Vedant Poly Fabs’ payment shift drove a 160-day cycle

Vedant Poly Fabs Limited’s working-capital cycle increased to 160 days in FY2026 from 36 days in FY2025, chiefly because its supplier-credit period fell from 167 days to seven days. The change coincided with net working capital rising to Rs 46.2689 crore, or 40.2% of FY2026 revenue, as the company shifted towards prompt supplier payments.

Why did Vedant Poly Fabs’ working-capital cycle reach 160 days?

Vedant Poly Fabs’ 160-day working-capital cycle in FY2026 resulted primarily from the sharp reduction in supplier credit rather than slower customer collections. The working-capital cycle measures the time cash remains tied up in trade receivables and inventory after deducting the credit received from suppliers. In FY2026, the company reported 90 debtor days, 77 inventory days and seven creditor days, which produces a 160-day cycle.

The company’s creditor holding period fell by 160 days, from 167 days in FY2025 to seven days in FY2026. Over the same period, debtor days declined by 44 days from 134 to 90, while inventory holding increased by eight days from 69 to 77. The shorter receivables cycle therefore partly offset, but did not compensate for, the withdrawal of supplier-funded credit.

Vedant Poly Fabs reported a negative 44-day cycle in FY2024, when 151 creditor days exceeded the combined 108 days of receivables and inventory. The cycle then moved to 36 days in FY2025 and 160 days in FY2026. Jain Sonu & Associates, Chartered Accountants, certified the holding-period data on May 12, 2026, using 365 days for each year.

Why did Vedant Poly Fabs cut supplier-credit days to seven?

Vedant Poly Fabs says the reduction in creditor days was a strategic procurement decision intended to strengthen supplier relationships, diversify its supplier base and maintain uninterrupted availability of raw materials. Its trade payables principally relate to polymer granules, films, inks, adhesives, solvents and consumables used in flexible-packaging production.

The company said enhanced working-capital facilities from State Bank of India and HDFC Bank during FY2026 improved its liquidity and enabled timely and early supplier payments. As of March 31, 2026, cash-credit and overdraft borrowings totalled Rs 31.2494 crore, comprising Rs 14.9412 crore from HDFC Bank, Rs 15.9907 crore from State Bank of India and Rs 0.3175 crore of HDFC Bank overdraft.

The payment change replaced supplier credit with bank-funded liquidity. Trade payables declined from Rs 21.4047 crore in FY2025 to Rs 1.6793 crore in FY2026, a reduction of Rs 19.7254 crore, while inventory increased from Rs 15.4053 crore to Rs 24.2888 crore. Vedant Poly Fabs said its proactive payment approach was designed to support a wider vendor network and mitigate supply-chain disruption amid global economic and industry uncertainty.

How did the payment shift affect Vedant Poly Fabs’ funding requirement?

Vedant Poly Fabs’ net working-capital requirement increased to Rs 46.2689 crore in FY2026 from Rs 19.267 crore in FY2025. The company defines this measure as current assets minus current liabilities, determined without short-term borrowings and cash and cash equivalents. FY2026 current assets were Rs 54.997 crore and current liabilities were Rs 8.7281 crore.

The working-capital requirement rose faster than revenue across the three reported financial years. Revenue increased from Rs 49.5346 crore in FY2024 to Rs 81.0212 crore in FY2025 and Rs 115.1391 crore in FY2026, while net working capital rose from Rs 7.1471 crore to Rs 19.267 crore and then Rs 46.2689 crore. As a share of revenue, the requirement increased from 14.4% in FY2024 to 23.8% in FY2025 and 40.2% in FY2026.

Vedant Poly Fabs proposes to use Rs 17.593 crore of fresh-issue proceeds for incremental working-capital requirements during the year ended March 31, 2027. Its board approved FY2027 and FY2028 working-capital estimates on May 12, 2026. The FY2027 requirement is estimated at Rs 68.4943 crore, to be funded by Rs 32 crore of bank borrowings, Rs 18.8813 crore of internal sources and the proposed Rs 17.593 crore from issue proceeds.

What must happen for Vedant Poly Fabs’ cycle to reduce?

Vedant Poly Fabs projects that its working-capital cycle will decline to 146 days in FY2027 and 142 days in FY2028, while retaining a prompt supplier-payment approach. Creditor days are projected at five in each year, below the seven days reported in FY2026 and far below the 167 days reported in FY2025. The projected improvement therefore depends on collection and inventory assumptions rather than a return to extended supplier credit.

The FY2027 projection assumes debtor days will decline to 75 from 90 in FY2026, while inventory holding will reduce by one day to 76. For FY2028, debtor days are projected to remain at 75 and inventory holding is projected to decline to 72 days. Vedant Poly Fabs attributes the receivables assumption to customer-wise credit limits based on customer loyalty, market reputation and order size.

Trade receivables are nevertheless projected to rise from Rs 28.3754 crore in FY2026 to Rs 36.9205 crore in FY2027 and Rs 46.1507 crore in FY2028 as business scale increases. Total inventory is projected to increase by 53.53% to Rs 37.2897 crore in FY2027, followed by 18.84% growth to Rs 44.3169 crore in FY2028. The company projects raw-material holding at 19 days in FY2027 and 17 days in FY2028, compared with 21 days in FY2026.

Vedant Poly Fabs says these estimates are based on its business plan, internal management estimates, prevailing market conditions and commercial and technical factors. The company also states that the estimates have not been appraised by a bank or financial institution. If issue proceeds are insufficient or costs increase, it may use internal accruals or seek additional debt.

Conclusion

Vedant Poly Fabs’ FY2026 working-capital increase reflects a material change in its cash-conversion model alongside revenue growth. The move from 167 creditor days in FY2025 to seven days in FY2026 removed a major source of supplier financing, while inventory increased and debtor days improved. That combination lifted the cycle to 160 days and net working capital to Rs 46.2689 crore.

The next measure is delivery against the company’s FY2027 plan for a 146-day cycle, 75 debtor days and five creditor days while funding Rs 68.4943 crore of working-capital requirements. The outcome will depend on the stated assumptions around collections, inventory planning, supplier payments, market conditions, input costs and the availability of internal or debt funding if a shortfall arises.