Prasol Chemicals Limited operating cash flow fell 57% versus FY24

Prasol Chemicals Limited generated Rs 49.470 crore of net cash from operating activities in Fiscal 2026, 57% below Rs 115.606 crore in Fiscal 2024, despite restated profit before tax reaching Rs 111.899 crore. An Rs 81.680 crore increase in trade and other receivables and an Rs 12.896 crore increase in other current and financial assets absorbed operating cash.

Why did Prasol Chemicals’ operating cash flow fall in Fiscal 2026?

Prasol Chemicals’ operating cash flow fell versus Fiscal 2024 because working-capital movements absorbed cash despite higher cash flow before working-capital changes in Fiscal 2026. Working capital is short-term capital tied up in receivables, inventory, current assets, payables and other liabilities. Cash flow before changes in working capital rose to Rs 148.307 crore in Fiscal 2026 from Rs 101.327 crore in Fiscal 2025, but net operating cash was Rs 49.470 crore after those movements and income-tax payments.

The largest Fiscal 2026 cash use was the Rs 81.680 crore increase in trade receivables and other receivables, indicating that more sales-related or other amounts remained outstanding at year-end. Prasol Chemicals also recorded an Rs 12.896 crore increase in other current and financial assets and a Rs 1.338 crore inventory increase. These cash uses were partly offset by a Rs 11.334 crore increase in trade payables, a Rs 13.417 crore increase in other current liabilities, a Rs 2.346 crore increase in other provisions and a Rs 25.6 lakh increase in other financial liabilities.

How did Prasol Chemicals’ operating cash flow change across three years?

Prasol Chemicals’ cash conversion, meaning the translation of accounting profit into cash, changed substantially between Fiscal 2024 and Fiscal 2026. Net operating cash fell from Rs 115.606 crore in Fiscal 2024 to Rs 22.260 crore in Fiscal 2025, before recovering to Rs 49.470 crore in Fiscal 2026. The Fiscal 2026 total remained Rs 66.136 crore below Fiscal 2024, producing the 57% two-year decline stated in the headline.

Fiscal 2024 differed because several working-capital movements released cash rather than consuming it. Trade and other receivables decreased by Rs 7.408 crore, inventory decreased by Rs 32.245 crore and other current financial assets decreased by Rs 8.190 crore. Those releases, alongside a Rs 26.464 crore increase in other current liabilities and an Rs 8.827 crore increase in trade payables, contributed to Rs 120.289 crore of cash generated from operations despite profit before tax of Rs 33.510 crore.

What explains the gap between Fiscal 2026 profit and operating cash?

Prasol Chemicals’ profit before tax rose 89% year on year to Rs 111.899 crore in Fiscal 2026 from Rs 59.287 crore in Fiscal 2025, but accounting profit is not the same as cash collected. The company added Rs 24.696 crore of depreciation and amortisation, Rs 7.322 crore of finance cost, Rs 3.755 crore of net foreign-exchange loss and Rs 1.065 crore of loss on sale of fixed assets. It also included a Rs 26.2 lakh provision for doubtful debts, while deducting Rs 18 lakh of interest income and Rs 51.2 lakh of expenses no longer payable written back.

Those adjustments lifted cash flow before working-capital changes to Rs 148.307 crore, Rs 36.408 crore above Fiscal 2026 profit before tax. Working-capital movements then reduced cash generated from operations to Rs 79.546 crore, and Rs 30.076 crore of income-tax payments reduced net operating cash to Rs 49.470 crore. Continued conversion of profit into cash depends on receivables collection and on whether growth in current assets is balanced by changes in payables and other current liabilities.

Which working-capital movements changed most from Fiscal 2025?

Prasol Chemicals’ principal working-capital pressure shifted from inventory in Fiscal 2025 to receivables in Fiscal 2026. Inventory increased by Rs 51.871 crore in Fiscal 2025, compared with an Rs 1.338 crore increase in Fiscal 2026. Trade and other receivables increased in both years, rising Rs 37.413 crore in Fiscal 2025 and Rs 81.680 crore in Fiscal 2026, increasing the annual cash absorption from that line by Rs 44.267 crore.

Trade payables provided less cash support in Fiscal 2026 than in Fiscal 2025. Prasol Chemicals reported an Rs 11.334 crore increase in trade payables in Fiscal 2026, compared with a Rs 25.609 crore increase in Fiscal 2025. Fiscal 2025 also included a Rs 2.903 crore increase in other current financial assets, a Rs 2.769 crore increase in other current liabilities and a Rs 27.3 lakh increase in other provisions, leaving cash generated from operations at Rs 37.555 crore before Rs 15.294 crore of tax payments.

What could affect Prasol Chemicals’ future operating cash flow?

Prasol Chemicals states that significant fluctuations or negative operating cash flow could affect its growth prospects, financial condition and the trading price of its equity shares. The Fiscal 2026 cash-flow mechanics identify collections from the Rs 81.680 crore receivables increase, inventory movements, changes in other current and financial assets, supplier-payment timing and tax payments as relevant factors. Prasol Chemicals does not provide a Fiscal 2027 operating-cash-flow forecast in the disclosed material.

Manufacturing disruption is another disclosed risk to cash flows. Prasol Chemicals’ Mahad Manufacturing Facility was shut from October 27, 2023 to May 3, 2024 after Maharashtra Pollution Control Board closure directions following a gas-leakage incident. The Mahad facility’s loss before exceptional items and tax narrowed to Rs 12.172 crore in Fiscal 2026 from Rs 15.766 crore in Fiscal 2025 and Rs 22.773 crore in Fiscal 2024, while its capacity utilisation increased in Fiscal 2026.

Conclusion

Prasol Chemicals’ Fiscal 2026 results show that a rise in reported profit did not translate proportionately into operating cash. Profit before tax rose to Rs 111.899 crore and cash flow before working-capital changes reached Rs 148.307 crore, but receivables, other current and financial assets and tax payments reduced net operating cash to Rs 49.470 crore. Fiscal 2024 provides the contrast, as lower inventory and receivables released cash.

The next disclosed items to watch are collection of the Rs 81.680 crore increase in trade and other receivables, inventory requirements and any manufacturing disruption. Prasol Chemicals also intends to implement an upgraded enterprise resource planning system at a suitable future time because it currently uses separate reports for inventory quantity and value, following auditors’ observations on inventory records and overhead allocation.