TNA Solutions projects 286-day cycle as export receivables lengthen

TNA Solutions Limited projects a 286-day working-capital cycle in FY 2027 and FY 2028, requiring 200 inventory days and 120 receivable days against 34 payable days. Its working-capital requirement is projected at Rs 109.7918 crore in FY 2028, while export customers represented 81.40% of trade receivables in FY 2026.

Why is TNA Solutions projecting a 286-day working-capital cycle?

TNA Solutions projects a 286-day working-capital cycle by adding 200 inventory days and 120 trade-receivable days and deducting 34 trade-payable days. The company defines working-capital requirement as inventory, trade receivables, other current assets and short-term loans and advances, net of trade payables, other current liabilities and short-term provisions. Operating cash and cash equivalents are excluded from the calculation.

The FY 2027 and FY 2028 assumption is below the 295 days reported in FY 2026 but above the 253 days in FY 2024 and 213 days in FY 2025. The change from FY 2026 requires a one-day reduction in inventory holding and an eight-day reduction in receivable days, while the supplier-payment period remains at 34 days.

The 286-day projection depends on inventory remaining near 200 days and collections improving from the FY 2026 level of 128 days. It also assumes TNA Solutions continues to pay suppliers in 34 days, compared with 81 days in FY 2024. A longer inventory or receivable period, without a corresponding increase in payable days, would increase the cash tied up in operations.

Why will TNA Solutions hold about 200 days of inventory?

TNA Solutions expects to hold about 200 days of inventory because it procures fabric and other materials in advance for existing and expected customer orders. The company says stock is held to avoid production delays from procurement and supplier lead times, while finished products can remain in inventory until final quality approval and dispatch.

Inventory increased from Rs 18.5179 crore in FY 2024 to Rs 24.6398 crore in FY 2025 and Rs 36.0552 crore in FY 2026. It is estimated at Rs 40.1842 crore in FY 2027 and projected at Rs 55.5426 crore in FY 2028. The FY 2028 balance would be Rs 19.4874 crore above FY 2026 even though the assumed holding period is one day lower than the FY 2026 actual level.

The inventory plan is linked to an increase in manufacturing capacity. Existing installed capacity rose from 13,10,506 metres in FY 2024 to 24,98,698 metres in FY 2025 and 52,23,386 metres in FY 2026. Total installed capacity is estimated at 87,63,264 metres in FY 2027, including 35,39,878 metres of new capacity, with commercial production from the new facility expected from April 2027.

How are export receivables lengthening TNA Solutions' cash cycle?

TNA Solutions says export-led business growth was the main reason trade-receivable days rose to 128 in FY 2026 from 78 days in FY 2025 and 40 days in FY 2024. Export customers accounted for 56.91% of total trade receivables in FY 2025 and 81.40% in FY 2026. The company attributes the longer collection period to commercially agreed credit periods for export customers.

Trade receivables rose from Rs 3.9181 crore in FY 2024 to Rs 17.3871 crore in FY 2025 and Rs 36.5384 crore in FY 2026. They are estimated at Rs 39.2041 crore in FY 2027 and projected at Rs 54.1879 crore in FY 2028. The FY 2028 estimate is Rs 17.6495 crore above FY 2026 despite assuming that receivable days improve by eight days to 120.

The 120-day receivable assumption is based on regular collection follow-up and the expectation that export sales will remain significant. TNA Solutions does not state that it will shorten commercially agreed export credit terms. The projected 286-day cycle therefore requires receivables to be collected within 120 days as export-linked business expands.

How will TNA Solutions fund its higher working-capital requirement?

TNA Solutions projects working-capital requirement of Rs 79.415 crore in FY 2027 and Rs 109.7918 crore in FY 2028, compared with Rs 74.1672 crore in FY 2026. The FY 2028 requirement is Rs 35.6246 crore higher than FY 2026, reflecting projected growth in inventory, receivables and other current assets after current liabilities are deducted.

The company proposes to deploy Rs 20 crore of initial public offering, or IPO, proceeds for working capital, comprising Rs 4 crore in FY 2027 and Rs 16 crore in FY 2028. The FY 2028 funding plan also includes Rs 37.50 crore of short-term borrowings and Rs 56.2918 crore of internal accruals, meaning funds generated within the business.

The funding pattern depends on TNA Solutions generating the projected internal accruals and obtaining the planned short-term borrowings. The company states that any shortfall in funding requirements would be met through internal accruals or loans. Its estimated and projected working-capital figures are based on management assumptions, reviewed by the auditor and certified by ATK & Associates, Chartered Accountants, on September 16, 2026.

What other balances could change TNA Solutions' funding need?

TNA Solutions projects other current assets, including short-term loans and advances, at Rs 18.0626 crore in FY 2028, compared with Rs 13.2559 crore in FY 2026. These items include prepaid expenses, statutory recoverables, supplier advances and other advances for goods and services to be received. Their balance can be affected by procurement timing, operational advances and the recovery or adjustment of statutory balances.

Trade payables are projected to increase to Rs 9.4422 crore in FY 2028 from Rs 6.1539 crore in FY 2026, while payable days remain at 34 in both periods. Other current liabilities are projected at Rs 3.6577 crore and short-term provisions at Rs 4.9015 crore in FY 2028, versus Rs 2.4203 crore and Rs 3.1081 crore in FY 2026. TNA Solutions says payable timing is based on agreed supplier terms and the need for regular material supply.

TNA Solutions also plans to purchase plant and machinery costing Rs 1.441 crore in the last quarter of FY 2027. The company says the machinery will require installation, testing and trial runs, and production from it has been included from FY 2028. That timetable links the FY 2028 working-capital projection to the planned expansion in production and business volume.

Conclusion

TNA Solutions' projected 286-day working-capital cycle shows that its expansion plan requires funding for roughly 200 days of inventory and 120 days of customer credit, partly offset by 34 days of supplier credit. The projected requirement reaches Rs 109.7918 crore in FY 2028 because inventory, receivables and other operating balances are expected to rise with capacity and business activity.

The key disclosed assumptions to watch are the reduction of receivable days from 128 to 120, inventory remaining at 200 days and the planned use of Rs 56.2918 crore of internal accruals in FY 2028. TNA Solutions has also disclosed Rs 20 crore of IPO proceeds for working capital and states that funding shortfalls would be met through internal accruals or loans.