 model assumes retention money remains outstanding for 120 days of EPC-contract revenue, unchanged from Fiscal 2026. The holding period increased from 83 days in Fiscal 2024 to 106 days in Fiscal 2025 and 120 days in Fiscal 2026, which Swastika Infra attributes to differing customer terms and its contract mix.

The forecast assumes trade-receivable days reduce to 75 in Fiscal 2027 from 83 in Fiscal 2026, although they remain above the 55 days reported in Fiscal 2024. Swastika Infra says Fiscal 2026 receivable days rose because sales contribution was relatively higher in the fourth quarter. A lower holding period does not prevent receivables from rising in rupee terms when the operating base increases.

Bank-guarantee and letter-of-credit arrangements also affect cash needs. Performance bank guarantees can equal up to 10% of project tender value and may continue for about 12 months after completion under defect-liability clauses. Swastika Infra states it maintains fixed deposits equal to 10% to 20% of relevant guarantee amounts as margin money, while letters of credit have tenures of 60 to 90 days and use a similar margin range.

The Fiscal 2027 model raises margin-money holding to 30 days of EPC revenue from 27 days in Fiscal 2026, citing higher collateral margins provided to banks. It also assumes trade-payable days fall to 60 from 91, as Swastika Infra seeks better credit terms for subcontractors and suppliers. Lower supplier credit would increase the funding requirement even if customer collections improve.

The projected funding mix comprises Rs 112 crore of current borrowings, Rs 38.09 crore of pre-IPO proceeds, Rs 90 crore of IPO net proceeds and Rs 175.88 crore of internal accruals or equity. Those sources total the estimated Rs 415.97 crore requirement, so the plan depends on bank facilities, internal accruals, contract execution and the timing of billing, retention releases and supplier payments.

How will Swastika Infra oversee use of the IPO proceeds?

Swastika Infra has appointed CRISIL Ratings Limited as monitoring agency under Regulation 41 of the SEBI ICDR Regulations. The company says the monitoring agency's reports will be placed before the Audit Committee, while use of gross proceeds and any interim deployment will be disclosed in its financial statements for periods in which proceeds remain unutilised.

Swastika Infra also says it will report quarterly to stock exchanges on any deviation from the stated fresh-issue objects and on category-wise variations in use of gross proceeds. Under Sections 13(8) and 27 of the Companies Act, 2013, changing the objects requires shareholder authorisation through a special resolution by postal ballot.

Conclusion

Swastika Infra's disclosed IPO use is principally a working-capital funding plan: Rs 128.09 crore of pre-IPO and IPO funding is identified against a Fiscal 2027 requirement of Rs 415.97 crore. Retention money of Rs 230.14 crore, together with receivables and unbilled revenue, explains why cash remains committed to EPC contract execution.

The next disclosed milestone is deployment of Rs 90 crore of IPO net proceeds during Fiscal 2027. Swastika Infra has stated that CRISIL Ratings Limited will monitor utilisation, while quarterly disclosures must identify deployment and deviations; a change in the stated objects would require shareholder approval under the Companies Act, 2013.