Mihika earmarks Rs 80.65 crore for FY27 working capital

Mihika Industries Limited plans to deploy up to Rs 80.65 crore of rights-issue net proceeds for working capital in fiscal 2027, based on management’s estimate that current assets will rise to Rs 91.0178 crore at March 31, 2027 from Rs 3.9148 crore at March 31, 2026. The estimate includes Rs 55.4458 crore of trade receivables and Rs 20.0031 crore of inventory.

How will Mihika use its rights issue proceeds?

Mihika proposes to allocate up to Rs 80.65 crore to existing and incremental working-capital requirements and up to Rs 8.55 crore to general corporate purposes. The rights issue comprises up to 9 crore equity shares with a face value and issue price of Rs 10 each, with no premium, and could generate gross proceeds of up to Rs 90 crore.

After estimated issue expenses of up to Rs 80 lakh, Mihika expects net proceeds of up to Rs 89.20 crore, assuming full subscription, allotment and the relevant rights entitlement ratio. The company has scheduled deployment of the full Rs 89.20 crore during fiscal 2027, following board approval of the proposed utilisation on July 17, 2026.

Applicants must pay Rs 2.50 per rights share, or 25% of the Rs 10 issue price, when applying. The balance of Rs 7.50 per share is payable in three later calls on terms to be decided by the board, meaning the stated Rs 80.65 crore allocation depends on full subscription, allotment and payment of call monies.

Why does Mihika need additional working capital?

Mihika says the funding is intended to support expansion in agricultural commodity trading, where seasonal procurement requires purchases during harvest periods. The company plans to hold inventory to ensure product availability and says it must make timely payments to farmers, suppliers, traders and procurement partners to maintain continuity of trading operations.

The company also expects a larger receivables requirement as trading volumes expand and it extends credit to certain customers. Management estimates trade receivables of Rs 55.4458 crore at March 31, 2027, compared with Rs 1.5713 crore in the audited March 31, 2026 position, leaving funds tied up until customer collections are received.

Mihika’s audited current assets fell from Rs 20.9125 crore at March 31, 2024 to Rs 92.77 lakh at March 31, 2025, before rising to Rs 3.9148 crore at March 31, 2026. Management projects a substantial increase to Rs 91.0178 crore at March 31, 2027 and Rs 102.1145 crore at March 31, 2028; these latter figures are estimates rather than audited results.

Which items drive Mihika’s projected FY27 funding gap?

Mihika’s projected March 31, 2027 current assets comprise Rs 55.4458 crore of receivables, Rs 20.0031 crore of inventory and Rs 15.5689 crore of short-term loans, advances and other current assets. Of the Rs 87.1030 crore increase in total current assets from the March 31, 2026 audited balance, receivables are the largest component.

The company also estimates current liabilities will increase to Rs 7.4073 crore at March 31, 2027 from Rs 3.25 lakh at March 31, 2026. The forecast includes Rs 4.0006 crore of trade payables and Rs 3.4067 crore of other current liabilities and short-term provisions, but these projected liabilities remain below the Rs 91.0178 crore current-assets estimate.

As a result, Mihika estimates a working-capital gap, defined as current assets minus current liabilities, of Rs 83.6105 crore at March 31, 2027, against Rs 3.8823 crore a year earlier. Its funding schedule assigns Rs 80.65 crore of that fiscal 2027 gap to issue proceeds and Rs 2.9605 crore to internal resources, with no short-term borrowings listed.

For March 31, 2028, Mihika estimates a larger working-capital gap of Rs 90.9317 crore. The schedule lists Rs 90.9317 crore of internal resources, with no rights-issue proceeds or short-term borrowings, but does not set out a separate financing arrangement for the later estimate.

What assumptions support Mihika’s working-capital estimates?

Mihika estimates a trade-receivables holding period of 1.67 months for fiscal 2027 and 2.14 months for fiscal 2028, compared with 5.55 months in fiscal 2026. This means the projected receivables increase to Rs 55.4458 crore in fiscal 2027 is based on substantially higher estimated trading activity while assuming a shorter collection cycle than in the audited fiscal 2026 period.

Inventory holding is estimated at 0.77 months in fiscal 2027 and 0.91 months in fiscal 2028, down from 4.75 months in fiscal 2026. Even with the lower assumed holding period, inventory is projected to rise from Rs 2.3055 crore at March 31, 2026 to Rs 20.0031 crore a year later, reflecting the anticipated scale of procurement and trading operations.

Trade-payables holding is estimated at 0.13 months in fiscal 2027 and 0.23 months in fiscal 2028, compared with 0.05 months in fiscal 2026. Mihika attributes the increase to higher purchases and better credit periods allowed by suppliers, while other current liabilities and short-term provisions are projected to have holding periods of 0.10 months and 0.15 months, respectively.

How will Mihika’s use of proceeds be monitored?

Mihika states that no bank, financial institution or other external agency has appraised the issue objects, including the Rs 80.65 crore working-capital plan. The company describes the funding requirement and deployment schedule as internal management estimates, which may change because of business strategy, market conditions, regulatory delays, finance charges and other factors.

The board or rights issue committee may change the method, timing or schedule of deployment, subject to applicable law. If a funding shortfall arises, Mihika says it may use internal accruals or seek debt from existing or future lenders; unspent amounts may be carried into subsequent fiscal years.

Brickwork Ratings India Pvt. Ltd. has been appointed as monitoring agency for the proceeds, including the Rs 8.55 crore general-corporate-purpose allocation. Mihika says it will keep proceeds in a separate bank account, submit monitoring reports to the audit committee, and report quarterly deviations and category-wise variations to stock exchanges until the proceeds are fully used.

Conclusion

Mihika’s proposed rights issue is principally a working-capital funding plan, with Rs 80.65 crore of projected net proceeds earmarked for fiscal 2027. The plan depends on management estimates of an Rs 83.6105 crore working-capital gap, driven chiefly by projected receivables of Rs 55.4458 crore and inventory of Rs 20.0031 crore as agricultural commodity trading expands.

The next disclosures to watch are the outcome of the rights issue and collection of the three subsequent calls, followed by fiscal 2027 deployment against the Rs 89.20 crore schedule. Mihika has also estimated a Rs 90.9317 crore working-capital gap for March 31, 2028, to be funded through internal resources, while retaining the option to seek additional debt if required.