Company FY26 profit rose as operating cash stayed negative

Company reported profit of Rs 18.18 crore for the financial year ended March 31, 2026 (FY26), up from Rs 11.41 crore in FY25, but consolidated operating cash flow remained negative at Rs 3.65 crore. A Rs 35.39 crore increase in trade receivables exceeded the cash released by a Rs 14.05 crore reduction in inventories.

Why did Company’s FY26 profit not turn into operating cash?

Company’s FY26 operating cash flow stayed negative because working-capital movements absorbed cash despite higher operating profit. Operating profit before working-capital changes was Rs 25.27 crore in FY26, compared with Rs 15.77 crore in FY25. Working capital is the balance of short-term operating assets and liabilities, including inventories, customer receivables, payables and advances.

The largest disclosed FY26 cash absorption was the Rs 35.39 crore increase in trade receivables, which indicates that a greater amount of recognised sales had not been collected by March 31, 2026. That increase was larger than the Rs 25.27 crore operating profit before working-capital changes. Company also recorded a Rs 2.29 crore increase in other non-current assets, a Rs 23.76 lakh increase in other current assets and Rs 2.66 crore of net income tax paid.

Several FY26 working-capital movements released or provided cash, but did not offset the receivables increase. Inventories fell by Rs 14.05 crore, loans and advances declined by Rs 12.36 crore, and trade payables increased by Rs 2.15 crore. These were offset further by a Rs 17.12 crore decrease in other current liabilities, leaving a consolidated net operating cash outflow of Rs 3.65 crore.

How did Company’s operating cash flow change in FY26?

Company recorded a second consecutive annual operating cash outflow, with the outflow increasing by Rs 55.49 lakh from FY25. Net cash used in operating activities was Rs 3.65 crore in FY26, compared with Rs 3.09 crore in FY25. This deterioration occurred although operating profit before working-capital changes rose by Rs 9.51 crore year on year.

The mix of working-capital movements changed materially between the two years. In FY25, inventories increased by Rs 9.34 crore, trade receivables increased by Rs 4.68 crore and loans and advances increased by Rs 11.30 crore. In FY26, inventory and loans-and-advances movements reversed to declines of Rs 14.05 crore and Rs 12.36 crore respectively, but the receivables increase accelerated by Rs 30.71 crore to Rs 35.39 crore.

Company ended FY26 with cash and cash equivalents of Rs 98.27 lakh, down Rs 2.30 lakh from Rs 1.01 crore at March 31, 2025. The relatively limited reduction reflected Rs 5.67 crore of financing inflow, which offset the combined Rs 5.72 crore of operating and investing outflows. A shift to positive operating cash flow would depend on working-capital movements, particularly customer collections, rather than reported profit alone.

What drove Company’s higher FY26 profit and margin?

Company’s FY26 profit increased because revenue rose while total expenses declined. Revenue from operations increased 6.11% to Rs 117.09 crore in FY26 from Rs 110.35 crore in FY25, while total expenses fell 1.54% to Rs 94.32 crore from Rs 95.79 crore. Profit before tax consequently increased 56.46% to Rs 24.44 crore from Rs 15.62 crore.

Profit for FY26 was Rs 18.18 crore, 59.38% above Rs 11.41 crore in FY25. The financial statement table puts profit at 15.31% of total revenue in FY26, compared with 10.24% in FY25. The management discussion separately describes profit margin as 15.53% in FY26 and 10.34% in FY25, and attributes the increase primarily to lower material cost and increased margin.

Purchases of stock in trade declined 37.35% to Rs 54.71 crore in FY26 from Rs 87.33 crore in FY25, which Company attributed to better purchase negotiations. The decline coincided with the Rs 14.05 crore inventory reduction in FY26, following a Rs 9.34 crore inventory increase in FY25. Employee benefits expense moved in the other direction, rising 51.77% to Rs 7.74 crore, including a Rs 1.40 crore increase in directors’ remuneration and a Rs 1.22 crore increase in salaries and wages.

Which sales and customer exposures matter for collections?

Company’s FY26 operating-revenue growth was led by bowling and management contracts, while go-karting and arcade-games revenue declined. Bowling revenue increased by Rs 19.03 crore to Rs 57.01 crore, while management-contract revenue increased by Rs 4.47 crore to Rs 9.68 crore. Go-karting revenue fell by Rs 13.88 crore to Rs 2.66 crore and arcade-games revenue fell by Rs 5.41 crore to Rs 41.99 crore.

Company reported standalone revenue from operations of Rs 113.56 crore and subsidiary revenue of Rs 3.53 crore in FY26. It attributed the increase to higher distribution, supply and installation sales of amusement and entertainment solutions, alongside operational scale and business expansion. The disclosed information does not provide a receivables ageing schedule or identify the revenue stream responsible for the Rs 35.39 crore rise in trade receivables.

Customer concentration is relevant because collections are exposed to a relatively small group of accounts. Company’s top 10 customers generated Rs 91.45 crore, or 80.53%, of FY26 revenue from operations, compared with Rs 72.33 crore, or 65.55%, in FY25. The largest customer accounted for Rs 36.50 crore, or 32.14%, in FY26, up from Rs 22.12 crore, or 20.05%, in FY25.

How did financing support Company’s FY26 cash position?

Company’s FY26 financing inflow offset negative operating and investing cash flows. Net cash from financing activities was Rs 5.67 crore in FY26, compared with a Rs 49.87 lakh financing outflow in FY25. The FY26 movement included Rs 5.71 crore of net proceeds from current borrowings and Rs 1.30 crore of long-term-loan proceeds, partly offset by Rs 1.12 crore of interest paid and Rs 21.63 lakh of long-term-loan repayments.

Company had total current and non-current borrowings of Rs 8.99 crore as of March 31, 2026. Finance costs increased 102.79% to Rs 1.12 crore in FY26 from Rs 55.26 lakh in FY25, comprising Rs 49.60 lakh of interest expense, Rs 49.47 lakh of interest on income tax and Rs 12.98 lakh of other borrowing costs. Company states that interest-rate changes can affect future debt-service obligations and access to funds.

Company also used Rs 2.07 crore in investing activities during FY26 after generating Rs 3.92 crore from investing activities in FY25. FY26 outflows included Rs 3.18 crore for property, plant and equipment and Rs 56.80 lakh of capital expenditure on capital work-in-progress. Proceeds of Rs 2.56 crore from term deposits partly offset those investments.

Conclusion

Company’s FY26 results show that higher revenue, lower purchases of stock in trade and increased accounting profit did not translate into positive operating cash generation. The Rs 35.39 crore increase in trade receivables outweighed the Rs 14.05 crore inventory reduction and contributed to a second straight annual operating cash outflow.

The disclosed item to watch is whether Company collects trade receivables without another substantial working-capital build-up. FY26 cash was supported by Rs 5.67 crore of financing inflow and total borrowings of Rs 8.99 crore at March 31, 2026; Company also identifies credit risk if customers do not pay promptly or at all, which could require provisions or write-offs.