Omara funded inventory build with borrowings as operating cash fell

Omara reported Rs 9.37 crore of profit after tax in FY 2025-26 but used Rs 6.70 crore in operating activities as inventory increased by Rs 18.99 crore. Net financing cash inflow was Rs 6.98 crore, with higher borrowings for working capital helping fund ready jewellery stock and supplier payments.

Why was Omara’s operating cash flow negative despite profit?

Omara’s operating cash flow was negative in FY 2025-26 because cash committed to working capital exceeded the cash generated from reported profit. Profit after tax rose from Rs 2.73 crore in FY 2024-25 to Rs 9.37 crore in FY 2025-26, while net cash used in operating activities increased from Rs 0.84 crore to Rs 6.70 crore. Profit after tax records income and expenses for a period, whereas operating cash flow also reflects movements in inventory, receivables and operating liabilities.

The principal cash commitment was the Rs 18.99 crore increase in finished-goods and stock-in-trade inventory during FY 2025-26. Omara said it added jewellery collections and designs to ready stock to support sales, while higher commodity spot rates also increased inventory cost. The company’s statement of profit and loss recorded a negative Rs 18.99 crore change in inventories, meaning closing inventory exceeded opening inventory and created a credit under that accounting line item.

Negative operating cash flow was reported in all three disclosed years, although the FY 2025-26 outflow was substantially larger. Net cash used in operating activities was Rs 0.10 crore in FY 2023-24, Rs 0.84 crore in FY 2024-25 and Rs 6.70 crore in FY 2025-26. Inventory rose by Rs 1.10 crore in FY 2024-25, compared with the Rs 18.99 crore build in FY 2025-26.

How did Omara fund its FY 2025-26 inventory build?

Omara funded its FY 2025-26 inventory build partly through higher borrowings, which helped produce Rs 6.98 crore of net financing cash inflow. The company’s cash-flow discussion identifies Rs 8.48 crore of increased long-term and short-term borrowings for working-capital purposes, offset by Rs 1.49 crore of interest paid. The financing inflow exceeded the Rs 6.70 crore operating cash outflow by Rs 0.28 crore, while cash and cash equivalents increased by Rs 24,000 during the year.

Short-term borrowings rose 64.95% to Rs 18.49 crore at March 31, 2026 from Rs 11.48 crore at March 31, 2025. Omara attributed the increase to enhanced working-capital limits from bankers and current maturities of fresh long-term borrowings from financial institutions. Long-term borrowings increased 58.97% to Rs 3.94 crore from Rs 2.48 crore, with the company attributing the increase to fresh bank facilities for working-capital requirements.

The funding need was also affected by lower supplier credit. Trade payables decreased by Rs 2.41 crore to Rs 8.80 crore at March 31, 2026, while inventory increased by Rs 18.99 crore to Rs 43.58 crore. Omara said working-capital assistance from banks and directors supported clearance of outstanding supplier dues, linking external funding to both greater stockholding and reduced trade payables.

What changed in Omara’s working-capital position in FY 2025-26?

Omara’s working-capital position became more concentrated in inventory during FY 2025-26, even as trade receivables declined. Inventory increased 77.19% to Rs 43.58 crore at March 31, 2026 from Rs 24.60 crore a year earlier, after a 4.69% increase in FY 2024-25. Omara said the balance reflected ready collections, more designs and increased commodity prices.

Trade receivables decreased 88.43% to Rs 16.97 lakh at March 31, 2026 from Rs 1.47 crore at March 31, 2025. Omara attributed the fall to higher retail sales volumes, quicker settlements and a more cautious approach to customer credit amid gold-price volatility. The reduction released some cash from receivables, but it was smaller than the cash deployed in inventory.

Short-term loans and advances rose 12.67% to Rs 1.32 crore at March 31, 2026, mainly because of a higher goods and services tax input-tax-credit balance. Short-term provisions increased to Rs 3.25 crore from Rs 0.93 crore, which Omara identified as a partial offset to the operating cash outflow. The current ratio, defined as current assets divided by current liabilities, increased to 1.48 from 1.16 over the same period.

How did the inventory build affect Omara’s earnings and costs?

Omara’s inventory build affected reported FY 2025-26 earnings through the accounting treatment of closing stock, while requiring cash when stock was procured. Purchases of stock-in-trade rose 189.82% to Rs 46.70 crore, exceeding revenue from operations of Rs 45.87 crore. The negative Rs 18.99 crore inventory-change line reduced total expenses because closing inventory was higher than opening inventory.

Revenue from operations rose 95.00% to Rs 45.87 crore in FY 2025-26 from Rs 23.52 crore in FY 2024-25. Profit after tax increased 242.85% to Rs 9.37 crore, and the profit-after-tax margin increased to 20.42% from 11.61%. Finance cost rose 49.17% to Rs 1.49 crore, which Omara attributed to greater interest on enhanced and utilised cash-credit limits and unsecured loans from non-banking financial companies, or NBFCs, used to support inventory.

For the inventory build to translate into operating cash, the Rs 43.58 crore balance at March 31, 2026 must be sold in the ordinary course without a comparably large new stock build. Omara stated that the inventory was consistent with its operational requirements and growth objectives and was expected to be liquidated in the ordinary course within a reasonable timeframe. Demand for the added jewellery designs and movements in gold and diamond prices can affect the pace and value of that conversion.

How concentrated were Omara’s suppliers and customers?

Omara’s procurement was concentrated among its largest suppliers in FY 2025-26. Its 10 largest suppliers accounted for Rs 43.24 crore, or 92.60%, of Rs 46.70 crore in purchases. The two largest suppliers represented 64.57% of purchases, up from 50.85% in FY 2024-25, when the top two supplied Rs 8.19 crore of Rs 16.11 crore in purchases.

Omara’s customer concentration was lower than supplier concentration, although its largest customer accounted for a higher share in FY 2025-26. The 10 largest customers contributed Rs 12.53 crore, or 27.32%, of Rs 45.87 crore in revenue from operations, compared with 21.41% in FY 2024-25. The largest customer contributed Rs 7.49 crore, or 16.33%, compared with Rs 89.25 lakh, or 3.79%, a year earlier.

Omara operates in one major segment and states that its business is not seasonal. Its inventory and financing requirements therefore depend on continued procurement from key suppliers, demand for diamond, gold, platinum and gemstone jewellery, and access to working-capital facilities. Omara also identifies commodity-price volatility, consumer spending, supply-chain conditions and inventory management as factors affecting results.

Conclusion

Omara’s FY 2025-26 accounts show that reported profitability and operating cash generation moved in different directions. Profit after tax of Rs 9.37 crore was accompanied by Rs 6.70 crore of negative operating cash flow, principally because inventory rose by Rs 18.99 crore. Borrowings and Rs 6.98 crore of net financing inflow helped finance the larger stock balance and the reduction in supplier payables.

The next results should show whether Omara’s stated expectation of ordinary-course inventory liquidation converts the Rs 43.58 crore inventory balance into operating cash. Relevant disclosed measures include inventory levels, operating cash flow, short-term borrowings of Rs 18.49 crore, finance cost of Rs 1.49 crore, and the purchase share held by the 10 largest suppliers.