Paramount Syntex Ltd’s FY26 profit doubled, but cash lagged

Paramount Syntex reported FY26 profit after tax of Rs 13.87 crore, more than double Rs 6.73 crore in FY25, but operating cash after tax was Rs 5.90 crore. The gap arose because working-capital movements used Rs 16.57 crore, led by higher short-term loans and advances, inventories and trade receivables.

Why did Paramount Syntex’s FY26 profit double?

Paramount Syntex’s FY26 profit doubled because revenue increased while total expenses remained slightly below the FY25 level. Revenue from operations rose 8.55% to Rs 122.03 crore in FY26 from Rs 112.42 crore in FY25, while total expenses declined to Rs 103.37 crore from Rs 103.54 crore. Profit before tax consequently increased to Rs 19.15 crore from Rs 9.18 crore, and profit after tax rose by Rs 7.14 crore.

The movement in finished-goods and stock-in-trade inventories was the largest expense-line change. The statement of profit and loss recorded a negative Rs 13.03 crore charge for changes in inventories in FY26, compared with negative Rs 1.17 crore in FY25. This offset a Rs 10.28 crore increase in materials consumed to Rs 104.51 crore; employee benefits rose to Rs 3.65 crore from Rs 3.21 crore, while finance costs increased to Rs 3.00 crore from Rs 2.77 crore.

Tax expense increased with earnings, reaching Rs 5.28 crore in FY26 against Rs 2.45 crore in FY25. FY26 tax included Rs 4.41 crore of current tax, Rs 54.88 lakh of tax relating to earlier years and Rs 32.27 lakh of deferred tax. Basic and diluted earnings per equity share were Rs 11.60 in FY26, compared with Rs 5.69 in FY25 and Rs 1.27 in FY24.

How did working capital leave Paramount Syntex’s cash below profit?

Working capital left Paramount Syntex’s cash below profit because increases in operating current assets absorbed more cash than higher current liabilities provided. Working capital is the balance of current assets, such as inventory and receivables, and current liabilities, such as trade payables. Paramount Syntex generated Rs 24.13 crore of operating profit before working-capital changes in FY26, but these changes created a net cash outflow of Rs 16.57 crore.

Short-term loans and advances were the largest FY26 working-capital use, absorbing Rs 9.44 crore of cash. Inventory used Rs 4.79 crore, trade receivables used Rs 4.43 crore and other current assets used Rs 1.01 crore. These outflows were partly offset by a Rs 2.20 crore increase in trade payables, Rs 81.83 lakh from other current liabilities and Rs 8.98 lakh from short-term provisions.

Cash conversion improved from FY25 despite the FY26 outflow. In FY25, Rs 15.86 crore of working-capital outflows exceeded Rs 13.67 crore of operating profit before working-capital changes, resulting in Rs 2.19 crore of cash utilised in operations before tax. In FY26, cash generated from operations was Rs 7.56 crore before income-tax payments of Rs 1.66 crore, resulting in Rs 5.90 crore of net cash from operating activities.

Which balance-sheet items accounted for Paramount Syntex’s cash requirement?

Short-term loans and advances accounted for the largest balance-sheet increase, rising to Rs 13.04 crore at March 31, 2026 from Rs 3.60 crore at March 31, 2025. The Rs 9.44 crore increase matches the cash-flow statement’s largest working-capital outflow. Related-party disclosures for FY26 list Rs 5.78 crore of loans advanced to managing director Punit Arora and Rs 2.30 crore advanced to whole-time director KumKum Arora.

Trade receivables increased to Rs 25.40 crore at March 31, 2026 from Rs 21.14 crore a year earlier and Rs 12.61 crore at March 31, 2024. Inventories rose to Rs 41.34 crore from Rs 36.55 crore in FY25, while other current assets rose to Rs 1.22 crore from Rs 20.42 lakh. The increases in these assets exceeded the Rs 9.61 crore rise in FY26 revenue from operations, requiring cash to remain deployed until the balances are collected, sold or recovered.

Current liabilities did not fully fund the increase in current assets. Short-term borrowings rose to Rs 27.70 crore at March 31, 2026 from Rs 25.62 crore, while long-term borrowings declined to Rs 5.55 crore from Rs 7.85 crore. Trade payables at March 31, 2026 comprised Rs 1.32 crore due to micro and small enterprises and Rs 8.26 crore due to other creditors, compared with combined trade payables of Rs 7.69 crore at March 31, 2025.

Did investment and financing flows affect Paramount Syntex’s year-end cash?

Investment and financing flows reduced most of Paramount Syntex’s FY26 operating cash inflow, leaving cash and cash equivalents at Rs 30.77 lakh on March 31, 2026. Investing activities used Rs 2.87 crore, including Rs 2.86 crore spent on property, plant and equipment and Rs 17.13 lakh invested in fixed deposits. The FY25 investing outflow was higher at Rs 4.41 crore, including Rs 4.28 crore of property, plant and equipment purchases.

Financing activities used Rs 3.01 crore in FY26, after generating Rs 6.22 crore in FY25. Paramount Syntex repaid Rs 2.30 crore of long-term borrowings and paid Rs 2.79 crore of finance cost, partly offset by Rs 2.07 crore of proceeds from short-term borrowings. Net cash and cash equivalents therefore increased by only Rs 2.21 lakh from Rs 28.56 lakh at March 31, 2025.

Conclusion

Paramount Syntex’s FY26 results show that higher reported earnings did not translate proportionately into operating cash. Profit after tax increased by Rs 7.14 crore, but the Rs 16.57 crore working-capital outflow reduced cash from operations to Rs 5.90 crore after tax. The FY26 cash result was nevertheless a change from the Rs 2.57 crore operating cash outflow reported in FY25.

The next financial update will show whether the Rs 9.44 crore increase in short-term loans and advances, Rs 4.43 crore increase in receivables and Rs 4.79 crore increase in inventories convert into cash. The FY26 statements disclose no plan or timetable for reducing these balances, so continued operating cash generation depends on collections, inventory movement and recovery of advances without comparable new deployment.