The Company allocates Rs 130 crore as working capital rises

The Company plans to allocate Rs 130 crore of net proceeds to incremental working capital in fiscal 2027, when its projected working-capital requirement is Rs 572.943 crore. The requirement follows an order book of Rs 1,635.560 crore at September 30, 2025 and a projected increase in working-capital days from 141 in fiscal 2026 to 178 in fiscal 2027.

Why does The Company need Rs 130 crore for working capital?

The Company needs Rs 130 crore because its working-capital requirement is projected to increase by Rs 247.804 crore, from Rs 325.139 crore at March 31, 2026 to Rs 572.943 crore at March 31, 2027. Working capital is current assets less current liabilities, covering operating balances including inventory, trade receivables, retention money and deposits supporting banking facilities.

The Company’s fiscal 2027 funding plan provides Rs 442.943 crore from working-capital facilities and internal accruals, with the remaining Rs 130 crore proposed from net proceeds. In fiscal 2026, the estimated Rs 325.139 crore requirement is expected to be funded entirely through facilities and internal accruals. The Board approved the standalone business plan, projected requirements and funding pattern on January 23, 2026.

The Company recorded a working-capital requirement of Rs 239.866 crore for the six-month period ended September 30, 2025, compared with Rs 198.472 crore at March 31, 2025 and Rs 140.202 crore at March 31, 2023. Total current assets stood at Rs 388.525 crore at September 30, 2025, against current liabilities of Rs 148.659 crore, showing that the requirement is linked to operating assets exceeding short-term obligations.

How does The Company’s order book increase working-capital needs?

The Company’s order book increased to Rs 1,635.560 crore at September 30, 2025 from Rs 861.472 crore in fiscal 2025, Rs 595.848 crore in fiscal 2024 and Rs 522.375 crore in fiscal 2023. A larger order book can require more inventory, contract-related deposits and receivables before customer collections are received.

Transformer manufacturing represented Rs 1,364.388 crore, or 83.42%, of the September 30, 2025 order book, compared with 45.25% in fiscal 2023. Engineering, procurement and construction, or EPC, represented 16.58% at September 30, 2025, down from 54.75% in fiscal 2023. EPC covers contracts to engineer, procure and construct infrastructure such as substations and transmission lines.

The Company reported revenue from operations of Rs 450.612 crore in fiscal 2025, compared with Rs 276.690 crore in fiscal 2024 and Rs 303.768 crore in fiscal 2023. Revenue was Rs 165.578 crore for the six months ended September 30, 2025. The Company disclosed a 21.80% compound annual growth rate in revenue from fiscal 2023 to fiscal 2025, while its fiscal 2027 projections assume continued execution of the larger order book.

Which balances are projected to absorb more funds?

The Company projects trade receivables to reach Rs 440.381 crore at March 31, 2027, from an estimated Rs 262.353 crore at March 31, 2026. Inventory is projected to rise to Rs 228.612 crore from Rs 166.199 crore, while non-current financial assets are projected to increase to Rs 105.934 crore from Rs 71.571 crore.

Non-current financial assets include retention money held back by customers and deposits lodged as security for borrowings, bank guarantees, letters of credit and other commitments. Retention money is an amount contractually withheld to secure performance and defect-liability obligations. The Company expects these balances to rise with larger projects and longer execution timelines.

The Company expects current liabilities to increase by Rs 34.061 crore between fiscal 2026 and fiscal 2027, less than the projected Rs 281.865 crore increase in current assets. Trade payables are projected to decline from Rs 117.600 crore to Rs 110.679 crore, while other current liabilities are projected to rise from Rs 63.699 crore to Rs 93.384 crore. The difference between projected asset growth and liability growth produces the additional funding requirement.

Why are The Company’s working-capital days projected to lengthen?

The Company projects working-capital days of 178 in fiscal 2027, compared with 141 in fiscal 2026 and 160 in fiscal 2025. Working-capital days measure current-asset days less current-liability days. The fiscal 2027 projection remains below the 247 days recorded for the six-month period ended September 30, 2025, which was calculated over a 182-day period.

Trade-receivable days are projected to rise to 130 in fiscal 2027 from 124 in fiscal 2026. The Company attributes its longer collection cycle in transformer manufacturing to milestone-based billing, inspection and approval processes, and the predominance of government and public-sector undertaking customers. A public-sector undertaking is a government-owned enterprise, and the forecast also reflects the higher transformer-manufacturing share of the order book.

Inventory days are projected at 109 in fiscal 2027, up from 85 in fiscal 2026, but below 175 days in the six months ended September 30, 2025. The Company says fiscal 2025 inventory days of 77 were temporarily lower because two large projects were completed near the year-end. Its fiscal 2027 estimate assumes proactive stocking for higher megavolt-ampere capacity projects and raw-material supply conditions linked to transmission and distribution capital expenditure.

The Company also assumes shorter supplier credit, with trade-payable days falling to 63 in fiscal 2027 from 77 in fiscal 2026 and 79 in fiscal 2025. It cites competition for raw materials and suppliers’ preference for manufacturers able to offer advance payments or accept shorter payment periods. The 178-day projection therefore depends on its receivable, inventory and payable assumptions being realised during fiscal 2027.

How does The Company currently fund operating capital?

The Company funds working capital through internal accruals and facilities from banks and financial institutions. At November 30, 2025, secured borrowings were Rs 287.329 crore and unsecured borrowings were Rs 10 crore. Secured borrowings included Rs 22.689 crore of fund-based borrowings and Rs 264.640 crore of non-fund-based borrowings.

Non-fund-based borrowings include bank guarantees, which support contractual obligations without immediate cash disbursement. The Company had Rs 16.060 crore outstanding in cash credit and overdraft or working-capital demand loans within fund-based borrowings at November 30, 2025, alongside Rs 10 crore of unsecured borrowings. Margin deposits supporting guarantees and letters of credit can therefore tie up cash as contract activity rises.

The Company funded its Rs 239.866 crore working-capital requirement at September 30, 2025 with Rs 34.496 crore of working-capital facilities and Rs 205.370 crore of internal accruals. At March 31, 2025, it used Rs 24.811 crore of facilities and Rs 173.661 crore of internal accruals. The proposed fiscal 2027 net-proceeds allocation would add a third identified funding source to this structure.

Conclusion

The Company’s planned Rs 130 crore allocation is tied to a fiscal 2027 working-capital requirement of Rs 572.943 crore, driven by projected receivables, inventory, retention money and deposits rather than a single operating expense. The larger order book has become more concentrated in transformer manufacturing, which the Company expects to involve longer project cycles and elevated operating balances.

The next point to watch is execution of the fiscal 2027 business plan approved on January 23, 2026, particularly whether receivable days, inventory days and supplier-credit assumptions track the projections. The Company has disclosed that it may use internal accruals or seek additional debt from existing or other lenders if net proceeds fall short or actual utilisation for stated objects increases.