Technocrats Plasma: Site Projects Drove Rs 50 Crore Cash Outflow

Technocrats Plasma attributed roughly Rs 50 crore of negative operating cash flow in H1 FY27 to collections from site projects that can take four to five months, as receivables rose to almost Rs 68 crore and inventory reached Rs 53 crore. Management plans to shift more work into factory-based production with faster payment terms.

Why did Technocrats Plasma report negative operating cash flow?

Technocrats Plasma said site-based project execution was the main reason for the H1 FY27 cash outflow of around Rs 50 crore cited by an analyst. The analyst also pointed to trade receivables rising from Rs 21 crore to almost Rs 68 crore and inventories increasing from Rs 33 crore to Rs 53 crore, despite the company reporting operating profit.

Management said collections for projects performed at customer sites generally take four to five months. It described this as the normal cycle for this type of work and said funds remain deployed until customers pay. Management added that the relevant customers were tier-one and tier-two companies and characterised the receivables as assured, while acknowledging the time needed for conversion into cash.

The difference between earnings and cash collection was evident in the H1 FY27 results. Technocrats Plasma reported revenue from operations of Rs 103.551 crore, up 97.4% year on year, while earnings before interest, tax, depreciation and amortisation, or EBITDA, rose 78% to Rs 17.039 crore. Management’s explanation was that revenue and EBITDA can be recognised before cash is received on outside-site work.

How did receivables and inventory change in H1 FY27?

Technocrats Plasma’s receivables increased by about Rs 47 crore, from Rs 21 crore to almost Rs 68 crore, while inventories increased by Rs 20 crore, from Rs 33 crore to Rs 53 crore. The combined increase of roughly Rs 67 crore in these two balances was larger than the approximately Rs 50 crore operating cash outflow raised during the H1 FY27 call.

Management said much of the Rs 53 crore inventory was ready stock that could be billed, rather than unallocated raw material. It said cash would come when the material was billed, but it did not provide a date for normalisation of either the inventory balance or receivables of almost Rs 68 crore. In a separate response, management said material purchases had also risen for future projects.

An analyst also cited other current assets increasing from Rs 1.2 crore to Rs 35 crore. Management said this reflected initial parking of initial public offering, or IPO, proceeds, while referring to about Rs 34 crore that was yet to be deployed. In a subsequent answer, management said the amount was “already deployed actually,” leaving the classification and deployment status unresolved in the call.

Technocrats Plasma raised approximately Rs 60.98 crore in its SME IPO during the year, according to management. It said it had used Rs 21.2 lakh for capital expenditure and Rs 14.74 crore for working capital, with approximately Rs 34 crore described as yet to be deployed. The stated uses included manufacturing capability, long-term working capital and general corporate purposes.

How will in-house production shorten Technocrats Plasma’s cash cycle?

Technocrats Plasma expects factory-based work to reduce the cycle from 90 to 120 days for site projects to a maximum of 60 days for in-house production. Management said factory-based sales commonly involve advances, part payments or milestone payments, and that 90% of payment is received before dispatch in many cases.

The planned change depends on moving work from customer sites to a 20,000-square-foot rented facility. Management said it had previously performed more outside work because it lacked enough space with high ceilings and lateral ground area. The new facility is intended to accommodate more internal manufacturing and system work, rather than establish a direct formula between floor area and revenue.

Management said it was evaluating bill discounting to address the collection lag on site projects. It did not disclose a lender, discounting cost, facility size or implementation date. The call therefore presented bill discounting as an option under evaluation, not as an adopted funding arrangement or a forecast reduction in the H1 FY27 cash outflow.

Over two to three years, management expects 80% to 90% of activity to follow the in-house payment model, with advances, milestones or payment before dispatch. That is management’s stated operating expectation rather than a reported result. It implies a lower dependence on the 90-to-120-day collection cycle associated with outside-site execution.

Can the shift in work location also change Technocrats Plasma’s margins?

Technocrats Plasma said outside jobs carry profit margins of 15% to 20%, compared with 40% to 50% for work completed in its own factory. Management linked the higher in-house economics to specialised and customised automation products, including high-end systems that it expects to manufacture internally rather than execute predominantly at customer locations.

Management explicitly rejected the suggestion that expanding from 4,000 square feet to 20,000 square feet would automatically make revenue potential five times larger. Instead, it said the operational benefit would be higher profitability and better cash flow from bringing outside work indoors. That distinction matters because H1 FY27 revenue mix included 35.3% lifecycle support and 34.8% customisation and retrofit solutions.

Machines with automation represented 22.5% of H1 FY27 revenue, while machines without automation contributed 7.5%. Technocrats Plasma reported an overall EBITDA margin of 16.5% and profit after tax of Rs 11.948 crore, up 58% year on year, with a 11.5% profit-after-tax margin. Management’s 40% to 50% comments concerned in-house work economics, not consolidated margin guidance.

Management retained its aim for FY27 revenue growth of about 45% to 50% versus FY26 and said the second half is generally better than the first half. It described that range as a minimum assumption, while H1 FY27 revenue had already increased 97.4% year on year. The company did not provide an operating-cash-flow forecast for FY27.

Conclusion

Technocrats Plasma’s H1 FY27 cash-flow explanation centres on working capital rather than a lack of reported earnings: collections from outside-site projects take four to five months, while ready-to-bill inventory and receivables accumulated. The movement in receivables from Rs 21 crore to almost Rs 68 crore and in inventory from Rs 33 crore to Rs 53 crore occurred alongside EBITDA of Rs 17.039 crore.

The next development to watch is whether the 20,000-square-foot facility changes the payment mix toward advances, milestones and up to 90% payment before dispatch, as management expects over two to three years. Investors can also monitor management’s clarification of the approximately Rs 34 crore of IPO proceeds discussed under other current assets and any decision on bill discounting.