Anand Seamless Limited profit rose but operating cash stayed negative

Anand Seamless Limited reported FY26 profit after tax of Rs 5.48 crore, but its restated cash-flow statement recorded a Rs 5.57 crore operating outflow. Inventory increased by Rs 13.40 crore and trade receivables by Rs 3.30 crore during FY26, while net cash from financing activities was Rs 19.68 crore.

Why did Anand Seamless profits rise while operating cash stayed negative?

Anand Seamless increased FY26 profit after tax to Rs 5.48 crore from Rs 2.65 crore in FY25, but the reported profit did not translate into cash from operating activities. Revenue from operations rose to Rs 56.00 crore in FY26 from Rs 33.55 crore in FY25, while profit before tax increased to Rs 7.44 crore from Rs 3.58 crore. The financial statements are prepared on an accrual basis, under which sales of goods are generally recognised when goods are dispatched rather than when customer cash is collected.

Anand Seamless reported operating profit before working-capital changes of Rs 10.16 crore in FY26, compared with Rs 5.67 crore in FY25. Working capital refers to short-term operating assets and liabilities, including inventories, trade receivables and payables. The reported movements in those balances and the income-tax adjustment resulted in a Rs 5.57 crore net operating cash outflow in FY26.

The FY26 outflow followed a Rs 3.11 crore operating outflow in FY25, compared with Rs 1.51 crore of operating cash generated in FY24. Profit after tax, however, was Rs 3.36 crore in FY24, Rs 2.65 crore in FY25 and Rs 5.48 crore in FY26. The two-year divergence means that the increase in reported earnings was accompanied by a larger need for cash in operating balances.

Which working-capital items absorbed Anand Seamless cash in FY26?

Inventory was Anand Seamless's largest stated use of operating cash in FY26, followed by trade receivables. The cash-flow statement records a Rs 13.40 crore inventory increase and a Rs 3.30 crore receivables increase. An inventory increase uses cash when materials or goods remain on hand, while an increase in receivables means recognised sales have not yet been collected in cash.

The composition changed in FY26. The inventory cash use increased by Rs 5.82 crore from FY25, whereas the receivables cash use reduced by Rs 4.24 crore from the FY25 level. The cash-flow statement also records Rs 4.58 crore generated through an increase in other payables, but a Rs 2.17 crore decrease in other current liabilities. Those movements did not offset the inventory and receivables cash requirements.

Anand Seamless's profit-and-loss statement reported Rs 11.52 crore as the FY26 change in inventories of finished goods, work-in-progress and stock-in-trade, compared with Rs 1.98 crore in FY25. That line is presented as an expense classification in the profit-and-loss statement, while the cash-flow inventory movement is included under the indirect method required by Accounting Standard 3, or AS 3, Cash Flow Statements. The two measures have different purposes, but both identify inventory as material to the FY26 accounts.

How large were Anand Seamless's inventory and receivable balances?

Anand Seamless reported inventories of Rs 44.59 crore at March 31, 2026, compared with Rs 31.19 crore at March 31, 2025 and Rs 23.62 crore at March 31, 2024. The FY26 inventory balance was Rs 20.97 crore above the FY24 balance. The accounting policies value inventories at the lower of cost and net realisable value, with raw materials, spares and packing materials valued on a first-in, first-out basis.

Work-in-progress and finished goods are valued using weighted-average cost, including conversion and other costs required to bring them to their present location and condition. Trade receivables reached Rs 13.65 crore at March 31, 2026, from Rs 10.32 crore at March 31, 2025 and Rs 2.75 crore at March 31, 2024. Collections and inventory turnover would need to support these year-end balances for future reported profits to convert into operating cash.

The FY24 audit report contained a qualified opinion because Anand Seamless had not maintained quantity information for inventory, which the previous auditor described as a material weakness in internal controls. The restated financial information says that qualification related to record keeping rather than inventory valuation, and states that inventory quantity and value are recorded and reconciled monthly. The disclosed control process is relevant to the Rs 44.59 crore inventory balance reported at March 31, 2026.

How did Anand Seamless fund its FY26 cash requirements?

Anand Seamless reported Rs 19.68 crore of net cash from financing activities in FY26, following Rs 10.84 crore in FY25 and an Rs 0.98 crore outflow in FY24. The FY26 financing section includes Rs 7.78 crore of proceeds from long-term borrowings, Rs 3.44 crore of increased short-term borrowings and Rs 4.64 crore from issuing share capital including premium. It also records Rs 4.32 crore of long-term borrowing repayments and Rs 2.25 crore of interest and other borrowing expenses.

Long-term borrowings stood at Rs 11.20 crore at March 31, 2026, while short-term borrowings were Rs 16.83 crore, producing combined reported borrowings of Rs 28.02 crore. At March 31, 2025, the comparable balances were Rs 9.04 crore and Rs 12.10 crore respectively, or Rs 21.13 crore combined. The increase in combined borrowings was Rs 6.89 crore over the year.

Cash and cash equivalents nevertheless fell to Rs 46.53 lakh at March 31, 2026 from Rs 1.57 crore at March 31, 2025. The FY26 closing balance included Rs 26.82 lakh of bank balances held as margin money or security, Rs 18.06 lakh cash on hand and Rs 1.65 lakh in current accounts. The reported Rs 5.57 crore operating outflow, Rs 1.04 crore investing outflow and Rs 19.68 crore financing inflow resulted in a Rs 1.10 crore decline in cash during FY26.

What would need to change for operating cash to improve?

Anand Seamless would need lower cash absorption by inventory and receivables, or larger cash offsets from operating liabilities, for operating cash flow to improve on the disclosed FY26 figures. Inventory increased by Rs 13.40 crore in FY26, while receivables increased by Rs 3.30 crore and other payables supplied Rs 4.58 crore. The cash-flow statement does not disclose a separate target or plan for reducing those balances.

Anand Seamless's stated revenue-recognition policy records goods sales generally on dispatch, and its receivable balance was Rs 13.65 crore at March 31, 2026. Its stated inventory policy requires lower-of-cost-and-net-realisable-value measurement, while monthly quantity and value reconciliation is disclosed in the accounting policies. Future financial statements can show whether sales recognised under those policies are collected and whether stock converts into revenue without a comparable rise in working-capital cash use.

Conclusion

Anand Seamless's FY26 statements show that profit growth and cash generation moved in different directions. Revenue from operations reached Rs 56.00 crore and profit after tax reached Rs 5.48 crore, but inventory and receivables growth contributed to a second consecutive operating cash outflow, at Rs 5.57 crore in FY26 after Rs 3.11 crore in FY25.

The disclosed points to watch are the monthly inventory reconciliation process, collections against the Rs 13.65 crore receivable balance and financing needs after combined borrowings reached Rs 28.02 crore at March 31, 2026. The accounts do not set a working-capital reduction target, so later financial statements will determine whether the reported inventory and receivables balances convert into cash.