VANS Electroengineerings assigns Rs 25 crore to working capital

VANS Electroengineerings Limited plans to use Rs 25 crore of IPO proceeds for working capital, with Rs 15 crore scheduled for FY 2026-27 and Rs 10 crore for FY 2027-28. Its management estimates project net working-capital requirements rising from Rs 11.1506 crore in FY 2025-26 to Rs 37.1885 crore in FY 2027-28, without independent appraisal.

Why is VANS Electroengineerings assigning Rs 25 crore to working capital?

VANS Electroengineerings is assigning Rs 25 crore to longer-term working-capital requirements rather than a specified capital project. The prospectus lists working capital and general corporate purpose as the two stated objects of the fresh issue, while the general-corporate-purpose amount remains subject to finalisation after the issue price is determined.

Working capital is the funding needed for current assets after current liabilities. VANS Electroengineerings says its expanding operations require more funding for inventory, trade receivables, trade payables and related operating needs. Revenue from operations increased from Rs 2.5957 crore in FY 2023-24 to Rs 13.5624 crore in FY 2024-25 and Rs 22.843 crore in FY 2025-26, a stated compound annual growth rate of 196.65% for FY 2024-2026.

The proposed deployment is Rs 15 crore in FY 2026-27 and Rs 10 crore in FY 2027-28, with the latter amount intended to be used by December 31, 2027. VANS Electroengineerings says the timing may change depending on completion of the issue, market conditions, its board’s assessment of economic trends, business needs and competition.

How much are receivables and inventory projected to grow?

VANS Electroengineerings projects that receivables and inventory will account for most of the increase in current assets through FY 2027-28. Trade receivables are projected to rise from Rs 13.1416 crore in FY 2025-26 to Rs 28.5271 crore in FY 2027-28, while inventory is projected to increase from Rs 2.2008 crore to Rs 13.9822 crore.

VANS Electroengineerings attributes the receivables forecast to expected revenue growth, business expansion and continued credit to railway customers. Debtor days, which measure the estimated collection period for trade receivables, are projected at 94 days in FY 2026-27 and 99 days in FY 2027-28, compared with 108 days in FY 2025-26. The forecast therefore depends on collections remaining within that projected range as sales increase.

Inventory days are projected to rise from 56 days in FY 2025-26 to 64 days in FY 2026-27 and 80 days in FY 2027-28. VANS Electroengineerings says it expects to hold more raw materials and components as it expands manufacturing capacity and its product range, while maintaining stock to meet order-execution schedules and avoid supply-chain disruption.

How will VANS Electroengineerings finance the working-capital requirement?

VANS Electroengineerings projects a mix of IPO proceeds and short-term borrowings to finance the FY 2026-27 and FY 2027-28 requirements. The FY 2026-27 funding pattern shows Rs 15 crore of IPO proceeds and Rs 12.714 crore of short-term borrowings, while FY 2027-28 shows Rs 10 crore of IPO proceeds and Rs 27.1885 crore of short-term borrowings.

This differs from the historical funding pattern presented for FY 2023-24 to FY 2025-26, when the table attributes the listed net working-capital requirements to internal accruals. Actual short-term borrowings were Rs 5.1665 crore in FY 2023-24, declined to Rs 1.20 crore in FY 2024-25 and increased to Rs 2.5489 crore in FY 2025-26. VANS Electroengineerings attributes the FY 2025-26 increase to larger operations and a business cycle weighted towards the second half.

Trade payables, meaning amounts owed to suppliers, are projected to increase from Rs 3.2499 crore in FY 2025-26 to Rs 5.799 crore in FY 2026-27 before declining to Rs 4.9392 crore in FY 2027-28. Creditor days are projected at 35 days and 33 days in the two forecast years, against 46 days in FY 2025-26, reflecting the company’s stated intention to make timely supplier payments to support material availability.

What assumptions support the VANS Electroengineerings projections?

VANS Electroengineerings states that its FY 2026-27 and FY 2027-28 working-capital projections are management estimates of future financial performance. The assumptions include the order book, future events and management actions that may not occur; the board approved the estimates, and H H R & Associates certified the working-capital statement on September 9, 2026.

The company reported an order book of Rs 50.6185 crore as of September 5, 2026 and cites it as a basis for higher FY 2026-27 working-capital needs. For FY 2027-28, VANS Electroengineerings identifies an expanded product portfolio, including single-bottle circuit breakers, earthing switches and multipliers, wider customer and vendor approvals, and higher operational throughput as support for expected revenue growth.

The projections are also affected by the timing of revenue. VANS Electroengineerings reported Rs 17.2072 crore of FY 2025-26 revenue in the second half, equal to 75.33% of that year’s Rs 22.843 crore revenue from operations. The company says this second-half concentration contributed to year-end receivables of Rs 13.1416 crore and debtor days of 108 days in FY 2025-26.

What oversight and flexibility apply to the IPO proceeds?

No bank, financial institution or independent third-party organisation has appraised VANS Electroengineerings’ stated use of proceeds. The company says the funding requirements rely on available quotations and management estimates and may change with interest-rate structures, financial condition, commercial conditions, external circumstances, business operations or strategy.

If actual use for an object is lower than planned, any balance may be used for general corporate purposes, subject to a ceiling of 15% of gross proceeds or Rs 10 crore, whichever is lower. A funding shortfall may be met through internal accruals, borrowings or unsecured loans, and VANS Electroengineerings may use overdraft, cash-credit, term-loan or unsecured facilities if the IPO is delayed.

Because the issue size will not exceed Rs 50 crore, a monitoring agency is not required under Regulation 262(1) of the Securities and Exchange Board of India’s Issue of Capital and Disclosure Requirements Regulations. VANS Electroengineerings says its audit committee will monitor use of net proceeds through half-yearly disclosures, while annual statements will cover funds used for purposes other than those stated until the proceeds are fully utilised.

Conclusion

VANS Electroengineerings’ Rs 25 crore working-capital allocation is tied to a projected increase in net working-capital requirements of Rs 26.0384 crore between FY 2025-26 and FY 2027-28. Receivables and inventory drive much of that increase, while projected short-term borrowings rise to Rs 27.1885 crore in FY 2027-28.

The next disclosed milestone is deployment of the Rs 10 crore scheduled for FY 2027-28 by December 31, 2027. VANS Electroengineerings may revise timing or allocations in accordance with applicable requirements, while a variation in the issue objects requires shareholder approval through a special resolution under Section 27 of the Companies Act, 2013.