Mangal Electrical Unit IV spending trails its IPO schedule

Mangal Electrical Industries Limited had deployed Rs 12.06 crore of the Rs 87.86 crore allocated from its initial public offering, or IPO, for the Unit IV expansion by September 30, 2026. CARE Ratings Limited said this was behind the FY26 deployment plan and may delay implementation and the project’s intended operational benefits.

How much has Mangal Electrical spent on Unit IV expansion?

Mangal Electrical had used Rs 12.06 crore for capital expenditure, including civil works, for the Unit IV facility expansion as of September 30, 2026. This left Rs 75.80 crore unutilised from the Rs 87.86 crore allocation disclosed in the offer document, according to the monitoring agency’s report for Q2FY27.

Spending accelerated in Q2FY27, when Mangal Electrical deployed Rs 7.30 crore, mainly for vendor payments related to machinery procurement using fixed-deposit proceeds. The company had spent Rs 4.76 crore at the start of the quarter, so the Q2FY27 outlay represented more than half of cumulative Unit IV expenditure at September 30, 2026.

The Unit IV project was one of five stated uses for the Rs 400.00 crore fresh issue completed in FY26. The other allocations were Rs 101.27 crore for repayment or prepayment of borrowings, Rs 122.00 crore for working-capital requirements, Rs 64.84 crore for general corporate purposes and Rs 24.03 crore for issue-related expenses.

Why is Mangal Electrical’s Unit IV spending behind schedule?

Mangal Electrical said the delay in capital expenditure arose because quotations were being finalised and were awaiting approval by a committee appointed by the board of directors. The company constituted the Project Procurement Committee on January 28, 2026 to finalise quotations and appoint vendors for the capex programme described in its prospectus.

The offer document scheduled Rs 49.93 crore of Unit IV capex for FY26 and Rs 37.93 crore for FY27. Against the FY26 schedule alone, the Rs 12.06 crore used by Q2FY27 was Rs 37.87 crore lower, showing that the shortfall relates to the timing of deployment rather than a revised allocation for the project.

CARE Ratings reported no deviation from the stated IPO objects and no change in the means of finance for them. However, it identified the slower capex deployment as an unfavourable event affecting the object’s viability, stating that it may adversely affect the implementation timeline and delay the stated objective and operational benefits.

The monitoring agency did not provide a revised completion date or quantify the delay in days or months as of September 30, 2026. Its implementation table recorded the FY26 portion of Unit IV capex as ongoing, with the precise delay not ascertainable, while the FY27 component was also described as ongoing.

Where are Mangal Electrical’s unspent IPO proceeds held?

Mangal Electrical had Rs 77.50 crore of unutilised IPO proceeds deployed in 16 fixed deposits with HDFC Bank at September 30, 2026. The deposits comprised fifteen placements of Rs 5.00 crore each and one placement of Rs 2.50 crore, with maturity dates ranging from October 12, 2026 to June 30, 2027.

The disclosed annual returns on those deposits ranged from 4.25% to 6.15%. Seven Rs 5.00 crore deposits maturing on November 29, 2026 carried a 6.15% return, while several Rs 5.00 crore deposits due on June 30, 2027 carried 6.00%; the Rs 2.50 crore deposit due on December 31, 2026 carried 4.25%.

The Rs 77.50 crore deposit total reflected Rs 75.80 crore of unspent Unit IV capex funds and Rs 3.09 crore remaining for debt repayment, offset by a Rs 1.39 crore working-capital over-utilisation reported earlier. CARE Ratings said the working-capital objective had been completed by Q3FY26 despite that over-utilisation.

Mangal Electrical subsequently reimbursed Rs 1.39 crore from its cash-credit account, applying Rs 0.28 crore to the repayment objective and Rs 1.11 crore to capex. CARE Ratings noted that no IPO proceeds were credited to the cash-credit account during Q4FY26 and that multiple debits and credits in that account resulted in commingling of funds.

How does the Unit IV delay compare with Mangal Electrical’s other IPO objects?

Mangal Electrical had deployed Rs 98.18 crore toward repayment or prepayment of borrowings by September 30, 2026, including Rs 0.20 crore during Q2FY27. This was closer to the Rs 101.27 crore allocation than Unit IV’s Rs 12.06 crore utilisation was to its Rs 87.86 crore allocation, although the FY26 debt-repayment schedule still had Rs 3.09 crore outstanding.

General corporate purposes of Rs 64.84 crore were completed by Q3FY26, while issue-related expenses of Rs 24.03 crore were completed in Q1FY27. Working-capital utilisation reached Rs 123.39 crore against the disclosed Rs 122.00 crore allocation, producing the Rs 1.39 crore over-utilisation that was subsequently reimbursed through the cash-credit account.

CARE Ratings said the stated use of proceeds remained consistent with the offer document, despite the working-capital over-utilisation and the Unit IV timing slippage. For capex monitoring, it relied on a chartered accountant certificate dated October 13, 2026, bank statements, Mangal Electrical’s declaration and sample invoices, and stated that it does not independently audit or verify the information received.

What operating results accompanied Mangal Electrical’s capex delay?

Mangal Electrical reported revenue from operations of Rs 294.4062 crore for the half year ended September 30, 2026, compared with Rs 243.9883 crore in the corresponding half year of 2025. Manufacturing and trading of electrical transformers, cold rolled grain oriented electrical steel and related electrical items contributed Rs 277.2600 crore, while engineering, procurement and construction, or EPC, contributed Rs 17.1462 crore.

Manufacturing and trading revenue increased from Rs 228.8090 crore in the previous corresponding half year, while EPC revenue rose from Rs 15.1793 crore. However, EPC recorded a Rs 0.2743 crore loss before finance cost, depreciation, amortisation and other income in the six months to September 2026, compared with a Rs 2.5892 crore profit a year earlier.

Mangal Electrical’s shares were listed on the National Stock Exchange of India and BSE on August 28, 2025. CARE Ratings recorded a share price of Rs 234.50 on October 26, 2026 against the Rs 561 issue price, while the board said the post-listing movement reflected market conditions and investor sentiment and did not affect operational performance or its ability to execute the business plan and IPO objectives.

Conclusion

Mangal Electrical’s Rs 12.06 crore of Unit IV spending by September 30, 2026 was substantially below the Rs 49.93 crore planned for deployment by FY26, leaving Rs 75.80 crore unused from the Rs 87.86 crore allocation. CARE Ratings reported no deviation in IPO objects, but said the slower deployment could push back implementation and the project’s operational benefits.

The next point to watch is the Project Procurement Committee’s approval of quotations and appointment of vendors, which Mangal Electrical identified as the cause of the delay. The offer document allows use of net proceeds to move into a subsequent fiscal depending on business needs and other factors, subject to applicable compliance requirements for variations.